issue-1996-07-16•Federal Register final rules — 1996-07-16
Federal Register final rules — 1996-07-16
issue-1996-07-16Federal Register final rules — 1996-07-16Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. 96-18065 Exchange Visitor Program
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Page 37002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18065]
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UNITED STATES INFORMATION AGENCY
22 CFR Part 514
Exchange Visitor Program
AGENCY: United States Information Agency.
ACTION: Notice of policy statement.
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SUMMARY: Notice is hereby given that Agency-designated sponsors
currently authorized the professor and research scholar categories, who
seek authority to utilize the short-term scholar category provided for
in existing regulations, may do so by written request to the Agency.
ADDRESSES: Letter requests should be addressed to: Sally J. Lawrence,
Chief, Program Designation Branch, Office of the General Counsel, Room
700, 301 4th Street, SW, Washington, D.C. 20547.
FOR FURTHER INFORMATION CONTACT:
Sally J. Lawrence, Chief, Program Designation Branch, at the above
address or by telephone, (202) 401-9810.
SUPPLEMENTARY INFORMATION: The Agency published a final rule in the
Federal Register on June 10, 1996 that amended existing regulations
governing Exchange Visitor Program eligibility requirements for
prospective professor and research scholar participants. These
amendments placed a twelve month bar from continued program
participation upon individuals who had been physically present in the
United States for all or part of the twelve months immediately
preceding their commencement of program participation as a professor or
research scholar. This regulation further provided an exception to the
application of a twelve month bar to prospective participants who had
previously participated in the Exchange Visitor Program as a short-term
scholar participant.
By providing this exception to the twelve month bar, the Agency
seeks to promote the proper use of the short-term scholar category,
having determined that such use will foster and promote collaborative
international research and exchange. Currently, some but not all of the
Agency's designated Exchange Visitor Program sponsors are authorized to
utilize the short-term scholar category. As stated, the Agency endorses
the use of this category and accordingly has determined that designated
sponsors currently authorized to utilize the professor and research
scholar category shall be authorized to utilize the short-term scholar
category solely upon written request to the Agency.
Les Jin,
General Counsel.
[FR Doc. 96-18065 Filed 7-15-96; 8:45 am]
BILLING CODE 8230-01-M
Complete official Federal Register PDF
FR Doc. 96-18063 Amendments to Laboratory Certification Requirements
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37015-37017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18063]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary of Transportation
49 CFR Part 40
[OST Docket No. OST-96-1532]
RIN 2105-AC37
Amendments to Laboratory Certification Requirements
AGENCY: Office of the Secretary, DOT.
ACTION: Final rule.
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SUMMARY: This final rule establishes provisions that would permit drug
testing laboratories located outside the U.S. to participate in the
Department's drug testing program. The Department of Transportation
would take action permitting the laboratories to participate based on
recommendations from the Department of Health and Human Services.
EFFECTIVE DATE: This rule is effective on July 16, 1996.
FOR FURTHER INFORMATION CONTACT: Robert C. Ashby, Deputy Assistant
General Counsel for Regulation and Enforcement, Room 10424, (202-366-
9306); 400 7th Street, SW., Washington DC 20590; or Mary Bernstein,
Director, Office of Drug Enforcement and Program Compliance, same
street address, Room 10317, (202) 366-3784.
SUPPLEMENTARY INFORMATION: Recently, the Federal Highway Administration
(FHWA) issued a final rule applying its drug and alcohol testing
requirements to foreign-based drivers operating in the United States
(60 FR 49322; September 22, 1995). Under the rule, Canadian and Mexican
drivers who come into the United States will be subject to testing on
the same basis as U.S. drivers, beginning July 1, 1996, for employees
of larger carriers and a year later for employees of smaller carriers.
In any case, Canadian and Mexican employers who collect drug urine
specimens under FHWA rules will be able to have the specimens tested in
U.S. laboratories certified by the Department of Health and Human
Services (DHHS), on the same basis as U.S. employers. In the interest
of facilitating program implementation, the Department hopes that it
will be possible for Mexican and Canadian laboratories to participate
in the program as well. (If Canadian and Mexican laboratories are not
authorized to participate in the program as provided in this rule,
Canadian and Mexican employers must send specimens to DHHS-certified
laboratories in the U.S. for testing.)
Canadian and Mexican laboratories may participate in the DOT-
mandated testing program only if their participation is consistent with
the Department's statutory authority. Strict safeguards for the
accuracy and quality of laboratory tests are a key mandate of the
Omnibus Transportation Employee Testing Act of 1991.
The motor carrier portion of the Act (49 U.S.C. 31306(b), which
parallels the other modal sections of the Act), provides that, in
carrying out the requirement to establish a motor carrier drug testing
program , the Secretary ``shall'' develop requirements ``that shall''
(2) for laboratories and testing procedures for controlled
substances, incorporate the Department of Health and Human Services
scientific and technical guidelines dated April 11, 1988, and any
amendments to those guidelines, including mandatory guidelines
establishing--
(A) comprehensive standards for every aspect of laboratory
controlled substances testing and laboratory procedures to be
applied in carrying out this section, including standards requiring
the use of the best available technology to ensure the complete
reliability and accuracy of controlled substances tests and strict
procedures governing the chain of custody of specimens collected for
controlled substances testing; * * *
(C) appropriate standards and procedures for periodic review of
laboratories and criteria for certification and revocation of
certification of laboratories to perform controlled substances
testing in carrying out this section.
(3) require that a laboratory involved in testing under this
section have the capability and facility, at the laboratory, of
performing screening and confirmation tests; * * *
The language of these provisions is clearly mandatory, a point
which the legislative history reinforces. Senate Report 102-54 (May 2,
1991), concerning S. 676, the bill that became the Act, notes, in
response to concerns about testing accuracy and false positive tests,
that ``By incorporating laboratory certification and testing procedures
developed by HHS and DOT * * * the Committee has taken affirmative
steps to ensure accuracy.'' (S. Rept. 102-54 at 7.) Later, in speaking
of the laboratory and other safeguards in the bill, the report says
that
These safeguards are critical to the success of any testing
program. They are designed to ensure that * * * there is
accountability and accuracy of testing. They provide what the
Committee believes are the basic minimums * * * the Secretary is
urged to carefully review the safeguards in any testing program to
ensure they are adhered to in a vigorous manner. (Id. at 31)
More specifically on laboratory matters, the Committee said that
Incorporating the HHS guidelines relating to laboratory
standards and procedures * * * as DOT has done in Part 40 * * * is
an essential component of the procedural safeguards specified in
this subsection.* * