issue-1996-07-08•Federal Register final rules — 1996-07-08
Federal Register final rules — 1996-07-08
issue-1996-07-08Federal Register final rules — 1996-07-08Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. X96-10708 Tariffs and Service Contracts; First Interim ATFI Amendments
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35685-35686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X96-10708]
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FEDERAL MARITIME COMMISSION
46 CFR Part 514
[Docket No. 90-23]
Tariffs and Service Contracts; First Interim ATFI Amendments
CFR Correction
In title 46 of the Code of Federal Regulations, parts 500 to end,
revised as of October 1, 1995, the table following Sec. 514.17(d)(1) is
incorrect. It should read as follows:
[[Page 35686]]
[Sec. 514.17(d)(1)] ATFI Essential Terms Search
JKL Line Essential Terms Publication (XYZ [1]
004).
ET Num: 681.............................. Personal Computers from Taiwan............. [2]
SC Num: 765.............................. Amendment Num: 3--Available until: 31 Jan [3]
1992.
FMC File Num: 123456..................... Contract Effective: 01 Dec 1992............ [4]
Amendment Type: C........................ Special Case: 123456--Contract Expiration: [5]
15 Jan 1993.
Filing Date: 01 Jan 1992................. Contract Termination: 15 Jan 1993.......... [6]
----------------------------------------------------------------------------------------------------------------
Term (Amend) List of essential terms titles [7]
1 ( 0) Origin........................ [i]
2 ( 0) Destination................... [ii]
3 ( 0) Commodities................... [iii]
4 ( 1) Minimum Quantity.............. [iv]
4 A( 0) Minimum Quantity in 20ft [A]
containers.
4 B( 3) Minimum Quantity in 40ft [B]
containers.
5 ( 0) Service Commitments........... [v]
6 ( 0) Contract Rates or Rate [vi]
Schedules(s).
7 ( 2) Liquidated Damages for Non- [vii]
Performance (if any).
8 ( 0) Later Events Causing Deviation [viii]
From ET (if any).
9 ( 0) Duration of the Contract [ix]
(e.g., ``46 days from 01 Dec.
1992 to 15 Jan. 1993'').
10 ( 0) Assessorials.................. [x]
100 ( 0) (Title and text--Optional).... [8]
101 ( 0) (Title and text--Optional).... [8]
[999 zzz (999) Maximum term and amendment ...........
values].
BILLING CODE 1505-01-D
Complete official Federal Register PDF
FR Doc. 96-17263 Public Financial Disclosure, Conflicts of Interest, and Certificates of Divestiture for Executive Branch Officials; Correction
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Page 35589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17263]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules
and Regulations
[[Page 35589]]
OFFICE OF GOVERNMENT ETHICS
5 CFR Part 2634
RIN 3209-AA06
Public Financial Disclosure, Conflicts of Interest, and
Certificates of Divestiture for Executive Branch Officials; Correction
AGENCY: Office of Government Ethics (OGE).
ACTION: Final rule; correction.
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SUMMARY: This document corrects a typographical error in one of the
amendatory instructions of the final rule on executive branch
certificates of divestiture, which was published by OGE in the Federal
Register on Tuesday, June 25, 1996 (61 FR 32633-32636).
EFFECTIVE DATE: July 25, 1996.
FOR FURTHER INFORMATION CONTACT: William E. Gressman, Office of
Government Ethics; telephone: 202-208-8000, extension 1110; FAX: 202-
208-8000.
SUPPLEMENTARY INFORMATION: In the above-noted final rule document
published by OGE, amendatory instruction 2 inadvertently indicated that
it was revising portions of paragraph (b) of Sec. 2634.1002 of 5 CFR,
whereas in fact it was intended to revise portions of paragraph (b) of
Sec. 2634.1001 of 5 CFR (amendatory instruction 3 revised portions of
Sec. 2634.1002). This correction document corrects the error in
amendatory instruction 2.
Approved: July 2, 1996.
F. Gary Davis,
Deputy Director, Office of Government Ethics.
For the reasons set forth in the preamble, the Office of Government
Ethics is correcting the June 25, 1996 publication of the final rule on
Public Financial Disclosure, Conflicts of Interest, and Certificates of
Divestiture for Executive Branch Officials, which was the subject of FR
Doc. 96-15970, as follows:
On page 32635, in the second column, in the first line of
amendatory instruction 2, the reference to ``Sec. 2634.1002'' is
corrected to read ``Sec. 2634.1001''.
[FR Doc. 96-17263 Filed 7-5-96; 8:45 am]
BILLING CODE 6345-01-P
Complete official Federal Register PDF
FR Doc. 96-17257 Office of the Assistant Secretary for Public and Indian Housing; Public Housing Management Assessment ProgramConforming Change
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35633-35634]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17257]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 901
[Docket No. FR-3447-F-02]
RIN 2577-AA89
Office of the Assistant Secretary for Public and Indian Housing;
Public Housing Management Assessment Program--Conforming Change
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: This rule removes the adjustment for the heating degree day
(HDD) factor from Indicator #4, Energy Consumption, of the Public
Housing Management Assessment Program (PHMAP) at 24 CFR part 901. The
effect of removing this adjustment is to conform the indicator to
current HUD practice, which no longer makes use of the HDD factor.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: MaryAnn Russ, Deputy Assistant
Secretary for Public and Assisted Housing Operations, Office of Public
and Indian Housing, Department of Housing and Urban Development, 451
Seventh Street, SW., Washington, D.C. 20410, telephone (202) 708-1380.
A telecommunications device for hearing or speech impaired persons
(TTY) is available at (202) 708-0850. (These are not toll-free
telephone numbers.)
SUPPLEMENTARY INFORMATION: On October 13, 1994 (59 FR 51852), a final
rule was published in the Federal Register that eliminated the
application of the HDD factor for utility consumption. That rule will
first affect PHAs with fiscal year ending December 31, 1995. The PHMAP
scores for these PHAs are computed as of June 30, 1996. This rule makes
a conforming change to eliminate the HDD factor as an adjustment in
Indicator #4, Energy Consumption.
The Department has published a proposed rule (61 FR 20358, May 6,
1996) that would revise all of the PHMAP, including the current
Indicator #4. However, because a comprehensive PHMAP final rule will
not be published in time to correct Indicator #4 for the June 1996
PHMAP computation, HUD is issuing this final rule to remove the HDD
factor. This action will avoid confusion and permit the timely
computation of PHMAP scores.
Other Matters
Justification for Final Rulemaking
In general, the Department publishes a rule for public comment
before issuing a rule for effect, in accordance with its own
regulations on rulemaking, 24 CFR part 10. However, part 10 does
provide for exceptions from that general rule where the agency finds
good cause to omit advance notice and public participation. The good
cause requirement is satisfied when prior public procedure is
``impracticable, unnecessary, or contrary to the public interest.'' (24
CFR 10.1) The Department finds that good cause exists to publish this
rule for effect without first soliciting public comment, in that prior
public procedure is unnecessary. This rule eliminates an adjustment
factor that can no longer be used because of other regulatory changes.
Environmental Impact
A Finding of No Significant Impact (FONSI) with respect to the
environment has been made in accordance with HUD regulations at 24 CFR
part 50, which implement section 102(2)(C) of the National
Environmental Policy Act of 1969. The FONSI made in the development of
the proposed rule published on May 6, 1996 (61 FR 20358) remains
applicable to this final rule and is available for public inspection
between 7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules
Docket Clerk at the above address.
[[Page 35634]]
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule does not have a significant
economic impact on a substantial number of small entities. The rule
eliminates a single adjustment factor for PHAs that has been rendered
inapplicable because of other regulatory changes and HUD does not
anticipate a significant economic impact on a substantial number of
small entities resulting from this elimination.
Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
States or their political subdivisions, or the relationship between the
Federal government and the States, or on the distribution of power and
responsibilities among the various levels of government. The rule
eliminates a single adjustment factor that has become obsolete. The
rule does not create any new significant requirements of its own. As a
result, the rule is not subject to review under the Order.
Family Impact
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule does not have
potential for significant impact on family formation, maintenance, and
general well-being, and, thus, is not subject to review under the
Order. The rule only involves the removal of a single, obsolete
adjustment factor for management assessment of PHAs.
List of Subjects in 24 CFR Part 901
Administrative practice and procedure, Public housing, Reporting
and recordkeeping requirements.
Accordingly, part 901 of title 24 of the Code of Federal
Regulations is amended as follows:
PART 901--PUBLIC HOUSING MANAGEMENT ASSESSMENT PROGRAM
1. The authority citation for part 901 continues to read as
follows:
Authority: 42 U.S.C. 1437d(j) and 3535(d).
2. In Sec. 901.10, paragraph (b)(4) is revised to read as follows:
Sec. 901.10 Indicators.
* * * * *
(b) * * *
(4) Energy Consumption. The annual energy consumption. This
indicator has a weight of x1.
(i) Grade A: Annual energy consumption, as compared to the average
of the three years' rolling base consumption, has not increased.
(ii) Grade B: Annual energy consumption, as compared to the average
of the three years' rolling base consumption, has not increased by more
than 3%.
(iii) Grade C: Annual energy consumption, as compared to the
average of the three years' rolling base consumption, has increased by
greater than 3% and less than or equal to 5%.
(iv) Grade D: Annual energy consumption, as compared to the average
of the three years' rolling base consumption, has increased by greater
than 5% and less than or equal to 7%.
(v) Grade E: Annual energy consumption, as compared to the average
of the three years' rolling base consumption, has increased by greater
than 7% and less than or equal to 9%.
(vi) Grade F: Annual energy consumption, as compared to the average
of the three years' rolling base consumption, has increased by more
than 9%.
* * * * *
Dated: June 27, 1996.
Kevin Emanuel Marchman,
Acting Assistant Secretary for Public and Indian Housing.
[FR Doc. 96-17257 Filed 7-5-96; 8:45 am]
BILLING CODE 4210-33-P
Complete official Federal Register PDF
FR Doc. 96-17236 Export of Nuclear Equipment and Materials
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35600-35607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17236]
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NUCLEAR REGULATORY COMMISSION
10 CFR Part 110
RIN 3150-AF51
Export of Nuclear Equipment and Materials
AGENCY: Nuclear Regulatory Commission.
ACTION: Final rule.
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SUMMARY: The Nuclear Regulatory Commission (NRC) is amending its
regulations pertaining to the export of nuclear equipment and
materials. These amendments are necessary to conform the export
controls of the United States to the international export control
guidelines of the Nuclear Suppliers Group, of which the United States
is a member, and to reflect the nuclear nonproliferation policies of
the Department of State.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Elaine O. Hemby, Office of
International Programs, U.S. Nuclear Regulatory Commission, Washington,
DC 20555-0001, telephone (301) 415-2341, e-mail [email protected]
SUPPLEMENTARY INFORMATION: The Nuclear Regulatory Commission (NRC) is
amending its regulations pertaining to the export of nuclear materials
and equipment. Cambodia and Vietnam are removed from the list of
embargoed destinations; Algeria, Comoros, Guyana, Mauritania, Niger,
St. Kitts, United Arab Emirates, Vanuatu, and Yemen Arab Republic are
removed from the list of restricted destinations; Brazil, New Zealand,
Republic of Korea, South Africa, and Ukraine are added as member
countries of the Nuclear Suppliers Group (NSG) eligible to receive
radioactive materials under certain general licenses for export;
Austria and Finland are added as eligible countries to receive nuclear
reactor components under general license for export; plants for the
conversion of uranium and especially designed or prepared equipment for
uranium conversion are added to the export controls of the NRC; the
kinds of uranium conversion equipment and uranium enrichment equipment
under NRC export licensing authority are added for clarification;
exports of less than one kilogram of source or special nuclear material
exported under the U.S.-IAEA Agreement for Cooperation no longer
require Executive Branch review before an NRC license is issued; a
general license to export source material and a general license for
import are amended to correct inadvertent errors; a reference is added
to clarify that some imports and exports of nuclear items are under
Department of State controls; and Appendices B and L to Part 110 are
amended to correct errors.
Section 110.1, which describes the scope of 10 CFR Part 110, is
revised to add a reference that nuclear items on the U.S. Munitions
List are subject to the export controls of the Department of State.
In Sec. 110.8, which lists the nuclear facilities and equipment
under NRC export authority, and in the appendices to Part 110, which
describe the especially designed and prepared equipment under NRC
export controls, the word ``specially'' where it appears is changed to
``especially'' to conform to the NSG guidelines.
Section 110.8 is amended to add uranium conversion plants and
especially designed or prepared equipment for uranium conversion plants
to the export authority of the NRC to conform to the NSG guidelines.
Recently, the United States and other member countries of the NSG
agreed to add to the NSG Trigger List (INFCIRC/254/Part 1) uranium
conversion plants. This includes conversion of uranium ore concentrates
to UO3, conversion of UO3 to UO2, conversion of uranium oxides to UF4
or UF6, conversion of UF4 to UF6, conversion of UF6 to UF4, conversion
of UF4 to uranium metal, and conversion of uranium fluorides to uranium
oxides. The nuclear materials and equipment designated as ``trigger
list'' items are controlled by the NRC. Conversion of uranium is an
essential step of the nuclear fuel cycle for both civil and military
programs, including the production of highly enriched uranium and
plutonium. In Sec. 110.2, a definition of ``conversion facility'' is
added for clarification.
Exports of uranium conversion plants and equipment are presently
controlled by the Department of Commerce (DOC). The addition of uranium
conversion plants to the NRC licensing authority will allow the DOC to
remove this item from its nuclear referral list. Accordingly,
Sec. 110.1(b)(3), which describes nuclear-related commodities that are
subject to DOC export controls, is revised to remove the reference to
DOC controls on conversion plants.
In Sec. 110.22, paragraph (c) is amended to delete the word ``not''
where it first appears. This action is necessary to correct an
inadvertent error in a final rule published July 21, 1995 (60 FR
37556). As corrected, Sec. 110.22(c) authorizes the export of uranium
or thorium, other than U-230, U-232, Th-227, or Th-228, in individual
shipments of one kilogram or less to any country listed in Sec. 110.29,
not to exceed 100 kilograms per year to any one country, except for
source material in radioactive waste.
In Sec. 110.26, Austria and Finland are added as eligible
recipients of nuclear reactor components under the NRC's general
license authority for export. These countries are now members of
EURATOM. EURATOM has provided the necessary written assurances to the
U.S. Government to permit these kinds of exports.
In Sec. 110.27, which describes the general licenses for import,
paragraph (4) is amended to delete the term ``advance'' to describe the
kind of notification required. For some activities under Sec. 73.27,
advance notification would not apply.
In Sec. 110.28, which lists the embargoed destinations, Cambodia
and Vietnam are removed. Because President Clinton lifted the U.S.
general trade embargo against Vietnam on February 3, 1995, and the
embargo restrictions for Cambodia in 1993, the Executive Branch
recently recommended that Cambodia and Vietnam be removed from the
embargoed destinations. Both Cambodia and Vietnam are adherents to the
Treaty on the Non-Proliferation of Nuclear Weapons (NPT). Exports to
Cambodia and Vietnam now qualify for the NRC general licensing
authorizations specified in Secs. 110.21 through 110.25.
In Sec. 110.29, Algeria, Comoros, Guyana, Mauritania, Niger, St.
Kitts, United Arab Emirates, Vanuatu, and Yemen Arab Republic are
removed from
[[Page 35601]]
the restricted destinations. The Executive Branch recently recommended
that these countries be removed because they are NPT adherents.
Accordingly, exports to these countries now qualify for the NRC general
licensing authorizations specified in Secs. 110.21 through 110.25.
In Sec. 110.30, Brazil, New Zealand, Republic of Korea, South
Africa, and Ukraine are added as members of the NSG. Accordingly, these
countries are eligible to receive radioactive materials under NRC
general licenses.
In Sec. 110.41, paragraph (4) is amended to reflect the Executive
Branch judgment that any export of less than one kilogram of source or
special nuclear material which is exported under the provisions of the
U.S.-IAEA Agreement for Cooperation does not require review by the
Executive Branch.
In Appendix B to Part 110, which describes the gas centrifuge
equipment under NRC licensing authority, the footnote to section 1 is
amended to change the specifications for filamentary materials suitable
for gas centrifuge rotating components. This action is necessary to
correct errors when the equations were converted from English to metric
units. The current level of control catches items with a wide variety
of non-nuclear, non-sensitive applications. Section 1.2 of Appendix B
is amended to clarify the kinds of static components NRC controls to
reflect the NSG Guidelines.
New appendices to Part 110 are added to clarify the uranium
enrichment equipment and uranium conversion equipment under NRC export
licensing authority to reflect the guidelines of the NSG. The
appendices are illustrative only and not inclusive. Corresponding
changes are made to Sec. 110.8.
In Appendix L, which lists the byproduct materials under NRC
licensing controls, the entry ``Tungsten 185 (w 85)'' is corrected to
read ``Tungsten 185 (W 185).''
The NRC has determined that this rule is necessary to reflect the
Executive Branch's nuclear non-proliferation policies and to conform
the export controls of the United States to the international export
control guidelines of the NSG, of which the United States is a member.
The rule also corrects several minor, inadvertent errors from previous
rulemakings.
Because the substance of this rule involves a foreign affairs
function of the United States, the notice and comment provisions of the
Administrative Procedure Act do not apply (5 U.S.C. 553(a)(1)). In
addition, solicitation of public comments would delay United States
conformance with its international obligations and would thus be
contrary to the public interest (5 U.S.C. 553(b)).
Small Business Regulatory Enforcement Fairness Act
In accordance with the Small Business Regulatory Enforcement
Fairness Act of 1996, the NRC has determined that this action is not a
major rule and has verified this determination with the Office of
Information and Regulatory Affairs of OMB. The rule is necessary to
conform the nuclear nonproliferation policies of the United States with
international export guidelines.
Environmental Impact: Categorical Exclusion
The NRC has determined that this final rule is the type of action
described in categorical exclusion 10 CFR 51.22(c)(1) and (c)(2).
Therefore, neither an environmental impact statement nor an
environmental assessment has been prepared for this final rule.
Paperwork Reduction Act Statement
This final rule does not contain a new or amended information
collection requirement subject to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.). Existing requirements in Secs. 110.26,
110.31, 110.32, 110.53 and the use of Form NRC 7 were approved by the
Office of Management and Budget, approval numbers 3150-0036 and 3150-
0027.
Public Protection Notification
The NRC 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.
Regulatory Analysis
The final rule eliminating the requirement for a specific license
in some circumstances should have a positive economic effect on U.S.
export business. U.S. exporters can ship nuclear equipment and
materials under the NRC general license authority to additional foreign
markets without the expense of license application fees, the paperwork
burden, time delays, and uncertainties in delivery. For the first time,
Cambodia and Vietnam are eligible to receive certain NRC nuclear
materials under general license. Austria and Finland are now eligible
to receive nuclear reactor equipment under NRC general license. In
addition, Brazil, New Zealand, Republic of Korea, South Africa,
Ukraine, Algeria, Comoros, Guyana, Mauritania, Niger, St. Kitts, United
Arab Emirates, Vanuatu, and Yemen Arab Republic can now receive certain
nuclear materials under NRC general licenses.
In transferring export authority of uranium conversion plants and
equipment from the DOC to NRC export authority, the Commission was
aware of a potential detrimental impact on exporters because of the
license fee imposed by NRC for each license application submitted.
However, according to DOC export licensing data, the DOC issued only
one export license for conversion equipment in the past five years, at
a value of $317,000. In view of this information, the NRC continues to
believe that the economic impact of the rule on U.S. companies is not
significant.
There are no alternatives for achieving the stated objective. This
rule conforms NRC's export controls to the international export
guidelines of the NSG. Thus, the regulation is required to satisfy
international obligations of the United States. The foregoing
discussion constitutes the regulatory analysis for this final rule.
Backfit Analysis
The NRC has determined that a backfit analysis is not required for
this final rule because these amendments do not include any provisions
that would require backfits as defined in 10 CFR 50.109(a)(1).
List of Subjects in 10 CFR Part 110
Administrative practice and procedure, Classified information,
Criminal penalties, Export, Import, Intergovernmental relations,
Nuclear materials, Nuclear power plants and reactors, Reporting and
recordkeeping requirements, Scientific equipment.
For the reasons set out in the preamble and under the authority of
the Atomic Energy Act of 1954, as amended, the Energy Reorganization
Act of 1974, as amended, and 5 U.S.C. 552 and 553, the NRC is adopting
the following amendments to 10 CFR Part 110.
PART 110--EXPORT AND IMPORT OF NUCLEAR EQUIPMENT AND MATERIAL
1. The authority citation for part 110 continues to read as
follows:
Authority: Secs. 51, 53, 54, 57, 63, 64, 65, 81, 82, 103, 104,
109, 111, 126, 127, 128, 129, 161, 181, 182, 183, 187, 189, 68 Stat.
929, 930, 931, 932, 933, 936, 937, 948, 953, 954, 955, 956, as
amended (42 U.S.C. 2071, 2073, 2074, 2077, 2092-2095, 2111, 2112,
2133, 2134, 2139, 2139a, 2141, 2154-2158, 2201, 2231-2233, 2237,
2239); sec. 201, 88 Stat. 1242, as amended (42 U.S.C. 5841); sec. 5,
Pub. L. 101-575, 104 Stat. 2835 (42 U.S.C. 2243).
[[Page 35602]]
Sections 110.1(b)(2) and 110.1(b)(3) also issued under Pub. L.
96-92, 93 Stat. 710 (22 U.S.C. 2403). Section 110.11 also issued
under sec. 122, 68 Stat. 939 (42 U.S.C. 2152) and secs. 54c and 57d,
88 Stat. 473, 475 (42 U.S.C. 2074). Section 110.27 also issued under
sec. 309(a), Pub. L. 99-440. Section 110.50(b)(3) also issued under
sec. 123, 92 Stat. 142 (42 U.S.C. 2153). Section 110.51 also issued
under sec. 184, 68 Stat. 954, as amended (42 U.S.C. 2234). Section
110.52 also issued under sec. 186, 68 Stat. 955 (42 U.S.C. 2236).
Sections 110.80-110.113 also issued under 5 U.S.C. 552, 554.
Sections 110.130-110.135 also issued under 5 U.S.C. 553. Sections
110.2 and 110.42 (a)(9) also issued under sec. 903, Pub. L. 102-496
(42 U.S.C. 2151 et seq.).
2. In Sec. 110.1, paragraph (b)(2) is revised, paragraphs (b)(3)
and (b)(4) are redesignated as paragraphs (b)(4) and (b)(5), the
redesignated paragraph (b)(4) is revised, and a new paragraph (b)(3) is
added to read as follows:
Sec. 110.1 Purpose and scope.
* * * * *
(b) * * *
(2) Persons who export or import U.S. Munitions List nuclear items,
such as uranium depleted in the isotope-235 and incorporated in defense
articles. These persons are subject to the controls of the Department
of State pursuant to 22 CFR 120-130 ``International Traffic in Arms
Regulations'' (ITAR), under the Arms Export Control Act, as authorized
by section 110 of the International Security and Development
Cooperation Act of 1980;
(3) Persons who export uranium depleted in the isotope-235 and
incorporated in commodities solely to take advantage of high density or
pyrophoric characteristics. These persons are subject to the controls
of the Department of Commerce under the Export Administration Act, as
authorized by section 110 of the International Security and Development
Cooperation Act of 1980;
(4) Persons who export nuclear referral list commodities. These
persons are subject to the licensing authority of the Department of
Commerce pursuant to 15 CFR part 799, such as bulk zirconium, rotor and
bellows equipment, maraging steel, nuclear reactor related equipment,
including process control systems and simulators; and
* * * * *
3. In Sec. 110.2, a definition for Conversion facility is added in
alphabetical order to read as follows:
Sec. 110.2 Definitions.
* * * * *
Conversion facility means any facility for the transformation from
one uranium chemical species to another, including: conversion of
uranium ore concentrates to UO3, conversion of UO3 to UO2, conversion
of uranium oxides to UF4 or UF6, conversion of UF4 to UF6, conversion
of UF6 to UF4, conversion of UF4 to uranium metal, and conversion of
uranium fluorides to UO2.
* * * * *
4. Section 110.8 is revised to read as follows:
Sec. 110.8 List of nuclear facilities and equipment under NRC export
licensing authority.
(a) Nuclear reactors and especially designed or prepared equipment
and components for nuclear reactors. (See appendix A to this part.)
(b) Plants for the separation of isotopes of uranium (source
material or special nuclear material) including gas centrifuge plants,
gaseous diffusion plants, aerodynamic enrichment plants, chemical
exchange or ion exchange enrichment plants, laser based enrichment
plants, plasma separation enrichment plants, electromagnetic enrichment
plants, and especially designed or prepared equipment, other than
analytical instruments, for the separation of isotopes of uranium. (See
appendices to this part for lists of: gas centrifuge equipment--
Appendix B; gaseous diffusion equipment--Appendix C; aerodynamic
enrichment equipment--Appendix D; chemical exchange or ion exchange
enrichment equipment--Appendix E; laser based enrichment equipment--
Appendix F; plasma separation enrichment equipment--Appendix G; and
electromagnetic enrichment equipment--Appendix H.)
(c) Plants for the separation of the isotopes of lithium and
especially designed or prepared assemblies and components for these
plants.
(d) Plants for the reprocessing of irradiated nuclear reactor fuel
elements and especially designed or prepared assemblies and components
for these plants. (See Appendix I to this part.)
(e) Plants for the fabrication of nuclear reactor fuel elements and
especially designed or prepared assemblies and components for these
plants.
(f) Plants for the conversion of uranium and especially designed or
prepared assemblies and components for these plants. (See Appendix J to
this part.)
(g) Plants for the production, separation, or purification of heavy
water, deuterium, and deuterium compounds and especially designed or
prepared assemblies and components for these plants. (See Appendix K to
this part.)
(h) Other nuclear-related commodities are under the export
licensing authority of the Department of Commerce.
Sec. 110.22 [Amended]
5. In Sec. 110.22(c), remove the word ``not'' where it appears
between ``country'' and ``listed.''
Sec. 110.23 [Amended]
6. In Sec. 110.23, paragraph (a)(1), ``Appendix F'' is revised to
read ``Appendix L.''
Sec. 110.26 [Amended]
7. In Sec. 110.26, paragraph (a)(2) is amended by adding
``Austria'' and ``Finland'' in alphabetical order.
8. In Sec. 110.27, paragraph (d) is revised to read as follows:
Sec. 110.27 General license for imports.
* * * * *
(d) A person importing formula quantities of strategic special
nuclear material (as defined in Sec. 73.2 of this chapter) under this
general license shall provide the notifications required by Sec. 73.27
and Sec. 73.72 of this chapter.
Sec. 110.28 [Amended]
9. Section 110.28 is amended by removing ``Cambodia'' and
``Vietnam.''
Sec. 110.29 [Amended]
10. Section 110.29 is amended by removing ``Algeria,'' ``Comoros,''
``Guyana,'' ``Mauritania,'' ``Niger,'' ``St. Kitts,'' ``United Arab
Emirates,'' ``Vanuatu,'' and ``Yemen Arab Republic.''
Sec. 110.30 [Amended]
11. Section 110.30 is amended by adding ``Brazil,'' ``New
Zealand,'' ``Republic of Korea,'' ``South Africa,'' and ``Ukraine'' in
alphabetical order.
Sec. 110.41 [Amended]
12. In Sec. 110.41, paragraph (a)(4) is revised to read as follows:
(a) * * *
(4) One kilogram or more of source or special nuclear material to
be exported under the US-IAEA Agreement for Cooperation.
* * * * *
13. In Sec. 110.44, paragraph (b)(2), ``Appendix G'' is revised to
read ``Appendix M.''
Appendix A to Part 110 [Amended]
14. In Appendix A to Part 110, paragraph (9), remove the word
``specially'' and add in its place the word ``especially.''
15. In Appendix B to Part 110, paragraph (c) of the Footnote to
section 1 is revised and paragraphs (e) and (f) are added to section
1.2 to read as follows:
[[Page 35603]]
Footnote
The materials used for centrifuge rotating components are:
* * * * *
(c) Filamentary materials suitable for use in composite
structures and having a specific modulus of 3.18 x 10\6\ m or
greater and a specific ultimate tensile strength of 7.62 x 10\4\ m
or greater.
(``Specific Modulus'' is the Young's modulus in N/m \2\ divided by
the specific weight in N/m \3\ when measured at a temperature of
2320C and a relative humidity of 505%.
``Specific tensile strength'' is the ultimate tensile strength in N/
m \2\ divided by the specific weight in N/m \3\ when measured at a
temperature of 2320C and a relative humidity of
505%.)
* * * * *
1.2 Static Components.
* * * * *
(e) Centrifuge housing/recipients: Components especially
designed or prepared to contain the rotor tube assembly of a gas
centrifuge. The housing consists of a rigid cylinder of wall
thickness up to 30 mm (1.2in) with precision machined ends to locate
the bearings and with one or more flanges for mounting. The machined
ends are parallel to each other and perpendicular to the cylinder's
longitudinal axis to within 0.05 degrees or less. The housing may
also be a honeycomb type structure to accommodate several rotor
tubes. The housings are made of or protected by materials resistant
to corrosion by UF6.
(f) Scoops: Especially designed or prepared tubes of up to 12 mm
(0.5in) internal diameter for the extraction of UF6 gas from within
the rotor tube by a Pitot tube action (that is, with an aperture
facing into the circumferential gas flow within the rotor tube, for
example by bending the end of a radially disposed tube) and capable
of being fixed to the central gas extraction system. The tubes are
made of or protected by materials resistant to corrosion by UF6.
* * * * *
Appendices D, E, F, and G to Part 110 [Redesignated as Appendice I, K
through M of Part 110]
16. Appendix D to Part 110 is redesignated Appendix I to Part 110
and Appendices E through G to Part 110 are redesignated as Appendices K
through M to Part 110.
17. A new Appendix D to Part 110 is added to read as follows:
Appendix D to Part 110--Illustrative List of Aerodynamic Enrichment
Plant Equipment and Components Under NRC Export Licensing Authority
Note--In aerodynamic enrichment processes, a mixture of gaseous
UF6 and light gas (hydrogen or helium) is compressed and then passed
through separating elements wherein isotopic separation is
accomplished by the generation of high centrifugal forces over a
curved-wall geometry. Two processes of this type have been
successfully developed: the separation nozzle process and the vortex
tube process. For both processes the main components of a separation
stage included cylindrical vessels housing the special separation
elements (nozzles or vortex tubes), gas compressors and heat
exchangers to remove the heat of compression. An aerodynamic plant
requires a number of these stages, so that quantities can provide an
important indication of end use. Because aerodynamic processes use
UF6, all equipment, pipeline and instrumentation surfaces (that come
in contact with the gas) must be made of materials that remain
stable in contact with UF6. All surfaces which come into contact
with the process gas are made of or protected by UF6-resistant
materials; including copper, stainless steel, aluminum, aluminum
alloys, nickel or alloys containing 60% or more nickel and UF6-
resistant fully fluorinated hydrocarbon polymers.
The following items either come into direct contact with the UF6
process gas or directly control the flow within the cascade:
(1) Separation nozzles and assemblies.
Especially designed or prepared nozzles that consist of slit-
shaped, curved channels having a radius of curvature less than 1 mm
(typically 0.1 to 0.05 mm). The nozzles are resistant to UF6
corrosion and have a knife-edge within the nozzle that separates the
gas flowing through the nozzle into two fractions.
(2) Vortex tubes and assemblies.
Especially designed or prepared vortex tubes that are
cylindrical or tapered, made of or protected by materials resistant
to UF6 corrosion, have a diameter of between 0.5 cm and 4 cm, a
length to diameter ratio of 20:1 or less and with one or more
tangential inlets. The tubes may be equipped with nozzle-type
appendages at either or both ends.
The feed gas enters the vortex tube tangentially at one end or
through swirl vanes or at numerous tangential positions along the
periphery of the tube.
(3) Compressors and gas blowers.
Especially designed or prepared axial, centrifugal, or positive
displacement compressors or gas blowers made of or protected by
materials resistant to UF6 corrosion and with a suction volume
capacity of 2 m \3\/min or more of UF6/carrier gas (hydrogen or
helium) mixture. These compressors and gas blowers typically have a
pressure ratio between 1.2:1 and 6:1.
(4) Rotary shaft seals.
Especially designed or prepared seals, with seal feed and seal
exhaust connections, for sealing the shaft connecting the compressor
rotor or the gas blower rotor with the driver motor to ensure a
reliable seal against out-leakage of process gas or in-leakage of
air or seal gas into the inner chamber of the compressor or gas
blower which is filled with a UF6/carrier gas mixture.
(5) Heat exchangers for gas cooling.
Especially designed or prepared heat exchangers, made of or
protected by materials resistant to UF6 corrosion.
(6) Separation element housings.
Especially designed or prepared separation element housings,
made of or protected by materials resistant to UF6 corrosion, for
containing vortex tubes or separation nozzles.
These housings may be cylindrical vessels greater than 300 mm in
diameter and greater than 900 mm in length, or may be rectangular
vessels of comparable dimensions, and may be designed for horizonal
or vertical installation.
(7) Feed systems/product and tails withdrawal systems.
Especially designed or prepared process systems or equipment for
enrichment plants made of or protected by materials resistant to UF6
corrosion, including:
(i) Feed autoclaves, ovens, or systems used for passing UF6 to
the enrichment process;
(ii) Desublimers (or cold traps) used to remove UF6 from the
enrichment process for subsequent transfer upon heating;
(iii) Solidification or liquefaction stations used to remove UF6
from the enrichment process by compressing and converting UF6 to a
liquid or solid form; and
(iv) ``Product'' or ``tails'' stations used for transferring UF6
into containers.
(8) Header piping systems.
Especially designed or prepared header piping systems, made of
or protected by materials resistant to UF6 corrosion, for handling
UF6 within the aerodynamic cascades.
The piping network is normally of the ``double'' header design
with each stage or group of stages connected to each of the headers.
(9) Vacuum systems and pumps.
Especially designed or prepared vacuum systems having a suction
capacity of 5 m\3\/min or more, consisting of vacuum manifolds,
vacuum headers and vacuum pumps, and designed for service in UF6-
bearing atmospheres.
Especially designed or prepared vacuum pumps for service in UF6-
bearing atmospheres and made of or protected by materials resistant
to UF6 corrosion. These pumps may use fluorocarbon seals and special
working fluids.
(10) Special shut-off and control valves.
Especially designed or prepared manual or automated shut-off and
control bellows valves made of or protected by materials resistant
to UF6 corrosion with a diameter of 40 to 1500 mm for installation
in main and auxiliary systems of aerodynamic enrichment plants.
(11) UF6 mass spectrometers/ion sources.
Especially designed or prepared magnetic or quadrupole mass
spectrometers capable of taking ``on-line'' samples of feed,
``product'' or ``tails'', from UF6 gas streams and having all of the
following characteristics:
(i) Unit resolution for mass greater than 320;
(ii) Ion sources constructed of or lined with nichrome or monel
or nickel plated;
(iii) Electron bombardment ionization sources; and
(iv) Collector system suitable for isotopic analysis.
(12) UF6/carrier gas separation systems.
Especially designed or prepared process systems for separating
UF6 from carrier gas (hydrogen or helium).
These systems are designed to reduce the UF6 content in the
carrier gas to 1 ppm or less and may incorporate equipment such as:
[[Page 35604]]
(i) Cryogenic heat exchangers and cryoseparators capable of
temperatures of -120 deg.C or less;
(ii) Cryogenic refrigeration units capable of temperatures of
-120 deg.C or less;
(iii) Separation nozzle or vortex tube units for the separation
of UF6 from carrier gas; or
(iv) UF6 cold traps capable of temperatures of -20 deg.C or
less.
18. A new Appendix E to Part 110 is added to read as follows:
Appendix E to Part 110--Illustrative List of Chemical Exchange or Ion
Exchange Enrichment Plant Equipment and Components Under NRC Export
Licensing Authority
Note--The slight difference in mass between the isotopes of
uranium causes small changes in chemical reaction equilibria that
can be used as a basis for separation of the isotopes. Two processes
have been successfully developed: liquid-liquid chemical exchange
and solid-liquid ion exchange.
A. In the liquid-liquid chemical exchange process, immiscible
liquid phases (aqueous and organic) are countercurrently contacted
to give the cascading effect of thousands of separation stages. The
aqueous phase consists of uranium chloride in hydrochloric acid
solution; the organic phase consists of an extractant containing
uranium chloride in an organic solvent. The contactors employed in
the separation cascade can be liquid-liquid exchange columns (such
as pulsed columns with sieve plates) or liquid centrifugal
contactors. Chemical conversions (oxidation and reduction) are
required at both ends of the separation cascade in order to provide
for the reflux requirements at each end. A major design concern is
to avoid contamination of the process streams with certain metal
ions. Plastic, plastic-lined (including use of fluorocarbon
polymers) and/or glass-lined columns and piping are therefore used.
(1) Liquid-liquid exchange columns.
Countercurrent liquid-liquid exchange columns having mechanical
power input (i.e., pulsed columns with sieve plates, reciprocating
plate columns, and columns with internal turbine mixers), especially
designed or prepared for uranium enrichment using the chemical
exchange process. For corrosion resistance to concentrated
hydrochloric acid solutions, these columns and their internals are
made of or protected by suitable plastic materials (such as
fluorocarbon polymers) or glass. The stage residence time of the
columns is designed to be short (30 seconds or less).
(2) Liquid-liquid centrifugal contactors.
Especially designed or prepared for uranium enrichment using the
chemical exchange process. These contactors use rotation to achieve
dispersion of the organic and aqueous streams and then centrifugal
force to separate the phases. For corrosion resistance to
concentrated hydrochloric acid solutions, the contactors are made of
or are lined with suitable plastic materials (such as fluorocarbon
polymers) or are lined with glass. The stage residence time of the
centrifugal contactors is designed to be short (30 seconds or less).
(3) Uranium reduction systems and equipment.
(i) Especially designed or prepared electrochemical reduction
cells to reduce uranium from one valence state to another for
uranium enrichment using the chemical exchange process. The cell
materials in contact with process solutions must be corrosion
resistant to concentrated hydrochloric acid solutions.
The cell cathodic compartment must be designed to prevent re-
oxidation of uranium to its higher valence state. To keep the
uranium in the cathodic compartment, the cell may have an impervious
diaphragm membrane constructed of special cation exchange material.
The cathode consists of a suitable solid conductor such as graphite.
These systems consist of solvent extraction equipment for
stripping the U+4 from the organic stream into an aqueous solution,
evaporation and/or other equipment to accomplish solution pH
adjustment and control, and pumps or other transfer devices for
feeding to the electrochemical reduction cells. A major design
concern is to avoid contamination of the aqueous stream with certain
metal ions. For those parts in contact with the process stream, the
system is constructed of equipment made of or protected by materials
such as glass, fluorocarbon polymers, polyphenyl sulfate, polyether
sulfone, and resin-impregnated graphite.
(ii) Especially designed or prepared systems at the product end
of the cascade for taking the U+4 out of the organic stream,
adjusting the acid concentration and feeding to the electrochemical
reduction cells.
These systems consist of solvent extraction equipment for
stripping the U+4 from the organic stream into an aqueous solution,
evaporation and/or other equipment to accomplish solution pH
adjustment and control, and pumps or other transfer devices for
feeding to the electrochemical reduction cells. A major design
concern is to avoid contamination of the aqueous stream with certain
metal ions. For those parts in contact with the process stream, the
system is constructed of equipment made of or protected by materials
such as glass, fluorocarbon polymers, polyphenyl sulfate, polyether
sulfone, and resin-impregnated graphite.
(4) Feed preparation systems.
Especially designed or prepared systems for producing high-
purity uranium chloride feed solutions for chemical exchange uranium
isotope separation plants.
These systems consist of dissolution, solvent extraction and/or
ion exchange equipment for purification and electrolytic cells for
reducing the uranium U+6 or U+4 to U+3. These systems produce
uranium chloride solutions having only a few parts per million of
metallic impurities such as chromium, iron, vanadium, molybdenum and
other bivalent or higher multi-valent cations. Materials of
construction for portions of the system processing high-purity U+3
include glass, fluorocarbon polymers, polyphenyl sulfate or
polyether sulfone plastic-lined and resin-impregnated graphite.
(5) Uranium oxidation systems.
Especially designed or prepared systems for oxidation of U+3 to
U+4 for return to the uranium isotope separation cascade in the
chemical exchange enrichment process.
These systems may incorporate equipment such as:
(i) Equipment for contacting chlorine and oxygen with the
aqueous effluent from the isotope separation equipment and
extracting the resultant U+4 into the stripped organic stream
returning from the product end of the cascade; and
(ii) Equipment that separates water from hydrochloric acid so
that the water and the concentrated hydrochloric acid may be
reintroduced to the process at the proper locations.
B. In the solid-liquid ion-exchange process, enrichment is
accomplished by uranium adsorption/desorption on a special, fast-
acting, ion-exchange resin or adsorbent. A solution of uranium in
hydrochloric acid and other chemical agents is passed through
cylindrical enrichment columns containing packed beds of the
adsorbent. For a continuous process, a reflux system is necessary to
release the uranium from the adsorbent back in the liquid flow so
that ``product'' and ``tails'' can be collected. This is
accomplished with the use of suitable reduction/oxidation chemical
agents that are fully regenerated in separate external circuits and
that may be partially regenerated within the isotopic separation
columns themselves. The presence of hot concentrated hydrochloric
acid solutions in the process requires that the equipment be made of
or protected by special corrosion-resistant materials.
(1) Fast reacting ion exchange resins/adsorbents.
Especially designed or prepared for uranium enrichment using the
ion exchange process, including porous macroreticular resins, and/or
pellicular structures in which the active chemical exchange groups
are limited to a coating on the surface of an inactive porous
support structure, and other composite structures in any suitable
form including particles or fibers. These ion exchange resins/
adsorbents have diameters of 0.2 mm or less and must be chemically
resistant to concentrated hydrochloric acid solutions as well as
physically strong enough so as not to degrade in the exchange
columns. The resins/adsorbents are especially designed to achieve
very fast uranium isotope exchange kinetics (exchange rate half-time
of less than 10 seconds) and are capable of operating at a
temperature in the range of 100 deg.C to 200 deg.C.
(2) Ion exchange columns.
Cylindrical columns greater than 1000 mm in diameter for
containing and supporting packed beds of ion exchange resin/
adsorbent, especially designed or prepared for uranium enrichment
using the ion exchange process. These columns are made of or
protected by materials (such as titanium or fluorocarbon plastics)
resistant to corrosion by concentrated hydrochloric acid solutions
and are capable of operating at a temperature in the range of
100 deg.C to 200 deg.C and pressures above 0.7 MPa (102 psia).
(3) Ion exchange reflux systems.
(i) Especially designed or prepared chemical or electrochemical
reduction systems for regeneration of the chemical
[[Page 35605]]
reducing agent(s) used in ion exchange uranium enrichment cascades.
The ion exchange enrichment process may use, for example,
trivalent titanium (Ti+3) as a reducing cation in which case the
reduction system would regenerate Ti+3 by reducing Ti+4.
(ii) Especially designed or prepared chemical or electrochemical
oxidation systems for regeneration of the chemical oxidizing
agent(s) used in ion exchange uranium enrichment cascades.
The ion exchange enrichment process may use, for example,
trivalent iron (Fe+3) as an oxidant in which case the oxidation
system would regenerate Fe+3 by oxidizing Fe+2.
19. A new Appendix F to Part 110 is added to read as follows:
Appendix F to Part 110--Illustrative List of Laser-Based Enrichment
Plant Equipment and Components Under NRC Export Licensing Authority
Note--Present systems for enrichment processes using lasers fall
into two categories: the process medium is atomic uranium vapor and
the process medium is the vapor of a uranium compound. Common
nomenclature for these processes include: first category-atomic
vapor laser isotope separation (AVLIS or SILVA); second category-
molecular laser isotope separation (MLIS or MOLIS) and chemical
reaction by isotope selective laser activation (CRISLA). The
systems, equipment and components for laser enrichment plants
include: (a) Devices to feed uranium-metal vapor for selective
photo-ionization or devices to feed the vapor of a uranium compound
for photo-dissociation or chemical activation; (b) devices to
collect enriched and depleted uranium metal as ``product'' and
``tails'' in the first category, and devices to collect dissociated
or reacted compounds as ``product'' and unaffected material as
'tails' in the second category; (c) process laser systems to
selectively excite the uranium-235 species; and (d) feed preparation
and product conversion equipment. The complexity of the spectroscopy
of uranium atoms and compounds may require incorporation of a number
of available laser technologies.
All surfaces that come into contact with the uranium or UF6 are
wholly made of or protected by corrosion-resistant materials. For
laser-based enrichment items, the materials resistant to corrosion
by the vapor or liquid of uranium metal or uranium alloys include
yttria-coated graphite and tantalum; and the materials resistant to
corrosion by UF6 include copper, stainless steel, aluminum, aluminum
alloys, nickel or alloys containing 60% or more nickel and UF6-
resistant fully fluorinated hydrocarbon polymers.
Many of the following items come into direct contact with
uranium metal vapor or liquid or with process gas consisting of UF6
or a mixture of UF6 and other gases:
(1) Uranium vaporization systems (AVLIS).
Especially designed or prepared uranium vaporization systems
that contain high-power strip or scanning electron beam guns with a
delivered power on the target of more than 2.5 kW/cm.
(2) Liquid uranium metal handling systems (AVLIS).
Especially designed or prepared liquid metal handling systems
for molten uranium or uranium alloys, consisting of crucibles and
cooling equipment for the crucibles.
The crucibles and other system parts that come into contact with
molten uranium or uranium alloys are made of or protected by
materials of suitable corrosion and heat resistance, such as
tantalum, yttria-coated graphite, graphite coated with other rare
earth oxides or mixtures thereof.
(3) Uranium metal ``product'' and ``tails'' collector assemblies
(AVLIS).
Especially designed or prepared ``product'' and ``tails''
collector assemblies for uranium metal in liquid or solid form.
Components for these assemblies are made of or protected by
materials resistant to the heat and corrosion of uranium metal vapor
or liquid, such as yttria-coated graphite or tantalum, and may
include pipes, valves, fittings, ``gutters'', feed-throughs, heat
exchangers and collector plates for magnetic, electrostatic or other
separation methods.
(4) Separator module housings (AVLIS).
Especially designed or prepared cylindrical or rectangular
vessels for containing the uranium metal vapor source, the electron
beam gun, and the ``product'' and ``tails'' collectors.
These housings have multiplicity of ports for electrical and
water feed-throughs, laser beam windows, vacuum pump connections and
instrumentation diagnostics and monitoring with opening and closure
provisions to allow refurbishment of internal components.
(5) Supersonic expansion nozzles (MLIS).
Especially designed or prepared supersonic expansion nozzles for
cooling mixtures of UF6 and carrier gas to 150 K or less which are
corrosion resistant to UF6.
(6) Uranium pentafluoride product collectors (MLIS).
Especially designed or prepared uranium pentafluoride (UF5)
solid product collectors consisting of filter, impact, or cyclone-
type collectors, or combinations thereof, which are corrosion
resistant to the UF5/UF6 environment.
(7) UF6/carrier gas compressors (MLIS).
Especially designed or prepared compressors for UF6/carrier gas
mixtures, designed for long term operation in a UF6 environment.
Components of these compressors that come into contact with process
gas are made of or protected by materials resistant to UF6
corrosion.
(8) Rotary shaft seals (MLIS).
Especially designed or prepared rotary shaft seals, with seal
feed and seal exhaust connections, for sealing the shaft connecting
the compressor rotor with the driver motor to ensure a reliable seal
against out-leakage of process gas or in-leakage of air or seal gas
into the inner chamber of the compressor which is filled with a UF6/
carrier gas mixture.
(9) Fluorination systems (MLIS).
Especially designed or prepared systems for fluorinating UF5
(solid) to UF6 (gas).
These systems are designed to fluorinate the collected UF5
powder to UF6 for subsequent collection in product containers or for
transfer as feed to MLIS units for additional enrichment. In one
approach, the fluorination reaction may be accomplished within the
isotope separation system to react and recover directly off the
``product'' collectors. In another approach, the UF5 powder may be
removed/transferred from the ``product'' collectors into a suitable
reaction vessel (e.g., fluidized-bed reactor, screw reactor or flame
tower) for fluorination. In both approaches equipment is used for
storage and transfer of fluorine (or other suitable fluorinating
agents) and for collection and transfer of UF6.
(10) UF6 mass spectrometers/ion sources (MLIS).
Especially designed or prepared magnetic or quadrupole mass
spectrometers capable of taking ``on-line'' samples of feed,
``product'' or ``tails'', from UF6 gas streams and having all of the
following characteristics:
(i) Unit resolution for mass greater than 320;
(ii) Ion sources constructed of or lined with nichrome or monel
or nickel plated;
(iii) Electron bombardment ionization sources; and
(iv) Collector system suitable for isotopic analysis.
(11) Feed systems/product and tails withdrawal systems (MLIS).
Especially designed or prepared process systems or equipment for
enrichment plants made of or protected by materials resistant to
corrosion by UF6, including:
(i) Feed autoclaves, ovens, or systems used for passing UF6 to
the enrichment process;
(ii) Desublimers (or cold traps) used to remove UF6 from the
enrichment process for subsequent transfer upon heating;
(iii) Solidification or liquefaction stations used to remove UF6
from the enrichment process by compressing and converting UF6 to a
liquid or solid; and
(iv) ``Product'' or ``tails'' stations used to transfer UF6 into
containers.
(12) UF6/carrier gas separation systems (MLIS).
Especially designed or prepared process systems for separating
UF6 from carrier gas. The carrier gas may be nitrogen, argon, or
other gas.
These systems may incorporate equipment such as:
(i) Cryogenic heat exchangers or cryoseparators capable of
temperatures of -120 deg.C or less;
(ii) Cryogenic refrigeration units capable of temperatures of
-120 deg.C or less; or
(iii) UF6 cold traps capable of temperatures of -20 deg.C or
less.
(13) Lasers or Laser systems (AVLIS, MLIS and CRISLA).
Especially designed or prepared for the separation of uranium
isotopes. The laser system for the AVLIS process usually consists of
two lasers: a copper vapor laser and a dye laser. The laser system
for MLIS usually consists of a CO2 or excimer laser and a
multi-pass optical cell with revolving mirrors at both ends. Lasers
or laser systems for both processes require a spectrum frequency
stabilizer for operation over extended periods.
20. A new Appendix G to Part 110 is added to read as follows:
[[Page 35606]]
Appendix G to Part 110--Illustrative List of Plasma Separation
Enrichment Plant Equipment and Components Under NRC Export Licensing
Authority
Note--In the plasma separation process, a plasma of uranium ions
passes through an electric field tuned to the 235U ion resonance
frequency so that they preferentially absorb energy and increase the
diameter of their corkscrew-like orbits. Ions with a large-diameter
path are trapped to produce a product enriched in 235U. The plasma,
made by ionizing uranium vapor, is contained in a vacuum chamber
with a high-strength magnetic field produced by a superconducting
magnet. The main technological systems of the process include the
uranium plasma generation system, the separator module with
superconducting magnet, and metal removal systems for the collection
of ``product'' and ``tails''.
(1) Microwave power sources and antennae.
Especially designed or prepared microwave power sources and
antennae for producing or accelerating ions having the following
characteristics: greater than 30 GHz frequency and greater than 50
kW mean power output for ion production.
(2) Ion excitation coils.
Especially designed or prepared radio frequency ion excitation
coils for frequencies of more than 100 kHz and capable of handling
more than 40 kW mean power.
(3) Uranium plasma generation systems.
Especially designed or prepared systems for the generation of
uranium plasma, which may contain high power strip or scanning
electron beam guns with a delivered power on the target of more than
2.5 kW/cm.
(4) Liquid uranium metal handling systems.
Especially designed or prepared liquid metal handling systems
for molten uranium or uranium alloys, consisting of crucible and
cooling equipment for the crucibles.
The crucibles and other system parts that come into contact with
molten uranium or uranium alloys are made of or protected by
corrosion and heat resistance materials, such as tantalum, yttria-
coated graphite, graphite coated with other rare earth oxides or
mixtures thereof.
(5) Uranium metal ``product'' and ``tails'' collector
assemblies.
Especially designed or prepared ``product'' and ``tails''
collector assemblies for uranium metal in solid form. These
collector assemblies are made of or protected by materials resistant
to the heat and corrosion of uranium metal vapor, such as yttria-
coated graphite or tantalum.
(6) Separator module housings.
Especially designed or prepared cylindrical vessels for use in
plasma separation enrichment plants for containing the uranium
plasma source, radio-frequency drive coil and the ``product'' and
``tails'' collectors.
These housings have a multiplicity of ports for electrical feed-
throughs, diffusion pump connections and instrumentation diagnostics
and monitoring. They have provisions for opening and closure to
allow for refurbishment of internal components and are constructed
of a suitable non-magnetic material such as stainless steel.
21. A new Appendix H to Part 110 is added to read as follows:
Appendix H to Part 110--Illustrative List of Electromagnetic Enrichment
Plant Equipment and Components Under NRC Export Licensing Authority
Note--In the electromagnetic process, uranium metal ions
produced by ionization of a salt feed material (typically UCL4) are
accelerated and passed through a magnetic field that has the effect
of causing the ions of different isotopes to follow different paths.
The major components of an electromagnetic isotope separator
include: a magnetic field for ion-beam diversion/separation of the
isotopes, an ion source with its acceleration system, and a
collection system for the separated ions. Auxiliary systems for the
process include the magnet power supply system, the ion source high-
voltage power supply system, the vacuum system, and extensive
chemical handling systems for recovery of product and cleaning/
recycling of components.
(1) Electromagnetic isotope separators.
Especially designed or prepared for the separation of uranium
isotopes, and equipment and components therefor, including:
(i) Ion Sources--especially designed or prepared single or
multiple uranium ion sources consisting of a vapor source, ionizer,
and beam accelerator, constructed of materials such as graphite,
stainless steel, or copper, and capable of providing a total ion
beam current of 50 mA or greater;
(ii) Ion collectors--collector plates consisting of two or more
slits and pockets especially designed or prepared for collection of
enriched and depleted uranium ion beams and constructed of materials
such as graphite or stainless steel;
(iii) Vacuum housings--especially designed or prepared vacuum
housings for uranium electromagnetic separators, constructed of
suitable non-magnetic materials such as stainless steel and designed
for operation at pressures of 0.1 Pa or lower.
The housings are specially designed to contain the ion sources,
collector plates and water-cooled liners and have provision for
diffusion pump connections and opening and closure for removal and
reinstallation of these components; and
(iv) Magnet pole pieces--especially designed or prepared magnet
pole pieces having a diameter greater than 2 m used to maintain a
constant magnetic field within an electromagnetic isotope separator
and to transfer the magnetic field between adjoining separators.
(2) High voltage power supplies.
Especially designed or prepared high-voltage power supplies for
ion sources, having all of the following characteristics:
(i) Capable of continuous operation;
(ii) Output voltage of 20,000 V or greater;
(iii) Output current of 1 A or greater; and
(iv) Voltage regulation of better than 0.01% over an 8 hour time
period.
(3) Magnet power supplies.
Especially designed or prepared high-power, direct current
magnet power supplies having all of the following characteristics:
(i) Capable of continuously producing a current output of 500 A
or greater at a voltage of 100 V or greater; and
(ii) A current or voltage regulation better than 0.01% over an 8
hour time period.
22. A new Appendix J to Part 110 is added to read as follows:
Appendix J to Part 110--Illustrative List of Uranium Conversion Plant
Equipment Under NRC Export Licensing Authority
Note--Uranium conversion plants and systems may perform one or
more transformations from one uranium chemical species to another,
including: conversion of uranium ore concentrates to UO3, conversion
of UO3 to UO2, conversion of uranium oxides to UF4 or UF6,
conversion of UF4 to UF6, conversion of UF6 to UF4, conversion of
UF4 to uranium metal, and conversion of uranium fluorides to UO2.
Many key equipment items for uranium conversion plants are common to
several segments of the chemical process industry, including
furnaces, rotary kilns, fluidized bed reactors, flame tower
reactors, liquid centrifuges, distillation columns and liquid-liquid
extraction columns. However, few of the items are available ``off-
the-shelf''; most would be prepared according to customer
requirements and specifications. Some require special design and
construction considerations to address the corrosive properties of
the chemicals handled (HF, F2, CLF3, and uranium fluorides). In all
of the uranium conversion processes, equipment which individually is
not especially designed or prepared for uranium conversion can be
assembled into systems which are especially designed or prepared for
uranium conversion.
(1) Especially designed or prepared systems for the conversion
of uranium ore concentrates to UO3.
Conversion of uranium ore concentrates to UO3 can be performed
by first dissolving the ore in nitric acid and extracting purified
uranyl nitrate using a solvent such as tributyl phosphate. Next, the
uranyl nitrate is converted to UO3 either by concentration and
denitration or by neutralization with gaseous ammonia to product
ammonium diuranate with subsequent filtering, drying, and calcining.
(2) Especially designed or prepared systems for the conversion
of UO3 to UF6.
Conversion of UO3 to UF6 can be performed directly by
fluorination. The process requires a source of fluorine gas or
chlorine trifluoride.
(3) Especially Designed or Prepared Systems for the conversion
of UO3 to UO2.
Conversion of UO3 to UO2 can be performed through reduction of
UO3 with cracked ammonia gas or hydrogen.
(4) Especially Designed or Prepared Systems for the conversion
of UO2 to UF4.
Conversion of UO2 to UF4 can be performed by reacting UO2 with
hydrogen fluoride gas (HF) at 300-500 deg.C.
(5) Especially Designed or Prepared Systems for the conversion
of UF4 to UF6.
[[Page 35607]]
Conversion of UF4 to UF6 is performed by exothermic reaction
with fluorine in a tower reactor. UF6 is condensed from the hot
effluent gases by passing the effluent stream through a cold trap
cooled to -10 deg.C. The process requires a source of fluorine gas.
(6) Especially Designed or Prepared Systems for the conversion
of UF4 to U metal.
Conversion of UF4 to U metal is performed by reduction with
magnesium (large batches) or calcium (small batches). The reaction
is carried out at temperatures above the melting point of uranium
(1130 deg.C).
(7) Especially designed or prepared systems for the conversion
of UF6 to UO2.
Conversion of UF6 to UO2 can be performed by one of three
processes. In the first, UF6 is reduced and hydrolyzed to UO2 using
hydrogen and steam. In the second, UF6 is hydrolyzed by solution in
water, ammonia is added to precipitate ammonium diuranate, and the
diuranate is reduced to UO2 with hydrogen at 820 deg.C. In the third
process, gaseous UF6, CO2, and NH3 are combined in water,
precipitating ammonium uranyl carbonate. The ammonium uranyl
carbonate is combined with steam and hydrogen at 500-600 deg.C to
yield UO2. UF6 to UO2 conversion is often performed as the first
stage of a fuel fabrication plant.
(8) Especially Designed or Prepared Systems for the conversion
of UF6 to UF4. Conversion of UF6 to UF4 is performed by reduction
with hydrogen.
Appendix L to Part 110 [Amended]
23. In newly redesignated Appendix L to Part 110, the entry
``Tungsten 185 (W 85)'' is revised to read ``Tungsten 185 (W 185).''
Dated in Rockville, MD, this 28th day of June 1996.
For the Nuclear Regulatory Commission.
James M. Taylor,
Executive Director for Operations.
[FR Doc. 96-17236 Filed 7-5-96; 8:45 am]
BILLING CODE 7590-01-P
Complete official Federal Register PDF
FR Doc. 96-17232 Federal-Aid Project Authorization
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35629-35633]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17232]
=======================================================================
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
23 CFR Part 630
[FHWA Docket No. 94-30]
RIN 2125-AD43
Federal-Aid Project Authorization
AGENCY: Federal Highway Administration (FHWA), DOT.
ACTION: Final rule.
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SUMMARY: The FHWA is amending its regulation on Federal-aid program
approval and project authorization. In light of changes made by the
Intermodal Surface Transportation Efficiency Act of 1991, in the area
of statewide planning and transportation improvement programs, and the
joint FHWA/Federal Transit Administration (FTA) regulations
implementing those changes, this regulation removes the obsolete
project programming provisions from this part. This regulation provides
more flexible funding arrangements and a more flexible Federal-aid
authorization process. Changes contained in related laws are included.
EFFECTIVE DATE: This final rule is effective August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Mr. Jack Wasley, Office of
Engineering, 202-366-4658, or Wilbert Baccus, Office of the Chief
Counsel, 202-366-0780, FHWA, 400 Seventh Street, SW., Washington, D.C.
20590. Office Hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday
through Friday except Federal holidays.
SUPPLEMENTARY INFORMATION: The amendments in this final rule are based
primarily on the notice of proposed rulemaking (NPRM) published in the
February 17, 1995, Federal Register at 60 FR 9306 (FHWA Docket No. 94-
30). All comments received in response to this NPRM have been
considered in adopting these amendments.
The initiation of work for transportation projects funded under the
Federal-aid highway program is a two-step process. First, the State, in
cooperation and consultation with local officials, as appropriate,
through the metropolitan and statewide planning process, determines
activities which will be advanced with Federal funds made available
under title 23, United States Code, and the Federal Transit Act (49
U.S.C. 5301-5338) and develops a Statewide program of projects for
these activities. Prior to passage of the Intermodal Surface
Transportation Efficiency Act of 1991 (Pub. L. 102-240, 105 Stat. 1914)
(ISTEA), the requirements for developing the program of projects were
found in 23 U.S.C. 105 and the implementing regulations in 23 CFR part
630, subpart A. With passage of the ISTEA, title 23, U.S.C., was
modified and the new requirements concerning development of a program
of projects, now referred to as the Statewide transportation
improvement program, are contained in 23 U.S.C. 135. The implementing
regulation for this section is in 23 CFR part 450 and was initiated
through previous rulemaking actions.
Accordingly, those requirements pertaining to a program of projects
in 23 CFR part 630, subpart A, no longer need to be retained. This
final rule therefore eliminates these programming references.
The second step in initiation of work is the project authorization
process. The State highway agency (SHA) requests FHWA authorization to
proceed with a proposed Federal-aid highway project. The FHWA
authorization commits the Federal government to participate in the
funding of a project, except in those instances where the State
requests FHWA authorization without the commitment of Federal funds. In
addition, FHWA authorization also establishes a point in time after
which costs incurred on a project are eligible for Federal
participation. The requirements covering project authorization are
contained in this final rule. The following is a section-by-section
analysis of the amendments
[[Page 35630]]
made by this final rule to the present regulations.
Section-by-Section Analysis
Section 630.102 Purpose
The statement of purpose is revised to eliminate the reference to
programming of projects since this activity is eliminated from this
subpart.
Section 630.104 Applicability
The existing Sec. 630.104, Definitions, is replaced by a new
section identifying the types of projects that are covered by this
subpart. FHWA planning and research funds, as defined in 23 CFR
420.103, are authorized using the procedures in the regulations dealing
specifically with these types of funded projects. Projects utilizing
special funding may have unique authorization requirements, and these
types of projects will be authorized as set out in implementing
instructions or regulations.
Section 630.106 Authorization to Proceed
The current Sec. 630.106, Policy, is removed. A new Sec. 630.106,
Authorization to proceed, is redesignated from current Sec. 630.114,
covering the authorization process, and it retains many of the basic
principles set forth in existing Sec. 630.114. Modifications were made
to provide greater flexibility in some funding areas, and other
additions were made for clarification. The following discussion breaks
down new Sec. 630.106 by individual paragraph.
Paragraph (a) retains the requirement that FHWA authorization to
proceed with a Federal-aid project will only be given in response to a
request from the SHA, and then only if the applicable requirements in
law have been satisfied for the project.
Paragraph (b) retains the longstanding requirement that Federal-aid
funds will only participate in costs incurred after the date the FHWA
has authorized the State to proceed with the project. However,
exceptions to this requirement are allowed under a process set forth in
23 CFR 1.9(b). For informational purposes, wording has been included in
paragraph (b) to identify and cross reference the exception process.
Paragraphs (c), (d), and (e) retain the requirement that, at the
time a Federal-aid project is authorized, the total amount of
appropriate Federal funds for the project must be available. Four
general categories of exceptions to this rule are retained from the
existing regulation. A fifth category of exceptions in the existing
regulation, related to bond issue projects under 23 U.S.C. 122, has
been eliminated. Section 311 of the National Highway System Designation
Act of 1995 (Pub. L. 104-59, 109 Stat. 568)(NHS Act), enacted November
28, 1995, significantly revised 23 U.S.C. 122. Previously, section 122
allowed certain types of projects to be approved as bond issue
projects. Similar to advance construction, these projects were advanced
as Federal-aid projects without any commitment of Federal funds until
the bonds matured and the State converted the projects to regular
Federal-aid. As amended, section 122 makes bond related costs eligible
for Federal reimbursement on any Federal-aid project; however, the
process of converting bond issue projects similar to advance
construction projects is no longer set forth in the section. As a
result, paragraph (c) of Sec. 630.106 has dropped bond issue projects
from the listing of exceptions.
Paragraph (f) is added for purposes of clarification. The FHWA
authorization represents a contractual action by the FHWA, and the
Federal share of eligible costs must be agreed upon when the
authorization occurs. The Federal share may be in the form of a
specified percentage of eligible costs or a lump sum amount. Use of the
lump sum share is intended to accommodate those instances where there
is a desire to commit a fixed amount of Federal funds to a project. The
lump sum amount may not exceed the legal pro rata share for the Federal
funds involved; this may require downward adjustment of the lump sum
amount when costs of eligible work on a project are less than the
initial estimates at the time of FHWA authorization.
The Federal share agreed to at the time of FHWA authorization is to
continue through the life of the project. Manipulation of funding
levels of individual projects to accommodate program funding changes or
needs is not allowed. However, adjustments to the Federal share are
permitted for projects where bid prices are significantly different
from the estimates at the time of FHWA authorization and should be made
prior to, or shortly after, contract award.
In addition, Federal participation is based on eligible costs
incurred by the State. The Federal share of such costs cannot exceed
the maximum share permitted by legislation.
Paragraph (g) incorporates into the regulation the provision in 23
U.S.C. 120(i) that allows a State to contribute more than the normal
State match on a Federal-aid project. This provision has been
interpreted to mean that a State may overmatch and not be tied to a
mandatory Federal share. However, project financing proposals that
result in the Federal share representing only a minor percentage of
eligible work should be avoided unless they are based on sound project
management decisions.
Discussion of Comments
Interested persons were invited to participate in the development
of this final rule by submitting written comments on the NPRM to FHWA
Docket No. 94-30 on or before April 18, 1995. There were 10 commenters
to this docket, all representing State transportation agencies.
Three State transportation agencies specifically endorsed the
proposed rewrite of the regulation. The other State agencies raised
several issues for consideration, which have been grouped into the
following categories: (1) Third party (private) cash donations; (2)
token financing; (3) the relationship of this rulemaking to FHWA's
innovative financing test and evaluation project; and (4) establishing
a project's Federal share.
Third Party Cash Donations
This issue received the most comments. The NPRM proposed to include
a new provision in the regulation that would clearly set forth the cost
sharing principles for Federal-aid highway projects, including the
requirement at the time the NPRM was issued that a third party cash
contribution to a specific project could not be applied to the required
State matching share but instead had to be applied to reduce the
overall project cost. The commenters felt the requirement on third
party donations was overly restrictive, diminished the incentive for
States to seek third party contributions, and could adversely affect
the advancement of certain projects. Although these points are well
taken, the requirement on third party cash contributions, as stated in
the NPRM, reflected a legal interpretation consistent with title 23 as
it existed at that time.
A significant change has occurred in Federal highway law related to
third party donations since the NPRM was issued. The NHS Act amended 23
U.S.C. 322 to allow the value of third party funds, materials, or
services donated to a specific Federal-aid project to be applied to the
State's matching share. Thus, Congress has provided legislative relief
on this matter.
The FHWA has issued implementing guidance on 23 U.S.C. 322 and the
application of third party donations of
[[Page 35631]]
funds, materials, or services towards the State's matching share. That
guidance is available for review in FHWA Docket No. 94-30 in the FHWA
Docket Room at the address listed above. Accordingly, the matter of
third party contributions will not be addressed in this regulation.
Token Financing
Several commenters expressed concern about the NPRM provision on
``token financing'' and the accompanying preamble discussion which
suggested that, as a general rule of thumb, Federal funding for a
specific project should represent at least 50 percent of eligible
project costs. It was pointed out that the phrase ``token financing''
is vague and not clearly defined in the regulation. Further, the NPRM
preamble discussion that suggested a project have at least a target
Federal funding level of ``50 percent'' was interpreted as being too
inflexible. Several commenters recommended a lower percentage threshold
or a minimum dollar figure.
Section 630.106(g) of the final rule adds a new provision to
implement 23 U.S.C. 120(i) which allows the State to contribute more
than the normal State match on a project. The phrase ``token
financing'' has not been used in the regulation. Instead, the concept
of ``token financing'' has been expressed in the phrase, ``project
financing proposals that result in the Federal share representing only
a minor percentage of eligible work should be avoided.'' The phrase
``minor percentage'' has not been defined, by a specific value or a
general target value, in either the regulation or this preamble and
considerable flexibility is intended. As expressed in Sec. 630.106(g),
this provision is to be applied based on sound project management
decisions. For example, it would make little sense to place small
amounts of Federal funds in a large number of projects. This could
overburden the FHWA and would unnecessarily Federalize a large number
of projects. It is expected that a State and FHWA division office will
reach agreement on a reasonable implementation of this requirement
based on project circumstances.
Relationship of This Rulemaking to FHWA's Innovative Financing Test
and Evaluation Project
In 1994, the FHWA established a nationwide innovative financing
test and evaluation project, known as TE-045, to evaluate new financing
concepts to increase investment or reduce public agency costs on
Federal-aid highway projects. Under TE-045, numerous concepts are
currently being evaluated. Two of these concepts, ``phased funding''
and ``tapered share,'' were mentioned by commenters on the NPRM as
issues that could be addressed in this regulation.
When the FHWA authorizes a State to proceed with a Federal-aid
highway project, the FHWA is required to obligate Federal funds for the
full Federal share of the cost of the work being authorized. Phased
funding is an exception to this requirement. Under phased funding, the
FHWA obligates an amount of Federal funds for each year a project is
under construction, the annual amount obligated being equal to the
estimated project construction expenditures expected in the year. Thus,
phased funding is a financing technique that can accelerate project
advancement because a State can proceed with project construction
before the full Federal share of the cost of the work is available to
the State.
Previously, under Sec. 630.114(h)(5), the FHWA Administrator had
the authority, in special cases, to allow a project to proceed without
the full Federal share of costs being available to a State. This
authority had been used to approve phased funding on a small number of
very costly Interstate projects. Early on, TE-045 accepted proposals to
experiment further with the phased funding concept; however, no
additional proposals are planned for testing. This is because of the
FHWA's 1995 revision of its policy on advance construction projects
that now allows an advance construction project to be converted to a
regular Federal-aid project in increments over time. Partial conversion
of advance construction projects can accomplish much of the same
flexibility that phased funding provides a State. As a result, the FHWA
has decided there is no need at this time to modify the phased funding
authority the Administrator has under this regulation. The provision
that allows the Administrator to approve special case exceptions for
phased funding is retained as Sec. 630.106(c)(4).
Tapered share is an alternate means of making project reimbursement
to a State. Under the tapered share concept, the Federal share of costs
incurred can vary as reimbursement is provided to a State, as long as
the overall Federal funding provided to the State does not exceed the
amount of Federal funds obligated when the project was authorized. For
example, on a project that is being cost shared at 80 percent Federal,
20 percent State, the State's billings to the FHWA are normally
reimbursed with Federal funds at 80 percent of the billed amount.
However, the tapered share concept could be applied to allow a State to
receive 100 percent Federal funds on early billings with the Federal
share tapering off on later billings.
The tapered share concept is a reimbursement or payment issue, not
an authorization issue. Because this regulation covers authorization
requirements, the tapered share concept will not be addressed in this
regulation. The FHWA continues to evaluate the tapered share concept
under TE-045 and it is expected that any proposals to allow this
concept, including recommendations on needed statutory changes, will
emerge from TE-045.
Establishing a Project's Federal Share
In the NPRM, Sec. 630.106(f) was proposed to clarify that the
Federal share could be established either as a percentage of eligible
project costs or as a lump sum amount, provided the lump sum amount did
not exceed the maximum legal percentage allowed for the Federal-aid
funding being used on the project.
One commenter suggested another alternative, i.e., that the
authorization would specify a percentage with a maximum amount of
Federal funds also specified. If a State establishes Federal share as a
percentage, any decision to further impose an upper limit on additional
Federal funds it will provide to a project, should overruns occur, is a
State decision. This decision has no impact on the amount of Federal
funds being obligated on the project when the FHWA initially authorizes
the work because the amount of Federal funds obligated would still be
determined based on the specified Federal share percentage.
Consequently, this proposed alternative has not been incorporated into
the regulation. If a State desires to set an upper limit for Federal
funding on a project where Federal share has been established by
percentage and desires to alert all parties involved with the project
of the limit, one means of accomplishing this is with an appropriate
note on the Federal-aid project agreement.
Several comments were received concerning the adjustment of Federal
share during the life of a project. The authorization of a project,
with the accompanying obligation of Federal funds, is a contractual
action by the FHWA, which has been viewed as fixing or establishing the
Federal share of the project. The FHWA's longstanding position has been
that Federal share could not be adjusted after the initial project
authorization. Recognizing that some flexibility is desirable,
particularly in situations involving construction work where bid prices
are significantly
[[Page 35632]]
different from the engineer's estimate on which the initial
authorization of construction is based, the NPRM proposed to allow the
Federal share to be adjusted after authorization to reflect bids
received.
One commenter suggested eliminating the provision that Federal
share is established at authorization and replacing it with a
requirement that Federal share be established when the Federal-aid
project agreement is executed, after which it could not be adjusted.
This suggestion is not being implemented. The timing of when a Federal-
aid project agreement is executed for a project can vary considerably,
with it sometimes being combined directly with the authorization and
sometimes following the authorization by several weeks. Keeping in mind
that the FHWA's authorization is a legally binding action on the
agency's part, it is at this point that the Federal share being
committed to the project needs to be clearly defined.
Other commenters suggested that a State be allowed to continue to
make adjustments to Federal share throughout the life of a project.
Allowing these adjustments raises several concerns. How many times
could changes be made? Would changes be allowed after construction is
physically completed? Could changes be retroactive and applied to costs
already incurred? What are the Federal fiscal implications of
unrestricted changes? At this time, the decision has been made not to
expand flexibility for adjusting Federal share beyond that proposed in
the NPRM, namely, that Federal share could be adjusted based on the
bids received. The final rule has added clarifying language to indicate
that any such adjustment should occur before or shortly after award of
the contract.
Another comment concerned Federal shares for various project
activities. The commenter appears to be interpreting the word
``project'' to include all work phases of a project, such as design,
right-of-way, and construction. The commenter was concerned that if a
specific Federal share was established for design work, a State would
be locked into using that same Federal share on all subsequent
activities, such as the construction work. This is not the intent of
the regulation. The term ``project'' is intended to mean that
particular activity or phase of work for which Federal funds are being
authorized. Federal share is established for each individual
authorization. Design work could be authorized at one Federal share and
construction work later authorized at a different Federal share.
Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures
The FHWA has determined that this action is not a significant
regulatory action within the meaning of Executive Order 12866 or
significant within the meaning of Department of Transportation
regulatory policies and procedures. The amendments would simply make
minor changes to update the Federal-aid project authorization
regulations to conform to recent laws, regulations, and guidance, and
to clarify existing policies. It is anticipated that the economic
impact of this rulemaking will be minimal because the amendments would
only clarify or simplify procedures presently being used by SHAs.
Therefore, a full regulatory evaluation is not required.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the FHWA has evaluated the effects of this rule on small
entities. Based on the evaluation, the FHWA certifies that this action
would not have a significant economic impact on a substantial number of
small entities. The proposed amendments would only clarify or simplify
procedures used by SHA's in accordance with existing laws, regulations,
or guidance.
Executive Order 12612 (Federalism Assessment)
This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 12612, and it has been determined
that this action does not have sufficient federalism implications to
warrant the preparation of a federalism assessment. This action merely
conforms the Federal-aid project authorization regulations to recent
laws, regulations, and guidance; clarifies these regulations; and gives
the SHAs more flexibility in implementing them.
Executive Order 12372 (Intergovernmental Review)
Catalog of Federal Domestic Assistance Program Number 20.205,
Highway Planning and Construction. The regulations implementing
Executive Order 12372 regarding intergovernmental consultation on
Federal programs and activities apply to this program.
Paperwork Reduction Act
This action does not contain a collection of information
requirement for purposes of the Paperwork Reduction Act of 1995, 44
U.S.C. 3501-3520.
National Environmental Policy Act
The Agency has analyzed this action for the purpose of the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et.seq.) and has
determined that this action would not have any effect on the quality of
the environment.
Regulation Identification Number
A regulation identification number (RIN) is assigned to each
regulatory action listed in the Unified Agenda of Federal Regulations.
The Regulatory Information Service Center publishes the Unified Agenda
in April and October of each year. The RIN contained in the heading of
this document can be used to cross reference this action with the
Unified Agenda.
List of Subjects in 23 CFR Part 630
Government contracts, Grant programs--transportation, Highways and
roads, Project authorization.
Issued on: June 26, 1996.
Rodney E. Slater,
Federal Highway Administrator.
In consideration of the foregoing, the FHWA is amending title 23,
Code of Federal Regulations, by revising part 630, subpart A to read as
follows:
PART 630--PRECONSTRUCTION PROCEDURES
Subpart A--Federal-Aid Project Authorization
Sec.
630.102 Purpose.
630.104 Applicability.
630.106 Authorization to proceed.
Authority: 23 U.S.C. 106, 118, 120, and 315; 49 CFR 1.48(b).
Subpart A--Federal-Aid Project Authorization
Sec. 630.102 Purpose.
The purpose of this subpart is to prescribe policies for
authorizing Federal-aid projects.
Sec. 630.104 Applicability.
(a) This regulation is applicable to all Federal-aid projects
unless specifically exempted.
(b) Projects financed with FHWA planning and research funds, as
defined in 23 CFR 420.103 are not covered by this subpart. These
projects are to be handled in accordance with 23 CFR parts 420 and 450.
(c) Other projects which involve special procedures shall be
authorized as set out in the implementing instructions for those
projects.
Sec. 630.106 Authorization to proceed.
(a) The FHWA issuance of an authorization to proceed with a
Federal-
[[Page 35633]]
aid project shall be in response to a written request from the State
highway agency (SHA). Authorization can be given only after applicable
prerequisite requirements of Federal laws and implementing regulations
and directives have been satisfied.
(b) Federal funds shall not participate in costs incurred prior to
the date of authorization to proceed except as provided by 23 CFR
1.9(b).
(c) Authorization of a Federal-aid project shall be deemed a
contractual obligation of the Federal government under 23 U.S.C. 106
and shall require that appropriate funds be available at the time of
authorization for the total agreed Federal share, either pro rata or
lump sum, of the cost of eligible work to be incurred by the State,
except as follows:
(1) Advance construction projects authorized under 23 U.S.C. 115.
(2) Projects for preliminary studies for the portion of the
preliminary engineering and right-of-way (ROW) phase(s) through the
selection of a location.
(3) Projects for ROW acquisition in hardship and protective buying
situations through the selection of a particular location. This
includes ROW acquisitions within a potential highway corridor under
consideration where necessary to preserve the corridor for future
highway purposes. Authorization of work under this paragraph shall be
in accordance with the provisions of 23 CFR part 712.
(4) In special cases where the Federal Highway Administrator
determines it to be in the best interest of the Federal-aid highway
program.
(d) The authorization to proceed with a project under 23 CFR
630.106(c)(1) through (c)(4) shall contain the following statement:
``Authorization to proceed shall not constitute any commitment of
Federal funds, nor shall it be construed as creating in any manner any
obligation on the part of the Federal government to provide Federal
funds for that portion of the undertaking not fully funded herein.''
(e) When a project has received an authorization under 23 CFR
630.106(c)(2) and (c)(3), subsequent authorizations beyond the location
stage shall not be given until appropriate available funds have been
obligated to cover eligible costs of the work covered by the previous
authorization.
(f)(1) The Federal-aid share of eligible project costs shall be
established at the time of project authorization in one of the
following manners:
(i) Pro rata, with the authorization stating the Federal share as a
specified percentage, or
(ii) Lump sum, with the authorization stating that Federal funds
are limited to a specified dollar amount not to exceed the legal pro
rata.
(2) The pro-rata or lump sum share may be adjusted before or
shortly after contract award to reflect any substantive change in the
bids received as compared to the SHA's estimated cost of the project at
the time of FHWA authorization, provided that Federal funds are
available.
(3) Federal participation is limited to the agreed Federal share of
eligible costs incurred by the State, not to exceed the maximum
permitted by enabling legislation.
(g) The State may contribute more than the normal non-Federal share
of title 23, U.S.C., projects. In general, financing proposals that
result in only minimal amounts of Federal funds in projects should be
avoided unless they are based on sound project management decisions.
[FR Doc. 96-17232 Filed 7-5-96; 8:45 am]
BILLING CODE 4910-22-P
Complete official Federal Register PDF
FR Doc. 96-17231 Change Time of Designation for Restricted Area R-3107, Kaula Rock; HI
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Page 35623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17231]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 73
[Airspace Docket No. 96-AWP-12]
Change Time of Designation for Restricted Area R-3107, Kaula
Rock; HI
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This action reduces the time of designation for Restricted
Area 3107 (R-3107), Kaula Rock, HI, to accurately reflect actual times
of use. This administrative change, initiated by the U.S. Navy, will
not affect the boundaries, designated altitudes, or activities
conducted within the restricted area.
EFFECTIVE DATE: 0901 UTC, October 10, 1996.
FOR FURTHER INFORMATION CONTACT: Steve Brown, Airspace and Rules
Division, ATA-400, Office of Air Traffic Airspace Management, Federal
Aviation Administration, 800 Independence Avenue, SW., Washington, DC
20591; telephone: (202) 267-8783.
SUPPLEMENTARY INFORMATION:
The Rule
This amendment to part 73 of the Federal Aviation Regulations
reduces the time of designation for R-3107, Kaula Rock, HI, to
accurately reflect actual times of use. This administrative change,
initiated by the U.S. Navy, will not affect the boundaries, designated
altitudes, or activities conducted within the restricted area.
Therefore, I find that notice and public procedure under 5 U.S.C.
553(b) are unnecessary because this action is a minor technical
amendment in which the public would not be particularly interested.
Section 73.31 of part 73 of the Federal Aviation Regulations was
republished in FAA Order 7400.8C dated June 29, 1995.
The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore--(1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
will only affect air traffic procedures and air navigation, it is
certified that this rule will not have a significant economic impact on
a substantial number of small entities under the criteria of the
Regulatory Flexibility Act.
Environmental Review
This action reduces the restricted area's time of designation. In
accordance with FAA Order 1050.1D, ``Policies and Procedures for
Considering Environmental Impacts,'' this action is not subject to
environmental assessments and procedures and the National Environmental
Policy Act.
List of Subjects in 14 CFR Part 73
Airspace, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 73 as follows:
PART 73--[AMENDED]
1. The authority citation for part 73 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 73.31 [Amended]
2. Section 73.31 is amended as follows:
R-3107 Kaula Rock, HI. [Amended]
By removing the current time of designation and substituting the
following:
Time of designation. 0700-2200 local time Monday-Friday; 0800-1600
local time Saturday-Sunday; other times by NOTAM issued at least 24
hours in advance.
Issued in Washington, DC, on June 28, 1996.
Nancy B. Kalinowski,
Acting Program Director for Air Traffic Airspace Management.
[FR Doc. 96-17231 Filed 7-5-96; 8:45 am]
BILLING CODE 4910-13-P
Complete official Federal Register PDF
FR Doc. 96-17229 Standard Instrument Approach Procedures; Miscellaneous Amendments
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35623-35624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17229]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 97
[Docket No. 28615; Amdt. No. 1739]
RIN 2120-AA65
Standard Instrument Approach Procedures; Miscellaneous Amendments
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment establishes, amends, suspends, or revokes
Standard Instrument Approach Procedures (SIAPs) for operations at
certain airports. These regulatory actions are needed because of the
adoption of new or revised criteria, or because of changes occurring in
the National Airspace System, such as the commissioning of new
navigational facilities, addition of new obstacles, or changes in air
traffic requirements. These changes are designed to provide safe and
efficient use of the navigable airspace and to promote safe flight
operations under instrument flight rules at the affected airports.
DATES: An effective date for each SIAP is specified in the amendatory
provisions.
Incorporation by reference-approved by the Director of the Federal
Register on December 31, 1980, and reapproved as of January 1, 1982.
ADDRESSES: Availability of matters incorporated by reference in the
amendment is as follows:.
For Examination--
1. FAA Rules Docket, FAA Headquarters Building, 800
[[Page 35624]]
Independence Avenue, SW., Washington, DC 20591;
2. The FAA Regional office of the region in which the affected
airport is located; or
3. The Flight Inspection Area Office which originated the SIAP.
For Purchase--Individual SIAP copies may be obtained from:
1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building,
800 Independence Avenue, SW., Washington, DC 20591; or
2. The FAA Regional Office of the region in which the affected
airport is located.
By Subscription--Copies of all SIAPs, mailed once every 2 weeks,
are for sale by the Superintendent of Documents, U.S. Government
Printing Office, Washington, DC 20402.
FOR FURTHER INFORMATION CONTACT:
Paul J. Best, Flight Procedures Standards Branch (AFS-420), Technical
Programs Division, Flight Standards Service, Federal Aviation
Administration, 800 Independence Avenue, SW., Washington, DC 20591;
telephone (202) 267-8277.
SUPPLEMENTARY INFORMATION: This amendment to part 97 of the Federal
Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or
revokes Standard Instrument Approach Procedures (SIAPs). The complete
regulatory description of each SIAP is contained in official FAA form
documents which are incorporated by reference in this amendment under 5
U.S.C. 552(a), 1 CFR part 51, and Sec. 97.20 of the Federal Aviation
Regulations (FAR). The applicable FAA Forms are identified as FAA Form
8260-5. Materials incorporated by reference are available for
examination or purchase as stated above.
The large number of SIAPs, their complex nature, and the need for a
special format make their verbatim publication in the Federal Register
expensive and impractical. Further, airmen do not use the regulatory
text of the SIAPs, but refer to their graphic depiction on charts
printed by publishers of aeronautical materials. Thus, the advantages
of incorporation by reference are realized and publication of the
complete description of each SIAP contained in FAA form documents is
unnecessary. The provisions of this amendment state the affected CFR
(and FAR) sections, with the types and effective dates of the SIAPs.
This amendment also identifies the airport, its location, the procedure
identification and the amendment number.
This amendment to part 97 is effective upon publication of each
separate SIAP as contained in the transmittal. The SIAPs contained in
this amendment are based on the criteria contained in the United States
Standard for Terminal Instrument Approach Procedures (TERPS). In
developing these SIAPs, the TERPS criteria were applied to the
conditions existing or anticipated at the affected airports.
The FAA has determined through testing that current non-localizer
type, non-precision instrument approaches developed using the TERPS
criteria can be flown by aircraft equipped with Global Positioning
System (GPS) equipment. In consideration of the above, the applicable
Standard Instrument Approach Procedures (SIAPs) will be altered to
include ``or GPS'' in the title without otherwise reviewing or
modifying the procedure. (Once a stand alone GPS procedure is
developed, the procedure title will be altered to remove ``or GPS''
from these non-localizer, non-precision instrument approach procedure
titles.) Because of the close and immediate relationship between these
SIAPs and safety in air commerce, I find that notice and public
procedure before adopting these SIAPs are, impracticable and contrary
to the public interest and, where applicable, that good cause exists
for making some SIAPs effective in less than 30 days.
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 ``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. For the same reason, the FAA
certifies that this amendment 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 97
Air traffic control, Airports, Navigation (Air).
Issued in Washington, DC, on June 28, 1996.
Thomas C. Accardi,
Director, Flight Standards Service.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me, part 97 of
the Federal Aviation Regulations (14 CFR part 97) is amended by
establishing, amending, suspending, or revoking Standard Instrument
Approach Procedures, effective at 0901 UTC on the dates specified, as
follows:
PART 97--STANDARD INSTRUMENT APPROACH PROCEDURES
1. The authority citation for part 97 is revised to read as
follows:
Authority: 49 U.S.C. 40103, 40113, 40120, 44701; 49 U.S.C.
106(g); and 14 CFR 11.49(b)(2).
2. Part 97 is amended to read as follows:
Secs. 97.23, 97.27, 97.33 97.35 [Amended]
By amending: Sec. 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or
TACAN; Sec. 97.27 NDB, NDB/DME; Sec. 97.33 RNAV SIAPS; and Sec. 97.35
COPTER SIAPSs, identified as follows:
* * * Effective Aug. 15, 1996
Goshen, IN, Goshen Muni, VOR or GPS RWY 9, Amdt 11 CANCELLED
Goshen, IN, Goshen Muni, VOR RWY 9, Amdt 11
Lovington, NM, Lea County-Zip Franklin Memorial, RNAV or GPS RWY 3,
Orig CANCELLED
Lovington, NM, Lea County-Zip Franklin Memorial, RNAV RWY 3, Orig
Riverton, WY, Riverton Regional, VOR or GPS RWY 10, Amdt 8 CANCELLED
Riverton, WY, Riverton Regional, VOR RWY 10, Amdt 8
Riverton, WY, Riverton Regional, VOR or GPS RWY 28, Amdt 8 CANCELLED
Riverton, WY, Riverton Regional, VOR RWY 28, Amdt 8.
[FR Doc. 96-17229 Filed 7-5-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-17228 Standard Instrument Approach Procedures; Miscellaneous Amendments
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35624-35626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17228]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 97
[Docket No. 28614; Amdt. No. 1738]
RIN 2120-AA65
Standard Instrument Approach Procedures; Miscellaneous Amendments
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment establishes, amends, suspends, or revokes
Standard Instrument Approach Procedures (SIAPs) for operations at
certain airports. These regulatory actions are needed because of
changes occurring in the National Airspace System, such as the
commissioning of new navigational facilities, addition of new
obstacles, or changes in air traffic requirements. These changes are
designed to provide safe and efficient use of the navigable airspace
and to promote safe flight operations under instrument flight rules at
the affected airports.
[[Page 35625]]
DATES: An effective date for each SIAP is specified in the amendatory
provisions.
Incorporation by reference--approved by the Director of the Federal
Register on December 31, 1980, and reapproved as of January 1, 1982.
ADDRESSES: Availability of matter incorporated by reference in the
amendment is as follows:
For Examination--
1. FAA Rules Docket, FAA Headquarters Building, 800 Independence
Avenue, SW., Washington, DC 20591;
2. The FAA Regional Office of the region in which affected airport
is located; or
3. The Flight Inspection Area Office which originated the SIAP.
For Purchase--Individual SIAP copies may be obtained from:
1. FAA Public Inquiry Center (APA--200); FAA Headquarters Building,
800 Independence Avenue, SW., Washington, DC 20591; or
2. The FAA Regional Office of the region in which the affected
airport is located.
By Subscription--Copies of all SIAPs, mailed once every 2 weeks,
are for sale by the Superintendent of Documents, US Government Printing
Office, Washington, DC 20402.
FOR FURTHER INFORMATION CONTACT: Paul J. Best, Flight Procedures
Standards Branch (AFS-420), Technical Programs Division, Flight
Standards Service, Federal Aviation Administration, 800 Independence
Avenue, SW., Washington, DC 20591; telephone (202) 267-8277.
SUPPLEMENTARY INFORMATION: This amendment to part 97 of the Federal
Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or
revokes Standard Instrument Approach Procedures (SIAPs). The complete
regulatory description on each SIAP is contained in the appropriate FAA
Form 8260 and the National Flight Data Center (FDC)/Permanent (P)
Notices to Airmen (NOTAM) which are incorporated by reference in the
amendment under 5 U.S.C. 552(a), 1 CFR part 51, and Sec. 97.20 of the
Federal Aviation Regulations (FAR). Materials incorporated by reference
are available for examination or purchase as stated above.
The large number of SIAPs, their complex nature, and the need for a
special format make their verbatim publication in the Federal Register
expensive and impractical. Further, airmen do not use the regulatory
text of the SIAPs, but refer to their graphic depiction of charts
printed by publishers of aeronautical materials. Thus, the advantages
of incorporation by reference are realized and publication of the
complete description of each SIAP contained in FAA form documents is
unnecessary. The provisions of this amendment state the affected CFR
(and FAR) sections, with the types and effective dates of the SIAPs.
This amendment also identifies the airport, its location, the procedure
identification and the amendment number.
The Rule
This amendment to part 97 of the Federal Aviation Regulations (14
CFR part 97) establishes, amends, suspends, or revokes SIAPs. For
safety and timeliness of change considerations, this amendment
incorporates only specific changes contained in the content of the
following FDC/P NOTAM for each SIAP. The SIAP information in some
previously designated FDC/Temporary (FDC/T) NOTAMs is of such duration
as to be permanent. With conversion to FDC/P NOTAMs, the respective
FDC/T NOTAMs have been cancelled.
The FDC/P NOTAMs for the SIAPs contained in this amendment are
based on the criteria contained in the U.S. Standard for Terminal
Instrument Approach Procedures (TERPS). In developing these chart
changes to SIAPs by FDC/P NOTAMs, the TERPS criteria were applied to
only these specific conditions existing at the affected airports. All
SIAP amendments in this rule have been previously issued by the FAA in
a National Flight DATA Center (FDC) Notice to Airmen (NOTAM) as an
emergency action of immediate flight safety relating directly to
published aeronautical charts. The circumstances which created the need
for all these SIAP amendments requires making them effective in less
than 30 days.
Further, the SIAPs contained in this amendment are based on the
criteria contained in the TERPS. Because of the close and immediate
relationship between these SIAPs and safety in air commerce, I find
that notice and public procedure before adopting these SIAPs are
impracticable and contrary to the public interest and, where
applicable, that good cause exists for making these SIAPs effective in
less than 30 days.
Conclusion
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. For the same reason, the FAA
certifies that this amendment 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 97
Air traffic control, Airports, Navigation (Air).
Issued in Washington, DC, on June 28, 1996.
Thomas C. Accardi,
Director, Flight Standards Service.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me, part 97 of
the Federal Aviation Regulations (14 CFR part 97) is amended by
establishing, amending, suspending, or revoking Standard Instrument
Approach Procedures, effective at 0901 UTC on the dates specified, as
follows:
PART 97--STANDARD INSTRUMENT APPROACH PROCEDURES
1. The authority citation for part 97 is revised to read as
follows:
Authority: 49 U.S.C. 40103, 40113, 40120, 44701; 49 U.S.C.
106(g); and 14 CFR 11.49(b)(2).
2. Part 97 is amended to read as follows:
Secs. 97.23, 97.25, 97.27, 97.29, 97.31, 97.33 and 97.35 [Amended]
By amending: Sec. 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or
TACAN; Sec. 97/25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; Sec. 97.27
NDB, NDB/DME; Sec. 97.29 ILS, ILS/DME, ISMLS, MLS, MLS/DME, MLS/RNAV;
Sec. 97.31 RADAR SIAPs; Sec. 97.33 RNAV SIAPs and Sec. 97.35 COPTER
SIAPs, identified as follows:
* * * Effective Upon Publication
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDC Date State City Airport FDC No. SIAP
--------------------------------------------------------------------------------------------------------------------------------------------------------
05/23/96... FL Miami.................... Miami Intl.............. 6/3205 ILS RWY 12 AMDT 3...
[[Page 35626]]
05/23/96... GA Reidsville............... Reidsville.............. 6/3197 NDB OR GPS RWY 11 AMDT 6A...
06/13/96... CA Monterey................. Monterey Peninsula...... 6/3777 LOC/DME RWY 28L AMDT 3A...
06/13/96... MN Hibbing.................. Chisholm-Hibbing........ 6/3770 VOR OR GPS RWY 13 AMDT 11A...
06/14/96... CA Oceanside................ Oceanside Muni.......... 6/3792 VOR OR GPS-A AMDT 3...
06/14/96... NE Alliance................. Alliance Muni........... 6/3801 VOR OR GPS RWY 12 AMDT 2A...
06/14/96... NE Alliance................. Alliance Muni........... 6/3802 NDB RWY 30 AMDT 7...
06/14/96... NE Alliance................. Alliance Muni........... 6/3803 VOR RWY 30 AMDT 1...
06/17/96... KS Chanute.................. Chanute Martin Johnson.. 6/3867 VOR OR GPS-A AMDT 9...
06/17/96... KS Chanute.................. Chanute Martin Johnson.. 6/3868 VOR/DME RNAV OR GPS RWY 36 AMDT 3...
06/17/96... NE Sidney................... Sidney Muni............. 6/3872 VOR RWY 12 AMDT 6...
06/17/96... NE Sidney................... Sidney Muni............. 6/3873 VOR/DME OR TACAN OR GPS RWY 12 AMDT 4...
06/17/96... NE Sidney................... Sidney Muni............. 6/3874 GPS RWY 30 ORIG...
06/17/96... NE Sidney................... Sidney Muni............. 6/3875 VOR RWY 30 AMDT 6...
06/17/96... NE Tekamah.................. Tekamah Muni............ 6/3870 VOR OR GPS RWY 32 AMDT 4...
06/18/96... IL Peoria................... Greater Peoria Regional. 6/3913 ILS/DME RWY 4 ORIG-A...
06/18/96... NE Hastings................. Hastings Muni........... 6/3898 NDB RWY 14 AMDT 12...
06/18/96... NE Hastings................. Hastings Muni........... 6/3900 VOR OR GPS RWY 4 AMDT 5...
06/18/96... NE Hastings................. Hastings Muni........... 6/3901 VOR OR GPS RWY 32 AMDT 13...
06/18/96... NE Hastings................. Hastings Muni........... 6/3905 VOR RWY 14 AMDT 16...
06/19/96... AR Mountain Home............ Baxter County Regional.. 6/3943 VOR OR GPS-A AMDT 9...
06/19/96... AR Mountain Home............ Baxter County Regional.. 6/3944 VOR/DME RNAV RWY 5 AMDT 1...
06/20/96... TX Abilene.................. Abilene Regional........ 6/3952 RADAR-1 AMDT 8...
06/21/96... MO St. Louis................ Spirit of St Louis...... 6/4023 ILS RWY 8R AMDT 13...
06/21/96... MO St. Louis................ Spirit of St Louis...... 6/4024 VOR OR GPS RWY 8R AMDT 7A...
06/21/96... MO St. Louis................ Spirit of St Louis...... 6/4025 NDB RWY 8R AMDT 11...
06/24/96... KS Lawrence................. Lawrence Muni........... 6/4100 NDB OR GPS RWY 33 ORIG...
06/24/96... KS Lawrence................. Lawrence Muni........... 6/4101 VOR/DME RNAV RWY 33 AMDT 4...
06/24/96... KS Lawrence................. Lawrence Muni........... 6/4102 VOR/DME OR GPS-A AMDT 9...
06/24/96... KS Lawrence................. Lawrence Muni........... 6/4103 ILS RWY 33 ORIG...
06/25/96... MN Springfield.............. Springfield Muni........ 6/4150 VOR/DME OR GPS RWY 14 AMDT 2B...
06/25/96... MN St Paul.................. St Paul Downtown Holman 6/4148 ILS RWY 32 AMDT 3...
Field.
06/25/96... MN St Paul.................. St Paul Downtown Holman 6/4153 NDB OR GPS RWY 30 AMDT 7...
Field.
06/26/96... KS Lawrence................. Lawrence Muni........... 6/4199 ILS RWY 33, ORIG-A...
06/26/96... MT Helena................... Helena Regional......... 6/4193 LOC/DME BC-C AMDT 3...
06/26/96... NE Omaha.................... Eppley Airfield......... 6/4200 NDB OR GPS RWY 14R, AMDT 23...
06/26/96... WI Sparta................... Fort McCoy.............. 6/4183 GPS RWY 11 ORIG...
06/26/96... WI Sparta................... Fort McCoy.............. 6/4184 GPS RWY 29 ORIG...
--------------------------------------------------------------------------------------------------------------------------------------------------------
[FR Doc. 96-17228 Filed 7-5-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-17227 Standard Instrument Approach Procedures; Miscellaneous Amendments
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35626-35628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17227]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 97
[Docket No. 28612; Amdt. No. 1737]
Standard Instrument Approach Procedures; Miscellaneous Amendments
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment establishes, amends, suspends, or revokes
Standard Instrument Approach Procedures (SIAPs) for operations at
certain airports. These regulatory actions are needed because of the
adoption of new or revised criteria, or because of changes occurring in
the National Airspace System, such as the commissioning of new
navigational facilities, addition of new obstacles, or changes in air
traffic requirements. These changes are designed to provide safe and
efficient use of the navigable airspace and to promote safe flight
operations under instrument flight rules at the affected airports.
DATES: An effective date for each SIAP is specified in the amendatory
provisions.
Incorporation by reference-approved by the Director of the Federal
Register on December 31, 1980, and reapproved as of January 1, 1982.
ADDRESSES: Availability of matters incorporated by reference in the
amendment is as follows:
For Examination--
1. FAA Rules Docket, FAA Headquarters Building, 800 Independence
Avenue SW., Washington, DC 20591;
2. The FAA Regional Office of the region in which the affected
airport is located; or
3. The Flight Inspection Area Office which originated the SIAP.
[[Page 35627]]
For Purchase--Individual SIAP copies may be obtained from:
1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building,
800 Independence Avenue SW., Washington, DC 20591; or
2. The FAA Regional Office of the region in which the affected
airport is located.
By Subscription--Copies of all SIAPs, mailed once every 2 weeks,
are for sale by the Superintendent of Documents, U.S. Government
Printing Office, Washington, DC 20402.
FOR FURTHER INFORMATION CONTACT:
Paul J. Best, Flight Procedures Standards Branch (AFS-420), Technical
Programs Division, Flight Standards Service, Federal Aviation
Administration, 800 Independence Avenue SW., Washington, DC 20591;
telephone (202) 267-8277.
SUPPLEMENTARY INFORMATION: This amendment to part 97 of the Federal
Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or
revokes Standard Instrument Approach Procedures (SIAPs). The complete
regulatory description of each SIAP is contained in official FAA form
documents which are incorporated by reference in this amendment under 5
U.S.C. 552(a), 1 CFR part 51, and Sec. 97.20 of the Federal Aviation
Regulations (FAR). The applicable FAA Forms are identified as FAA Forms
8260-3, 8260-4, and 8260-5. Materials incorporated by reference are
available for examination or purchase as stated above.
The large number of SIAPs, their complex nature, and the need for a
special format make their verbatim publication in the Federal Register
expensive and impractical. Further, airmen do not use the regulatory
text of the SIAPs, but refer to their graphic depiction on charts
printed by publishers of aeronautical materials. Thus, the advantages
of incorporation by reference are realized and publication of the
complete description of each SIAP contained in FAA form documents is
unnecessary. The provisions of this amendment state the affected CFR
(and FAR) sections, with the types and effective dates of the SIAPs.
This amendment also identifies the airport, its location, the procedure
identification and the amendment number.
The Rule
This amendment to part 97 is effective upon publication of each
separate SIAP as contained in the transmittal. Some SIAP amendments may
have been previously issued by the FAA in a National Flight Data Center
(FDC) Notice to Airmen (NOTAM) as an emergency action of immediate
flight safety relating directly to published aeronautical charts. The
circumstances which created the need for some SIAP amendments may
require making them effective in less than 30 days. For the remaining
SIAPs, an effective date at least 30 days after publication is
provided.
Further, the SIAPs contained in this amendment are based on the
criteria contained in the U.S. Standard for Terminal Instrument
Approach Procedures (TERPS). In developing these SIAPs, the TERPS
criteria were applied to the conditions existing or anticipated at the
affected airports. Because of the close and immediate relationship
between these SIAPs and safety in air commerce, I find that notice and
public procedure before adopting these SIAPs are impracticable and
contrary to the public interest and, where applicable, that good cause
exists for making some SIAPs effective in less than 30 days.
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. For the same reason, the FAA
certifies that this amendment 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 97
Air traffic control, Airports, Navigation (Air).
Issued in Washington, DC, on June 28, 1996.
Thomas C. Accardi,
Director, Flight Standards Service.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me, part 97 of
the Federal Aviation Regulations (14 CFR part 97) is amended by
establishing, amending, suspending, or revoking Standard Instrument
Approach Procedures, effective at 0901 UTC on the dates specified, as
follows:
PART 97--STANDARD INSTRUMENT APPROACH PROCEDURES
1. The authority citation for part 97 is revised to read as
follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120, 44701; and 14
CFR 11.49(b)(2).
2. Part 97 is amended to read as follows:
Sec. Sec. 97.23, 97.25, 97.27, 97.29, 97.31, 97.33 and 97.35 [Amended]
By amending Sec. 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or
TACAN; Sec. 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; Sec. 97.27
NDB, NDB/DME; Sec. 97.29 ILS, ILS/DME, ISMLS, MLS, MLS/DME, MLS/RNAV;
Sec. 97.31 RADAR SIAPs; Sec. 97.33 RNAV SIAPs; and Sec. 97.35 COPTER
SIAPs, identified as follows:
* * * Effective July 18, 1996
Pascagoula, MS, Trent Lott International, ILS RWY 17, Orig
* * * Effective August 15, 1996
Middletown, DE, Summit Airpark, GPS RWY 35, Orig
Baxley, GA, Baxley Muni, NDB RWY 8, Orig
Baxley, GA, Baxley Muni, GPS RWY 8, Orig
Hinesville, GA, Liberty County, GPS RWY 32, Orig
Sioux City, IA. Sioux Gateway, NDB RWY 35, Orig
Boise, ID, Boise Air Terminal (Gowen Field) MLS RWY 28L, Orig
Calendonia, MN, Houston County, Houston County, VOR/DME or GPS-A,
Amdt 2
Rushford, MN, Rushford Muni, VOR/DME-A, Amdt-1
Warroad, MN, Warroad Intl-Swede Carlson Field, ILS RWY 31, Amdt 1
Warroad, MN, Warroad Intl-Swede Carlson Field, VOR/DME RNAV RWY 31,
Amdt 4
Warroad, MN, Warroad Intl-Swede Carlson Field, NDB or GPS RWY 31,
Amdt 1
Winona, MN, Winona Muni-Max Conrad Fld, VOR RWY 29, Amdt 15
Winona, MN, Winona Muni-Max Conrad Fld, VOR or GPS-A, Amdt 12
Winona, MN, Winona Muni-Max Conrad Fld, GPS RWY 29, Amdt 1
Pascagoula, MS, Trent Lott Intl, GPS RWY 17, Orig
Portland, OR, Portland Intl, ILS RWY 10L, Amdt 1
Portland, OR, Portland Intl, LOC/DME RWY 10L, Orig, CANCELLED
La Crosse, WI, La Crosse Muni, VOR RWY 13, Amdt 29
La Crosse, WI, La Crosse Muni, VOR or GPS RWY 36, Amdt 30
La Crosse, WI, La Crosse Muni, ILS RWY 18, Amdt 18
Guernsey, WY, Camp Guernsey, NDB RWY 32, Orig
* * * Effective October 10, 1996
Oceanside, CA, Oceanside Muni, GPS RWY 24, Orig
Fryeburg, ME, Eastern Slopes Regional, GPS RWY 32, Orig
Fryeburg, ME, Eastern Slopes Regional, NDB OR GPS-B, Amdt 1
[[Page 35628]]
Orange, MA, Orange Muni, GPS RWY 32, Orig
Jackson, MS, Hawkins Field, GPS RWY 16, Orig
Jackson, MS, Hawkins Field, GPS RWY 34, Orig
Forsyth, MT, Tillitt Field, GPS RWY 26, Orig
Rochester, NY, Greater Rochester International, GPS RWY 10, Orig
Lebanon, TN, Lebanon Muni, GPS RWY 19, Orig
[FR Doc. 96-17227 Filed 7-5-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-17226 Operating Requirements: Domestic Flag, Supplemental, Commuter, and On-Demand Operations: Corrections and Editorial Changes
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Page 35628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17226]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Parts 119, 121, and 135
[Docket No. 28154; Amendments Nos. 119-2, 121-256, 135-65 and SFAR 38-
13]
RIN 2120-AG03
Operating Requirements: Domestic Flag, Supplemental, Commuter,
and On-Demand Operations: Corrections and Editorial Changes
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule; correction.
-----------------------------------------------------------------------
SUMMARY: This document contains a correction to the final rule
published in the Federal Register on June 14, 1996 (61 FR 30432). The
final rule adopted changes that were editorial or typographical in
nature in parts 119, 121, and 135. The changes were necessary to
correct errors or clarify the intent of the regulations published in
December 20, 1996 (60 FR 65832).
EFFECTIVE DATE: July 15, 1996.
FOR FURTHER INFORMATION CONTACT:
Linda William, (202) 267-9685.
Correction of Publication
In rule document 96-14565, on page 30432, in the issue of Friday,
June 14, 1996, make the following correction:
On page 30432, in the first column, in the heading, Amendment No.
``121-259'' should read ``121-256'', and SFAR 38-13 should be added to
the heading.
Issued in Washington, DC, on July 1, 1996.
Joseph A. Conte,
Acting Chief Counsel for Regulations.
[FR Doc. 96-17226 Filed 7-5-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-17200 Grading and Inspection, General Specification for Approved Plants and Standards for Grades of Dairy Products; United States Standards for Instant Nonfat Dry Milk
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35589-35592]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17200]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 58
[DA-93-04]
Grading and Inspection, General Specification for Approved Plants
and Standards for Grades of Dairy Products; United States Standards for
Instant Nonfat Dry Milk
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document revises the United States Standards for Instant
Nonfat Dry Milk. The revision limits the use of lactose as a processing
aid in the instantizing process, provides fortification levels for
instant nonfat dry milk with added vitamins A and D, and deletes the
optional phosphatase test. This revision was developed in cooperation
with the American Dairy Products Institute and other dairy trade
associations.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Roland S. Golden, Dairy Products
Marketing Specialist, Dairy Standardization Branch, USDA/AMS/Dairy
Division, Room 2750-S, P.O. Box 96456, Washington, DC 20090-6456, (202)
720-7473.
SUPPLEMENTARY INFORMATION: This final rule has been reviewed under
Executive Order 12778, Civil Justice Reform. This action is not
intended to have retroactive effect. This rule does not preempt any
State or local laws, regulations, or policies, unless they present an
irreconcilable conflict with this rule. There are no administrative
procedures which must be exhausted prior to any judicial challenge to
the provisions of this rule.
The final rule also has been reviewed in accordance with the
Regulatory Flexibility Act, 5 U.S.C. 601 et seq. The Administrator,
Agricultural Marketing Service, has determined that the final rule will
not have a significant economic impact on a substantial number of small
entities because use of the standards is voluntary and the revisions do
not increase costs to those utilizing the standards.
The Department is issuing this rule in conformance with Executive
Order 12866.
To provide quality grade standards that reflect the ability of the
U.S. dairy industry to produce high-quality instant nonfat dry milk,
USDA is revising the U.S. Standards for Instant Nonfat Dry Milk as
follows:
1. Restrict the Amount of Lactose Used as a Processing Aid
The use of lactose as a processing aid in the production of instant
nonfat dry milk is an acceptable practice provided the amount used does
not exceed the amount necessary to produce the desired effect. If more
lactose than necessary is added, the additional lactose serves no
purpose other than to displace nonfat dry milk. The revision permits
the use of lactose as a processing aid and restricts the amount added
to a maximum of 2.0 percent of the weight of the nonfat dry milk.
2. Provide Fortification Levels for Instant Nonfat Dry Milk With Added
Vitamins A and D
Previously, the U.S. Standards for Instant Nonfat Dry Milk have not
provided fortification levels for product with added vitamins A and D.
This revision incorporates fortification levels that are consistent
with the Food and Drug Administration's standards of identity for
nonfat dry milk fortified with vitamins A and D (21 CFR 131.127).
3. Delete the Reference to the Optional Phosphatase Test
Pasteurization destroys pathogenic organisms and occurs when milk
is heated to pasteurization temperature and held at that temperature
for a specified period of time. To be considered pasteurized, the
heating and holding of milk must take place in properly designed and
installed equipment which has been inspected and sealed by the State
Regulatory Agency. Phosphatase testing confirms only that a given
sample of instant
[[Page 35590]]
nonfat dry milk has been pasteurized but does not ensure that
pasteurization has occurred for product manufactured before and after
the sample tested.
Before U.S. grade can be assigned to instant nonfat dry milk, it
must be produced in a dairy plant which has been inspected by USDA.
When a USDA dairy plant inspection is conducted, the inspector
evaluates the pasteurization system for compliance with program
requirements.
The Department believes that the inspection and sealing of
pasteurization equipment by the State Regulatory Agency and a review of
the system by the USDA inspector provides adequate assurance that the
instant nonfat dry milk has been properly pasteurized. For this reason,
the Department has deleted the reference to the optional phosphatase
test that appears in 7 CFR Sec. 58.2756. This action does not prohibit
using the phosphatase test upon request.
4. Update the Terminology and Format of the Standards
The current U.S. Standards for Instant Nonfat Dry Milk were last
revised in 1984. Since that time, changes in terminology and formatting
of standards have taken place. The revision updates the standards to
provide consistency among the various U.S. grade standards.
USDA grade standards are voluntary standards that are developed
pursuant to the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 et
seq.) to facilitate the marketing process. Manufacturers of dairy
products are free to choose whether or not to use these grade
standards. USDA grade standards for dairy products have been developed
to identify the degree of quality in the various products. Quality in
general refers to usefulness, desirability, and value of the product--
its marketability as a commodity. When instant nonfat dry milk is
officially graded, the USDA regulations and standards governing the
grading of manufactured or processed dairy products are used. These
regulations also require a charge for the grading service provided by
USDA. The Agency believes this revision accurately identifies quality
characteristics in instant nonfat dry milk.
Corollary changes are also made for the General Specifications for
Dairy Plants Approved for USDA Inspection and Grading Service, to
conform the definition of instant nonfat dry milk set forth therein
with the revision of the United States Standards for Instant Nonfat Dry
Milk.
Public Comments
On March 6, 1995, the Department published a proposed rule (60 FR
12154) to revise the United States Standards for Instant Nonfat Dry
Milk. The public comment period closed on May 5, 1995. One institute
representing the dry milk industry submitted comments.
Discussion of Comments
The commenter supported all of the proposed changes except for the
lowering of the direct microscopic clump (DMC) count from 75 to 40
million per gram. The commenter suggested deletion of this requirement
from the standard and provided the following comments in support of
this position.
1. The accuracy and reproducibility of the DMC count results is
unreliable.
2. A 0.1 milliliter sample of reconstituted instant nonfat dry milk
is an extremely small sample to evaluate a large volume of product.
3. Grade A milk is used to manufacture most instant nonfat dry milk
produced in the United States. The maximum allowable bacteria in Grade
A raw milk is less than the maximum allowed in manufacturing grade
milk. The production of manufacturing grade milk has decreased since
the last revision of this standard and provides instant nonfat dry milk
with lower DMC counts. (This fact was submitted to support the deletion
of DMC count requirements.)
4. Requirements for Grade A (the designation of the National
Conference on Interstate Milk Shippers, not an indication of USDA
quality grade) instant nonfat dry milk do not include DMC count limits.
5. The Codex Alimentarius ``Standard for Whole Milk Powder, Partly
Skimmed Milk Powder and Skimmed Milk Powder'' does not provide DMC
count limits for product in international trade.
The comments pertaining to the accuracy, reproducibility, and small
sample size become increasingly valid as DMC count limits are lowered.
The Department accepts these concerns and elects not to lower the DMC
count limits at this time.
The Department disagrees with the request for deletion of the DMC
count requirement. U.S. Grade Standards are quality standards and
differ from standards developed by the National Conference on
Interstate Milk Shipments and The Codex Alimentarius Commission. The
U.S. Standards for Instant Nonfat Dry Milk will retain the DMC count
maximum requirement of 75 million per gram.
List of Subjects in 7 CFR Part 58
Dairy products, Food grades and standards, Food labeling, Reporting
and recordkeeping requirements.
For the reasons set forth in the preamble, 7 CFR Part 58 is amended
as follows:
PART 58--[AMENDED]
1. The authority citation for 7 CFR Part 58 continues to read as
follows:
Authority: 7 U.S.C. 1621-1627.
2. In Part 58, Sec. 58.205 paragraph (b) is revised to read as
follows:
Sec. 58.205 Meaning of words.
* * * * *
(b) Instant nonfat dry milk. Instant nonfat dry milk is nonfat dry
milk which has been produced in such a manner as to substantially
improve its dispersing and reconstitution characteristics over that
produced by the conventional process. Instant nonfat dry milk shall not
contain dry buttermilk, dry whey, or products other than nonfat dry
milk, except that lactose may be added as a processing aid during
instantizing. The instant nonfat dry milk shall not contain any added
preservatives, neutralizing agent, or other chemical. If lactose is
used, the amount of lactose shall be the minimum required to produce
the desired effect, but in no case shall the amount exceed 2.0 percent
of the weight of the nonfat dry milk. If instant nonfat dry milk is
fortified with vitamin A, and the product is reconstituted in
accordance with the label directions, each quart of the reconstituted
product shall contain 2000 International Units thereof. If instant
nonfat dry milk is fortified with vitamin D, and the product is
reconstituted in accordance with the label directions, each quart of
the reconstituted product shall contain 400 International Units
thereof.
* * * * *
3. In Part 58, subpart U is revised to read as follows:
Subpart U--United States Standards for Instant Nonfat Dry Milk
Definitions
Sec.
58.2750 Instant nonfat dry milk.
U.S. Grade
58.2751 Nomenclature of the U.S. grade.
58.2752 Basis for determination of the U.S. grade.
58.2753 Specifications for the U.S. grade.
58.2754 U.S. grade not assignable.
58.2756 Test methods.
Explanation of Terms
58.2759 Explanation of terms.
[[Page 35591]]
Subpart U--United States Standards for Instant Nonfat Dry Milk
1
Definitions
Sec. 58.2750 Instant nonfat dry milk.
(a) Instant nonfat dry milk is nonfat dry milk which has been
produced in such a manner as to substantially improve its dispersing
and reconstitution characteristics over that produced by the
conventional processes. Instant nonfat dry milk covered by these
standards shall not contain dry buttermilk, dry whey, or products other
than nonfat dry milk, except that lactose may be added as a processing
aid during instantizing. The instant nonfat dry milk shall not contain
any added preservatives, neutralizing agent, or other chemical. If
lactose is used, the amount of lactose shall be the minimum required to
produce the desired effect, but in no case shall the amount exceed 2.0
percent of the weight of the nonfat dry milk. If instant nonfat dry
milk is fortified with vitamin A, and the product is reconstituted in
accordance with the label directions, each quart of the reconstituted
product shall contain 2000 International Units thereof. If instant
nonfat dry milk is fortified with vitamin D, and the product is
reconstituted in accordance with the label directions, each quart of
the reconstituted product shall contain 400 International Units
thereof.
---------------------------------------------------------------------------
\1\ Compliance with these standards does not excuse failure to
comply with the provisions of the Federal Food, Drug, and Cosmetic
Act.
---------------------------------------------------------------------------
(b) ``Nonfat dry milk'' is the product obtained by the removal of
only water from pasteurized skim milk. It contains not more than 5
percent by weight of moisture and not more than 1\1/2\ percent by
weight of milkfat and it conforms to the applicable provisions or 21
CFR 131 ``Milk and Cream'' as issued by the Food and Drug
Administration. Nonfat dry milk shall not contain nor be derived from
dry buttermilk, dry whey, or products other than skim milk, and shall
not contain any added preservative, neutralizing agent, or other
chemical.
U.S. Grade
Sec. 58.2751 Nomenclature of the U.S. grade.
The nomenclature of the U.S. grade is U.S. Extra.
Sec. 58.2752 Basis for determination of the U.S. grade.
The U.S. grade of instant nonfat dry milk is determined on the
basis of flavor, physical appearance, bacterial estimate on the basis
of standard plate count and coliform count, milkfat content, moisture
content, scorched particle content, solubility index, titratable
acidity, and dispersibility.
Sec. 58.2753 Specifications for the U.S. grade.
(a) U.S. Extra Grade. U.S. Extra Grade instant nonfat dry milk
shall conform to the following requirements (See Tables I, II, and III
of this section):
(1) Flavor. Reconstituted instant nonfat dry milk shall possess a
sweet, pleasing, and desirable flavor, but may possess the following
flavors to a slight degree: Chalky, cooked, feed, or flat. See Table I
of this section.
(2) Physical appearance. Instant nonfat dry milk shall possess a
uniform white to light cream natural color. It shall be reasonably
free-flowing and free from lumps except those that readily break up
with very slight pressure. See Table II of this section.
(3) Bacterial estimate. Not more than 30,000 per gram standard
plate count. See Table III of this section.
(4) Coliform count. Not more than 10 per gram. See Table III of
this section.
(5) Milkfat content. Not more than 1.25 percent. See Table III of
this section.
(6) Moisture content. Not more than 4.5 percent. See Table III of
this section.
(7) Scorched particle content. Not more than 15.0 mg. See Table III
of this section.
(8) Solubility index. Not more than 1.0 ml. See Table III of this
section.
(9) Titratable acidity. Not more than 0.15 percent (lactic acid).
See Table III of this section.
(10) Dispersibility. Not less than 85.0 percent. See Table III of
this section.
(b) [Reserved]
Table I of Sec. 58.2753--Classification of Flavor
------------------------------------------------------------------------
Flavor characteristics U.S. extra grade
------------------------------------------------------------------------
Chalky..................................... Slight.
Cooked..................................... Slight.
Feed....................................... Slight.
Flat....................................... Slight.
------------------------------------------------------------------------
Table II of Sec. 58.2753--Classification of Physical Appearance
------------------------------------------------------------------------
Physical appearance characteristics U.S. extra grade
------------------------------------------------------------------------
Color.................................. White to light
cream.
Free flowing........................... Reasonably.
Lumpy.................................. Very slight
pressure.
------------------------------------------------------------------------
Table III of Sec. 58.2753--Classification According to Laboratory
Analysis
------------------------------------------------------------------------
U.S.
Laboratory tests extra
grade
------------------------------------------------------------------------
Bacterial estimate; Standard plate count; per gram (max)..... 30,000
Coliform count; per gram (max)............................... 10
Milkfat content; percent (max)............................... 1.25
Moisture content; percent (max).............................. 4.5
Scorched particle content; mg (max).......................... 15.0
Solubility index; ml (max)................................... 1.0
Titratable acidity (lactic acid); percent (max).............. 0.15
Dispersibility; percent (min)................................ 85.0
------------------------------------------------------------------------
Sec. 58.2754 U.S. grade not assignable.
Instant nonfat dry milk shall not be assigned the U.S. grade for
one or more of the following reasons:
(a) The instant nonfat dry milk fails to meet the requirements for
U.S. Extra Grade.
(b) The instant nonfat dry milk has a direct microscopic clump
(DMC) count exceeding 75 million per gram.
(c) The instant nonfat dry milk is produced in a plant that is
rated ineligible for USDA grading service or is not USDA-approved.
Sec. 58.2756 Test methods.
All required tests shall be performed in accordance with DA
Instruction No. 918-RL, ``Instruction for Resident Grading Quality
Control Service Programs and Laboratory Analysis,'' Dairy Grading
Branch, Dairy Division, Agricultural Marketing Service, U.S. Department
of Agriculture, Washington, DC 20090-6456; the latest revision of
``Official Methods of Analysis of the Association of Official
Analytical Chemists''; or the latest edition of ``Standard Methods for
the Examination of Dairy Products'' available from the American Public
Health Association, 1015 Fifteenth Street, NW, Washington, DC 20005.
Explanation of Terms
Sec. 58.2759 Explanation of terms.
(a) With respect to flavor:
(1) Slight. Detected only upon critical examination.
(2) Chalky. A tactual type of flavor lacking in characteristic milk
flavor.
(3) Cooked. Similar to a custard flavor and imparts a smooth
aftertaste.
(4) Feed. Feed flavors (such as alfalfa, sweet clover, silage, or
similar feed) in milk carried through into the instant nonfat dry milk.
(5) Flat. Insipid, practically devoid of any characteristic
reconstituted instant nonfat dry milk flavor.
[[Page 35592]]
(b) With respect to physical appearance:
(1) Reasonably free-flowing. Pours in a fairly constant, uniform
stream from the open end of a tilted container or scoop.
(2) Very slight pressure. Lumps fall apart with only light touch.
(3) Lumpy. Loss of powdery consistency but not caked into hard
chunks.
(4) Natural color. A color that is white to light cream.
Dated: June 28, 1996.
Lon Hatamiya,
Administrator.
[FR Doc. 96-17200 Filed 7-5-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-17199 Pork Promotion, Research, and Consumer Information Order Increase in Importer Assessments
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Page 35597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17199]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Part 1230
[Docket No. LS-96-001]
Pork Promotion, Research, and Consumer Information Order--
Increase in Importer Assessments
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule; Correction.
-----------------------------------------------------------------------
SUMMARY: The Agricultural Marketing Service is correcting a final rule
published on June 4, 1996, 61 FR 29002 concerning the Pork Promotion,
Research, and Consumer Information Order (Order).
EFFECTIVE DATE: July 5, 1996.
FOR FURTHER INFORMATION CONTACT: Ralph L. Tapp, Chief, Marketing
Programs Branch, 202/720-1115.
SUPPLEMENTARY INFORMATION:
Background
Pursuant to the Pork Promotion, Research, and Consumer Information
Act (Act) of 1985 (7 U.S.C. 4801-4819) and the Order (7 CFR Part 1230)
issued thereunder, the final rule increased the amount of the
assessment per pound due on imported pork and pork products to reflect
an increase in the 1995 five-market average price for domestic barrows
and gilts. This action brought the equivalent market value of the live
animals from which such imported pork and pork products were derived in
line with the market values of domestic porcine animals. These changes
will facilitate the continued collection of assessments on imported
porcine animals, pork, and pork products.
Need for Correction
The final rule as published contains an error in the chart listing
the cents per kilogram assessments for each of the 33 HTS numbers in
the table listing assessments for imported pork and pork products. The
proposed rule published in the March 22, 1996, Federal Register (61 FR
11777) listed the cents per kilogram assessments correctly.
Correction of Publication
Accordingly, in FR Doc 96-13833, published June 4, 1996, on page
28003, in the second column, in Sec. 1230.110, paragraph (b) is
corrected to read as follows:
Sec. 1230.110 [Corrected]
* * * * *
(b) The following HTS categories of imported pork and pork products
are subject to assessment at the rates specified.
------------------------------------------------------------------------
Assessment
Pork and pork products -------------------------
Cents/lb. Cents/kg.
------------------------------------------------------------------------
0203.11.0000.................................. .27 .595242
0203.12.1010.................................. .27 .595242
0203.12.1020.................................. .27 .595242
0203.12.9010.................................. .27 .595242
0203.12.9020.................................. .27 .595242
0203.19.2010.................................. .31 .683426
0203.19.2090.................................. .31 .683426
0203.19.4010.................................. .27 .595242
0203.19.4090.................................. .27 .595242
0203.21.0000.................................. .27 .595242
0203.22.1000.................................. .27 .595242
0203.22.9000.................................. .27 .595242
0203.29.2000.................................. .31 .683426
0203.29.4000.................................. .27 .595242
0206.30.0000.................................. .27 .595242
0206.41.0000.................................. .27 .595242
0206.49.0000.................................. .27 .595242
0210.11.0010.................................. .27 .595242
0210.11.0020.................................. .27 .595242
0210.12.0020.................................. .27 .595242
0210.12.0040.................................. .27 .595242
0210.19.0010.................................. .31 .683426
0210.19.0090.................................. .31 .683426
1601.00.2010.................................. .37 .815702
1601.00.2090.................................. .37 .815702
1602.41.2020.................................. .41 .903886
1602.41.2040.................................. .41 .903886
1602.41.9000.................................. .27 .595242
1602.42.2020.................................. .41 .903886
1602.42.2040.................................. .41 .903886
1602.42.4000.................................. .27 .595242
1602.49.2000.................................. .37 .815702
1602.49.4000.................................. .31 .683426
------------------------------------------------------------------------
Dated: June 28, 1996.
Lon Hatamiya,
Administrator.
[FR Doc. 96-17199 Filed 7-5-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-17198 Milk in the Southwest Plains Marketing Area; Suspension of Certain Provisions of the Order
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35595-35597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17198]
-----------------------------------------------------------------------
[[Page 35596]]
DEPARTMENT OF AGRICULTURE
7 CFR Part 1106
[DA-96-05]
Milk in the Southwest Plains Marketing Area; Suspension of
Certain Provisions of the Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Suspension of rule.
-----------------------------------------------------------------------
SUMMARY: This document suspends a portion of the supply plant shipping
requirement and the touch-base requirement of the Southwest Plains
Federal milk marketing order (Order 106) for the period of September
1996 through August 1998. The action was requested by Kraft Foods, Inc.
(Kraft), which contends the suspension is necessary to prevent the
uneconomical and inefficient movement of milk and to ensure that
producers historically associated with the market will continue to have
their milk pooled under Order 106.
EFFECTIVE DATE: September 1, 1996, through August 31, 1998.
FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist,
USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South
Building, P.O. Box 96456, Washington, DC 20090- 6456, (202) 690-1932.
SUPPLEMENTARY INFORMATION: Prior document in this proceeding:
Notice of Proposed Suspension: Issued April 9, 1996; published
April 22, 1996 (61 FR 17588).
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the
Agency to examine the impact of a rule on small entities. Pursuant to 5
U.S.C. 605(b), the Agricultural Marketing Service has certified that
this rule will not have a significant economic impact on a substantial
number of small entities. This rule lessens the regulatory impact of
the order on certain milk handlers and tends to ensure that dairy
farmers will continue to have their milk priced under the order and
thereby receive the benefits that accrue from such pricing.
The Department is issuing this final rule in conformance with
Executive Order 12866.
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This rule is not intended to have a retroactive
effect. This rule will not preempt any state or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with the rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674), provides that administrative proceedings must be
exhausted before parties may file suit in court. Under section
608c(15)(A) of the Act, any handler subject to an order may file with
the Secretary a petition stating that the order, any provisions of the
order, or any obligation imposed in connection with the order is not in
accordance with law and request a modification of the order or to be
exempted from the order. A handler is afforded the opportunity for a
hearing on the petition. After a hearing, the Secretary would rule on
the petition. The Act provides that the district court of the United
States in any district in which the handler is an inhabitant, or has
its principal place of business, has jurisdiction in equity to review
the Secretary's ruling on the petition, provided a bill in equity is
filed not later than 20 days after the date of the entry of the ruling.
This order of suspension is issued pursuant to the provisions of
the Agricultural Marketing Agreement Act and of the order regulating
the handling of milk in the Southwest Plains marketing area.
Notice of proposed rulemaking was published in the Federal Register
on April 22, 1996 (61 FR 17588) concerning a proposed suspension of
certain provisions of the order. Interested persons were afforded
opportunity to file written data, views and arguments thereon. One
comment supporting the proposed suspension was received.
After consideration of all relevant material, including the
proposal in the notice, the comment received, and other available
information, it is hereby found and determined that for the period of
September 1996 through August 1998 the following provisions of the
order do not tend to effectuate the declared policy of the Act:
In Sec. 1106.6, the words ``during the month''.
In Sec. 1106.7(b)(1), beginning with the words ``of February
through August'' and continuing to the end of the paragraph.
In Sec. 1106.13, paragraph (d)(1) in its entirety.
Statement of Consideration
This rule suspends the requirement that producers ``touch- base''
at a pool plant with at least one day's production during the month
before their milk is eligible for diversion to a nonpool plant. By
suspending the touch-base provision, producer milk will not be required
to be delivered to pool plants before going to unregulated
manufacturing plants.
The suspension will allow a supply plant that has been associated
with the Southwest Plains order during the months of September 1995
through January 1996 to qualify as a pool plant without shipping any
milk to a pool distributing plant during the months of September 1996
through August 1998. Without the suspension, a supply plant would be
required to ship 50 percent of its producer receipts to pool
distributing plants during the months of September through January and
20 percent of its producer receipts to pool distributing plants during
the months of February through August to qualify as a pool plant under
the order.
According to Kraft's letter requesting the suspension, supplemental
milk supplies will not be needed to meet the fluid needs of
distributing plants. Kraft anticipates that there will be an adequate
supply of direct-ship producer milk located in the general area of
distributing plants available to meet the Class I needs of the market.
Consequently, it states, there is no need to require producers located
some distance from pool distributing plants to touch-base when their
milk can more economically be diverted directly to manufacturing plants
in the production area.
One comment letter was received in support of the suspension
request; none were received in opposition to it. A letter submitted by
Associated Milk Producers, Inc. (AMPI), Southern Region, states that it
supports continuation of the proposed suspension. AMPI agrees with
Kraft that more than sufficient supplies of local milk are readily
available to meet the fluid needs of the market.
The suspension is found to be necessary for the purpose of assuring
that producers' milk will not have to be moved in an uneconomic and
inefficient manner, and to assure that producers whose milk has long
been associated with the Southwest Plains marketing area will continue
to benefit from pooling and pricing under the order.
List of Subjects in 7 CFR Part 1106
Milk marketing orders.
For the reasons set forth in the preamble, 7 CFR Part 1106 is
amended as follows:
PART 1106--MILK IN THE SOUTHWEST PLAINS MARKETING AREA
1. The authority citation for 7 CFR Part 1106 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
Sec. 1106.6 [Suspended in part]
2. In Sec. 1106.6, the words, ``during the month'' are suspended.
[[Page 35597]]
Sec. 1106.7 [Suspended in part]
3. In Sec. 1106.7(b)(1), beginning with the words ``of February
through August'' and continuing until the end of the paragraph are
suspended.
Sec. 1106.13 [Suspended in part]
4. In Sec. 1106.13, paragraph (d)(1) in its entirety is suspended.
Dated: June 28, 1996.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 96-17198 Filed 7-5-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-17197 Onions Grown in Certain Designated Counties in Idaho, and Malheur County, Oregon, and Imported Onions; Modification of Size Requirements
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35592-35593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17197]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Part 958
[FV96-958-1FR]
Onions Grown in Certain Designated Counties in Idaho, and Malheur
County, Oregon, and Imported Onions; Modification of Size Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule changes the ``repacker/prepacker'' size
designations for all varieties of onions except white or red varieties
by increasing the minimum diameter from 1\1/2\ inches to 1\3/4\ inches,
and the maximum diameter from 2\1/2\ inches to 2\3/4\ inches for onions
in this size category. Recent trends in buyer preference reflect an
increasing demand for larger size onions in the ``repacker/prepacker''
category. This final rule will benefit producers and handlers by
increasing their flexibility and efficiency in the packaging of
``repacker/prepacker'' size onions. As provided under section 8e of the
Agricultural Marketing Agreement Act of 1937, the change to the minimum
size requirement also applies to all imported onions except white or
red varieties.
EFFECTIVE DATE: July 15, 1996.
FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369,
Portland, Oregon 97204-2807; telephone: (503)326-2724; FAX: (503)326-
7440; or Robert F. Matthews, Marketing Order Administration Branch,
Fruit and Vegetable Division, AMS, USDA, room 2523, South Building,
P.O. Box 96456, Washington, D.C. 20090-6456; telephone: (202)690-0464;
FAX: (202)720-5698.
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Agreement No. 130 and Marketing Order No. 958 (7 CFR Part 958), both as
amended, regulating the handling of onions grown in certain designated
counties in Idaho and Malheur County, Oregon. The marketing agreement
and marketing order are effective under the Agricultural Marketing
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter
referred to as the Act.
This final rule, which also affects the minimum size requirements
for all varieties of imported onions, except white or red varieties, is
also issued pursuant to section 8e of the Act. The provisions of
section 8e and the onion import regulations are discussed later in this
final rule.
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This action is not intended to have retroactive
effect. This final rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. After the hearing the Secretary would rule on the petition.
The Act provides that the district court of the United States in any
district in which the handler is an inhabitant, or has his or her
principal place of business, has jurisdiction to review the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after the date of the entry of the ruling.
There are no administrative proceedings which must be exhausted
prior to any judicial challenge to the provisions of import regulations
issued under section 8e of the act.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
Import regulations issued under the Act are based on those
established under Federal marketing orders which regulate the handling
of domestically produced products. Thus, this final rule should have
small entity orientation, and impact both small and large business
entities in a manner comparable to those issued under marketing orders.
There are currently 34 handlers subject to regulation under the
marketing order and approximately 550 onion producers in the regulated
production area. In addition, at least 148 importers of onions are
subject to import regulations and will be affected by this final rule.
Small agricultural service firms have been defined by the Small
Business Administration (13 CFR 121.601) as those having annual
receipts of less than $5,000,000, and small agricultural producers are
defined as those whose annual receipts are less than $500,000. The
majority of handlers and producers of Idaho-Eastern Oregon onions may
be classified as small entities. The majority of importers may also be
classified as small entities.
This final rule changes the ``repacker/prepacker'' size
designations for all varieties of onions except white or red varieties
by increasing the minimum diameter from 1\1/2\ inches to 1\3/4\ inches,
and the maximum diameter from 2\1/2\ inches to 2\3/4\ inches for onions
in this size category. Recent trends in buyer preference reflect an
increasing demand for larger size onions in the ``repacker/prepacker''
category. This final rule will benefit producers and handlers by
allowing them to better meet the needs of their customers, who desire
slightly larger ``repacker/prepacker'' size onions.
As provided under section 8e of the Act, the change to the minimum
size requirement also applies to all imported onions except white or
red varieties. The benefits to producers and handlers should apply also
to importers. The slight increase in minimum size is expected also to
benefit importers by recognizing recent trends in buyer preference for
larger size onions.
Because this rule is expected to benefit and have a positive impact
on producers, handlers, importers, and consumers of onions, the AMS has
determined that the issuance of this final rule will not have a
significant
[[Page 35593]]
economic impact on a substantial number of small entities.
Pursuant to authority contained in section 958.51 of the marketing
order, the Idaho-Eastern Oregon Onion Committee (Committee), at its
November 16, 1995, meeting, unanimously recommended changing the
minimum and maximum sizes set forth in section 958.328(a)(3)(ii) of the
handling regulation. For this size category, the Committee recommended
increasing the minimum diameter from 1\1/2\ inches to 1\3/4\ inches,
and the maximum diameter from 2\1/2\ inches to 2\3/4\ inches for all
onions except white or red varieties produced and handled in the
production area. Yellow onions are the major variety produced in the
regulated production area.
This final rule modifies a marketing order size category that is
recognized by the onion industry as ``repacker'' or ``prepacker'' size
onions. Onions in this size category are generally packed and shipped
in 50-pound sacks for later repacking into various consumer packs.
The U.S. Standards for Grades of Onions were recently amended to
include a classification for ``repacker/prepacker'' size onions (60 FR
46976, September 8, 1995), effective October 10, 1995. Section 51.2836
of the U.S. Standards defines such onions as those ranging from a
minimum diameter of 1\3/4\ inches to a maximum diameter of 3 inches.
The U.S. Standards also specify that not more than 5 percent of the
onions in a lot may be undersized and that not more than 10 percent may
be oversized.
Recent trends in buyer preference reflect an increasing demand for
larger size onions in the ``repacker/prepacker'' category. The
Committee reports that the current maximum diameter of 2\1/2\ inches
for this size category is too restrictive and has resulted in a high
percentage of onions being packed in a different category due to
oversize. This has resulted in fewer ``repacker/prepacker'' size onions
being available for market. With an increase in the maximum allowable
diameter to 2\3/4\ inches for ``repacker/prepacker'' size onions, the
Committee expects the quantity of such onions available for market to
increase. The Committee recommended an increase to 2\3/4\ inches rather
than 3 inches, the upper limit of the size range specified in the U.S.
Standards, because the smaller size is more suitable for this industry
and its customers. In addition to the increase in the maximum diameter
for onions in this category, the Committee recommended that the minimum
diameter be increased from 1\1/2\ inches to 1\3/4\ inches to be the
same as the recently amended U.S. Standards.
Any costs to handlers and producers attributable to this regulation
are expected to be offset by the benefits derived from improved
returns. The modification increases the volume of onions marketed in
this size category, and is expected to result in higher returns for
producers and handlers.
Section 8e of the Act requires that when certain domestically
produced commodities, including onions, are regulated under a Federal
marketing order, imports of that commodity must meet the same or
comparable grade, size, quality, or maturity requirements. Section 8e
also provides that whenever two or more marketing orders regulating the
same commodity produced in different areas of the United States are
concurrently in effect, the Secretary shall determine which of the
areas produces the commodity in more direct competition with the
imported commodity. Imports must then meet the requirements established
for the particular area.
Grade, size, quality, and maturity regulations have been issued
regularly under both Marketing Order 958 and Marketing Order 959, which
regulates the handling of onions grown in South Texas. Pursuant to
section 8e of the Act, the current import regulation (7 CFR 980.117)
specifies that import requirements for onions are to be based on the
seasonal categories of onions grown in both marketing order areas. The
import regulation specifies that imported onions must meet the
requirements of Marketing Order 958 during the June 5 through March 9
period each season (61 FR 25556; May 22, 1996), and Marketing Order 959
through the remainder of the year. The current import regulation also
provides that all varieties of imported onions, except for white
varieties, must be a minimum of 1\1/2\ inches in diameter. This final
rule will change the import requirements for the period June 5 through
March 9 each marketing year to provide that all varieties of onions
except white or red varieties shall be a minimum of 1\3/4\ inches in
diameter. While no changes are required in the language of
Sec. 980.117, all imported onions other than white or red varieties
will be required to meet the minimum size requirement herein.
The proposed rule concerning this action was published in the May
6, 1996, Federal Register (61 FR 20188), with a 30-day comment period
ending June 5, 1996. No comments were received.
After consideration of all relevant matters presented, including
the information and recommendations submitted by the Committee and
other available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
In accordance with section 8e of the Act, the United States Trade
Representative has concurred with the issuance of this final rule.
Pursuant to 5 U.S.C. 553, it is also found and determined that good
cause exists for not postponing the effective date of this action until
30 days after publication in the Federal Register because: (1) This
action will provide handlers more marketing flexibility in meeting
buyer preferences; (2) the 1996 crop harvest and shipments are expected
to begin in August and this action needs to be effective promptly to
allow handlers to make their marketing plans; and (3) interested
persons were invited to submit written comments and no comments were
submitted.
List of Subjects in 7 CFR Part 958
Marketing agreements, Onions, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 958 is hereby
amended as follows:
PART 958--ONIONS GROWN IN CERTAIN DESIGNATED COUNTIES IN IDAHO, AND
MALHEUR COUNTY, OREGON
1. The authority citation for 7 CFR part 958 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Section 958.328 is amended by revising paragraph (a)(3)(ii) to
read as follows:
Sec. 958.328 Handling Regulation.
* * * * *
(a) * * *
(3) * * *
(ii) U.S. No. 1, 1\3/4\ inches minimum to 2\3/4\ maximum diameter;
or
* * * * *
Dated: June 28, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-17197 Filed 7-5-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-17196 Assessment Rate for Domestically Produced Peanuts Handled by Persons Not Subject to Peanut Marketing Agreement No. 146 and for Marketing Agreement No. 146 Regulating the Quality of Domestically Produced Peanuts
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35593-35595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17196]
-----------------------------------------------------------------------
[[Page 35594]]
DEPARTMENT OF AGRICULTURE
7 CFR Parts 997 and 998
[Docket No. FV96-998-2IFR]
Assessment Rate for Domestically Produced Peanuts Handled by
Persons Not Subject to Peanut Marketing Agreement No. 146 and for
Marketing Agreement No. 146 Regulating the Quality of Domestically
Produced Peanuts
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This interim final rule establishes an assessment rate for the
Peanut Administrative Committee (Committee) under Marketing Agreement
No. 146 (agreement) for the 1996-97 and subsequent crop years. The
Committee is responsible for local administration of the marketing
agreement which regulates the handling of peanuts grown in 16 States.
Authorization to assess peanut handlers who have signed the agreement
enables the Committee to incur expenses that are reasonable and
necessary to administer the program. Public Law 103-66 requires the
Department of Agriculture (Department) to impose an administrative
assessment on farmers stock peanuts received or acquired by handlers
who are not signatory (non-signatory handlers) to the agreement.
Therefore, this same assessment rate established under the agreement
will apply to all non-signatory handlers.
DATES: Effective on July 1, 1996. Comments received by August 7, 1996,
will be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent in triplicate to the Docket
Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room
2523-S, Washington, DC 20090-6456, FAX 202-720-5698. Comments should
reference the docket number and the date and page number of this issue
of the Federal Register and will be available for public inspection in
the Office of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Martha Sue Clark, Program Assistant,
Marketing Order Administration Branch, Fruit and Vegetable Division,
AMS, USDA, P.O. Box 96456, room 2523-S, Washington, DC 20090-6456,
telephone 202-720-9918, FAX 202-720-5698, or William G. Pimental,
Marketing Specialist, Southeast Marketing Field Office, Fruit and
Vegetable Division, AMS, USDA, P.O. Box 2276, Winter Haven, FL 33883-
2276, telephone 941-299-4770, FAX 941-299-5169.
SUPPLEMENTARY INFORMATION: This rule is issued pursuant to the
requirements of the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601-674), and as further amended December 12, 1989,
hereinafter referred to as the ``Act''; public Law 101-220, section
4(1), (2), 103 Stat. 1878, December 12, 1989; Public Law 103-66,
section 8b(b)(1), 107 Stat. 312, August 10, 1993; and under Marketing
Agreement 146 (7 CFR part 998) regulating the quality of domestically
produced peanuts.
The Department is issuing this rule in conformance with Executive
Order 12866.
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. Farmers' stock peanuts received or acquired by non-
signatory handlers and farmers' stock peanuts received or acquired by
handlers signatory to the agreement, other than from those described in
Secs. 998.31(c) and (d), are subject to assessments. It is intended
that the assessment rates issued herein will be applicable to all
assessable peanuts beginning July 1, 1996, and continuing until
amended, suspended, or terminated. This rule will not preempt any State
or local laws, regulations, or policies, unless they present an
irreconcilable conflict with this rule. There are no administrative
procedures which must be exhausted prior to any judicial challenge to
the provisions of this rule.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened.
There are approximately 45 handlers of peanuts who have not signed
the agreement and, thus, will be subject to the regulations specified
herein. Also, there are approximately 47,000 producers of peanuts in
the 16 States covered under the agreement and approximately 32 handlers
subject to regulation under the agreement. Small agricultural producers
have been defined by the Small Business Administration (13 CFR 121.601)
as those having annual receipts of less than $500,000, and small
agricultural service firms are defined as those whose annual receipts
are less than $5,000,000. A majority of the producers and the non-
signatory handlers may be classified as small entities, and some of the
handlers covered under the agreement are small entities.
The peanut marketing agreement provides authority for the
Committee, with the approval of the Department, to formulate an annual
budget of expenses and collect assessments from handlers to administer
the program. Funds to administer the peanut agreement program are paid
to the Committee and are derived from signatory handler assessments.
The members of the Committee are handlers and producers of peanuts.
They are familiar with the Committee's needs and with the costs for
goods and services in their local areas and, thus, are in a position to
formulate an appropriate budget and assessment rate. The assessment
rate is formulated and discussed in public meetings. Thus, all directly
affected persons have an opportunity to participate and provide input.
The handlers of peanuts who are directly affected have signed the
marketing agreement authorizing the expenses that may be incurred and
the imposition of assessments.
The Committee met on March 19, 1996, and unanimously recommended
1996-97 administrative expenditures of $1,025,500 and an administrative
assessment rate of $0.70 per net ton of assessable farmers' stock
peanuts received or acquired by handlers. The Committee met again on
May 23, 1996, and with 17 favorable votes and one abstention voted not
to recommend an assessment rate for indemnification for handler losses
due to aflatoxin contamination. Adequate funds are included in the
Committee's indemnification reserve for such expenses during the 1996-
97 crop year. In comparison, last year's budgeted administrative
expenditures were $1,067,500. The assessment rate of $0.70 is the same
as last year's initially established rate. An interim final rule has
been published on June 13, 1996 (61 FR 29926) increasing last year's
administrative assessment rate to $0.83 per ton.
Major expenditures recommended by the Committee for the 1996-97
year include $112,450 for executive salaries, $131,500 for clerical
salaries, $296,700 for field representatives salaries, $42,000 for
payroll taxes, $148,000 for employee benefits, $40,000 for committee
members travel, $5,000 for staff travel, $110,000 for field
representatives travel, $9,800 for insurance and bonds, $46,200 for
office rent and parking, $14,000 for office supplies and stationery,
$13,200 for postage and mailing, $15,000 for
[[Page 35595]]
telephone and telegraph, $6,000 for repairs and maintenance agreements,
$10,400 for the audit fee, and $10,250 for the contingency reserve.
Budgeted expenses for these items in 1995-96 were $145,051, $138,856,
$304,344, $44,000, $148,000, $40,000, $5,000, $110,000, $9,500,
$44,360, $14,000, $13,200, $15,000, $6,000, $10,400, and $4,789,
respectively.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected receipts and acquisitions of
farmers' stock peanuts. Farmers' stock peanuts received or acquired by
non-signatory handlers and farmers' stock peanuts received or acquired
by handlers signatory to the agreement, other than from those described
in Secs. 998.31(c) and (d), are subject to the assessments. Assessments
are due on the 15th of the month following the month in which the
farmers' stock peanuts are received or acquired. Peanut shipments for
the year under the agreement are estimated at 1,465,000 tons, which
should provide $1,025,500 in assessment income. Approximately 95
percent of the domestically produced peanut crop is marketed by
handlers who are signatory to the agreement.
Public Law 101-220 amended section 608b of the Act to require that
all peanuts handled by persons who have not entered into the agreement
(non-signers) be subject to quality and inspection requirements to the
same extent and manner as are required under the Agreement.
Approximately 5 percent of the U.S. peanut crop is marketed by non-
signer handlers.
Public Law 103-66 (107 Stat. 312) provides for mandatory assessment
of farmer's stock peanuts acquired by non-signatory peanut handlers.
Under this law, paragraph (b) of section 1001, of the Agricultural
Reconciliation Act of 1993, specifies that: (1) Any assessment (except
indemnification assessments) imposed under the Agreement on signatory
handlers also shall apply to non-signatory handlers, and (2) such
assessment shall be paid to the Secretary.
While this action will impose some additional costs on handlers,
the costs are in the form of uniform assessments on all handlers
signatory to the agreement. Some of the additional costs may be passed
on to producers. However, these costs will be significantly offset by
the benefits derived from the operation of the marketing agreement.
This administrative assessment is required by law to be applied
uniformly to all non-signatory handlers and should be of benefit to
all. Therefore, the AMS has determined that this rule will not have a
significant economic impact on a substantial number of small entities.
The assessment rates established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and information submitted by the
Committee or other available information.
Although these assessment rates are effective for an indefinite
period, the Committee will continue to meet prior to or during each
crop year to recommend a budget of expenses and consider
recommendations for modification of the assessment rate. The dates and
times of Committee meetings are available from the Committee or the
Department. Committee meetings are open to the public and interested
persons may express their views at these meetings. The Department will
evaluate Committee recommendations and other available information to
determine whether modification of the assessment rate is needed.
Further rulemaking will be undertaken as necessary. The Committee's
1996-97 budget and those for subsequent crop years will be reviewed
and, as appropriate, approved by the Department.
After consideration of all relevant matter presented, including the
information and recommendation submitted by the Committee and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect and that good cause exists for not postponing the effective date
of this action until 30 days after publication in the Federal Register
because: (1) The Committee needs to have sufficient funds to pay its
expenses which are incurred on a continuous basis; (2) Public Law 103-
66 requires the Department to impose an administrative assessment on
peanuts received or acquired for the account of non-signatory handlers;
(3) the 1996-97 crop year begins on July 1, 1996, and the marketing
agreement and Public Law 103-66 require that the rate of assessment for
each crop year apply to all peanuts handled during such crop year; (4)
handlers are aware of this action which was unanimously recommended by
the Committee at a public meeting and is similar to other assessment
rate actions issued in past years; and (5) this interim final rule
provides a 30-day comment period, and all comments timely received will
be considered prior to finalization of this rule.
List of Subjects
7 CFR Part 997
Food grades and standards, Peanuts, Reporting and recordkeeping
requirements.
7 CFR Part 998
Marketing agreements, Peanuts, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR parts 997 and 998
are amended as follows:
1. The authority citation for 7 CFR parts 997 and 998 continues to
read as follows:
Authority: 7 U.S.C. 601-674.
Note: These amendments will appear in the Code of Federal
Regulations.
PART 997--[AMENDED]
2. In part 997, a new undesignated center heading, Assessment
Rates, and Sec. 997.101 are added to read as follows:
Assessment Rates
Sec. 997.101 Assessment rate.
On and after July 1, 1996, an administrative assessment rate of
$0.70 per net ton of assessable farmers stock peanuts received or
acquired by each non-signatory first handler is established for
peanuts.
PART 998--[AMENDED]
3. In part 998, a new undesignated center heading, Assessment
Rates, and Sec. 998.409 are added to read as follows:
Subpart--Assessment Rates
Sec. 998.409 Assessment rate.
On and after July 1, 1996, an administrative assessment rate of
$0.70 per net ton of farmers' stock peanuts received or acquired other
than from those described in Secs. 998.31 (c) and (d) is established
for handlers signatory to the agreement. Assessments are due on the
15th of the month following the month in which the farmers' stock
peanuts are received or acquired.
Dated: June 28, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-17196 Filed 7-5-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-17194 VISAS: Passports and Visas Not Required for Certain Nonimmigrants
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35628-35629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17194]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
Bureau of Consular Affairs
22 CFR Part 41
[Public Notice 2409]
VISAS: Passports and Visas Not Required for Certain Nonimmigrants
AGENCY: Bureau of Consular Affairs, DOS.
ACTION: Interim Rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This interim rule amends part 41, title 22 of the Code of
Federal Regulations concerning visas for nonimmigrants pursuant to
section 217 of the Immigration and Nationality Act (INA), 8. U.S.C.
1187, as amended. Section 217, as amended, extends the Visa Waiver
Pilot Program to nationals of all countries that qualify under the
provisions of the Pilot Program and which are designated by the
Secretary of State and the Attorney General as countries whose
nationals benefit from the waiver of the nonimmigrant B-1/B-2 visa
requirement. This amendment extends the Visa Waiver Pilot Program to
Argentina, which has met all of the requirements for the Program.
DATES: This interim rule is effective July 8, 1996. Written comments
are invited and must be received on or before August 7, 1996.
ADDRESSES: Written comments may be submitted, in duplicate, to the
Chief, Legislation and Regulations Division, Visa Services, Department
of State, Washington, DC 20520-0113.
FOR FURTHER INFORMATION CONTACT: Stephen K. Fischel, Chief, Legislation
and Regulations Division, Visa Office, Department of State, Washington,
DC 20522-0113 (202) 663-1204.
SUPPLEMENTARY INFORMATION: This interim rule amends Part 41, Title 22
of the Code of Federal Regulations concerning visas for nonimmigrants
pursuant to section 217 of the Immigration and Nationality Act (INA), 8
U.S.C. 1187, as amended by Pub. L. 103-415, 108 Stat. 4299, October
25,1994 and Pub. L. 103-416, 108 Stat. 4305, October 25, 1994.
Section 313 of the Immigration Reform and Control Act of 1986
(IRCA), Pub. L. 99-603, added section 217 to the INA. Section 217, 8
U.S.C. 1187, established the nonimmigrant Visa Waiver Pilot Program
(VWPP) which waives the nonimmigrant visa requirement for the admission
of certain aliens into the United States for a period not to exceed
ninety days. That original provision authorized the participation of
eight countries in the VWPP to be designated by the Secretary of State
and the Attorney General, acting jointly through their designees. These
original qualifying countries included: France; the Federal Republic of
Germany; Italy; Japan, the Netherlands; Sweden; Switzerland; and the
United Kingdom. [See Federal Register publications 53 FR 24903-24904,
June 30, 1988; 53 FR 50161-50162, December 13, 1988; and 54 FR 27120-
27121, June 27, 1989.]
Pub. L.103-415 amended section 217 of the INA to extend the Visa
Waiver Pilot Program (VWPP) through September 30, 1995. Pub. L. 103-416
amended section 217 of the INA to extend the Visa Waiver Pilot Program
to September 30, 1996, and to create a new probationary status for
certain countries which meet the requirements for that status under the
Visa Waiver Pilot Program and which are designated by the Secretary of
State and the Attorney General, acting jointly, as countries whose
nationals benefit from the waiver of the nonimmigrant B-1/B-2 visa
requirement.
On November 29, 1990, the President approved the Immigration Act of
1990 (Pub. L. 101-649, 104 Stat. 4978) [IA]). Section 201 thereof
revised the Visa Waiver Pilot Program set forth in section 313 of IRCA
(Sec. 217 INA, 8 U.S.C. 1187). It removed the eight-country cap and
extended its provisions to all countries that meet the qualifying
provisions of the Visa Waiver Pilot Program and are designated by the
Secretary of State and the Attorney General as Pilot Program countries
thereunder.
Effective October 1, 1991, Andorra, Austria, Belgium, Denmark,
Finland, Iceland, Liechtenstein, Luxembourg, Monaco, New Zealand,
Norway, San Marino, and Spain, having met all of the requirements for
participants in the nonimmigrant Visa Waiver Pilot Program, were added
as participants in the Program. [See 56 FR 46716-46717, September 13,
1991.] Brunei was designated as a participant in the Visa Waiver Pilot
Program by the Secretary of State and the Attorney General, acting
jointly through their designees, in an interim rule published at 58 FR
40581-40586 of the Federal Register of July 26, 1993. On March 28, 1995
the interim rule published at 59 FR 15872-15873 added Ireland as a Visa
Waiver Pilot Program country with probationary status.
Each of the above rules amended 22 CFR 41.2. This interim rule,
with request for comments, further amends Part 41, Title 22 to include
Argentina as a Visa Waiver Pilot Program country
[[Page 35629]]
since it meets the requirements for that status under INA 217, as
amended.
Argentina does not require visas for nationals of the United States
entering for ninety (90) days or less. Thus it meets the requirement of
providing reciprocal treatment for United States nationals. Other
requirements are that the country meet statutorily prescribed limits on
visa refusal rates for the prior two year period as well as the prior
year; that it meet statutorily prescribed limits on rates of exclusion
at port of entry and on overstay limits, and that it have a machine
readable passport program. Argentina meets these additional
requirements. Argentina is, therefore, added effective July 8, 1996 as
a participating country in the Visa Waiver Pilot Program. (See the
Immigration and Naturalization Service rule also published in this
issue of the Federal Register.) Therefore, effective on the publication
date of this interim rule, citizens of Argentina shall be eligible for
participation in the Visa Waiver Pilot Program.
Interim Rule
The implementation of this rule as an interim rule, with a 30-day
provision for post-promulgation public comments, is based upon the
``good cause'' exceptions established by 5 U.S.C. 553(b)(B) and
553(d)(3). This rule grants or recognizes an exemption or relieves a
restriction under 5 U.S.C. 553(d)(1) and is considered beneficial to
both the traveling public and United States businesses. Therefore, it
is being made effective thirty days after publication in the Federal
Register. In accordance with 5 U.S.C. 605(b) [Regulatory Flexibility
Act], it is certified that this rule does not have a ``significant
adverse economic impact'' on a substantial number of small entities,
because it is inapplicable. This rule is exempt from E.O. 12866, but
has been coordinated with the Immigration and Naturalization Service
because joint action of the Secretary of State and the Attorney General
is required under section 217 of the INA, as amended. The rule imposes
no reporting or record-keeping action from the public requiring the
approval of the Office of Management and Budget under the Paperwork
Reduction Act requirements. This rule has been reviewed as required by
E.O. 12988 and is certified to be in compliance therewith.
List of Subjects in 22 CFR Part 41
Aliens, Nonimmigrants, Visas, Passports, Temporary Visitors,
Waivers.
In view of the foregoing, 22 CFR Part 41 is amended as follows:
PART 41--[AMENDED]
1. The authority citation for Part 41 continues to read:
Authority: 8 U.S.C. 1104, 66 Stat. 174; 8 U.S.C. 1187, 108 Stat.
4312 and 4313.
2. In Sec. 41.2 the last sentence of paragraph (l)(2) is amended by
removing the period and adding the following text at the end of the
sentence:
Sec. 41.2 Waiver by Secretary of State and Attorney General of
passport and/or visa requirements for certain categories of
nonimmigrants.
* * * * *
(l) Visa Waiver Pilot Program. * * *; and Argentina July 8, 1996.
Dated: July 13, 1996.
Mary A. Ryan,
Assistant Secretary for Consular Affairs.
[FR Doc. 96-17194 Filed 7-5-96; 8:45 am]
BILLING CODE 4710-06-P
Complete official Federal Register PDF
FR Doc. 96-17156 Fees Assessed for Defaulted Payments
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35597-35598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17156]
=======================================================================
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DEPARTMENT OF JUSTICE
Immigration and Naturalization Service
8 CFR Part 103
[INS No. 1692-95]
RIN 1115-AD92
Fees Assessed for Defaulted Payments
AGENCY: Immigration and Naturalization Service, Justice.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule amends the Immigration and Naturalization Service
(Service) regulations to increase the fee imposed from $5.00 to $30.00
when a check submitted to the Service in payment of a fee is not
honored by the bank upon which it is drawn. The purpose of this change
is to enable the Service to recoup the administrative costs incurred in
processing all returned checks and other defaulted payments. This
action will result in the Service no longer losing money as a result of
bad check activity.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT:
Allen H. Sinsheimer, Systems Accountant, Debt Collection and Cash
Management Branch, Office of Financial Management, Immigration and
Naturalization Service, 425 I Street, NW., Room 6034, Washington, DC
20536, telephone (202) 616-7715.
SUPPLEMENTARY INFORMATION:
Introduction
Changes in the current regulation are needed to make the bad check
charge consistent with the actual costs incurred by the Service in
processing returned checks and other defaulted payments. The current
bad check charge is $5.00.
The Service has studied the costs incurred by several
Administrative Centers attributable to the return of a bad check from a
financial institution. The Administrative Center, Dallas and the
Administrative Center, Twin Cities were asked to identify each action
that must be undertaken and quantify the time and costs involved in
processing a bad check. Meaningful and reliable accumulations of the
time and expense involved in the average costs of processing each bad
check have been gathered by these centers since they process a
substantial number of financial transactions each year. For example,
three employees at the Administrative Center, Dallas each spend 38
hours each month processing bad checks. Over 900 bad checks are
processed each year at the Administrative Center, Dallas. Data from
[[Page 35598]]
the processing of over 1,800 bad checks were provided by the
Administrative Centers.
As a result of our study, we have determined that the average cost
to the Service to process each bad check received is $30.11. We have
rounded off the cost to $30.00.
The Service notes that the United States Customs Service has
recently completed a review of the costs incurred in processing bad
checks and has also concluded that a $30.00 fee for bad checks is
appropriate compensation for the costs it incurs in processing bad
checks.
On September 28, 1995, at 60 FR 50145, the Immigration and
Naturalization Service published a proposed rule with request for
comments in the Federal Register, to allow the Service to recoup the
administrative costs incurred in processing all returned checks and
other defaulted payments. Written comments were requested by November
27, 1995. The Service did not receive any comments to the proposed rule
and is amending Section 103.7(a) to make the bad check charge
consistent with the actual costs incurred by the Service in processing
returned checks and other defaulted payments. Accordingly, the bad
check charge is being increased from ``$5.00'' to ``$30.00.''
Regulatory Flexibility Act and Executive Order 12866
Pursuant to the provisions of the Regulatory Flexibility Act (5
U.S.C. 601, et seq.), and for the reasons stated in the preamble, it is
certified that the rule would not have a significant impact on a
substantial number of small entities. Accordingly, this rule is not
subject to the regulatory analysis or other requirements of 5 U.S.C.
603 and 604. This rule will not result in a ``significant regulatory
action'' under Executive Order 12866.
Executive Order 12612
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this rule
does not have sufficient federalism implication to warrant the
preparation of a Federal Assessment.
List of Subjects in 8 CFR Part 103
Administrative practice and procedure, Authority delegations
(Government agencies), Freedom of information, Privacy, Reporting and
recordkeeping requirements, Surety bonds.
Accordingly, part 103 of chapter I of title 8 of the Code of
Federal Regulations is amended as follows:
PART 103--POWERS AND DUTIES OF SERVICE OFFICERS; AVAILABILITY OF
SERVICE RECORDS
1. The authority citation for part 103 continues to read as
follows:
Authority: 5 U.S.C. 552, 552(a); 8 U.S.C. 1101, 1103, 1201, 1252
note, 1252(b), 1304, 1356; 31 U.S.C. 9701; E.0. 12356, 47 FR 14874,
15557;3 CFR, 1982 Comp., p. 166; 8 CFR part 2.
2. Section 103.7 is amended by:
a. Redesignating the text of paragraph (a) following the heading as
paragraph (a)(1);
b. Removing in the sixth sentence of newly designated paragraph
(a)(1) the term ``$5'' and adding in its place the term ``$30.00''; and
c. Removing the seventh sentence of newly designated paragraph
(a)(1); and
d. Adding a new paragraph (a)(2), to read as follows:
Sec. 103.7 Fees.
(a) * * * (1) * * *
(2) A charge of $30.00 will be imposed if a check in payment of a
fee, fine, penalty, and/or any other matter is not honored by the bank
or financial institution on which it is drawn. A receipt issued by a
Service officer for any such remittance shall not be binding upon the
Service if the remittance is found uncollectible. Furthermore, credit
for meeting legal and statutory deadlines will not be deemed to have
been met if payment is not made within 10 business days after
notification by the Service of the dishonored check.
* * * * *
Dated: April 30, 1996.
Doris Meissner,
Commissioner, Immigration and Naturalization Service.
[FR Doc. 96-17156 Filed 7-5-96; 8:45 am]
BILLING CODE 4410-10-M
Complete official Federal Register PDF
FR Doc. 96-17125 Amendment of FIRMR Schedule Provisions
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Page 35685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17125]
=======================================================================
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GENERAL SERVICES ADMINISTRATION
41 CFR Part 201-39
RIN 3090-AF89
Amendment of FIRMR Schedule Provisions
AGENCY: Office of Policy, Planning and Evaluation, GSA.
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This change to the Federal Information Resources Management
Regulation (FIRMR) removes provisions for using Federal information
processing (FIP) multiple award schedule (MAS) contracts. The Federal
Acquisition Regulation (FAR) will now govern all MAS contacting
actions. This change is an example of GSA's ongoing efforts to ensure
uniform regulatory procedures within the MAS program.
DATES: This amendment is effective July 8, 1996. Comments will be
considered in the final rule, but must be received on or before
September 6, 1996.
ADDRESSES: Comments may be mailed to GSA, Policy and Regulations
Division (MKR), 18th & F Streets, NW., Room 3224, Washington, DC 20405,
Attn: Judy Steele, or delivered to that address between 8:00 a.m. and
4:30 p.m.
FOR FURTHER INFORMATION CONTACT:
Judy Steele, GSA/MKR, FTS/Commercial (202) 501-3194(v) or (202) 501-
0657 (tdd), Internet ([email protected]).
SUPPLEMENTARY INFORMATION: As a result of a recent reorganization,
GSA's FIP MAS Program is now a part of the Federal Supply Service
schedule program. The FIRMR is being revised to reflect that change.
Section 201-39.801-1 is revised to clarify that the FIP MAS contracts
now fall under the FSS program umbrella. Part 8 of the Federal
Acquisition Regulation governs the FSS MAS Program, and will therefore,
also apply to FIP MAS schedule contracts. Sections 201-39.803 and 201-
39.803-1 through 201-39.803-3 are removed and reserved since a separate
section on ordering from the FIP MAS contracts is no longer necessary.
This rule was submitted to, and reviewed by, the Office of
Management and Budget (OMB) in accordance with Executive Order 12866,
Regulatory Planning and Review.
The recordkeeping provisions of the Paperwork Reduction Act do not
apply because the FIRMR changes do not impose information collection
requirements or collection of information from offerors, contractors,
or members of the public which require the approval of OMB under 44
U.S.C. 3501 et seq.
List of Subjects in 41 CFR Part 201-39
Archives and records, Computer technology, Federal information
processing resources activities, Government procurement, Property
management, Records management, and Telecommunications.
For the reasons set forth in the preamble, GSA is amending 41 CFR
Part 201-39 as follows:
PART 201-39--ACQUISITION OF FEDERAL INFORMATION PROCESSING (FIP)
RESOURCES BY CONTRACTING
1. The authority citation for part 201-39 continues to read as
follows:
Authority: 40 U.S.C. 486(c) and 751(f).
2. Section 201-39.801-1 is revised to read as follows:
Sec. 201-39.801-1 General.
GSA directs and manages the Federal Supply Schedules programs.
Except as provided in Sec. 201.39.804, use of the Federal Supply
Schedules program is covered by FAR 8.4.
Secs. 201-39.803, 201-39.803-1 through 201-39.803-3 [Removed and
Reserved]
3. Sections 201-39.803 and 201-39.803-1 through 201-39.803-3 are
removed and reserved.
Dated: June 4, 1996.
David J. Barram,
Acting Administrator of General Services.
[FR Doc. 96-17125 Filed 7-5-96; 8:45 am]
BILLING CODE 6820-25-M
Complete official Federal Register PDF
FR Doc. 96-17120 Office of Federal Housing Enterprise Oversight; Minimum Capital
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35607-35623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17120]
=======================================================================
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
12 CFR Part 1750
RIN 2550-AA03
Office of Federal Housing Enterprise Oversight; Minimum Capital
AGENCY: Office of Federal Housing Enterprise Oversight, HUD.
ACTION: Final regulation.
-----------------------------------------------------------------------
SUMMARY: The Office of Federal Housing Enterprise Oversight (OFHEO) is
issuing a final regulation that sets forth the methodology for
computing the minimum capital requirement for the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie Mac) (collectively, the Enterprises). The final
regulation also establishes procedures for the filing of quarterly
minimum capital reports by each Enterprise. In addition, the final
regulation establishes procedures under which OFHEO will determine the
capital classification of each Enterprise on a quarterly basis.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Gary L. Norton, Deputy General Counsel
(202/414-3800); Isabella W. Sammons, Associate General Counsel (202/
414-3800); Michael P. Scott, Assistant Director, Office of Research,
Analysis and Capital Standards (202/414-3800), 1700 G Street, N.W., 4th
Floor, Washington, D.C. 20552.
SUPPLEMENTARY INFORMATION:
I. Background
Title XIII of the Housing and Community Development Act of 1992,
Pub. L. No. 102-550, known as the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (1992 Act), established OFHEO as an
independent office within the Department of Housing and Urban
Development. OFHEO is responsible for ensuring that the Enterprises are
adequately capitalized and operating in a safe and sound manner.
Included among the express statutory authorities of the Director of
OFHEO is the authority to issue regulations establishing minimum and
risk-based capital standards.1
---------------------------------------------------------------------------
\1\ 1992 Act, section 1313(b)(1) (12 U.S.C. 4513(b)(1)).
---------------------------------------------------------------------------
As a separate rulemaking procedure, OFHEO published an Advance
Notice of Proposed Rulemaking (ANPR) 2 as the first step toward
developing the risk-based capital regulation required by section 1361
of the 1992 Act.3 The risk-based capital regulation will specify a
stress test that will determine the amount of capital that an
Enterprise must hold to maintain positive capital throughout a 10-year
period of economic stress. That amount, plus an additional 30 percent
to cover management and operations risk, will constitute the risk-based
capital requirement of the Enterprise.
---------------------------------------------------------------------------
\2\ 60 FR 7468, Feb. 8, 1995.
\3\ 12 U.S.C. 4611.
---------------------------------------------------------------------------
The ANPR solicited public comment on a variety of issues concerning
the development of the risk-based capital regulation. In light of the
complex issues, OFHEO decided to issue the proposed risk-based capital
regulation in two Notices of Proposed Rulemaking (NPRs).
The first NPR addresses two key components of the stress test--the
``benchmark loss experience'' (the basis for determining the extent of
Enterprise credit losses during the stress test) and the use of the
OFHEO House Price Index (HPI) in the stress test to estimate changes
over time in the values of single-family properties securing Enterprise
mortgages.4 A second NPR, currently being developed, will address
the remaining aspects of the risk-based capital stress test and how the
stress test will be used to determine the Enterprises' risk-based
capital requirements.
---------------------------------------------------------------------------
\4\ 61 FR 29592, Jun. 11, 1996.
---------------------------------------------------------------------------
In addition to the risk-based capital standard, the 1992 Act
prescribes a minimum capital standard for the Enterprises.5 This
final regulation implements the minimum capital standard of the 1992
Act. Unlike the risk-based capital requirement that is computed by
applying the stress test, the minimum capital requirement is computed
on the basis of capital ratios that are applied to certain defined on-
balance sheet assets and off-balance sheet obligations of the
Enterprises.
---------------------------------------------------------------------------
\5\ Section 1362 (12 U.S.C. 4612).
---------------------------------------------------------------------------
OFHEO issued a proposed Minimum Capital regulation on June 8,
1995.6 As discussed in the preamble to the proposed regulation,
the proposed regulation contained the interim administrative procedures
with respect to the methodology for computing the minimum capital
requirement for on- and off-balance sheet items, except for interest
rate and foreign exchange rate contracts for which the methodology was
modified. The proposed regulation also established procedures for the
filing of minimum capital reports by the Enterprises each quarter, or
at other times as required by the Director. The proposed regulation
further required OFHEO to provide each Enterprise with notice and
opportunity to comment on its proposed capital classification.
---------------------------------------------------------------------------
\6\ 60 FR 30201.
---------------------------------------------------------------------------
OFHEO received five comments in response to the proposed
regulation. Comments were received from a federal government agency
(Office of Thrift Supervision), both Enterprises, and two trade
associations (America's Community Bankers and Mortgage Bankers
Association of America). OFHEO has carefully considered the comments in
developing the final regulation. A discussion of the comments received
follows.
II. Comments on the Proposed Minimum Capital Regulation
General Comments
Freddie Mac commented generally on OFHEO's role with respect to the
[[Page 35608]]
minimum capital standard of the 1992 Act. First, Freddie Mac noted that
the 1992 Act details what the capital standard is, unlike the statutes
governing the capital standards for banks and thrifts. Therefore,
Freddie Mac concluded that the Minimum Capital regulation should
reflect Congress' intent that OFHEO act as the implementor, rather than
the creator, of the minimum capital standard.
OFHEO agrees that its role is to implement the minimum capital
standard set forth in the 1992 Act. Nevertheless, Congress specifically
authorized OFHEO to adjust the capital ratios that are applied to
certain off-balance sheet obligations, the credit risk of which differs
from that of mortgage-backed securities (MBS). Additionally, in
implementing the 1992 Act, OFHEO must define those terms not defined
therein. OFHEO believes that the final regulation effectively
implements the minimum capital standard in a manner completely
consistent with the specific provisions and overall intent of the 1992
Act.
Secondly, Freddie Mac stated that Congress recognized that the
minimum capital standard would create marginal capital requirements and
that marginal capital requirements tend to induce changes in the
Enterprises' behavior.7 Therefore, Freddie Mac explained, Congress
cautioned OFHEO against creating ``perverse incentives'' that may
induce Freddie Mac to make inappropriate changes in the conduct of its
businesses.8 Freddie Mac further noted that, in the context of
OFHEO's risk-based capital standard, ``OFHEO has expressed a policy of
designing the [risk-based] capital regulation to reflect closely the
relative risks inherent in the Enterprises' different activities,
rather than setting out to encourage or discourage particular
activities by means of a [risk-based] capital regulation that rewards
or punishes an Enterprise that engages in such activities.' Freddie Mac
urged OFHEO to apply this policy to its design of the Minimum Capital
regulation.
---------------------------------------------------------------------------
\7\ Marginal capital requirements are incremental capital
requirements for each additional dollar of business.
\8\ Freddie Mac cites S. Rep. No. 282, 102d Cong., 2d Sess. 24
(1992).
---------------------------------------------------------------------------
As recognized by Freddie Mac, congressional concern regarding the
creation of perverse incentives was expressed in the context of the
discussion of risk-based capital and the appropriate level of detail of
the stress test.9 OFHEO has stated that, where feasible, it will
endeavor to avoid the creation of perverse incentives in its risk-based
capital regulation for the Enterprises. However, this concept has
little relevance to the minimum capital standard. The minimum capital
requirement is computed on the basis of simple leverage ratios.
---------------------------------------------------------------------------
\9\ The Senate report accompanying the legislation states: ``A
more detailed [stress test] model will be more likely to create the
right incentives and less likely to create perverse incentives.'' S.
Rep. No. 282, 102d Cong., 2d Sess. 24 (1992).
---------------------------------------------------------------------------
The proposed regulation deviates from the specific statutory ratios
in only one area--by adjusting the statutory ratio of 0.45 percent for
certain off-balance sheet obligations relative to the credit risk of
MBS. The proposed regulation establishes different minimum capital
ratios for collateralized and uncollateralized exposure for interest
rate and foreign exchange rate contracts. Although OFHEO considered
using a single capital ratio applied to all interest rate and foreign
exchange rate contracts, thus treating contracts as one broad risk
category, OFHEO believes that making a distinction between
collateralized and uncollateralized exposure provides the Enterprises
with better risk management incentives.
Section 1750.1 General
Section 1750.1 of the proposed Minimum Capital regulation provides
in part that:
The board of directors of each Enterprise is responsible for
ensuring that the Enterprise maintains capital at a level that is
sufficient to ensure the continued financial viability of the
Enterprise and in excess of the minimum capital level contained in
this Subpart A.
Freddie Mac recommended that the phrase ``is sufficient to ensure
the continued financial viability of the Enterprise'' be deleted from
section 1750.1 because it appears to establish a new or additional
capital standard not provided for in the 1992 Act. Freddie Mac stated
that, in light of the comprehensive guidance in the 1992 Act as to how
to determine the levels of capital that the Enterprises are required to
hold, it would be inappropriate for OFHEO, by regulation, to amend the
minimum capital standard of the 1992 Act by adding a financial
viability standard.
OFHEO disagrees with Freddie Mac's view because OFHEO has the duty
and authority to ensure the safe and sound financial operation of the
Enterprises, and none of the capital levels specified in the 1992 Act
represent the amount needed by an Enterprise to operate safely and
soundly under all circumstances. The language in proposed section
1750.1 is consistent with OFHEO's authority under section 1313(a) of
the 1992 Act,10 which provides that the duty of the Director is to
ensure that the Enterprises are adequately capitalized and operating
safely. OFHEO's specific authority to issue the Minimum Capital
regulation is derived from section 1313(b) of the 1992 Act,11
which provides the Director with the authority to issue regulations to
carry out (a) part 1 of subtitle A of the 1992 Act (which establishes
OFHEO and sets forth OFHEO's authorities), (b) subtitle B (which sets
forth the required capital levels for the Enterprises and OFHEO's
special enforcement powers with respect to capital levels), (c)
subtitle C (which sets forth OFHEO's enforcement provisions), and (d)
``other matters relating to safety and soundness.'' As explained in
section 1302 of the 1992 Act,12 Congress finds that--
---------------------------------------------------------------------------
\10\ 12 U.S.C. 4513(a).
\11\ 12 U.S.C. 4513(b).
\12\ 12 U.S.C. 4501.
* * * an entity regulating such enterprises should have the
authority to establish capital standards, require financial
disclosure, prescribe adequate standards for books and records and
other internal controls, conduct examinations when necessary, and
enforce compliance with the standards and rules that it establishes
---------------------------------------------------------------------------
* * *.
Section 1750.1 is also consistent with the manner in which the
capitalization provisions of the 1992 Act are designed to operate. The
capitalization provisions in the 1992 Act are structured in the
following way. The 1992 Act provides for both ``mandatory'' and
``discretionary'' capital classifications.13 The 1992 Act also
sets forth certain supervisory actions that are specific to each
capital classification.14
---------------------------------------------------------------------------
\13\ Section 1364 (12 U.S.C. 4614).
\14\ Sections 1365-1367 (12 U.S.C. 4615-4617).
---------------------------------------------------------------------------
Under the discretionary capital classification criteria, the
Director may reclassify an Enterprise at a lower capital level than it
would be classified under the mandatory classification criteria. The
Director may do so if the Enterprise is engaging in conduct that could
result in a rapid depletion of core capital or the value of the
property subject to mortgages held or securitized by the Enterprise has
decreased significantly.15
---------------------------------------------------------------------------
\15\ Section 1364(b) (12 U.S.C. 4614(b)).
---------------------------------------------------------------------------
When the Enterprise is placed in a lower capital classification as
a result of either a mandatory or discretionary classification, it is
required to increase its capital pursuant to a mandatory capital
restoration plan.16 The Director's discretionary classification
authority thus could have the effect of requiring
[[Page 35609]]
an Enterprise that is engaging in certain types of risky activities to
increase the amount of capital it holds, pursuant to a mandatory
capital restoration plan, even though it meets or exceeds the minimum
capital or risk-based capital requirement.17
---------------------------------------------------------------------------
\16\ Sections 1365(a)(1) and 1369C (12 U.S.C. 4615(a)(1) and
4622).
\17\ Section 1365 (12 U.S.C. 4615).
---------------------------------------------------------------------------
The discretionary classification authority reflects the statutory
scheme that the minimum capital ratios in the 1992 Act establishes a
``floor'' on capital, not a ``ceiling.'' The legislative history of the
1992 Act indicates that there was some confusion regarding this issue
that was resolved in favor of the ``floor'' approach. For example,
during Senate consideration of the bill, Senator Metzenbaum stated to
the Chairman of the Committee:
[You] said on this floor that the Director [of OFHEO] did indeed
have the authority to set the required ratios above the minimum
levels * * * if necessary to protect the health and security of an
enterprise and that it is important that the Director act in those
circumstances. Since that time, I have learned that some Senators
may have a different view about the Director's authority. I would
like to be assured by the chairman of the committee and the manager
of this bill that the director has authority to raise capital
standards, if necessary.
Senator Riegle, in replying, explained that:
[T]he Director is given the duty to ensure that the enterprises
are adequately capitalized and operating safely in accordance with
this act and the Charter Acts. Under section 103(a)(1) of the bill,
the Director is authorized to issue regulations concerning the
financial health and security of the enterprises, including the
establishment of capital standards. There is no way the Director can
discharge these responsibilities unless he or she has the authority
to prescribe capital standards to be met by the enterprises.
* * * * *
Unless the legislation specifically and affirmatively prohibits
the Director from establishing required capital ratios, it must be
assumed that the Director has that authority in order to discharge
his or her duties assigned under section 102 * * *. The only
constraint on the Director's authority is that the required capital
ratios cannot be set below the minimum levels contained in section
202.
* * * * *
If the Director believed that the minimum statutory ratios * * *
should be raised, he or she would obviously have to seek a change in
the law. A Director might believe an increase in the statutory
minimum ratios * * * to be necessary if he or she concluded that
they were clearly inadequate under all foreseeable circumstances. If
the Congress were to so raise the statutory minimum ratios * * * it
would establish a new and higher floor applicable to the Director's
discretionary authority to prescribe capital ratios. However, there
is nothing in the legislation that would preclude the Director from
setting the required rated * * * without further legislation. If the
circumstances that gave rise to the need for higher ratios changed,
the Director could then reduce the required capital ratios, but not
lower than the minimum ratios * * *.18
---------------------------------------------------------------------------
\18\ 138 Cong. Rec. S9353-54 (July 1, 1992). This colloquy was
with respect to section 202, Minimum Capital Levels, of S. 2733.
Although the 1992 Act was a compromise between S. 2733 and H.R.
2900, section 202 of S. 2733 is substantially similar to section
1362 of the 1992 Act. Therefore, the colloquy with respect to
section 202, cited above, is relevant to the discussion of section
1362 of the 1992 Act.
In the House of Representatives, the issue of whether the minimum
capital ratios constituted a floor or a ceiling was raised during the
consideration of the conference report. In a discussion between the
Chairman and Ranking Member of the Committee, the two members agreed
that the duty of the Director to ensure that the Enterprises are
adequately capitalized and operating safely in accordance with the 1992
Act authorizes the Director to require a higher ratio than the minimum
ratio specified in the statute.19
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\19\ 138 Cong. Rec. H11,102 (Oct. 3, 1992) (discussion by Mr.
Gonzalez, Mr. Frank, and Mr. Leach). In response to Mr. Gonzalez'
explanation, Mr. Leach stated that ``I fully share with you the
interpretation that would imply that the Director could go above the
2.5-percent requirement that is currently in statute [sic] * * *.''
Id.
---------------------------------------------------------------------------
Freddie Mac further questioned why the board of directors of each
Enterprise is held responsible for maintaining capital at a level that
is sufficient to ensure the continued viability of the Enterprise.
Freddie Mac stated that the board of directors has a fiduciary duty to
protect the interests of the Enterprise's shareholders, and that
maintaining an adequate level of capital under varying circumstances
would be one aspect of the overall set of responsibilities represented
within that duty. Furthermore, Freddie Mac stated that the fiduciary
duties of corporate directors are derived principally from state common
law, so the adoption of a viability standard and corresponding
responsibility could interfere with the subtleties and complexities of
that law.
OFHEO believes that to the extent there is any conflict between
state law and the 1992 Act, the conflict would be resolved in favor of
the 1992 Act and implementing regulations. The Enterprises are
federally-chartered entities subject to federal statutory and
regulatory requirements. The 1992 Act imposes capital requirements on
the Enterprises and makes clear that the board of directors of each
Enterprise is responsible for the financial safety and soundness of the
Enterprise. Specifically, the Director is authorized to take
enforcement actions, e.g., cease and desist orders and civil money
penalties, against directors of an Enterprise for actions that deplete
the core capital of the Enterprise, cause a loss to the Enterprise, or
violate an order or regulation of OFHEO.20 In exercising its
enforcement powers, OFHEO will be cognizant of all of the relevant
federal and, if applicable, state requirements. However, to the extent
there are any applicable state law requirements relating to the
fiduciary responsibilities of the directors, they would not override
the obligations created by the 1992 Act or the Minimum Capital
regulation.
---------------------------------------------------------------------------
\20\ See sections 1371, 1372, and 1376 (12 U.S.C. 4631, 4632,
and 4636).
---------------------------------------------------------------------------
Freddie Mac also recommended that the phrase ``in excess of the
minimum capital level'' be replaced by ``is equal to or exceeds the
minimum capital level'' in order to reflect accurately the minimum
capital standard set forth in the 1992 Act. OFHEO agrees and has
revised section 1750.1 accordingly. OFHEO has also substituted, where
appropriate, the word ``requirement'' for ``level'' to ensure
consistency of terms throughout the Minimum Capital regulation.
Section 1750.1 of the proposed regulation also contains a sentence
that reads: ``The regulation contained in this Subpart A establishes
the minimum capital requirements for each Enterprise.'' Freddie Mac
recommended an editorial change that would clarify that the regulation
sets forth the ``methodology'' for computing the minimum capital
requirement for each Enterprise. OFHEO agrees with the need for this
change and the final regulation has been revised accordingly.
Section 1750.2 Definitions
Proposed Section 1750.2 defines various terms used in the Minimum
Capital regulation. OFHEO received comments on the definitions of the
following terms: commitment, core capital, foreign exchange rate
contract, interest rate contract, multifamily credit enhancement, off-
balance sheet obligation, other off-balance sheet obligations, and
qualifying collateral. The comments are discussed below.
Commitment
Freddie Mac recommended that, for the purpose of the minimum
capital requirement computation, the term ``commitment'' should be
defined as a legally binding agreement that obligates an Enterprise to
purchase mortgages that
[[Page 35610]]
specify all the terms of the transaction, including price, volume, and
fees.
Freddie Mac referenced its comments to OFHEO's ANPR on risk-based
capital.21 In those comments, Freddie Mac stated that, as a matter
of general contract law, an agreement is legally binding only if all of
its key terms are included and agreed upon. Therefore, any definition
of a contractual commitment should include a requirement that it be a
binding contractual obligation of the Enterprise to purchase mortgages
and specify price, volume, and fees.
---------------------------------------------------------------------------
\21\ ``Comments of the Federal Home Loan Mortgage Corporation on
the Advance Notice of Proposed Rulemaking on Risk-Based Capital of
the Office of Federal Housing Enterprise Oversight,'' 139-146 (May
9, 1995) (available at OFHEO).
---------------------------------------------------------------------------
OFHEO agrees that for purposes of the Minimum Capital regulation
the term ``commitment'' should mean any legally binding agreement that
obligates an Enterprise to purchase or securitize mortgages, and has
defined the term as such. However, OFHEO does not believe it necessary
or appropriate to restrict the definition of the term ``commitment'' by
reference to price, volume, and fees because agreements may be legally
binding even when there is a lack of specificity on all terms.22
It would not be possible for OFHEO to reflect the complexities of this
area of contract law in a regulatory definition. Moreover, to do so
would be inadvisable in light of Congress' specific concerns regarding
the need for capital to support commitments and other off-balance sheet
obligations.
---------------------------------------------------------------------------
\22\ See Restatement (Second) of Contracts section 204 (1981).
---------------------------------------------------------------------------
For example, in discussing the need for the capital requirements of
the 1992 Act, Congress expressed the concern that off-balance sheet
obligations had not been previously captured under prior capital
standards:
The capital provisions of the GSEs' charter Acts limit their
debt to 15 times their capital unless HUD sets a higher ratio * * *
This is unsatisfactory because no capital need be held against the
GSEs' $750 billion of off balance sheet guarantees * * *. 23
---------------------------------------------------------------------------
\23\ S. Rep. No. 282, 102d Cong., 2d Sess. 11 (1992).
Recognizing this concern, it would be inappropriate for OFHEO to
promulgate a narrow definition that could exempt certain legally
binding commitments from the minimum capital calculation.
OFHEO has made editorial revisions to the definition of the term
``commitment'' by substituting the word ``agreement'' for
``arrangement'' and by deleting the phrase ``for portfolio.''
Core Capital
In drafting the definition of core capital in the proposed
regulation, OFHEO made minor changes to the statutory language that
were intended to improve the clarity of the provision. Freddie Mac
commented that since Congress expressly defined core capital in section
1303(4) of the 1992 Act,24 the regulation should use the same
statutory language to avoid confusion. In light of the comment
received, OFHEO wants to ensure that the regulation does not create any
confusion and has revised the definition of core capital in the final
regulation to mirror the statutory definition.
---------------------------------------------------------------------------
\24\ 12 U.S.C. 4502(4).
---------------------------------------------------------------------------
Foreign Exchange Rate Contracts and Interest Rate Contracts
OFHEO received a comment from Freddie Mac on the definitions of the
terms ``foreign exchange rate contracts'' and ``interest rate
contracts.'' Freddie Mac stated that the definitions of these terms as
they appear in section 1750.2 and Appendix A of the proposed regulation
are not identical. To avoid any implication that the differences are
intentional, Freddie Mac recommended that OFHEO define the terms only
in one location, or that OFHEO conform the language of the two sets of
definitions.
The different ways these terms are used in the regulation and
Appendix A make it is necessary to include a definition in the main
body of the regulation as well as a separate discussion in Appendix A.
However, in light of the comment, OFHEO has made editorial changes to
conform the definitions of the terms ``foreign exchange rate
contracts'' and ``interest rate contracts'' in section 1750.2 to the
discussion of such terms in Appendix A.
Multifamily Credit Enhancement
Section 1750.2 of the proposed regulation defines the term
multifamily credit enhancement to mean ``a guarantee by an Enterprise
of the payments on a multifamily mortgage revenue bond issued by a
state or local housing finance agency.''
Fannie Mae recommended that OFHEO revise the definition to describe
more fully the routine types of transactions in which an Enterprise
engages ``to support multifamily bond issues.'' Fannie Mae stated that
it normally provides credit enhancement through a collateral pledge,
purchase agreement, or other contractual obligation by which the
mortgage loan risk is borne by the Enterprise during a period in which
the bonds are credit enhanced by a letter of credit or surety
obligation of another party.
Fannie Mae also commented that under many state laws, other state
and local governmental units or instrumentalities may issue mortgage
revenue bonds, not only state and local housing finance agencies.
Therefore, Fannie Mae recommended that the definition should be
expanded to include any state and local governmental issuers authorized
to issue such revenue bonds secured by mortgages.
OFHEO agrees with the comment and has revised the definition of the
term ``multifamily credit enhancement'' to describe more fully the
routine types of transactions in which an Enterprise engages to support
multifamily bond issues.
Off-balance Sheet Obligation and Other Off-Balance Sheet Obligations
OFHEO received comments from Freddie Mac on the definitions of the
terms ``off-balance sheet obligation'' and ``other off-balance sheet
obligations.'' The term ``off-balance sheet obligation'' is defined in
proposed section 1750.2 to mean--
* * * a binding agreement, contract, or similar arrangement that
requires or may require future payment(s) in money or kind by
another party to an Enterprise or that effectively guarantees all or
part of such payment(s) to third parties, where such agreement or
contract is a source of credit risk that is not included on its
balance sheet.
The term ``other off-balance sheet obligations'' is defined in proposed
section 1750.2 to mean--
* * * all off-balance sheet obligations of an Enterprise that are
not mortgage-backed securities or substantially equivalent
instruments.
Freddie Mac noted that section 1362(a)(3) of the 1992 Act 25
requires the Enterprises to hold 0.45 percent core capital against
other off-balance sheet obligations (excluding commitments in excess of
50 percent of the average dollar amount of commitments outstanding each
quarter over the preceding four quarters), except as the Director
adjusts the 0.45 percent ratio to reflect differences between the
credit risk of such obligations and MBS. Freddie Mac stated that an
obligation of an Enterprise does not subject the Enterprise directly to
credit risk: ``it is the party holding the obligation that bears the
credit risk of an Enterprise obligation.'' However, while the
obligations of an Enterprise create no
[[Page 35611]]
direct credit risk for the Enterprise, certain obligations, such as MBS
or commitments to purchase mortgages, involve identifiable credit risk
that is related in one way or another to those obligations (the risk of
the default on the associated mortgages). Freddie Mac believes that
this related credit risk is what Congress intended to capture when it
enacted the minimum capital requirement applicable to other off-balance
sheet obligations. Therefore, Freddie Mac believes that a definition of
``other off-balance sheet obligations'' will not capture the related
credit risk that is apparently the focus of the 1992 Act.
---------------------------------------------------------------------------
\25\ 12 U.S.C. 4612(a)(3).
---------------------------------------------------------------------------
To resolve this concern, Freddie Mac recommended that OFHEO delete
the definition of the term ``off-balance sheet obligation'' and take a
targeted approach in the definition of the term ``other off-balance
sheet obligations'' by identifying only those items that OFHEO intends
to include within the scope of the term, i.e., commitments, multifamily
credit enhancements, sold portfolio remittances pending, and interest
rate and foreign exchange rate contracts. Freddie Mac believes that
because OFHEO has considered no other items to be other off-balance
sheet obligations, such a definition would fully implement section
1362(a)(3) of the 1992 Act.26 Freddie Mac stated that, to the
extent that the Director determines in the future that other items
should be considered to be other off-balance sheet obligations, the
Director should address such items in a future rulemaking proceeding to
amend the Minimum Capital regulation. In connection with this
recommendation, Freddie Mac also recommended that section 1750.4(a)(7)
be deleted. That section provides for other off-balance sheet
obligations to be included in the computation of the minimum capital
requirement.
---------------------------------------------------------------------------
\26\ Id.
---------------------------------------------------------------------------
After considering Freddie Mac's comments, OFHEO has determined not
to adopt the recommendations with respect to the definition of the
terms ``off-balance sheet obligation'' and ``other off-balance sheet
obligations.'' The capital provisions of the 1992 Act require the
Enterprises to hold sufficient capital to ensure against risks of both
on- and off-balance sheet items. For off-balance sheet obligations, the
1992 Act specifies the ratio of 0.45 percent of the unpaid principal
balance of MBS and substantially equivalent instruments issued or
guaranteed by the Enterprise. The Act also specifies a ratio of 0.45
percent of other off-balance sheet obligations (excluding commitments
in excess of 50 percent of the average dollar amount of the commitments
outstanding each quarter over the preceding four quarters), except that
the Director must adjust the 0.45 percent ratio to reflect differences
between the credit risk of such obligations and MBS.
OFHEO believes that it is appropriate to provide for a definition
of other off-balance sheet obligations, which ensures that capital will
be held against all off-balance sheet obligations whether or not they
are now used by the Enterprises or at any time in the future. The 1992
Act requires that OFHEO apply a ratio of 0.45 percent to other off-
balance sheet obligations until OFHEO determines whether an adjustment
is necessary. OFHEO has determined the appropriate ratios for
commitments, multifamily credit enhancements, sold portfolio
remittances pending, interest rate contracts, and foreign exchange rate
contracts. When an Enterprise begins to use a new type of obligation,
OFHEO will apply the statutory ratio of 0.45 percent. OFHEO will then
analyze the obligation to determine whether an adjustment to the 0.45
percent ratio is necessary, and will amend the Minimum Capital
regulation, as appropriate.
Freddie Mac believes that the proposed definitions could create
confusion because they appear to conflict with how the term
``obligation'' is used elsewhere in the 1992 Act and in the
Enterprises' Charter Acts. The proposed regulation defines the term
``off-balance sheet obligation'' as a binding agreement or contract
that requires another party to make future payments in money or in kind
to an Enterprise (or guarantees of such payments to a third party). In
contrast, Freddie Mac stated that the term ``obligation'' used
elsewhere in the 1992 Act and the Enterprises' Charter Acts applies
only to future payments from an Enterprise to a third party--and not to
future payments from another party to the Enterprise (or guarantees of
such payments to a third party).
Freddie Mac also stated that the proposed definition of the term
``other off-balance sheet obligations'' could create confusion as to
whether resecuritizations of MBS, such as real estate mortgage
investment conduits and other multi-class MBS, are included in that
definition. Freddie Mac believes that it was the intent of Congress
that such resecuritizations should not be included and that OFHEO's
interim procedures do not include resecuritizations. Also, Freddie Mac
believes that the definition of the term ``other off-balance sheet
obligations'' is too narrow because commitments, which Congress
expressly considered to be other off-balance sheet obligations, would
not fall within the proposed definition of that term.
OFHEO believes that because the term ``obligation'' may be used
differently in the 1992 Act and the Enterprises' Charter Acts, it more
important to include a definition of the terms ``off-balance sheet
obligation'' and ``other off-balance sheet obligations'' for purposes
of the computation of the minimum capital requirement. However, to
eliminate any confusion regarding the treatment of commitments, the
definition of the term ``off-balance sheet obligation'' has been
revised to include an express reference to commitments. Also, the
definition of the term ``other off-balance sheet obligations'' has been
revised to clarify that resecuritizations of MBS are not included in
the definition.
Qualifying Collateral
Freddie Mac noted that the definition of the term ``qualifying
collateral'' in section 1750.2 differs from the discussion of what
constitutes qualifying collateral in paragraph 5 of Appendix A.
Consistent with this comment, OFHEO has made conforming editorial
changes to both the definition in section 1750.2 and the discussion in
Appendix A.
OFHEO has also revised the footnote in connection with the
definition of the term ``qualifying collateral'' by defining the term
``OECD-based group of counties'' to conform with the Joint Final Rule
published by the Federal Reserve System, the Office of the Comptroller
of the Currency, and the Federal Deposit Insurance Corporation.27
This final rule was promulgated after the publication of the proposed
Minimum Capital regulation.
---------------------------------------------------------------------------
\27\ 60 FR 66042, Dec. 20, 1995.
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Section 1750.4 Minimum Capital Requirement Computation
Section 1750.4(a) of the proposed regulation provides that the
minimum capital requirement for each Enterprise is the sum of the
following amounts--
--2.50 percent times the aggregate on-balance sheet assets of the
Enterprise;
--0.45 percent times the unpaid principal balance of mortgage-backed
securities and substantially equivalent instruments that were issued or
guaranteed by the Enterprise;
--0.45 percent of 50 percent of the average dollar amount of
commitments outstanding each quarter over the preceding four quarters;
[[Page 35612]]
--0.45 percent of the outstanding principal amount of bonds with
multifamily credit enhancements;
--0.45 percent of the dollar amount of sold portfolio remittances
pending;
--3.00 percent of the credit equivalent amount of interest rate and
foreign exchange rate contracts except to the extent of the current
market value of posted qualifying collateral;
--1.50 percent of the credit equivalent amount of interest rate and
foreign exchange rate contracts equal to the market value of posted
qualifying collateral; and
--0.45 percent of the outstanding amount of other off-balance sheet
obligations, excluding commitments, multifamily credit enhancements,
sold portfolio remittances pending, and interest rate and foreign
exchange rate contracts, except as adjusted by the Director to reflect
differences in the credit risk of such obligations in relation to MBS.
Section 1750.4(b) provides that any asset or financial obligation
that can be properly classified in more than one of the enumerated
categories shall be classified in the category that yields the highest
minimum capital amount.
OFHEO received comments with respect to section 1750.4, as
explained below.
Section 1750.4(a)(6) Ratios With Respect to Interest Rate and Foreign
Exchange Rate Contracts
Notice of Adjustment
Freddie Mac asserted that OFHEO has not provided adequate notice to
the Enterprises of the basis, in quantifiable terms, for the proposed
upward adjustment it makes to the 0.45 percent ratio with respect to
interest rate and foreign exchange rate contracts.
OFHEO believes that it provided adequate notice of the basis of the
proposed adjustment in the preamble of the proposed Minimum Capital
regulation. The preamble explained how OFHEO analyzed the relative
credit risk of interest rate and foreign exchange rate contracts as
compared with the credit risk of MBS. However, in light of this
comment, OFHEO believes it appropriate to summarize its reasons for
adjusting the 0.45 percent ratio.
The source of credit risk of MBS to the Enterprises is the risk of
defaults and losses on the mortgages underlying the MBS. The aggregate
credit risk associated with the underlying mortgages is low because the
Enterprises require very broad geographic diversification; strict and
consistent mortgage underwriting standards; minimum initial
collateralization of 125 percent (i.e., maximum 80 percent loan-to-
value ratio) or supplemental mortgage insurance; and increasing levels
of collateralization as loans amortize and property values increase.
Moreover, the credit risk of MBS is offset by the continuing source of
income provided by guarantee fees.
Neither Enterprise has experienced a net credit loss on its MBS.
Annual losses to date have ranged from two basis points to ten basis
points (expressed as a percentage of the outstanding portfolio), and
have been easily covered by guarantee fee income, which has ranged from
20 to 25 basis points.
The source of credit risk of interest rate and foreign exchange
rate contracts is the risk of counterparty default. The credit risk of
interest rate and foreign exchange rate contracts is greater than that
of MBS, even though the Enterprises attempt to limit the credit risk of
the contracts by restricting their business to high quality
counterparties and adjusting collateral requirements on the basis of
the counterparty credit quality and the current replacement cost of the
contracts. The credit risk associated with interest rate and foreign
exchange rate contracts is a result of the following characteristics:
Large swings in market rates, on which interest rate and
foreign exchange rate contracts are based, may simultaneously increase
exposure to and risk of default by one or more counterparties, which
are typically financial firms.
While losses may be infrequent, the high level of
interdependence of the world's major financial institutions, many of
which are important interest rate and foreign exchange rate contract
counterparties, could cause disproportionately high losses when they do
occur. This phenomenon is often referred to as ``systemic risk.''
Counterparty risk is concentrated. The loss resulting from
the default of a single counterparty could be many times larger than
the amount of capital that would be associated with the application of
a 0.45 percent capital ratio.
Interest rate and foreign exchange rate contract exposures
are not as fully collateralized as are the mortgages underlying the
Enterprises' MBS.
The interest rate and foreign exchange rate contracts
markets are comparatively new; therefore, the functioning of these
markets is less predictable in terms of operational and legal risk.
There is no current stream of fee income to offset losses
on interest rate and foreign exchange rate contracts associated with
counterparty failures.
OFHEO recognizes that, although the credit risk characteristics of
interest rate and foreign exchange rate contracts can be identified,
they are difficult to quantify. However, the 1992 Act does not require
such quantification. Rather, it requires a reasonable analysis, based
on available information, of the credit risk of interest rate and
foreign exchange rate contracts relative to that of MBS.
The fact that the Enterprises have not experienced a net credit
loss on their MBS does not mean that there are no risks associated with
these instruments. Similarly, the fact that the Enterprises have not
experienced losses associated with interest rate and foreign exchange
rate contracts does not mean that there are no risks associated with
these contracts. In these circumstances, it is appropriate for OFHEO to
analyze the relative risks of these instruments by comparing their
respective credit risk characteristics. Based on an analysis of these
relative credit risk characteristics, OFHEO adjusted the 0.45 percent
ratio applicable to MBS upward to reflect the greater risk of interest
rate and foreign exchange rate contracts. As OFHEO and the Enterprises
accumulate data on the risk of, and gain experience with the
application of the ratios for, interest rate and foreign exchange rate
contracts, OFHEO may make adjustments to the ratios, as appropriate.
Freddie Mac also commented on the upward adjustment of ratios for
interest rate and foreign exchange rate contracts in light of OFHEO's
statement in the Annual Report to Congress that the credit risk of the
Enterprises' derivatives (interest rate and foreign exchange rate)
contracts ``is very small relative to the credit risk the Enterprises
face with regard to mortgages they hold or guarantee.'' 28 This
statement was in the context of the notional values of the contracts.
As the Annual Report to Congress notes two sentences later, the
replacement cost (current credit exposure) of the contracts is
relatively small. In other words, the replacement cost, which together
with an amount for potential future credit exposure constitutes the
credit equivalent amount, is very small in comparison with the notional
amount. We note that the credit equivalent amount represents the
overall credit risk of interest rate and foreign exchange rate
contracts.
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\28\ OFHEO, Annual Report to Congress, 9 (June 15, 1995).
---------------------------------------------------------------------------
Lowering the Proposed Ratios
Fannie Mae recommended lowering the proposed ratios from 3.0
percent of
[[Page 35613]]
the credit equivalent amount of uncollateralized interest rate and
foreign exchange rate contracts and 1.5 percent of the credit
equivalent amount of collateralized contracts to 2.0 percent and 0.5
percent respectively. Fannie Mae believes that the proposed ratios are
unreasonably high in relation to the historical loss experience for
similar obligations.
Fannie Mae stated that the factors that determine an adequate
amount of required capital for interest rate and foreign exchange rate
contracts include the probability of default and the severity of
possible loss. To determine the probability of default of
collateralized interest rate and foreign exchange rate contracts,
Fannie Mae analyzed historical default statistics from Moody's
Investors Service over the past 25 years for unsecured, 5- to 9-year
term senior debt of corporations with debt ratings from Aaa to Baa.
Fannie Mae stated that it uses historical data for unsecured senior
debt because data on interest rate and foreign exchange rate contracts
is limited due to the relative newness of the market in such contracts.
Fannie Mae believes that their default rates are functionally
equivalent because interest rate and foreign exchange rate contracts
and unsecured senior debt represent general corporate obligations.
Fannie Mae stated that the average rating of its interest rate and
foreign exchange rate counterparties is Aa or A. Using the Moody's
Investors Service historical data, the default rates for unsecured
senior debt in those categories ranges from 0.3 percent to 1.5 percent.
Thus, Fannie Mae suggested that an appropriate estimate of default
incidence for its interest rate and foreign exchange rate contracts is
between 0.3 and 1.5 percent.
Fannie Mae then stated that the historical data demonstrates that
the average loss severity from 1974 through 1994 is 51.1 percent for
all corporate unsecured senior debt, and 28.4 percent for Baa or better
corporate unsecured senior debt. Multiplying the default incidence by
the loss severity yields a ``capital ratio.'' Thus, according to Fannie
Mae, a default incidence in the range of 0.3 to 1.5 percent and a
severity level in the range of 28.4 to 51.1 percent produces a
``capital ratio'' for uncollateralized interest rate and foreign
exchange rate contracts in the range of 0.1 to 0.75 percent. The ratio
that Fannie Mae recommended--2.0 percent for uncollateralized interest
rate and foreign exchange rate contracts--is 2\2/3\ times its estimated
``worst case'' ratio of 0.75 percent. Consequently, Fannie Mae believes
the recommended ratio to be an adequate and suitable minimum capital
ratio for uncollateralized interest rate and foreign exchange rate
contracts.
Fannie Mae further believes that the use of collateral
significantly reduces the severity of loss associated with interest
rate and foreign exchange rate contracts. Fannie Mae asserted that 10
percent is a reasonable estimate of expected loss severity for
collateralized interest rate and foreign exchange rate contracts,
because Fannie Mae evaluates the market value of collateral and
exposures at least monthly, Fannie Mae requires over-collateralization
if credit quality deteriorates below a specific level, and the loss
severity of uncollateralized exposures is best represented by the 28.4
percent historical loss severity experience for unsecured senior debt.
By multiplying the 10 percent loss severity by the 0.3 to 1.5 percent
historical average default rates, Fannie Mae estimated a ``capital
ratio range'' of 0.03 percent to 0.15 percent. Thus, Fannie Mae's
recommendation of a 0.5 percent ratio for collateralized interest rate
and foreign exchange rate contracts is 3\1/3\ times its estimated
``worst case.''
After carefully considering Fannie Mae's arguments, OFHEO has
decided not to reduce the proposed ratio for interest rate and foreign
exchange rate contracts. Fannie Mae's analysis assumes that the default
rate for interest rate and foreign exchange rate contracts will conform
with the historical default rates for corporate unsecured senior debt.
As Fannie Mae noted, interest rate and foreign exchange rate contracts
are relatively new instruments and historical default rates are
lacking. Therefore, OFHEO cannot assume that the default rates of
unsecured senior debt and interest rate and foreign exchange rate
contracts will prove to be comparable.
Even assuming the default rates would be comparable, Fannie Mae's
proposal does not provide an adequate capital cushion. Fannie Mae
derives what it calls ``capital ratios'' based on more than twenty
years' experience of a national sample of corporate credits. These
``capital ratios'' are in fact average national loss rates for a period
not marked by extreme economic stress. For minimum capital purposes,
Fannie Mae proposes to apply rates to both uncollateralized and
collateralized counterparty exposure that are roughly three times as
high as these capital ratios. The 1992 Act requires that any adjustment
to the 0.45 percent ratio reflect the credit risk relative to MBS.
Fannie Mae's proposed multiples are not consistent with this
requirement. As the above discussion notes, neither Enterprise has
experienced any net credit loss on its MBS. However, ignoring guarantee
fee income, annual losses to date have ranged from two basis points to
ten basis points. Thus the 0.45 percent statutory capital ratio for MBS
ranges from 4.5 to 22.5 times the historical loss experience for MBS--
higher than the 2\2/3\ and 3\1/3\ times the estimated ``worst case''
loss proposed by Fannie Mae.
Fannie Mae's analysis also ignores a number of factors which
increase the potential loss associated with the credit exposure of
interest rate and foreign exchange rate contracts that are not present
with MBS. The credit exposures of interest rate and foreign exchange
rate contracts are highly concentrated, large swings of interest rates
may simultaneously increase both the credit exposure and the default
risk, and systemic problems could cause disproportionately high losses
when they do occur.
Furthermore, Fannie Mae predicates its proposal on its current risk
management practices, with respect to counterparty creditworthiness and
collateral requirements and their enforcement. OFHEO believes that a
minimum capital requirement establishes an essential amount of capital
that an Enterprise with given levels of business must hold to address
broad categories of risk, not specific exposures. Accordingly, it
should not attempt to reflect the quality of current risk management
practices. For example, Fannie Mae's analysis assumes that it will
continue to manage credit risk by doing business with counterparties
with Aa and A ratings and that such counterparties are not subject to
sudden declines in ratings. Fannie Mae also assumes that, if ratings
decline, it will require and be able to obtain more collateral.
Even if these assumptions were valid, OFHEO believes that they
cannot be the basis of a minimum capital requirement. The minimum
capital requirement is not intended to be a risk-based capital
requirement. The 1992 Act separately provides for a risk-based capital
requirement in which credit, interest, and operational and management
risk are calculated using a stress test. The 1992 Act requires that the
0.45 percent ratio for other off-balance sheet obligations be adjusted
to reflect differences in the credit risk of the obligation and MBS.
OFHEO believes that the adjustment should be for differences in risk
associated with the inherent risk characteristics of different
instruments, not the risk characteristics of counterparties to these
obligations or
[[Page 35614]]
current risk management practices for these obligations.
Right to Raise the Ratio
America's Community Bankers recommended that OFHEO explicitly
reserve the right to raise the ratio for uncollateralized interest rate
and foreign exchange rate contracts to 4.0 percent depending on the
specific counterparty risks involved. As discussed above, OFHEO
believes that counterparty credit ratings are not the appropriate focus
of minimum capital ratios and that it has required an adequate amount
of capital for uncollateralized interest rate and foreign exchange rate
contracts. If OFHEO's experience with the application of the ratio for
interest rate and foreign exchange rate contracts proves otherwise,
OFHEO will raise the ratio. In addition, as discussed in connection
with the comments on section 1750.1, if the business practices of an
Enterprise were to endanger the capital adequacy of the Enterprise,
OFHEO would take any actions necessary to ensure the financial safety
and soundness of the Enterprise's operations.
Avoid Changing the Capital Calculation
Mortgage Bankers Association of America (MBA) stated that the
proposed change from the interim guidelines in the calculation of the
capital ratio for interest rate and foreign exchange rate contracts
does not appear to be so significant as to cause the Enterprises to
increase current guarantee fees, which would ultimately harm consumers
in the form of higher interest rates or fees. MBA understands that the
Enterprises currently have sufficient capital to meet the higher
capital ratios that would result from the proposal. Nevertheless, MBA
urged OFHEO to remain cautious and avoid changing the capital
calculation of interest rate and foreign exchange rate contracts if the
calculation influences the Enterprises' selection of funding and
hedging instruments in a way that affects their ability to manage
risks, is detrimental to their housing mission, or increases the cost
of credit to consumers.
MBA recognizes that OFHEO does not wish to jeopardize the
Enterprises' ability to meet their housing mission and goals, but must
ensure the safety and soundness of the Enterprises. MBA believes that
OFHEO should strive to strike a balance and avoid imposing inefficient
capital requirements that inhibit the management of risk.
OFHEO agrees that the capital requirements should ensure the safety
and soundness of the Enterprises while not jeopardizing the
Enterprises' ability to meet their housing mission and goals.
Consistent with that approach, OFHEO does not believe that the change
in the calculation of the capital ratio for interest rate and foreign
exchange rate contracts will adversely affect the Enterprises' ability
to manage risk or increase the cost of mortgage credit to consumers.
Furthermore, mindful of the need to strike a balance among competing
interests, OFHEO believes that it is in the best long-term interests of
consumers and the Enterprises that the Enterprises have an adequate
cushion of minimum capital to ensure against loss. While a decrease in
capital requirements could result in a reduction in mortgage credit
costs for consumers in the short-term, the decrease would not be
beneficial in the long-term if it jeopardized the financial viability
of the Enterprises.
This view is consistent with the congressional findings set forth
in the 1992 Act that recognize the Enterprises' important housing
mission and the need to provide long-term safeguards in the form of
capital requirements to reduce the risk of failure.\29\ The
congressional findings also recognize the Enterprises' obligation to
facilitate the financing of affordable housing while maintaining a
strong financial condition and a reasonable economic return.\30\
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\29\ See section 1302 (12 U.S.C. 4501).
\30\ Section 1302(7) (12 U.S.C. 4501(7)).
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``Pro Rata'' Capital Charge
The Office of Thrift Supervision asked whether the proposed
regulation would provide a reduced ``pro rata'' capital charge for
partially collateralized interest rate and foreign exchange rate
contracts. In response to this comment, OFHEO notes that section
1750.4(a)(6) provides a ratio of 3.00 percent of the credit equivalent
amount of interest rate and foreign exchange rate contracts, except to
the extent of the current market value of posted qualifying collateral;
and 1.50 percent of the market value of qualifying collateral posted to
secure interest rate and foreign exchange rate contracts, not to exceed
the credit equivalent amount of such contracts. Thus, an interest rate
or foreign exchange rate contract partially collateralized with
qualifying collateral will have a reduced capital charge to the extent
of the qualifying collateral.
Enterprises' Right to Require Collateral
Fannie Mae and Freddie Mac both stated that the market widely
perceives an agreement with a Aaa rated counterparty that agrees to
post collateral if it is downgraded to be as safe as, or safer than, a
comparable agreement with a lesser-rated counterparty that posts
collateral. They claimed that the proposed regulation would run counter
to well-established market practices by rewarding an Enterprise with a
lower capital requirement if its Aaa rated counterparties are
downgraded and post collateral under their collateral agreements, or if
the Enterprise avoids Aaa rated counterparties in favor of lesser-rated
counterparties.
Freddie Mac recommended the following standard: The same minimum
capital ratio would apply for collateralized agreements and for
uncollateralized agreements where the counterparty holds the highest
credit rating of any entity effectively recognized by the Division of
Market Regulation of the Securities and Exchange Commission as a
nationally recognized statistical rating organization for the purposes
of capital rules for broker-dealers, and has entered into a binding
agreement to post qualifying collateral if and when the counterparty no
longer holds the highest rating of such an entity. As an alternative,
Freddie Mac recommended treating the contract as fully collateralized
for purposes of computing the minimum capital requirement where a Aaa
rated counterparty has agreed to post collateral when it is downgraded.
OFHEO has considered Fannie Mae's and Freddie Mac's
recommendations, but has decided not to adopt them. The Enterprises'
recommendations rely heavily on the credit ratings of counterparties
and current Enterprise practice. In fact, Freddie Mac has noted
elsewhere that credit enhancements in which the counterparty is
required to post collateral only when its credit rating or capital
begins to deteriorate ``present some management-and-operations risk
because the arrangements need to be monitored and the collateral needs
to be posted in a timely fashion.'' \31\
---------------------------------------------------------------------------
\31\ ``Comments of the Federal Home Loan Mortgage Corporation on
the Advance Notice of Proposed Rulemaking on Risk-Based Capital of
the Office of Federal Housing Enterprise Oversight,'' 72 (May 9,
1995)(available at OFHEO).
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OFHEO believes that reliance on the credit ratings of
counterparties and current Enterprise practice should not be the basis
for establishing minimum capital ratios. Even though the 1992 Act
requires that credit risk be taken into account when adjusting the
ratio for certain off-balance sheet obligations, the minimum capital
requirement essentially is computed on the basis of simple leverage
ratios. Categories of obligations that are assigned a specific ratio
include obligations with a mixture
[[Page 35615]]
of greater and lesser risk, depending on borrower or counterparty
characteristics.
Consistent with the concepts underlying ``minimum'' as opposed to
``risk-based'' capital, when developing the proposed regulation, OFHEO
considered whether the minimum capital ratio should be the same for
interest rate and foreign exchange rate contracts regardless of whether
collateral was posted. In adopting the proposed regulation, OFHEO
determined that a lower minimum capital ratio for the collateralized
portion of an obligation was appropriate. This determination was made
based on the recognition that a collateralized position affords the
Enterprises greater certainty of collection than an uncollateralized
position in the event of a decline in the financial condition of a
counterparty. In contrast, the value of a promise by a counterparty to
post collateral in the event that it is downgraded is subject to the
diminished capacity of a counterparty during times of financial stress
to identify and pledge adequate liquid assets to secure its contractual
obligations.
OFHEO also recognizes that the value of a promise by a counterparty
to post collateral when it is downgraded is influenced by the speed of
the rating agency's ability to recognize changes in credit conditions.
Recent incidents, such as the default of Barings from trading losses,
illustrate how rapidly the financial health of a well-respected entity
can deteriorate. When a decline occurs very rapidly, a promise to post
collateral to secure counterparty obligations may be of little value.
Finally, as a point of comparison, OFHEO notes that the risk-based
capital standards for banks and thrifts do not treat agreements to post
collateral as the equivalent of collateral and do not incorporate
counterparty credit ratings into the determination of risk weights
assigned to different counterparties.
Section 1750.4(a)(7) Ratio With Respect to Other Off-Balance Sheet
Obligations
Section 1750.4(a)(7) of the proposed regulation provides the amount
of other off-balance sheet obligations that is to be included in the
computation of the minimum capital requirement. The amount is--
0.45 percent of the outstanding amount of other off-balance sheet
obligations, excluding commitments, multifamily credit enhancements,
sold portfolio remittances pending, and interest rate contracts and
foreign exchange rate contracts except as adjusted by the Director to
reflect differences in the credit risk of such obligations in relation
to mortgage-backed securities.
Freddie Mac recommended that proposed section 1750.4(a)(7) be
deleted in connection with its comments that (1) the definition of the
term ``off-balance sheet obligation'' be deleted and (2) the definition
of the term ``other off-balance sheet obligations'' be defined in terms
of commitments, multifamily credit enhancements, sold portfolio
remittances pending, and interest rate and foreign exchange rate
contracts. (See the full discussion under section 1750.2, above.) If
section 1750.4(a)(7) is retained, Freddie Mac recommended that OFHEO
delete the phrase ``the outstanding amount.'' Freddie Mac believes that
the phrase could create confusion if, in the future, OFHEO determines
that an item should be treated as an ``other off-balance sheet
obligation,'' and OFHEO also determines that the appropriate measure of
credit risk should be something other than an ``outstanding amount.''
OFHEO agrees with Freddie Mac; however, rather than deleting the
phrase ``outstanding amount,'' OFHEO has substituted the phrase
``credit equivalent amount, or other appropriate measure, as determined
by the Director.'' This revision will clarify that, depending on the
specific characteristics of the obligation, the computation of the
minimum capital requirement may be based on the credit equivalent
amount or other measures that the Director determines are appropriate.
OFHEO also has made a clarifying editorial revision to proposed
section 1750.4(a)(6)(ii) with respect to the computation of the minimum
capital amount for interest rate and exchange rate contracts.
Section 1750.4(b) Capital Treatment of On-Balance Sheet and Off-
Balance Sheet Items
Section 1750.4(b) of the proposed regulation provides that, for
purposes of the minimum capital requirement computation, any asset or
financial obligation that is properly classifiable in more than one
category of items must be classified in the category that yields the
highest requirement.
Freddie Mac expressed the concern that the proposed regulation
would require capital charges for foreign exchange rate contracts to be
computed as if such contracts were reflected on the balance sheet, even
if they are not. Freddie Mac also recommended that OFHEO clarify that
the regulation will not require an Enterprise to make adjustments to a
balance sheet that has been prepared in accordance with generally
accepted accounting principles (GAAP).
As noted by Freddie Mac, the Enterprises are required to prepare
their balance sheets in accordance with GAAP. Consistent with that
requirement, the Minimum Capital regulation does not require an
Enterprise to adjust its balance sheet prepared in accordance with
GAAP. The requirements of the Minimum Capital regulation relate only to
the computation of the minimum capital requirement.
Under GAAP, it is possible that some assets or obligations may
properly be reflected either on or off the balance sheet. OFHEO
believes that, for minimum capital purposes, it is appropriate to
classify any asset or obligation that may be properly reflected either
on or off the balance sheet in the category that yields the highest
minimum capital requirement. The purpose of capital is to serve as a
cushion to absorb losses and thereby reduce the risk of failure of the
Enterprise. The minimum capital requirement represents a level of
capital for an Enterprise which, if not met, will result in the
institution being classified as 'significantly undercapitalized.''
Consequently, it would be inappropriate for the Minimum Capital
regulation to permit an Enterprise to determine its minimum capital
requirement by favoring one accounting treatment over another. The
purpose of section 1750.4(b) is to avoid such a circumstance.
In addition, Freddie Mac commented on the relationship between
section 1750.4(b) and paragraph 4 of Appendix A, suggesting that they
articulated inconsistent requirements with respect to interest rate and
foreign exchange rate contracts. In that regard, Freddie Mac
recommended that OFHEO treat all foreign exchange rate contracts as
other off-balance sheet obligations, and then subtract from the
computed minimum capital requirement the amount, if any, that is
attributable to the contracts as on-balance sheet assets.
OFHEO does not believe there is any inconsistency between section
1750.4(b) and paragraph 4 of Appendix A. The scope of the two
provisions is different and, to the extent they deal with the same
issue, they address different aspects of the issue. As explained above,
section 1750.4(b) provides that an Enterprise's assets or obligations
that may be properly classified in more than one of the on- or off-
balance sheet categories will be classified according to the category
that yields the highest
[[Page 35616]]
minimum capital requirement. The scope of section 1750.4(b) encompasses
not only interest rate and foreign exchange rate contracts, but also
any other assets or obligations that could be classified in more than
one category.
In contrast, paragraph 4 of Appendix A, Avoidance of Double
Counting, is restricted in scope to interest rate and foreign exchange
rate contracts and only addresses the issue of double counting. The
purpose of paragraph 4 is to ensure that the capital amount for such
contracts is not double counted if the proper accounting treatment
results in a portion of the credit exposure of the contract(s) being
reflected on and off the balance sheet. To that end, paragraph 4
provides that the amount of credit exposure arising from interest rate
and foreign exchange rate contracts may need to be excluded from on-
balance sheet assets in calculating the minimum capital requirement.
Section 1750.5 Notice of Capital Classification
Section 1750.5 outlines the procedures that OFHEO will follow when
notifying each Enterprise of its capital classification.
Freddie Mac noted that while the proposed regulation sets forth a
process that could result in a final capital classification not being
issued until a full 150 days after the end of a quarter, it hopes that
a process of less than 90 days would continue to be the norm.
Section 1750.3 provides that an Enterprise has 30 days after the
end of each quarter to file a minimum capital report. Section 1750.5
provides that within 60 days of receiving the minimum capital report,
OFHEO will provide each Enterprise with a notice of proposed capital
classification. The Enterprise has 30 days in which to respond to the
proposed capital classification. The Enterprise's response period may
be extended up to 30 additional calendar days, or shortened, at the
sole discretion of the Director. The Director, after taking into
consideration the Enterprise's response, has up to 30 calendar days
following the end of the response period in which to issue a final
notice of capital classification.
The time periods specified in the regulation are designed to
establish the longest possible timeframes for actions by the
Enterprises and OFHEO in the capital classification process. OFHEO
would expect that under most circumstances the total elapsed time for a
capital classification will be substantially less than the maximum
period contemplated in the regulation. In that regard, the timing of
the submission of the Enterprise's minimum capital report and its
response to the proposed classification will have a significant impact
on the time period for receipt of the final capital classification.
Appendix A
Appendix A provides the methodology for computing the minimum
capital component for interest rate and foreign exchange rate
contracts.
The Office of Thrift Supervision questioned whether OFHEO had
considered whether the proposed treatment of interest rate and foreign
exchange rate contracts, including the bilateral netting provisions,
adds unnecessary complexity to the minimum capital standard in light of
the sophisticated risk-based capital regulation that OFHEO is
developing.
Although the minimum capital standard is a minimum leverage ratio
standard, Congress has required that OFHEO consider the credit risk of
off-balance sheet obligations and adjust the 0.45 percent ratio to
reflect the difference between the credit risk of interest rate and
foreign exchange rate contracts and MBS. Thus, OFHEO believes that the
adjusted ratios should be applied to the credit equivalent amount of
interest rate and foreign exchange rate contracts because the credit
equivalent amount best represents the dollar amount at risk. OFHEO also
believes that bilateral netting, that is, the offsetting of positive
and negative mark-to-market values in the determination of a current
credit exposure used in the calculation of a credit equivalent amount,
provides a more accurate representation of the dollar amount at risk.
Consequently, OFHEO believes that the more complex treatment with
respect to interest rate and foreign exchange rate contracts is
appropriate.
Paragraph 5. Collateral
Freddie Mac noted that the definition of the term ``qualifying
collateral'' in section 1750.2 differs from the discussion of what
constitutes qualifying collateral in paragraph 5 of Appendix A. OFHEO
does not intend that there be any difference and has revised the
discussion in Appendix A to conform with the definition set forth in
section 1750.2. (See the full discussion of this comment under section
1750.2, Qualif
FR Doc. 96-17120 Office of Federal Housing Enterprise Oversight; Minimum Capital
ying collateral, above.)
Additionally, OFHEO has renumbered paragraphs 1 and 2 of Appendix A
of the proposed regulation to ensure ease of reading and reference.
IV. Section-by-Section Analysis
Section 1750.1 General
This section states that the regulation sets forth the methodology
for computing the minimum capital requirement for each Enterprise. It
further states that the board of directors of each Enterprise is
responsible for ensuring that the Enterprise maintains capital at a
level that is sufficient to ensure the continued financial viability of
the Enterprise and that equals or exceeds the minimum capital
requirement.
Section 1750.2 Definitions
Section 1750.2 provides definitions for the terms used in the
regulation.
The term ``affiliate'' is defined as to mean any entity that
controls, is controlled by, or is under common control with, an
Enterprise, except as otherwise provided by the Director.
The term ``commitment'' is defined to mean any contractual, legally
binding agreement that obligates an Enterprise to purchase or to
securitize mortgages.
The term ``core capital'' is defined to mean the sum of (as
determined in accordance with generally accepted accounting principles)
the par or stated value of outstanding common stock; the par or stated
value of outstanding perpetual, noncumulative preferred stock; paid-in
capital; and retained earnings. This definition does not include debt
instruments or any amounts an Enterprise could be required to pay at
the option of an investor to retire capital instruments. The amount of
retained earnings includable in the calculation of core capital is the
net of the carrying value of Treasury stock. Treasury stock is stock
that an Enterprise has issued and subsequently acquired, but has not
retired or resold. Carrying value is typically the amount the
Enterprise paid for the Treasury stock.
The term ``Director'' is defined to mean the Director of OFHEO.
The term ``Enterprise'' is defined to mean the Federal National
Mortgage Association and any affiliate thereof or the Federal Home Loan
Mortgage Corporation and any affiliate thereof.
The term ``foreign exchange rate contracts'' is defined to mean
cross-currency interest rate swaps, forward foreign exchange contracts,
currency options purchased (including currency options purchased over-
the-counter), and any other instrument that gives rise to similar
credit risks. The definition clarifies that the term ``foreign exchange
rate contracts'' does not mean foreign exchange rate contracts with an
original maturity of 14 calendar days or less and
[[Page 35617]]
foreign exchange rate contracts traded on exchanges that require daily
payment of variation margins.
The term ``interest rate contracts'' is defined to mean single
currency interest rate swaps, basis swaps, forward rate agreements,
interest rate options purchased (including caps, collars, and floors
purchased), over-the-counter options purchased, and any other
instrument that gives rise to similar credit risks (including when-
issued securities and forward deposits accepted). The definition of the
term ``interest rate contracts'' does not include instruments traded on
exchanges that require daily payment of variation margins.
The term ``mortgage-backed security'' is defined to mean a
security, investment, or substantially equivalent instrument that
represents an interest in a pool of loans secured by mortgages or deeds
of trust where the principal or interest payments to the investor in
the security or substantially equivalent instrument are guaranteed or
effectively guaranteed by an Enterprise.
The term ``multifamily credit enhancement'' is defined to mean any
guarantee, pledge, purchase arrangement, or other obligation or
commitment provided or entered into by an Enterprise with respect to
multifamily mortgages to provide credit enhancement, liquidity,
interest rate support, and other guarantees and enhancements for
revenue bonds issued by a state or local governmental unit (including a
housing finance agency) or other bond issuer.
The term ``1992 Act'' is defined to mean the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992, found at Title
XIII of the Housing and Community Development Act of 1992, Pub. L. No.
102-550.
The term ``notional amount'' is defined to mean the face value of
the underlying financial instrument(s) on which an interest rate or
foreign exchange rate contract is based.
The term ``off-balance sheet obligation'' is defined to mean a
binding agreement, contract, or similar arrangement that requires or
may require future payment(s) in money or kind by another party to an
Enterprise, or that effectively guarantees all or part of such
payment(s) to third parties (including commitments), where such
agreement or contract is a source of credit risk that is not included
on its balance sheet.
The term ``OFHEO'' is defined to mean the Office of Federal Housing
Enterprise Oversight.
The term ``other off-balance sheet obligations'' is defined to mean
all off-balance sheet obligations of an Enterprise that are not
mortgage-backed securities or substantially equivalent instruments and
that are not resecuritized MBS such as real estate mortgage investment
conduits or similar resecuritized instruments.
The term ``perpetual, noncumulative preferred stock'' is defined to
mean preferred stock that does not have a maturity date, provides the
issuer the ability and the legal right to eliminate dividends and does
not permit the accruing or payment of impaired dividends, and that
cannot be redeemed at the option of the holder. It is further defined
as preferred stock that has no other provisions that will require
future redemption of the issue, in whole or in part, or that will reset
the dividend periodically based, in whole or in part, on the
Enterprise's current credit standing, such as auction rate, money
market, or remarketable preferred stock, or that may cause the dividend
to increase to a level that could create an incentive for the issuer to
redeem the instrument, such as exploding rate stock. For purposes of
minimum capital, perpetual, noncumulative preferred stock must provide
capital that is available to absorb losses of the Enterprise from any
source.
The term ``qualifying collateral'' is defined to mean cash on
deposit; securities issued or guaranteed by the central governments of
the OECD-based group of countries,32 United States Government
agencies, or United States Government-sponsored agencies; and
securities issued by multilateral lending institutions or regional
development banks.
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\32\ The OECD-based group of countries comprises full members of
the Organization for Economic Cooperation and Development (OECD)
regardless of entry date, as well as countries that have concluded
special lending arrangements with the International Monetary Fund
(IMF) associated with the IMF's General Arrangements to Borrow, but
excludes any country that has rescheduled its external sovereign
debt within the previous 5 years. A rescheduling of external
sovereign debt generally would include any renegotiation of terms
arising from a country's mobility or unwillingness to meet its
external debt service obligations, but generally not include any
renegotiation to allow the borrower to take advantage of a decline
in interest rate or other change in market conditions.
As of November 1995, the OECD countries included the following
countries: Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg,
Mexico, the Netherlands, New Zealand, Norway, Portugal, Spain,
Sweden, Switzerland, Turkey, the United Kingdom, and the United
States; and Saudi Arabia has concluded special lending arrangements
with the IMF associated with the IMF's General Arrangements to
Borrow.
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Section 1750.3 Procedures and Timing
Section 1750.3 provides that each Enterprise must file with the
Director a minimum capital report each quarter, or at such other times
as the Director requires, in his or her sole discretion. The report
must contain the information that responds to all of the items required
by OFHEO in written instructions to the Enterprise, including, but not
limited to an estimate of the minimum capital requirement; an estimate
of core capital overage or shortfall relative to the estimated minimum
capital requirement; and such other information as may be required by
the Director.
This section further provides that the report must be submitted not
later than April 30, July 30, October 30, and January 30 of each year,
and that it must be in writing and in such other format as may be
required by the Director.
In the event an Enterprise makes an adjustment to its financial
statements for a quarter or a date for which the information was
requested which would cause an adjustment to a minimum capital report,
section 1750.3 requires that the Enterprise file an amended minimum
capital report not later than 3 business days after the date of such
adjustment.
Finally, section 1750.3 provides that each minimum capital report
or any amended minimum capital report must contain a declaration by an
officer authorized by the board of directors of the Enterprise to make
such a declaration, including, but not limited to, a president, vice
president, or treasurer, that the report is true and correct to the
best of such officer's knowledge and belief.
Section 1750.4 Minimum Capital Requirement Computation
Section 1750.4 sets forth the methodology for computing the minimum
capital requirement. The minimum capital requirement is the sum of the
following amounts:
--2.50 percent times the aggregate on-balance sheet assets of the
Enterprise;
--0.45 percent times the unpaid principal balance of mortgage-backed
securities and substantially equivalent instruments that were issued or
guaranteed by the Enterprise;
--0.45 percent of 50 percent of the average dollar amount of
commitments outstanding each quarter over the preceding four quarters;
--0.45 percent of the outstanding principal amount of bonds with
multifamily credit enhancements;
--0.45 percent of the dollar amount of sold portfolio remittances
pending;
[[Page 35618]]
--3.00 percent of the credit equivalent amount of interest rate
contracts and foreign exchange rate contracts, except to the extent of
the current market value of posted qualifying collateral, computed in
accordance with Appendix A; 1.50 percent of the market value of
qualifying collateral posted to secure interest rate and foreign
exchange rate contracts, not to exceed the credit equivalent amount of
such contracts, computed in accordance with Appendix A; and
--0.45 percent of the outstanding amount, credit equivalent amount, or
other measure determined appropriate by the Director, of other off-
balance sheet obligations (excluding commitments, multifamily credit
enhancements, sold portfolio remittances pending, and interest rate
contracts and foreign exchange rate contracts), except as adjusted by
the Director to reflect differences in the credit risk of such
obligations in relation to mortgage-backed securities.
In the event that any asset or financial obligation is properly
classifiable in more than one of the above categories, section 1750.4
provides that, for minimum capital purposes, the asset or financial
obligation must be classified in the category that yields the highest
minimum capital requirement.
The section further explains that the term ``preceding four
quarters'' means the last day of the quarter just ended (or the date
for which the minimum capital report is filed, if different), and the
three preceding quarter-ends.
Section 1750.5 Notice of Capital Classification
Section 1750.5 states that not later than 60 calendar days after
the date for which the minimum capital report is filed, OFHEO will
provide each Enterprise with a notice of proposed capital
classification in accordance with section 1368 of the 1992 Act.33
The notice of proposed capital classification includes the proposed
minimum capital requirement and the summary computation of the proposed
minimum capital requirement.
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\33\ 12 U.S.C. 4618.
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Each Enterprise has a period of 30 calendar days following receipt
of a notice of proposed capital classification to submit a response.
The response period may be extended for up to 30 additional calendar
days at the sole discretion of the Director. The Director may shorten
the response period with the consent of the Enterprise or without such
consent if the Director determines that the condition of the Enterprise
requires a shorter response period.
Section 1750.5 further provides that the Director must take into
consideration any response to the notice of proposed capital
classification received from the Enterprise and must issue a notice of
final capital classification for each Enterprise not later than 30
calendar days following the end of the response period.
Appendix A to Subpart A of Part 1750--Minimum Capital Components for
Interest Rate and Foreign Exchange Rate Contracts
Calculation of Credit Equivalent Amounts
Appendix A provides that the minimum capital components for
interest rate and foreign exchange rate contracts are computed on the
basis of the credit equivalent amounts of such contracts. The credit
equivalent amount of an off-balance sheet interest rate or foreign
exchange rate contract that is not subject to a qualifying bilateral
netting contract in accordance with Appendix A is equal to the sum of
the current exposure (sometimes referred to as the replacement cost) of
the contract and an estimate of the potential future credit exposure
over the remaining life of the contract.
The current exposure is determined by the mark-to-market value of
the contract. If the mark-to-market value is positive, then the current
exposure is the mark-to-market value. If the mark-to-market value is
zero or negative, then the current exposure is zero. Mark-to-market
values are measured in United States dollars, regardless of the
currency or currencies specified in the contract, and should reflect
changes in the relevant rates as well as counterparty credit quality.
The potential future credit exposure of a contract, including a
contract with a negative mark-to-market value, is estimated by
multiplying the notional principal amount of the contract by a credit
conversion factor. The effective rather than the apparent or stated
notional amount must be used in this calculation. The credit conversion
factors for interest rate contracts are 0.0 percent for interest rate
contracts with a remaining maturity of 1 year or less; 0.5 percent for
interest rate contracts with a remaining maturity of over 1 year; 1.0
percent for foreign exchange rate contracts with a remaining maturity
of 1 year or less; and 5.0 percent for foreign exchange rate contracts
with a remaining maturity of over 1 year.
Because foreign exchange rate contracts involve an exchange of
principal upon maturity, and foreign exchange rates are generally more
volatile than interest rates, higher conversion factors have been
established for foreign exchange rate contracts than for interest rate
contracts.
No potential future credit exposure is calculated for single
currency interest rate swaps in which payments are made based upon two
floating rate indexes, so-called floating/floating or basis swaps. The
credit exposure on these contracts is evaluated solely on the basis of
their mark-to-market values.
Avoidance of Double Counting
Appendix A provides that, in certain cases, credit exposures
arising from the interest rate and foreign exchange rate contracts
covered by this Appendix A may already be reflected, in part, on the
balance sheet. To avoid double counting such exposures in the
assessment of capital adequacy, counterparty credit exposures arising
from the types of instruments covered by this Appendix A may need to be
excluded from balance sheet assets in calculating the minimum capital
requirement.
Collateral
Appendix A provides that the sufficiency of collateral for off-
balance sheet items is determined by the market value of the collateral
in relation to the credit equivalent amount. Collateral held against a
netting contract is not recognized for minimum capital standard
purposes unless it is legally available to support the single legal
obligation created by the netting contract. Excess collateral held
against one contract or a group of contracts for which a recognized
netting agreement exists may not be considered.
The only forms of collateral that are formally recognized by the
minimum capital standard framework are cash on deposit; securities
issued or guaranteed by the central governments of the OECD-based group
of countries, United States Government agencies, or United States
Government-sponsored agencies; and securities issued by multilateral
lending institutions or regional development banks.
Netting
For purposes of Appendix A, netting refers to the offsetting of
positive and negative mark-to-market values in the determination of a
current exposure to be used in the calculation of a credit equivalent
amount. Any legally enforceable form of bilateral netting (that is,
netting with a single counterparty) of interest rate and foreign
exchange rate contracts is recognized for purposes of calculating the
credit equivalent amount if it meets the following requirements.
Netting is
[[Page 35619]]
accomplished under a written netting contract that creates a single
legal obligation, covering all included individual contracts, with the
effect that the Enterprise would have a claim to receive, or obligation
to pay, only the net amount of the sum of the positive and negative
mark-to-market values on included individual contracts in the event
that a counterparty, or a counterparty to whom the contract has been
validly assigned, fails to perform due to default, insolvency,
liquidation, or similar circumstances.
The Enterprise must obtain a written and reasoned legal opinion(s)
representing that in the event of a legal challenge--including one
resulting from default, insolvency, liquidation, or similar
circumstances--the relevant court and administrative authorities would
find the Enterprise's exposure to be such a net amount under--
--the law of the jurisdiction in which the counterparty is chartered or
the equivalent location in the case of noncorporate entities, and if a
branch of the counterparty is involved, then also under the law of the
jurisdiction in which the branch is located;
--the law that governs the individual contracts covered by the netting
contract; and
--the law that governs the netting contract.
The Enterprise must establish and maintain procedures to ensure
that the legal characteristics of netting contracts are kept under
review in the event of possible changes in relevant law. Furthermore,
the Enterprise must maintain in its files documentation adequate to
support the netting of rate contracts, including a copy of the
bilateral netting contract and necessary legal opinions.
A contract containing a walkaway clause is not eligible for netting
for purposes of calculating the credit equivalent amount. A walkaway
clause is a provision in a netting contract that permits a non-
defaulting counterparty to make lower payments than it would make
otherwise under the contract, or no payment at all, to a defaulter or
to the estate of a defaulter, even if the defaulter or the estate of
the defaulter is a net creditor under the contract.
By netting individual contracts for the purpose of calculating its
credit equivalent amount, the Enterprise represents that it has met the
requirements of Appendix A, and that all the appropriate documents are
in the Enterprise's files and available for inspection by OFHEO. OFHEO
may determine that an Enterprise's files are inadequate or that a
netting contract, or any of its underlying individual contracts, may
not be legally enforceable under any one of the bodies of law described
in Appendix A. If such a determination is made, the netting contract
may be disqualified from recognition for minimum capital standard
purposes or underlying individual contracts may be treated as though
they are not subject to the netting contract.
The credit equivalent amount of interest rate and foreign exchange
rate contracts that are subject to a qualifying bilateral netting
contract is calculated by adding the current exposure of the netting
contract and the sum of the estimates of the potential future credit
exposures on all individual contracts subject to the netting contract,
estimated in accordance with Appendix A. Offsetting contracts in the
same currency maturing on the same date will have lower potential
future exposure as well as lower current exposure. Therefore, for
purposes of calculating potential future credit exposure to a netting
counterparty for foreign exchange rate contracts, and other similar
contracts in which notional principal is equivalent to cash flows,
total notional principal is defined as the net receipts falling due on
each value date in each currency.
The current exposure of the netting contract is determined by
summing all positive and negative mark-to-market values of the
individual contracts included in the netting contract. If the net sum
of the mark-to-market values is positive, then the current exposure of
the netting contract is equal to that sum. If the net sum of the mark-
to-market values is zero or negative, then the current exposure of the
netting contract is zero. OFHEO may determine that a netting contract
qualifies for netting treatment even though certain individual
contracts may not qualify. In such instances, the nonqualifying
contracts should be treated as individual contracts that are not
subject to the netting contract.
In the event a netting contract covers contracts that are normally
excluded from the minimum capital requirement computation--for example,
foreign exchange rate contracts with an original maturity of 14
calendar days or less, or instruments traded on exchanges that require
daily payment of variation margin--an Enterprise may elect consistently
either to include or exclude all mark-to-market values of such
contracts when determining net current exposure.
As stated in the preamble to the proposed regulation, in developing
Appendix A, OFHEO considered provisions of the regulations of the
federal banking agencies with respect to the calculation of the credit
equivalent amount for interest rate and foreign exchange rate
contracts. Subsequent to the publication of the proposed Minimum
Capital regulation, the federal banking agencies amended their
regulations with respect to interest rate and foreign exchange rate
contracts.34 The amendments increase the number of credit
conversion factors that are used to measure the potential future credit
exposure of interest rate and foreign exchange rate contracts. They
also change the way the potential future credit exposure is calculated
when the interest rate and foreign exchange rate contracts are subject
to a qualifying bilateral netting agreement, resulting in a reduction
in the amount of capital required for the netted interest rate and
foreign exchange rate contracts.
---------------------------------------------------------------------------
\34\ 60 FR 46170 (Sept. 5, 1995).
---------------------------------------------------------------------------
OFHEO is analyzing those amendments and considering whether to
conform Appendix A to the final regulations of the federal banking
agencies. Based on the results of that analysis, OFHEO will publish a
proposal, as appropriate.
Regulatory Impact
Executive Order 12606, The Family
This regulation does not have potential for significant impact on
family formulation, maintenance, and general well-being, and thus is
not subject to review under Executive Order 12606.
Executive Order 12612, Federalism
This regulation has no federalism implications that warrant the
preparation of a Federalism Assessment in accordance with Executive
Order 12612.
Executive Order 12866, Regulatory Planning and Review
This regulation has been reviewed by the Office of Management and
Budget pursuant to Executive Order 12866.
Executive Order 12988, Civil Justice Reform
This proposed regulation meets the applicable standards of sections
3(a) and (b) of Executive Order 12988.
Unfunded Mandates Reform Act of 1995
The regulation does not require the preparation of an assessment
statement in accordance with the Unfunded Mandates Reform Act of 1995.
Assessment statements are not required for regulations that incorporate
requirements specifically set forth in
[[Page 35620]]
law. As explained in the preamble, this regulation implements the
minimum capital standard contained in the 1992 Act. In addition, this
regulation does not include a federal mandate that may result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100,000,000 or more (adjusted annually
for inflation) in any 1 year.
Regulatory Flexibility Act
This regulation is applicable only to the Enterprises, which are
not small entities for purposes of the Regulatory Flexibility Act, and
does not have a significant effect on a substantial number of small
entities. Therefore, the General Counsel of OFHEO has certified that
the final regulation will not have significant economic impact on a
substantial number of small entities.
Paperwork Reduction Act
This regulation contains no information collection requirements
that require the approval of the Office of Management and Budget
pursuant to the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq.
List of Subjects in 12 CFR Part 1750
Banks, banking, Federal Home Loan Mortgage Corporation, Federal
National Mortgage Association, Mortgages, Securities.
Accordingly, for the reasons set forth in the preamble, OFHEO
amends Chapter XVII of Title 12 of the Code of Federal Regulations by
adding Part 1750 to read as follows:
PART 1750--CAPITAL
Subpart A--Minimum Capital
Sec.
1750.1 General.
1750.2 Definitions.
1750.3 Procedure and timing.
1750.4 Minimum capital requirement computation.
1750.5 Notice of capital classification.
Appendix A to Subpart A of Part 1750--Minimum Capital Components for
Interest Rate and Foreign Exchange Rate Contracts
Subpart B--[Reserved]
Authority: 12 U.S.C. 4513, 4514, 4612, 4614, 4618.
Subpart A--Minimum Capital
Sec. 1750.1 General.
The regulation contained in this subpart A sets forth the
methodology for computing the minimum capital requirement for each
Enterprise. The board of directors of each Enterprise is responsible
for ensuring that the Enterprise maintains capital at a level that is
sufficient to ensure the continued financial viability of the
Enterprise and that equals or exceeds the minimum capital requirement
contained in this subpart A.
Sec. 1750.2 Definitions.
For purposes of this subpart A, the following definitions shall
apply:
Affiliate means any entity that controls, is controlled by, or is
under common control with, an Enterprise, except as otherwise provided
by the Director.
Commitment means any contractual, legally binding agreement that
obligates an Enterprise to purchase or to securitize mortgages.
Core Capital--(1) Means the sum of (as determined in accordance
with generally accepted accounting principles)--
(i) The par or stated value of outstanding common stock;
(ii) The par or stated value of outstanding perpetual,
noncumulative preferred stock;
(iii) Paid-in capital; and
(iv) Retained earnings; and
(2) Does not include debt instruments or any amounts the Enterprise
could be required to pay at the option of an investor to retire capital
instruments.
Director means the Director of OFHEO.
Enterprise means the Federal National Mortgage Association and any
affiliate thereof or the Federal Home Loan Mortgage Corporation and any
affiliate thereof.
Foreign exchange rate contracts--
(1) Means cross-currency interest rate swaps, forward foreign
exchange contracts, currency options purchased (including currency
options purchased over-the-counter), and any other instrument that
gives rise to similar credit risks; and
(2) Does not mean foreign exchange rate contracts with an original
maturity of 14 calendar days or less and foreign exchange rate
contracts traded on exchanges that require daily payment of variation
margins.
Interest rate contracts--
(1) Means single currency interest rate swaps, basis swaps, forward
rate agreements, interest rate options purchased (including caps,
collars, and floors purchased), over-the-counter options purchased, and
any other instrument that gives rise to similar credit risks (including
when-issued securities and forward deposits accepted); and
(2) Does not mean such instruments traded on exchanges that require
daily payment of variation margins.
Mortgage-backed security means a security, investment, or
substantially equivalent instrument that represents an interest in a
pool of loans secured by mortgages or deeds of trust where the
principal or interest payments to the investor in the security or
substantially equivalent instrument are guaranteed or effectively
guaranteed by an Enterprise.
Multifamily credit enhancement means any guarantee, pledge,
purchase arrangement, or other obligation or commitment provided or
entered into by an Enterprise with respect to multifamily mortgages to
provide credit enhancement, liquidity, interest rate support, and other
guarantees and enhancements for revenue bonds issued by a state or
local governmental unit (including a housing finance agency) or other
bond issuer.
1992 Act means the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, found at Title XIII of the Housing and Community
Development Act of 1992, Pub. L. 102-550, 12 U.S.C. 4501 et seq.
Notional amount means the face value of the underlying financial
instrument(s) on which an interest rate or foreign exchange rate
contract is based.
Off-balance sheet obligation means a binding agreement, contract,
or similar arrangement that requires or may require future payment(s)
in money or kind by another party to an Enterprise, or that effectively
guarantees all or part of such payment(s) to third parties (including
commitments), where such agreement or contract is a source of credit
risk that is not included on its balance sheet.
OFHEO means the Office of Federal Housing Enterprise Oversight.
Other off-balance sheet obligations means all off-balance sheet
obligations of an Enterprise that are not mortgage-backed securities or
substantially equivalent instruments and that are not resecuritized
mortgage-backed securities, such as real estate mortgage investment
conduits or similar resecuritized instruments.
Perpetual, noncumulative preferred stock means preferred stock
that--
(1) Does not have a maturity date;
(2) Provides the issuer the ability and the legal right to
eliminate dividends and does not permit the accruing or payment of
impaired dividends;
(3) Cannot be redeemed at the option of the holder; and
(4) Has no other provisions that will require future redemption of
the issue, in whole or in part, or that will reset the dividend
periodically based, in whole or in part, on the Enterprise's current
credit standing, such as auction rate,
[[Page 35621]]
money market, or remarketable preferred stock, or that may cause the
dividend to increase to a level that could create an incentive for the
issuer to redeem the instrument, such as exploding rate stock.
Qualifying collateral means cash on deposit; securities issued or
guaranteed by the central governments of the OECD-based group of
countries,1 United States Government agencies, or United States
Government-sponsored agencies; and securities issued by multilateral
lending institutions or regional development banks.
---------------------------------------------------------------------------
\1\ The OECD-based group of countries comprises full members of
the Organization for Economic Cooperation and Development (OECD)
regardless of entry date, as well as countries that have concluded
special lending arrangements with the International Monetary Fund
(IMF) associated with the IMF's General Arrangements to Borrow, but
excludes any country that has rescheduled its external sovereign
debt within the previous 5 years. A rescheduling of external
sovereign debt generally would include any renegotiation of terms
arising from a country's mobility or unwillingness to meet its
external debt service obligations, but generally not include any
renegotiation to allow the borrower to take advantage of a decline
in interest rate or other change in market conditions. As of
November 1995, the OECD countries included the following countries:
Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico,
the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland, Turkey, the United Kingdom, and the United States; and
Saudi Arabia has concluded special lending arrangements with the IMF
associated with the IMF's General Arrangements to Borrow.
---------------------------------------------------------------------------
Sec. 1750.3 Procedure and timing.
(a) Each Enterprise shall file with the Director a minimum capital
report each quarter or at such other times as the Director requires, in
his or her sole discretion. The report shall contain the information
that responds to all of the items required by OFHEO in written
instructions to the Enterprise, including, but not limited to:
(1) Estimate of the minimum capital requirement;
(2) Estimate of core capital overage or shortfall relative to the
estimated minimum capital requirement;
(3) Such other information as may be required by the Director.
(b) The quarterly minimum capital report shall be submitted not
later than April 30, July 30, October 30, and January 30 of each year.
(c) Each minimum capital report shall be submitted in writing and
in such other format as may be required by the Director.
(d) In the event an Enterprise makes an adjustment to its financial
statements for a quarter or a date for which the information was
requested, which would cause an adjustment to a minimum capital report,
the Enterprise shall file with the Director an amended minimum capital
report not later than 3 business days after the date of such
adjustment.
(e) Each minimum capital report or any amended minimum capital
report shall contain a declaration by an officer authorized by the
board of directors of the Enterprise to make such a declaration,
including, but not limited to a president, vice president, or
treasurer, that the report is true and correct to the best of such
officer's knowledge and belief.
Sec. 1750.4 Minimum capital requirement computation.
(a) The minimum capital requirement for each Enterprise shall be
computed by adding the following amounts:
(1) 2.50 percent times the aggregate on-balance sheet assets of the
Enterprise;
(2) 0.45 percent times the unpaid principal balance of mortgage-
backed securities and substantially equivalent instruments that were
issued or guaranteed by the Enterprise;
(3) 0.45 percent of 50 percent of the average dollar amount of
commitments outstanding each quarter over the preceding four quarters;
(4) 0.45 percent of the outstanding principal amount of bonds with
multifamily credit enhancements;
(5) 0.45 percent of the dollar amount of sold portfolio remittances
pending;
(6)(i) 3.00 percent of the credit equivalent amount of interest
rate contracts and foreign exchange rate contracts, except to the
extent of the current market value of posted qualifying collateral,
computed in accordance with appendix A to this subpart;
(ii) 1.50 percent of the market value of qualifying collateral
posted to secure interest rate and foreign exchange rate contracts, not
to exceed the credit equivalent amount of such contracts, computed in
accordance with appendix A to this subpart; and
(7) 0.45 percent of the outstanding amount, credit equivalent
amount, or other measure determined appropriate by the Director, of
other off-balance sheet obligations (excluding commitments, multifamily
credit enhancements, sold portfolio remittances pending, and interest
rate contracts and foreign exchange rate contracts), except as adjusted
by the Director to reflect differences in the credit risk of such
obligations in relation to mortgage-backed securities.
(b) Any asset or financial obligation that is properly classifiable
in more than one of the categories enumerated in paragraphs (a) (1)
through (7) of this section shall be classified in the category that
yields the highest minimum capital requirement.
(c) As used in this section, the term ``preceding four quarters''
means the last day of the quarter just ended (or the date for which the
minimum capital report is filed, if different), and the three preceding
quarter-ends.
Sec. 1750.5 Notice of capital classification.
(a) Pursuant to section 1364 of the 1992 Act (12 U.S.C. 4614),
OFHEO is required to determine the capital classification of each
Enterprise on a not less than quarterly basis.
(b) The determination of the capital classification shall be made
following a notice to, and opportunity to respond by, the Enterprise.
(1) Not later than 60 calendar days after the date for which the
minimum capital report is filed, OFHEO will provide each Enterprise
with a notice of proposed capital classification in accordance with
section 1368 of the 1992 Act (12 U.S.C. 4618). The notice shall contain
the following information--
(i) The proposed capital classification;
(ii) The proposed minimum capital requirement; and
(iii) The summary computation of the proposed minimum capital
requirement.
(2) Each Enterprise shall have a period of 30 calendar days
following receipt of a notice of proposed capital classification to
submit a response regarding the proposed capital classification. The
response period may be extended for up to 30 additional calendar days
at the sole discretion of the Director. The Director may shorten the
response period with the consent of the Enterprise, or without such
consent if the Director determines that the condition of the Enterprise
requires a shorter period.
(3) The Director shall take into consideration any response to the
notice of proposed capital classification received from the Enterprise
and shall issue a notice of final capital classification for each
Enterprise not later than 30 calendar days following the end of the
response period in accordance with section 1368 of the 1992 Act (12
U.S.C. 4618).
Appendix A to Subpart A of Part 1750--Minimum Capital Components for
Interest Rate and Foreign Exchange Rate Contracts
1. The minimum capital components for interest rate and foreign
exchange rate contracts are computed on the basis of the credit
equivalent amounts of such contracts. Credit equivalent amounts are
computed for each of the following off-balance sheet
[[Page 35622]]
interest rate and foreign exchange rate contracts:
a. Interest Rate Contracts
i. Single currency interest rate swaps.
ii. Basis swaps.
iii. Forward rate agreements.
iv. Interest rate options purchased (including caps, collars,
and floors purchased).
v. Any other instrument that gives rise to similar credit risks
(including when-issued securities and forward deposits accepted).
b. Foreign Exchange Rate Contracts
i. Cross-currency interest rate swaps.
ii. Forward foreign exchange rate contracts.
iii. Currency options purchased.
iv. Any other instrument that gives rise to similar credit
risks.
2. Foreign exchange rate contracts with an original maturity of
14 calendar days or less and foreign exchange rate contracts traded
on exchanges that require daily payment of variation margins are
excluded from the minimum capital requirement computation. Over-the-
counter options purchased, however, are included and treated in the
same way as the other interest rate and foreign exchange rate
contracts.
3. Calculation of Credit Equivalent Amounts
a. The minimum capital components for interest rate and foreign
exchange rate contracts are computed on the basis of the credit
equivalent amounts of such contracts. The credit equivalent amount
of an off-balance sheet interest rate and foreign exchange rate
contract that is not subject to a qualifying bilateral netting
contract in accordance with this appendix A is equal to the sum of
the current exposure (sometimes referred to as the replacement cost)
of the contract and an estimate of the potential future credit
exposure over the remaining life of the contract.
b. The current exposure is determined by the mark-to-market
value of the contract. If the mark-to-market value is positive, then
the current exposure is the mark-to-market value. If the mark-to-
market value is zero or negative, then the current exposure is zero.
Mark-to-market values are measured in United States dollars,
regardless of the currency or currencies specified in the contract,
and should reflect changes in the relevant rates, as well as
counterparty credit quality.
c. The potential future credit exposure of a contract, including
a contract with a negative mark-to-market value, is estimated by
multiplying the notional principal amount of the contract by a
credit conversion factor. The effective rather than the apparent or
stated notional amount must be used in this calculation. The credit
conversion factors are:
------------------------------------------------------------------------
Foreign
Interest rate exchange rate
Remaining maturity contracts contracts
(percent) (percent)
------------------------------------------------------------------------
1 year or less............................ 0.0 1.0
Over 1 year............................... 0.5 5.0
------------------------------------------------------------------------
d. Because foreign exchange rate contracts involve an exchange
of principal upon maturity, and foreign exchange rates are generally
more volatile than interest rates, higher conversion factors have
been established for foreign exchange rate contracts than for
interest rate contracts.
e. No potential future credit exposure is calculated for single
currency interest rate swaps in which payments are made based upon
two floating rate indexes, so-called floating/floating or basis
swaps. The credit exposure on these contracts is evaluated solely on
the basis of their mark-to-market values.
4. Avoidance of Double Counting
In certain cases, credit exposures arising from the interest
rate and foreign exchange instruments covered by this appendix A may
already be reflected, in part, on the balance sheet. To avoid double
counting such exposures in the assessment of capital adequacy,
counterparty credit exposures arising from the types of instruments
covered by this appendix A may need to be excluded from balance
sheet assets in calculating the minimum capital requirement.
5. Collateral
a. The sufficiency of collateral for off-balance sheet items is
determined by the market value of the collateral in relation to the
credit equivalent amount. Collateral held against a netting contract
is not recognized for minimum capital standard purposes unless it is
legally available to support the single legal obligation created by
the netting contract. Excess collateral held against one contract or
a group of contracts for which a recognized netting agreement exists
may not be considered.
b. The only forms of collateral that are formally recognized by
the minimum capital standard framework are cash on deposit;
securities issued or guaranteed by the central governments of the
OECD-based group of countries, United States Government agencies, or
United States Government-sponsored agencies; and securities issued
by multilateral lending institutions or regional development banks.
6. Netting
a. For purposes of this appendix A, netting refers to the
offsetting of positive and negative mark-to-market values in the
determination of a current exposure to be used in the calculation of
a credit equivalent amount. Any legally enforceable form of
bilateral netting (that is, netting with a single counterparty) of
interest rate and foreign exchange rate contracts is recognized for
purposes of calculating the credit equivalent amount provided that
the following criteria are met:
i. Netting must be accomplished under a written netting contract
that creates a single legal obligation, covering all included
individual contracts, with the effect that the Enterprise would have
a claim to receive, or obligation to pay, only the net amount of the
sum of the positive and negative mark-to-market values on included
individual contracts in the event that a counterparty, or a
counterparty to whom the contract has been validly assigned, fails
to perform due to default, insolvency, liquidation, or similar
circumstances.
ii. The Enterprise must obtain a written and reasoned legal
opinion(s) representing that in the event of a legal challenge--
including one resulting from default, insolvency, liquidation, or
similar circumstances--the relevant court and administrative
authorities would find the Enterprise's exposure to be such a net
amount under--
A. The law of the jurisdiction in which the counterparty is
chartered or the equivalent location in the case of noncorporate
entities, and if a branch of the counterparty is involved, then also
under the law of the jurisdiction in which the branch is located;
B. The law that governs the individual contracts covered by the
netting contract; and
C. The law that governs the netting contract.
iii. The Enterprise must establish and maintain procedures to
ensure that the legal characteristics of netting contracts are kept
under review in the event of possible changes in relevant law.
iv. The Enterprise must maintain in its files documentation
adequate to support the netting of rate contracts, including a copy
of the bilateral netting contract and necessary legal opinions.
b. A contract containing a walkaway clause is not eligible for
netting for purposes of calculating the credit equivalent
amount.1
---------------------------------------------------------------------------
\1\ A walkaway clause is a provision in a netting contract that
permits a non-defaulting counterparty to make lower payments than it
would make otherwise under the contract, or no payment at all, to a
defaulter or to the estate of a defaulter, even if the defaulter or
the estate of the defaulter is a net creditor under the contract.
---------------------------------------------------------------------------
c. By netting individual contracts for the purpose of
calculating its credit equivalent amount, the Enterprise represents
that it has met the requirements of this appendix A and all the
appropriate documents are in the Enterprise's files and available
for inspection by OFHEO. OFHEO may determine that an Enterprise's
files are inadequate or that a netting contract, or any of its
underlying individual contracts, may not be legally enforceable
under any one of the bodies of law described in this appendix A. If
such a determination is made, the netting contract may be
disqualified from recognition for minimum capital standard purposes
or underlying individual contracts may be treated as though they are
not subject to the netting contract.
d. The credit equivalent amount of interest rate and foreign
exchange rate contracts that are subject to a qualifying bilateral
netting contract is calculated by adding the current exposure of the
netting contract and the sum of the estimates of the potential
future credit exposures on all individual contracts subject to the
netting contract, estimated in accordance with paragraph 3 of this
appendix A. Offsetting contracts in the same currency maturing on
the same date will have lower potential future exposure as well as
lower current exposure. Therefore, for purposes of calculating
potential future credit exposure to a netting counterparty for
foreign exchange rate contracts and other similar contracts in which
notional principal
[[Page 35623]]
is equivalent to cash flows, total notional principal is defined as
the net receipts falling due on each value date in each currency.
e. The current exposure of the netting contract is determined by
summing all positive and negative mark-to-market values of the
individual contracts included in the netting contract. If the net
sum of the mark-to-market values is positive, then the current
exposure of the netting contract is equal to that sum. If the net
sum of the mark-to-market values is zero or negative, then the
current exposure of the netting contract is zero. OFHEO may
determine that a netting contract qualifies for minimum capital
standard netting treatment even though certain individual contracts
may not qualify. In such instances, the nonqualifying contracts
should be treated as individual contracts that are not subject to
the netting contract.
f. In the event a netting contract covers contracts that are
normally excluded from the minimum capital requirement computation--
for example, foreign exchange rate contracts with an original
maturity of 14 calendar days or less, or instruments traded on
exchanges that require daily payment of variation margin--an
Enterprise may elect consistently either to include or exclude all
mark-to-market values of such contracts when determining net current
exposure.
Subpart B--[Reserved]
Aida Alvarez,
Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 96-17120 Filed 7-5-96; 8:45 am]
BILLING CODE 4220-01-P
Complete official Federal Register PDF
FR Doc. 96-17067 State Energy Conservation Program
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35890-35903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17067]
[[Page 35889]]
_______________________________________________________________________
Part IV
Department of Energy
_______________________________________________________________________
Office of Energy Efficiency and Renewable Energy
_______________________________________________________________________
10 CFR Parts 420 and 450
State Energy Conservation Program; Interim Rule
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules
and Regulations
[[Page 35890]]
DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Parts 420 and 450
[Docket No. EE-RM-96-402]
RIN 1904-AA81
State Energy Conservation Program
AGENCY: Office of Energy Efficiency and Renewable Energy.
ACTION: Interim final rule with opportunity to comment.
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SUMMARY: The Department of Energy (Department or DOE) amends the
regulations for the State Energy Conservation Program to provide for
the consolidation of two formula grant programs--the State Energy
Conservation Program (SECP) and the Institutional Conservation Program
(ICP). DOE removes prescriptive energy audit procedures that are no
longer needed and conflict with the President's regulatory reform
program. DOE is also incorporating in this rule provisions for
competitively awarded financial assistance for a number of State-
oriented special project activities.
DATES: This rule is effective July 8, 1996. Written comments [six
copies and, if possible, a computer disk] on the interim final rule
must be received by DOE no later than August 7, 1996, to ensure their
consideration.
The incorporation by reference of certain publications listed in
the regulation is approved by the Director of the Federal Register as
of July 8, 1996.
ADDRESSES: All written comments (six copies) are to be submitted to:
Thomas P. Stapp, U.S. Department of Energy, Office of Building
Technology, State and Community Programs, EE-44, Docket Number EE-RM-
96-402, 1000 Independence Avenue, S.W., Washington, DC, 20585, (202)
586-2096.
Copies of the comments, as well as other parts of the record, will
be available for inspection between the hours of 9:00 a.m. and 4:00
p.m., Monday through Friday except Federal holidays at the following
address: DOE Freedom of Information Reading Room, United States
Department of Energy, Room 1E-190, Forrestal Building, 1000
Independence Avenue, S.W., Washington, DC 20585, (202) 586-6020.
Copies of the material to be incorporated by reference are
available from:
The American Society of Heating, Refrigerating and Air-Conditioning
Engineers (ASHRAE), 1791 Tullie Circle, N.E., Atlanta, Georgia 30329,
(404) 636-8400;
The Illuminating Engineering Society of North America (IESNA), 345
East 47th Street, New York, New York 10017, (212) 705-7913; and
The Council of American Building Officials (CABO), 5203 Leesburg
Pike, Suite 708, Falls Church, Virginia 22041, (703) 931-4533.
For more information concerning public participation in this
rulemaking proceeding, see section IV, ``Opportunity for Public
Comment.''
FOR FURTHER INFORMATION CONTACT: Thomas P. Stapp, Office of Building
Technology, State and Community Programs, Department of Energy, Mail
Stop 5G-063, EE-44, Forrestal Building, 1000 Independence Avenue, S.W.,
Washington, DC 20585, (202) 586-2096.
SUPPLEMENTARY INFORMATION:
I. Introduction and Description of the Program
II. Rationale for Interim Final Rulemaking
III. The Revisions to the Rule
IV. Opportunity for Public Comment
V. Review Under Executive Order 12612
VI. Review Under Executive Order 12866
VII. Review Under Executive Order 12988
VIII. Unfunded Mandate Review
IX. Review Under the Regulatory Flexibility Act
X. Review Under the Paperwork Reduction Act
XI. Review Under the National Environmental Policy Act
XII. Review Under the Small Business Regulatory Enforcement Fairness
Act of 1996
XIII. The Catalog of Federal Domestic Assistance
I. Introduction and Description of the Program
The conference report accompanying the Balanced Budget Down Payment
Act II of 1996, Public Law 104-134, (H.R. Conf. Rept. No. 537, 104th
Cong., 2d Sess. (1996)), provided the Department with the opportunity
to consolidate two of its formula grant programs consistent with
recommendations made in an earlier conference report (H.R. Conf. Rept.
No. 402, 104th Cong., 1st Sess. 60 (1995)), which accompanied the
Interior and Related Agencies Appropriations Bill, 1996 (H.R. 1977,
104th Cong., 1st Sess. (1995)). Congress, in that earlier report,
recommended such a consolidation to provide a more flexible program to
be operated by the States. The Department is hereby following that
recommendation by consolidating the State Energy Conservation Program
(42 U.S.C. 6321 et seq.) and the Institutional Conservation Program (42
U.S.C. 6371 et seq.) under the name ``State Energy Program (SEP)''.
These two components will constitute the formula grants part of SEP. In
the other part of SEP, DOE is providing for financial assistance for a
number of State-oriented competitively awarded special project
activities.
The State Energy Program Formula Grants
The approach used to apply for and implement the activities
formerly funded under ICP regulations (10 CFR part 455) will be
different under SEP. The process for applying for the types of
activities formerly funded under SECP will essentially stay the same,
and will become the standard approach.
DOE encourages all States to consider including ICP-type activities
in their SEP State Plans in 1996 and future years, as appropriate.
Following are brief explanations of how the component programs under
the formula grants will work in the SEP context.
The State Energy Conservation Program
This program provides grants to States for a wide range of energy-
related projects, and such projects will continue to be eligible for
funding under SEP, using the same application process, and following
the same programmatic requirements. This rulemaking is based on the
SECP rule and makes only a few revisions to the SECP process, as
discussed further in this document.
The Institutional Conservation Program
This program provides grants both to schools and hospitals for a
variety of energy conservation measures and technical audits of
buildings, and to States to administer the program and, since 1993, to
provide specialized assistance to institutions. States wishing to
continue to undertake such activities under SEP will apply to do so
under the rule published today. Grants will no longer be issued by DOE
to individual schools and hospitals; the activities would now be
covered under one or more of the program activities under the SEP grant
to the State, and the State would then provide the funding to the
institutions using the financial mechanisms specified in its approved
State Plan. The State would also specify the requirements it will place
on its schools and hospitals applicants. The regulations covering ICP
(10 CFR Part 455) will not apply to grants issued under SEP but States
are free to adopt any of the requirements in those regulations to cover
ICP-type activities under SEP. ICP-type activities also continue to be
eligible for funding under the various Petroleum Violation Escrow (PVE)
settlements.
For fiscal year 1996 Congress consolidated the funding for ICP and
SECP. DOE believes that having these two programs consolidated into the
State Energy Program Formula Grants
[[Page 35891]]
part of SEP will make it easier for States to apply for grants and more
efficient for both DOE and the States to manage the grants. It should
also simplify the process for the ultimate recipients of assistance,
such as schools and hospitals, which will now be able to receive
assistance directly from their States, rather than from DOE.
Special Projects Financial Assistance
Financial assistance for the special projects now being provided
for in this rulemaking covers a range of State-oriented activities to
be offered as options in years when funding is available. States will
be invited to apply for any of a range of potential activities
announced for the fiscal year concerned. The announcement will be made
in special project notices of funding availability published in the
Federal Register, and in detailed program guidance/solicitation
documents.
Activities may include, but may not be limited to, new State-
oriented programs based on existing DOE initiatives such as Motor
Challenge, Climate Wise, Clean Cities, Rebuild America, and the Federal
Energy Management Program, as well as programs for updating State and
local government building energy codes.
DOE would then make its selection of projects based on the results
of the technical evaluations and on each State's expressed interests/
priorities, DOE's priorities, the amount of funding requested,
geographical diversity, the responsiveness of the applications to the
purposes, requirements and program policy selection factors specified
in the special projects guidance/solicitation, and the total funds
available for each type of project.
Providing for these projects to be undertaken as part of SEP will
result in a more efficient vehicle for funding these more specialized
activities, some of which may be new initiatives, and some of which
were formerly funded separately. The rationale for covering these
projects in a separate part of the rule, and for using a different
approach for the application process, is that appropriations for these
projects are from a variety of sources different from the source for
the formula grants, and the funding must, therefore, be separately
tracked. Projects approved for funding will be handled as amendment(s)
to the SEP grant.
Energy Audit Procedures and List of Measures
Consistent with section 365(e) of the Energy Policy and
Conservation Act (EPCA or the Act), 42 U.S.C. 6325(e), in the late
1970's DOE issued prescriptive regulations, codified at 10 CFR part
450, containing a list of energy conservation measures and detailed
energy audit procedures. The list of measures is no longer needed
because the programs that utilized them have not been funded for more
than 10 years. Prescriptive energy audit procedures are no longer
needed for SEP because States are familiar with developing such
procedures in light of their particular facts and circumstances. In
lieu of prescriptive regulations, DOE will be providing informally
energy audit guidance for States to consider and apply as they deem
appropriate. This approach is consistent with the President's
regulatory reform program which emphasizes removal of unnecessary
categorical requirements in State grant programs.
II. Rationale for Interim Final Rulemaking
In ordinary circumstances, DOE provides an opportunity for public
comment prior to making significant final changes in the rules for
financial assistance programs. Similarly, DOE ordinarily provides for
an effective date 30 days or more following the date of publication so
that affected entities have an opportunity to learn of changes and
prepare to comply. However, the unusual and extended delay in the
enactment of the 1996 appropriation for the State energy conservation
grants subject to today's interim rule necessitates that DOE make
expedited regulatory changes in order to facilitate early completion of
necessary pre-award DOE activities and State plan amendments in light
of the decrease in Federal funds for FY 1996. If the appropriation had
been enacted on or about October 1, 1995 (the beginning of FY 1996)
rather than April 25, 1996, then there would have been enough time for
DOE to conduct a normal notice and comment rulemaking, to issue annual
grant guidance on applying for funds to the States, and to review State
plans and award grants. There would also have been ample time for
States to develop and submit their plans reflecting a significant
downsizing of their programs and for their employees to begin making
appropriate personal plans where necessary.
Although the magnitude of the funding reduction has been apparent
for some time, DOE had to delay regulatory revisions until an
appropriation act became law. It is now so late in FY 1996, which ends
on September 30, 1996, that significant delay in changing existing
rules could pressure the States into making hasty and ill-considered
changes to their programs that would be highly disruptive. DOE has
extensively and informally consulted with the States on the content of
today's rule and has reason to believe that it will prove broadly
acceptable. In any event, adjustments, if warranted, will be made in
the notice of final rulemaking that responds to comments on today's
notice and will apply to funds for FY 1997 and thereafter. Simultaneous
with publication of this rule, DOE is sending a copy of this notice to
each State so that they will be aware of the revised regulations in
time to comply. On the basis of the foregoing, DOE has decided to waive
prior notice and opportunity for public comment because issuance of a
notice of proposed rulemaking is impracticable and contrary to the
public interest. For the same reasons, DOE is making today's interim
final rule effective immediately.
III. The Revisions to the Rule
List of Subparts and Sections
To provide for the different approaches for the State Energy
Program Formula Grants and the special projects financial assistance,
DOE has divided the rule into three subparts. Subpart A covers the
general provisions for all financial assistance under the program,
subpart B covers the Formula Grant procedures, and subpart C covers the
implementation of special projects financial assistance.
With the exceptions of Sec. 420.1, Sec. 420.2, Sec. 420.3 (formerly
Sec. 420.13), Sec. 420.4 (formerly Sec. 420.10), and Sec. 420.5
(formerly Sec. 420.11), now in subpart A, the sections now found under
subpart B comprised the entire former rule. Those sections have been
rearranged and in some cases revised to improve the organization of the
rule and to accommodate the new subpart format. The new arrangement
(with former section numbers noted, if there has been a change) is as
follows:
Subpart A--General Provisions for State Energy Program Financial
Assistance
420.1 Purpose and scope. (same)
420.2 Definitions. (same)
420.3 Administration of financial assistance. (formerly
Sec. 420.13)
420.4 Technical assistance. (formerly Sec. 420.10)
420.5 Reports. (formerly Sec. 420.11)
420.6 Reference sources. (new)
Subpart B--State Energy Program Formula Grant Procedures
420.10 Purpose. (new)
420.11 Allocations among the States. (formerly part of Sec. 420.3)
420.12 State matching contribution. (formerly part of Sec. 420.3)
420.13 Annual State applications and State plans. (formerly
Sec. 420.4)
[[Page 35892]]
420.14 Review and approval of annual State applications and State
plans. (formerly Sec. 420.5)
420.15 Minimum criteria for required program activities for plans.
(formerly Sec. 420.6)
420.16 Extensions for compliance with required program activities.
(formerly Sec. 420.8)
420.17 Optional elements of State Energy Program plans. (formerly
Sec. 420.7)
420.18 Expenditure prohibitions and limitations. (formerly
Sec. 420.12)
420.19 Administrative review. (formerly Sec. 420.9)
Throughout the rule cross-references have been revised to reflect
the new section numbers. Subpart C has been added to the rule to
provide for financial assistance for the new special projects. This
subpart, with its respective sections, is as follows:
Subpart C--Implementation of Special Projects Financial Assistance
420.30 Purpose and scope.
420.31 Notice of availability.
420.32 Program guidance/solicitation.
420.33 Application requirements.
420.34 Matching contributions or cost sharing.
420.35 Application evaluation.
420.36 Evaluation criteria.
420.37 Selection.
Subpart A--General Provisions for State Energy Program Financial
Assistance
Section 420.1 Purpose and scope
This section has been substantially reduced by eliminating the
first sentence of paragraph (a) and all of paragraph (b) and moving
paragraph (c) to new Sec. 420.13. The second sentence of paragraph (a)
is all that remains, modified to add the reduction of dependence on
imported oil as a purpose of the program and to refer to the new State
Energy Program name. The deleted wording from paragraphs (a) and (b)
was essentially redundant. Former paragraph (c) more appropriately
belongs under the section on State applications.
Section 420.2 Definitions
A definition for ``alternative transportation fuel'' has been added
to reflect the program's renewed emphasis on reducing dependence on
imported oil. The text of the definition is based on the definition of
alternative transportation fuel in section 301 of the Energy Policy Act
of 1992 (Pub. L. 102-486).
The definition for ``ASHRAE 90-75'' has been deleted because it is
now obsolete.
The definition of ``ASHRAE/IESNA 90.1-1989'' has been revised to
add ``NA'' after ``IES'', to add ``as amended,'' to add the
Illuminating Engineering Society of North America as co- publisher, and
to reference addenda to be used as part of this standard and to cite
the authority for incorporation by reference.
The definition of ``Assistant Secretary'' has been revised to
reflect the new name of the organization, Energy Efficiency and
Renewable Energy.
The definition of ``Btu'' has been deleted because it is more
completely defined under ``British thermal unit.''
The definition for ``building'' has been revised to include the
exempted buildings formerly included under the definition of ``exempted
building'' which has been deleted.
The definition of ``CABO MEC-89'' has been deleted because it is
out of date; Model Energy Code, 1993 is the version of this standard
that should now be used.
The definition for ``Deputy Assistant Secretary'' has been revised
to reflect a reorganization within DOE whereby the Deputy Assistant
Secretary for Building Technology, State and Community Programs has
assumed responsibility for SEP.
A definition for ``Director, State and Community Programs'' has
been added to provide for this position which has responsibility for
DOE's formula grants to States.
The definition of ``energy audit'' has been revised primarily to
delete the reference to 10 CFR part 450 which has been removed for
reasons discussed above, under Energy Audit Procedures and list of
measures.
A definition for ``energy conservation measure'' has been added, to
provide for this type of activity which may be more important under SEP
now that ICP is included in the program. This definition is based on
the one in Section 366 of the Act, 42 U.S.C. 6326 (4). As a conforming
change, this term has been substituted for the term ``energy
conservation building retrofit'' wherever that term appeared in the
existing rule.
The definition for ``exempted building'' has been deleted, with
types of buildings formerly listed under that definition moved to the
definition of ``building.''
The definition for ``Governor'' has been revised to conform to the
definition of ``State.''
The definition for ``HUD minimum property standards'' has been
deleted because it is out of date. The Model Energy Code, 1993 should
now be used instead.
The definition for ``industrial plant'' is being revised to
``industrial facility'' because that is the term now used in the rule.
The definition for ``major building type'' is being deleted because
the term is no longer used in the rule.
A definition for ``Model Energy Code, 1993'' has been added. This
standard replaces the former ``CABO MEC-89,'' which has been deleted,
as previously discussed.
The definition for ``National energy conservation program'' is
being deleted because it is no longer used in the rule.
The definition for ``petroleum violation escrow funds'' has been
revised to clarify that the matching requirements referred to are only
found in Sec. 420.12 (formerly Sec. 420.3(e)), whereas under
Sec. 420.18(b) (formerly Sec. 420.12(b)), there are cost limitations.
The definition of ``plan'' has been revised to refer to the new
State Energy Program.
The definition for ``program measure'' has been revised to replace
the word ``measure'' with the word ``activity.'' The term ``program
activity'' now covers what were formerly referred to as ``program
measures'' in some parts of the rule and ``programs'' in other parts of
the rule.
Under the definition of ``public building,'' a new subparagraph(e)
has been added to include public and private non-profit schools and
hospitals, reflecting the consolidation of ICP into SEP.
The definition of ``renewable-resource energy measure'' has been
revised to be a definition of ``renewable energy measure'' and to
provide a more detailed description of such measures. This definition
is based on the one in section 366 of the Act, 42 U.S.C. 6326(6). In
addition, the reference to subpart D (covering Energy Measures) of 10
CFR part 450, is being deleted, for reasons discussed earlier under
Energy Audit Procedures and list of measures.
The definition of ``State economic product'' has been deleted
because the term is no longer used in the rule.
The definition of ``Support Office Director'' has been revised to
reflect the new title ``Regional Support Office Director.'' The new
title, and the new Regional Support Office name, are now used
throughout the rule wherever the former names appeared.
Section 420.3 Administration of Financial Assistance
Former paragraph (a) (now paragraph (a)(1)) of this section has
been revised to provide the current references for the requirement for
intergovernmental review and coordination, now found in Executive Order
12372 and its
[[Page 35893]]
implementing regulations at 10 CFR part 1005.
Paragraphs (b) and (c) of this section were formerly found under
Sec. 420.3 as paragraphs (c) and (e), respectively. Paragraph (b) has
been revised to specify that budget periods (for both formula grants
and special projects) shall be consistent with 10 CFR part 600.
Paragraph (c) has been revised to add the necessity for subawards
to be consistent with this part and 10 CFR part 600.
Section 420.4 Technical Assistance
This section was formerly Sec. 420.10.
Section 420.5 Reports
This section was formerly Sec. 420.11. It now covers all SEP
financial assistance under both subpart B and subpart C. The
requirement for an annual energy savings report has been deleted
because of the marginal need for this particular type of report at this
time.
Section 420.6 Reference Standards
This is a new section providing information about the incorporation
by reference of two standards, ASHRAE/IESNA 90.1-1989 and The Model
Energy Code, 1993, which are referred to in Sec. 420.2 and Sec. 420.15.
Subpart B--State Energy Program Formula Grant Procedures
Section 420.10 Purpose
This is a new section to introduce the purpose of subpart B, which
is to set forth the procedures that apply to the State Energy Program
Formula Grants.
Section 420.11 Allocation of Funds Among the States
This section has been adapted from paragraphs (a) and (b) of former
Sec. 420.3. Paragraph (a) remains the same.
DOE has revised the process (specified under Sec. 420.11(b)) by
which grant funds are allocated to the States, to accommodate the
inclusion of ICP funds which were formerly allocated to States using a
formula different from that used for SECP. The only common element in
the two formulas was the population of each State. The other two
elements in the ICP formula were regional costs of energy and the sum
of a State's heating and cooling degree days. The other two elements in
the SECP formula were a provision for dividing a portion of the funds
equally among all the States, and the State's estimated energy savings
from SECP efforts undertaken in calendar year 1980.
The revised process involves an allocation for each State
consisting of: a base allocation calculated on the program's $25.5
million available funding for fiscal year 1996 and divided in the same
ratio as each State received in fiscal year 1995 in combined funding
from appropriations for ICP and SECP, together with a provision that
any available funding beyond $25.5 million be allocated based on a new
formula. This revised process serves several purposes: (1) it will
reflect and incorporate in the base allocation the historical funding
of the two distinct major component programs in SEP that formerly used
different funding formulas; (2) it will provide for an equitable
adjustment in program funding levels; and (3) it will help maintain the
organizational capacity of the States to manage the programs.
Base Allocation
To achieve this, DOE is hereby replacing the former SECP formula
with the two-step process discussed above. The base allocation reflects
elements from the ICP and SECP formulas in such a way that each State
will receive, in fiscal year 1996, a base allocation in the same ratio
(based on each State's 1995 allocations from 1995 appropriated funds)
as it would have received if ICP and SECP were operated as separate
programs. This base allocation, which applies to the first $25.5
million of funds available, will remain the same in future years, or be
adjusted downward if available funds are less than $25.5 million. Table
1, listing the base allocation by State using the $25.5 million total,
is added after Sec. 420.11(b)(1). Funds available above $25.5 million
will be allocated based on the new formula described below.
Formula Allocation
Funding available for SEP beyond the base $25.5 million ICP/SECP
consolidated funds will be allocated using the new formula based on the
following factors: 33\1/3\ percent divided among the States equally;
33\1/3\ percent divided on the basis of the population of the
participating States; and 33\1/3\ percent divided on the basis of the
energy consumption of the participating States.
The formula for the entire annual allocation is expressed
mathematically as (PA)=(BA)+(FA), where (PA) is the total program
allocation, (BA) is the base allocation, and (FA) is the formula
allocation.
Paragraphs (c) and (e) are now found under new Sec. 420.3, as
already discussed under that section.
Paragraph (d) is now found under new Sec. 420.12.
Section 420.12 State Matching Contribution
This section was formerly paragraph (d) of former Sec. 420.3. It
has been given a new title, and revised to replace the term ``cost
sharing'' with ``match'' or ``matching'' because the Act uses the term
``match'' in the sense of a percent of the State's Federal allocation,
whereas, in this context, a ``cost share'' would be a percent of the
total project cost. To receive financial assistance, each State must
contribute a match of no less than 20 percent of the Federal financial
assistance allocated to the State. Cash and in-kind contributions may
continue to be used to meet this requirement. The sentence in this
paragraph requiring that the State's match be identified in the State's
application has been moved to Sec. 420.13 where it becomes new
Sec. 420.13(b)(4)(ii).
Section 420.13 Annual State Application and State Plans
This section was formerly Sec. 420.4.
The title of this section has been changed to add State plans which
must be included with SEP grant applications.
A new paragraph (b)(1) has been added to provide for the submission
of an application face page on Standard Form 424.
Former paragraph (b)(1) has been redesignated (b)(2).
Paragraph (b)(3) has been added to this section (it was formerly
Sec. 420.1(c)). Since this paragraph refers to a requirement for State
plans, DOE felt it was more appropriate to include it in the section
covering applications and plans.
Former paragraph (b)(2) has been redesignated (b)(4) to provide for
the addition of new paragraphs (b)(1) and (b)(3) and has been revised
to add a new (b)(4)(ii) requiring that States include their matching
contribution in their applications, as already discussed under
Sec. 420.12.
Former subparagraphs (b)(2)(ii), (b)(2)(iii), and (b)(2)(iv) have
been redesignated (b)(4)(iii), (b)(4)(iv), and (b)(4)(v), respectively,
to allow for new (b)(4)(ii).
Former paragraph (b)(3) has been redesignated (b)(5) to provide for
the addition of new paragraphs (b)(1) and (b)(3).
Paragraph (b)(6) (formerly paragraph (b)(4)) of this section, which
required States to specify that activities funded under SECP would
supplement and not supplant activities funded under ICP or the
Weatherization Assistance Program (Weatherization), has been revised by
deleting the reference to ICP. Activities
[[Page 35894]]
formerly funded under ICP are now being funded under SEP, so
supplantation is not an issue.
To continue the renumbering of paragraphs necessitated by the
addition of paragraphs (b)(1) and (b)(3), former (b)(5) has been
renumbered (b)(7); a new paragraph (b)(8) has been added covering State
assurances; and former (b)(6) has been renumbered (b)(9).
Former paragraph (b)(7) has been deleted because it does not relate
to the contents of an application.
The wording of a number of paragraphs in this section has been
simplified to make the format consistent.
Section 420.14 Review and Approval of Annual State Applications and
State Plans
This section was formerly Sec. 420.5
Section 420.15 Minimum Criteria for Required Program Measures for
Plans
This section was formerly Sec. 420.6.
Paragraphs (a)(3) and (d)(3) have been revised to refer to ASHRAE/
IESNA 90.1-1989 as amended, which is the current citation, as
previously discussed under Sec. 420.2, Definitions. Paragraph (d)(4)
has been revised to refer to Model Energy Code, 1993 as amended, which
is the current citation, as previously discussed under Sec. 420.2,
Definitions. The new standards are based upon the requirements of Title
III of the Energy Conservation and Production Act, 42 U.S.C. 6831 et
seq.
A new paragraph (e)(3) has been added to provide for left turns
from one-way streets onto one-way streets at traffic lights (right
turns for the Virgin Islands), where appropriate, as required by
section 362(c)(5) of EPCA, 42 U.S.C. 6322(c)(5).
Former paragraph (e)(3) has been eliminated. This paragraph
provided for a delay in implementing the requirement under paragraph
(e)(2) until June 27, 1979. That provision is no longer necessary.
Section 420.16 Extensions for Compliance With Required Program
Activities
This section was formerly Sec. 420.8.
Section 420.17 Optional Elements of State Energy Program Plans
This section was formerly Sec. 420.7.
Paragraph (a)(3)(ii) has been revised to add wording at the end to
make clear that public and private non-profit schools and hospitals,
and local government buildings, which were formerly covered by ICP, are
eligible buildings under SEP. It is important to note that local
government buildings, which were eligible only for technical audits
under ICP, are also eligible for energy conservation measures under
SEP.
New paragraphs (a)(10), (a)(11),(a)(12) and (a)(13) are being added
to provide for four new examples of optional elements of State plans
which were added to EPCA by section 141(b) of the Energy Policy Act of
1992, Pub. L. 102-486 (EPACT). Those new elements are: program
activities to provide training to building designers and contractors to
promote energy efficiency ((a)(10)); program activities for the
development of building retrofit standards ((a)(11)); support for
feasibility studies to facilitate access to capital and credit for
energy efficiency projects ((a)(12)); and program activities to
facilitate the voluntary use of renewable energy technologies in
Federal agency programs ((a)(13)).
Former paragraph (a)(10) has been renumbered (a)(14).
Section 420.18 Expenditure Prohibitions and Limitations
This section was formerly Sec. 420.12.
This section has been renamed because the former name, ``Prohibited
expenditures,'' did not reflect the fact that a number of the
paragraphs under this section cover expenditures that are, under
certain circumstances, allowable.
Paragraph (e) has been revised to change the limitation of 33
percent of a State's allocation to 50 percent, and to clarify that, up
to that limit, funds may be used for the purchase and installation of
energy conservation measures and renewable energy measures, to allow
States more flexibility in this regard. With ICP-typed activities now a
component of the consolidated SEP, and with energy conservation
measures and renewable energy measures the primary purpose of ICP, DOE
does not want to limit States to 33 percent for such expenditures, and
believes a 50 percent limit is now appropriate because approximately 50
percent of the appropriated funds for FY 1996 are attributable to ICP.
Paragraph (e)(4), which required that funds under this program be
used to supplement, but not supplant, ICP or Weatherization funds, has
been revised to delete the reference to ICP. The reasons were
previously discussed under Sec. 420.13.
Former subparagraphs (e)(6)(i) and (e)(6)(iv) have been deleted
because they are no longer necessary, and former subparagraphs
(e)(6)(ii) and (e)(6)(iii) have been redesignated new subparagraphs
(e)(6)(i) and (e)(6)(ii), respectively.
Former paragraph (e)(7) has been deleted because the same
limitation is covered in paragraph (d).
Section 420.19 Administrative Review
This section was formerly Sec. 420.9. It covers decisions made
under Sec. 420.14 and does not apply to financial assistance for the
special projects in subpart C.
Subpart C--Implementation of Special Projects Financial Assistance
This subpart is being added to specify how DOE will implement
financial assistance for these special projects activities under SEP.
Section 420.30 Purpose
This section is being added to provide the purpose of subpart C.
Section 420.31 Notice of Availability
This section is being added to specify the process DOE will use for
announcing the availability of funds for special projects financial
assistance.
Section 420.32 Program Guidance/Solicitation
This section is being added to provide for the program guidance/
solicitation, which will contain the relevant information necessary for
States to apply for funding under this subpart.
Section 420.33 Application Requirements
This section is being added to provide general information about
applying for financial assistance for these special projects. More
detailed application requirements will be provided by DOE in the
program guidance/solicitation document.
Section 420.34 Matching Contributions or Cost Sharing
This section is being added to address the possibility of a match
or cost share requirement for some, or all, special projects financial
assistance, to be specified in the program guidance/solicitation.
Section 420.35 Application Evaluation
This section is being added to provide for the technical
evaluations of applications for financial assistance pursuant to this
subpart.
Section 420.36 Evaluation Criteria
This section is being added to provide for the evaluation criteria
to be applied to applications for financial assistance pursuant to this
subpart.
Section 420.37 Selection
This section is being added to provide for program policy factors
which may be
[[Page 35895]]
applied in selecting special projects for funding under this subpart.
IV. Opportunity for Public Comment
Written Comment Procedures
Interested persons are invited to participate in this rulemaking by
submitting data, views or arguments with respect to the matters set
forth in this notice.
Comments (6 copies and, if possible, a computer disk) should be
identified on the outside of the envelope, and on the documents
themselves, with the designation: ``State Energy Program, Interim Final
Rule, Docket Number EE-RM-96-402.'' In the event any person wishing to
submit a written comment cannot provide six copies, alternative
arrangements can be made in advance by calling (202) 586-2096.
Any person submitting information which that person believes to be
confidential, and which may be exempt by law from public disclosure,
should submit one complete copy, as well as two copies from which the
information claimed to be confidential has been deleted. DOE shall make
a determination of any such claim as set forth in 10 CFR 1004.11 (53 FR
15661, May 3, 1988).
V. Review Under Executive Order 12612
Executive Order 12612, 52 FR 41685 (October 30, 1987) requires that
regulations, legislation and any other policy action be reviewed for
any substantial direct effects on States, on the relationship between
the National Government and the States, or on the distribution of power
among various levels of government. If there are sufficient substantial
direct effects, the Executive Order requires preparation of a
federalism assessment to be used in decisions by senior policy-makers
in promulgating or implementing the regulation.
Today's regulatory amendments will not have a substantial direct
effect on the traditional rights and prerogatives of States in
relationship to the Federal Government. Preparation of a federalism
assessment is therefore unnecessary.
VI. Review Under Executive Order 12866
Today's regulatory action has been determined not to be a
significant regulatory action under Executive Order 12866, Regulatory
Planning and Review, October 4, 1993. Accordingly, this action was not
subject to review under the Executive Order by the Office of
Information and Regulatory Affairs (OIRA).
VII. Review Under Executive Order 12988
Section 3 of Executive Order 12988, 61 FR 4729 (February 7, 1996),
instructs each agency to adhere to certain requirements in promulgating
new regulations. These requirements, set forth in Section 3(a) and (b),
include eliminating drafting errors and needless ambiguity, drafting
the regulations to minimize litigation, providing clear and certain
legal standards for affected legal conduct, and promoting
simplification and burden reduction. Agencies are also instructed to
make every reasonable effort to ensure that the regulation describes
any administrative proceeding to be available prior to judicial review
and any provisions for the exhaustion of administrative remedies. The
Department has determined that today's regulatory action meets the
requirements of Section 3 (a) and (b) of Executive Order 12988.
VIII. Unfunded Mandate Review
The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) places a
variety of review and consultative obligations on Federal agencies
proposing regulatory actions for Federal intergovernmental mandates.
Today's rule does not involve such a mandate because the Unfunded
Mandates Reform Act excludes from the definition of ``Federal
intergovernmental mandate'' provisions in a regulation that would
impose conditions incident to a financial assistance program (not
involving an entitlement) or a duty arising from participation in a
voluntary Federal program 2 U.S.C. 658(5). This program is a standard
non-entitlement financial assistance program and States are not
obligated to participate in it.
IX. Review Under the Regulatory Flexibility Act
There is no need to prepare a final regulatory flexibility analysis
of today's interim final regulations under the Regulatory Flexibility
Act, 5 U.S.C. 601 et seq., because they are not subject to a legal
requirement for a general notice of proposed rulemaking.
X. Review Under the Paperwork Reduction Act
No new information collection or recordkeeping requirements are
imposed on the public by today's rules.
XI. Review Under the National Environmental Policy Act
A programmatic environmental assessment has been prepared covering
the grant program under the interim final regulations published today
which was sent to the States for comment on March 27, 1996. No comments
were received by the end of the 14-day comment period. This
programmatic environmental assessment resulted in a finding of no
significant impact (FONSI). A FONSI was issued on June 7, 1996. The
documents relating to this programmatic environmental assessment are
available in the DOE Freedom of Information Reading Room, United States
Department of Energy, Room 1E-190, Forrestal Building, 1000
Independence Avenue, SW., Washington, DC 20585, (202) 586-6020.
XII. Congressional Notification
The final regulations published today are subject to the
Congressional notification requirements of the Small Business
Regulatory Enforcement Fairness Act of 1996 (Act), 5 U.S.C. 801. OMB
has determined that the final regulations do not constitute a ``major
rule'' under the Act, 5 U.S.C. 804. DOE will report to Congress on the
promulgation of the final regulations prior to the effective date set
forth at the beginning of this notice.
XIII. The Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance number for the State
Energy Program is 81.041.
List of Subjects
10 CFR Part 420
Energy conservation, Grant programs--energy, Reporting and
recordkeeping requirements, Technical assistance, Incorporation by
reference.
10 CFR Part 450
Buildings, Business and Industry, Energy conservation, Housing,
Reporting and recordkeeping requirements.
Issued in Washington, DC, on June 26, 1996.
Christine A. Ervin,
Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble, Chapter II of Title 10,
Code of Federal Regulations is amended as follows:
1. Part 420 is revised to read as follows:
PART 420--STATE ENERGY PROGRAM
Subpart A--General Provisions for State Energy Program Financial
Assistance
Sec.
420.1 Purpose and scope.
420.2 Definitions.
420.3 Administration of financial assistance.
[[Page 35896]]
420.4 Technical assistance.
420.5 Reports.
420.6 Reference standards.
Subpart B--Formula Grant Procedures
420.10 Purpose.
420.11 Allocation of funds among the States.
420.12 State matching contribution.
420.13 Annual State applications and State plans.
420.14 Review and approval of annual State applications and State
plans.
420.15 Minimum criteria for required program activities for plans.
420.16 Extensions for compliance with required program activities.
420.17 Optional elements of State Energy Program plans.
420.18 Expenditure prohibitions and limitations.
420.19 Administrative review.
Subpart C--Implementation of Special Projects Financial Assistance
420.30 Purpose and scope.
420.31 Notice of availability.
420.32 Program guidance/solicitation.
420.33 Application requirements.
420.34 Matching contributions or cost-sharing.
420.35 Application evaluation.
420.36 Evaluation criteria.
420.37 Selection.
Authority: Title III, part D, as amended, of the Energy Policy
and Conservation Act (42 U.S.C. 6321 et seq.); Department of Energy
Organization Act (42 U.S.C. 7101 et seq.)
Subpart A--General Provisions for State Energy Program Financial
Assistance
Sec. 420.1 Purpose and scope.
It is the purpose of this part to promote the conservation of
energy, to reduce the rate of growth of energy demand, and to reduce
dependence on imported oil through the development and implementation
of a comprehensive State Energy Program and the provision of Federal
financial and technical assistance to States in support of such
program.
Sec. 420.2 Definitions.
As used in this part:
Act means title III, part D, as amended, of the Energy Policy and
Conservation Act, 42 U.S.C. 6321 et seq.
Alternative transportation fuel means methanol, denatured ethanol,
and other alcohols; mixtures containing 85 percent or more by volume of
methanol, denatured ethanol, and other alcohols with gasoline or other
fuels; natural gas; liquified petroleum gas; hydrogen; coal-derived
liquid fuels; fuels (other than alcohol) derived from biological
materials (including neat biodiesel); and electricity (including
electricity from solar energy).
ASHRAE/IESNA 90.1-1989, as amended means the building design
standard published in December 1989 by the American Society of Heating,
Refrigerating and Air-Conditioning Engineers, and the Illuminating
Engineering Society of North America titled ``Energy Efficient Design
of New Buildings Except Low-Rise Residential Buildings,'' with Addenda
90.1b-1992; Addenda 90.1d-1992; Addenda 90.1e-1992; Addenda 90.1g-1993;
and Addenda 90.1i-1993, which is incorporated by reference in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The availability of
this incorporation by reference is given in Sec. 420.6(b).
Assistant Secretary means the Assistant Secretary for Energy
Efficiency and Renewable Energy or any official to whom the Assistant
Secretary's functions may be redelegated by the Secretary.
British thermal unit (Btu) means the quantity of heat necessary to
raise the temperature of one pound of water one degree Fahrenheit at
39.2 degrees Fahrenheit and at one atmosphere of pressure.
Building means any structure which includes provision for a heating
or cooling system, or both, or for a hot water system, except for the
following:
(1) Any building whose peak design rate of energy usage for all
purposes is less than one watt (3.4 Btu's per hour) per square foot of
floor area for all purposes;
(2) Any building with neither a heating nor cooling system;
(3) Any mobile home; or
(4) Any building owned or leased in whole or in part by the United
States.
Carpool means the sharing of a ride by two or more people in an
automobile.
Carpool matching and promotion campaign means a campaign to
coordinate riders with drivers to form carpools and/or vanpools.
Commercial building means any building other than a residential
building, including any building constructed for industrial or public
purposes.
Commercially available means available for purchase by the general
public or target audience in the State.
Deputy Assistant Secretary means the Deputy Assistant Secretary for
Building Technology, State and Community Programs or any official to
whom the Deputy Assistant Secretary's functions may be redelegated by
the Assistant Secretary.
Director, Office of State and Community Programs means the official
responsible for DOE's formula grant programs to States, or any official
to whom the Director's functions may be redelegated by the Assistant
Secretary.
DOE means the Department of Energy.
Energy audit means a determination of the energy consumption
characteristics of a building which:
(1) Identifies the type, size, energy use level and the major
energy using systems of such building or buildings;
(2) Determines appropriate energy conservation maintenance and
operating procedures; and
(3) Indicates the need and the estimated cost and energy cost
savings, if any, associated with the acquisition and installation of
energy conservation measures.
Energy conservation measure means an installation which modifies
any building, building system, energy consuming device associated with
the building or industrial facility the construction of which was
completed prior to May 1, 1989, if such measure has been determined by
means of an energy audit to be likely to maintain or improve the
efficiency of energy use and to reduce energy costs in an amount
sufficient to enable a person to recover the total cost of purchasing
and installing such measure within the lesser of--
(1) The useful life of the modification involved; or
(2) 15 years after the purchase and installation of such measure.
Environmental residual means any pollutant or pollution causing
factor which results from any activity.
Exterior envelope physical characteristics means the physical
nature of those elements of a building which enclose conditioned spaces
through which thermal energy may be transferred to or from the
exterior.
Governor means the chief executive officer of a State, the District
of Columbia, Puerto Rico, or any territory or possession of the United
States, or a person duly designated in writing by the Governor to act
upon his or her behalf.
Grantee means the State or other entity named in the notice of
grant award as the recipient.
HVAC means heating, ventilating and air-conditioning.
IBR means incorporation by reference.
Industrial facility means any fixed equipment or facility which is
used in connection with, or as part of, any process or system for
industrial production or output.
Institution of higher education has the same meaning as such term
is defined in section 1201(a) of the Higher Education Act of 1965 (20
U.S.C. 1141(a)).
Metropolitan Planning Organization means that organization required
by the
[[Page 35897]]
Department of Transportation, and designated by the Governor as being
responsible for coordination within the State, to carry out
transportation planning provisions in a Standard Metropolitan
Statistical Area.
Model Energy Code, 1993, including Errata, means the model building
code published by the Council of American Building Officials, which is
incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR
part 51. The availability of this incorporation by reference is given
in Sec. 420.6(b).
Park-and-ride lot means a parking facility generally located at or
near the trip origin of carpools, vanpools and/or mass transit.
Petroleum violation escrow funds. For purposes both of exempting
petroleum violation escrow funds from the matching requirements of
Sec. 420.12 and of applying the limitations specified under
Sec. 420.18(b), this term means any funds distributed to the States by
the Department of Energy or any court and identified as Alleged Crude
Oil Violation funds, together with any interest earned thereon by the
States, but excludes any funds designated as ``excess funds'' under
section 3003(d) of the Petroleum Overcharge Distribution and
Restitution Act, subtitle A of title III of the Omnibus Budget
Reconciliation Act of 1986, Public Law 99-509, and the funds
distributed under the ``Warner Amendment,'' section 155 of Public Law
97-377.
Plan means a State Energy Program plan including required program
activities in accordance with Sec. 420.15 and otherwise meeting the
applicable provisions of this part.
Political subdivision means a unit of government within a State,
including a county, municipality, city, town, township, parish,
village, local public authority, school district, special district,
council of governments, or any other regional or intrastate
governmental entity or instrumentality of a local government exclusive
of institutions of higher learning and hospitals.
Preferential traffic control means any one of a variety of traffic
control techniques used to give carpools, vanpools and public
transportation vehicles priority treatment over single occupant
vehicles other than bicycles and other two-wheeled motorized vehicles.
Program activity means one or more State actions, in a particular
area, designed to promote energy efficiency, renewable energy and
alternative transportation fuel.
Public building means any building which is open to the public
during normal business hours, including:
(1) Any building which provides facilities or shelter for public
assembly, or which is used for educational office or institutional
purposes;
(2) Any inn, hotel, motel, sports arena, supermarket,
transportation terminal, retail store, restaurant, or other commercial
establishment which provides services or retail merchandise;
(3) Any general office space and any portion of an industrial
facility used primarily as office space;
(4) Any building owned by a State or political subdivision thereof,
including libraries, museums, schools, hospitals, auditoriums, sport
arenas, and university buildings; and
(5) Any public or private non-profit school or hospital.
Public transportation means any scheduled or nonscheduled
transportation service for public use.
Regional Support Office Director means the director of a DOE
Regional Support Office with responsibility for grants administration
or any official to whom that function may be redelegated.
Renewable energy means a non-depletable source of energy.
Renewable energy measure means a measure which modifies any
building or industrial facility if such measure has been determined by
means of an energy audit to--
(1) Involve changing, in whole or in part, the fuel or source of
the energy used to meet the requirements of such building or facility
from a depletable source of energy to a non-depletable source of
energy; and
(2) Be likely to reduce energy costs (as calculated on the basis of
energy cost assumptions provided by DOE) in an amount sufficient to
enable a person to recover the total cost of purchasing and installing
such measure (without regard to any tax benefit or Federal financial
assistance applicable thereto) within the lesser of--
(i) The useful life of the modification involved; or
(ii) 25 years after the purchase and installation of such measure.
Residential building means any building which is constructed for
residential occupancy.
Secretary mean the Secretary of DOE.
SEP means the State Energy Program under this part.
Small business means a private firm that does not exceed the
numerical size standard promulgated by the Small Business
Administration under section 3(a) of the Small Business Act (15 U.S.C.
632) for the Standard Industrial Classification (SIC) codes designated
by the Secretary of Energy.
Start-up business means a small business which has been in
existence for 5 years or less.
State means a State, the District of Columbia, Puerto Rico, or any
territory or possession of the United States.
State or local government building means any building owned and
primarily occupied by offices or agencies of a State; and any building
of a unit of local government or a public care institution which could
be covered by part H, title III, of the Energy Policy and Conservation
Act, 42 U.S.C. 6372-6372i.
Transit level of service means characteristics of transit service
provided which indicate its quantity, geographic area of coverage,
frequency and quality (comfort, travel, time, fare and image).
Urban area traffic restriction means a setting aside of certain
portions of an urban area as restricted zones where varying degrees of
limitation are placed on general traffic usage and/or parking.
Vanpool means a group of riders using a vehicle, with a seating
capacity of not less than eight individuals and not more than fifteen
individuals, for transportation to and from their residence or other
designated locations and their place of employment, provided the
vehicle is driven by one of the pool members.
Variable working schedule means a flexible working schedule to
facilitate carpool, vanpool and/or public transportation usage.
Sec. 420.3 Administration of financial assistance.
(a) Financial assistance under this part shall comply with
applicable laws and regulations including, but without limitation, the
requirements of:
(1) Executive Order 12372, Intergovernmental Review of Federal
Programs, as implemented by 10 CFR part 1005.
(2) DOE Financial Assistance Rules (10 CFR part 600); and
(3) Other procedures which DOE may from time to time prescribe for
the administration of financial assistance under this part.
(b) The budget period(s) covered by the financial assistance
provided to a State according to Sec. 420.11(b) or Sec. 420.33 shall be
consistent with 10 CFR part 600.
(c) Subawards are authorized under this part and are subject to the
requirements of this part and 10 CFR part 600.
Sec. 420.4 Technical assistance.
At the request of the Governor of any State to DOE and subject to
the
[[Page 35898]]
availability of personnel and funds, DOE will provide information and
technical assistance to the State in connection with effectuating the
purposes of this part.
Sec. 420.5 Reports.
(a) Each State receiving financial assistance under this part shall
submit to the cognizant Regional Support Office Director a quarterly
program performance report and a quarterly financial status report.
(b) Reports under this section shall contain such information as
the Secretary may prescribe in order to monitor effectively the
implementation of a State's activities under this part.
(c) The reports shall be submitted within 30 days following the end
of each calendar year quarter.
Sec. 420.6 Reference standards.
(a) The following standards which are not otherwise set forth in
this part are incorporated by reference and made a part of this part.
The following standards have been approved for incorporation by
reference by the Director of the Federal Register in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. A notice of any change in these
materials will be published in the Federal Register. The standards
incorporated by reference are available for inspection at the Office of
the Federal Register, 800 North Capitol Street, N.W., suite 700,
Washington, D.C.
(b) The following standards are incorporated by reference in this
part:
(1) The American Society of Heating, Refrigerating and Air-
Conditioning Engineers (ASHRAE), 1791 Tullie Circle, N.E., Atlanta,
Georgia 30329, (404) 636-8400/The Illuminating Engineering Society of
North America (IESNA), 345 East 47th Street, New York, New York 10017,
(212) 705-7913: (i) ASHRAE/IESNA 90.1-1989, entitled ``Energy Efficient
Design of New Buildings Except Low-Rise Residential Buildings,'' with
Addenda 90.1b-1992; Addenda 90.1d-1992; Addenda 90.1e-1992; Addenda
90.1g-1993; and Addenda 90.1i-1993, IBR approved for Sec. 420.2 and
Sec. 420.15.
(2) The Council of American Building Officials (CABO), 5203
Leesburg Pike, Suite 708, Falls Church, Virginia 22041, (703) 931-4533:
(i) The Model Energy Code, 1993, including Errata, IBR approved for
Sec. 420.2 and Sec. 420.15.
Subpart B--Formula Grant Procedures
Sec. 420.10 Purpose.
This subpart specifies the procedures that apply to the Formula
Grant part of the State Energy Program, which allows States to apply
for financial assistance to undertake a wide range of required and
optional energy-related activities provided for under Sec. 420.15 and
Sec. 420.17. Funding for these activities is allocated to the States
based on funds available for any fiscal year, as described under
Sec. 420.11.
Sec. 420.11 Allocation of funds among the States.
(a) The cognizant Regional Support Office Director shall provide
financial assistance to each State having an approved annual
application from funds available for any fiscal year to develop,
modify, or implement a plan.
(b) DOE shall allocate financial assistance to develop, implement
or modify plans among the States from funds available for any fiscal
year, as follows:
(1) If the available funds equal $25.5 million, such funds shall be
allocated to the States according to Table 1 of this section.
(2) The base allocation for each State is listed in Table 1.
Table 1.--Base Allocation by State
------------------------------------------------------------------------
State/Territory
------------------------------------------------------------------------
Alabama................................................. $381,000
Alaska.................................................. 180,000
Arizona................................................. 344,000
Arkansas................................................ 307,000
California.............................................. 1,602,000
Colorado................................................ 399,000
Connecticut............................................. 397,000
Delaware................................................ 164,000
District of Columbia.................................... 158,000
Florida................................................. 831,000
Georgia................................................. 534,000
Hawaii.................................................. 170,000
Idaho................................................... 190,000
Illinois................................................ 1,150,000
Indiana................................................. 631,000
Iowa.................................................... 373,000
Kansas.................................................. 327,000
Kentucky................................................ 411,000
Louisiana............................................... 446,000
Maine................................................... 231,000
Maryland................................................ 486,000
Massachusetts........................................... 617,000
Michigan................................................ 973,000
Minnesota............................................... 584,000
Mississippi............................................. 279,000
Missouri................................................ 518,000
Montana................................................. 182,000
Nebraska................................................ 246,000
Nevada.................................................. 196,000
New Hampshire........................................... 216,000
New Jersey.............................................. 783,000
New Mexico.............................................. 219,000
New York................................................ 1,633,000
North Carolina.......................................... 564,000
North Dakota............................................ 172,000
Ohio.................................................... 1,073,000
Oklahoma................................................ 352,000
Oregon.................................................. 325,000
Pennsylvania............................................ 1,090,000
Rhode Island............................................ 199,000
South Carolina.......................................... 340,000
South Dakota............................................ 168,000
Tennessee............................................... 476,000
Texas................................................... 1,322,000
Utah.................................................... 242,000
Vermont................................................. 172,000
Virginia................................................ 571,000
Washington.............................................. 438,000
West Virginia........................................... 286,000
Wisconsin............................................... 604,000
Wyoming................................................. 155,000
American Samoa.......................................... 115,000
Guam.................................................... 120,000
Northern Marianas....................................... 114,000
Puerto Rico............................................. 322,000
U.S. Virgin Islands..................................... 122,000
------------------------------------------------------------------------
Total............................................. 25,500,000
------------------------------------------------------------------------
(3) If the available funds for any fiscal year are less than $25.5
million, then the base allocation for each State shall be reduced
proportionally.
(4) If the available funds exceed $25.5 million, $25.5 million
shall be allocated as specified in Table 1 and any in excess of $25.5
million shall be allocated as follows:
(i) One-third of the available funds is divided among the States
equally;
(ii) One-third of the available funds is divided on the basis of
the population of the participating States as contained in the most
recent reliable census data available from the Bureau of the Census,
Department of Commerce, for all participating States at the time DOE
needs to compute State formula shares; and
(iii) One-third of the available funds is divided on the basis of
the energy consumption of the participating States as contained in the
most recent State Energy Data Report available from DOE's Energy
Information Administration.
(c) The budget period covered by the financial assistance provided
to a State according to Sec. 420.11(b) shall be consistent with 10 CFR
part 600.
Sec. 420.12 State matching contribution.
(a) Each State shall provide cash, in kind contributions, or both
for SEP activities in an amount totalling not less than 20 percent of
the financial assistance allocated to the State under Sec. 420.11(b).
(b) Cash and in-kind contributions used to meet this State matching
requirement are subject to the limitations on expenditures described in
Sec. 420.18(a), but are not subject to the 20 percent limitation in
Sec. 420.18(b).
[[Page 35899]]
(c) Nothing in this section shall be read to require a match for
petroleum violation escrow funds used under this part.
Sec. 420.13 Annual State applications and State plans.
(a) To be eligible for financial assistance under subpart B of this
part, a State shall submit to the cognizant Regional Support Office
Director an original and two copies of the annual application executed
by the Governor. The date for submission of the annual State
application shall be set by DOE.
(b) An application shall include:
(1) A face sheet containing basic identifying information, on
Standard Form (SF) 424;
(2) A description of the energy efficiency, renewable energy, and
alternative transportation fuel goals to be achieved, including
wherever practicable:
(i) An estimate of the energy to be saved by implementation of the
State plan;
(ii) Why the goals were selected;
(iii) How the attainment of the goals will be measured by the
State; and
(iv) How the program activities included in the State plan
represent a strategy to achieve these goals;
(3) With respect to financial assistance under subpart B of this
part, a goal, consisting of an improvement of 10 percent or more in the
efficiency of use of energy in the State concerned in the calendar year
2000, as compared to the calendar year 1990, and may contain interim
goals;
(4) For the budget period for which financial assistance will be
provided:
(i) A total program budget with supporting justification, broken
out by object category and by source of funding;
(ii) The source and amount of State matching contribution;
(iii) A narrative statement detailing the nature of amendments and
of new program activities;
(iv) For each program activity, a budget and listing of milestones;
and
(v) An explanation of how the minimum criteria for required program
activities prescribed in Sec. 420.15 shall be satisfied;
(5) A detailed description of the increase or decrease in
environmental residuals expected from implementation of a plan defined
insofar as possible through the use of information to be provided by
DOE and an indication of how these environmental factors were
considered in the selection of program activities.
(6) For program activities involving purchase or installation of
materials or equipment for weatherization of low-income housing, an
explanation of how these activities would supplement and not supplant
the existing DOE program under 10 CFR part 440.
(7) A reasonable assurance to DOE that it has established policies
and procedures designed to assure that Federal financial assistance
under subpart B of this part will be used to supplement, and not to
supplant, State and local funds, and to the extent practicable, to
increase the amount of such funds that otherwise would be available, in
the absence of such Federal financial assistance, for those activities
set forth in the State Energy Program plan approved pursuant to this
part;
(8) An assurance that the State shall comply with all applicable
statutes and regulations in effect with respect to the periods for
which it receives grant funding; and
(9) For informational purposes only, and not subject to DOE review,
an energy emergency plan for an energy supply disruption, as designed
by the State consistent with applicable Federal and State law including
an implementation strategy or strategies (including regional
coordination) for dealing with energy emergencies.
(c) The Governor may request an extension of the annual submission
date by submitting a written request to the cognizant Regional Support
Office Director not less than 15 days prior to the annual submission
date. The extension shall be granted only if, in the cognizant Regional
Support Office Director's judgment, acceptable and substantial
justification is shown, and the extension would further objectives of
the Act.
Sec. 420.14 Review and approval of annual State applications and State
plans.
(a) After receipt of an application for financial assistance under
subpart B of this part, or application for approval of an amendment to
a State plan, the cognizant Regional Support Office Director may
request the State to submit within a reasonable period of time any
revisions necessary to make the application complete and to bring the
application into compliance with the requirements of this part. The
cognizant Regional Support Office Director shall attempt to resolve any
dispute over the application informally and to seek voluntary
compliance. If a State fails to submit timely appropriate revisions to
complete an application and/or bring it into compliance, the cognizant
Regional Support Office Director may reject the application in a
written decision, including a statement of reasons, which shall be
subject to administrative review under Sec. 420.19 of this part.
(b) On or before 60 days from the date that a timely filed
application is complete, the cognizant Regional Support Office Director
shall--
(1) Approve the application in whole or in part to the extent
that--
(i) The application conforms to the requirements of this part;
(ii) The proposed program activities are consistent with a State's
achievement of its energy conservation goals in accordance with
Sec. 420.13; and
(iii) The provisions of the application regarding program
activities satisfy the minimum requirements prescribed by Sec. 420.15
and Sec. 420.17 as applicable;
(2) Approve the application in whole or in part subject to special
conditions designed to ensure compliance with the requirements of this
part; or
(3) Disapprove the application if it does not conform to the
requirements of this part.
Sec. 420.15 Minimum criteria for required program activities for
plans.
A plan shall satisfy all of the following minimum criteria for
required program activities.
(a) Mandatory lighting efficiency standards for public buildings
shall:
(1) Be implemented throughout the State, except that the standards
shall be adopted by the State as a model code for those local
governments of the State for which the State's constitution reserves
the exclusive authority to adopt and implement building standards
within their jurisdictions;
(2) Apply to all public buildings above a certain size, as
determined by the State;
(3) For new public buildings, be no less stringent than the
provisions of ASHRAE/IESNA 90.1-1989, and should be updated by
enactment of, or support for the enactment into local codes or
standards, which, at a minimum, are comparable to provisions of ASHRAE/
IESNA 90.1-1989 which is incorporated by reference in accordance with 5
U.S.C. 552 (a) and 1 CFR part 51. The availability of this
incorporation by reference is given in Sec. 420.6; and
(4) For existing public buildings, contain the elements deemed
appropriate by the State.
(b) Program activities to promote the availability and use of
carpools, vanpools, and public transportation shall:
(1) Have at least one of the following actions under implementation
in at least one urbanized area with a population of 50,000 or more
within the State or in the largest urbanized area within the State if
that State does not have an urbanized
[[Page 35900]]
area with a population of 50,000 or more:
(i) A carpool/vanpool matching and promotion campaign;
(ii) Park-and-ride lots;
(iii) Preferential traffic control for carpoolers and public
transportation patrons;
(iv) Preferential parking for carpools and vanpools;
(v) Variable working schedules;
(vi) Improvement in transit level of service for public
transportation;
(vii) Exemption of carpools and vanpools from regulated carrier
status;
(viii) Parking taxes, parking fee regulations or surcharge on
parking costs;
(ix) Full-cost parking fees for State and/or local government
employees;
(x) Urban area traffic restrictions;
(xi) Geographical or time restrictions on automobile use; or
(xii) Area or facility tolls; and
(2) Be coordinated with the relevant Metropolitan Planning
Organization, unless no Metropolitan Planning Organization exists in
the urbanized area, and not be inconsistent with any applicable Federal
requirements.
(c) Mandatory standards and policies af
FR Doc. 96-17067 State Energy Conservation Program
fecting the procurement
practices of the State and its political subdivisions to improve energy
efficiency shall--
(1) With respect to all State procurement and with respect to
procurement of political subdivisions to the extent determined feasible
by the State, be under implementation; and
(2) Contain the elements deemed appropriate by the State to improve
energy efficiency through the procurement practices of the State and
its political subdivisions.
(d) Mandatory thermal efficiency standards for new and renovated
buildings shall--
(1) Be implemented throughout the State, with respect to all
buildings other than exempted buildings, except that the standards
shall be adopted by the State as a model code for those local
governments of the State for which the State's constitution reserves
the exclusive authority to adopt and implement building standards
within their jurisdictions;
(2) Take into account the exterior envelope physical
characteristics, HVAC system selection and configuration, HVAC
equipment performance and service water heating design and equipment
selection;
(3) For all new commercial and multifamily high-rise buildings, be
no less stringent than provisions of sections 7-12 of ASHRAE/IESNA
90.1-1989, and should be updated by enactment of, or support for the
enactment into local codes or standards, which, at a minimum, are
comparable to provisions of ASHRAE/IESNA 90.1-1989; and
(4) For all new single-family and multifamily low-rise residential
buildings, be no less stringent than the Model Energy Code, 1993, and
should be updated by enactment of, or support for the enactment into
local codes or standards, which, at a minimum, are comparable to the
Model Energy Code, 1993, which is incorporated by reference in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The availability of
this incorporation by reference is given in Sec. 420.6;
(5) For renovated buildings:
(i) Apply to those buildings determined by the State to be
renovated buildings; and
(ii) Contain the elements deemed appropriate by the State regarding
thermal efficiency standards for renovated buildings.
(e) A traffic law or regulation which permits the operator of a
motor vehicle to make a turn at a red light after stopping shall:
(1) Be in a State's motor vehicle code and under implementation
throughout all political subdivisions of the State;
(2) Permit the operator of a motor vehicle to make a right turn
(left turn with respect to the Virgin Islands) at a red traffic light
after stopping except where specifically prohibited by a traffic sign
for reasons of safety or except where generally prohibited in an urban
enclave for reasons of safety; and
(3) Permit the operator of a motor vehicle to make a left turn from
a one-way street to a one-way street (right turn with respect to the
Virgin Islands) at a red traffic light after stopping except where
specifically prohibited by a traffic sign for reasons of safety or
except where generally prohibited in an urban enclave for reasons of
safety.
(f) Procedures must exist for ensuring effective coordination among
various local, State, and Federal energy efficiency, renewable energy
and alternative transportation fuel programs within the State,
including any program administered within the Office of Building
Technology, State and Community Programs of the Department of Energy
and the Low Income Home Energy Assistance Program administered by the
Department of Health and Human Services.
Sec. 420.16 Extensions for compliance with required program
activities.
An extension of time by which a required program activity must be
ready for implementation may be granted if DOE determines that the
extension is justified. A written request for an extension, with
accompanying justification and an action plan acceptable to DOE for
achieving compliance in the shortest reasonable time, shall be made to
the cognizant Regional Support Office Director. Any extension shall be
only for the shortest reasonable time that DOE determines necessary to
achieve compliance. The action plan shall contain a schedule for full
compliance and shall identify and make the most reasonable commitment
possible to provision of the resources necessary for achieving the
scheduled compliance.
Sec. 420.17 Optional elements of State Energy Program plans.
(a) Other appropriate activities or programs may be included in the
State plan. These activities may include, but are not limited to, the
following:
(1) Program activities of public education to promote energy
efficiency, renewable energy, and alternative transportation fuels;
(2) Program activities to increase transportation energy
efficiency, including programs to accelerate the use of alternative
transportation fuels for government vehicles, fleet vehicles, taxis,
mass transit, and privately owned vehicles;
(3) Program activities for financing energy conservation measures
and renewable energy measures--
(i) Which may include loan programs and performance contracting
programs for leveraging of additional public and private sector funds
and program activities which allow rebates, grants, or other incentives
for the purchase of energy conservation measures and renewable energy
measures; or
(ii) In addition to or in lieu of program activities described in
paragraph (a)(3)(i) of this section, which may be used in connection
with public or nonprofit buildings owned and operated by a State, a
political subdivision of a State or an agency or instrumentality of a
State, or an organization exempt from taxation under section 501(c)(3)
of the Internal Revenue Code of 1986 including public and private non-
profit schools and hospitals, and local government buildings;
(4) Program activities for encouraging and for carrying out energy
audits with respect to buildings and industrial facilities (including
industrial processes) within the State;
(5) Program activities to promote the adoption of integrated energy
plans which provide for:
(i) Periodic evaluation of a State's energy needs, available energy
resources (including greater energy efficiency), and energy costs; and
[[Page 35901]]
(ii) Utilization of adequate and reliable energy supplies,
including greater energy efficiency, that meet applicable safety,
environmental, and policy requirements at the lowest cost;
(6) Program activities to promote energy efficiency in residential
housing, such as:
(i) Program activities for development and promotion of energy
efficiency rating systems for newly constructed housing and existing
housing so that consumers can compare the energy efficiency of
different housing; and
(ii) Program activities for the adoption of incentives for
builders, utilities, and mortgage lenders to build, service, or finance
energy efficient housing;
(7) Program activities to identify unfair or deceptive acts or
practices which relate to the implementation of energy conservation
measures and renewable energy measures and to educate consumers
concerning such acts or practices;
(8) Program activities to modify patterns of energy consumption so
as to reduce peak demands for energy and improve the efficiency of
energy supply systems, including electricity supply systems;
(9) Program activities to promote energy efficiency as an integral
component of economic development planning conducted by State, local,
or other governmental entities or by energy utilities;
(10) Program activities (enlisting appropriate trade and
professional organizations in the development and financing of such
programs) to provide training and education (including, if appropriate,
training workshops, practice manuals, and testing for each area of
energy efficiency technology) to building designers and contractors
involved in building design and construction or in the sale,
installation, and maintenance of energy systems and equipment to
promote building energy efficiency;
(11) Program activities for the development of building retrofit
standards and regulations, including retrofit ordinances enforced at
the time of the sale of a building;
(12) Program activities to provide support for prefeasibility and
feasibility studies for projects that utilize renewable energy and
energy efficiency resource technologies in order to facilitate access
to capital and credit for such projects;
(13) Program activities to facilitate and encourage the voluntary
use of renewable energy technologies for eligible participants in
Federal agency programs, including the Rural Electrification
Administration and the Farmers Home Administration; and
(14) In accordance with paragraph (b) of this section, program
activities to implement the Energy Technology Commercialization
Services Program.
(b) This section prescribes requirements for establishing State-
level Energy Technology Commercialization Services Program as an
optional element of State plans.
(1) The program activities to implement the functions of the Energy
Technology Commercialization Services Program shall:
(i) Aid small and start-up businesses in discovering useful and
practical information relating to manufacturing and commercial
production techniques and costs associated with new energy
technologies;
(ii) Encourage the application of such information in order to
solve energy technology product development and manufacturing problems;
(iii) Establish an Energy Technology Commercialization Services
Program affiliated with an existing entity in each State;
(iv) Coordinate engineers and manufacturers to aid small and start-
up businesses in solving specific technical problems and improving the
cost effectiveness of methods for manufacturing new energy
technologies;
(v) Assist small and start-up businesses in preparing the technical
portions of proposals seeking financial assistance for new energy
technology commercialization; and
(vi) Facilitate contract research between university faculty and
students and small start-up businesses, in order to improve energy
technology product development and independent quality control testing.
(2) Each State Energy Technology Commercialization Services Program
shall develop and maintain a data base of engineering and scientific
experts in energy technologies and product commercialization interested
in participating in the service. Such data base shall, at a minimum,
include faculty of institutions of higher education, retired
manufacturing experts, and National Laboratory personnel.
(3) The services provided by the Energy Technology
Commercialization Services Program established under this part shall be
available to any small or start-up business. Such service programs
shall charge fees which are affordable to a party eligible for
assistance, which shall be determined by examining factors, including
the following: the costs of the services received; the need of the
recipient for the services; and the ability of the recipient to pay for
the services.
Sec. 420.18 Expenditure prohibitions and limitations.
(a) No financial assistance provided to a State under this part
shall be used:
(1) For construction, such as construction of mass transit systems
and exclusive bus lanes, or for construction or repair of buildings or
structures;
(2) To purchase land, a building or structure or any interest
therein;
(3) To subsidize fares for public transportation;
(4) To subsidize utility rate demonstrations or State tax credits
for energy conservation measures or renewable energy measures; or
(5) To conduct, or purchase equipment to conduct, research,
development or demonstration of energy efficiency or renewable energy
techniques and technologies not commercially available.
(b) No more than 20 percent of the financial assistance awarded to
the State for this program shall be used to purchase office supplies,
library materials, or other equipment whose purchase is not otherwise
prohibited by this section. Nothing in this paragraph shall be read to
apply this 20 percent limitation to petroleum violation escrow funds
used under this part.
(c) Demonstrations of commercially available energy efficiency or
renewable energy techniques and technologies are permitted, and are not
subject to the prohibitions of Sec. 420.18(a)(1), or to the limitation
on equipment purchases of Sec. 420.18(b).
(d) A State may use regular or revolving loan mechanisms to fund
SEP services which are consistent with this part and which are included
in the State's approved SEP plan. The State may use loan repayments and
any interest on the loan funds only for activities which are consistent
with this part and which are included in the State's approved SEP plan.
(e) A State may use funds under this part for the purchase and
installation of equipment and materials for energy conservation
measures and renewable energy measures subject to the following terms
and conditions:
(1) Such use must be included in the State's approved plan and, if
funded by petroleum violation escrow funds, must be consistent with any
judicial or administrative terms and conditions imposed upon State use
of such funds;
(2) A State may use for these purposes no more than 50 percent of
all funds allocated by the State to SEP in a given year, regardless of
source, except that this limitation shall not include regular
[[Page 35902]]
and revolving loan programs funded with petroleum violation escrow
funds, and is subject to waiver by DOE for good cause. Loan documents
shall ensure repayment of principal and interest within a reasonable
period of time, and shall not include provisions of loan forgiveness.
(3) Subject to the restrictions of this part, State and local
government buildings, as defined in Sec. 420.2, are eligible for energy
conservation measures and renewable energy measures under this section;
(4) Funds must be used to supplement and no funds may be used to
supplant weatherization activities under the Weatherization Assistance
Program for Low-Income Persons, under 10 CFR part 440;
(5) Subject to paragraph (e)(6) of this section, a State may use a
variety of financial incentives to fund purchases and installation of
materials and equipment under this paragraph including, but not limited
to, regular loans, revolving loans, loan buy-downs, performance
contracting, rebates, and grants.
(6) The following mechanisms are not allowed for funding the
purchase and installation of materials and equipment under this
paragraph:
(i) Rebates for more than 50 percent of the total cost of
purchasing and installing materials and equipment (States shall set
appropriate restrictions and limits to insure the most efficient use of
rebates); and
(ii) Loan guarantees.
Sec. 420.19 Administrative review.
(a) A State shall have 20 days from the date of receipt of a
decision under Sec. 420.14 to file a notice requesting administrative
review in accordance with paragraph (b) of this section. If an
applicant does not timely file such a notice, the decision under
Sec. 420.14 shall become final for DOE.
(b) A notice requesting administrative review shall be filed with
the cognizant Regional Support Office Director and shall be accompanied
by a written statement containing supporting arguments. If the
cognizant Regional Support Office Director has disapproved an entire
application for financial assistance, the State may request a public
hearing.
(c) A notice or any other document shall be deemed filed under this
section upon receipt.
(d) On or before 15 days from receipt of a notice requesting
administrative review which is timely filed, the cognizant Regional
Support Office Director shall forward to the Deputy Assistant
Secretary, the notice requesting administrative review, the decision
under Sec. 420.14 as to which administrative review is sought, a draft
recommended final decision for concurrence, and any other relevant
material.
(e) If the State requests a public hearing on the disapproval of an
entire application for financial assistance, the Deputy Assistant
Secretary, within 15 days, shall give actual notice to the State and
Federal Register notice of the date, place, time, and procedures which
shall apply to the public hearing. Any public hearing under this
section shall be informal and legislative in nature.
(f) On or before 45 days from receipt of documents under paragraph
(d) of this section or the conclusion of the public hearing, whichever
is later, the Deputy Assistant Secretary shall concur in, concur in as
modified, or issue a substitute for the recommended decision of the
cognizant Regional Support Office Director.
(g) On or before 15 days from the date of receipt of the
determination under paragraph (f) of this section, the Governor may
file an application for discretionary review by the Assistant
Secretary. On or before 15 days from filing, the Assistant Secretary
shall send a notice to the Governor stating whether the Deputy
Assistant Secretary's determination will be reviewed. If the Assistant
Secretary grants a review, a decision shall be issued no later than 60
days from the date review is granted. The Assistant Secretary may not
issue a notice or decision under this paragraph without the concurrence
of the DOE Office of General Counsel.
(h) A decision under paragraph (f) of this section shall be final
for DOE if there is no review under paragraph (g) of this section. If
there is review under paragraph (g) of this section, the decision
thereunder shall be final for DOE and no appeal shall lie elsewhere in
DOE.
(i) Prior to the effective date of the termination or suspension of
a grant award for failure to implement an approved State plan in
compliance with the requirements of this part, a grantee shall have the
right to written notice of the basis for the enforcement action and of
the opportunity for public hearing before the DOE Financial Assistance
Appeals Board notwithstanding any provisions to the contrary of 10 CFR
600.22, 600.24, 600.25, and 600.243. To obtain a public hearing, the
grantee must request an evidentiary hearing, with prior Federal
Register notice, in the election letter submitted under Rule 2 of 10
CFR 1024.4 and the request shall be granted notwithstanding any
provisions to the contrary of Rule 2.
Subpart C--Implementation of Special Projects Financial Assistance
Sec. 420.30 Purpose and scope.
(a) This subpart sets forth DOE's policies and procedures for
implementing special projects financial assistance under this part.
(b) For years in which such funding is available, States may apply
for financial assistance to undertake a variety of State-oriented
energy-related special projects activities in addition to the funds
provided under the regular SEP grants.
(c) The types of funded activities may vary from year to year, and
from State to State, depending upon funds available for each type of
activity and DOE and State priorities.
(d) A number of end-use sector programs in the Office of Energy
Efficiency and Renewable Energy participate in the funding of these
activities, and the projects must meet the requirements of those
programs.
(e) The purposes of the special project activities are:
(1) To utilize States to accelerate deployment of energy
efficiency, renewable energy, and alternative transportation fuel
technologies;
(2) To facilitate the commercialization of emerging and
underutilized energy efficiency and renewable energy technologies; and
(3) To increase the responsiveness of Federally funded technology
development efforts to the needs of the marketplace.
Sec. 420.31 Notice of availability.
(a) If in any fiscal year DOE has funds available for special
projects, DOE shall publish in the Federal Register one or more
notice(s) of availability of SEP special projects financial assistance.
(b) Each notice of availability shall cite this part and shall
include:
(1) Brief descriptions of the activities for which funding is
available;
(2) The amount of money DOE has available or estimates it will have
available for award for each type of activity, and the total amount
available;
(3) The program official to contact for additional information,
application forms, and the program guidance/solicitation document; and
(4) The dates when:
(i) The program guidance/solicitation will be available; and
(ii) The applications for financial assistance must be received by
DOE.
Sec. 420.32 Program guidance/solicitation.
After the publication of the notice of availability in the Federal
Register, DOE shall, upon request, provide States
[[Page 35903]]
interested in applying for one or more project(s) under the special
projects financial assistance with a detailed program guidance/
solicitation that will include:
(a) The control number of the program;
(b) The expected duration of DOE support or period of performance;
(c) An application form or the format to be used, location for
application submission, and number of copies required;
(d) The name of the DOE program office contact from whom to seek
additional information;
(e) Detailed descriptions of each type of program activity for
which financial assistance is being offered;
(f) The amount of money available for award, together with any
limitations as to maximum or minimum amounts expected to be awarded;
(g) Deadlines for submitting applications;
(h) Evaluation criteria that DOE will apply in the selection and
ranking process for applications for each program activity;
(i) The evaluation process to be applied to each type of program
activity;
(j) A listing of program policy factors if any that DOE may use in
the final selection process, in addition to the results of the
evaluations, including:
(1) The importance and relevance of the proposed applications to
SEP and the participating programs in the Office of Energy Efficiency
and Renewable Energy; and
(2) Geographical diversity;
(k) Reporting requirements;
(l) References to:
(1) Statutory authority for the program;
(2) Applicable rules; and
(3) Other terms and conditions applicable to awards made under the
program guidance/solicitation; and
(m) A statement that DOE reserves the right to fund in whole or in
part, any, all, or none of the applications submitted.
Sec. 420.33 Application requirements.
(a) Consistent with Sec. 420.32 of this part, DOE shall set forth
general and special project activity-specific requirements for
applications for special projects financial assistance in the program
guidance/solicitation.
(b) In addition to any other requirements, all applications shall
provide:
(1) A detailed description of the proposed project, including the
objectives of the project in relationship to DOE's program and the
State's plan for carrying it out;
(2) A detailed budget for the entire proposed period of support,
with written justification sufficient to evaluate the itemized list of
costs provided on the entire project; and
(3) An implementation schedule for carrying out the project.
(c) DOE may, subsequent to receipt of an application, request
additional budgetary information from a State when necessary for
clarification or to make informed preaward determinations.
(d) DOE may return an application which does not include all
information and documentation required by this part, 10 CFR part 600,
or the program guidance/solicitation, when the nature of the omission
precludes review of the application.
Sec. 420.34 Matching contributions or cost-sharing.
DOE may require (as set forth in the program guidance/solicitation)
States to provide either:
(a) A matching contribution of at least a specified percentage of
the Federal financial assistance award; or
(b) A specified share of the total cost of the project for which
financial assistance is provided.
Sec. 420.35 Application evaluation.
(a) DOE staff at the cognizant Regional Support Office shall
perform an initial review of all applications to ensure that the State
has provided the information required by this part, 10 CFR part 600,
and the program guidance/solicitation.
(b) DOE shall group, and technically evaluate according to program
activity, all applications determined to be complete and satisfactory.
(c) DOE shall select evaluators on the basis of their professional
qualifications and expertise relating to the particular program
activity being evaluated.
(1) DOE anticipates that evaluators will primarily be DOE
employees; but
(2) If DOE uses non-DOE evaluators, DOE shall require them to
comply with all applicable DOE rules or directives concerning the use
of outside evaluators.
Sec. 420.36 Evaluation criteria.
The evaluation criteria, including program activity-specific
criteria, will be set forth in the program guidance/solicitation
document.
Sec. 420.37 Selection.
(a) DOE may make selection of applications for award based on:
(1) The findings of the technical evaluations;
(2) The priorities of DOE, SEP, and the participating program
offices;
(3) The availability of funds for the various special project
activities; and
(4) Any program policy factors set forth in the program guidance/
solicitation.
(b) The Director, Office of State and Community Programs makes the
final selections of projects to be awarded financial assistance.
PART 450--[REMOVED]
2. Under the authority of 42 U.S.C. 7101 et seq. Part 450 is
removed.
[FR Doc. 96-17067 Filed 7-5-96; 8:45 am]
BILLING CODE 6450-01-P
Complete official Federal Register PDF
FR Doc. 96-17023 Leather Tanning and Finishing Effluent Limitations Guidelines; Pretreatment Standards; New and Existing Sources
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35680-35685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17023]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 425
RIN 2040-AC48
[FRL-5527-4]
Leather Tanning and Finishing Effluent Limitations Guidelines;
Pretreatment Standards; New and Existing Sources
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: EPA is promulgating changes modifying the pretreatment
standards for existing and new sources applicable to certain facilities
in the leather tanning and finishing point source category that conduct
unhairing operations and that discharge process wastewater to publicly
owned treatment works (``POTW''). This rule responds to a petition
submitted by the leather tanning industry. The Agency conducted an
informal survey of a small number of POTWs, permitting authorities, and
industry representatives knowledgeable of leather processing operations
and wastewater treatment. EPA is promulgating these changes as a
``direct'' final rule because the Agency does not expect significant
adverse or critical comments. EPA also wants to provide prompt
implementation of the rule to minimize any potential hazards to worker
safety and health that may occur in the absence of this rule. Prompt
implementation will also allow affected facilities in this category to
reduce the use of treatment chemicals.
DATES: This rule is effective on October 7, 1996 unless significant
adverse or critical comments are received by September 6, 1996. If the
effective date is delayed, timely notice will be published in the
Federal Register.
ADDRESSES: Send comments in triplicate on this rule to Mr. Ed Terry,
Engineering and Analysis Division (4303), U.S. EPA, 401 M St. S.W.,
Washington, DC 20460.
[[Page 35681]]
FOR FURTHER INFORMATION CONTACT: Mr. Ed Terry, Engineering and Analysis
Division (4303), U.S. EPA, 401 M St., S.W., Washington, DC 20460, or
telephone 202-260-7128.
SUPPLEMENTARY INFORMATION:
Regulated entities. Entities potentially regulated by this action
are those facilities in the leather tanning and finishing point source
category that conduct unhairing operations and that discharge process
wastewater to publicly owned treatment works, and entities include:
------------------------------------------------------------------------
Category Examples of regulated entities
------------------------------------------------------------------------
Industry.......................... Leather tanning facilities that
conduct beamhouse operations and
indirectly discharge process
wastewater to publicly owned
treatment works
------------------------------------------------------------------------
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 Sec. 425.15, Sec. 425.25, Sec. 425.65, or
Sec. 425.85 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.
Organization of this document:
I. Legal Authority
II. Clean Water Act
III. Overview of the Leather Tanning Industry
IV. Regulatory Activities and Responses
V. Petition Submitted by Industry
VI. Agency Action in Response to Petition
VII. Options Considered
A. Selected Option
B. Other Options Considered
(1) Option 2
(2) Option 3
VIII. Scope of This Rule
IX. Executive Order 12866
X. Unfunded Mandates Reform Act
XI. Regulatory Flexibility Analysis
XII. Submission to Congress and the General Accounting Office
XIII. Paperwork Reduction Act
XIV. Administrative Procedure Requirements
I. Legal Authority
These regulations are being promulgated under the authority of
sections 301, 304, 306, 307, 308, and 501 of the Federal Water
Pollution Control Act of 1972, as amended (known as the Clean Water
Act), 33 U.S.C. sections 1311, 1314, 1316, 1317, 1318, and 1361.
II. Clean Water Act
The Federal Water Pollution Control Act of 1972 (``the Act'')
established a comprehensive program to ``restore and maintain the
chemical, physical, and biological integrity of the Nation's waters''
[Section 101(a)]. By July 1, 1977, existing industrial dischargers were
to achieve ``effluent limitations requiring the application of the best
practicable control technology currently available'' (``BPT'')[Section
301(b)(1)(A)]; and by July 1, 1983, dischargers of certain pollutants
were required to achieve ``effluent limitations requiring the
application of the best available technology economically achievable *
* * which will result in reasonable further progress toward the
national goal of eliminating the discharge of all pollutants''
(``BAT'') [Section 301(b)(2)(A)]. New industrial direct dischargers
were required, under Section 306, to comply with new source performance
standards (``NSPS''), based on the best available demonstrated
technology; and new and existing dischargers to publicly owned
treatment works (``POTW'') were subject to pretreatment standards under
Sections 307(b) and of the Clean Water Act. The requirements for direct
dischargers were to be incorporated into National Pollutant Discharge
Elimination System (``NPDES'') permits issued under Section 402 of the
Act, and pretreatment standards were made enforceable directly against
dischargers to POTWs (``indirect dischargers'').
III. Overview of the Leather Tanning Industry
Leather tanning is a general term for the various processing steps
involved in converting animal skins or hides into leather. The three
major hide and skin types used to manufacture leather are cattle hides,
sheepskins and pigskins. The three primary steps of processing hides or
skins are: beamhouse operations which wash and soak the hides or skins
and (at most tanneries) chemically remove the attached hair; tanyard
processes in which the tanning agent (primarily chromium) reacts with
and stabilizes the proteinaceous matter in the hides or skins; and
retanning and wet finishing processes which accomplish further
processing by using additional tanning agents (again primarily chromium
although other agents are also used) and other chemical agents such as
dyes, lubricants and various finishes.
The U.S. leather tanning industry, identified by the Department of
Commerce's Standard Industrial Classification as industry number 3111,
is an old industry. The number of tanneries in the U.S. has steadily
decreased from around 7,500 in 1865 to approximately 1,000 by the year
1900. In 1982, EPA data indicated there were 158 tanneries producing
leather and discharging wastewaters to surface streams or to POTWs.
According to estimates in the U.S. Industrial Outlook--1993, in 1992
the leather tanning and finishing industry employed about 12,700
people, distributed among 110 facilities, or an average of about 115
employees per facility. Tanneries are clustered in the northeast and
mid-Atlantic states, the Chicago-Milwaukee area and the Gloversville-
Johnstown area of New York State. Other facilities are scattered around
the U.S. Cattle hides represent the bulk of raw material utilized for
tanning done in the U.S. The following is a brief description of the
three primary areas of process operations of facilities in the leather
tanning and finishing industry.
The first primary area of process operations is the beamhouse in
which the raw hides and skins are prepared by cleaning and soaking to
make them more pliable, and unhairing, or hair removal, to make the
hides more attractive and useful. Beamhouse operations usually start
with siding and trimming, followed by washing and soaking, fleshing and
unhairing. The unhairing operation includes lime and sodium sulfide as
the primary chemicals which dissolve the hair. Wastewaters are highly
alkaline, in a pH range of 10 to 12.
The second primary area of process operations is the tanyard in
which a durable material is produced from the animal hides or skins.
The proteinaceous matter in the hides reacts with the tanning agent and
becomes stabilized. The tanning is accomplished by trivalent chromium,
by vegetable tannins extracted from the bark of certain trees, or by
synthetic tanning agents. These operations occur in an acidic medium
and the wastewater generated usually has a pH in the range of 2.5 to
3.5. The resulting stabilized materials will not degrade by physical or
biological mechanisms.
The third primary area of process operations is retanning and wet
finishing which gives the tanned hides special or desired features,
such as bleached appearance, added coloring, lubricants, or further
tanning for finished leather properties. These operations usually do
not have a significant effect on the acidity/alkalinity of associated
wastewaters.
[[Page 35682]]
IV. Regulatory Activities and Responses
On April 9, 1974 (39 FR 12958) EPA promulgated the original
regulation for the leather tanning industry, establishing effluent
limitations guidelines and standards for the industry based on the best
practicable control technology currently available (``BPT''), the best
available technology economically achievable (``BAT''), new source
performance standards (``NSPS'') for new direct dischargers, and
pretreatment standards for new indirect dischargers (``PSNS''). These
requirements were codified at 40 CFR Part 425, Subparts A-F.
The Tanners Council of America, Inc. (now the Leather Industries of
America, Inc.), challenged the 1974 promulgated rule. The U.S. Court of
Appeals for the Fourth Circuit left BAT and PSNS undisturbed, but
remanded the BPT and NSPS limitations and standards.
On March 23, 1977 (42 FR 15696), EPA promulgated pretreatment
standards for existing sources (``PSES'') for the leather tanning
industry. These standards included only a pH range and did not
establish limits on chromium or sulfide.
On July 2, 1979 (44 FR 38746), EPA proposed revised effluent
limitations guidelines and standards for the leather tanning and
finishing point source category. EPA proposed to replace the remanded
BPT and NSPS limitations and standards, establish new best conventional
pollutant control technology (``BCT'') limitations, and revise BAT,
PSES and PSNS limitations and standards.
On November 23, 1982 (47 FR 52848) EPA promulgated a final
regulation for the leather tanning and finishing industry point source
category, establishing effluent limitations and standards to control
specific toxic, nonconventional and conventional pollutants for nine
subcategories in the leather tanning and finishing point source
category. The pretreatment standards for indirect dischargers to POTWs
established categorical limits on the discharge of chromium and
sulfides and revised pH limits in certain subcategories.
The Tanners Council of America (now known as the Leather Industries
of America, Inc. (LIA)) filed a petition for judicial review of several
aspects of the promulgated regulation. This action was followed by the
filing of an administrative Petition for Reconsideration with EPA. The
Agency conducted an extensive review of the existing data base and
acquired additional data. Following discussions between the Agency and
the LIA, the parties entered into a settlement agreement.
The settlement agreement, signed on December 11, 1984, addressed
the issues raised in the LIA petition. EPA agreed to propose amendments
to the 1982 rule and to solicit comments on these issues. LIA agreed to
dismiss its petition for judicial review and to withdraw the Petition
for Reconsideration if EPA promulgated rules consistent with the
proposed amendments.
In response to the 1984 settlement agreement on the revised
effluent guidelines, EPA published on January 21, 1987 (52 FR 2370)
proposed amendments to the 1982 rule and preamble language with
solicitation of comments. As one of the provisions of the settlement
agreement, EPA agreed to propose to delete the upper pH limit for
vegetable tanners in Subpart C [Hair Save or Pulp, Non-chrome Tan,
Retan-Wet Finish subcategory (Sec. 425.35(a))] only. Also, as part of
the settlement agreement, LIA and EPA jointly requested the U.S. Court
of Appeals for the Fourth Circuit to stay the effectiveness of the
sections of 40 CFR Part 425 which EPA had agreed to propose to amend,
pending final action by EPA on the proposed amendments. On February 22,
1985, the Court entered an Order staying specified sections of Part
425, pending final promulgation of an amendment to the regulation
consistent with the settlement agreement.
On March 21, 1988 (53 FR 9176) EPA promulgated amendments to 40 CFR
Part 425. The promulgated rule added an alternative sulfide analytical
method, clarification of the procedures that support applicability of
sulfide pretreatment standards, revisions to certain BPT effluent
limitations, corrections to NSPS, and an allowance for small tannery
exemptions under certain conditions. The preamble to the promulgated
rule stated that the Agency would not consider a waiver from the upper
pH limit of 10.0 for other subcategories than Subpart C because it
would be unduly complicated.
V. Petition Submitted by Industry
On March 18, 1993, Counsel for the leather tanning industry
submitted a petition to the Agency, requesting that the Agency amend
the upper pH limit for leather tanning facilities that conduct
unhairing (``beamhouse'') operations with indirect discharge to
publicly owned treatment works (``POTWs''). The petition asks the
Administrator ``* * * to include within the relevant regulatory section
language allowing a POTW, subject to EPA review, to waive the upper pH
limit for regulated discharges upon a showing that any such waiver will
not `interfere,' cause a `pass through' or be `incompatible' with a
POTW's treatment works.'' The petitioners go on to say: ``The
rulemaking is requested because, as a result of changes in operating
conditions and an incorrect assumption that flow equalization alone
would allow continuous control of tannery wastewaters to a level
between 7.0 and 10.0, the existing upper pH limit cannot always be
safely met.''
Since 1977, EPA has prohibited the discharge into POTWs of effluent
from such facilities where the discharge failed to fall within a pH
range of 7.0 to 10.0. This limitation was established primarily due to
concerns over the solubility of chromium at higher pH levels and the
potential for upsetting biological treatment systems of POTWs. To meet
the pH requirement, leather tanning facilities would mix high pH
beamhouse wastewaters with low pH tanyard wastewaters in a flow
equalization process, resulting in a wastewater discharge that would
meet the pH requirement.
In 1982, EPA subsequently set chromium pretreatment standards for
the industry. The treatment technology for chromium reduction is
precipitation at a pH range of 8.5 to 9.0, thus requiring tanyard
wastewater to be raised from its usual range of 2.5 to 3.5. However,
this treatment was not required at most facilities because POTWs would
grant removal credits allowing chromium to be discharged without
pretreatment.
Following the invalidation of the original removal credit
regulation in 1986, see NRDC v. EPA, 790 F.2d 289 (3rd Cir. 1986),
cert. denied 479 U.S. 1084 (1987), leather tanning facilities raised
the pH of the tanyard wastewaters in order to achieve necessary
chromium reduction. The petitioners assert that because the resulting
wastewaters, when combined with the beamhouse wastewaters, are still at
a pH outside the pretreatment standard, plants have found it necessary
to add acid to the combined wastewater before discharge.
The petitioners indicate this acidification is problematic for
several reasons. First, this adjustment to the pH may result in the
generation and release of hydrogen sulfide (H2S), a highly toxic
gas, in the leather tanning facility or in the POTW. In addition, the
petitioners assert that many municipal authorities believe that tannery
wastewater alkalinity and buffering capacity are highly beneficial in
counteracting sewer corrosion and H2S generation within the sewer
system.
[[Page 35683]]
VI. Agency Action in Response to Petition
In response to the petition, the Agency conducted an informal
survey of a small number of POTWs receiving leather tanning
wastewaters, permitting authorities, and industry representatives
knowledgeable of leather processing operations and wastewater
treatment.
Eight POTW managers and operators were contacted regarding the
issues raised in the petition. Three of the POTWs contacted were
identified in the petition and five of the POTWs contacted were known
by EPA to be receiving wastewater from leather tanning facilities. All
those contacted were amenable to receiving leather tanning and
finishing wastewaters with a higher pH at the point of discharge to the
POTW. Four operators stated that wastewaters with alkaline pH
contribute to more efficient POTW operation. Three operators expressed
the opinion that higher pH levels inhibit corrosion. Two operators
stated that high pH at the user's point of discharge reduces or
eliminates the need for adding caustic to the POTW treatment system to
maximize removal efficiency. One POTW operator stated that his system
had not had any operating or performance problems associated with too
high a pH in his system.
Based on review of the petition, telephone discussions with
operators and managers of POTWs receiving leather tanning wastewater,
and regulatory personnel, EPA has determined that there is sufficient
basis for promulgating amendments to the upper pH limit contained in
the pretreatment standards for existing and new sources in the subparts
identified below.
VII. Options Considered
A. Selected Option
EPA is promulgating this rule to revise the existing pretreatment
standards to eliminate upper (alkaline) pH limits for plants in four
subcategories in which unhairing operations are conducted. This minor
revision will benefit POTW operations by lowering operating costs and
reducing potential risks for worker safety and health. This option was
selected because EPA believes that interference with the operation of
POTWs (i.e., damage to POTW collection systems and upset of biological
treatment processes, and potential for adverse effect on the health and
safety of POTW workers) and potential for pass through of pollutants
are not likely events. Affected POTWs may still elect to set an
alternative upper (alkaline) pH limit based on local circumstances.
B. Other Options Considered
The following options were considered but not selected.
(1) Option 2
EPA would promulgate a rule to develop new upper (alkaline) pH
limits for all indirect dischargers in each of the four subcategories
affected by the petition. This option was not selected because EPA does
not have sufficient data to develop different pH limits. Even if
sufficient data were available to develop different pH limits, this
option also may leave individual cases where new pH limits still may
not fit local circumstances, thus requiring further regulatory action.
Moreover, as indicated above, the information currently available to
the Agency indicate that no upper (alkaline) pH limits are necessary.
(2) Option 3
EPA would promulgate a rule adding a new section to 40 CFR Part 425
which would establish a procedure for use by individual POTWs in
changing the pH range specified in the categorical pretreatment
standards. The procedure would allow individual POTWs receiving these
wastewaters to determine the appropriate upper (alkaline) pH limit for
each of the affected leather tanning and finishing facilities. POTWs
would determine the appropriate upper pH limit applicable to each
indirect discharging leather tanning and finishing facility with
operations in the affected subcategories based on consideration of all
relevant factors pertinent to the POTW, including but not limited to
those that EPA might present in support of such an option. EPA did not
select this option because of the added unnecessary procedural burden
this would place on POTWs; as indicated above, EPA does not believe
that such limits are necessary. Where local conditions make such limits
appropriate, POTWs should be free to set limits based on existing
procedures rather than a new procedure developed for this rule.
VIII. Scope of This Rule
This notice of a ``direct'' final rule addresses only certain
leather tanning facilities that conduct beamhouse operations and
indirectly discharge process wastewater to publicly owned treatment
works. Thus this final rule applies to the standards in Subparts A, B,
F, and H of 40 CFR Part 425, at Secs. 425.15, 425.25, 425.65, and
425.85.
The petition submitted by the Leather Industries of America, Inc.,
sought to amend only the Pretreatment Standards for Existing Sources
(PSES). Because EPA set Pretreatment Standards for New Sources (PSNS)
equal to PSES, this final rule applies to both existing and new
indirect dischargers. However, because PSNS were set equal to PSES in
each subcategory, EPA need only promulgate an amendment to PSES to
effect the elimination of the upper (alkaline) pH limit for both
existing and new sources in these four subcategories.
The petitioners also asked for relief from 40 CFR Part 425 Subpart
C--Pretreatment Standards for Existing Sources--Hair Save or Pulp, Non-
Chrome Tan, Retan--Wet Finish subcategory. However, EPA's rulemaking to
implement the 1984 settlement agreement addressed removal of the upper
(alkaline) pH limit for this subcategory.
IX. 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 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 Executive Order 12866, it has been
determined that this rule is not a ``significant regulatory action''
under the terms of Executive Order 12866 and is therefore not subject
to OMB review.
X. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.
L. 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA,
[[Page 35684]]
EPA generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to State, local, and tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any one year. Before promulgating an EPA rule for
which a written statement is needed, section 205 of the UMRA generally
requires EPA to identify and consider a reasonable number of regulatory
alternatives and adopt the least costly, most cost-effective or least
burdensome alternative that achieves the objectives of the rule. The
provisions of section 205 do not apply when they are inconsistent with
applicable law. Moreover, section 205 allows EPA to adopt an
alternative other than the least costly, most cost-effective or least
burdensome alternative if the Administrator publishes with the final
rule an explanation why that alternative was not adopted.
Under section 204 of the UMRA, EPA generally must develop a process
to permit elected officials of State, local and tribal governments (or
their designated employees with authority to act on their behalf) to
provide meaningful and timely input in the development of regulations
containing significant Federal intergovernmental mandates. These
consultation requirements build on those of Executive Order 12875
(``Enhancing the Intergovernmental Partnership'').
Before EPA establishes any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, it must have developed under section 203 of the UMRA a
small government agency plan. The plan must provide for notifying
potentially affected small governments, enabling officials of affected
small governments to have meaningful and timely input in the
development of EPA regulatory proposals with significant Federal
intergovernmental mandates, and informing, educating, and advising
small governments on compliance with the regulatory requirements.
EPA has determined that this rule does not contain a Federal
mandate that may result in expenditures of $100 million or more for
State, local, and tribal governments, in the aggregate, or the private
sector in any one year. This rule is intended to reduce the burden of
compliance by affected industries with certain federal effluent
requirements. In addition, the approach selected for altering the
existing regulations is intended also to decrease implementation
burdens for State and local governments. Thus, today's rule is not
subject to the requirements of sections 202 and 205 of the UMRA.
Similarly, EPA has also determined that this rule contains no
regulatory requirements that might significantly or uniquely affect
small governments and thus this rule is not subject to the requirements
of section 203 of UMRA. However, EPA has nonetheless involved state and
local governments in the process of developing this rule. The Agency
consulted with representatives of selected POTWs regarding the
underlying technical aspects of this rule. The Agency will continue
this process of consulting with state, local and other affected parties
after issuance of the rule in order to further minimize the potential
for unfunded mandates.
XI. Regulatory Flexibility Analysis
The Regulatory Flexibility Act, 5 U.S.C 601 et seq., requires EPA
and other agencies to prepare a final regulatory flexibility analysis
for regulations that have a significant impact on a substantial number
of small entities. This regulatory action does not have any adverse
impact on either small or large entities. Therefore, a regulatory
flexibility analysis is not required. Pursuant to section 605(b) of the
Regulatory Flexibility Act, 5 U.S.C. 605(b), the Administrator
certifies that this rule will not have a significant economic impact on
a substantial number of small entities.
XII. 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.
XIII. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, 44 U.S.C.
3500 et seq., EPA must submit a copy of any rule that contains a
collection-of-information requirement to the Director of the Office of
Management and Budget for review and approval. This rule contains no
additional information collection requirements beyond those already
required by 40 CFR part 403 and 40 CFR part 122 and by 40 CFR Part 425,
and therefore the review requirement of the Paperwork Reduction Act is
not applicable.
XIV. Administrative Procedure Requirements
The Agency is publishing this action as a ``direct final'' rule. A
direct final rule is not an ``interim final'' rule (i.e. a rule which
provides for public comment after it has gone into effect); rather it
is a rule which is published with a delayed effective date allowing for
the receipt of and response to public comment before the rule goes into
effect. A response to all comments received will be placed in the
docket for this rule prior to the effective date. This rule thus fully
complies with notice-and-comment requirements under the Administrative
Procedure Act (APA). EPA has chosen to use the direct final approach
for this rule because the Agency does not expect to receive adverse or
critical comment and to allow for the most expeditious implementation
possible, consistent with the APA. However, consistent with APA
requirements, if EPA does receive significant adverse or critical
comment, EPA will withdraw this rule prior to its effective date and
proceed with a normal rulemaking process. As a result, elsewhere in
today's Federal Register, EPA is also proposing this rule; if EPA
decides to withdraw the direct final rule based on public comment, EPA
will proceed with a revised rule based on this proposal. There will not
be an additional comment period, so parties interested in commenting on
the proposed rule should do so at this time.
List of Subjects in 40 CFR Part 425
Leather, Leather Tanning and Finishing, Water Pollution Control,
Wastewater Treatment and Disposal, Pretreatment Standards for Existing
and New Sources.
Dated: June 26, 1996.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble, part 425, subchapter N,
chapter I, of title 40, Code of Federal Regulations, is amended as
follows:
PART 425--[AMENDED]
1. The authority citation for part 425 is revised to read as
follows:
Authority: 33 U.S.C. 1311, 1314 (b), (c), (e) and (g), 1316 (b)
and (c), 1317 (b) and (c), 1318 and 1361.
Subpart A--Hair Pulp, Chrome Tan, Retan-Wet Finish Subcategory
2. Section 425.15(a) is amended by revising the footnote to the
table to read as follows:
[[Page 35685]]
Sec. 425.15 Pretreatment standards for existing sources (PSES).
(a) * * *
______________
\1\ Not less than 7.0.
* * * * *
Subpart B--Hair Save, Chrome Tan, Retan-Wet Finish Subcategory
3. Section 425.25 is amended by revising the footnote to the table
to read as follows:
Sec. 425.25 Pretreatment standards for existing sources (PSES).
* * * * *
______________
\1\ Not less than 7.0.
Subpart F--Through-the-Blue Subcategory
4. Section 425.65 is amended by revising the footnote to the table
to read as follows:
Sec. 425.65 Pretreatment standards for existing sources (PSES).
* * * * *
______________
\1\ Not less than 7.0.
Subpart H--Pigskin Subcategory
5. Section 425.85 is amended by revising the footnote to the table
to read as follows:
Sec. 425.85 Pretreatment standards for existing sources (PSES).
* * * * *
______________
\1\ Not less than 7.0.
[FR Doc. 96-17023 Filed 7-5-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-16668 General Procedures to Opt Out of the Reformulated Gasoline Requirements; Removal of Jefferson County, Albany and Buffalo, New York; Twenty-eight Counties in Pennsylvania; and Hancock and Waldo Counties in Maine From the Reformulated Gasoline Program
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35673-35680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16668]
=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-5528-6]
General Procedures to Opt Out of the Reformulated Gasoline
Requirements; Removal of Jefferson County, Albany and Buffalo, New
York; Twenty-eight Counties in Pennsylvania; and Hancock and Waldo
Counties in Maine From the Reformulated Gasoline Program
AGENCY: Environmental Protection Agency.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule establishes the criteria and general
procedures for states to opt out of the federal reformulated gasoline
program for ozone non-attainment areas where the state had previously
voluntarily opted into the program. This action describes the petition
process a state must follow to be removed from the program, the
criteria used by EPA to approve a petition, and the transition period
before the opt-out becomes effective. This final rule also removes
Jefferson County and the Albany and Buffalo areas in New York; twenty-
eight counties in Pennsylvania; and Hancock and Waldo counties in Maine
from the list of covered areas identified in Sec. 80.70 of the
reformulated gasoline rule.
Today's action only applies to opt-out requests submitted by states
prior to December 31, 1997, unless this final rule is superseded by
another rule which pertains to new criteria and general procedures for
reformulated gasoline program opt-outs. The Agency intends to propose
and solicit comments on separate opt-out procedures for subsequent
requests to opt out of the reformulated gasoline program.
EFFECTIVE DATE: This final rule is effective August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Mark Coryell, U.S. Environmental
Protection Agency Office of Air and Radiation, 401 M Street, SW
(6406J), Washington, DC 20460, (202) 233-9014. Also, contact Christine
Hawk at (202) 233-9672 or Pat Childers at (202) 233-9415.
SUPPLEMENTARY INFORMATION:
Regulated Entities
Entities potentially regulated by this action are those which
produce, supply or distribute motor gasoline. Regulated categories and
entities include:
------------------------------------------------------------------------
Category Examples of regulated entities
------------------------------------------------------------------------
Industry............................... Petroleum refiners, motor
gasoline distributors and
retailers.
State governments...................... State departments of
environmental protection.
------------------------------------------------------------------------
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 business is regulated by this action, you should carefully examine
the list of areas covered by the reformulated gasoline program in
Sec. 80.70 of title 40 of the Code of Federal Regulations. 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.
A copy of this action is available on the OAQPS Technology Transfer
Network Bulletin Board System (TTNBBS). The TTNBBS can be accessed with
a dial-in phone line and a high-speed modem (PH# 919-541-5742). The
parity of your modem should be set to none, the data bits to 8, and the
stop bits to 1. Either a 1200, 2400, 9600, 24.4K, or 48.8K baud modem
should be used. When first signing on, the user will be required to
answer some basic informational questions for registration purposes.
After completing the registration process, proceed through the
following series of menus:
(M) OMS.
(K) Rulemaking and Reporting.
(3) Fuels.
(9) Reformulated gasoline.
[[Page 35674]]
A list of ZIP files will be shown, all of which are related to the
reformulated gasoline rulemaking process. Today's action will be in the
form of a ZIP file and can be identified by the following title:
OPTOUT.ZIP. To download this file, type the instructions below and
transfer according to the appropriate software on your computer:
ownload, rotocol, xamine, ew, ist, or elp
Selection or to exit: D filename.zip
You will be given a list of transfer protocols from which you must
choose one that matches with the terminal software on your own
computer. The software should then be opened and directed to receive
the file using the same protocol. Programs and instructions for de-
archiving compressed files can be found via ystems Utilities from
the top menu, under rchivers/de-archivers. Please note that due to
differences between the software used to develop the document and the
software into which the document may be downloaded, changes in format,
page length, etc. may occur.
Extended Summary
Based upon public comments that were solicited in the Notice of
Proposed Rulemaking (60 FR 31269) published June 14, 1995, EPA has made
the following decisions that are contained in this final rule.
This final rule provides the Agency's general rules concerning
criteria and procedures for states to opt out certain non-attainment
areas from the federal reformulated gasoline (RFG) program. This action
applies to non-attainment areas where the state voluntarily opted into
the program, and subsequently decides to withdraw from the reformulated
gasoline program, an action referred to as ``opt-out.'' This rule
describes the process a state must follow to petition for removal from
the program, the criteria used by EPA to evaluate a request, and the
transition period before the opt-out becomes effective.
This final rule authorizes the EPA's Administrator to approve a
petition to opt out all or a portion of an opt-in area. The final rule
requires that the governor submit the opt-out petition, or the
governor's authorized representative. It must include specific
information on how, if at all, reformulated gasoline has been relied
upon by the state in state or local implementation plans, or revisions
to such plans, both pending or already approved.
This final rule specifies the effective date that an area will be
removed from the list of covered areas defined in Sec. 80.70 of the
reformulated gasoline rule. If reformulated gasoline was included as a
control measure in an approved State Implementation Plan (e.g. to
demonstrate attainment or maintenance), then the opt-out would not
become effective until 90 days from the effective date for Agency
approval of a revision to the state plan removing reformulated gasoline
as a control. If reformulated gasoline was relied upon in a plan
pending Agency approval, then the opt-out would become effective 90
days from the date EPA provides written notification to the state that
the petition has been approved. If the state does not have a plan or
did not rely on reformulated gasoline in a pending plan, then the
effective date is the same as for pending plans described above. The
Agency would also publish a Federal Register notice announcing the
approval of the petition and the effective date for the opt-out.
This final rule also removes Jefferson County and the Albany and
Buffalo areas in New York (a total of nine counties in New York); the
twenty-eight opt-in counties in Pennsylvania; and Hancock and Waldo
counties in Maine from the list of covered areas defined by Sec. 80.70
of the reformulated gasoline rule per the request of the States of New
York, Pennsylvania and Maine. This is based on requests from the
Governors of New York, Pennsylvania and Maine that these areas opt out
of this federal program. In a separate action signed by the EPA
Administrator on December 29, 1994, EPA stayed the application of the
reformulated gasoline regulations in these areas effective January 1,
1995 until July 1, 1995. 60 FR 2696 (January 11, 1995). EPA proposed to
extend this stay until final action was taken on the opt-out requests.
60 FR 31269 (June 14, 1995). In a separate action signed by the EPA
Administrator the Agency extended the stay on June 30, 1995. 60 FR
35488 (July 10, 1995).
The regulations adopted in today's action for processing opt-outs
from the reformulated gasoline requirements would be applicable for
opt-out petitions received or under Agency consideration beginning June
21, 1996, until December 31, 1997, unless superseded by a subsequent
rulemaking.
I. General Procedures for EPA's Processing of Future Opt-Out Requests
A. Background
The federal reformulated gasoline (RFG) program is designed to
reduce ozone levels in the largest metropolitan areas of the U.S. with
the worst ground level ozone problems by reducing vehicle emissions of
the ozone precursors, specifically volatile organic compounds (VOC),
through fuel reformulation. Reformulated gasoline also achieves a
significant reduction in air toxics. In Phase II of the program
nitrogen oxides (NOx), another precursor of ozone, are also
reduced. The 1990 Amendments to the Clean Air Act requires reformulated
gasoline in the nine largest cities with the highest levels of ozone.
In section 211(k)(6), Congress provided the opportunity for states to
opt-in to the RFG program for their other nonattainment areas.
EPA issued final rules establishing requirements for reformulated
gasoline on December 15, 1993. 59 FR 7716 (February 16, 1994). During
the development of the RFG rule a number of states inquired as to
whether they would be permitted to opt out of the RFG program at a
future date, or opt out of certain of the requirements. This was based
on their concern that the air quality benefits of RFG, given their
specific needs, might not warrant the cost of the program, specifically
focusing on the more stringent standards in Phase II of the program
(starting in the year 2000). Such states wished to retain the
flexibility to opt out of the program. Other states indicated they
viewed RFG as an interim strategy to help bring their nonattainment
areas into attainment sooner than would otherwise be the case.
The regulation issued on December 15, 1993 did not include
procedures for opting out of the RFG program because EPA had not
proposed and was not ready to adopt such procedures. However, the
Agency did indicate that it intended to propose such procedures in a
separate rule.
B. Statutory Authority
The statutory authority for this rule is granted to EPA by section
211(c) and (k) and section 301(a) of the Clean Air Act as amended, 42
U.S.C. 7545(c) and (k) and 7601(a). A discussion of EPA's statutory
authority may be found in the preamble to the proposal, at 60 FR 31271
(June 14, 1995).
C. General Rulemaking vs. Notice and Comment Rulemaking for Each Opt-
Out Request
In the NPRM, EPA proposed a general rule that would apply for all
future opt-out requests. Some industry representatives and associations
provided opposing comments. Some commenters argued that under section
307(d) of the Act, EPA must provide public notice and a comment period
for each opt-out request. They argued that EPA must conduct rulemaking
for each opt-out request to consider the
[[Page 35675]]
ramifications of each opt-out request, for example, on long-term costs
to state, local and tribal governments and private industry and
possible adverse regional air quality consequences. Other commenters,
however, preferred the Agency's proposal to develop general opt-out
procedures rather than conduct a rulemaking for each state opt-out
request.
EPA does not agree that a separate rulemaking must be conducted for
each future opt-out request. Through this rulemaking, EPA is
establishing a petition based process that will address, on a case by
case basis, future individual state requests to opt out of the federal
RFG program. The regulations establish clear and objective criteria for
EPA to apply in these future non-rulemaking, adjudication actions.
These criteria address when a state's petition is complete and the
appropriate transition time under the regulations. This application of
regulatory criteria on a case by case basis to future individual
situations does not require notice and comment rulemaking, either under
section 307(d) of the Clean Air Act or the Administrative Procedure
Act.
It is not uncommon for the Agency to establish such a petition
based process within a regulatory structure, in order to apply the
criteria established in a regulation to a wide variety of individual
cases. The reformulated gasoline regulations, for example, include a
petition process for approval of individual baseline, augmentations of
the complex model, exemptions, alternative test procedures, and the
like. EPA believes that approach is most appropriate here as well, as
it will allow for expeditious and consistent Agency action on the
individual opt-out requests presented by states.
EPA believes that the general procedures adopted here will provide
consistent opt-out decisions. This rule will also provide greater
certainty in the market than individual rulemakings could provide.
Lastly, this rule will provide quick approval for opt-out requests
while maintaining a sufficient transition period to minimize costly
market disruptions.
In certain cases, the affected parties will be able to comment on
the state action. In those states where the reformulated gasoline
program is included as a part of an approved state implementation plan
(SIP), affected parties that are concerned with the impacts of an opt-
out would have the opportunity to comment on a state's revised plan
that removes reformulated gasoline as an air control measure.
The Agency is not taking action today on the portion of the
proposed notice concerning the question whether the Agency has the
discretion under section 211(k) of the act to allow attainment areas to
opt into this federal program. EPA has received comments on this
question and is reviewing options that would permit opt-in
opportunities to be expanded. EPA anticipates announcing a policy
shortly.
D. Applicability
The regulations adopted in today's action for processing opt-outs
from the reformulated gasoline requirements would be applicable for
opt-out petitions received or under Agency consideration beginning June
21, 1996, until December 31, 1997, unless superseded by a subsequent
rulemaking.
EPA received comments that complying with the Phase II reformulated
gasoline requirements involves significantly greater capital investment
than for the Phase I requirements. The transition periods set forth in
today's rule for opting out of Phase I reformulated gasoline
requirements would be, according to the comments, grossly inadequate
for industry to recover in a reasonable time frame investment costs
associated with the Phase II. EPA recognizes these different
circumstances may call for different opt-out provisions and intends to
propose separate rules for opting out areas from the Phase II
reformulated gasoline requirements.
E. Petition Process
In the NPRM, EPA proposed that a state may petition the EPA to opt
out of the reformulated gasoline program. Under the proposal, a
petition would have to include specific information about how the
program is used in a State Implementation Plan. If a state did include
the reformulated gasoline program as a control measure in such plan or
revision submitted to EPA for approval, then the state would have to
describe if and how it intended to replace reformulated gasoline as a
control measure. In addition, the state would need to identify whether
it intended to submit a revision and, if so, when.
Several commenters raised concerns about the impacts that approved
petitions would have on air quality, especially in nonattainment areas,
since reformulated gasoline provides significant clean air benefits. A
fuels association commented that petitions should demonstrate that
there will be no unacceptable adverse air quality impacts to other
areas or other states. Industry representatives commented that
nonattainment areas should not be permitted to opt out unless the state
has binding commitments to adopt substitute measures to achieve
attainment. Another commenter cautioned that a petition should not be
approved if there is adequate showing that opting out would cause the
area to return to nonatttainment status. Regarding opportunity for
public consideration, an association remarked that the petition process
should include a formal comment period.
EPA is committed to ensuring that areas around the country attain
the National Ambient Air Quality Standards (NAAQS), including the ozone
standard. EPA recognizes, however, that under the Clean Air Act the
states play a primary role in attaining the NAAQS, including choosing
those control measures they prefer to include in its plans to attain
and maintain the NAAQS. Today's action maintains the flexibility that
states have in air quality planning by honoring their right to opt out
and substitute alternative control measures where the state considers
appropriate. EPA believes that the state should retain flexibility to
revise the SIP by selecting control measures it desires to include in
its plan as long as it makes the necessary demonstrations under the
Act.
To begin the opt-out process, this final rule requires that a
Governor, or his or her authorized representative, submit an opt-out
petition to the Administrator of the Agency. The opt-out petition must
include information describing how, if at all, reformulated gasoline
has been relied upon by the state in its State Implementation Plans,
revisions to such plans, or redesignation requests, both pending or
already approved. This would include, for example, attainment as well
as maintenance plans. The petition must also include a geographic
description of the opt-out area.
In the case where a state has included reformulated gasoline in a
pending plan submission, the petition must identify whether the state
is withdrawing the plan and what alternative air quality control
measures, if any, that the state intends to use to replace RFG. In the
case where a state intends to submit a revision to an approved plan or
to a pending SIP submission, the petition must identify this intention
as well as the alternative air quality control measures that will be
substituted for reformulated gasoline to reach or maintain compliance
with the federal ozone standard. Furthermore, the petition must include
the status of any proposed revision to an approved plan or pending SIP
submission and the projected schedule for the revised plan. In the
event a state does not intend on
[[Page 35676]]
revising an approved plan or pending SIP submission, the petition must
include a description why no revision is considered necessary. A
revision may not be considered necessary, for instance, if the proposed
opt-out area does not need to rely on reformulated gasoline to achieve
or maintain attainment.
The purpose of the information required in the petition is to
provide EPA the assurance that a state has considered the programmatic
effects of the requested opt-out. For instance, EPA expects that states
will fully consider the effects that an RFG opt-out would have on its
SIP or 15% VOC rate of progress plan as well as its overall ability to
attain and maintain the federal ozone standard. Through this petition
exercise, a state may find that alternative control measures may not
offer the cost-effectiveness, immediate benefits, or ancillary benefits
such as toxics reduction that reformulated gasoline provides. Thus
careful planning is needed by the state since reductions from other
sources may be much less practicable, depending on the state's
circumstances. Reformulated gasoline is one of the most cost-effective
measures for ozone control available and also yields significant air
toxics benefits. EPA believes that the information requirement will
address some of the commenters' concerns that states consider the
effects on air quality of their decision to opt out, stated earlier in
this section.
After a state submits a petition, the Agency will review the
document to determine whether it contains all of the required
information. Once the Agency determines that the petition is complete
with the required elements, EPA will send a letter to the state
approving the petition and identifying the effective date of the opt-
out. For those instances where the state does not include federal RFG
in an approved plan, the effective date shall be 90 days from the date
of the notification to the state. When the state has included RFG in an
approved plan, the effective date will be 90 days from the effective
date for Agency approval of a revision to the plan that removes
reformulated gasoline as a control measure.
F. Transition Period
In the NPRM, EPA proposed to make the effective date for an opt-out
dependent upon whether or not a state has an approved plan in place. If
reformulated gasoline was relied upon as a control measure in an
approved plan, EPA proposed to make the opt-out effective 30 days after
the Agency had approved an appropriate revision to the state plan. If
reformulated gasoline was not relied upon in an approved or pending
SIP, SIP revision, or redesignation request, EPA proposed to make the
opt-out become effective 30 days from receipt of a complete opt-out
petition. If reformulated gasoline was relied upon as a control measure
in a plan revision that had been submitted to the Agency but was still
pending Agency approval, and the Agency had found the plan to be
complete and/or made a protectiveness finding under 40 CFR Secs. 51.448
and 93.128, EPA proposed to make the opt-out effective 120 days from
the date a complete petition is received. When the state had a pending
plan revision that the Agency had determined complete and/or for which
the Agency had made a protectiveness finding and the state decided to
withdraw the submission or indicated to the Agency the state's
intention to submit a revision, EPA proposed to make the opt-out
effective 30 days from receipt of a complete petition from the state,
as described above and specified in the proposed regulatory language.
EPA received numerous comments on two aspects of the proposal.
First, the majority of the commenters indicated that the proposed time
period between the approval of an opt-out and the date the opt-out
becomes effective (referred to in this preamble as the transition
period) is insufficient for industry to change the supply of gasoline
from reformulated gasoline to conventional without significant
disruption to the supply infrastructure. Second, commenters recommended
that the opt-out process should be more orderly, with the Agency giving
expeditious and clear notification to the public as to when the opt-out
becomes effective.
In response to the comments received on the timing of opt-outs, EPA
is adopting opt-out provisions that are modified from the proposal.
First, today's action provides for a single 90 day transition period.
In determining an appropriate length of time for the transition period,
EPA weighed the need for industry to plan and implement a change in
gasoline throughout the distribution system to the retail stations
against the request from states to opt out in a timely manner. The
majority of commenters indicated that 60 to 90 days would be adequate
for industry to turn over existing stocks of reformulated gasoline to
conventional gasoline. Also, based upon comments from state
associations, as well as EPA's experience in other opt-outs, states are
concerned that the Agency make a timely decision on the opt-out and
generally consider a 90-day transition period reasonable once the opt-
out approval by the Agency has been made.
This action finalizes a single transition period, not two periods
as proposed. In the NPRM, states with plan revisions containing RFG
pending before the Agency would be opted out of the RFG program in 120
days, but a state could shorten this period to 30 days simply by
withdrawing the pending plan revision or indicating to EPA the state's
intention to submit a revision to the pending plan. These two
conditions provide little impediment to a state to effectively opt out
in 30 days. Therefore, EPA believes that a single transition period
length will simplify an opt-out and maximize affected parties's ability
to plan for a smooth transition from the reformulated gasoline program.
EPA is also modifying the procedure for initiating the 90 day count
for the transition period. Several commenters noted, and EPA concurs,
that in some cases the proposed procedures not only would have created
uncertainty surrounding the transition period start date, but also
would have effectively shortened the proposed transition period. In the
NPRM, EPA proposed to make the transition period begin upon receipt of
a complete petition. As commenters pointed out, this method would
create uncertainty about whether the petition was complete on the day
that the Agency received the petition and did not provide a means for
communicating the petition's approval or effective date to the
regulated industry.
EPA believes that in those cases where reformulated gasoline is
relied upon as a control measure in an approved plan, the procedures
for re-approval of the state plan, with notice, comment, and
publication of the revision, would sufficiently address commenters'
concerns about clear notification of Agency action. Therefore, if RFG
is relied upon as a control measure in an approved plan, the opt-out
would become effective 90 days after the effective date of the Agency's
approval of an appropriate revision to the state plan. Notice of this
action would be published in the Federal Register. Prior to this notice
in the Federal Register, the state must also submit a complete petition
to opt out of the reformulated gasoline program.
Where reformulated gasoline is relied upon as a control measure in
a plan revision pending before the Agency, or is not relied upon in any
plan, the state must petition the Agency to opt out of the reformulated
gasoline program, and the opt-out will be effective 90 days after the
Agency notifies the state that the state's petition is approved. The
[[Page 35677]]
Agency will provide written notification to the state indicating EPA's
approval of the petition. The 90-day transition clock will start from
the date of the approval notification sent to the opt-out state. To
facilitate an orderly opt-out process and minimize any uncertainties
that may result from an opt-out, EPA intends to quickly review opt-out
petitions and expeditiously notify the public of the effective date of
opt-outs. EPA intends to make a decision on the state's petition within
two weeks from receipt of the petition. EPA will promptly notify the
state and publish a notice in the Federal Register notifying the public
of the effective date of the opt-out, thereby giving consistent and
timely information to the affected parties. The Agency will make every
effort to notify the associations of affected industries and states
after EPA has approved a state's opt-out petition. In addition EPA will
announce the opt-out's effective date on the OAQPS Technology Transfer
Network Bulletin Board System (TTNBBS). For information on how to
access this system, see the SUPPLEMENTARY INFORMATION section of this
rule for details.
Finally, at a state's request, the opt-out could be effective later
than 90 days after the start of the transition period. In such a case,
a state must indicate in its petition to the Agency the desired
effective date for the opt-out. In this scenario, EPA recommends that a
state consider an opt-out date which becomes effective on one of the
reformulated gasoline program's natural transition points. EPA received
comments supporting opt-out effective dates that are consistent with
the natural transition points. These natural transition points are
identified as January 1, the start of the averaging season, and May 1
and September 15, the beginning and end, respectively, of the VOC
control season. The Agency understands these concerns and will support
state efforts to accommodate these natural transition points.
G. Cyclic Opt-outs and Opt-ins by a State
The reformulated gasoline program is a cost-effective program
designed to reduce ozone levels in participating metropolitan areas.
But the cost effectiveness of the reformulated gasoline program is
jeopardized by regulatory uncertainty, as it pertains to the regulated
community's ability to plan for providing the manufacturing capacity to
produce oxygenate and reformulated gasoline to specified control areas.
Specifically, the uncertainty is increased by the perceived absence of
long term commitment to the reformulated gasoline program by those
states who opted into the reformulated gasoline program and by the
relatively simple process for states to opt out of the reformulated
gasoline program provided for in this final rule.
EPA understands and expects that before a state submits an opt-out
petition it will have given thoughtful consideration to the air quality
consequences of its action and considered the substitute control
measures that may be needed to achieve air quality standards and
protect the health of its citizens. Therefore, the Agency believes it
is improbable that a state would seek to reverse an opt-out decision by
shortly thereafter requesting to opt back into the program.
However, comments from the oil industry expressed their concern
that states may engage in a cycle of opt-ins and opt-outs. The Agency
agrees that the integrity of the reformulated gasoline program would be
jeopardized if states maintained a cycle of opt-ins and opt-outs, e.g.
to create a customized seasonal program. The reformulated gasoline
program is a year-round program.
Given the limited applicability of this final rule to December 31,
1997, EPA believes that it is unlikely that states would have the
opportunity to complete a cycle of opt-out and opt-in. Although this
final rule effectively allows states to quickly opt out of the
reformulated gasoline program, the Agency may set the effective date of
opt-in up to one year from the date of a governor's opt-in application.
Section 211(k)(6). States would not be able to plan, with any
certainty, the timing of opt-ins and opt-outs which would create a
seasonal reformulated gasoline program. EPA does not believe that
current conditions warrant any further restrictions on opt-ins and opt-
outs. EPA may promulgate restrictions in the future if it is determined
in the future that cyclic opt-outs and opt-ins are occurring.
H. Effect on Averaging
Under the RFG regulations, refiners and importers may elect to meet
certain RFG standards either on a per-gallon basis or on average. This
election, which must be made separately for each parameter and
separately for each calendar year, applies to all RFG produced at a
refinery by a refiner, or imported by an importer, during a calendar
year.
Some commenters indicated that a refiner or importer who elects to
comply with the RFG standards on average may be adversely affected by
an area opting out of the RFG program during an averaging period. This
could occur where a refiner's or importer's average is out of
compliance at the time of an unanticipated opt-out, and reduced future
production or importation of RFG due to the opt-out results in the
refiner or importer having insufficient volume in the remainder of the
averaging period to bring the average into compliance.
EPA believes that the 90 day (minimum) transition period provides
adequate time for refiners and importers to adjust to changes in the
RFG market which may be attributed to opt-outs and that it is unlikely
that a refiner's or importer's ability to comply with the RFG standards
on average would be significantly impaired if an area opts out of the
RFG program. As a result, EPA is not providing regulatory relief in
today's action for such a possibility. Nevertheless, in setting a
potential penalty in an enforcement action for violation of the RFG
averaging standards, EPA will consider the effects of any opt-outs if
the refiner or importer is able to demonstrate (1) that it would have
been in compliance but for the opt-out, and (2) that it took all
reasonable steps to address the averaging problem caused by the opt-
out.
II. New York's, Pennsylvania's and Maine's Requests to Remove Selected
Opt-In Areas From the Requirements of the Reformulated Gasoline Program
A. Introduction
In the NPRM, EPA proposed to grant the petitions from the governors
of the States of New York, Pennsylvania and Maine to remove Jefferson
County and the Albany and Buffalo areas in New York (a total of nine
counties in New York); the twenty-eight opt-in counties in
Pennsylvania; and Hancock and Waldo counties in Maine from the list of
covered areas defined by section 80.70 of the reformulated gasoline
rule.
Jefferson County and the other eight New York counties affected by
this proposal were included as covered areas in EPA's reformulated
gasoline regulations based on Governor Mario Cuomo's request of October
28, 1991, that these areas be included under the Act's opt-in provision
for ozone nonattainment areas (57 FR 7926, March 5, 1992). See 40 CFR
80.70(j)(10)(vi). On November 29, 1994, EPA received a petition from
the Commissioner of New York's Department of Environmental
Conservation, Mr. Langdon Marsh, to remove Jefferson County from the
list of areas covered by the requirements of the reformulated gasoline
program. EPA understands that Commissioner Marsh was acting for
Governor Cuomo in this
[[Page 35678]]
matter. The Administrator responded to the State's request in a letter
to Commissioner Marsh dated December 12, 1994, stating EPA's intention
to grant New York's request, and conduct rulemaking to implement this.
In the letter of December 12, addressing the opt-out request for
Jefferson County, the Administrator also indicated that effective
January 1, 1995, and until the rulemaking to remove Jefferson County
from the list of covered areas is completed, EPA would not enforce the
reformulated gasoline requirements in Jefferson County for reformulated
gasoline violations arising after January 1, 1995. This was based on
the particular circumstances in Jefferson County.
On December 23, 1994, Commissioner Marsh of New York's Department
of Environmental Conservation wrote to further request the opt-out of
the Albany and Buffalo areas which include the counties of Albany,
Greene, Montgomery, Rennsselaer, Saratoga, Schenectady, Erie and
Niagara. EPA Assistant Administrator for Air and Radiation, Mary
Nichols, responded to the state's request in a letter to Commissioner
Marsh dated December 28, 1994, stating EPA's intention to grant New
York's request, and conduct rulemaking to implement this. The December
28 letter also indicated EPA's intent to stay the reformulated gasoline
regulations from January 1, 1995, until July 1, 1995, in the specified
counties while the Agency completes rulemaking to appropriately change
the regulations. The letter stated, however, that the requirements of
the reformulated gasoline program would apply in these areas until the
stay becomes effective January 1, 1995.
Twenty-eight counties in Pennsylvania were included as covered
areas in EPA's reformulated gasoline regulations based on Governor
Robert P. Casey's request dated September 25, 1991. See 40 CFR
80.70(j)(11)(i) through (xxviii). The counties referred to are listed
as follows: Adams, Allegheny, Armstrong, Beaver, Berks, Blair, Butler,
Cambria, Carbon, Columbia, Cumberland, Dauphin, Erie, Fayette,
Lackawanna, Lancaster, Lebanon, Lehigh, Luzerne, Mercer, Monroe,
Somerset, Northhampton, Perry, Washington, Westmoreland, Wyoming and
York. On December 1, 1994, EPA received a petition from Governor Casey
to remove these twenty-eight counties from the list of covered areas
defined by Sec. 80.70 of the reformulated gasoline rule. As with New
York's request, the Administrator responded to the State's request in a
letter to Governor Casey dated December 12, 1994, stating EPA's
intention to grant Pennsylvania's request, and conduct rulemaking to
implement this. Effective January 1, 1995, and until formal rulemaking
to remove the twenty-eight counties from the list of covered areas is
completed, EPA would not enforce the reformulated gasoline requirements
in these twenty-eight counties for reformulated gasoline violations
arising after January 1, 1995. This was based on the particular
circumstances in Pennsylvania. EPA has reserved its authority to
enforce the reformulated gasoline program for violations that may have
occurred prior to January 1, 1995.
Hancock and Waldo Counties in Maine were included as covered areas
in EPA's reformulated gasoline regulation based on Governor John R.
McKernan's request of June 26, 1991, that these counties be included
under the Act's opt-in provision for ozone nonattainment areas. (56 FR
46119, September 10, 1991) See 40 CFR 80.70(j)(5)(viii) and (ix). On
December 27, EPA received a petition from the Acting Commissioner of
Maine's Department of Environmental Protection, Ms. Deborah Garrett, to
remove Hancock and Waldo Counties in Maine from the list of areas
covered by the requirements of the reformulated gasoline program. EPA
understands that Commissioner Garrett is acting for Governor McKernan
in this matter. EPA Assistant Administrator for Air and Radiation, Mary
Nichols, responded to the state's request in a letter to Commissioner
Garrett, dated December 28, 1994, stating EPA's intention to grant
Maine's request, and conduct rulemaking to implement this. The December
28 letter also stated EPA's intent to stay the reformulated gasoline
regulations from January 1, 1995 until July 1, 1995, in the specified
counties while the Agency completes rulemaking to appropriately change
the regulations. However, EPA has reserved its authority to enforce the
reformulated gasoline program for violations that may have occurred
prior to January 1, 1995.
In separate notices signed by the EPA Administrator on December 29,
1994, and June 30, 1995, and for the reasons described therein, EPA has
stayed the program in these thirty-nine counties, or portions thereof,
effective January 1, 1995, until such time as the Agency completed
rulemaking on the proposed opt-out for these areas. (60 FR 2696,
January 11, 1995; 60 FR 35488, July 10, 1995) Based on this chronology,
EPA proposed that these areas be removed from the reformulated gasoline
program effective upon the issuance of final action in this rulemaking.
(60 FR 31269, June 14, 1995)
B. EPA Grants New York's, Pennsylvania's and Maine's Requests To Remove
Selected Opt-In Areas From the Requirements of the Reformulated
Gasoline Program
EPA believes that it is appropriate to interpret section 211(k) as
authorizing states to opt out of the RFG program, provided that a
process is established for a reasonable transition out of the program.
60 FR 31269 (June 14, 1995). The Agency has considered two key aspects
in granting these opt-outs: the first involves coordination of air
quality planning, and the second involves appropriate lead time for
industry to transition out of the program.
With respect to air quality planning, EPA believes there is no
reason to delay the removal of the 39 affected counties, or portions of
counties, in New York, Pennsylvania and Maine. These areas do not
include or rely on reformulated gasoline as a control measure in any
state implementation plan, maintenance plan or 15% rate of progress
plan. Even if reformulated gasoline is included as a contingency
measure in a maintenance plan for the redesignation packages, allowing
an area to opt out now would not interfere with implementing that
contingency. The areas could opt into the reformulated gasoline program
in the future, if necessary, within the restrictions outlined in
section 211 (k)(6) of the Act.
As indicated above, the reformulated gasoline program is currently
stayed in all of the affected areas, and Agency consideration of an
appropriate lead time for industry to change the supply of gasoline is
unnecessary.
Therefore, in today's action, EPA removes Jefferson County and the
Albany and Buffalo areas in New York (a total of nine counties in New
York); the twenty-eight opt-in counties in Pennsylvania; and Hancock
and Waldo counties in Maine from the list of covered areas defined by
Sec. 80.70 of the reformulated gasoline rule as of July 8, 1996.
III. Environmental Impact
If an area opts out of the reformulated gasoline program, it will
not receive the reductions in volatile organic compounds, oxides of
nitrogen (NOX), and air toxics that are expected from this
program. Instead, the areas would be subject to the federal controls on
Reid vapor pressure for gasoline in the summertime, and would receive
control of NOX and air toxics through the requirements of the
conventional gasoline anti-dumping program. These latter requirements
are designed to ensure that gasoline quality does not
[[Page 35679]]
degrade from the levels found in 1990. These areas would be foregoing
the air quality benefits obtained from the use of reformulated
gasoline.
However, as discussed in the proposal, one of the central concepts
behind this rule is a recognition that states have the primary
responsibility to develop the mix of control strategies needed to
attain and maintain the NAAQS, and should have flexibility in
determining the mix of control measures needed to meet their air
pollution goals. EPA expects that states will in fact act prudently in
exercising their rights to opt out under these rules. Any environmental
impacts of opting out are therefore not expected to occur in isolation,
but in a context of states exercising their responsibility and
developing appropriate control strategies for their areas' air
pollution goals.
IV. Regulatory Flexibility Analysis
This rule is not expected to result in any additional compliance
cost to regulated parties and in fact is expected to decrease
compliance costs to those entities who previously supplied reformulated
gasoline to the area opting out. This rule also establishes a
transition period which maximizes affected parties's ability to plan
for smooth transition from the reformulated gasoline program,
minimizing disruption to the motor gasoline marketplace. This
transition period is reasonably expected to allow parties to turn over
existing stocks of reformulated gasoline to conventional gasoline.
Accordingly, EPA has determined that it is not necessary to prepare
regulatory flexibility analysis in connection with this final rule. EPA
has determined that this rule will have no significant adverse effect
on substantial number of small businesses.
V. Public Participation
A. Public Comments
The Agency received submissions during the comment period for the
NPRM from 36 commenters. Copies of all of the written comments
submitted to EPA, as well as records of all oral comments received
during the comment period, can be obtained from the docket for this
rule (see ADDRESSES).
The Agency received comments from the public on three major issues:
the opt-out process, EPA's authority to promulgate a rule on opt-outs,
and transition period. A summary of these comments along with the
Agency's responses are located throughout the preamble above.
Discussion of public comments on the proposed opt-out process and the
Agency response can be located in Section I, Parts C and E of this
preamble. Discussion of public comments on the proposed transition
periods and the Agency response can be found in Section I, Part F. The
Agency response to comments on statutory authority are located in
Section I, Part B and in the preamble to the proposal, at 60 FR 31271.
The docket also contains a document that provides a more detailed
summary of the comments, including some issues not covered in this
preamble because they were minor or less contentious issues, and EPA's
rationale for its response.
B. Public Hearing
The Agency held a public hearing on July 5, 1995 to hear comments
on the Notice of Proposed Rulemaking (60 FR 31269) published June 14,
1995. Comments at the hearing were provided by representatives of the
oil industry and fuel oxygenate producers. These comments have been
presented and addressed in the preamble above.
VI. Executive Order 12866
Under Executive Order 12866 1, the Agency must determine
whether a regulation 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\ See 58 FR 51735 (October 4, 1993).
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(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 of 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
this Executive Order.2
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\2\ Id. at section 3(f)(1)-(4).
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It has been determined that this rule is not a ``significant
regulatory action'' under the terms of Executive Order 12866 and is
therefore not subject to OMB review.
VII. Unfunded Mandates
Under section 202 of the Unfunded Mandates Reform Act of 1995
(``UMRA''), Pub.L. 104-4, EPA must prepare a budgetary impact statement
to accompany any general notice of proposed rulemaking or final rule
that includes a Federal mandate which 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, for any rule
subject to Section 202 EPA generally must select the least costly, most
cost-effective, or least burdensome alternative that achieves the
objectives of the rule and is consistent with statutory requirements.
Under Section 203, before establishing any regulatory requirements that
may significantly or uniquely affect small governments, EPA must take
steps to inform and advise small governments of the requirements and
enable them to provide input.
EPA has determined that the final rule promulgated today does not
trigger the requirements of UMRA. The rule does not include a Federal
mandate that may result in estimated annual costs to State, local or
tribal governments in the aggregate, or to the private sector, of $100
million or more, and it does not establish regulatory requirements that
may significantly or uniquely affect small governments.
VIII. Judicial Review
Because this final action is nationally applicable, under section
307(b)(1) of the Clean Air Act judicial review of this action is
available only by the filing of a petition for review in the U.S. Court
of Appeals for the D.C. Circuit within sixty days of publication of
this action in the Federal Register.
VIIII. Submission to Congress and the General Accounting Office
Under section 801(a)(1)(A) of the Administrative Procedures 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 in 40 CFR Part 80
Environmental protection, Air pollution control, Fuel additives,
Gasoline, Motor vehicle pollution.
Dated: June 21, 1996.
Carol M. Browner,
Administrator.
40 CFR part 80 is amended as follows:
[[Page 35680]]
PART 80--REGULATION OF FUELS AND FUEL ADDITIVES
1. The authority citation for part 80 continues to read as follows:
Authority: Sections 114, 211 and 301(a) of the Clean Air Act, as
amended (42 U.S.C. 7414, 7545, and 7601(a)).
2. Section 80.2 is amended by adding paragraph (vv) to read as
follows:
Sec. 80.2 Definitions.
* * * * *
Opt-in area. An area which becomes a covered area under Sec. 80.70
pursuant to section 211(k)(6) of the Clean Air Act.
3. Section 80.70 is amended by revising paragraph (j) introductory
text; by removing paragraphs (j)(5)(viii), (5)(ix), (j)(10)(i),
(10)(iii), (10)(v) through (10)(xi); by redesignating paragraphs
(j)(10)(ii) and (iv) as (10)(i) and (10)(ii); by removing paragraph
(j)(11) and redesignating (j)(12) through (14) as (j)(11) through (13)
respectively; and by adding a new paragraph (l) to read as follows:
Sec. 80.70 Covered areas.
* * * * *
(j) The ozone nonattainment areas listed in this paragraph (j) are
covered areas for purposes of subparts D, E, and F of this part. The
geographic extent of each covered area listed in this paragraph (j)
shall be the nonattainment area boundaries as specified in 40 CFR part
81, subpart C:
* * * * *
(l) Upon the effective date for removal under Sec. 80.72(a), the
geographic area covered by such approval shall no longer be considered
a covered area for purposes of subparts D, E and F of this part.
4. Section 80.72 is added to read as follows:
Sec. 80.72 Procedures for opting out of the covered areas.
(a) For petitions received prior to and including December 31, 1997
and in accordance with paragraph (b) of this section, the Administrator
may approve a petition from a state asking for removal of any opt-in
area, or portion of an opt-in area, from inclusion as a covered area
under Sec. 80.70. If the Administrator approves a petition, he or she
shall set an effective date as provided in paragraph (c) of this
section. The Administrator shall notify the state in writing of the
Agency's action on the petition and the effective date of the removal
when the petition is approved.
(b) To be approved under paragraph (a) of this section, a petition
must be signed by the governor of a state, or his or her authorized
representative, and must include the following:
(1) A geographic description of each opt-in area, or portion of
each opt-in area, which is covered by the petition;
(2) A description of all ways in which reformulated gasoline is
relied upon as a control measure in any approved state or local
implementation plan or plan revision, or in any submission to the
Agency containing any proposed plan or plan revision (and any
associated request for redesignation) that is pending before the Agency
when the petition is submitted; and
(3) For any opt-in areas covered by the petition for which
reformulated gasoline is relied upon as a control measure as described
under paragraph (b)(2) of this section, the petition shall include the
following information:
(i) Identify whether the state is withdrawing any such pending plan
submission;
(ii)(A) Identify whether the state intends to submit a revision to
any such approved plan provision or pending plan submission that does
not rely on reformulated gasoline as a control measure, and describe
the alternative air quality measures, if any, that the state plans to
use to replace reformulated gasoline as a control measure;
(B) A description of the current status of any proposed revision to
any such approved plan provision or pending plan submission, as well as
a projected schedule for submission of such proposed revision;
(iii) If the state is not withdrawing any such pending plan
submission and does not intend to submit a revision to any such
approved plan provision or pending plan submission, describe why no
revision is necessary;
(iv) If reformulated gasoline is relied upon in any pending plan
submission, other than as a contingency measure consisting of a future
opt-in, and the Agency has found such pending plan submission complete
or made a protectiveness finding under 40 CFR 51.448 and 93.128,
demonstrate whether the removal of the reformulated gasoline program
will affect the completeness and/or protectiveness determinations;
(4) The Governor of a State, or his or her authorized
representative, shall submit additional information upon request of the
Administrator,
(c) (1) Except as provided in paragraph (c)(2) of this section, the
Administrator shall set an effective date for removal of an area under
paragraph (a) of this section of 90 days from the Agency's written
notification to the state approving the opt-out petition.
(2) If reformulated gasoline is contained as an element of any plan
or plan revision that has been approved by the Agency, other than as a
contingency measure consisting of a future opt-in, then the effective
date under paragraph (a) of this section shall be 90 days from the
effective date for Agency approval of a revision to the plan that
removes reformulated gasoline as a control measure.
(d) The Administrator shall publish a notice in the Federal
Register announcing the approval of any petition under paragraph (a) of
this section, and the effective date for removal.
[FR Doc. 96-16668 Filed 7-5-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-16650 Protection of Archaeological Resources
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35666-35673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16650]
=======================================================================
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OFFICE OF NAVAJO AND HOPI INDIAN RELOCATION
25 CFR Part 700
Protection of Archaeological Resources
AGENCY: Office of Navajo and Hopi Indian Relocation.
ACTION: Interim final rule with comment period.
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SUMMARY: This rule establishes procedures for implementing provisions
of the Archaeological Resources Protection Act of 1979 (16 U.S.C. 470-
aa-11) for the lands which are administered by the O.N.H.I.R. and have
been acquired pursuant to Public Law 96-305 (25 U.S.C. 640-d(h). The
rule is necessary and its intended effect is to allow the Federal Land
Manager to protect archaeological resources on lands being developed
for resettlement purposes.
DATES: This rule is effective August 7, 1996.
Comments must be received on or before August 7, 1996.
ADDRESSES: Comments may be mailed to the Executive Director, Office of
Navajo and Hopi Indian Relocation, P.O. Box KK, Flagstaff, Arizona
86002.
FOR FURTHER INFORMATION CONTACT:
Paul Tessler (Legal Counsel), Office of Navajo and Hopi Indian
Relocation, at 520-779-8953.
SUPPLEMENTARY INFORMATION: Pub. L. 96-305 (25 U.S.C. 640d-11) provided
for the acquisition of land for the use of Navajo families required to
relocate under the terms of Pub. L. 93-531. Approximately 365,000 acres
of land in Arizona have been acquired, taken into trust, and made part
of the Navajo Reservation. Approximately 35,000 acres of land in the
State of New Mexico will be acquired, taken into trust and made a part
of the Navajo Reservation. These lands are referred to as the New
Lands. Pursuant to Pub. L. 96-305, as amended, by Pub. L. 100-666, the
Office of Navajo and Hopi Indian Relocation (O.N.H.I.R.) has complete
administrative authority over these New Lands until the relocation
program is completed as determined by the President.
The 1986 Interior Appropriations Bill (Pub. L. 99-190) provided
construction funds to the Bureau of Indian Affairs for the purpose of
building replacement homes on the New Lands. A number of relocations
were completed at the New Lands under the authority of the Bureau of
Indian Affairs. In 1988, Congress enacted Pub. L. 100-666, which
transferred to the O.N.H.I.R. on January 31, 1989, all powers and
duties of the Bureau of Indian Affairs derived from Pub. L. 99-190,
that related to the relocation of members of the Navajo Tribe and also
transferred all funds appropriated for such activities relating to such
relocation. Before the passage of Pub. L. 100-666, the O.N.H.I.R. and
the Bureau of Indian Affairs had worked together planning and
developing the New Lands for resettlement purposes and relied upon the
Bureau of Indian Affairs, to issue Archaeological Resources Protection
Act (16 U.S.C. 470aa-11) permits on the New Lands. After the passage of
Pub. L. 100-666, and the transfer of all powers and duties of the
Bureau of Indian Affairs to the O.N.H.I.R., questions arose regarding
which governmental agency was the Federal Land Manager and has the
authority to issue A.R.P.A. permits on the New Lands. It was determined
that the O.N.H.I.R. is the Federal Land Manager on the New Lands and
that the Bureau of Indian Affairs, Navajo Area Office, did not have
administrative jurisdiction or surface management responsibilities on
the New Lands located in Arizona. Thus the O.N.H.I.R. has the
appropriate authority to issue A.R.P.A. permits. These regulations are
being published pursuant to that authority to allow the Federal Land
Manager to protect archaeological resources on the New Lands by issuing
permits for authorized excavation and/or removal of archaeological
resources, by imposing civil penalties for unauthorized excavation,
removal, damage, alteration, or defacement of archaeological resources,
by providing for the preservation of archaeological resource
collections and data and by ensuring confidentiality of information
about archaeological resources when disclosure would threaten the
resources. These regulations will apply to all New Lands in the states
or Arizona and New Mexico acquired for relocation purposes.
These regulations are being published as an Interim Final Rule
because of the time frame involved in the movement of eligible
individuals to the New Lands. Because the O.N.H.I.R. has been requested
by Congress in the 1995 Department of Interior and Related Agencies
Appropriations Act (Pub. L. 103-332) to present a plan for the phase
out of the relocation program, and transfer of its functions before the
year 2000, there is considerable urgency to complete the development of
the New Lands. In order to complete such development the O.N.H.I.R.
must publish these regulations. It is, therefore, necessary for these
regulations to become effective immediately so that development can go
on uninterrupted.
The principal author of this final rulemaking is Paul Tessler,
Legal counsel, Office of Navajo and Hopi Indian Relocation.
List of Subjects in 25 CFR Part 700
Administrative practice and procedure, Conflict of interest,
Freedom of information, Grant program--Indians, Indian claims, Privacy,
Real property acquisition, Relocation Assistance and New Lands
Administration.
PART 700--[AMENDED]
Accordingly, the Office is amending 25 CFR Part 700, by adding
Subpart R, as follows:
1. The authority citation for Part 700 continues to read as
follows:
[[Page 35667]]
Authority Pub. L. 99-590; Pub. L. 93-531; 88 Stat. 1712, as
amended by Pub. L. 96-305, 94 Stat. 929; Pub. L. 100-666, 102 Stat.
3929 (25 U.S.C. 640d).
2. 25 CFR, Part 700, is amended by adding Subpart R, Protection of
Archaeological Resources, as follows:
Subpart R--Protection of Archaeological Resources
Sec.
700.801 Purpose.
700.803 Authority.
700.805 Definitions.
700.807 Prohibited acts.
700.809 Permit requirements and exceptions.
700.811 Application for permits and information collection.
700.813 Notification to Indian Tribes of possible harm to,
destruction of, sites on the New Lands having religious or cultural
importance.
700.815 Issuance of permits.
700.817 Terms and conditions of permits.
700.819 Suspension and revocation of permits.
700.821 Appeals relating to permits.
700.823 Relationship to section 106 of the National Historic
Preservation Act.
700.825 Custody of archaeological resources.
700.827 Determination of archaeological or commercial value and
cost of restoration and repair.
700.829 Assessment of civil penalties.
700.831 Civil penalty amounts.
700.833 Other penalties and rewards.
700.835 Confidentiality of archaeological resource information.
700.837 Report.
700.839 Permitting procedures for Navajo Nation Lands.
Subpart R--Protection of Archaeological Resources
Sec. 700.801 Purpose.
(a) The regulations in this subpart implement provisions of the
Archaeological Resources Protection Act of 1979 (16 U.S.C. 470aa-11) by
establishing the uniform definitions, standards, and procedures to be
followed by the O.N.H.I.R. New Lands Manager in providing protection
for archaeological resources, located on the New Lands. The regulations
enable Federal land managers to protect archaeological resources,
taking into consideration provisions of the American Indian Religious
Freedom Act (92 Stat. 469: 43 U.S.C. 1996), through permits authorizing
excavation and/or removal of archaeological resources, through civil
penalties for unauthorized excavation and/or removal, through
provisions for the preservation of archaeological resource collections
and data, and through provisions for ensuring confidentiality of
information about archaeological resources.
(b) The regulations in this part do not impose any new restrictions
on activities permitted under other laws, authorities, and regulations
relating to mining, mineral leasing, reclamation, and other multiple
uses of the public lands.
Sec. 700.803 Authority.
The regulations in this part are promulgated pursuant to section
10(b) of the Archaeological Resources Protection Act of 1979 (16 U.S.C.
470ii). Section 10(b) of the Act (16 U.S.C. 470ii) provides that each
Federal land manager shall promulgate such rules and regulations,
consistent with the uniform rules and regulations in this part, as may
be necessary for carrying out the purposes of the Act.
Sec. 700.805 Definitions.
As used for purposes of this part:
(a) Archaeological resource means any material remains of human
life or activities which are at least 100 years of age, and which are
of archaeological interest.
(1) Of archaeological interest means capable of providing
scientific or humanistic understandings of past human behavior,
cultural adaptation, and related topics through the application of
scientific or scholarly techniques such as controlled observation,
contextual measurement, controlled collection, analysis, interpretation
and explanation.
(2) Material remains means physical evidence of human habitation,
occupation, use, or activity, including the site, location or context
in which such evidence is situated.
(3) The following classes of material remains (and illustrative
examples), if they are at least 100 years of age, are of archaeological
interest and shall be considered archaeological resources unless
determined otherwise pursuant to paragraph (a)(4) or (a)(5) of this
section.
(i) Surface or subsurface structures, shelters, facilities, or
features (including, but not limited to, domestic structures, storage
structures, cooking structures, ceremonial structures, artificial
mounds, earthworks, fortifications, canals, reservoirs, horticultural/
agricultural gardens or fields, bedrock mortars, or grinding surfaces,
rock alignments, cairns, trails, borrow pits, cooking pits, refuse
pits, burial pits, or graves, hearths, kilns, post molds, wall
trenches, middens);
(ii) Surface or subsurface artifact concentrations or scatters;
(iii) Whole or fragmentary tools, implements, containers, weapons,
and weapon projectiles, clothing, and ornaments (including, but not
limited to pottery and other ceramics, cordage, basketry and other
weaving, bottles and other glassware, bone, ivory, shell, metal, wood,
hide, feathers, pigments, and flaked ground or pecked stone);
(iv) By-products, waste products, or debris resulting from
manufacture or use of human-made or natural materials;
(v) Organic waste (including, but not limited to vegetal and animal
remains, coprolites);
(vi) Human remains (including, but not limited to, bone, teeth,
mummified flesh, burials, cremations);
(vii) Rock carvings, rock paintings, intaglios, and other works of
artistic or symbolic representation;
(viii) Rockshelters and caves or portions thereof containing any of
the material remains described in this paragraph (a);
(ix) All portions of shipwrecks (including, but not limited to
armaments, apparel, tackle, cargo);
(x) Any portion or piece of material remains described in this
paragraph (a).
(4) The following material remains shall not be considered of
archaeological interest, and shall not be considered to be
archaeological resources for purposes of the Act and this part, unless
found in a direct physical relationship with archaeological resources
as defined in this section:
(i) Paleontological remains;
(ii) Coins, bullets, and unworked minerals and rocks.
(5) The Federal Land Manager may determine that certain material
remains, in specified areas under the Federal Land Manager's
jurisdiction and under specified circumstances, are not or are no
longer of archaeological interest and are not to be considered
archaeological resources under this part. Any determination made
pursuant to this paragraph (a)(5) shall be documented. Such
determination shall in no way affect the Federal Land Manager's
obligations under other applicable laws or regulations.
(b) Arrowhead means any projectile point which appears to have been
designed for use with an arrow.
(c) Commissioner means the Commissioner of the Office of Navajo and
Hopi Indian Relocation. Reference to approval of other action by the
Commissioner will also include approval or other action by another
Federal Officer under delegated authority from the Commissioner.
(d) Federal Land Manager means, with respect to the New Lands, the
Commissioner of Navajo and Hopi Indian Relocation, having primary
management authority over such lands,
[[Page 35668]]
including persons to whom such management authority has been officially
delegated.
(e) New Lands means the land acquired for the use of relocatees
under the authority of Public Law 96-305, 25 U.S.C., 640(d)-10. These
lands include the 250,000 acres of land acquired by the Navajo and Hopi
Indian Relocation Commission and added to the Navajo Reservation,
150,000 acres of private lands previously owned by the Navajo Nation in
fee and taken in trust by the United States pursuant to 25 U.S.C. 640d-
10 and up to 35,000 acres of land in the State of New Mexico to be
acquired and added to the Navajo Reservation.
(f) Indian lands means lands of The Navajo Nation, which are either
held in trust by the United States or subject to a restriction against
alienation imposed by the United States, except for subsurface
interests not owned or controlled by an Indian tribe or Indian
individual.
(g) Indian tribe or Tribe means The Navajo Nation.
(h) Person means an individual, corporation, partnership, trust,
institution, association, or any other private entity, or any officer,
employee, agent, department, or instrumentality of the United States,
or of any Indian tribe, or of any State or political subdivision
thereof.
(i) State means any of the fifty states, the District of Columbia,
Puerto Rico, Guam, and the Virgin Islands.
(j) Tribe means the Navajo Nation.
(k) Act means the Archaeological Resources Protection Act of 1979
(16 U.S.C. 470-aa11.)
Sec. 700.807 Prohibited acts.
(a) No person may excavate, remove, damage or otherwise alter or
deface any archaeological resource located on the New Lands or Indian
lands unless such activity is pursuant to a permit issued under
Sec. 700.815 or exempted by Sec. 700.809(b) of this part.
(b) No person may sell, purchase, exchange, transport, or receive
any archaeological resource, if such resource was excavated or removed
in violation of:
(1) The prohibitions contained in paragraph (a) of this section; or
(2) Any provision, rule, regulation, ordinance, or permit in effect
under any other provision of Federal law.
Sec. 700.809 Permit requirements and exceptions.
(a) Any person proposing to excavate and/or remove archaeological
resources from the New Lands or Indian lands, and to carry out
activities associated with such excavation and/or removal, shall apply
to the Federal Land Manager for a permit for the proposed work, and
shall not begin the proposed work until a permit has been issued. The
Federal Land Manager may issue a permit to any qualified person,
subject to appropriate terms and conditions, provided that the person
applying for a permit meets conditions in Sec. 700.815(a) of this part.
(b) Exceptions: (1) No permit shall be required under this part for
any person conducting activities on the New Lands under other permits,
leases, licenses, or entitlements for use, when those activities are
exclusively for purposes other than the excavation and/or removal of
archaeological resources, even though those activities might
incidentally result in the disturbance of archaeological resources.
General earth-moving excavation conducted under a permit or other
authorization shall not be construed to mean excavation and/or removed
as used in this part. This exception does not, however, affect the
Federal Land Manager's responsibility to comply with other authorities
which protect archaeological resources prior to approving permits,
leases, licenses or entitlements for use; any excavation and/or removal
of archaeological resources required for compliance with those
authorities shall be conducted in accordance with the permit
requirements of this part.
(2) No permit shall be required under this part for any person
collecting for private purposes any rock, coin, bullet, or mineral
which is not an archaeological resource as defined in this part,
provided that such collecting does not result in disturbance of any
archaeological resource.
(3) No permit shall be required under this part or under section 3
of the Act of June 8, 1906 (16 U.S.C. 432), for the excavation or
removal by any Indian tribe or member thereof of any archaeological
resource located on Indian lands of such Indian tribe, except that in
the absence of tribal law regulating the excavation or removal of
archaeological resources on Indian lands, an individual tribal member
shall be required to obtain a permit under this part;
(4) No permit shall be required under this part for any person to
carry out any archaeological activity authorized by a permit issued
under section 3 of the Act of June 8, 1906 (16 U.S.C. 432), before the
enactment of the Archaeological Resources Protection Act of 1979. Such
permit shall remain in effect according to its terms and conditions
until expiration.
(5) No permit shall be required under section 3 of the Act of June
8, 1906 (16 U.S.C. 432) for any archaeological work for which a permit
is issued under this part.
(c) Persons carrying out official agency duties under the Federal
Land Manager's direction, associated with the management of
archaeological resources, need not follow the permit application
procedures of Sec. 700.811. However, the Federal Land Manager shall
insure that provisions of Secs. 700.815 and 700.817 have been met by
other documented means and that any official duties which might result
in harm to or destruction of any Indian tribal religious or cultural
site, as determined by the Federal Land Manager, have been the subject
of consideration under Sec. 700.813.
(d) Upon the written request of the Governor of any State, on
behalf of the State or its educational institutions, the Federal Land
Manager shall issue a permit, subject to the provisions of
Secs. 700.809(b)(5), 700.813, 700.815(a) (3), (4), (5), (6), and (7),
700.817, 700.819, 700.823, 700.825(a), to such Governor or to such
designee as the Governor deems qualified to carry out the intent of the
Act, for purposes of conducting archaeological research, excavating,
and/or removing archaeological resources, and safeguarding and
preserving any materials and data collected in a university, museum, or
other scientific or educational institution approved by the Federal
Land Manager.
(e) Under other statutory, regulatory, or administrative
authorities governing the use of the New Lands and Indian lands,
authorizations may be required for activities which do not require a
permit under this part. Any person wishing to conduct on the New Lands
or Indian lands any activity related to but believed to fall outside
the scope of this part should consult with the Federal Land Manager,
for the purpose of determining whether any authorization is required,
prior to beginning such activities.
Sec. 700.811 Application for permits and information collection.
(a) Any person may apply to the appropriate Federal Land Manager
for a permit to excavate and/or remove archaeological resources from
the New Lands or Indian lands and to carry out activities associated
with such excavation and/or removal.
(b) Each application for a permit shall include:
(1) The nature and extent of the work proposed, including how and
why it is proposed to be conducted, proposed time of performance,
location maps, and
[[Page 35669]]
proposed outlet for public written dissemination of the results.
(2) The name and address of the individual(s) proposed to be
responsible for conducting the work, institutional affiliation, if any,
and evidence of education, training and experience in accord with the
minimal qualifications listed in Sec. 700.815(a).
(3) The name and address of the individual(s), if different from
the individual(s) named in paragraph (b)(2) of this section, proposed
to be responsible for carrying out the terms and conditions of the
permit.
(4) Evidence of the applicant's ability to initiate, conduct and
complete the proposed work, including evidence of logistical support
and laboratory facilities.
(5) Where the application is for the excavation and/or removal of
archaeological resources on the New Lands, the names of the university,
museum, or other scientific or educational institution in which the
applicant proposes to store all collections, and copies of records,
data, photographs, and other documents derived from the proposed work.
Applicants shall submit written certification, signed by an authorized
official of the institution, of willingness to assume curatorial
responsibility for the collections, records, data, photographs and
other documents and to safeguard and preserve these materials as
property of the Navajo Nation.
(6) Where the application is for the excavation and/or removal of
archaeological resources on Indian lands, the name of the university,
museum, or other scientific or educational institution in which the
applicant proposes to store copies of records, data, photographs, and
other documents derived from the proposed work, and all collections in
the event the Indian owners do not wish to take custody or otherwise
dispose of the archaeological resources. Applicants shall submit
written certification, signed by an authorized official of the
institution, of willingness to assume curatorial responsibility for the
collections, if applicable, and/or the records, data, photographs, and
other documents derived from the proposed work.
(c) The Federal Land Manager may require additional information,
pertinent to land management responsibilities, to be included in the
application for permit and shall so inform the applicant.
(d) Paperwork Reduction Act. The information collection requirement
contained in Sec. 700.811 has been approved by the Office of Management
and Budget under 44 U.S.C. 3501 et seq. and assigned clearance number
1024-0037. The purpose of the information collection is to meet
statutory and administrative requirements in the public interest. The
information will be used to assist Federal land managers in determining
that applicants for permits are qualified, that the work proposed would
further archaeological knowledge, that archaeological resources and
associated records and data will be property preserved, and that the
permitted activity would not conflict with the management of the New
Lands involved. Response to the information requirement is necessary in
order for an applicant to obtain a benefit.
Sec. 700.813 Notification to Indian tribes of possible harm to, or
destruction of, sites on the New Lands having religious or cultural
importance.
(a) If the issuance of a permit under this part may result in harm
to, or destruction of, any Indian tribal religious or cultural site on
the New Lands, as determined by the Federal Land Manager, at least 30
days before issuing such permit the Federal Land Manager shall notify
any Indian tribe which may consider the site as having religious or
cultural importance. Such notice shall not be deemed a disclosure to
the public for purposes of section 9 of the Act.
(1) Notice by the Federal Land Manager to any Indian tribe shall be
sent to the chief executive officer or other designated official of the
tribe. Indian tribes are encouraged to designate a tribal official to
be the focal point for any notification and discussion between the
tribe and the Federal Land Manager.
(2) The Federal Land Manager may provide notice to any other Native
American group that is known by the Federal Land Manager to consider
sites potentially affected as being of religious or cultural
importance.
(3) Upon request during the 30-day period, the Federal Land Manager
may meet with official representatives of any Indian tribe or group to
discuss their interests, including ways to avoid or mitigate potential
harm or destruction such as excluding sites from the permit area. Any
mitigation measures which are adopted shall be incorporated into the
terms and conditions of the permit under Sec. 700.817.
(4) When the Federal Land Manager determines that a permit applied
for under this part must be issued immediately because of an imminent
threat or loss or destruction of an archaeological resource, the
Federal Land Manager shall so notify the appropriate tribe
(b) (1) In order to identify sites of religious or cultural
importance, the Federal Land Manager shall seek to identify all Indian
tribes having aboriginal or historic ties to the lands under the
Federal Land Manager's jurisdiction and seek to determine, from the
chief executive officer or other designated official of any such tribe,
the location and nature of specific sites of religious or cultural
importance so that such information may be on file for land management
purposes. Information on sites eligible for or included in the National
Register of Historic Places may be withheld from public disclosure
pursuant to section 304 of the Act of October 15, 1966, as amended (16
U.S.C. 470w-3).
(2) If the Federal Land Manager becomes aware of a Native American
group that is not an Indian tribe as defined in this part but has
aboriginal or historic ties to the New Lands under the Federal Land
Manager's jurisdiction, the Federal Land Manager may seek to
communicate with official representatives of that group to obtain
information on sites they may consider to be of religious or cultural
importance.
(3) The Federal Land Manager may enter into agreement with any
Indian tribe or other Native American group for determining locations
for which such tribe or group wishes to receive notice under this
section.
Sec. 700.815 Issuance of permits.
(a) The Federal Land Manager may issue a permit, for a specified
period of time appropriate to the work to be conducted, upon
determining that:
(1) The applicant is appropriately qualified, as evidenced by
training, education, and/or experience, and possesses demonstrable
competence in archaeological theory and methods, and in collecting,
handling, analyzing, evaluating, and reporting archaeological data,
relative to the type and scope of the work proposed, and also meets the
following minimum qualifications:
(i) A graduate degree in anthropology or archaeology, or equivalent
training and experience;
(ii) The demonstrated ability to plan, equip, staff, organize, and
supervise activity of the type and scope proposed;
(iii) The demonstrated ability to carry research to completion, as
evidenced by timely completion of theses, research reports, or similar
documents;
(iv) Completion of at least 16 months of professional experience
and/or specialized training in archaeological field, laboratory, or
library research,
[[Page 35670]]
administration, or management, including at least 4 months experience
and/or specialized training in the kind of activity the individual
proposes to conduct under authority of the permit; and
(v) Applicants proposing to engage in historical archaeology should
have at least one year of experience in research concerning
archaeological resources of the historic period. Applicants proposing
to engage in prehistoric archaeology should have had at least one year
of experience in research concerning archaeological resources of the
prehistoric period.
(2) The proposed work is to be undertaken for the purpose of
furthering archaeological knowledge in the public interest, which may
include but need not be limited to, scientific or scholarly research,
and preservation of archaeological data;
(3) The proposed work, including time, scope, location, and
purpose, is not inconsistent with any management plan or established
policy, objectives, or requirements applicable to the management of the
public lands concerned;
(4) Where the proposed work consists of archaeological survey and/
or data recovery undertaken in accordance with other approved uses of
the New Lands or Indian lands, and the proposed work has been agreed to
in writing by the Federal Land Manager, pursuant to section 106 of the
National Historic Preservation Act (16 U.S.C. 470f), paragraphs (a)(2)
and (a)(3) of this section shall be deemed satisfied by the prior
approval.
(5) Written consent has been obtained, for work proposed on Indian
lands, from the Indian land owner and the Indian tribe having
jurisdiction over such lands;
(6) Evidence is submitted to the Federal Land Manager that any
university, museum, or other scientific or educational institution
proposed in the application as the repository possesses adequate
curatorial capability for safeguarding and preserving the
archaeological resources and all associated records; and
(7) The applicant has certified that, not later than 980 days after
the date the final report is submitted to the Federal Land Manager, the
following will be delivered to the appropriate official of the approved
university, museum, or other scientific or educational institution,
which shall be named in the permit;
(i) All artifacts, samples, collections, and copies of records,
data, photographs, and other documents resulting from work conducted
under the requested permit where the permit is for the excavation and/
or removal of archaeological resources from the New Lands.
(ii) All artifacts, samples, and collections resulting from work
under the requested permit for which the custody or disposition is not
undertaken by the Indian owners, and copies of records, data,
photographs, and other documents resulting from work conducted under
the requested permit, where the permit is for the excavation and/or
removal of archaeological resources from Indian lands.
(b) When the area of the proposed work would cross jurisdictional
boundaries, so that permit applications must be submitted to more than
one Federal land manager, the Federal land managers shall coordinate
the review and evaluation of applications and the issuance of permits.
Sec. 700.817 Terms and conditions of permits.
(a) In all permits issued, the Federal Land Manager shall specify:
(1) The nature and extent of work allowed and required under the
permit, including the time, duration, scope, location and purpose of
the work;
(2) The name of the individual(s) responsible for conducting the
work and, if different, the name of the individual(s) responsible for
carrying out the terms and conditions of the permit;
(3) The name of any university, museum, or other scientific or
educational institution in which any collected materials and data shall
be deposited; and
(4) Reporting requirements.
(b) The Federal Land Manager may specify such terms and conditions
as deemed necessary, consistent with this part, to protect public
safety and other values and/or resources, to secure work areas to
safeguard other legitimate land uses, and to limit activities
incidental to work authorized under a permit.
(c) The Federal Land Manager shall include in permits issued for
archaeological work on Indian lands such terms and conditions as may be
requested by the Indian landowner and the Indian tribe having
jurisdiction over the lands, and for archaeological work on the New
Lands shall include such terms and conditions as may have been
developed pursuant to Sec. 700.813.
(d) Initiation of work or other activities under the authority of a
permit signifies the permittee's acceptance of the terms and conditions
of the permit.
(e) The permittee shall not be released from requirements of a
permit until all outstanding obligations have been satisfied, whether
or not the term of the permit has expired.
(f) The permittee may request that the Federal Land Manager extend
or modify a permit.
(g) The permittee's performance under any permit issued for a
period greater than 1 year shall be subject to review by the Federal
Land Manager, at least annually.
Sec. 700.819 Suspension and revocation of permits.
(a) Suspension or revocation for cause. (1) The Federal Land
Manager may suspend a permit issued pursuant to this part upon
determining that the permittee has failed to meet any of the terms and
conditions of the permit or has violated any prohibition of the Act of
Sec. 700.807. The Federal Land Manager shall provide written notice to
the permittee of suspension, the cause thereof, and the requirements
which must be met before the suspension will be removed.
(2) The Federal Land Manager may revoke a permit upon assessment of
a civil penalty under Sec. 700.829 upon the permittee's conviction
under section 6 of the Act, or upon determining that the permittee has
failed after notice under this section to correct the situation which
led to suspension of the permit.
(b) Suspension or revocation for management purposes. The Federal
Land Manager may suspend or revoke a permit without liability to the
United States, its agents, or employees when continuation of work under
the permit would be in conflict with management requirements not in
effect when the permit was issued. The Federal Land Manager shall
provide written notice to the permittee stating the nature of and basis
for the suspension or revocation.
Sec. 700.821 Appeals relating to permits.
Any affected person may appeal permit issuance, denial of permit
issuance, suspension, revocation, and terms and conditions of a permit
through existing administrative appeal procedures, or through
procedures which may be established by the Federal Land Manager
pursuant to section 10(b) of the Act and this part.
Sec. 700.823 Relationship to section 106 of the National Historic
Preservation Act.
Issuance of a permit in accordance with the Act and this part does
not constitute an undertaking requiring compliance with Section 106 of
the Act of October 15, 1996 (16 U.S.C. 470f). However, the mere
issuance of such a permit does not excuse the Federal Land Manager from
compliance with section 106 where otherwise required.
[[Page 35671]]
Sec. 700.825 Custody of archaeological resources.
(a) Archaeological resources excavated or removed from public lands
remain the property of the Navajo Nation.
(b) Archaeological resources excavated or removed from Indian lands
remain the property of the Indian or Indian tribe having rights of
ownership over such resources.
Sec. 700.827 Determination of archaeological or commercial value and
cost of restoration and repair.
(a) Archaeolgical value. For purposes of this part, the
archaeological value of any archaeological resource involved in a
violation of the prohibitions in Sec. 700.807 of this part or
conditions of a permit issued pursuant to this part shall be the value
of the information associated with the archaeological resource. This
value shall be appraised in terms of the costs of the retrieval of the
scientific information which would have been obtained prior to the
violation. These costs may include, but need not be limited to, the
cost of preparing a research design, conducting field work, carrying
out laboratory analysis, and preparing reports as would be necessary to
realize the information potential.
(b) Commercial value. For purposes of this part, the commercial
value of any archaeological resource involved in a violation of the
prohibitions in Sec. 700.807 of this part or conditions of a permit
issued pursuant to this part shall be for its fair market value. Where
the violation has resulted in damage to the archaeological resource,
the fair market value should be determined using the condition of the
archaeological resource prior to the violation to the extent that its
prior condition can be ascertained.
(c) Cost of restoration and repair. For purposes of this part, the
cost of restoration and repair of archaeological resources damages as a
result of a violation or prohibitions or conditions pursuant to this
part, shall be the sum of the costs already incurred for emergency
restoration or repair work, plus those costs projected to be necessary
to complete restoration and repair, which may include, but need not be
limited to, the costs of the following.
(1) Reconstruction of the archaeological resource;
(2) Stabilization of the archaeological resource;
(3) Ground contour reconstruction and surface stabilization;
(4) Research necessary to carry out reconstruction or
stabilization;
(5) Physical barriers or other protective devices, necessitated by
the disturbance of the archaeological resource, to protect it from
further disturbance;
(6) Examination and analysis of the archaeological resource
including recording remaining archaeological information, where
necessitated by disturbance, in order to salvage remaining values which
cannot be otherwise conserved;
(7) Reinterment of human remains in accordance with religious
custom and State, local, or tribal law, where appropriate, as
determined by the Federal Land Manager.
(8) Preparation of reports relating to any of the above activities.
Sec. 700.829 Assessment of civil penalties.
(a) The Federal Land Manager may assess a civil penalty against any
person who has violated any prohibition contained in Sec. 700.807 or
who has violated any term or condition included in a permit issued in
accordance with the Act and this part.
(b) Notice of violation. The Federal Land Manager shall serve a
notice of violation upon any person believed to be subject to a civil
penalty, either in person or by registered or certified mail (return
receipt requested). The Federal Land Manager shall include in the
notice:
(1) A concise statement of the facts believed to show a violation;
(2) A specific reference to the provision(s) of this part or to a
permit issued pursuant to this part allegedly violated;
(3) The amount of penalty proposed to be assessed, including any
initial proposal to mitigate or remit where appropriate, or a statement
that notice of the proposed penalty amount will be served after the
damages associated with the alleged violation have been ascertained;
(4) Notification of the right to file a petition for relief
pursuant to paragraph (d) of this section, or to await the Federal Land
Manager's notice of assessment, and to request a hearing in accordance
with paragraph (g) of this section. The notice shall also inform the
person of the right to seek judicial review of any final administrative
decision assessing a civil penalty.
(c) The person served with a notice of violation shall have 45
calendar days from the date of its service (or the date of service of a
proposed penalty amount, if later) in which to respond. During this
time the person may:
(1) Seek informal discussions with the Federal Land Manager;
(2) File a petition for relief in accordance with paragraph (d) of
this section;
(3) Take no action and await the Federal Land Manager's notice of
assessment;
(4) Accept in writing or by payment the proposed penalty, or any
mitigation or remission offered in the notice. Acceptance of the
proposed penalty or mitigation or remission shall be deemed a waiver of
the notice of assessment and of the right to request a hearing under
paragraph (g) of this section.
(d) Petition for relief. The person served with a notice of
violation may request that no penalty be assessed or that the amount be
reduced, by filing a petition for relief with the Federal Land Manager
within 45 calendar days of the date of service of the notice of
violation (or of a proposed penalty amount, if later). The petition
shall be in writing and signed by the person served with the notice of
violation. If the person is a corporation, the petition must be signed
by an officer authorized to sign such documents. The petition shall set
forth in full the legal or factual basis for the requested relief.
(e) Assessment of penalty. (1) The Federal Land Manager shall
assess a civil penalty upon expiration of the period for filing a
petition for relief, upon completion of review of any petition filed,
or upon completion of informal discussions, whichever is later.
(2) The Federal Land Manager shall take into consideration all
available information, including information provided pursuant to
paragraphs (c) and (d) of this section or furnished upon further
request by the Federal Land Manager.
(3) If the facts warrant a conclusion that no violation has
occurred, the Federal Land Manger shall so notify the person served
with a notice of violation, and no penalty shall be assessed.
(4) Where the facts warrant a conclusion that a violation has
occurred, the Federal Land Manager shall determine a penalty amount in
accordance with Sec. 700.831.
(f) Notice of assessment. The Federal Land Manager shall notify the
person served with a notice of violation of the penalty amount assessed
by serving a written notice of assessment, either in person or by
registered or certified mail (return receipt requested). The Federal
Land Manager shall include the following in the notice of assessment.
(1) The facts and conclusions from which it was determined that a
violation did occur;
(2) The basis in Sec. 700.831 for determining the penalty amount
assessed and/or any offer to mitigate or remit the penalty; and
(3) Notification of the right to request a hearing, including the
procedures to
[[Page 35672]]
be followed, and to seek judicial review of any final administrative
decision assessing a civil penalty.
(g) Hearings. (1) Except where the right to request a hearing is
deemed to have been waived as provided in paragraph (c)(4) of this
section, the person served with a notice of assessment may file a
written request for a hearing with the adjudicatory body specified in
the notice. The person shall enclose with the request for hearing a
copy of the notice of assessment, and shall deliver the request, as
specified in the notice of assessment, personally or by registered or
certified mail (return receipt requested).
(2) Failure to deliver a written request for a hearing within 45
days of the date of service of the notice of assessment shall be deemed
a waiver of the right to a hearing.
(3) Any hearing conducted pursuant to this section shall be held in
accordance with 5 U.S.C. 554. In any such hearing, the amount of civil
penalty assessed shall be determined in accordance with this part, and
shall not be limited by the amount assessed by the Federal Land Manager
under paragraph (f) of this section or any offer of mitigation or
remission made by the Federal Land Manager.
(h) Final administrative decision. (1) Where the person served with
a notice of violation has accepted the penalty pursuant to paragraph
(c)(4) of this section, the notice of violation shall constitute the
final administrative decision;
(2) Where the person served with a notice of assessment has not
filed a timely request for a hearing pursuant to paragraph (g)(1) of
this section, the notice of assessment shall constitute the final
administrative decision;
(3) Where the person served with a notice of assessment has filed a
timely request for hearing pursuant to paragraph (g)(1) of this
section, the decision resulting from the hearing or any applicable
administrative appeal therefrom shall constitute the final
administrative decision.
(i) Payment of penalty. (1) The person assessed a civil penalty
shall have 45 calendar days from the date of issuance of the final
administrative decision in which to make full payment assessed, unless
a timely request for appeal has been filed with a U.S. District Court,
as provided in Section 7(b)(1) of the Act.
(2) Upon failure to pay the penalty, the Federal Land Manager may
request the Attorney General to institute a civil action to collect the
penalty in a U.S. District Court for any district in which the person
assessed a civil penalty is found, resides, or transacts business.
Where the Federal Land Manager is not represented by the Attorney
General, a civil action may be initiated directly by the Federal Land
Manager.
(j) Other remedies not waived. Assessment of a penalty under this
section shall not be deemed a waiver of the right to pursue other
available legal or administrative remedies.
Sec. 700.831 Civil penalty amounts.
(a) Maximum amount of penalty. (1) Where the person being assessed
a civil penalty has not committed any previous violation of any
prohibition in Sec. 700.807 or of any term or condition included in a
permit issued pursuant to this part, the maximum amount of the penalty
shall be the full cost of restoration and repair of archaeological
resources damaged plus the commercial value of archaeological resources
destroyed or not recovered.
(2) Where the persons being assessed a civil penalty has committed
any previous violation of any prohibition in Sec. 700.807 or of any
term or condition included in a permit issued pursuant to this part,
the maximum amount of the penalty shall be doubled the cost of
restoration and repair plus double the commercial value of
archaeological resources destroyed or not recovered.
(3) Violations limited to the removal of arrowheads located on the
surface of the ground shall not be subject to the penalties prescribed
in this section.
(b) Determination of penalty amount, mitigation, and remission. The
Federal Land Manager may assess a penalty amount less than the maximum
amount of penalty and may offer to mitigate or remit the penalty.
(1) Determination of the penalty amount and/or a proposal to
mitigate or remit the penalty may be based upon any of the following
factors.
(i) Agreement by the person being assessed a civil penalty to
return to the Federal Land Manager archaeological resources removed
from the New Lands or Indian lands;
(ii) Agreement by the person being assessed a civil penalty to
assist the Federal Land Manager in activity to preserve, restore, or
otherwise contribute to the protection and study of archaeological
resources on the New Lands or Indian Lands.
(iii) Agreement by the person being assessed a civil penalty to
provide information which will assist in the detection, prevention, or
prosecution of violations of the Act or this part;
(iv) Demonstration of hardship or inability to pay, provided that
this factor shall only be considered when the person being assessed a
civil penalty has not been found to have previously violated the
regulations in this part;
(v) Determination that the person being assessed a civil penalty
did not willfully commit the violation.
(vi) Determination that the proposed penalty would constitute
excessive punishment under the circumstances.
(vii) Determination of other mitigating circumstances appropriate
to consideration in reaching a fair and expeditious assessment.
(2) When the penalty is for a violation on Indian lands, the
Federal Land Manager shall consult with and consider the interests of
the Indian landowner and the Indian tribe having jurisdiction over the
Indian lands prior to proposing to mitigate or remit the penalty.
(3) When the penalty is for a violation which may have had an
effect on a known Indian tribal religious or cultural site on the New
Lands, the Federal Land Manager should consult with and consider the
interests of the affected tribe(s) prior to proposing to mitigate or
remit the penalty.
Sec. 700.833 Other penalties and rewards.
(a) Section 6 of the Act contains criminal prohibitions and
provisions for criminal penalties. Section 8(b) of the Act provides
that archaeological resources, vehicles, or equipment involved in a
violation may be subject to forfeiture.
(b) Section 8(a) of the Act provides for rewards to be made to
persons who furnish information which leads to conviction for a
criminal violation or to assessment of a civil penalty. The Federal
Land Manager may certify to the Secretary of the Treasury that a person
is eligible to receive payment. Officers and employees of Federal,
State, or local government who furnish information or render services
in the performance of their official duties, and persons who have
provided information under Sec. 700.831(b)(1)(iii) shall not be
certified eligible to receive payment of rewards.
(c) In cases involving Indian lands, all civil penalty monies and
any item forfeited under the provisions of this section shall be
transferred to the appropriate Indiana or Indian tribes.
Sec. 700.835 Confidentiality of archaeological resource information.
The Federal Land Manager shall not make available to the public
under subchapter II of chapter 5 of title 5 of the United States Code
or any other provision of law, information concerning the nature and
location of any archaeological resource, with the following exceptions:
(a) the Federal Land Manager may make information available,
provided
[[Page 35673]]
that the disclosure will further the purposes of the Act and this part,
or the Act of June 27, 1960, as amended (16 U.S.C. 469-469c) without
risking harm to the archaeological resource or to the site in which it
is located.
(b) The Federal Land Manager shall make information available, when
the Governor of any State has submitted to the Federal Land Manager a
written request for information concerning the archaeological resources
within the requesting Governor's state; provided that the request
includes:
(1) The specific archaeological resource or area about which
information is sought.
(2) The purpose for which the information is sought; and
(3) The Governor's written commitment to adequately protect the
confidentiality of the information.
Sec. 700.837 Report.
Each Federal Land Manager, when requested by the Secretary of the
Interior, shall submit such information as is necessary to enable the
Secretary to comply with section 13 of the Act.
Sec. 700.839 Permitting procedures for Navajo Nation lands.
(a) If the lands involved in a permit application are Indian lands,
the consent of the appropriate Indian tribal authority or individual
Indian landowner is required by the Act and the regulations in this
subpart.
(b) When Indian tribal lands are involved in an application for a
permit or a request for extension or modification of a permit, the
consent of the Indian tribal government must be obtained. For Indian
allotted lands outside reservation boundaries, consent from only the
individual landowner is needed. When multiple-owner allotted lands are
involved, consent by more than 50 percent of the ownership interest is
sufficient. For Indian allotted lands within reservation boundaries,
consent must be obtained from the Indian tribal government and the
individual landowner(s).
(c) The applicant should consult with the Office concerning
procedures for obtaining consent from the appropriate Indian tribal
authorities and submit the permit application to the Office that is
responsible for the administration of the lands in question. The Office
shall ensure that consultation with the appropriate Indian tribal
authority or individual Indian landowner regarding terms and conditions
of the permit occurs prior to detailed evaluation of the application.
The Indian tribal authority or individual Indian landowner shall have
30 days from the date of receipt of the consultation request from the
Office to respond to such request. Failure of the Indian tribal
authority or individual Indian landowner to respond timely to the
consultation request shall be deemed to be consent to the request.
Permits shall include terms and conditions requested by the Indian
tribe or Indian landowner pursuant to Sec. 700.817 of this part.
(d) The issuance of a permit under this part does not remove the
requirement for any other permit required by Indian tribal law.
Dated: June 25, 1996.
Christopher J. Bavasi,
Executive Director, Office of Navajo and Hopi Indian Relocation.
[FR Doc. 96-16650 Filed 7-5-96; 8:45 am]
BILLING CODE 6820-BB-M
Complete official Federal Register PDF
FR Doc. 96-16624 Adding Argentina to the List of Countries Authorized to Participate in the Visa Waiver Pilot Program
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35598-35600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16624]
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DEPARTMENT OF JUSTICE
8 CFR Part 217
[INS No. 1777-96]
RIN 1115-AB93
Adding Argentina to the List of Countries Authorized to
Participate in the Visa Waiver Pilot Program
AGENCY: Immigration and Naturalization Service, Justice.
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This rule amends the Immigration and Naturalization Service
(``Service'') regulations by adding Argentina to the list of countries
designated to participate in the Visa Waiver Pilot Program (VWPP),
thereby permitting nationals of Argentina to apply for admission to the
United States for ninety (90) days or less as nonimmigrant visitors for
business or pleasure without first obtaining a nonimmigrant visa. This
action will facilitate travel to the United States and benefit United
States businesses.
EFFECTIVE DATES: July 8, 1996. Written comments must be submitted on or
before September 6, 1996.
ADDRESSES: Please submit written comments, in triplicate, to the
Director, Policy Directives and Instructions Branch, Immigration and
Naturalization Service, 425 I Street, NW., Room 5307, Washington, DC
20536.
To ensure proper handling please reference INS number 1777-96 on
your correspondence. Comments are available for public inspection at
the above address by calling (202) 514-3048 to arrange for an
appointment.
FOR FURTHER INFORMATION CONTACT:
Tom Graber, Assistant Chief Inspector, Inspections Division,
Immigration and Naturalization Service, 425 I Street NW., Room 7228,
Washington, DC 20536, Telephone number: (202) 616-7496.
SUPPLEMENTARY INFORMATION: Section 313 of the Immigration Reform and
Control Act of 1986 (IRCA), Public Law 99-603, added section 217 to the
Immigration and Nationality Act (Act), 8 U.S.C. 1187, which established
the VWPP. The VWPP waives the nonimmigrant visa requirement for the
admission of certain aliens to the United States for a period not to
exceed ninety (90) days. That original provision authorized the
participation of eight countries in the Pilot Program. Accordingly, the
Service designated by regulations published in the Federal Register,
the following eight (8) countries to participate in the VWPP:
[[Page 35599]]
----------------------------------------------------------------------------------------------------------------
Country Effective date Federal Register citation
----------------------------------------------------------------------------------------------------------------
(1) United Kingdom.................... July 1, 1988.................. 53 FR 24901, June 30, 1988.
(2) Japan............................. Dec. 15, 1988................. 53 FR 50161, Dec. 13, 1988.
(3) France............................ July 1, 1989.................. 54 FR 27120, June 27, 1989.
(4) Switzerland....................... July 1, 1989.................. 54 FR 27120, June 27, 1989.
(5) Germany........................... July 15, 1989................. 54 FR 27120, June 27, 1989.
(6) Sweden............................ July 15, 1989................. 54 FR 27120, June 27, 1989.
(7) Italy............................. July 29, 1989................. 54 FR 27120, June 27, 1989.
(8) Netherlands....................... July 29, 1989................. 54 FR 27120, June 27, 1989.
----------------------------------------------------------------------------------------------------------------
Section 201 of the Immigration Act of 1990 (IMMACT 90), Public Law
101-649, dated November 29, 1990, further amended the VWPP removing the
eight-country cap and extending the provisions to all countries that
met the qualifying provisions contained in section 217 of the Act. In
addition, section 201 of IMMACT 90 also extended the period for the
VWPP until September 30, 1994. Subsequently, the Service designated by
regulations published in the Federal Register, the following fourteen
(14) additional countries to participate in the VWPP:
----------------------------------------------------------------------------------------------------------------
Country Effective date Federal Register citation
----------------------------------------------------------------------------------------------------------------
(1) Andorra........................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(2) Austria........................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(3) Belgium........................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(4) Denmark........................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(5) Finland........................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(6) Iceland........................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(7) Liechtenstein..................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(8) Luxembourg........................ Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(9) Monaco............................ Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(10) New Zealand...................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(11) Norway........................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(12) San Marino....................... Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(13) Spain............................ Oct. 1, 1991.................. 56 FR 46716, Sept. 13, 1991.
(14) Brunei........................... July 29, 1993................. 58 FR 40581, July 29, 1993.
----------------------------------------------------------------------------------------------------------------
Section 210 of the Immigration and Nationality Technical
Corrections Act of 1994, Public Law 103-416, dated October 25, 1994,
extended the expiration date of the VWPP until September 30, 1996.
Addition of Argentina to the VWPP
Argentina does not require visas for citizens and nationals of the
United States entering for ninety (90) days or less. Thus it meets the
requirement of providing reciprocal treatment for United States
citizens and nationals. Argentina also meets the statutorily prescribed
limits on visa refusal rates for the prior 2-year period and for each
of those two years. Argentina also has a machine-readable passport
program and the Attorney General has determined that law enforcement
interests would not be compromised by the designation of Argentina.
Accordingly, this interim rule amends 8 CFR part 217 to extend the VWPP
to include the country of Argentina, which meets all the requirements
for that status. Argentina is, therefore, designated as a country
participating in the VWPP by the Secretary of State and the Attorney
General, acting jointly through their designees. [See the Department of
State rule published elsewhere in this issue of the Federal Register.]
The Service's implementation of this rule as an interim rule, with
provisions for post-promulgation public comments, is based upon the
``good cause'' exceptions found at 5 U.S.C. 553(b)(B) and (d)(3). The
reasons and the necessity for immediate implementation of this interim
rule without prior notice and comment are as follows: This interim rule
relieves a restriction and is beneficial to both the traveling public
and United States businesses.
Regulatory Flexibility Act
The Commissioner of the Immigration and Naturalization Service, in
accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has
reviewed this regulation and, by approving it, certifies that this rule
will not have a significant economic impact on a substantial number of
small entities. This rule merely removes a restriction for both the
public and United States businesses.
Executive Order 12866
This rule is not considered by the Department of Justice,
Immigration and Naturalization Service, to be a ``significant
regulatory action'' under Executive Order 12866, section 3(f),
Regulatory Planning and Review, and the Office of Management and Budget
has waived its review process under section 6(a)(3)(A).
Executive Order 12612
The regulation adopted herein will not have substantial direct
effects on the States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this rule
does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
List of Subjects in 8 CFR Part 217
Administrative practices and procedures, Aliens, Nonimmigrants,
Passports and visas.
Accordingly, part 217 of chapter I of title 8 of the Code of
Federal Regulations is amended as follows:
PART 217--VISA WAIVER PILOT PROGRAM
1. The authority citation for part 217 continues to read as
follows:
Authority: 8 U.S.C. 1103, 1187; 8 CFR part 2.
2. Sec. 217.5, paragraph (a)(1) is revised to read as follows:
[[Page 35600]]
Sec. 217.5 Designated countries.
(a)(1) Visa Waiver Pilot Program Countries. United Kingdom
(effective July 1, 1988); Japan (effective December 15, 1988); France
and Switzerland (effective July 1, 1989); Germany and Sweden (effective
July 15, 1989); Italy and the Netherlands (effective July 29, 1989);
Andorra, Austria, Belgium, Denmark, Finland, Iceland, Liechtenstein,
Luxembourg, Monaco, New Zealand, Norway, San Marino, and Spain
(effective October 1, 1991); Brunei (effective July 29, 1993); and
Argentina July 8, 1996, have been designated as Visa Waiver Pilot
Program countries based on the criteria set forth at sections
217(a)(2)(A) and 217(c) of the Act.
* * * * *
Dated: June 24, 1996.
Doris Meissner,
Commissioner, Immigration and Naturalization Service.
[FR Doc. 96-16624 Filed 7-5-96; 8:45 am]
BILLING CODE 4410-10-M
Complete official Federal Register PDF
FR Doc. 96-16036 Leasing of Tribal Lands for Mineral Development and Leasing of Allotted Lands for Mineral Development
[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35634-35666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16036]
=======================================================================
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DEPARTMENT OF THE INTERIOR
Bureau of Indian Affairs
25 CFR Parts 211 and 212
RIN 1076-AA82
Leasing of Tribal Lands for Mineral Development and Leasing of
Allotted Lands for Mineral Development
AGENCY: Bureau of Indian Affairs, Interior.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Indian Affairs (BIA) of the Department of the
Interior (Department) is promulgating regulations revising and updating
regulations in 25 CFR Parts 211 and 212 that govern mineral leasing on
tribal and allotted Indian lands respectively. The intent of these
regulations is to ensure that Indian mineral owners, both tribes and
individual owners, desiring to have their resources developed are
assured that they will be developed in a manner that maximizes their
best economic interests and minimizes any adverse environmental or
cultural impact resulting from such development. Further, these
regulations recognize Federal government reorganization, enacted
legislation, and prevailing administrative practice in the 58 years
since these regulations were first promulgated.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Richard N. Wilson (303) 231-5070 or
Pete C. Aguilar (303) 231-5070.
SUPPLEMENTARY INFORMATION: These final rules are published in the
exercise of the authority delegated by the Secretary of the Interior
(Secretary) to the Assistant Secretary for Indian Affairs by 209 DM 8.
The principal authors of these rules are Richard N. Wilson and Pete C.
Aguilar, both in the Division of Energy and Mineral Resources, Golden,
Colorado.
This final rulemaking revises and updates the mineral leasing of
tribally-owned minerals governed by the Act of May 11, 1938 (25 U.S.C.
396a), and the mineral leasing of allotted lands governed by the Act of
March 3, 1909, as amended, (25 U.S.C. 396). The 1938 Act permits Indian
tribes to elect whether they wish to offer their mineral resources for
lease by competitive bidding, or enter into negotiations with
prospective lessees if bids are not satisfactory. The Act of 1909
permits individual Indian mineral owners to offer their mineral
resources for lease by competitive bidding under the aegis of the
Secretary.
This is the first comprehensive revision of general BIA regulations
governing mineral leasing of Indian lands since 1938. In the
intervening period Congress has enacted many laws applicable to Indian
mineral leases, including the National Environmental Policy Act of 1969
and the Federal Oil and Gas Royalty Management Act of 1982. There have
also been major changes in Federal Indian policy, as reflected in the
Indian Self-Determination Act of 1975 and recent amendments thereto.
This revision is the product of many years of consultation with Indian
tribal leaders. It is intended to update, streamline and clarify the
procedures for Indian mineral leasing and administration, consistent
with the Federal government's role as trustee for these mineral
resources and with the modern Federal policy of self-determination.
Indeed, they largely reflect current BIA practice and procedure, and
are intended in part to eliminate the confusion often fostered by the
existing,
[[Page 35635]]
outmoded regulations. Although these revised regulations include new
requirements imposed by modern statutes and intervening judicial
interpretations of the BIA's legal responsibilities, they are no
lengthier than the existing regulations, most of which have been in
place for 58 years.
Pursuant to section 8 of the Indian Mineral Development Act (IMDA)
of 1982, the BIA published a notice of proposed rulemaking in the
Federal Register on July 12, 1983 (48 FR 31978) to revise and
reorganize the regulations governing solid mineral, oil and gas, and
geothermal leasing adopted pursuant to the Acts of 1909 and 1938, last
revised in their entirety on December 24, 1957 (22 FR 10588); as well
as to promulgate regulations implementing the IMDA. On August 24, 1987,
the BIA published final regulations (52 FR 31916) that were scheduled
to become effective on October 24, 1987. Then, in response to concerns
expressed by the public, the regulations were amended and republished
as proposed on October 21, 1987 (52 FR 39332), and the public was
notified that the regulations published on August 24, 1987 would not
become effective.
Public responses to these publications contained compelling
arguments for restructuring the format of the proposed regulations.
Several commenters stated that the October 21, 1987 proposed
regulations were confusing and ambiguous. The format of the proposed
regulations, implementing the Acts of March 3, 1909 and May 11, 1938,
and the IMDA; combined the regulations into two separate parts: (1)
Part 211, contracts for prospecting and mining on Indian lands (except
oil and gas and geothermal) and (2) Part 225, oil and gas and
geothermal contracts. The most common major concern was whether
provisions of the IMDA would supplant lease and regulatory conditions
contained in lease contracts entered into under the authority of the
1909 and 1938 Acts. The regulatory format created confusion about
contract approval procedures for leasing tribal versus allotted lands.
In addition, the format created confusion between regulatory
requirements for solid mineral versus fluid mineral contracts. The
uncertainty expressed by Indian interests and industry on numerous
issues convinced the Department that the regulations needed to be
entirely reformatted and revised.
The proposed regulations were then organized under a system that
would be more familiar to both Indian mineral owners and industry. The
proposed regulations were organized in three parts: (1) 25 CFR Part 211
provided the procedures for obtaining and operating standard mineral
leases, for both solid and fluid minerals, on tribal lands under the
Act of May 11, 1938, as amended; (2) 25 CFR Part 212 provided the
procedures for obtaining and operating standard mineral leases, for
both solid and fluid minerals, on allotted lands under the Act of March
3, 1909, as amended; and (3) 25 CFR Part 225 provided a new and
separate part governing minerals agreements for development of Indian
minerals under the IMDA.
Along with the reformatting, many changes were made to the
individual parts of the regulation. Those changes reflected the
Department's efforts to be responsive to the comments received in 1987,
and to include the additional business and administrative experience
that had been gained on several issues during the intervening years.
In order to provide Indian mineral owners and Indian-mineral
operators full opportunity to review and comment on the reformatted and
rewritten regulations, the Department determined that those regulations
should be published as proposed rather than as final rules, and that
the public should be given 90 days to review the regulations and
provide written comments. The proposed rulemaking was published in the
Federal Register (56 FR 58734) on November 21, 1991. The closing date
for submission of review comments on the proposed rulemaking was
February 19, 1992.
Comments received from Indian mineral owners, industry, and the
public were directed mostly to 25 CFR Parts 211 and 212. Tribes were
especially concerned that the proposed regulations did not adequately
recognize tribal rules and regulations and did not provide for adequate
notification and communication with tribes prior to implementation of
Departmental decision and authority with respect to mineral leasing and
mineral management activities. Industry expressed concern about acreage
limitations in the leasing of solid minerals and oil and gas, the role
of the regulatory structure of the Department and its effects on the
reclamation of Indian lands mined for coal, and were still concerned
about the possible effects of the proposed rules on existing mineral
leases on Indian lands.
Because there were: (1) regulations formerly in place governing the
mineral leasing of Indian lands (25 CFR Parts 211 and 212 as well as
the regulations of other Federal agencies); (2) no regulations
governing the disposition of mineral resources pursuant to the IMDA;
and (3) because the IMDA is and has been utilized by tribes to
participate in minerals agreements, since 1982, without benefit of
formal regulations designed specifically to implement the IMDA; the
Department published separately (25 CFR Part 225, 59 FR 14960, March
30, 1994) as final rulemaking the regulations implementing the IMDA. In
response to the wishes and numerous comments of Indian tribes and the
public and to ensure that Indian mineral owners and lessees and the
general public had adequate and full opportunity for review and
comment, the Department determined that the regulations revising and
updating 25 CFR Parts 211 and 212 should be published as final
rulemaking only after an additional opportunity for review and comment
had been provided.
Accordingly, the public comment period was reopened, public
meetings scheduled, and additional opportunity provided for concerned
and involved parties to further discuss and provide comments, prior to
final rulemaking, on 25 CFR Parts 211 and 212 published on November 21,
1991. The comment period was reopened for 60 days by Federal Register
notice (57 FR 40298) on September 2, 1992. Public hearings were held at
Denver, Colorado on September 25, 1992 and at Albuquerque, New Mexico
on September 28, 1992 to receive public comments on 25 CFR Parts 211
and 212 as proposed and published on November 21, 1991. The closing
date for submission of comments on proposed rulemaking was November 2,
1992.
In reviewing all of the issues raised in the 1987, 1991 and 1992
comments and in redrafting the regulations, the goal of the BIA is to
ensure that the Department is able to fulfill its trust responsibility
by providing adequate provisions to ensure the protection of the trust
resources and at the same time benefit the Indian mineral owners by
removing unnecessary regulatory barriers and complications that could
make their minerals less attractive to industry and thus frustrate
development. In addition, consistent with the policy on self-
determination, the Department has attempted to provide the tribes as
much freedom as possible to make their own determination on issues
affecting the development of their minerals.
The regulations are rewritten and restructured in response to the
comments received during the comment periods of 1991 and 1992. Because
of previous extensive reformatting and restructuring in response to
comments received in 1987 (56 FR 58735), as well as to comments
received in 1991 and
[[Page 35636]]
1992, the Department is of the opinion that a detailed review of
comments received during a time interval of more than five years would
be more confusing than helpful. Accordingly, the Department decided to
provide in the preamble a listing by section of the salient changes
made in the proposed regulations.
I. Changes Made to Proposed Rules
Set forth in the following list of changes are most of the
clarifying changes, but not each and every minor change, made to the
regulations since they were last published as proposed in the Federal
Register on November 21, 1991. The proposed rules are modified: (1) in
response to comments received; (2) to reflect the fact that 25 CFR
Parts 211 and 212 now stand alone after separation and subsequent
publication of 25 CFR Part 225 (59 FR 14960) as a final rule; and (3)
in recognition of prevailing and customary business and administrative
practices developed in the last 58 years (since regulations were first
promulgated in 1938) under the Acts of 1909 and 1938. The salient
modifications to the proposed rules are here summarized by section.
Many of the changes and modifications made in 25 CFR Part 212 are the
same as those made in 25 CFR Part 211 or the sections are included from
25 CFR Part 211 by reference. The changes and modifications in sections
so referenced are the same in both parts. These changes and
modifications as well as changes and modifications in common in the
text of both parts of regulation are set forth only in the section
summaries of Part 211 below, but are easily found because the numbering
and designation of sections in Part 212 parallel those of Part 211.
Where significant differences exist the sections of Part 212 are
discussed separately (below). The section headings refer to this final
rule.
Section 211.1. Purpose and Scope
Several changes are made to this section to more clearly state the
general guidance of this section and to assure the Alaska native
corporations that 25 CFR Parts 211 and 212 are applicable only to
Indian mineral interests held in trust by the United States. In
addition, a change is made to clarify that 25 CFR Parts 211 and 212 do
not affect certain key provisions of existing mineral leases and
permits.
Section 211.3. Definitions
The definitions section of Part 211 is modified somewhat, partly in
response to comments, because permits are now specifically recognized
in regulation, and for other reasons. The necessary changes made are:
Applicant is an addition to clarify that no one is a lessee or
permittee does not exist until after the issuance of a lease or permit;
Bureau is deleted from definitions because this word is no longer
used specifically without qualification in the regulations;
Cooperative Agreement is added because the term is used in many
places in the discussion of agreements that allocate costs and benefits
among the operator(s) and the mineral owner(s).
Director's representative is added to bring the Office of Surface
Mining Reclamation and Enforcement representative formally into Part
211;
In the best interest of the Indian mineral owner is modified to
clarify that the Secretary shall consider any relevant factor in making
a best interest determination;
Indian Surface Owner is defined in both Part 211 and Part 212 in
response to comments and because this phrase is brought into Part 212
by reference to the appropriate sections of Part 211.
Minerals is modified to better define the scope and description of
minerals that may be included in a mineral lease or permit on Indian
lands;
Permit is added to recognize that permits, as well as leases, may
be issued in the course of exploration and development of mineral
resources on Indian lands;
Permittee is added to recognize one who holds a permit as compared
to one who holds a lease on Indian land;
Tar sand is deleted, but tar sand is now defined as a mineral and
included as a result of the modification of the definition of
``minerals.''
Section 211.4. Authority and Responsibility of the Bureau of Land
Management (BLM)
References are added to cite the BLM regulations concerning onshore
oil and gas and geothermal unitization and communitization.
Section 211.6. Authority and Responsibility of the Minerals Management
Service (MMS)
This section is expanded to clarify that the Secretary may consider
alternative provisions in a lease or permit with respect to the
requirements found in 30 CFR Chapter II, Subchapters A and C, if they
are reasonable and adequately address the royalty functions governed by
MMS regulations.
Section 211.7. Environmental Studies
A change is made in this section to clarify that although
compliance with all environmental, archeological and historic
preservation statutes is required, the exhaustive, site-specific
analyses and surveys demanded when operations begin at a specific site
are not invariably required prior to approval of a lease or permit.
Rather, the degree and timing of environmental compliance activity
demanded at a specific site or area is dependent upon the findings of
the environmental analysis or environmental assessment.
Section 211.9. Existing Permits and Leases for Minerals Issued Pursuant
to 43 CFR and Acquired for Indian Tribes
This section is modified to clarify that permits and leases issued
under 43 CFR on certain Federal lands which later became Indian lands,
shall be administered in accordance with the regulations set forth in
30 CFR and 43 CFR, as applicable. This section also provides guidance
in the making of payments and the submittal of reports for mineral
permits and leases.
Section 211.20. Leasing Procedures
Changes are made in this section to emphasize that the Secretary
undertakes mineral leasing on Indian lands at the request of, and in
consultation with, the Indian mineral owner. Except for oil and gas,
and with the approval of the Secretary, the Indian mineral owner and/or
the Secretary may engage in private negotiations in pursuit of mineral
leasing. After oil and gas lands have been considered for lease by
competitive bid, the oil and gas lands may be leased by private
negotiation between the Indian mineral owner and the mineral industry,
subject to approval of the Secretary.
Section 211.24. Bonds
Changes in this section emphasize that bonds are payable to the
Secretary or the Secretary's designee and provide minimum (nationwide
and/or statewide bonds) requirements for the bonding of lessees and
permittees. Current financial and business practices are now recognized
in the regulations by providing for a variety of financial instruments
to accompany a personal bond so that a wide variety of assets can be
used to satisfy the bonding requirements.
Section 211.25. Acreage Limitation
As a result of comments, Section 211.25 is rewritten to more nearly
reflect current administrative practice. In the previous proposed
rulemaking, coal leases were restricted to 640 acres (56 FR 58740). In
the final rule the limit is raised to 2,560 acres and may, with the
consent of the Indian mineral
[[Page 35637]]
owner, be approved in larger acreage. This is similar to the existing
regulation. For other minerals each lease may not exceed 640 acres, or
the nearest aliquot portion thereof, although multiple leases of 640
acres each may be obtained by lessees. Indian mineral owners and
applicants who find the acreage limitations in Sec. 211.25 unduly
restrictive may avail themselves of procedures under the IMDA (25 CFR
Part 225).
Section 211.27. Duration of Leases
Rewording in this section clarifies the conditions under which a
lease may be extended beyond its primary term of lease duration by
drilling (oil and gas and geothermal leases) or actual production
(solid minerals leases). A provision is added, in the interest of
diligent development of oil and gas and geothermal leases, that
provides a lease cannot be extended more than 120 days beyond its
primary term by drilling activity in the absence of production or an
approval of a cooperative agreement.
Section 211.28. Unitization and Communitization Agreements, and Well
Spacing
Additions to this section include (1) the requirement that the
Secretary consult with the Indian mineral owner prior to making a
determination concerning a cooperative agreement or a well-spacing plan
and (2) a clarification at Sec. 211.28(e) that requests for approval of
cooperative agreements, which must be appropriately filed ninety (90)
days prior to the expiration date of the first Indian lease to be
included in the proposed agreement, apply to all mineral commodities
amenable to approval of a cooperative agreement.
Section 211.29. Exemption of Leases and Permits Made by Organized
Tribes
At the suggestion of tribal commenters, the regulation currently
found in 25 CFR Sec. 211.29, acknowledging that tribal laws may
supersede these regulations, has been retained in this final rule.
However, for clarification purposes, a proviso has been added, stating
that tribal law may not supersede the requirements of Federal statutes
governing Indian mineral leasing, for example, the requirement in 25
U.S.C. Sec. 396a that a tribal lease must be approved by the Secretary
of the Interior.
Section 211.40. Manner of Payments
The change to this section clarifies the manner of payments and
specifically identifies the Secretary's designees to receive payments
prior to the establishment of production.
Section 211.41. Rentals and Production Royalty on Oil and Gas Leases
The change to this section: (1) raises the minimum annual rental
for Indian land to $2.00 per acre in keeping with current practices and
rentals for mineral leases on Federal land; (2) clarifies at
Sec. 211.41(c) that the Secretary may consider alternative lease or
permit provisions to the requirements of 30 CFR Chapter II, Subchapters
A and C, if the alternatives are reasonable and adequately address the
royalty functions governed by regulations of the Minerals Management
Service; and (3) restores the language in regulations formerly in place
at Sec. 211.13(b) thus removing the requirement in the proposed
regulations (56 FR 58734) that lessor use of gas in excess of lessee's
requirements must be provided for in lease provisions.
Section 211.42. Annual Rentals and Expenditures for Development on
Leases Other Than Oil and Gas
The changes to this section increase the minimum annual development
expenditure to $20.00 per acre and increase the minimum rental to $2.00
per acre in keeping with current rates and rentals for mineral leases
on Federal land and to reflect the effects of inflation over the years.
Section 211.43. Royalty Rates for Minerals Other Than Oil and Gas
Minor changes are made to clarify that the royalty rates specified
are only minimums, and that higher rates are allowed without any
special approvals.
Section 211.53. Assignments, Overriding Royalties, and Operating
Agreements
Changes are made in this section to clarify that: (1) the Indian
mineral owner must consent to assignment or transfer of approved leases
or any interest therein if such approval of the Indian mineral owner is
required in the lease; (2) even if such consent is not required the
Secretary shall notify the Indian mineral owner of a proposed
assignment; (3) agreements creating overriding royalties or payments
out of production or agreements designating operators, although not
requiring the approval of the Secretary, are required to be filed with
the superintendent and do not relieve the lessee from obligations
imposed by the MMS for reporting, accounting, and auditing; and (4) in
response to comments, the proposed restrictions concerning assignment
of partial interests and assignment of stratigraphic intervals are
removed from the regulations.
Section 211.54. Lease or Permit Cancellation; Bureau of Indian Affairs
Notice of Noncompliance
Changes to this section include: (1) reorganization of the section
in the interests of clarity of procedure in the serving of notices of
noncompliance, orders of cessation, notices of cancellation, and orders
of cancellation; (2) allowing a permittee or lessee thirty (30) days,
rather than twenty (20) days, in which to respond to notices; and (3)
clarification, by reorganization and addition of paragraphs, of BIA
procedures to be followed in the event of noncompliance and necessary
enforcement associated with the cancellation process which includes the
option of BIA to issue a notice of non-compliance rather than to
immediately start cancellation proceedings.
Section 211.55. Penalties
This section is rewritten with minor changes, including a change in
section title, to clarify procedures in the event penalties are imposed
on a permittee or lessee. A change is made to formally recognize the
authority of the director's representative of the Office of Surface
Mining Reclamation and Enforcement to impose penalties and paragraph
(f) is rewritten to guard against the imposition of multiple penalties
by different Federal agencies for the same violation. A penalties
section in the Bureau of Indian Affairs minerals regulations continues
to be necessary because the only other remedies available to the
Secretary for noncompliance with permit requirements or breach of the
lease are cessation of operations or cancellation of the lease, either
of which may be seen as extreme measures and may cause harm to the
interests of the Indian mineral owner. Also, there are no penalty
provisions under any other Federal agency's regulations to provide for
enforcement of provisions of a permit or lease which includes solid
minerals or other mineral commodities not covered by the Federal Oil
and Gas Royalty Management Act of 1982 (FOGRMA) or the Surface Mining
Control and Reclamation Act of 1977 (SMCRA). The new rule also provides
more detail on the due process and appeal procedures available to a
lessee or operator subject to a penalty assessment, than is found in
the existing rule in 25 CFR Sec. 211.22.
Section 211.56. Geological and Geophysical Permits
Change is made in Sec. 211.56(a)(3) to provide for the release of
data after six (6) years after receipt by the Federal
[[Page 35638]]
Government, if no time limit for the release of data is prescribed in
the permit; and to provide that data release is subject to the consent
of the Indian mineral owner.
Section 212.20. Leasing Procedures
Changes made in this section emphasize that the Secretary
undertakes mineral leasing on Indian lands at the request of the Indian
mineral owner and that the lease or permit shall not be approved
without the consent of the Indian mineral owner. After the lands have
been considered for lease by competitive bid, the Secretary may engage
in negotiations, at the request of, and on behalf of the Indian mineral
owner, in pursuit of mineral leasing.
Section 212.21. Execution of Leases
Minor changes are made in the wording to clarify under what
circumstances the Secretary may execute leases on behalf of the Indian
mineral owners. A change has been made to subsection (b), in part to
reflect the existence of modern tribal courts, by adding a proviso that
the Secretary may exercise this authority only if there is no parent,
guardian, conservator, or other person who has lawful authority to
execute a lease on behalf of the minor or person with mental
incapacity.
Section 212.28. Unitization and Communitization Agreements, and Well
Spacing
This section, included in Part 212 by reference to Part 211 in
proposed rules, is now specifically included in Part 212 in final rules
because of necessary minor differences in the unitization and
communitization of allotted versus unallotted lands. Clarification is
made at Sec. 212.28(e) that requests for approval of a cooperative
agreement, that must be appropriately filed ninety (90) days prior to
the expiration date of the first Indian lease to be included in the
proposed agreement, apply to all mineral commodities amenable to
approval of a cooperative agreement.
Section 212.33. Terms Applying After Relinquishment
This section is rewritten with the provision that the lessee may,
after lease relinquishment by the Secretary and the revesting of the
lessor's title, withhold payment of rental and royalty until all
parties agree upon and designate a trustee in writing and in a
recordable instrument to receive all payments due thereunder on behalf
of said parties and their respective successors in title. The provision
that there must be four or more parties entitled to royalties and
rentals before withholding is permitted is removed.
Section 212.41. Rentals and Production Royalty on Oil and Gas Leases
Changes in this section (1) raise the minimum annual rental for
Indian land to $2.00 per acre in keeping with current practices and
rentals for mineral leases on Federal land and (2) clarify at
Sec. 212.41(c) that if valuation provisions in the lease are
inconsistent with the regulations in 30 CFR Chapter II, Subchapters A
and C, the lease provisions shall govern.
Section 212.56. Geological and Geophysical Permits
This section is reorganized in the interests of clarity of
presentation and a change is made to proposed Sec. 212.56(a)(3) to
provide for the release of data after six (6) years after receipt by
the Federal Government, if no time limit for the release of data is
prescribed in the permit, and to provide that data release is subject
to the discretion of the Secretary.
II. Comments Received on Proposed Rules
The notice of Proposed Rulemaking was published in the Federal
Register on November 21, 1991 (56 FR 58734). The proposed rules
provided for a 90-day comment period ending on February 19, 1992. The
comment period was subsequently reopened (57 FR 40298) on September 2,
1992. Public hearings were held at Denver, Colorado on September 25,
1992 and at Albuquerque, New Mexico on September 28, 1992. The closing
date for the submission of comments on proposed rulemaking and the
reopened comment period was November 2, 1992. During the two comment
periods, 27 commenters submitted written comments and/or oral
statements and comments at public hearings. All comments were accepted
for consideration in preparation of the final rules and are addressed
in this portion of the preamble (Section II). All substantive comments
applicable to sections of 25 CFR Parts 211 and 212 were considered with
respect to both Parts whether or not the comments were directed to Part
212 specifically.
(1) One commenter states that the title of Part 211 creates some
unnecessary confusion by referring to ``Leasing'' of tribal lands; that
Part 225 also applies to certain ``leases'' of tribal lands, when
negotiated under the IMDA; and that the title to Part 211 would be more
accurate if it referred to ``Competitive Bid Leasing'' rather than just
``Leasing.''
Response: References to leasing are mostly removed from 25 CFR Part
225 (published separately in final rulemaking, 59 FR 14960) and efforts
made to refer, where at all possible, to the disposition of mineral
resources under Part 225 as disposition by minerals agreement. Also, at
the request of the Indian mineral owner or in the event of waiver,
rejection, or failure of the bidding process, negotiated leases may be
issued under Parts 211 and 212. Thus, the present titling of Part 211
is retained without change.
(2) Several commenters stated that sufficient time for review of
the proposed regulations was not initially provided and ask for
extended review time as well as public hearings at locations convenient
to the Indian tribes; and stated that the proposed rules should be
subject to a negotiated rule-making process among interested tribes,
industry, and the Bureau of Indian Affairs.
Response: As set forth in the introductory remarks (above), the
Secretary reopened the period for comment for an additional 60 days and
public hearings were held at Denver, Colorado and Albuquerque, New
Mexico. Thus, the regulations have been subject to written oral
comments twice and all interested parties have been afforded an
opportunity to influence the content. Additionally, the regulations are
not subject to negotiated rulemaking processes because enacted and
codified legislation is not subject to subsequent unilateral
negotiation to the exclusion of any concerned party.
(3) One commenter indicates that the purpose of the proposed
rulemaking is to make regulations consistent with the regulations
governing mineral leasing and development of Federal lands. The
commenter states that mineral leasing and development on Indian lands
are not sufficiently similar to mineral leasing on Federal lands to
justify uniformity.
Response: One of the Department's purposes in the reformatting and
changing of proposed rules is to make, when appropriate, these
regulations consistent with the regulations governing mineral leasing
and development of Federal lands (56 FR 58734). Appropriate consistency
is desirable because many of the operating and reclamation regulations
of other offices and bureaus of the Department of the Interior are also
applicable in the day-to-day management of the mineral estate on Tribal
and allotted Indian lands subject to mineral leasing and development
under 25 CFR 211 and 212. The commenter is correct that in a number of
important respects mineral
[[Page 35639]]
leasing and development on Indian lands differ from such activities on
Federal lands; in such instances different treatment is required, and
the regulations so provide. To the extent that Indian tribes find the
Department's leasing regulations generally unuseful, they may wish to
enter into minerals agreements under the IMDA (see 25 CFR Part 225).
(4) One commenter states that the rules must provide that fixed
dollar amounts (in lease provisions), whether in relation to annual
rental, bonds, or other fees be indexed for inflation.
Response: Although many fixed costs and charges in these
regulations have been increased to offset the inflationary effects
since the rules were last revised, no provision is made for indexing
costs and charges to reflect the expected decrease in the purchasing
power of money in future years. It is doubtful if an index (standard)
or method of calculation acceptable to all parties to Indian mineral
leasing can be found. Further, the IMDA provides the means by which
indexing for inflation can be done for individual mineral properties
and minerals agreements.
(5) One commenter states that the Department attempting to ``remove
unnecessary regulatory barriers and complications which could make
[Indian] minerals less attractive to industry and thus frustrate
development'' (56 FR 59735) should be principally addressed by tribes
because many of the regulatory barriers and complications exist to
protect tribes.
Response: Tribes may address how best to protect their interests in
minerals agreements under the IMDA (25 CFR Part 225). Also, provision
is made at Sec. 211.29 in final rules for supersedence of Federal
regulations by the provisions of any properly issued tribal
constitution, bylaw, or charter.
(6) One commenter states that the proposed regulations should be
reproposed with coal mining leases and operations addressed by separate
regulations specific to coal operations because, as proposed, the
regulations would impose an unnecessary and duplicate regulatory burden
on coal operations on Indian lands; and further states that coal-
specific regulations must avoid creating overlapping and duplicative
regulatory requirements and that the mining of minerals other than coal
also warrants separate treatment.
Response: The authorization for the leasing of allotted and
unallotted Indian lands for mining (including oil and gas) is set forth
at 25 U.S.C. Sec. 396 and Secs. 396a-396g, in which no provision is
made for the promulgation of separate regulations for individual
mineral commodities. Although not prohibited, the Secretary is of the
opinion that the devising of regulations for the administration of
individual mineral commodities occurring in each individual land
category would create a costly and unmanageable administrative
situation for those engaged in the management of minerals operations
and reclamation of disturbed lands. Sections 211.7, 211.24, 211.47,
211.48, 211.51, 211.54, and 211.58 have all been changed to remove the
concerns of regulatory overlap and duplication.
(7) Several Alaska Native Regional Corporations ask that language
be made in the rules to clarify that the Part 211 Tribal leasing
regulations do not apply to lands conveyed pursuant to the Alaska
Native Claims Settlement Act of 1971.
Response: Language is added in 25 CFR 211.1(a) to clarify that the
rules apply only to lands which the United States holds in trust for
the benefit of an Indian tribe, or which are subject to a restriction
against alienation imposed by the United States.
(8) Several tribal commenters are in favor of a broader retroactive
effect for the proposed regulations. One commenter stated that only the
royalty rate should not be subject to retroactive change by the
regulations. One industry commenter stated that the regulations should
not have any retroactive effect unless agreed to by all parties.
Response: The current regulations in Sec. 211.28 provide for an
effective date and state that the current regulations supersede all
former regulations. The current regulations then include a proviso,
``That no regulations made after the approval of any lease shall
operate to affect the term of the lease, rate of royalty, rental or
acreage unless agreed to by both parties to the lease.'' This provision
has been carried essentially unchanged. No attempt has been made to
change this provision that has been in effect for many years and has
not led to any problems in interpretation or application. Therefore, no
changes were made pursuant to the comments.
(9) Several commenters state that the placement of the provisions
of Sec. 211.29, from regulations formerly in place, at proposed
Sec. 211.1(c) does not: (1) adequately recognize the regulatory
authority of tribes; (2) specifically provide that the proposed
regulations may be superseded by the provisions of any tribal
constitution, bylaw, or ordinance; nor (3) provide the proper platform
for the adoption of tribal bylaws, ordinances, and other measures
governing assignments, taxation, and other matters of regulation of the
Indian mineral estate.
Response: In response to this and other comments the regulation in
25 CFR Sec. 211.29 has been reinstated in the same place, with minor
revisions for clarification purposes. In addition to the tribal
regulatory authority recognized in the new Section 211.1(d) (211.1(c)
in the proposed rules), Section 211.29 recognizes that tribes may enact
laws which supersede these regulations, but not Federal statutes.
(10) One commenter states that many tribes have adopted their own
mineral leasing act, which should be noted in the new regulations.
Response: See the response to comment (9).
(11) One commenter is concerned that each part of proposed 25 CFR
Parts 211, 212, and 225 have separate sets of definitions and states
that only one set of definitions should be used.
Response: The commenter is correct in stating that uniformity of
definition is desirable. However, with the decision to separate 25 CFR
Parts 211 and 212 from Part 225 (59 FR 14960), more than one set of
definitions is required for publication in the Federal Register. Also,
the three parts of regulation respond to at least three different sets
of empowering legislation over about an 80-year, time span such that
differences of definition are unavoidable. Wherever possible terms in
the three sets of regulations have the same meaning.
(12) One commenter points out that ``Bureau'' is specified in
definition, but not used consistently in the proposed regulations and
suggests usage consistent with definition.
Response: We agree. The word ``Bureau'' is removed from definitions
and the regulations in favor of usage of the ``Secretary'' or the
title(s) of the Secretary's designee.
(13) One commenter states that ``coal'' ought to be defined because
it is a referenced mineral in the proposed regulations.
Response: The definition of ``minerals'' includes coal specifically
in definition and also by virtue of including metalliferous, non-
metalliferous, energy, and non-energy minerals. A definition of
``coal'' is not added in final rulemaking.
(14) One commenter suggests that coal be specifically included in
the definition of ``solid minerals.''
Response: Coal is specifically included in the definition of
``minerals'', and by virtue of being a solid is included in the
definition of ``solid minerals.'' The definition is unchanged in final
rulemaking.
(15) Several commenters are concerned that the definition of
``gas'': (1) may or may not include coal-bed
[[Page 35640]]
methane and suggest that methane gas and other ``non-traditional
hydrocarbons'' be exempted from definitions of minerals acquired under
a traditional mineral lease; and (2) should exclude those substances
found in other minerals as a constituent part of other minerals.
Response: The issues raised by commenters are currently being
litigated. The definition of ``gas'' in these regulations is consistent
with the position that the Department of the Interior has taken in
litigation. If necessary, distinction among gases of various origin or
association may be made by the use of suitable modifiers in lease
provisions (e.g., coal-bed methane, natural gas, or carbon-dioxide gas)
at the time of advertisement of properties for lease and/or subsequent
lease negotiation by principals. Further, the IMDA is available to
tribes (and allottees if participating in a minerals agreement under
the IMDA) to specifically address in minerals agreements these issues
on an individual basis.
(16) One commenter states that the definition of a ``gas'' should
make clear the meaning of ``ordinary temperatures and pressure
conditions'' because of perceived differences in ordinary temperature
and pressure in subsurface contrasted with ordinary temperature and
pressure at land surface.
Response: Ordinary temperature and pressure generally means near
room temperature and about one atmosphere pressure as commonly used in
the calculation and handling of gases and in specified standards for
the determination of quantities of materials. The specification of
temperature and pressure standards for produced gas(es) are found in
the operating regulations of the BLM and the production and valuation
regulations of MMS. The specification of a standard, if required,
should appear in lease provisions or be specified at the time of lease
negotiation.
(17) One commenter suggests that the definition in proposed rules
of ``in the best interest of the Indian mineral owner'' be dropped
because an adequate and concise definition of this phrase is difficult
to compose, although the concept is generally understood.
Response: The final definition includes a partial list of factors
to be considered by the Secretary and is consistent with Kenai Oil and
Gas, Inc. v. Department of Interior, 671, F.2d 383.
(18) One commenter suggests that the proposed definition of ``in
the best interest of the Indian mineral owner'' be changed to require
the Secretary to consider any relevant factor in the best interest
determination.
Response: We agree. The definition is changed in final rulemaking.
(19) One commenter is concerned that the definition of ``Indian
lands'' was included in proposed rulemaking with no explanation in
preamble and is different than the definition used by OSM.
Response: The proposed rules state (56 FR 58735) that the
definitions section of the regulations is expanded significantly to
eliminate ambiguities and questions concerning the meaning of
frequently used terms. The definition of ``Indian lands'' used by OSM
is found in SMCRA, and is applicable only to the provisions of SMCRA.
Indeed, that statutory definition has been the subject of varying
interpretations and litigation over its meaning. The definition used in
these regulations simply recognizes that Indian-owned lands held in
trust or subject to Federal restrictions against alienation are within
the purview of the Indian mineral leasing statutes and the Secretary's
trust responsibilities.
(20) One commenter suggests that the proposed definition of
``Indian lands'' specifically exclude Alaska Native Regional
Corporations which own land or interest in minerals.
Response: Language is added to 25 CFR 211.1(a) to specify those
lands to which 25 CFR Part 211 applies, language which excludes lands
or mineral interest owned by Alaska Native Regional Corporations.
(21) One commenter objects to confusing syntax in the proposed
definition of ``Indian lands'' and suggests that such lands be defined
(in part) in terms of ownership by group(s) recognized by the United
States as eligible for services from the Bureau of Indian Affairs.
Another commenter suggests that in use in regulation the words ``trust
or restricted lands'' be changed to ``Indian lands.''
Response: See the response to comment (19).
(22) One commenter questions the need for including lands owned by
any individual Indian in the definition of ``Indian lands'' because
Part 211 deals exclusively with leasing of tribal lands.
Response: Use of the term ``Indian lands'' in Part 211 is very
limited. See Sections 211.9 and 211.22. There the context includes
allotted as well as tribal lands.
(23) Several commenters state that ``Indian surface owner'' needs
to be defined in rulemaking.
Response: We agree. The phrase ``Indian surface owner'' is defined
in both Part 211 and Part 212 because sections of Part 211 are
referenced in Part 212.
(24) One commenter suggests that the definition of ``lessee''
imposes diligent development and other operating obligations (as well
as the obligation of paying royalty and rental) on a designated royalty
payor rather than an operator and suggests the definition be deleted
whereas another commenter states that the definition should be
broadened to include anyone who has been assigned any rights associated
with the lease.
Response: The definition of ``lessee'' in Parts 211 and 212
parallels and supports similar definitions in the operating regulations
of both the BLM and the MMS. The MMS definition includes those who have
been assigned an obligation to make royalty or other payments as
required by the lease. The definition is retained unchanged in final
rulemaking.
(25) Several commenters point out that the definition of ``lessee''
should not include those prior to the time a lease is granted.
Response: We agree. The definition is rewritten to reflect that
those who have made application for or who are negotiating for a lease
are not lessees.
(26) One commenter states that the common mineral varieties should
be excluded from the definition of ``minerals'' at Sec. 211.3.
Response: The authority in the Act of May 11, 1938, for the leasing
of tribal lands for mining purposes has been interpreted broadly since
its enactment. Nothing in the Act suggests that common varieties of
minerals should not be included.
(27) Two commenters object to the exclusion of materials from the
definition of mining based on the type and volume of material
considered for extraction and one questions if the extraction of 5,000
cubic yards of gold and silver bearing material is a non-mining
venture.
Response: Common varieties of mineral resources extracted in small
amounts are excluded from the definition of mining, especially because
the purpose of such extraction is often for local and/or tribal use.
However, permits for these small operations are still reviewed and
approved at the superintendent's office. Gold and silver are not
included in the extraction of small amounts of materials because gold
and silver are precious metals and not common mineral varieties. The
Indian mineral owner still retains the option of disposing of the
common mineral varieties in whatever types and quantities specified by
a minerals agreement under the provisions of the IMDA, if desired.
[[Page 35641]]
(28) One commenter points out that in proposed rulemaking the
definitions of ``oil'' and ``gas'' are at odds with the definitions
used by the Minerals Management Service and suggests that the
definitions of the two Federal agencies should be more compatible.
Response: The definitions of the two Federal agencies are
unavoidably different because those at 25 CFR Sec. 211.3 are similar to
those used by the Bureau of Land Management in the management of
mineral leasing and production whereas the Minerals Management Service
definitions are more closely tied to measurement and royalty management
concerns.
(29) Three commenters suggest that a definition of ``in paying
quantities'' be included in proposed definitions at Sec. 211.3.
Response: The paying quantities determination is made by the Bureau
of Land Management after operations commence and production begins. The
definition of paying quantities is contained in 43 CFR Part 3160. The
definitions of commercial quantities for geothermal resources is in 43
CFR Part 3260 and for coal is in 43 CFR Part 3480. A definition is not
needed here, because this responsibility falls to the BLM to determine
whether production meets the ``pay quantities'' criteria. Therefore no
definition is included.
(30) One commenter suggests that additional definitions be added to
Sec. 211.3 including ``primary term'' and ``maximum term'' as used in
Sec. 211.27.
Response: The primary term is defined in context when used to
describe the duration of a lease. No reference is made to a maximum
term of lease duration in final regulation. These definitions are not
added in final rulemaking.
(31) One commenter states that the definition of ``tar sands'' is
restrictive because it is limited in definition to production by mining
or quarrying.
Response: We agree. The definition is not used in regulation and is
removed from Sec. 211.3 (and Sec. 212.3) in final rulemaking.
(32) Two commenters feel that in proposed Secs. 211.4, 211.5, and
211.6 the authority and responsibility of tribal governments over
operations on reservation lands should be explicitly recognized and one
believes that with respect to the authority and responsibilities of the
various agencies of the U.S. Government, explicit mention of the
Government's trust responsibility to Indians should be included in the
regulations.
Response: The authority and responsibility of tribal governments is
recognized and in these rules at Sec. 211.1(d), at Sec. 211.29, and
discussed above (see comment number 9 and in the summary remarks of
this preamble). Insofar as the mention of the Secretary's trust
responsibility is concerned all Federal agencies must recognize the
trust responsibility of the United States when implementing programs
for Indians.
(33) One commenter is especially concerned about Sec. 211.5 and
states that the regulations should make it clear that coal mining
reclamation requirements and procedures have no application to open-
pit, hard-rock operations.
Response: Section 211.5 is changed to specifically cite the Code of
Federal Regulations governing coal mining and reclamation requirements
and procedures.
(34) One commenter states that the regulations of the MMS recognize
that Indian lessees must ``dual account'' for gas produced from tribal
lands and states that the proposed regulations are silent on this
methodology which could be viewed as a retreat from the valuation
system that greatly enhances tribal income. Another commenter states
that these regulations must expressly state that the trust
responsibility requires the Secretary to maximize valuation on Indian
lands.
Response: Under FOGRMA and the Department of the Interior Manual,
the valuation of production for royalty purposes is a function of the
MMS. Thus, the requirements and methodology of valuation are properly
set forth in appropriate case law and Title 30 of the CFR in Chapter
II, Subchapters A and C, of the MMS rules and regulations. Section
211.6 is rewritten to provide that if parties to a lease or permit are
able to provide reasonable provisions satisfactorily addressing the
functions governed by MMS regulations, the Secretary may approve such
alternate provisions.
(35) Several tribal commenters and many industry commenters raise
questions concerning the application of environmental, historic
preservation and archaeological protection laws to Indian lands. One
tribal commenter states that the National Historic Preservation Act
does not apply to Indian lands. Another opposes the application of the
National Environmental Protection Act (NEPA) to Indian lands. Industry
commenters state that compliance with environmental, archaeological and
historic preservation survey requirements is an extremely burdensome,
expensive, and unnecessary requirement. Several industry commenters
recommend that archaeological surveys be performed after approval of a
lease, but prior to approval of any surface disturbing operations.
Response: The National Environmental Protection Act and the other
historic preservation and archaeological protection statutes cited in
this section apply to Indian lands when activities on those lands are
subject to approval by the Federal Government. Therefore, the
Department has no discretion to determine whether or not to comply with
those laws as they affect mineral leasing on Indian lands. It is also
clear that the provisions of NEPA must be complied with at the time of
lease approval. It is not possible to defer NEPA compliance until the
surface disturbance phase of lease development. However, the prior
proposed regulations stated that all historic preservation and
archaeological surveys would be performed prior to approval of a lease.
It has been determined that this statement may impose a greater burden
than is actually required by applicable regulations. Therefore
Sec. 211.7 is modified to state that ``the Secretary shall ensure that
all clearances and surveys are performed in compliance with these laws
* * *.''
(36) One commenter states that the second sentence of Sec. 211.9
should be revised to read that ``Existing mineral prospecting permits,
exploration and mining leases on these lands issued prior to these
properties being placed in trust status or becoming Indian lands
pursuant to 43 CFR * * *.''
Response: We agree. Section 211.9 is rewritten to clarify that such
lands, once taken into trust or becoming Indian lands, are no longer
treated as public or Federal lands (recognizing pre-existing rights).
(37) Several commenters state that the leasing procedures of
proposed Sec. 211.20 are not clear and suggest that the procedures are
in need of clarification.
Response: We agree. Section 211.20 is rewritten and recast to
clarify procedures and to emphasize the involvement of the Indian
mineral owner in the leasing process.
(38) One commenter states that Sec. 211.20 is unclear as to
amendments to existing leases and suggests that amendments to 1938 Act
leases be negotiated under the 1982 Act (IMDA).
Response: Neither rules formerly in place nor final rules provide a
formal regulatory scheme for amendment to existing leases because the
amendments are either at the convenience of the parties to the lease or
result from lease provisions to open and renegotiate a lease after a
specified event occurs. Regardless of the approach to amendment, the
resulting terms must be approved by the Secretary, an action
[[Page 35642]]
resulting in the issuance of a minerals agreement (25 CFR Part 225), a
new lease, or ancillary terms appended to an existing lease; all of
which are new leases that must be approved by the Secretary. Provision
is made for the amendment of minerals agreements (25 CFR Part 225, 59
FR 14975). Minerals agreements are expected to be the preferred
procedure for the amendment of all existing leases and agreements.
(39) One commenter states that potential lessees should be
instructed to submit lease applications directly to the Indian mineral
owner as well as the superintendent at the time of application.
Response: Submittal of applications to lease to multiple offices is
not required in final rules. Rather, the Indian mineral owner shall be
promptly notified of the lease application and the leasing
alternatives. The course of action to be followed after this
notification is then contingent upon the decisions of the Indian
mineral owner.
(40) Several tribes comment that the royalty rate and rental as
well as bonus should be included as variables in the advertisement of
leases for sealed or oral bid, and that the Secretary should not
unilaterally set a royalty rate and rental amount in the advertisement.
Response: Comments concerning the need for tribal input are well
taken and Sec. 211.20 is modified to require consultation with the
Indian mineral owner prior to advertisement. However, the comments
requesting that royalty rate and rental be variables in the sealed and
oral bid process is not accepted because the procedures can be managed
only with great difficulty. Past experience has shown that it is
extremely difficult to compare the values of bids that are contingent
upon three different variables bid separately. In addition, if an
Indian mineral owner desires to receive offers to lease a land parcel
or tract, the value of which is determined by the total value of a
variety of considerations each of which may be dependent on another,
the procedures under the IMDA or, in certain circumstances, negotiation
offer flexibility to a Tribe.
(41) One commenter states that there ought to be included in
Sec. 211.20 a provision that requires BIA to issue a comprehensive
analysis of the potential value of the property being considered for
oil and gas development and its potential effect upon reservoir
production; otherwise, tribes that do not have independent assessment
capabilities will have no way of knowing what the value of properties
are before they are submitted for bid.
Response: Mineral inventories and appraisals are conducted by the
BLM and BIA, depending upon the resources available. Limited resources
make it impossible to appraise every mineral tract prior to leasing.
The best readily available measure of mineral worth of an oil and gas
tract is likely the fair market value of the tract as revealed by past
and present bonus bids for the tract or (if available) nearby similar
tracts.
(42) One commenter states that the language of Sec. 211.20(b)(5)
indicating the high bidder ``may'' forfeit the required 25 percent of
bonus bid should be changed to ``shall'' and that there is no standard
to establish when the forfeiture occurs.
Response: We agree. In final rules a standard is specified and the
forfeiture is made certain by the use of the word ``shall'' in final
rules.
(43) One commenter states that the successful oral bidder should be
required to immediately pay 25 percent bonus [bid as] deposit at the
time of the auction.
Response: The final rules continue to permit five (5) working days
in which the successful oral auction high bidder will be allowed to
remit the required 25 percent deposit of the bonus bid. In the event of
a spirited auction, the successful high bidder may not have at the
place and time of auction the requisite 25 percent of the bonus bid for
the deposit.
(44) One commenter states that the required publication of a notice
of sale at least thirty (30) days prior to the sale date should be
sixty (60) days to give an interested party adequate time to prepare
for the sale.
Response: The publication of the advertisement of lease sale thirty
(30) days in advance of the sale date is a minimum time interval. The
publication of the advertisement of date of lease sale and ancillary
information may take place more than thirty (30) days before the sale.
This minimum time has for many years proved to be a workable minimum.
(45) Two commenters are of the opinion that the proposed rules
allow for competitive bonus bid and negotiated leases at the same time
and object to negotiations after the potential lessor has the advantage
of evaluating bids received. Further, one commenter states that the
results of competitive bidding should be final and the winning bid
should be awarded the lease.
Response: As owner of the property to be leased, the Indian mineral
owner has wide latitude in the determination of methods of auction and
conditions of lease sale. Under the trust responsibility, the Secretary
must reserve sufficient latitude to properly discharge that
responsibility. Accordingly, there is no provision in final rules for
lease sales and lease negotiations to be conducted at the same time for
the same land tracts. In the event that the results of a lease sale are
not to the liking or not in the best interest of an Indian mineral
owner, action must be taken to satisfy the needs and wishes of the
potential lessor. Section 211.20 therefore balances concerns of
potential lessees and lessors.
(46) One commenter is uncertain why the storage option is granted
at 25 CFR Sec. 211.22 and is unsure of what benefit is derived by a
lessor when a lessee produces oil and gas, but stores it for future
use; and whether or not hydrocarbons not previously produced includes
hydrocarbons produced, but stored; and if a lessee may store previously
produced minerals indefinitely and thereby hold the lease without
payments to the lessor.
Response: The storage option is included at 25 CFR Sec. 211.22 to
provide the Indian mineral owner with a mechanism to profitably
participate in the demand for surge storage capacity for oil and gas
(usually hydrocarbons) by underground storage. Participation is
achieved by means of leasing or adjusting existing lease provisions to
accommodate produced oil and gas, in existing natural or near natural
underground structures (oil and gas traps comprising an oil and gas
field) at or near the end of productive life; or those older, produced
fields having capacity that can be used to store oil and gas. Payments
to Indian mineral owners can be based on metered transfer of oil and
gas in and out of the field (structure) that may provide rental in lieu
of, or in addition to, royalties deriving from field production. Oil
and gas stored may be from the same field or other sources (including
pipelines). Usually, provision must be made in royalty, fees, and/or
rentals to ensure proper accounting and payment for all oil and gas
recovered from storage including quantities in excess of stored amounts
and those fluid phases, produced as a result of introduction of stored
hydrocarbons (say, residue gas) or other gases, that would not have
been produced otherwise. Also, provision must be made in royalty, fees,
and/or rentals to pay the Indian mineral owner for the use of the field
(trap) for storage purposes. Section 211.22 is unchanged in final
rulemaking.
(47) Two commenters representing industry interests recommend the
deletion of proposed Sec. 211.23(b) that requires: (1) the filing of a
statement
[[Page 35643]]
showing a corporate applicant's State of incorporation; (2) that the
corporation is authorized to hold interests in property in the State in
which the lands are operated; and (3) a notarized statement that the
corporation has the power to conduct all business and operations as
described in the lease.
Response: The requirements are retained because the information
required has been found to be useful to the Department, is not
burdensome to industry, and is a standard requirement of long standing
for all significant transactions with corporations. Therefore no
changes were made in final rules.
(48) Several commenters are concerned that the dollar amounts
stated in Sec. 211.24 for bond requirements are inadequate and
recommend that bonds be required in amounts sufficient to protect the
interests of the Indian mineral owner and the United States.
Response: The final rule balances the high cost of bonds against
potential damage to the Indian mineral owner and the United States.
Section 211.24 is rewritten to permit the use of personal bonds as
surety as well as the customary Statewide and Nationwide bonds and
Sec. 211.24(e) provides for increasing bond amounts in any particular
case at the discretion of the Secretary. The goal in regulation remains
that lessees furnish bond sufficient to ensure compliance with all
lease provisions and applicable rules and statutes.
(49) One commenter states that Sec. 211.24 should make provision
for bonding to include Federal, State, or fee mineral leases, the
surface of which is owned by a tribe or individual Indian, for purposes
of surface reclamation as proposed in an approved plan of operation.
Response: The rules in 25 CFR Parts 211 and 212 are concerned with
the leasing of minerals on Indian lands. Therefore, the requirements
for leasing of Federal, State, and fee minerals must be addressed under
other authority, and published elsewhere.
(50) One commenter states that proposed paragraphs 211.24(c) and
211.24(c)(3) are inconsistent in naming the payee.
Response: Although Sec. 211.24 is rewritten the language included
in these proposed paragraphs is essentially the same; the payee is the
Secretary with the stipulation that the letter of credit is payable to
the Bureau of Indian Affairs (the Secretary's designee) upon receipt
from the Secretary of a notice of attachment stating the basis thereof.
(51) One commenter states that the Indian mineral owner should be
allowed to be named as the payee on a bond.
Response: An Indian mineral owner cannot be named as payee on
Statewide or Nationwide bonds which affect more than one Indian mineral
owner. In final rulemaking the Secretary remains the payee because, in
the discharge of the trust responsibility, the bond must be continually
and easily available to defray the cost of abandonment, reclamation
and/or provide for payment of royalties, other charges, and fees in the
event of default.
(52) One commenter states that the proposed Sec. 211.24(d) should
be changed to state explicitly that bonding shall be in an amount
satisfactory to the Secretary and the Indian mineral owner or the
Indian surface owner, in amounts sufficient to ensure compliance with
the requirements of the authorized officer and the Indian mineral owner
or the Indian surface owner and shall be available, in the Secretary's
discretion, with concurrence by the Indian mineral or surface owner, to
satisfy any unpaid debt of the lessee or assignee to the lessor or
surface owner.
Response: In situations requiring complex and detailed bonding in
response to many and varied interests, the prospective lessor should
consider using a minerals agreement under the IMDA (25 CFR Part 225)
rather than 25 CFR Part 211.
(53) One commenter points out that no definition is provided for
the term ``assignee'' which is used in Sec. 211.24.
Response: The paragraph (a) in Sec. 211.24 is rewritten to clarify
the use in context of the word ``assignee.''
(54) Two commenters recommend that proposed paragraph
Sec. 211.24(d) be revised to allow the posting of an individual lease
bond is some amount not to exceed $5,000 to encourage independent
operators to invest and work on Indian land.
Response: The rule at Sec. 211.24 is rewritten in response to
comments to provide in final rulemaking the minimal requirements for
the bonding (or equivalent surety) of lessees conducting mineral
operations on Indian lands such that the Secretary may adequately and
timely fulfill the trust responsibility.
(55) Several commenters object to the single section of land (640
acre), lease-size limitation. It is stated that smaller leases would be
less attractive to industry because they would be less economic. Other
commenters request that the lease-size limitation be subject to
variations on a case-by-case basis to allow for irregularities in land
sections.
Response: Except for coal, the lease-size limitations remain the
same as in the proposed rules. Coal leases have historically been
limited to 2,560 acres with due allowances for exceptions to provide
for the dedication of sufficient reserves to specific projects
(powerplants) to ensure that ventures will not fail for lack of fuel.
Additional language is added to Sec. 211.25 to restore the 2,560-acre
limitation (with provision for exception) for coal and to provide that
the rule of approximation shall apply in the event irregular land
sections are included in the leased land blocks as well as provision
for lands not surveyed under the United States Governmental survey.
Changes to Sec. 211.25 are also made to emphasize that the acquisition
and holding of multiple leases (both adjoining and not adjoining) of
640 acres each are not affected by the acreage limitation. In the past,
large tracts of Indian land have been held by production from a small
portion of a lease and in response to this concern the Department has
for three decades restricted the size of offered leases (especially for
oil and gas) not to exceed 640 acres or one section, with provision for
irregular sections. In addition, the problems raised by commenters may
easily be mitigated in several ways: (1) acquisition of multiple leases
because there is no limitation on the number of leases a party may
enter into; (2) inclusion of multiple leases in a unitization or
communitization agreement to allow mineral development on one lease to
hold more than one lease; and (3) a party desiring a larger lease may
enter into negotiations with an Indian mineral owner to secure a
minerals agreement in accordance with the IMDA, under which there is no
provision limiting lease acreage. Finally, acreage limitations will
have no retroactive effect, and so will not reduce the acreage of any
current lease.
(56) One industry commenter states that the 10-year limitation on
the term of any minerals lease is insufficient to permit development
into production, especially for a surface coal mining operation. The
commenter recommends that the 20-year time period provided in the
Mineral Leasing Act of 1920, for Federal lands, be used instead. The
commenter further recommends that the regulations should prevent tribes
from entering into leases for periods of less than 10 years.
Response: The Indian Mineral Leasing Act of 1938, that governs
leasing of tribal lands, provides a statutory 10-year limit (25 U.S.C.
Sec. 396a) with exceptions for the primary term of lease duration. This
limitation is statutory and may not be waived by the parties to a
lease, or altered by the Department by regulations. As an alternative,
the IMDA
[[Page 35644]]
does not limit the time period for development and therefore, may be
for any time period negotiated by the parties.
(57) One commenter believes that a primary lease term should be
determined by the commodity leased, together with a term maximum, say
oil and gas leases not to exceed 3 years, solid minerals other than
coal not to exceed 5 years, coal not to exceed 10 years, and no lease
to exceed a 20-year maximum unless agreed to between the Indian mineral
owner and the lessee.
Response: Although permitted by statute, the primary term of lease
duration is not specified in final rules as a result of commodity
considerations. If the specific mineral commodity is regarded as a
critical factor in the determination of lease duration, then this
factor may be set forth at the time of advertisement of lease sale,
negotiated, or the lease provisions may be determined in minerals
agreements, under the IMDA (25 CFR Part 225), by the Indian mineral
owner and a prospective lessee.
(58) One tribal commenter points out that some leases impose a
maximum ultimate term [of lease duration] of twenty (20) to thirty (30)
years. Therefore, the commenter recommends that the regulations include
a provision that would defer to specific lease terms on this point.
Response: In any instance where specific lease provisions do not
conflict with statutory authorities, or do not prevent the Department
from exercising its trust responsibilities, the Indian mineral owners
are free to negotiate specific lease provisions of their choosing. In
this particular instance the limitation of lease duration by the
provisions of lease is entirely appropriate. Therefore, the comment is
accepted and a change was made to clarify this point.
(59) One commenter states that commencement clauses (beyond the
primary lease term) should not be permitted because such clauses permit
oil companies to do nothing until the last day of the primary term, and
then begin drilling. Another commenter believes the proposed
regulations governing the primary-term commencement clauses works
contrary to the actual intent of a primary term and believes
Sec. 211.27(b) should be changed. Two commenters recommend the
inclusion of the commencement clause at Sec. 211.27 and state that a
duration of extension should be included in this section and one states
that a continuous drilling clause should be included.
Response: A review of comments indicate that the possibility that
this provision would allow lessees to extend leases for an inordinate
time period is highly unlikely. Most current leases limit the primary
term of lease duration to 3 to 5 years. An extension of this term
(duration) while active drilling takes place is an appropriate
extension of the lease and accords with standard business practice.
However, to ensure that lessees do not abuse this provision, a 120-day
limitation has been added in response to concerns of Indian mineral
owners. A drilling clause without limitation could extend, by mere
drilling that fails to result in production, the primary term of lease
duration.
(60) One commenter states that when read literally, the first
sentence of Sec. 211.27(a) is inconsistent with the provision for the
suspension of operations at Sec. 211.44.
Response: Section 211.44 makes provision for the suspension of
operations on a lease after the primary term. The paragraph at
Sec. 211.27(a) speaks to the primary term of lease duration.
(61) Several commenters state that the regulations should require
tribal consent to any communitization or unitization agreement whether
or not such consent is required in the lease. One commenter states that
the consent of the mineral owner is seldom required for t
FR Doc. 96-16036 Leasing of Tribal Lands for Mineral Development and Leasing of Allotted Lands for Mineral Development
he
communitization of an Indian lease, and in the commenter's view, is
unnecessary.
Response: Every tribal lease executed under the Indian Mineral
Leasing Act of 1938 contains the following provision or a similar
provision:
Unit Operation--The parties hereto agree to subscribe to and
abide by any agreement for the cooperative or unit development of
the field or area, affecting the leased lands, or any pool thereof,
if and when collectively adopted by a majority operating interest
therein and approved by the Secretary of the Interior, during the
period of supervision.
This provision grants the consent of the tribe to cooperative
agreements provided they are reviewed and approved by the Secretary.
The Department does not intend to attempt to amend this lease provision
through these regulations. Instead, the Department affirms that Indian
mineral owners may require consent in any future leases or lease
amendments. The Department believes that this remains the most
equitable method of handling this issue. However, in response to tribal
concerns, a provision has been added at Sec. 211.28 requiring the
Department to consult with the Indian mineral owner prior to making a
determination concerning an operating, unitization, or communitization
agreement or well spacing plan. This will ensure that the Indian
mineral owner has an opportunity to bring any relevant information
concerning the proposal to the Secretary's attention prior to any
cooperative action or well spacing plan being undertaken.
(62) Two commenters state that an affidavit from the lessee stating
that a notice was mailed to each mineral owner of record for whom the
superintendent and/or area director has an address should satisfy the
requirement that all Indian mineral owners will be notified by the
lessee at the time a cooperative agreement is submitted to the
superintendent and/or area director.
Response: We agree. Section 211.28(d) is changed in response to
this comment.
(63) One commenter states that the Secretary shall approve well
spacing programs, in the context of unit agreements and that it is not
clear why the regulations single out well spacing in this context for
Secretarial approval. Another commenter states that the well spacing
program should be approved by the Secretary and the Indian mineral
owner.
Response: The paragraph in Sec. 211.28(h) is rewritten to provide
that the well spacing program is subject to the approval of the
authorized officer under the operating rules of the Bureau of Land
Management. Provision is made at Sec. 211.28(b) for consultation with
the Indian mineral owner before approval of a well spacing plan.
(64) One commenter states that provision for lease segregation at
Sec. 211.28(g) should be included at Sec. 211.28(f) as a specific
``Pugh Clause.'' Such a clause provides that the effect of production
constructively obtained through communitization is restricted to lands
that are communitized and does not extend to other leases or to any
other leased lands outside the communitized area. Another commenter
states that Sec. 211.28(g) should be deleted entirely because it
provides a pugh clause in leases that are already reduced in size when
issued and that segregation should only occur when the lands are
partially included in Federal field-wide units. Another commenter
states that provision for segregation will clearly discourage leasing
and exploration activity on tribal lands.
Response: The segregation clause contained in Sec. 211.28(g) is
intended to ensure diligent development of Indian lands. If portions of
a lease are not included in a communitization agreement, or within a
producing or exploratory cooperative unit then there is no reason why
the excluded lease
[[Page 35645]]
portion should be held by the unit agreement to the disadvantage of the
Indian mineral owner and perhaps of no particular advantage to the
lessee, regardless of whether partially within an entire field or
mining district or only a portion of an entire field or just within a
mining unit. Further, the segregation provision must be applicable to
the lease portions both within and excluded from an exploratory or
productive unit for any mineral commodity and not satisfy only the pugh
clause requirements with respect to an area communitized for gas and
oil.
(65) One commenter states that well spacing is governed by state
oil and gas regulations and that there is no reason for the Secretary
to become involved in well spacing issues.
Response: Each State issues well spacing orders that are commonly,
but not necessarily, accepted as a spacing standard within the State or
area in question. However, States have no authority to regulate well
spacing on Indian land. The Secretary, in consultation with the Indian
mineral owner, has exclusive authority with respect to the spacing of
wells, as reflected in Sec. 211.28(h).
(66) One commenter states that Sec. 211.28 should be expanded to
permit unitization or communitization of hard rock mineral leases and
expresses concern about efficiency of operation in exploiting an ore
body in two or more sections of land.
Response: We agree. Although Sec. 211.28 is not greatly changed
from proposed rules, provision is made for the commenter's concern by
stating in final rules that a cooperative unit or other development
plan means an agreement to develop a specifically designated area
without regard to ownership of the land included in the agreement.
(67) Several commenters ask that various time deadlines be imposed
on the superintendent or area director to review and approve or reject
cooperative agreements. One commenter requests that agreements
submitted after the 90 day deadline be reviewed in the discretion of
the superintendent or area director.
Response: Review of these requests for a time limitation for
Departmental review of proposed cooperative agreements, indicates that
the issues raised in individual agreements and the problems posed in
individual cases vary so widely that it was not advisable to specify a
set time frame for review. However, the 90 day time period specified in
the regulations in effect imposes such a limitation. Cooperative
agreements submitted after the 90 day deadline will be considered by
the Department, but the lessee bears the risk that leases may expire
prior to the Department being able to take action to approve the
agreement.
(68) One commenter states that the existing lock-box arrangement
for receipt of monies is working well and another suggests that it be
stated in Sec. 211.40 that current lock-box arrangements are not to be
affected.
Response: Present lock-box arrangements for the receipt of monies
are not affected by Sec. 211.40. The final regulations merely provide
for the continuation of existing and standard procedures for the
receipt and handling of bonus, rent, and royalty payments.
(69) One commenter suggests that proposed Sec. 211.40 be modified
to allow lease provisions and Federal regulations to be superseded by
tribal regulation and another states that the regulation should
expressly authorize the Secretary to designate the tribe or the tribe's
fiscal agent as the payee.
Response: Section 211.40 is rewritten to clarify that unless
otherwise specifically provided for in a lease all payments after
production has been established shall be made to the MMS or such other
party as may be designated, and that prior to production all bonus and
rental payments shall be made to the superintendent or area director.
Present payment arrangements may be modified by tribal notification to
the Minerals Management Service prior to the modification. All payments
after production has been established are regulated in 30 CFR Chapter
II, Subchapters A and C. Supersedence of Federal regulations is
addressed in final rules at Sec. 211.29.
(70) One commenter points out that proposed Sec. 211.40 is
inconsistent in identifying where payments should be made and states
that payments should be made to the BIA and MMS unless otherwise
provided for in lease terms.
Response: We agree. Section 211.40 is rewritten to clarify where
and when all payments are to be made. Also, after production has been
established the payee may modify the manner of payment in accordance
with 30 CFR Chapter II, Subchapters A and C.
(71) One tribal commenter requests that the minimum rental be
increased from $1.25 per acre to $10.00 per acre with a consumer price
index adjustment clause. Two industry commenters object that in the
proposed regulations rentals are not credited against production
royalties.
Response: The minimum rental specified in final regulations is
$2.00 per acre, an increase of $0.75 per acre from the current rate.
This increases the rental to that presently being imposed for Federal
lands leased for oil and gas, which is a standard rate throughout the
industry. It is clearly stated in final regulations that the rental
will be controlled by the provisions negotiated in a lease. Any Indian
mineral owner who wishes to make provision for higher rental and/or
adjustments as a hedge against inflation in a lease is free to do so
for leases or lease provisions which are negotiated. In such cases,
whether or not the rentals are credited against production royalty is
entirely up to the parties. Where a lease is silent on this issue, the
rentals must be paid in addition to royalties. Therefore, further
changes are not made in Sec. 211.41(a).
(72) One tribal commenter states that the minimum royalty be set at
20 percent and others do not object to the 16\2/3\ percent minimum
royalty. Several industry commenters state that the proposed 16\2/3\
percent minimum royalty is too high and may place Indian minerals at a
competitive disadvantage.
Response: The 16\2/3\ percent royalty proposed in the regulations
is a minimum royalty that may be raised upon agreement of the parties
to a lease, or which may be reduced upon agreement of the parties and
the findings of the Department that a lower rate is in the best
interest of the Indian mineral owner. Although industry has objected to
the increased rates this change merely brings the rates in line with
general practice on Indian lands. For over twenty years the standard
royalty rate for all leases on Indian lands has been 16\2/3\ percent or
higher. The change in the regulations will not cause any significant
change in leasing procedures on Indian lands. It will not retroactively
affect any current leases, and will not require applicants for Indian
leases to agree to this royalty rate against their will. The minimum
royalty simply requires the parties to submit a good reason why a lower
royalty rate is necessary before it may be approved by the Department.
This helps to ensure that the Secretary exercises his responsibility to
protect trust resources.
(73) Several tribes comment that the regulations should contain
provisions concerning valuation of production and other accounting
issues. They are concerned that reference to the MMS regulations in 30
CFR Chapter II, Subchapters A and C, will not be sufficient to clarify
that the lease provisions concerning valuation issues shall govern in
the event that lease provisions are inconsistent with MMS's
regulations.
Response: The valuation provisions contained in current 25 CFR
Sec. 211.13 were included in the regulations prior to
[[Page 35646]]
the creation of the MMS. It is appropriate, now that authority for
valuation issues has been given to the MMS, that the BIA leasing
regulations defer to the much more detailed treatment of this subject
in the MMS regulations. However, in response to tribal concerns a
sentence is added to final Sec. 211.41(c) to clarify that the specific
provisions of a lease on this issue shall govern where those provisions
are inconsistent with the MMS regulations.
(74) One tribe comments that Indian mineral owners should be
allowed to use gas which is in excess of the lessees needs for any
purpose rather than be limited to use of excess gas for schools or
other tribal buildings. Two industry commenters object to this
provision and ask that it be removed entirely or that the use of excess
gas for tribal buildings be treated as a taking of royalty-in-kind.
Response: The provision in the current 25 CFR Sec. 211.13(b), which
is carried over to final rules at 25 CFR Sec. 211.41(d), provides for a
reasonable and limited use of excess gas by the lessor. This provision
has been included in the regulations for at least 30 years. In
addition, many current leases contain a specific provision allowing
such use, and all current leases contain a provision adopting
regulations in effect at the time of the lease. This means that
virtually all current tribal leases are subject to this provision.
Also, in the many years that this provision has been either included in
the leases specifically or by reference to the regulations, we know of
no instance where the right to use excess gas has been abused.
Therefore this section is amended to incorporate the language in
Sec. 211.13(b) of the current regulations as being clearer than the
proposed language. Thus, no change is effected in final rules.
(75) One commenter states that both the annual rental and the
expenditure for development on leases other than oil and gas, and
geothermal resources should be not less than $10.00 per acre and should
be escalated annually based on the CPI [Consumer Price Index] for all
urban consumers.
Response: In Sec. 211.14 formerly in place the minimum annual
rental is fixed at $1.00 per acre and the minimum annual expenditure at
$10.00 per acre unless otherwise authorized by the Secretary. These
minimum payments and expenditures have not been changed in many years
and thus do not reflect the effects of inflation. In final rules at
Sec. 211.42 the minimum annual rental is fixed at $2.00 per acre and
the minimum annual expenditure at $20.00 per acre, but with no
provision for the expected future decline in purchasing power of money.
It is not likely that a satisfactory index or method can be identified.
In those situations where escalation of payments and expenditures is an
issue, the prospective lessors may, however include indexing in
minerals agreements under the IMDA (25 CFR Part 225).
(76) One tribal commenter states that the value of production
removed and sold from the lease should be established FOB at the mine
rather than at the nearest shipping point as proposed at Sec. 211.43.
Another commenter states that the proposed rule would affect their
sales (but did not elaborate) and urged deletion of specific
commodities from this section.
Response: The wording of 25 CFR Sec. 211.43(a) stating the 10
percent minimum royalty ``at the nearest shipping point'' is the same
as that in regulations formerly in place at Sec. 211.15. In those
instances where the point of valuation is an issue or that Sec. 211.43
is not appropriate, as written, to a specific mineral commodity the
Indian mineral owner may wish to negotiate the royalty provisions or
conclude a minerals agreement under the IMDA (25 CFR Part 225). Section
211.43(a) is essentially unchanged in the final rules.
(77) Two commenters indicate that certain royalty rates and royalty
provisions at Sec. 211.43 for minerals other than oil and gas are not
sufficient and state that: (1) the royalty rate for byproducts from
geothermal resources should not be less than 10 percent of the value of
the byproducts; (2) a lower royalty rate should only be granted with
the consent of the Indian mineral owner; (3) a lower royalty rate may
be allowed, but not to exceed 5 years, after which the royalty rate
should be adjusted upward; and (4) that this section should be revised
to take into account potential unconventional means for developing coal
resources, e.g., where a processed product is made out of coal, the
royalty rate should be 12\1/2\ percent of the processed product, not
12\1/2\ percent of the value of what is removed.
Response: Special lease conditions and provisions for certain
mineral commodities, and special and/or new technologies are best
negotiated under the IMDA (25 CFR Part 225). Under Parts 211 and 212 a
lower royalty rate may be approved only if it is in the best interest
of the Indian mineral owner. This determination will require a higher
level of analysis to assure that the tribe is receiving adequate
consideration. Thus, a minimum royalty rate should provide no barrier
to mineral development. Tribes and industry are required to justify
proposed lower royalty rates for leases on a case-by-case basis.
(78) One commenter states that as noted in the proposed rules (56
FR 58736) the BIA for the first time is proposing minimum royalty rates
for minerals other than oil and gas with no explanation of the reasons
for imposing these minimum royalty rates and urges the BIA to withdraw
the minimum royalty provisions.
Response: In current regulations at Sec. 211.15 minimum royalty
rates for minerals other than oil and gas are set forth, and have been
contained in regulations since 1957. The preamble of the proposed
regulations (56 FR 58736), stating that a new section would provide,
for the first time, minimum royalty rates for minerals other than oil
and gas, was in error.
(79) One commenter states that the proposed rules (Sec. 211.43(b))
allow a lower royalty rate if it is determined to be in the best
interest of the Indian mineral owner but that no valid criteria are
established for implementing this term [in the best interest of the
Indian mineral owner]. The commenter states further that the lessee has
no assurance that a lower rate can be obtained in the event that he
proves that a minable deposit exists that cannot profitably be mined at
the rate set by regulation and that this could have a negative effect
on mineral development under Indian leases.
Response: The criteria implementing the best interest determination
are set forth at proposed Sec. 211.3 (56 FR 58738). Minor change in
Sec. 211.3 is made in the final rules to require the Secretary to
consider any relevant factor in the best interest determination.
Special assurances that lower royalty rates can be obtained by a lessor
or lessee, cast in a scenario of expected or possible future events,
are best sought by negotiation of a minerals agreement under the IMDA
(25 CFR Part 225).
(80) Some industry commenters object to the minimum royalty rates
in proposed Sec. 211.43 as being too high and one commenter states that
5 percent or less of net smelter returns has long been the royalty
standard for base and precious metals under leases of fee simple
mineral land and suggests that the regulations should allow minimum
royalties more in line with market rates or should establish a royalty
formula which will accommodate variances in mineral quality and
quantity, mining costs, recovery rates, and the like.
Response: In the event that minimum royalty rates, as set forth in
the
[[Page 35647]]
proposed and/or final Sec. 211.43, are judged to be too high by the
prospective parties to a minerals lease, the parties should consider
negotiating an IMDA minerals agreement. Similarly, if risk sharing or
royalty adjustment provisions in lease or minerals agreement
instruments are contemplated, then the parties should consider
negotiation rather than competitive bidding. In the final regulations,
the minimum royalties for the competitive acquisition of leases from
Indian mineral owners are brought into line with those prevailing on
Federal lands (not fee lands). In view of the negotiation alternatives,
available under both the Indian Mineral Leasing Act of 1938 and the
IMDA, no further changes to Sec. 211.43 are made.
(81) One commenter is of the opinion that proposed Sec. 211.44
requires tribal consent to suspension of operations whereas several
other commenters are concerned that suspension of operations for
remedial purposes by the Secretary (Sec. 211.44(a)) does not require
the consent of the Indian mineral owner; and another commenter states
that the proposed rule would allow an operator to suspend operations
without the consent of the Indian mineral owner and should not be
permitted.
Response: The suspension of operations provision at Sec. 211.44 is
applicable only to leases after expiration of the primary term of lease
duration and in no way affects the prerogatives of the Indian mineral
owner during the primary term. Section 211.44(a) provides the Secretary
the necessary latitude to act, under such provisions and conditions as
may be required, in the discharge of the trust responsibility in those
instances where all else has failed and remedial measures are required,
usually at once, for continued production, protection of the resource,
or protection of the environment. Provision is made at Sec. 211.44(b),
for mineral properties capable of production after expiration of the
primary term of lease duration, such that suspension of operations
requires the consent of the Indian mineral owner.
(82) One commenter states that suspension of operations should: (1)
never exceed the maximum lease term; (2) require the consent of the
Indian mineral owner if the suspension is longer than 90 days; and (3)
result in lease cancellation if an application for suspension of
operations is denied and the operator [be held] responsible for all
abandonment requirements. Another commenter states that: (1) a time
period for accomplishment of remedial operations is absolutely
necessary; (2) the regulations should expressly define the conditions
under which suspension of operations is necessary; and (3) if
suspension of operations is necessary, then the Department's current
policy requiring reinstatement of production within 30 days should
apply.
Response: Numerous provisions and conditions could be added to
Sec. 211.44, but are best dealt with on a case-by-case basis by the
Secretary.
(83) One commenter states that Sec. 211.44(b) has to do with
suspension of operations for non-physical reasons whereas with respect
to non-economic or non-marketing reasons, no tribal consent is required
for suspension of operations after expiration of the primary term and
there is no statutory distinction that justifies requiring tribal
consent in one case but not the other.
Response: We see no way of readily or reasonably separating the
subtle cause and effect of physical versus non-physical reasons for
situations leading to a suspension of operations or production. In the
event remedial measures are required in the proper and timely discharge
of the trust responsibility and in the best interest of the Indian
mineral owner, the Secretary has no choice but to take requisite
remedial measures. Provision is made at Sec. 211.44(b) for the parties
to the lease to make application for permission to suspend operations
on a lease capable of production after expiration of the primary term
of lease duration.
(84) One commenter recommends that the extended term be referred to
as either ``after expiration of the primary term of the lease'' or as
``in the extended term of the lease'' and not both.
Response: We agree. Although both phrases mean the same thing,
meaning that portion of the duration of the lease, when the lease is
held by production beyond the primary term of the lease. The primary
lease term cannot exceed 10 years. Section 211.44 is changed so that
only one phrase is used.
(85) Two commenters state that they do not understand why in
proposed rules that the suspension of operations necessary for remedial
operations must be approved by the Assistant Secretary and that this
matter is best left to the authority of the agency office.
Response: The final regulations are changed to clarify that the
suspension of operations is at the discretion of the Secretary,
although the suspension action will likely be issued by the authorized
officer for Sec. 211.44(a) and for Sec. 211.44(b) by the area director
or superintendent, under authority delegated by the Secretary.
(86) One commenter states that proposed Sec. 211.44(a) makes
reference to minimum royalty requirements but finds no minimum royalty
requirement in the proposed regulations.
Response: The final regulations are clarified to provide that
suspension of operations or production after expiration of the primary
term of lease duration shall not relieve the lessee from liability for
the payment of rental and other payments as required by lease
provisions.
(87) One commenter states that proposed Sec. 211.46 should make
clear to whom the books and records will be made available.
Response: Section 211.46 is modified to provide that lessees shall
allow the Indian mineral owner's representatives, or any authorized
representative of the Secretary to enter all parts of the leased
premises for the purposes of inspection and audit, that lessees shall
keep a full and correct account of all operations as required by the
lease and applicable regulations, and that books and records shall be
made available during regular business hours.
(88) One commenter states that clarification should be added under
Sec. 211.46 to indicate that under the FOGRMA of 1982 a lessee is
required only to maintain records of this type for 6 years after the
records are generated unless the Secretary notifies the record holder
that he has initiated an audit or investigation involving such records
and that such records must be maintained for a longer period.
Response: Record keeping requirements are set forth in the
operating regulations of BLM, MMS, and OSM which are included by
reference at Secs. 211.4, 211.5, and 211.6.
(89) One tribal commenter signifies that proposed Sec. 211.47 be
expanded to include protection of all Indian lands from drainage,
whether leased or not. Another tribal commenter states that the burden
falls on the Tribe to prove that additional development of leased lands
is required by the prudent operator standard. One industry commenter
states that no compensatory royalties should be assessed if ``the
superintendent has denied approval of a cooperative agreement for any
reason.''
Response: These regulations only concern the leasing of tribal
lands, and the requirements which are properly placed on lessees. These
regulations do not properly include provisions for dealing with
drainage from unleased lands. However, the standard that will be
applied to lessees as concerns the leased land is clear. Lessees are
required, among other requirements to exercise diligence in mining,
drilling and operating wells, protect the lease from drainage. This
standard imposes an affirmative duty on the lessee. No
[[Page 35648]]
changes in response to these tribal comments were made. Also, no
changes were made in response to the industry comment seeking relief
from the compensatory royalty provision in Sec. 211.47(b). A proposed
cooperative agreement may properly be rejected by the Department when
such proposed agreement fails to protect the lease. If an inappropriate
cooperative agreement has been rejected by the Department, the
rejection should not serve to relieve the lessee from the lessee's
obligations under the lease.
(90) One tribal commenter requests that the 200 feet setback
requirement for well pads and operations be increased to a minimum of
500 feet.
Response: The proposed section merely carries forward the
limitation contained in current Sec. 211.19. Because the current
regulation provides a minimum setback requirement, a tribe may
negotiate for a greater setback whenever it deems this to be necessary.
Also a greater setback may be requested by the authorized officer prior
to issuance of permission to drill. For these reasons no change is made
at Sec. 211.47(f) in final regulations.
(91) One commenter advises that proposed Sec. 211.47(j) be revised
to provide that the lessee pay the surface owner or tenant all damages,
including damages to crops, buildings, other improvements of the
surface owner occasioned by the lessee's operations as determined by
the Secretary with the consent of the Indian mineral owner.
Response: No change is made in Sec. 211.47 in the final regulations
because the suggested change would create rights that would not be
authorized in law.
(92) One industry commenter states that proposed Sec. 211.47(i)
gives the superintendent sole authority to establish the payment due
the Indian tribe or allottee for surface damages and expresses the
opinion that this should be a matter of negotiation, or based on an
independent appraisal with at most, approval of the superintendent.
Response: Authority for the determination of payment of damages to
the surface owner is retained by the Secretary, who may employ a BIA
appraiser in the decision making process, in this instance the
superintendent, for those situations in which the mineral and surface
estates have been separated and/or surface damages are at issue.
(93) One industry commenter objects to the provision that written
permission must be secured from the Secretary before any operations are
started on the leased premises.
Response: The applicable operating and reclamation regulations
administered by the Bureau of Land Management and the Office of Surface
Mining Reclamation and Enforcement require prior approval for drilling
or mining operations. Therefore, the only change made in this paragraph
is to the authorities cited to include the Office of Surface Mining
Reclamation and Enforcement. The intent of this paragraph is to alert
the mineral industry that a mineral lease issued by an Indian mineral
owner, still requires the approval of the Secretary. After the lease is
approved, lessees are still required to secure written permission
(written approval) from the appropriate agency or agencies before
beginning any operations on the lease.
(94) A tribal commenter feels that Sec. 211.48 should be amended to
include the need for written permission of the Indian mineral owner
before operations are started and that after permission is secured,
operation must also be in accordance with all operating rules and
regulations promulgated by the Secretary or the Indian mineral owner.
Response: Indian mineral owners are always consulted prior to final
approval of any activity involving Indian mineral lands, if it is an
action or activity that requires approval or consultation with the
Indian mineral owner.
(95) Two industry commenters object to Sec. 211.49 stating that the
broad and vague language could be used to restrict or preclude a lessee
from developing a lease. Both commenters suggest that any necessary
restrictions be spelled out in the lease.
Response: This section carries into final rules Sec. 211.21(a) of
regulations currently in place. This provision has been contained in
the Department's regulations for many years. The authority stated in
this section has rarely been used, and to our knowledge, has never been
used to preclude development of a lease. The section is necessary to
ensure that the Secretary has the ability to fulfill the fiduciary duty
to protect the trust resource.
(96) One commenter objects that proposed Sec. 211.51 does not
explicitly address the option of surrender of an operating oil and gas
property to the tribe, but rather appears to be confined to lease
surrenders after which all production ceases.
Response: There is no barrier in either proposed or final
regulations to a request to surrender an operating property to an
Indian mineral owner, subject to approval of the Secretary. There is a
requirement in proposed and final regulations that the lessee discharge
all lease obligations upon surrender, as required.
(97) Several commenters state that the requirement in proposed
Sec. 211.51(d) that the original lease documents be delivered to the
Department with the request to surrender is not supported by any reason
and imposes an additional administrative burden without providing any
benefit.
Response: The requirement that the original lease documents be
surrendered is intended, to the extent possible, to prevent any
confusion as to the extent and location of lands that are leased.
Additionally, surrender will prevent fraudulent assignments. This
requirement has been in the Department's regulations for several
decades (see Sec. 211.27(b)(6)). Also, it is standard industry practice
to require surrender of the documents. Because it is standard industry
practice the requirement does not impose an additional burden on
lessees.
(98) One tribal commenter questions whether this section is
sufficient to ensure that all reclamation be performed in an
environmentally sound manner.
Response: Section 211.51 requires that the leased land be left in
an environmentally sound condition and that all environmental work,
such as reclamation, be done. Changes are made in final regulations to
paragraph (h) to avoid any possible conflict with this requirement.
(99) Two industry commenters seek qualification to the paragraph in
this section requiring the lessee to pay for all drainage which occurs
prior to acceptance of surrender of the lease. One commenter states
that it is unreasonable to permit liability for compensatory royalty to
continue to accrue after filing an application to surrender. One
commenter asks that a provision be added to excuse the lessee from
payment of compensatory royalties for drainage if a cooperative
agreement has been denied ``for any reason'' by the Department.
Response: The provisions contained in proposed Sec. 211.51(g) are
an updated version of the current requirement found in
Sec. 211.27(b)(10). An addition to the proposed regulations is an
explicit reference to compensatory royalties for drainage. Neither of
the proposed changes are included in final regulations because they
could permit unacceptable actions on the part of the lessee. First, it
may be necessary and reasonable for the Department to assess
compensatory royalties for waste or drainage, if lack of diligence or
poor workmanship on the lease continues to cause the lessor damage
after the date of surrender. For instance, if a lessee has
[[Page 35649]]
missed the opportunity to enter into a cooperative agreement, and then
seeks immediately to surrender the lease, the lessor may not be able to
prevent drainage immediately. The lessee may not avoid liability for
the drainage by attempting to surrender the lease. Similarly, the fact
that a lessee at one time submitted a cooperative agreement for
approval will not relieve the lessee from responsibilities under the
regulations and lease provisions. The authority reserved to the
Secretary in final regulations is to ``impose reasonable and equitable
terms and conditions to protect the interests of the Indian mineral
owner.'' If however, the lessee believes that provisions imposed are
arbitrary or capricious, then the lessee may appeal under 25 CFR Part
2. We feel that these procedures provide adequate protection to
lessees.
(100) Three industry commenters object to the increase in filing
fees in proposed Sec. 211.52, by stating that the increase is
unjustified and imposes an additional burden on a struggling industry.
Response: For over four decades the BIA did not raise filing fees.
The increase from $10.00 to $75.00 reflects inflation that has occurred
during four decades and is in keeping with the current filing fees of
the Bureau of Land Management, which increased the filing fees to
$75.00 on December 22, 1987. However, surrender of leases no longer
must be accompanied by a filing fee, because most standard mineral
leases specify a surrender fee.
(101) Both tribes and industry comment that assignments of
stratigraphic horizons or intervals should be permitted. Tribes and
industry indicate that this practice is common within the industry and
would provide economic benefits to the Indian mineral owner.
Response: In final regulations the provisions in proposed rules at
Sec. 211.53(a) that prohibit such assignments are removed. Assignment
of stratigraphic thicknesses or intervals is permitted.
(102) One commenter states that Sec. 211.53 should be revised so
that the broad definition of ``assignment'' that is implied in the
Sec. 211.26(b), formerly in place, is retained.
Response: Proposed Sec. 211.53 is rewritten to be more nearly
compatible with Sec. 211.26 formerly in place and retain the existing
and widely understood concept of an assignment in current use with
respect to Indian mineral leases.
(103) Three commenters state that overrides and production payments
may render prudent economic development, or otherwise economic
operations and proposals uneconomic or prematurely uneconomic. One
commenter recommends that both the Secretary and the Indian mineral
owner approve overrides, production payments, and operating agreements;
one commenter recommends that overrides, production payments, and
operating agreements require approval; one commenter states that at a
minimum overriding royalties and operating agreements should be
forwarded to the Secretary for review.
Response: The creation of overrides, production payments, and use
of operating agreements have been standard business practices in the
minerals industry for many years and often serve as the necessary
economic incentive for the development of, and subsequent production
from, mineral properties, especially for oil and gas. Commenters
concerns are valid that under some conditions (e.g. a sudden decline in
value of the mineral product) mineral properties can be burdened by
overrides and production payments. In response to the concerns of
commenters, provision is made in final regulation that the Indian
mineral owner shall be notified of proposed assignments and agreements
creating overriding royalties or payments out of production, or
agreements designating operators shall be filed with the
superintendent. In those instances where the overrides, production
payments, and operating agreements are of concern to the Indian mineral
owner during the leasing process, the prospective lessors and lessees
may wish to arrive at a minerals agreement under the IMDA (25 CFR Part
225).
(104) Four tribal commenters state that the approval or consent of
the Indian mineral owner should be required for all assignments; one,
if required by lease or by tribal law; another, if any instrument or
agreement either makes a present conveyance of an interest in the
minerals or obligates one party to convey an interest in the minerals
to another party upon performance of some condition; a third,
regardless of whether the right of approval is retained in the lease
document; and a fourth, would require approval of the Indian mineral
owner for all actions regardless of whether the lease requires such
approval. One industry commenter states that the language of proposed
Sec. 211.53 is appropriate but not consistent with the various tribal
ordinances applicable to oil and gas leases; another perceives that
proposed Sec. 211.53 is a restatement of current regulatory practice
and that new regulations should place no greater restriction on the
lessee than currently exists.
Response: Section 211.53 is rewritten in language more nearly
resembling 25 CFR Part 211 and 212 formerly in place and is therefore
more familiar to both Indian mineral owners and prospective lessees.
There is no consensus or general agreement among Indian mineral owners
and/or industry upon the conditions of approval of assignments and
related agreements. Therefore, final regulations provide for a broad
right of assignment of an approved lease for Indian owned minerals, so
long as there is no change in the material provisions of the lease.
Final regulations are applicable to existing and future leases issued
under the Act of May 11, 1938 (25 U.S.C. 396a) and the Act of March 3,
1909 (25 U.S.C. 396). Indian mineral owners that wish to require
consent may, under the IMDA, or by negotiated, individual (not
necessarily standard) lease provisions under the Act of May 11, 1938;
either of which allow the Indian mineral owner to specify the
provisions under which owner consent and/or approval would be required
for lease assignments, overriding royalties, and operating agreements.
(105) One industry commenter objects to proposed lease cancellation
and notice of non-compliance provisions (Sec. 211.54) on the grounds
these provisions would allow the Bureau of Indian Affairs (BIA), to
``assume responsibility for enforcement not only of the provisions of
the IMDA, but of other laws and regulations as well.'' The commenter
objects to the idea that the BIA might interfere with the authorities
which SMCRA vests with the Secretary, who acts through the Office of
Surface Mining Reclamation and Enforcement (OSM).
Response: Nothing in this section is intended to interfere with the
authority of OSM to administer SMCRA. Section 211.54 is a continuation
of the cancellation provision in current 25 CFR Sec. 211.27(a) but
includes more due process procedures to protect lessees, and provides
the Department with the new option of issuing a notice of non-
compliance rather than threatening lease cancellation for any and all
offenses, no matter how minor. This section applies to leases issued
under the Act of May 11, 1938 (25 U.S.C. 396a). These regulations
neither govern IMDA agreements nor purport to govern the type of
activities governed by SMCRA. However, it should be clearly understood
that violations of SMCRA can also be violations of the lease which, in
turn, could lead to cancellation of the lease. Only the BIA,
[[Page 35650]]
pursuant to these regulations, has authority to cancel the lease
itself. Therefore, Sec. 211.54 does not provide the BIA with authority
that overlaps over the authority of OSM.
(106) One tribal commenter asks that a procedure be added for
tribes to report any non-compliance which they may observe.
Response: Because of the close working relationship between the
tribes and the BIA agency and area offices, it has been determined that
a formal regulatory procedure for tribes to share lease compliance
information with the BIA is not necessary. Information of any type and
in any format from tribes concerning lease compliance by lessees is
always welcomed by the Department.
(107) One tribal commenter asks that tribes be granted a larger
independent right to cancel a lease for non-compliance.
Response: The request for tribal authority to cancel leases is not
included in final regulations. The mineral lease approved by the
Secretary concerns lands which the Department has a statutory
obligation to protect. The Secretary will review any and all
information an Indian mineral owner may have concerning whether or not
a lease should be cancelled but the final decision to cancel must
remain with the Secretary: See Yavapai-Prescott Indian Tribe v. Watt,
707 F.2d 1072 (9th Cir. 1983), cert. denied 464 U.S. 1017.
(108) One tribal commenter asks that a time limit be imposed on the
Secretary to issue a decision with regard to a lease cancellation.
Response: The request for a time limit for issuance of a decision
on cancellation of a lease is not included in final regulations. The
factors to be considered and the unique nature of most lease
cancellation actions makes a time deadline for action by the Secretary
inappropriate.
(109) One tribal commenter suggests that proposed Sec. 211.54(a) be
expanded to include the enabling of the noncompliance and cancellation
processes in the event the Secretary determines that a lessee or
permittee has failed to comply with applicable tribal laws and
regulations, and mining or reclamation plans.
Response: Section 211.54(a) is rewritten in the interest of
simplification and to clarify that Sec. 211.54 is enabled in the event
of noncompliance with lease provisions, these regulations, or other
applicable rules and regulations. Although BLM and OSM are primarily
responsible under those agencies' regulations for enforcement of mining
and reclamation plans, under some circumstances it may be appropriate
for BIA officials to issue notices of non-compliance for violations of
such plans. Tribal administrative and judicial remedies will often be
the appropriate means for redressing violations of tribal laws and
regulations. But the revised language of this regulation leaves open
the possibility of enforcement under this Part when an alleged
violation raises mixed issues of Federal and tribal law.
(110) One commenter suggests that service by certified mail should
be deemed to occur seven (7) rather than five (5) days after the date
of mailing (in both Secs. 211.54 and 211.55) to be consistent with MMS
regulations regarding constructive service of official correspondence.
Response: In the interest of consistency the date of service is
deemed to be five (5) working days after the date of mailing in final
regulations.
(111) One commenter states that in proposed Sec. 211.54 there is no
provision for a hearing before the Secretary prior to lease
cancellation and that denial of the right to a hearing is the denial of
the right to due process that exists in present regulations and that
this right should be restored.
Response: Section 211.54 is rewritten in final regulations to
clarify noncompliance and cancellation procedures. Final regulations
provide lessees and permittees adequate time for response to notices of
noncompliance, orders of cessation, and notices of proposed
cancellation or of cancellation. Hearings may be requested in the
responses of lessees and permittees to notices and orders and the
rights of lessees and permittees under 25 CFR Part 2 (Sec. 211.58) are
not abridged. The suggested provisions are not included at Sec. 211.54.
(112) One commenter states that in proposed Sec. 211.54 reference
is made to an ``order of cessation'' and it is not clear what an order
of cessation is or how it differs from a notice of noncompliance.
Another commenter states that BIA does not define a ``cessation
order.''
Response: Section 211.54 is rewritten in final regulations to
clarify noncompliance and cancellation procedures.
(113) Several industry commenters object to proposed Sec. 211.55
and request that it be removed for a number of reasons. First, several
commenters challenge the authority of the Department to impose civil
penalties. Second, the $1,000.00 per day limit is challenged as unduly
high. Finally, even though the commenters maintain that the Secretary
lacks authority to impose civil penalties, the commenters object to the
civil penalties as duplicative of other civil penalties which the
Secretary has authority to impose.
Response: The proposed civil penalties provision is not new. The
current regulations contain Sec. 211.22 that provides for a $500.00 per
day civil penalty for violations of terms of the lease, regulations or
orders. Section 211.22 has been contained in the leasing regulations
for unallotted lands for many years. The proposed revisions to this
section do two things. First, the dollar limit for a violation is
updated to accord with current penalty limits contained in other
Departmental regulations (see 43 CFR Sec. 3162 and Sec. 3163.2). In
fact this dollar figure is conservative when compared to the $5,000.00
per violation per day limit contained in the Bureau of Land
Management's regulations. The second change provides lessees and
permittees with additional due process procedures to ensure that no
penalty is unfairly imposed. The Department believes that the broad
authority granted to the President by Congress to regulate Indian
affairs (see 25 U.S.C. Secs. 2 and 9), the longstanding administrative
interpretation of these statutes as granting authority to assess
penalties, and the unique responsibilities imposed on the Secretary to
protect Indian trust resources support this section. However, in
response to industry comments a provision has been added to this
section in final rules to clarify that no penalty may be assessed under
this section for a violation over which the BLM, OSM, or MMS have
either statutory or regulatory authority to assess a penalty. This will
ensure that this section does not duplicate any other penalty provision
and that no duplicative penalties will be issued.
(114) Five industry commenters express concern that the language in
proposed Sec. 211.56 is not adequate to protect the rights of the data
owner and more specifically that there are no requirements on the part
of the Indian mineral owner to protect the confidentiality of the data
provided to them. Three Indian commenters felt that the proposed
regulation is too weak, because it does not provide specifically for
submittal of collected data to the Indian mineral owner.
Response: The concern regarding the lack of confidentiality
requirements on the part of the Indian mineral owner is best considered
at the time of negotiation between the Indian mineral owner and the
proponent of the permit. Therefore, no specific change is made in final
regulation with respect to this item. Section 211.56 is rewritten to
[[Page 35651]]
reflect the major concerns of the commenters and provides that copies
of collected data shall be forwarded to the Indian mineral owner,
unless otherwise provided in the permit.
(115) One industry commenter expresses concern that seismic option
agreements are not covered in proposed regulation.
Response: The comment regarding seismic option agreements is not
considered because it is deemed that such agreements are best concluded
as minerals agreements under the provisions of the IMDA (25 CFR Part
225).
(116) One of the Indian commenters requests that the regulations
provide for the issuance of geological and geophysical permits by the
Indian mineral owner to university students. The same commenter
proposes that all collected data be submitted to the Indian mineral
owner, who in turn will provide it to the Secretary and also recommends
that the phrase that allows a permittee to take samples for assay and
experimental purposes be deleted.
Response: The recommendation that issuance of geological and
geophysical permits to universities be addressed in final regulations
is not included in final regulations because such requests should be
considered on a case-by-case basis by the Indian mineral owner, who has
the option of requesting assistance from the Secretary if consideration
of such permits pose problems in approval. The related recommendation
for deletion from Sec. 211.56(b) of the provision for the taking of
assay samples for experimental purposes is also not included because,
at times, the taking of experimental assay samples can be of benefit to
the Indian mineral owner.
(117) One industry commenter recommends that ``Indian owner'' in
Sec. 211.56(a) be changed to ``Indian mineral owner'' in order to
distinguish between the Indian surface owner and the Indian mineral
owner. The same commenter recommends that the word ``shall'' rather
than ``may'' (Sec. 211.56(c)) be used in regard to the Secretary's
responsibility to maintain for a reasonable period of time the
confidentiality of data submitted.
Response: The words ``Indian owner'' are changed to ``Indian
mineral owner'' to aid in distinction between the Indian mineral owner
and the Indian surface owner. Language in this section is unchanged in
that the Secretary ``may'' release information after six (6) years,
with the consent of the Indian mineral owner if no time period for
release is prescribed in the permit. The word ``may'' is retained in
the final regulations because the six years is a minimum time period
for information retention. It may not be in the best interest of the
Indian mineral owner to release information after the prescribed
retention period.
(118) One commenter states that the definition of Indian lands in
Sec. 212.3 should be limited to lands owned by any individual Indian or
Alaska native. Otherwise there is no substantive provision in the
regulations in Part 212 which limits their applicability to allotted
lands.
Response: The Secretary does not lease Indian lands without the
consent of the individual Indian mineral owner(s), and thus does not
unilaterally execute a lease for the individual Indian mineral owner,
except as provided in Sec. 212.21. Successors in title to approved and
issued mineral leases follow without respect to these regulations. No
change is made in the final rules.
(119) One commenter states that the definition of a lessor should
be changed to read that a lessor is an Indian mineral owner who has
accepted or consented to a lease or for whom the Secretary has executed
a lease, and any successor in title to an original lessor.
Response: The Secretary does not lease Indian mineral lands without
the consent of the individual Indian mineral owner(s), and thus does
not unilaterally execute a lease for the individual Indian mineral
owner, except as provided by specific statutory exceptions which allow
the Secretary to lease allotted lands when the allottee has died and
his heirs are undetermined or when the owner cannot be located.
Successors in title to approved and issued mineral leases follow
without respect to these regulations. No change is made in the final
rules.
(120) One commenter states that to receive optimal benefit for the
Indian landowner, royalty rates should be considered in the bidding
process.
Response: Royalty rates are considered in the bidding process in
the announcement of lease sale. Royalty bidding is not customarily
included in either written or oral bidding because of the difficulty in
determining the total value of bid based on multiple variables of say,
total value of bonus bid, plus rental bid, plus royalty bid, or any
combination thereof. Royalty rates may be considered or reconsidered
separately if the lease is subsequently negotiated on behalf of the
Indian mineral owner.
(121) One tribal commenter recommends an addition to proposed
Sec. 212.20 to provide that prior to negotiation for lease, a mineral
property must be listed but not successfully won in the most recent
lease sale of no later than the preceding 12-month period.
Response: Section 212.20 is rewritten to provide that the option in
leasing procedures be decided by the Indian mineral owner. In the event
that the leasing option cannot be determined by the Indian mineral
owner(s) the Secretary will act on their behalf, and in the best
interest of the Indian mineral owner(s).
(122) One tribal commenter suggests that proposed Sec. 212.20 be
modified to provide that if an offer to lease a mineral property is
made, and no tribal property exists within the same section or spacing
order, and given the approval of the Indian mineral owner, or the
majority of owners; the BIA or the Indian mineral owners themselves be
able to negotiate a lease agreement, subject to approval of the
Secretary.
Response: The suggested modifications to Sec. 212.20 place a great
many restrictions on the leasing procedures. The required consent of
all Indian mineral owners to the leasing of mineral lands composed of
both tribal and individual mineral ownership could adversely affect all
owners if difficulty is experienced in reaching a consensus. Thus, the
suggested modifications are not made in final regulations. However,
provision is made in final regulations at Sec. 212.20 that the Indian
mineral owner be advised of the results of bidding and that the lease
shall not be approved until the consent of the Indian mineral owner has
been obtained.
(123) One commenter suggests that a sentence be added to proposed
Sec. 212.20(b)(5) to provide that the Secretary shall not disperse any
bonus money to the Indian mineral owner(s) until such time as the lease
has been signed by the Indian mineral owner(s) unless otherwise agreed
to by the successful bidder.
Response: Bonus monies are not dispensed until the lease is issued.
Money received is placed in a special account at the BIA area or agency
where it is retained until a lease number can be assigned; whereupon
money is distributed after the lease is signed and a number assigned to
the lease instrument.
(124) One commenter states that the language of proposed
Sec. 212.20(a) should be the same as that in proposed Sec. 211.20(a)
providing the same superintendent is meant at both places, otherwise,
guidance as to the appropriate superintendent should be given.
Response: We agree. Change is made in the final regulations such
that both paragraphs now include a reference to
[[Page 35652]]
the superintendent having jurisdiction over the lands, because the same
superintendent is the same in both instances.
(125) One commenter suggests changes in Sec. 212.30 (a) and (b) to
restrict references to lessors and lessees to the mineral interest only
and that there does not appear to be any good reason for relieving
[from the supervision of the Secretary] the unrestricted land of an
existing lease.
Response: Changes are not made in response to this comment because
the references in these paragraphs are to the unrestricted owners and
not to the owners under restriction. Protection for the lessee existing
prior to the removal of restriction are contained in Sec. 212.30(b)
which provides that the Supervision of the Secretary shall continue
until adequate arrangements have been made to account for the mineral
resources of the restricted land separately from those of the
unrestricted. The unrestricted lands must be relieved from the
Supervision of the Secretary because the removal of restriction also
removes the authority of the Secretary.
(126) One commenter states that the 30-day notice to lessee and
lessor in proposed Sec. 212.33(a) is not adequate for the lessee to
prepare title opinions in order to timely and properly pay rentals and
royalties and suggests that a 120-day notice is appropriate unless a
shorter period is agreed to by the parties [to the lease instrument].
Response: The 30-day notice to principals in the event the
Secretary relinquishes supervision during the life of a mineral lease
instrument is standard and has been in the present regulations
(Sec. 212.29) for many years without causing difficulty. No change is
made in the final regulations.
(127) One commenter points out that the word ``fee'' is used in a
dual sense in Sec. 212.33 and suggests that distinction be made between
monetary fees and fee simple title and also suggests other changes in
this section in the interest of clarity.
Response: We agree. Sec. 212.33(b) is rewritten in final regulation
to clarify and simplify the provisions of this section.
(128) One commenter states that Sec. 212.56(c) should be amended to
state specifically that the subject section is applicable to allotted
lands only.
Response: The title of 25 CFR Part 212 states that these
regulations are applicable to the leasing of allotted lands for mineral
development and full explanation of the purpose and scope of Parts 211
and 212 are contained in Secs. 211.1 and 212.1 and to considerable
extent in preamble. This paragraph, although redesignated, remains
unchanged.
(129) One commenter states that the use of the words ``surface
occupant'' in proposed Sec. 212.56(c) be changed to ``surface owner.''
Otherwise the lessee may be in the position of not knowing who to
negotiate with, the surface occupant or the surface owner.
Response: The lessee may have to negotiate with both the surface
occupant and the surface owner depending upon land use (e.g., row crops
during the growing season on leased surface) and provisions of the
surface lease between the surface lessor and surface lessee. The
surface occupant is oftentimes the individual easiest to find. This
section is unchanged in final rules.
(130) One commenter states that proposed Sec. 212.56 should be
revised to make clear that the consent of the Indian surface owner is
not required by these regulations and that the consent referred to in
proposed paragraph (c) is required only if made ``necessary'' by some
other applicable law.
Response: Section 212.56 in final regulations provides that where
the Indian mineral owner is not the surface owner, the lessee must
obtain any additional necessary permits or rights of ingress or egress
from the surface occupant. This information is provided to lessees so
that the lessee will know that under some conditions a mineral lease
does not automatically authorize surface ingress and egress.
III. Conclusion
The scope and purpose of these final rules are to revise,
streamline and update implementation of the Act of May 11, 1938, as
amended, and the Act of March 3, 1909, as amended, that provide for the
leasing of Indian tribal and allotted lands, respectively, for mineral
development. By means of these final rules, the Department provides,
within statutory limitations, increased communication between the
Indian mineral owner and the Secretary and provides the Indian mineral
owner greater recognition and authority in the mineral leasing of
Indian lands within the framework of the Secretary's trust
responsibility and the determination of the best interest of the Indian
mineral owner. The Department understands the concerns and importance
to tribes of the recognition of tribal authority and responsibility in
matters of the management generally of their own mineral resources.
This authority and responsibility are recognized at Secs. 211.1 and
211.29 in final rules. Section 211.29 specifically permits the
supersedence of Federal regulations by the provisions of ordinance,
resolution, or other action authorized under any properly issued tribal
constitution, bylaw, or charter. Superseding provisions that: (1)
nullify the provisions of enacted legislation or judicial decision that
preclude the exercise of tribal authority; (2) modify the provisions of
an existing lease or permit which constitute substantially the
consideration of the lease or permit, or without which the lease or
permit would not have been made; or (3) provide for a regulatory taking
cannot be approved by the Secretary. Also, the rules formerly in place
have not been revised in entirety since 1938 and therefore the action
of the Department, in this revision, reflects in final regulation the
enactment of legislation, court decisions, evolution of usual and
common business and administrative practices, and changes and
reorganizations within the Federal government that has taken place
during the last 58 years.
Executive Order No. 12866 and Regulatory Flexibility Act
These rules have been reviewed under Executive Order 12866. In
addition, the Department of the Interior has determined that these
rules will not have a significant economic effect on a substantial
number of small entities under the Regulatory Flexibility Act (5 U.S.C.
601 et seq.).
This final rulemaking will have equal impact on anyone desiring to
engage in prospecting for or developing Indian-owned minerals,
including oil and gas and geothermal resources. The promulgation of
final rulemaking reduces the regulatory burden imposed on such persons
in several instances. This rulemaking will increase the filing fee
(from $10.00 to $75.00) that must accompany each application for lease,
permit, or assignment thereof and is no different from the filing fees
presently required when filing on Federal lands. This increase is
necessary to partially compensate the United States for its costs of
processing those documents, but experience shows that this increase is
not an amount that will discourage or prevent any small business from
contracting to engage in mineral development on Indian lands. The
minimum rental for mineral leases on Indian land will be increased from
$1.25 to $2.00 per acre which is no different from the minimum rentals
imposed on lessees of Federal minerals. The minimum annual development
expenditure on leases other than oil and gas and geothermal resources
will increase from $10.00 to $20.00 per acre. The increases in minimum
rental and annual development expenditure reflect
[[Page 35653]]
the effects of inflation during the last several years on the cost of
doing business, helps ensure diligent development of the Indian mineral
estate, and helps to protect the Indian mineral owner against the
decline through time in purchasing power of dollars received from the
Indian mineral leases. These rules promote economic growth by providing
tribes and individual Indian mineral owners greater opportunity to
negotiate or participate in the negotiation of leases and permits that
maximize their best economic interest and minimize any adverse
environmental and cultural impact and at the same time enhance economic
growth by allowing wise use of a portion of the National mineral
reserve base that might not be otherwise available.
Executive Order No. 12612
The Department has determined that these rules do not have
significant federalism effects. These rules support the goals of E.O.
No. 12612 by enhancing self determination among the Indian communities
by encouraging tribes to responsibly and independently achieve their
personal, cultural, and economic objectives through their own efforts.
Executive Order No. 12630
In accordance with E.O. 12630, the Department has determined that
these rules do not have significant takings implications.
Executive Order No. 12988
The Department has determined that these regulations meet the
applicable standards provided in Sections 3(a) and 3(b) (2) of
Executive Order No. 12988.
National Environmental Policy Act of 1969
The changes made in this final rulemaking are for the purpose of
streamlining and updating the regulations implementing the Act of May
11, 1938, as amended, and the Act of March 3, 1909, as amended. These
rules constitute an administrative action and do not impact on the
physical environment. The approval of mineral leases, permits, and
assignments will require compliance with the provisions of the National
Environmental Policy Act of 1969, including public participation in
compliance with the regulations of the Council on Environmental
Quality. In analyzing the alternatives to the changes in previously
proposed rulemaking that were made, the Bureau of Indian Affairs
considered the changes to be of such minor variation and degree that
the impacts were deemed equal to or less than the changes made by the
previously proposed rulemaking. The Department of the Interior has
determined therefore, that there will be no significant impact to the
human environment.
Paperwork Reduction Act of 1980
This rule is exempt from the information collections requirement
under the Paperwork Reduction Act, Pub. L. 95-511 (44 U.S.C. 3501 et
seq.).
List of Subjects in 25 CFR Parts 211 and 212
Geothermal energy, Indians--lands, Mineral resources, Mines, Oil
and gas exploration, Reporting and recordkeeping requirements.
Words of Issuance
For the reasons set out in the preamble, Parts 211 and 212 of Title
25, Chapter I of the Code of Federal Regulations are revised as set
forth below.
PART 211--LEASING OF TRIBAL LANDS FOR MINERAL DEVELOPMENT
Subpart A--General
Sec.
211.1 Purpose and scope.
211.2 Information collection.
211.3 Definitions.
211.4 Authority and responsibility of the Bureau of Land Management
(BLM).
211.5 Authority and responsibility of the Office of Surface Mining
Reclamation and Enforcement (OSM).
211.6 Authority and responsibility of the Minerals Management
Service (MMS).
211.7 Environmental studies.
211.8 Government employees cannot acquire leases.
211.9 Existing permits or leases for minerals issued pursuant to 43
CFR chapter II and acquired for Indian tribes.
Subpart B--How To Acquire Leases
211.20 Leasing procedures.
211.21 [Reserved]
211.22 Leases for subsurface storage of oil or gas.
211.23 Corporate qualifications and requests for information.
211.24 Bonds.
211.25 Acreage limitation.
211.26 [Reserved]
211.27 Duration of leases.
211.28 Unitization and communitization agreements, and well
spacing.
211.29 Exemption of leases and permits made by organized tribes.
Subpart C--Rents, Royalties, Cancellations and Appeals
211.40 Manner of payments.
211.41 Rentals and production royalty on oil and gas leases.
211.42 Annual rentals and expenditures for development on leases
other than oil and gas, and geothermal resources.
211.43 Royalty rates for minerals other than oil and gas.
211.44 Suspension of operations.
211.45 [Reserved]
211.46 Inspection of premises, books and accounts.
211.47 Diligence, drainage and prevention of waste.
211.48 Permission to start operations.
211.49 Restrictions on operations.
211.50 [Reserved]
211.51 Surrender of leases.
211.52 Fees.
211.53 Assignments, overriding royalties, and operating agreements.
211.54 Lease or permit cancellation; Bureau of Indian Affairs
notice of noncompliance.
211.55 Penalties.
211.56 Geological and geophysical permits.
211.57 Forms.
211.58 Appeals.
Authority: Sec. 4, Act of May 11, 1938, (52 Stat. 347): Act of
August 1, 1956 (70 Stat. 774): 25 U.S.C. 396a-g; and 25 U.S.C. 2 and
9.
Subpart A--General
Sec. 211.1 Purpose and scope.
(a) The regulations in this part govern leases and permits for the
development of Indian tribal oil and gas, geothermal, and solid mineral
resources except as provided under paragraph (e) of this section. These
regulations are applicable to lands or interests in lands the title to
which is held in trust by the United States or is subject to a
restriction against alienation imposed by the United States. These
regulations are intended to ensure that Indian mineral owners desiring
to have their resources developed are assured that they will be
developed in a manner that maximizes their best economic interests and
minimizes any adverse environmental impacts or cultural impacts
resulting from such development.
(b) The regulations in this part shall be subject to amendment at
any time by the Secretary of the Interior. No regulation that becomes
effective after the date of approval of any lease or permit shall
operate to affect the duration of the lease or permit, rate of royalty,
rental, or acreage unless agreed to by all parties to the lease or
permit.
(c) The regulations of the Bureau of Land Management, the Office of
Surface Mining Reclamation and Enforcement, and the Minerals Management
Service that are referenced in Secs. 211.4, 211.5, and 211.6 are
supplemental to the regulations in this part, and apply to parties
holding leases or permits for development of Indian mineral resources
unless specifically stated otherwise in this part or in such other
Federal regulations.
(d) Nothing in the regulations in this part is intended to prevent
Indian tribes
[[Page 35654]]
from exercising their lawful governmental authority to regulate the
conduct of persons, businesses, operations or mining within their
territorial jurisdiction.
(e) The regulations in this part do not apply to leasing and
development governed by regulations in 25 CFR Parts 213 (Members of the
Five Civilized Tribes of Oklahoma), 226 (Osage), or 227 (Wind River
Reservation).
Sec. 211.2 Information collection.
The information collection requirements contained in this part do
not require a review by the Office of Management and Budget under the
Paperwork Reduction Act (44 U.S.C. 3501; et seq.).
Sec. 211.3 Definitions.
As used in this part, the following words and phrases have the
specified meaning except where otherwise indicated:
Applicant means any person seeking a permit, lease, or an
assignment from the superintendent or area director.
Approving official means the Bureau of Indians Affairs official
with delegated authority to approve a lease or permit.
Area director means the Bureau of Indian Affairs official in charge
of an area office.
Authorized officer means any employee of the Bureau of Land
Management authorized by law or by lawful delegation of authority to
perform the duties described in this part and in 43 CFR Parts 3160,
3180, 3260, 3280, 3480 and 3590.
Cooperative agreement means a binding arrangement between two or
more parties purporting to the act of agreeing or of coming to a mutual
arrangement that is accepted by all parties to a transaction (e.g.,
communitization and unitization).
Director's representative means the Office of Surface Mining
Reclamation and Enforcement director's representative authorized by law
or lawful delegation of authority to perform the duties described in 30
CFR part 750.
Gas means any fluid, either combustible or non-combustible, that is
produced in a natural state from the earth and that maintains a gaseous
or rarefied state at ordinary temperature and pressure conditions.
Geological and geophysical permit means a written authorization to
conduct on-site surveys to locate potential deposits of oil and gas,
geothermal or solid mineral resources on the lands.
Geothermal resources means:
(1) All products of geothermal processes, including indigenous
steam, hot water and hot brines;
(2) Steam and other gases, hot water, and hot brines, resulting
from water, gas or other fluids artificially introduced into geothermal
formations;
(3) Heat or other associated energy found in geothermal formations;
and
(4) Any by-product derived therefrom.
In the best interest of the Indian mineral owner refers to the
standards to be applied by the Secretary in considering whether to take
an administrative action affecting the interests of an Indian mineral
owner. In considering whether it is ``in the best interest of the
Indian mineral owner'' to take a certain action (such as approval of a
lease, permit, uni
FR Doc. 96-16036 Leasing of Tribal Lands for Mineral Development and Leasing of Allotted Lands for Mineral Development
tization or communitization agreement), the Secretary
shall consider any relevant factor, including, but not limited to:
economic considerations, such as date of lease expiration; probable
financial effect on the Indian mineral owner; leasability of land
concerned; need for change in the terms of the existing lease;
marketability; and potential environmental, social, and cultural
effects.
Indian lands means any lands owned by any individual Indian or
Alaska Native, Indian tribe, band, nation, pueblo, community,
rancheria, colony, or other tribal group which owns land or interests
in the land, the title to which is held in trust by the United States
or is subject to a restriction against alienation imposed by the United
States.
Indian mineral owner means an Indian tribe, band, nation, pueblo
community, rancheria, colony, or other tribal group which owns mineral
interests in oil and gas, geothermal or solid mineral resources, title
to which is held in trust by the United States, or is subject to a
restriction against alienation imposed by the United States.
Indian surface owner means any individual Indian or Indian tribe
whose surface estate is held in trust by the United States, or is
subject to restriction against alienation imposed by the United States.
Lease means any contract approved by the United States under the
Act of May 11, 1938 (52 Stat. 347) (25 U.S.C. 396a-396g), as amended,
that authorizes exploration for, extraction of, or removal of any
minerals.
Lessee means a natural person, proprietorship, partnership,
corporation, or other entity that has entered into a lease with an
Indian mineral owner, or who has been assigned an obligation to make
royalty or other payments required by the lease.
Lessor means an Indian mineral owner who is a party to a lease.
Minerals includes both metalliferous and non-metalliferous
minerals; all hydrocarbons, including oil and gas, coal and lignite of
all ranks; geothermal resources; and includes but is not limited to,
sand, gravel, pumice, cinders, granite, building stone, limestone,
clay, silt, or any other energy or non-energy mineral.
Minerals Management Service official means any employee of the
Minerals Management Service (MMS) authorized by law or by lawful
delegation of authority to perform the duties described in 30 CFR
chapter II, subchapters A and C.
Mining means the science, technique, and business of mineral
development including, but not limited to: opencast work, underground
work, and in-situ leaching directed to severance and treatment of
minerals; Provided, when sand, gravel, pumice, cinders, granite,
building stone, limestone, clay or silt is the subject mineral, an
enterprise is considered ``mining'' only if the extraction of such a
mineral exceeds 5,000 cubic yards in any given year.
Oil means all nongaseous hydrocarbon substances other than those
substances leasable as coal, oil shale, or gilsonite (including all
vein-type solid hydrocarbons). Oil includes liquefiable hydrocarbon
substances such as drip gasoline and other natural condensates
recovered or recoverable in a liquid state from produced gas without
resorting to a manufacturing process.
Permit means any contract issued by the superintendent and/or area
director to conduct exploration on; or removal of less than 5,000 cubic
yards per year of common varieties of minerals from Indian lands.
Permittee means a person holding or required by this part to hold a
permit to conduct exploration operations on; or remove less than 5,000
cubic yards per year of common varieties of minerals from Indian lands.
Secretary means the Secretary of the Interior or an authorized
representative.
Solid minerals means all minerals excluding oil, gas and geothermal
resources.
Superintendent means the Bureau of Indian Affairs official in
charge of the agency office having jurisdiction over the minerals
subject to leasing under this part.
Sec. 211.4 Authority and responsibility of the Bureau of Land
Management (BLM).
The functions of the Bureau of Land Management are found in 43 CFR
part 3160--Onshore Oil and Gas Operations, 43 CFR part 3180--Onshore
Oil and Gas
[[Page 35655]]
Unit Agreements: Unproven Area, 43 CFR part 3260--Geothermal Resources
Operations, 43 CFR part 3280--Geothermal Resources Unit Agreements:
Unproven Areas, 43 CFR part 3480--Coal Exploration and Mining
Operations, and 43 CFR part 3590--Solid Minerals (other than coal)
Exploration and Mining Operations; and currently include, but are not
limited to, resource evaluation, approval of drilling permits, mining
and reclamation, production plans, mineral appraisals, inspection and
enforcement, and production verification. These regulations, apply to
leases and permits approved under this part.
Sec. 211.5 Authority and responsibility of the Office of Surface
Mining Reclamation and Enforcement (OSM).
The OSM is the regulatory authority for surface coal mining and
reclamation operations on Indian lands pursuant to the Surface Mining
Control and Reclamation Act of 1977 (30 U.S.C. 1201 et seq.). The
relevant regulations for surface coal mining and reclamation operations
are found in 30 CFR part 750. Those regulations apply to mining and
reclamation on leases approved under this part.
Sec. 211.6 Authority and responsibility of the Minerals Management
Service (MMS).
The functions of the MMS for reporting, accounting, and auditing
are found in 30 CFR chapter II, subchapters A and C, which, apply to
leases approved under this part. To the extent the parties to a lease
or permit are able to provide reasonable provisions satisfactorily
addressing the functions governed by MMS regulations, the Secretary may
approve alternate provisions in a lease or permit.
Sec. 211.7 Environmental studies.
(a) The Secretary shall ensure that all environmental studies are
prepared as required by the National Environmental Policy Act of 1969
(NEPA) and the regulations promulgated by the Council on Environmental
Quality (CEQ), found in 40 CFR parts 1500 through 1508.
(b) The Secretary shall ensure that all necessary surveys are
performed and clearances obtained in accordance with 36 CFR parts 60,
63, and 800 and with the requirements of the Archaeological and
Historic Preservation Act (16 U.S.C. 469 et seq.), the National
Historic Preservation Act (16 U.S.C. 470 et seq.), The American Indian
Religious Freedom Act (42 U.S.C. 1996), and Executive Order 11593,
Protection and Enhancement of the Cultural Environment (3 CFR, 1971
through 1975 Comp., p. 559). If these surveys indicate that a mineral
development will have an adverse effect on a property listed on or
eligible for listing on the National Register of Historic Places, the
Secretary shall:
(1) Seek the comments of the Advisory Council on Historic
Preservation, in accordance with 36 CFR part 800;
(2) Ensure that the property is avoided, that the adverse effect is
mitigated, or;
(3) Ensure that appropriate excavations or other related research
is conducted and ensure that complete data describing the historic
property is preserved.
Sec. 211.8 Government employees cannot acquire leases.
U.S. Government employees are prevented from acquiring leases or
interests in leases by the provisions of 25 CFR part 140 and 43 CFR
part 20 pertaining to conflicts of interest and ownership of an
interest in trust land.
Sec. 211.9 Existing permits or leases for minerals issued pursuant to
43 CFR chapter II and acquired for Indian tribes.
(a) Title to the minerals underlying certain Federal lands, which
were previously subject to general leasing and mining laws, is now held
in trust by the United States for Indian tribes. Existing mineral
prospecting permits, exploration and mining leases on these lands,
issued prior to these lands being placed in trust status or becoming
Indian lands, pursuant to 43 CFR chapter II (and its predecessor
regulations), and all actions on the permits and leases shall be
administered by the Secretary in accordance with the regulations set
forth in 30 CFR chapters II and VII and 43 CFR chapter II, as
applicable, provided, that all payment or reports required by a non-
producing lease or permit, issued pursuant to 43 CFR chapter II, shall
be made to the superintendent having administrative jurisdiction over
the land involved, instead of the officer of the Bureau of Land
Management designated in 43 CFR unless specifically stated otherwise in
the statutes authorizing the United States to hold the land in trust
for an Indian tribe. Producing lease payments and reports will be
submitted to the Minerals Management Service in accordance with 30 CFR
chapter II, subchapters A and C.
(b) Administrative actions regarding an existing lease or permit
under this section, may be appealed pursuant to 25 CFR part 2.
Subpart B--How to Acquire Leases
Sec. 211.20 Leasing procedures.
(a) Indian mineral owners may, with the approval of the
superintendent or area director, lease their land for mining purposes.
No oil and gas lease shall be approved unless it has first been offered
for bidding at an advertised lease sale in accordance with this
section. Leases for minerals other than oil and gas shall be advertised
for bids as prescribed in this section unless the Secretary grants the
Indian mineral owners written permission to negotiate for lease.
Application for leases shall be made to the superintendent having
jurisdiction over the lands.
(b) Indian mineral owners may request that the Secretary prepare
and advertise or negotiate (if the requirements of this section have
been met) mineral leases on their behalf. If requested by an applicant
interested in acquiring rights to Indian-owned minerals, the Secretary
shall promptly notify the Indian mineral owner, and advise the owner in
writing of the alternatives available, including the right to decline
to lease. If the Indian mineral owner decides to have the leases
advertised, the Secretary shall consult with the Indian mineral owner
concerning the appropriate royalty rate and rental. The Secretary may
then undertake the responsibility to advertise and lease in accordance
with the following procedures:
(1) Leases shall be advertised to receive optimum competition for
bonus consideration, under sealed bid, oral auction, or a combination
of both. Notice of such advertisement shall be published in at least
one local newspaper and in one trade publication at least thirty (30)
days in advance of sale. If applicable, such notice must identify the
reservation within which the tracts to be leased are found. No specific
description of the tracts to be leased need be published. Specific
description of such tracts shall be available at the office of the
superintendent and/or area director upon request. The complete text of
the advertisement, including a specific description, shall be mailed to
each person listed on the appropriate agency or area mailing list.
Individuals and companies interested in receiving advertisements of
lease sales should send their mailing information to the appropriate
superintendent or area director for future reference.
(2) The advertisement shall offer the tracts to the responsible
bidder offering the highest bonus. The Secretary, after consultation
with the Indian mineral owner, shall establish the rental and
[[Page 35656]]
royalty rates which shall be stated in the advertisement and shall not
be subject to negotiation. The advertisement shall provide that the
Secretary reserves the right to reject any or all bids, and that
acceptance of the lease bid by the Indian mineral owner is required.
(3) Each sealed bid must be accompanied by a cashier's check,
certified check or postal money order, or any combination thereof,
payable to the payee designated in the advertisement, in an amount not
less than 25 percent of the bonus bid, which shall be returned if that
bid is not accepted.
(4) A successful oral auction bidder will be allowed five (5)
working days to remit the required 25 percent deposit of the bonus bid.
(5) A successful bidder shall, within thirty (30) days after
notification of the bid award, remit to the Secretary the balance of
the bonus, the first year's rental, a $75 filing fee, its prorated
share of the advertising costs as determined by the Bureau of Indian
Affairs, and file with the Secretary all required bonds. The successful
bidder shall also file the lease in completed form at that time.
However, for good reasons, the Secretary may grant extensions of time
in thirty (30) day increments for filing of the lease and all required
bonds, provided that additional extension requests are submitted and
approved prior to the expiration of the original thirty (30) days or
the previously granted extension. Failure on the part of the bidder to
take all reasonable actions necessary to comply with the foregoing
shall result in forfeiture of the required payment of 25 percent of any
bonus bid for the use and benefit of the Indian mineral owner.
(6) If no satisfactory bid is received, or if the accepted bidder
fails to complete all requirements necessary for the approval of the
lease, or if the Secretary determines that it is not in the best
interest of the Indian mineral owner to accept any of the bids the
Secretary may re-advertise the lease for sale, or, subject to the
consent of the Indian mineral owner, the lease may be let through
private negotiations.
(c) The Secretary shall advise the Indian mineral owner of the
results of the bidding, and shall not approve the lease until the
consent of the Indian mineral owner has been obtained.
(d) The Indian mineral owner may also submit negotiated leases to
the Secretary for review and approval.
Sec. 211.21 [Reserved]
Sec. 211.22 Leases for subsurface storage of oil or gas.
(a) The Secretary, with the consent of the Indian mineral owners,
may approve storage leases, or modifications, amendments, or extensions
of existing leases, on Indian lands to provide for the subsurface
storage of oil or gas, irrespective of the lands from which production
is initially obtained. The storage lease, or modification, amendment,
or extension to an existing lease, shall provide for the payment of
such storage fee or rental on such oil or gas as may be determined
adequate in each case, or, in lieu thereof, for a royalty other than
that prescribed in the oil and gas lease when such stored oil and gas
is produced in conjunction with oil or gas not previously produced.
(b) The Secretary, with consent of the Indian mineral owners, may
approve a provision in an oil and gas lease under which storage of oil
and gas is authorized, for continuance of the lease at least for the
period of such storage use and so long thereafter as oil or gas not
previously produced is produced in paying quantities.
(c) Applications for subsurface storage of oil or gas shall be
filed in triplicate with the authorized officer and shall disclose the
ownership of the lands involved, the parties in interest, the storage
fee, rental, or royalty offered to be paid for such storage, and all
essential information showing the necessity for such project. Enough
copies of the final agreement signed by the Indian mineral owners and
other parties in interest shall be submitted for the approval of the
Secretary to permit retention of five copies by the Department after
approval.
Sec. 211.23 Corporate qualifications and requests for information.
(a) The signing in a representative capacity and delivery of bids,
geological and geophysical permits, mineral leases, or assignments,
bonds, or other instruments required by the regulations in this part
constitutes certification that the individual signing (except a surety
agent) is authorized to act in such capacity. An agent for a surety
shall furnish a power of attorney.
(b) A corporate applicant proposing to acquire an interest in a
permit or lease shall have on file with the superintendent or area
director a statement showing:
(1) The State(s) in which the corporation is incorporated, and that
the corporation is authorized to hold such interests in the State where
the land described in the instrument is situated; and
(2) A notarized statement that the corporation has power to conduct
all business and operations as described in the lease or permit.
(c) The Secretary may, either before or after the approval of a
permit, mineral lease, assignment, or bond, call for any reasonable
additional information necessary to carry out the regulations in this
part, or other applicable laws and regulations.
Sec. 211.24 Bonds.
(a) The lessee, permittee or prospective lessee acquiring a lease,
or any interest therein, by assignment shall furnish with each lease,
permit or assignment a surety bond or personal bond in an amount
sufficient to ensure compliance with all of the terms and conditions of
the lease(s), permit(s), or assignment(s) and the statutes and
regulations applicable to the lease, permit, or assignment. Surety
bonds shall be issued by a qualified company approved by the Department
of the Treasury (see Department of the Treasury Circular No. 570).
(b) An operator may file a $75,000 bond for all geothermal, mining,
or oil and gas leases, permits, or assignments in any one State, which
may also include areas on that part of an Indian reservation extending
into any contiguous State. Statewide bonds are subject to approval in
the discretion of the Secretary.
(c) An operator may file a $150,000 bond for full nationwide
coverage to cover all geothermal or oil and gas leases, permits, or
assignments without geographic or acreage limitation to which the
operator is or may become a party. Nationwide bonds are subject to
approval in the discretion of the Secretary.
(d) Personal bonds shall be accompanied by:
(1) Certificate of deposit issued by a financial institution, the
deposits of which are federally insured, explicitly granting the
Secretary full authority to demand immediate payment in case of default
in the performance of the provisions and conditions of the lease or
permit. The certificate shall explicitly indicate on its face that
Secretarial approval is required prior to redemption of the certificate
of deposit by any party;
(2) Cashier's check;
(3) Certified check;
(4) Negotiable Treasury securities of the United States of a value
equal to the amount specified in the bond. Negotiable Treasury
securities shall be accompanied by a proper conveyance to the Secretary
of full authority to sell such securities in case of default in the
performance of the provisions and conditions of a lease or permit; or
(5) Letter of credit issued by a financial institution authorized
to do business in the United States and whose
[[Page 35657]]
deposits are federally insured, and identifying the Secretary as sole
payee with full authority to demand immediate payment in the case of
default in the performance of the provisions and conditions of a lease
or permit.
(i) The letter of credit shall be irrevocable during its term.
(ii) The letter of credit shall be payable to the Bureau of Indian
Affairs upon demand, in part or in full, upon receipt from the
Secretary of a notice of attachment stating the basis thereof (e.g.,
default in compliance with the lease or permit provisions and
conditions or failure to file a replacement in accordance with
paragraph (d)(5)(v) of this section).
(iii) The initial expiration date of the letter of credit shall be
at least one (1) year following the date it is filed in the proper
Bureau of Indian Affairs office.
(iv) The letter of credit shall contain a provision for automatic
renewal for periods of not less than one (1) year in the absence of
notice to the proper Bureau of Indian Affairs office at least ninety
(90) days prior to the originally stated or any extended expiration
date.
(v) A letter of credit used as security for any lease or permit
upon which operations have taken place and final approval for
abandonment has not been given, or as security for a statewide or
nationwide bond, shall be forfeited and shall be collected by the
Secretary if not replaced by other suitable bond or letter of credit at
least thirty (30) days before its expiration date.
(e) The required amount of bonds may be increased in any particular
case at the discretion of the Secretary.
Sec. 211.25 Acreage limitation.
A lessee may acquire more than one lease but no single lease shall
be granted for mineral leasing purposes on Indian tribal or restricted
lands in excess of the following acreage except where the rule of
approximation applies:
(a) Leases for oil and gas and all other minerals except coal are
to be contained within one United States Governmental survey section of
land and shall be described by legal subdivisions including lots or
tract equivalents not to exceed 640 acres; in instances of irregular
surveys, including lands not surveyed under the United States
Governmental survey, lands shall be considered in multiples of 40 acres
or the nearest aliquot equivalent thereof;
(b) Leases for coal shall ordinarily be limited to 2,560 acres in a
reasonably compact form and shall be described by legal subdivisions
including lots or tract equivalents. In instances of irregular surveys,
including lands not surveyed under the United States Governmental
survey, lands shall be considered in multiples of 40 acres or the
nearest aliquot equivalent thereof. The Secretary may, upon application
and with the consent of the Indian mineral owner, approve the issuance
of a single lease for more than 2,560 acres, in a reasonably compact
form, upon a finding that the issuance is in the best interest of the
lessor.
Sec. 211.26 [Reserved]
Sec. 211.27 Duration of leases.
(a) All leases shall be for a term not to exceed a primary term of
lease duration of ten (10) years and, absent specific lease provisions
to the contrary, shall continue as long thereafter as the minerals
specified in the lease are produced in paying quantities. Absent
specific lease provisions to the contrary, all provisions in leases
governing their duration shall be measured from the date of approval by
the Secretary.
(b) An oil and gas or geothermal resource lease which stipulates
that it shall continue in full force and effect beyond the expiration
of the primary term of lease duration (``commencement clause'') if
drilling operations have commenced during the primary term, shall be
valid and shall hold the lease beyond the primary term of lease
duration if the lessee or the lessee's designee has commenced actual
drilling by midnight of the last day of the primary term of the lease
with a drilling rig designed to reach the total proposed depth, and
drilling is continued with reasonable diligence until the well is
completed to production or abandoned. However, in no case shall such
drilling hold the lease longer than 120 days past the primary term of
lease duration without actual production of oil, gas, or geothermal
resources. Provided, that this extension does not allow a lease to
continue past the 10-year statutory limitation. Drilling which meets
the requirements of this section and occurs within a unit or
communitization agreement to which the lease is committed shall be
considered as if it occurs on the leasehold itself. If there is a
conflict between the commencement clause and the habendum clause of a
lease, the commencement clause will control.
(c) A solid minerals lease which stipulates that it shall continue
in full force and effect beyond the expiration of the primary term of
lease duration if mining operations have commenced during the primary
term (commencement clause), shall be valid and hold the lease beyond
the primary term of lease duration if the lessee or the lessee's
designee has by midnight of the last day of the primary term of the
lease commenced actual removal of mineral materials intended for sale
and upon which royalties will be paid. If there is a conflict between
the commencement clause and the habendum clause of a lease, the
commencement clause will control.
Sec. 211.28 Unitization and communitization agreements, and well
spacing.
(a) For the purpose of promoting conservation and efficient
utilization of minerals, the Secretary may approve a cooperative unit,
drilling or other development plan on any leased area upon a
determination that approval is advisable and in the best interest of
the Indian mineral owner. For the purposes of this section, a
cooperative unit, drilling or other development plan means an agreement
for the development or operation of a specifically designated area as a
single unit without regard to separate ownership of the land included
in the agreement. Such cooperative agreements include, but are not
limited to, unit agreements, communitization agreements and other types
of agreements that allocate costs and benefits.
(b) The consent of the Indian mineral owner to such unit or
cooperative agreement shall not be required unless such consent is
specifically required in the lease. However, the Secretary shall
consult with the Indian mineral owner prior to making a determination
concerning a cooperative agreement or well spacing plan.
(c) Requests for approval of cooperative agreements which comply
with the requirements of all applicable rules and regulations shall be
filed with the superintendent or area director.
(d) All Indian mineral owners of any right, title or interest in
the mineral resources to be included in a cooperative agreement must be
notified by the lessee at the time the agreement is submitted to the
superintendent or area director. An affidavit from the lessee stating
that a notice was mailed to each mineral owner of record for whom the
superintendent or area director has an address will satisfy this notice
requirement.
(e) A request for approval of a proposed cooperative agreement, and
all documents incident to such agreement, must be filed with the
superintendent or area director at least ninety (90) days prior to the
first expiration date of any of the Indian leases in the area proposed
to be covered by the cooperative agreement.
[[Page 35658]]
(f) Unless otherwise provided in the cooperative agreement,
approval of the agreement commits each lease to the unit in the area
covered by the agreement on the date approved by the Secretary or the
date of first production, whichever is earlier, as long as the
agreement is approved before the lease expiration date.
(g) Any lease committed in part to any such cooperative agreement
shall be segregated into a separate lease or leases as to the lands
committed and lands not committed to the agreement. Segregation shall
be effective on the date the agreement is effective.
(h) Wells shall be drilled in conformity with a well spacing
program approved by the authorized officer.
Sec. 211.29 Exemption of leases and permits made by organized tribes.
The regulations in this part may be superseded by the provisions of
any tribal constitution, bylaw or charter issued pursuant to the Indian
Reorganization Act of June 18, 1934 (48 Stat. 984; 25 U.S.C. 461-479),
the Alaska Act of May 1, 1936 (49 Stat. 1250; 48 U.S.C. 362,258a), or
the Oklahoma Indian Welfare Act of June 26, 1936 (49 Stat. 1967; 25
U.S.C., and Sup., 501-509), or by ordinance, resolution, or other
action authorized under such constitution, bylaw or charter; Provided,
that such tribal law may not supersede the requirements of Federal
statutes applicable to Indian mineral leases. The regulations in this
part, in so far as they are not so superseded, shall apply to leases
and permits made by organized tribes if the validity of the lease or
permit depends upon the approval of the Secretary of the Interior.
Subpart C--Rents, Royalties, Cancellations and Appeals
Sec. 211.40 Manner of payments.
Unless otherwise specifically provided for in a lease, once
production has been established, all payments shall be made to the MMS
or such other party as may be designated, and shall be made at such
time as provided in 30 CFR chapter II, subchapters A and C. Prior to
production, all bonus and rental payments, shall be made to the
superintendent or area director.
Sec. 211.41 Rentals and production royalty on oil and gas leases.
(a) A lessee shall pay, in advance, beginning with the effective
date of the lease, an annual rental of $2.00 per acre or fraction of an
acre or such other greater amount as prescribed in the lease. This
rental shall not be credited against production royalty nor shall the
rental be prorated or refunded because of surrender or cancellation.
(b) The Secretary shall not approve leases with a royalty rate less
than 16-\2/3\ percent of the amount or value of production produced and
sold from the lease unless a lower royalty rate is agreed to by the
Indian mineral owner and is found to be in the best interest of the
Indian mineral owner. Such approval may only be granted by the area
director if the approving official is the superintendent and by the
Assistant Secretary for Indian Affairs if the approving official is the
area director.
(c) Value of lease production for royalty purposes shall be
determined in accordance with applicable lease provisions and
regulations in 30 CFR chapter II, subchapters A and C. If the valuation
provisions in the lease are inconsistent with the regulations in 30 CFR
chapter II, subchapters A and C, the lease provisions shall govern.
(d) If the leased premises produce gas in excess of the lessee's
requirements for the development and operation of said premises, then
the lessor may use sufficient gas, free of charge, for any desired
school or other buildings belonging to the tribe, by making his own
connections to a regulator installed, connected to the well and
maintained by the lessee, and the lessee shall not be required to pay
royalty on gas so used. The use of such gas shall be at the lessor's
risk at all times.
Sec. 211.42 Annual rentals and expenditures for development on leases
other than oil and gas, and geothermal resources.
(a) Unless otherwise authorized by the Secretary, a lease for
minerals other than oil, gas and geothermal resources shall provide for
a yearly development expenditure of not less than $20 per acre. All
such leases shall provide for a rental payment of not less than $2.00
for each acre or fraction of an acre payable on or before the first day
of each lease year.
(b) Within twenty (20) days after the lease year, an itemized
statement, in duplicate, of the expenditure for development under a
lease for minerals other than oil and gas shall be filed with the
superintendent or area director. The lessee must certify the statement
under oath.
Sec. 211.43 Royalty rates for minerals other than oil and gas.
(a) Except as provided in paragraph (b) of this section, the
minimum rates for leases of minerals other than oil and gas shall be as
follows:
(1) For substances other than coal, the royalty rate shall be 10
percent of the value of production produced and sold from the lease at
the nearest shipping point.
(2) For coal to be strip or open pit mined the royalty rate shall
be 12\1/2\ percent of the value of production produced and sold from
the lease, and for coal removed from an underground mine, the royalty
rate shall be 8 percent of the value of production produced and sold
from the lease.
(3) For geothermal resources, the royalty rate shall be 10 percent
of the amount or value of steam, or any other form of heat or energy
derived from production of geothermal resources under the lease and
sold or utilized by the lessee. In addition, the royalty rate shall be
5 percent of the value of any byproduct derived from production of
geothermal resources under the lease and sold or utilized or reasonably
susceptible of sale or utilization by the lessee, except that the
royalty for any mineral byproduct shall be governed by the appropriate
paragraph of this section.
(b) A lower royalty rate shall be allowed if it is determined to be
in the best interest of the Indian mineral owner. Approval of a lower
rate may only be granted by the area director if the approving official
is the superintendent or by the Assistant Secretary for Indian Affairs,
if the approving official is the area director.
Sec. 211.44 Suspension of operations.
(a) After the expiration of the primary term of the lease the
Secretary may approve suspension of operations for remedial purposes
which are necessary for continued production, to protect the resource,
the environment, or for other good reasons. Provided, that such
remedial operations are conducted in accordance with 43 CFR part 3160,
subpart 3165 and under such stipulations and conditions as may be
prescribed by the Secretary and are conducted with reasonable
diligence. Any suspension shall not relieve the lessee from liability
for the payment of rental and other payments as required by lease
provisions.
(b) An application for permission to suspend operations or
production for economic or marketing reasons on a lease capable of
production after the expiration of the primary term of lease duration
must be accompanied by the written consent of the Indian mineral owner,
an economic analysis, and an executed amendment by the parties to the
lease setting forth the provisions pertaining to the suspension of
operations and production. Such application shall be treated as a
negotiated change to lease provisions,
[[Page 35659]]
and as such, shall be subject to review and approval by the Secretary.
Sec. 211.45 [Reserved]
Sec. 211.46 Inspection of premises, books and accounts.
Lessees shall allow the Indian mineral owner, the Indian mineral
owner's representatives, or any authorized representative of the
Secretary to enter all parts of the leased premises for the purpose of
inspection and audit. Lessees shall keep a full and correct account of
all operations and submit all related reports required by the lease and
applicable regulations. Books and records shall be available for
inspection during regular business hours.
Sec. 211.47 Diligence, drainage and prevention of waste.
The lessee shall:
(a) Exercise diligence in mining, drilling and operating wells on
the leased lands while minerals production can be secured in paying
quantities;
(b) Protect the lease from drainage (if oil and gas or geothermal
resources are being drained from the lease premises by a well or wells
located on lands not included in the lease, the Secretary reserves the
right to impose reasonable and equitable terms and conditions to
protect the interest of the Indian mineral owner of the lands, such as
payment of compensatory royalty for the drainage);
(c) Carry on operations in a good and workmanlike manner in
accordance with approved methods and practices;
(d) Have due regard for the prevention of waste of oil or gas or
other minerals, the entrance of water through wells drilled by the
lessee to other strata, to the destruction or injury of the oil or gas,
other mineral deposits, or fresh water aquifers, the preservation and
conservation of the property for future productive operations, and the
health and safety of workmen and employees;
(e) Securely plug all wells and effectively shut off all water from
the oil or gas-bearing strata before abandoning them;
(f) Not construct any well pad location within 200 feet of any
structures or improvements without the Indian surface owner's written
consent;
(g) Carry out, at the lessee's expense, all reasonable orders and
requirements of the authorized officer relative to prevention of waste;
(h) Bury all pipelines crossing tillable lands below plow depth
unless other arrangements are made with the Indian surface owner; and
(i) Pay the Indian surface owner all damages, including damages to
crops, buildings, and other improvements of the Indian surface owner
occasioned by the lessee's operations as determined by the
superintendent.
Sec. 211.48 Permission to start operations.
(a) No exploration, drilling, or mining operations are permitted on
any Indian lands before the Secretary has granted written approval of a
mineral lease or permit pursuant to the regulations in this part.
(b) After a lease or permit is approved, written permission must be
secured from the Secretary before any operations are started on the
leased premises, in accordance with applicable rules and regulations in
25 CFR part 216; 30 CFR chapter II, subchapters A and C; 30 CFR part
750 (Requirements for Surface Coal Mining and Reclamation Operations on
Indian Lands), 43 CFR parts 3160, 3260, 3480, 3590, and Orders or
Notices to Lessees (NTLs) issued thereunder.
Sec. 211.49 Restrictions on operations.
Leases issued under the provisions of the regulations in this part
shall be subject to such restrictions as to time or times for well
operations and production from any leased premises as the Secretary
judges may be necessary or proper for the protection of the natural
resources of the leased land and in the interest of the lessor.
Sec. 211.50 [Reserved]
Sec. 211.51 Surrender of leases.
A lessee may, with the approval of the Secretary, surrender a lease
or any part of it, on the following conditions:
(a) All royalties and rentals due on the date the request for
surrender is received must be paid;
(b) The superintendent, after consultation with the authorized
officer, must be satisfied that proper provisions have been made for
the conservation and protection of the property, and that all
operations on the portion of the lease surrendered have been properly
reclaimed, abandoned, or conditioned, as required;
(c) If a lease has been recorded, the lessee must submit a release
along with the recording information of the original lease so that,
after acceptance of the release, it may be recorded;
(d) If a lessee requests to surrender an entire lease or an entire
undivided portion of a lease document, the lessee must deliver to the
superintendent or area director the original lease documents; Provided,
that where the request is made by an assignee to whom no copy of the
lease was delivered, the assignee must deliver to the superintendent or
area director only its copy of the assignment;
(e) If the lease (or a portion thereof being surrendered) is owned
in undivided interests, all lessees owning undivided interests in the
lease must join in the request for surrender;
(f) No part of any advance rental shall be refunded to the lessee,
nor shall any subsequent surrender or termination of a lease relieve
the lessee of the obligation to pay advance rental if advance rental
became due prior to the date the request for surrender was received by
the superintendent or area director;
(g) If oil, gas, or geothermal resources are being drained from the
leased premises by a well or wells located on lands not included in the
lease, the Secretary reserves the right, prior to acceptance of the
surrender, to impose reasonable and equitable terms and conditions to
protect the interests of the Indian mineral owners of the lands
surrendered. Such terms and conditions may include payment of
compensatory royalty for any drainage; and
(h) Upon expiration or surrender of a solid mineral lease the
lessee shall deliver the leased premises in a condition conforming to
the approved reclamation plan. Unless otherwise provided in the lease,
the machinery necessary to operate the mine is the property of the
lessee. However, the machinery may not be removed from the leased
premises without the written permission of the Secretary.
Sec. 211.52 Fees.
Unless otherwise authorized by the Secretary, each permit, lease,
sublease, or other contract, or assignment, thereof shall be
accompanied by a filing fee of $75.00 at the time of filing.
Sec. 211.53 Assignments, overriding royalties, and operating
agreements.
(a) Approved leases or any interest therein may be assigned or
transferred only with the approval of the Secretary. The Indian mineral
owner must also consent if approval of the Indian mineral owner is
required in the lease. If consent is not required, then the Secretary
shall notify the Indian mineral owner of the proposed assignment. To
obtain the approval of the Secretary the assignee must be qualified to
hold the lease under existing rules and regulations and shall furnish a
satisfactory bond conditioned for the faithful performance of the
covenants and conditions of the lease.
(b) No lease or interest therein or the use of such lease shall be
assigned, sublet, or transferred, directly or indirectly, by working or
drilling contract, or otherwise, without the consent of the Secretary.
(c) Assignments of leases, and stipulations modifying the
provisions of
[[Page 35660]]
existing leases, which stipulations are also subject to the approval of
the Secretary, shall be filed with the superintendent within five (5)
working days after the date of execution. Upon execution of
satisfactory bonds by the assignee the Secretary may permit the release
of any bonds executed by the assignor. Upon execution of satisfactory
bonds the assignee accepts all the assignor's responsibilities and
prior obligations and liabilities of the assignor (including but not
limited to any underpaid royalties and rentals) under the lease.
(d) Agreements creating overriding royalties or payments out of
production shall not be considered as interests in the leases as such
provision is used in this section. Agreements creating overriding
royalties or payments out of production, or agreements designating
operators are hereby authorized and the approval of the Secretary shall
not be required with respect thereto, but such agreements shall be
subject to the condition that nothing in such agreements shall be
construed as modifying any of the obligations of the lessee, including,
but not limited to, obligations imposed by requirements of the MMS for
reporting, accounting, and auditing; obligations for diligent
development and operation, protection against drainage and mining in
trespass, compliance with oil and gas, geothermal, and mining
regulations (25 CFR part 216; 43 CFR parts 3160, 3260, 3480, and 3590;
and those applicable rules found in 30 CFR chapter II, subchapters A
and C) and the requirements for Secretarial approval before abandonment
of any oil and gas or geothermal well or mining operation. All such
obligations are to remain in full force and effect, the same as if free
of any such overriding royalties or payments. The existence of
agreements creating overriding royalties or payments out of production,
whether or not actually paid, shall not be considered as justification
for the approval of abandonment of any oil and gas or geothermal well
or mining operation. Nothing in this paragraph revokes the requirement
for approval of assignments and other instruments which is required in
this section, but any overriding royalties or payments out of
production created by the provisions of such assignments or instruments
shall be subject to the condition stated in this section. Agreements
creating overriding royalties or payments out of production, or
agreements designating operators shall be filed with the superintendent
unless incorporated in assignments or instruments required to be filed
pursuant to this section.
Sec. 211.54 Lease or permit cancellation; Bureau of Indian Affairs
notice of noncompliance.
(a) If the Secretary determines that a permittee or lessee has
failed to comply with the terms of the permit or lease; the regulations
in this part; or other applicable laws or regulations; the Secretary
may:
(1) Serve a notice of noncompliance specifying in what respect the
permittee or lessee has failed to comply with the requirements
referenced in this paragraph, and specifying what actions, if any, must
be taken to correct the noncompliance; or
(2) Serve a notice of proposed cancellation of the lease or permit.
The notice of proposed cancellation shall set forth the reasons why
lease or permit cancellation is proposed and shall specify what
actions, if any, must be taken to avoid cancellation.
(b) The notice of noncompliance or proposed cancellation shall
specify in what respect the permittee or lessee has failed to comply
with the requirements referenced in paragraph (a), and shall specify
what actions, if any, must be taken to correct the noncompliance.
(c) The notice shall be served upon the permittee or lessee by
delivery in person or by certified mail to the permittee or lessee at
the permittee's or lessee's last known address. When certified mail is
used, the date of service shall be deemed to be when the notice is
received or five (5) working days after the date it is mailed,
whichever is earlier.
(d) The lessee or permittee shall have thirty (30) days (or such
longer time as specified in the notice) from the date that the notice
is served to respond, in writing, to the official or the Bureau of
Indian Affairs office that issued the notice.
(e) If a permittee or lessee fails to take any action that is
prescribed in the notice of proposed cancellation, fails to file a
timely written response to the notice, or files a written response that
does not, in the discretion of the Secretary, adequately justify the
permittee's or lessee's actions, then the Secretary may cancel the
lease or permit, specifying the basis for the cancellation.
(f) If a permittee or lessee fails to take corrective action or to
file a timely written response adequately justifying the permittee's or
lessee's actions pursuant to a notice of noncompliance, the Secretary
may issue an order of cessation of operations. If the permittee or
lessee fails to comply with the order of cessation, or fails to timely
file an appeal of the order of cessation pursuant to paragraph (h), the
Secretary may issue an order of lease or permit cancellation.
(g) Cancellation of a lease or permit shall not relieve the lessee
or permittee of any continuing obligations under the lease or permit.
(h) Orders of cessation or of lease or permit cancellation issued
pursuant to this section may be appealed under 25 CFR part 2.
(i) This section does not limit any other remedies of the Indian
mineral owner as set forth in the lease or permit.
(j) Nothing in this section is intended to limit the authority of
the authorized officer or the MMS official to take any enforcement
action authorized pursuant to statute or regulation.
(k) The authorized officer, MMS official, and the superintendent
and/or area director should consult with one another before taking any
enforcement actions.
Sec. 211.55 Penalties.
(a) In addition to or in lieu of cancellation under Sec. 211.54,
violations of the terms and conditions of any lease, or the regulations
in this part, or failure to comply with a notice of noncompliance or a
cessation order issued by the Secretary, or, in the case of solid
minerals the authorized officer, may subject a lessee or permittee to a
penalty of not more than $1,000 per day for each day that such a
violation or noncompliance continues beyond the time limits prescribed
for corrective action.
(b) A notice of a proposed penalty shall be served on the lessee or
permittee either personally or by certified mail to the lessee or
permittee at the lessee's or permittee's last known address. The date
of service by certified mail shall be deemed to be the date when
received or five (5) working days after the date mailed, whichever is
earlier.
(c) The notice shall specify the nature of the violation and the
proposed penalty, and shall specifically advise the lessee or permittee
of the lessee's or permittee's right to either request a hearing within
thirty (30) days from receipt of the notice or pay the proposed
penalty. Hearings shall be held before the superintendent and/or area
director whose findings shall be conclusive, unless an appeal is taken
pursuant to 25 CFR part 2.
(d) If the lessee or permittee served with a notice of proposed
penalty requests a hearing, penalties shall accrue each day the
violations or noncompliance set forth in the notice
[[Page 35661]]
continue beyond the time limits prescribed for corrective action. The
Secretary may issue a written suspension of the requirement to correct
the violations pending completion of the hearings provided by this
section only upon a determination, at the discretion of the Secretary,
that such a suspension will not be detrimental to the lessor and upon
submission and acceptance of a bond deemed adequate to indemnify the
lessor from loss or damage. The amount of the bond must be sufficient
to cover the cost of correcting the violations set forth in the notice
or any disputed amounts plus accrued penalties and interest.
(e) Payment in full of penalties more than ten (10) days after a
final decision imposing a penalty shall subject the lessee or permittee
to late payment charges. Late payment charges shall be calculated on
the basis of a percentage assessment rate of the amount unpaid per
month for each month or fraction thereof until payment is received by
the Secretary. In the absence of a specific lease provision prescribing
a different rate, the interest rate on late payments and underpayments
shall be a rate applicable under Sec. 6621(a)(2) of the Internal
Revenue Code of 1954. Interest shall be charged only on the amount of
payment not received and only for the number of days the payment is
late.
(f) None of the provisions of this section shall be interpreted as:
(1) Replacing or superseding the independent authority of the
authorized officer, the director's representative or the MMS official
to impose penalties for violations of applicable regulations pursuant
to 43 CFR part 3160, and 43 CFR Groups 3400 and 3500, 30 CFR part 750,
or 30 CFR chapter II, subchapters A and C;
(2) Replacing or superseding any penalty provision in the terms and
conditions of a lease or permit approved by the Secretary pursuant to
this part; or
(3) Authorizing the imposition of a penalty for violations of lease
or permit terms for which the authorized officer, director's
representative or MMS official, have either statutory or regulatory
authority to assess a penalty.
Sec. 211.56 Geological and geophysical permits.
Permits to conduct geological and geophysical operations on Indian
lands which do not conflict with any mineral leases entered into
pursuant to this part, may be approved by the Secretary with the
consent of the Indian mineral owner under the following conditions:
(a) The permit must describe the area to be explored, the duration,
and the consideration to be paid the Indian owner;
(b) The permit will not grant the permittee any option or
preference rights to a lease or other development contract, or
authorize the production of, or removal of oil and gas, geothermal
resources, or other minerals, except samples for assay and experimental
purposes, unless specifically so stated in the permit; and
(c) Copies of all data collected pursuant to operations conducted
under the permit shall be forwarded to the Secretary and the Indian
mineral owner, unless otherwise provided in the permit. Data collected
under a permit may be held by the Secretary as privileged and
proprietary information for the time prescribed in the permit. Where no
time period is prescribed in the permit, the Secretary may release such
information after six (6) years, with the consent of the Indian mineral
owner.
Sec. 211.57 Forms.
Leases, bonds, permits, assignments, and other instruments relating
to mineral leasing shall be on forms, prescribed by the Secretary, that
may be obtained from the superintendent or area director. The
provisions of a standard lease or permit may be changed, deleted, or
added to by written agreement of all parties with the approval of the
Secretary.
Sec. 211.58 Appeals.
Appeals from decisions of Bureau of Indian Affairs officers under
this part may be taken pursuant to 25 CFR part 2.
PART 212--LEASING OF ALLOTTED LANDS FOR MINERAL DEVELOPMENT
Subpart A--General
Sec.
212.1 Purpose and scope.
212.2 Information collection.
212.3 Definitions.
212.4 Authority and responsibility of the Bureau of Land Management
(BLM).
212.5 Authority and responsibility of the Office of Surface Mining
Reclamation and Enforcement (OSM).
212.6 Authority and responsibility of the Minerals Management
Service (MMS).
212.7 Environmental studies.
212.8 Government employees cannot acquire leases.
Subpart B--How to Acquire Leases
212.20 Leasing procedures.
212.21 Execution of leases.
212.22 Leases for subsurface storage of oil or gas.
212.23 Corporate qualifications and requests for information.
212.24 Bonds.
212.25 Acreage limitation.
212.26 [Reserved]
212.27 Duration of leases.
212.28 Unitization and communitization agreements, and well
spacing.
212.29 [Reserved]
212.30 Removal of restrictions.
212.31 [Reserved]
212.32 [Reserved]
212.33 Terms applying after relinquishment.
212.34 Individual tribal assignments excluded.
Subpart C--Rents, Royalties, Cancellations, and Appeals
212.40 Manner of payments.
212.41 Rentals and production royalty on oil and gas leases.
212.42 Annual rentals and expenditures for development on leases
other than oil and gas, and geothermal resources.
212.43 Royalty rates for minerals other than oil and gas.
212.44 Suspension of operations.
212.45 [Reserved]
212.46 Inspection of premises, books and accounts.
212.47 Diligence, drainage and prevention of waste.
212.48 Permission to start operations.
212.49 Restrictions on operations.
212.50 [Reserved]
212.51 Surrender of leases.
212.52 Fees.
212.53 Assignments, overriding royalties, and operating agreements.
212.54 Lease or permit cancellation; Bureau of Indian Affairs
notice of noncompliance.
212.55 Penalties.
212.56 Geological and geophysical permits.
212.57 Forms.
212.58 Appeals.
Authority: Act of March 3, 1909, (35 Stat. 783; 25 U.S.C. 396
(as amended)): Act of May 11, 1938, (Sec. 2, 52 Stat. 347; 25 U.S.C.
396 b-g: Act of August 1, 1956, (70 Stat. 774)); and 25 U.S.C. 2 and
9.
Subpart A--General
Sec. 212.1 Purpose and scope.
(a) The regulations in this part govern leases for the development
of individual Indian oil and gas, geothermal and solid mineral
resources. These regulations are applicable to lands or interests in
lands the title to which is held, for any individual Indian, in trust
by the United States or is subject to restriction against alienation
imposed by the United States. These regulations are intended to ensure
that Indian mineral owners desiring to have their resources developed
are assured that they will be developed in a manner that maximizes
their best economic interests and minimizes any adverse environmental
impacts or cultural impacts resulting from such development.
(b) The regulations in this part shall be subject to amendment at
any time by the Secretary of the Interior. No regulation that becomes
effective after
[[Page 35662]]
the date of approval of any lease or permit shall operate to affect the
duration of the lease or permit, rate of royalty, rental, or acreage
unless agreed to by all parties to the lease or permit.
(c) Nothing in the regulations in this part is intended to prevent
Indian tribes from exercising their lawful governmental authority to
regulate the conduct of persons, businesses, operations or mining
within their territorial jurisdiction.
(d) The regulations of the Bureau of Land Management, the Office of
Surface Mining Reclamation and Enforcement, and the Minerals Management
Service that are referenced in Secs. 212.4, 212.5, and 212.6 of this
part are supplemental to these regulations, and apply to parties
holding leases or permits for development of Indian mineral resources
unless specifically stated otherwise in this part or in such other
Federal regulations.
(e) The regulations in this part do not apply to leasing and
development governed by regulations in 25 CFR parts 213 (Members of the
Five Civilized Tribes of Oklahoma), 226 (Osage), or 227 (Wind River
Reservation).
Sec. 212.2 Information collection.
The information collection requirements contained in this part do
not require a review by the Office of Management and Budget under the
Paperwork Reduction Act (44 U.S.C. 3501; et seq.).
Sec. 212.3 Definitions.
As used in this part, the following words and phrases have the
specified meaning except where otherwise indicated:
Applicant means any person seeking a permit, lease, or an
assignment from the superintendent or area director.
Approving official means the Bureau of Indian Affairs official with
delegated authority to approve a lease or permit.
Area director means the Bureau of Indian Affairs official in charge
of an area office.
Authorized officer means any employee of the Bureau of Land
Management authorized by law or by lawful delegation of authority to
perform the duties described herein and in 43 CFR parts 3160, 3180,
3260, 3280, 3480, and 3590.
Cooperative agreement means a binding arrangement between two or
more parties purporting to the act of agreeing or of coming to a mutual
arrangement that is accepted by all parties to a transaction (e.g.,
communitization and unitization).
Director's representative means the Office of Surface Mining
Reclamation and Enforcement director's representative authorized by law
or lawful delegation of authority to perform the duties described in 30
CFR part 750.
Gas means any fluid, either combustible or non-combustible, that is
produced in a natural state from the earth and that maintains a gaseous
or rarefied state at ordinary temperature and pressure conditions.
Geological and geophysical permit means a written authorization to
conduct on-site surveys to locate potential deposits of oil and gas,
geothermal or solid mineral resources on the lands.
Geothermal resources means:
(1) All products of geothermal processes, including indigenous
steam, hot water and hot brines;
(2) Steam and other gases, hot water, and hot brines, resulting
from water, gas or other fluids artificially introduced into geothermal
formations;
(3) Heat or other associated energy found in geothermal formations;
and
(4) Any by-product derived therefrom.
In the best interest of the Indian mineral owner refers to the
standards to be applied by the Secretary in considering whether to take
an administrative action affecting the interests of an Indian mineral
owner. In considering whether it is ``in the best interest of the
Indian mineral owner'' to take a certain action (such as approval of a
lease, permit, unitization or communitization agreement), the Secretary
shall consider any relevant factor, including, but not limited to:
economic considerations, such as date of lease expiration; probable
financial effect on the Indian mineral owner; leasability of land
concerned; need for change in the terms of the existing lease;
marketability; and potential environmental, social, and cultural
effects.
Indian lands means any lands owned by any individual Indian or
Alaska Native, Indian tribe, band, nation, pueblo, community,
rancheria, colony, or other tribal group which owns lands or interest
in the minerals, the title to which is held in trust by the United
States or is subject to restriction against alienation imposed by the
United States.
Indian mineral owner means any individual Indian or Alaska Native
who owns mineral interests in oil and gas, geothermal, or solid mineral
resources, title to which is held in trust by the United States, or is
subject to the restriction against alienation imposed by the United
States.
Indian surface owner means any individual Indian or Indian tribe
whose surface estate is held in trust by the United States, or is
subject to restriction against alienation imposed by the United States.
Lease means any contract, approved by the Secretary of the Interior
under the Act of March 3, 1909 (35 Stat. 783)(25 U.S.C. 396), as
amended, and the Act of May 11, 1938 (52 Stat. 347) (25 U.S.C. 396a-
396g), as amended, that authorize exploration for, extraction of, or
removal of any minerals.
Lessee means a natural person, proprietorship, partnership,
corporation, or other entity which has entered into a lease with an
Indian mineral owner, or who has been assigned an obligation to make
royalty or other payments required by the lease.
Lessor means an Indian mineral owner who is a party to a lease.
Minerals includes both metalliferous and non-metalliferous
minerals; all hydrocarbons, including oil, gas, coal and lignite of all
ranks; geothermal resources; and includes but is not limited to, sand,
gravel, pumice, cinders, granite, building stone, limestone, clay,
silt, or any other energy or non-energy mineral.
Minerals Management Service official means any employee of the
Minerals Management Service (MMS) authorized by law or by lawful
delegation of authority to perform the duties described in 30 CFR
chapter II, subchapters A and C.
Mining means the science, technique, and business of mineral
development including, but not limited to: opencast work, underground
work, and in-situ leaching directed to severance and treatment of
minerals; Provided, when sand, gravel, pumice, cinders, granite,
building stone, limestone, clay or silt is the subject mineral, an
enterprise is considered ``mining'' only if the extraction of such a
mineral exceeds 5,000 cubic yards in any given year.
Oil means all nongaseous hydrocarbon substances other than those
substances leasable as coal, oil shale, or gilsonite (including all
vein-type solid hydrocarbons). Oil includes liquefiable hydrocarbon
substances such as drip gasoline and other natural condensates
recovered or recoverable in a liquid state from produced gas without
resorting to a manufacturing process.
Permit means any contract issued by the superintendent and/or area
director to conduct exploration on; or removal of less than 5,000 cubic
yards per year of common varieties of minerals from Indian lands.
Permittee means a person holding or required by this part to hold a
permit to conduct exploration operations on; or remove less than 5,000
cubic yards per
[[Page 35663]]
year of common varieties of minerals from Indian lands.
Secretary means the Secretary of the Interior or an authorized
representative.
Solid minerals means all minerals excluding oil and gas and
geothermal resources.
Superintendent means the Bureau of Indian Affairs official in
charge of the agency office having jurisdiction over the minerals
subject to leasing under this part.
Sec. 212.4 Authority and responsibility of the Bureau of Land
Management (BLM).
The functions of the Bureau of Land Management are found in 43 CFR
part 3160--Onshore Oil and Gas Operations, 43 CFR part 3180-- Onshore
Oil and Gas Unit Agreements: Unproven Area, 43 CFR part 3260--
Geothermal Resources Operations, 43 CFR part 3280--Geothermal Resources
Unit Agreements: Unproven Areas, 43 CFR part 3480--Coal Exploration and
Mining Operations, and 43 CFR part 3590--Solid Minerals (other than
coal) Exploration and Mining Operations, and currently include, but are
not limited to, resource evaluation, approval of drilling permits,
mining and reclamation, production plans, mineral appraisals,
inspection and enforcement, and production verification. Those
regulations, apply to leases or permits issued under this part.
Sec. 212.5 Authority and responsibility of the Office of Surface
Mining Reclamation and Enforcement (OSM).
The OSM is the regulatory authority for surface coal mining and
reclamation operations on Indian lands pursuant to the Surface Mining
Control and Reclamation Act of 1977 (30 U.S.C. 1201 et seq.). The
relevant regulations for surface coal mining and reclamation operations
are found in 30 CFR part 750. Those regulations apply to mining and
reclamation on leases issued under this part.
Sec. 212.6 Authority and responsibility of the Minerals Management
Service (MMS).
The functions of the MMS for reporting, accounting, and auditing
are found in 30 CFR chapter II, subchapters A and C, which apply to
leases approved under this part. To the extent the parties to a lease
or permit are able to provide reasonable provisions satisfactorily
addressing the functions governed by MMS regulations, the Secretary may
approve alternate provisions in a lease or permit.
Sec. 212.7 Environmental studies.
The provisions of Sec. 211.7 of this subchapter, as amended, are
applicable to leases under this part.
Sec. 212.8 Government employees cannot acquire leases.
U.S. Government employees are prevented from acquiring leases or
interests in leases by the provisions of 25 CFR part 140 and 43 CFR
part 20 pertaining to conflicts of interest and ownership of an
interest in trust land.
Subpart B--How to Acquire Leases
Sec. 212.20 Leasing procedures.
(a) Application for leases shall be made to the superintendent
having jurisdiction over the lands.
(b) Indian mineral owners may request the Secretary to prepare,
advertise and negotiate mineral leases on their behalf. Leases for
minerals shall be advertised for bids as prescribed in this section
unless one or more of the Indian mineral owners of a tract sought for
lease request the Secretary to negotiate for a lease on their behalf
without advertising. Unless the Secretary decides that negotiation of a
mineral lease is in the best interests of the Indian mineral owners, he
shall use the following procedure for leasing:
(1) Leases shall be advertised to receive optimum competition for
bonus consideration, under sealed bid, oral auction, or a combination
of both. Notice of such advertisement shall be published in at least
one local newspaper and in one trade publication at least thirty (30)
days in advance of sale. If applicable, such notice must identify the
reservation within which the tracts to be leased are found. No specific
description of the tracts to be leased need be published. Specific
description of such tracts shall be available at the office of the
superintendent and/or area director upon request. The complete text of
the advertisement, including a specific description, shall be mailed to
each person listed on the appropriate agency or area mailing list.
Individuals and companies interested in receiving advertisements on
lease sales should send their mailing information to the appropriate
agency or area office for future reference.
(2) The advertisement shall offer the tracts to a responsible
bidder offering the highest bonus. The Secretary shall establish the
rental and royalty rates which shall be stated in the advertisement and
will not be subject to negotiation. The advertisement shall provide
that the Secretary reserves the right to reject any or all bids, and
that acceptance of the lease bid by or on behalf of the Indian mineral
owner is required. The requirements under Sec. 212.21 are applicable to
the acceptance of a lease bid.
(3) Each sealed bid must be accompanied by a cashier's check,
certified check or postal money order, or any combination thereof,
payable to the payee designated in the advertisement, in an amount not
less than 25 percent of the bonus bid, which shall be returned if that
bid is not accepted.
(4) A successful oral auction bidder will be allowed five (5)
working days to remit the required 25 percent deposit of the bonus bid.
(5) A successful bidder shall, within thirty (30) days after
notification of the bid award, remit to the Secretary the balance of
the bonus, the first year's rental, a $75 filing fee, its prorated
share of the advertising costs as determined by the Bureau of Indian
Affairs, and file with the Secretary all required bonds. The successful
bidder shall also file the lease in completed form, signed by the
Indian mineral owner(s), at that time. However, for good reasons, the
Secretary may grant extensions of time in thirty (30) day increments
for filing of the lease and all required bonds, provided that
additional extension requests are submitted and approved prior to the
expiration of the original thirty (30) days or the previously granted
extension. Failure on the part of the bidder to take all reasonable
actions necessary to comply with the foregoing shall result in
forfeiture of the required payment of 25 percent of any bonus bid for
the use and benefit of the Indian mineral owner.
(6) If no satisfactory bid is received, or if the accepted bidder
fails to complete all requirements necessary for approval of the lease,
or if the Secretary determines that it is not in the best interest of
the Indian mineral owner to accept any of the bids the Secretary may
re-advertise the tract for sale, or subject to the consent of the
Indian mineral owner, a lease may be let through private negotiations.
(c) The Secretary shall advise the Indian mineral owner of the
results of the bidding, and shall not approve the lease until the
consent of the Indian mineral owner has been obtained. The requirements
under Sec. 212.21 are applicable to the approval of a mineral lease.
Sec. 212.21 Execution of leases.
(a) The Secretary shall not execute a mineral lease on behalf of an
Indian mineral owner, except when such owner is deceased and the heirs
to or devisee of the estate have not been determined, or if determined,
some or all of them cannot be located. Leases involving such interests
may be executed by the Secretary, provided that the mineral interest
shall have been
[[Page 35664]]
offered for sale under the provisions of section 212.20(b) (1) through
(6).
(b) The Secretary may execute leases on behalf of minors and
persons who are incompetent by reason of mental incapacity; Provided,
that there is no parent, guardian, conservator, or other person who has
lawful authority to execute a lease on behalf of the minor or person
with mental incapacity.
(c) If an owner is a life tenant, the procedures set forth in 25
CFR part 179 (Life Estates and Future Interests), shall apply.
Sec. 212.22 Leases for subsurface storage of oil or gas.
The provisions of Sec. 211.22 of this subchapter are applicable to
leases under this part.
Sec. 212.23 Corporate qualifications and requests for information.
The provisions of Sec. 211.23 of this subchapter are applicable to
leases under this part.
Sec. 212.24 Bonds.
The provisions of Sec. 211.24 of this subchapter are applicable to
leases under this part.
Sec. 212.25 Acreage limitation.
The provisions of Sec. 211.25 of this subchapter are applicable to
leases under this part.
Sec. 212.26 [Reserved]
Sec. 212.27 Duration of leases.
The provisions of Sec. 211.27 of this subchapter are applicable to
leases under this part.
Sec. 212.28 Unitization and communitization agreements, and well
spacing.
(a) For the purpose of promoting conservation and efficient
utilization of minerals, the Secretary may approve a cooperative unit,
drilling or other development plan on any leased area upon a
determination that approval is advisable and in the best interest of
the Indian mineral owner. For the purposes of this section, a
cooperative unit, drilling or other development plan means an agreement
for the development or operation of a specifically designated area as a
single unit without regard to separate ownership of the land included
in the agreement. Such cooperative agreements include, but are not
limited to, unit agreements, communitization agreements and other types
of agreements that allocate costs and benefits.
(b) The consent of the Indian mineral owner to such unit or
cooperative agreement shall not be required unless such consent is
specifically required in the lease.
(c) Requests for approval of cooperative agreements which comply
with the requirements of all applicable rules and regulations shall be
filed with the superintendent or area director.
(d) All Indian mineral owners of any right, title or interest in
the mineral resources to be included in a cooperative agreement must be
notified by the lessee at the time the agreement is submitted to the
superintendent or area director. An affidavit from the lessee stating
that a notice was mailed to each mineral owner of record for whom the
superintendent or area director has an address will satisfy this notice
requirement.
(e) A request for approval of a proposed cooperative agreement, and
all documents incident to such agreement, must be filed with the
superintendent or area director at least ninety (90) days prior to the
first expiration date of any of the Indian leases in the area proposed
to be covered by the cooperative agreement.
(f) Unless otherwise provided in the cooperative agreement,
approval of the agreement commits each lease to the unit in the area
covered by the agreement on the date approved by the Secretary or the
date of first production, whichever is earlier, as long as the
agreement is approved before the lease expiration date.
(g) Any lease committed in part to any such cooperative agreement
shall be segregated into a separate lease or leases as to the lands
committed and lands not committed to the agreement. Segregation shall
be effective on the date the agreement is effective.
(h) Wells shall be drilled in conformity with a well spacing
program approved by the authorized officer.
Sec. 212.29 [Reserved]
Sec. 212.30 Removal of restrictions.
(a) Notwithstanding the provisions of any mineral lease to the
contrary, the removal of all restrictions against alienation shall
operate to divest the Secretary of all supervisory authority and
responsibility with respect to the lease. Thereafter, all payments
required to be made under the lease shall be made directly to the
owner(s).
(b) In the event restrictions are removed from a part of the land
included in any lease approved by the Secretary, the entire lease shall
continue to be subject to the supervision of the Secretary until such
times as the holder of the lease and the unrestricted Indian owner
submits to the Secretary satisfactory evidence that adequate
arrangements have been made to account for the mineral resources of the
restricted land separately from those of the unrestricted. Thereafter,
the unrestricted portion shall be relieved from the supervision of the
Secretary, the lease, the regulations of this part, and all other
applicable laws and regulations.
Secs. 212.31, 212.32 [Reserved]
Sec. 212.33 Terms applying after relinquishment.
All leases for individual Indian lands approved by the Secretary
under this part shall contain provisions for the relinquishment of
supervision and provide for operations of the lease after such
relinquishment. These leases shall contain provisions that address the
following issues:
(a) Provisions of Relinquishment. If the Secretary relinquishes
supervision at any time during the life of the lease instrument as to
all or part of the acreage subject to the lease, the Secretary shall
give the Indian mineral owner and the lessee thirty (30) days written
notice prior to the termination of supervision. After notice of
relinquishment has been given to the lessee, the lease shall be subject
to the following conditions:
(1) All rentals and royalties thereafter accruing shall be paid
directly to the lessor or the lessor's successors in title, or to a
trustee appointed under the provisions of paragraph (b) of this
section.
(2) If, at the time supervision is relinquished by the Secretary,
the lessee has made all payments then due and has fully performed all
obligations on the lessee's part to be performed up to the time of such
relinquishment, the bond given to secure the performance of the lease,
on file in the appropriate agency or area office, shall be of no
further force or effect.
(3) Should relinquishment affect only part of the lease, then the
lessee may continue to conduct operations on the land covered by the
lease as an entirety; Provided, that the lessee shall pay, in the
manner prescribed by the lease and regulations for the benefit of
lessor, the same proportion of all rentals and royalties due under the
provisions of this part as the acreage retained under the supervision
of the Secretary bears to the entire acreage of the lessee, and shall
pay the remainder of the rentals and royalties directly to the
remaining lessors or successors in title or said trustee as the case
may be, as provided in paragraph (a) (1) of this section.
(b) Division of fee. If, after the execution of the lease and after
the
[[Page 35665]]
Secretary relinquishes supervision thereof, the fee of the leased land
is divided into separate parcels held by different owners, or if the
rental or royalty interest is divided in ownership, the obligations of
the lessee shall not be modified in any manner except as specifically
provided by the provisions of the lease. Notwithstanding such separate
ownership, the lessee may continue to conduct operations on said
premises as an entirety. Each separate owner shall receive such
proportion of all rental and royalties accruing after the vesting of
its title as the acreage of the fee, or rental or royalty interest,
bears to the entire acreage covered by the lease; or to the entire
rental or royalty interest as the case may be. If at any time after
departmental supervision of the lease is relinquished, in whole or in
part, to rentals and royalties, whether said parties are so entitled by
virtue of undivided interest or by virtue of ownership of separate
parcels of the land covered, the lessee may elect to withhold the
payment of further rentals or royalties (except as the portion due the
Indian lessor while under restriction), until all of said parties shall
agree upon and designate a trustee in writing and in a recordable
instrument to receive all payments due thereunder on behalf of said
parties and their respective successors in title. Payments to said
trustee shall constitute lawful payments, and the sole risk of an
improper or unlawful distribution of said funds by said trustee shall
rest upon the parties naming said trustee and their said respective
successors in title.
Sec. 212.34 Individual tribal assignments excluded.
The reference in this part to Indian mineral owners does not
include assignments of tribal lands made pursuant to tribal
constitutions or ordinances for the use of individual Indians and
assignees of such lands.
Subpart C--Rents, Royalties, Cancellations, and Appeals
Sec. 212.40 Manner of payments.
The provisions of Sec. 211.40 of this subchapter are applicable to
leases under this part.
Sec. 212.41 Rentals and production royalty on oil and gas leases.
(a) A lessee shall pay, in advance, beginning with the effective
date of the lease, an annual rental of $2.00 per acre or fraction of an
acre or such other greater amount as prescribed in the lease. This
rental shall not be credited against production royalty nor shall the
rental be prorated or refunded because of surrender or cancellation.
(b) The Secretary shall not approve leases with a royalty rate less
than 16-\2/3\ percent of the amount or value of production produced and
sold from the lease unless a lower royalty rate is agreed to by the
Indian mineral owner and is found to be in the best interest of the
Indian mineral owner. Such approval may only be granted by the area
director if the approving official is the superintendent and the
Assistant Secretary for Indian Affairs if the approving official is the
area director.
(c) Value of lease production for royalty purposes shall be
determined in accordance with applicable lease provisions and
regulations in 30 CFR chapter II, subchapters A and C. If the valuation
provisions in the lease are inconsistent with the regulations in 30 CFR
chapter II, subchapters A and C, the lease provisions shall govern.
Sec. 212.42 Annual rentals and expenditures for development on leases
other than oil and gas, and geothermal resources.
The provisions of Sec. 211.42 of this subchapter are applicable to
leases under this part.
Sec. 212.43 Royalty rates for minerals other than oil and gas.
The provisions of Sec. 211.43 of this subchapter are applicable to
leases under this part.
Sec. 212.44 Suspension of operations.
The provisions of Sec. 211.44 of this subchapter are applicable to
leases under this part.
Sec. 212.45 [Reserved]
Sec. 212.46 Inspection of premises, books, and accounts.
The provisions of Sec. 211.46 of this subchapter are applicable to
leases under this part.
Sec. 212.47 Diligence, drainage and prevention of waste.
The provisions of Sec. 211.47 of this subchapter are applicable to
leases under this part.
Sec. 212.48 Permission to start operations.
The provisions of Sec. 211.48 of this subchapter are applicable to
leases under this part.
Sec. 212.49 Restrictions on operations.
The provisions of Sec. 211.49 of this subchapter are applicable to
leases under this part.
Sec. 212.50 [Reserved]
Sec. 212.51 Surrender of leases.
The provisions of Sec. 211.51 of this subchapter are applicable to
leases under this part.
Sec. 212.52 Fees.
The provisions of Sec. 211.52 of this subchapter are applicable to
leases under this part.
Sec. 212.53 Assignments, overriding royalties, and operating
agreements.
The provisions of Sec. 211.53 of this subchapter are applicable to
leases under this part.
Sec. 212.54 Lease or permit cancellation; Bureau of Indian Affairs
notice of noncompliance.
The provisions of Sec. 211.54 of this subchapter are applicable to
leases under this part.
Sec. 212.55 Penalties.
The provisions of Sec. 211.55 of this subchapter are applicable to
this part.
Sec. 212.56 Geological and geophysical permits.
(a) Permits to conduct geological and geophysical operations on
Indian lands which do not conflict with any mineral lease entered into
pursuant to this part may be approved by the Secretary with the consent
of the Indian owner under the following conditions:
(1) The permit must describe the area to be explored, the duration
and the consideration to be paid the Indian owner;
(2) The permit may not grant the permittee any option or preference
rights to a lease or other development contract, authorize the
production of, or removal of oil and gas, or geothermal resources, or
other minerals except samples for assay and experimental purposes,
unless specifically so stated in the permit; and
(3) Copies of all data collected pursuant to operations conducted
under the permit shall be forwarded to the Secretary and made available
to the Indian mineral owner, unless otherwise provided in the permit.
Data collected under a permit shall be held by the Secretary as
privileged and proprietary information for the time prescribed in the
permit. Where no time period is prescribed in the permit, the Secretary
may, in the discretion of the Secretary, release such information after
six (6) years.
(b) A permit may be granted by the Secretary without 100 percent
consent of the individual mineral owners if:
(1) The minerals are owned by more than one person, and the owners
of a
[[Page 35666]]
majority of the interest therein consent to the permit;
(2) The whereabouts of one or more owners of the minerals or an
interest therein is unknown, and all the remaining owners of the
interests consent to the permit;
(3) The heirs or devisee of a deceased owner of the land or an
interest therein have not been determined, and the Secretary finds that
the permit activity will cause no substantial injury to the land or any
owner thereof; or
(4) The owners of interests in the land are so numerous that the
Secretary finds it would be impractical to obtain their consent, and
also finds that the permit activity will cause no substantial injury to
the land or any owner thereof.
(c) A lessee does not need a permit to conduct geological and
geophysical operations on Indian lands, if provided for in the lessee's
mineral lease, where the Indian mineral owner is also the surface land
owner. In instances where the Indian mineral owner is not the surface
owner, the lessee must obtain any additional necessary permits or
rights of ingress or egress from the surface occupant.
Sec. 212.57 Forms.
The provisions of Sec. 211.57 of this subchapter are applicable to
leases under this part.
Sec. 212.58 Appeals.
The provisions of Sec. 211.58 of this subchapter are applicable to
leases under this part.
Dated: June 13, 1996.
Ada E. Deer,
Assistant Secretary--Indian Affairs.
[FR Doc. 96-16036 Filed 7-5-96; 8:45 am]
BILLING CODE 4310-02-P
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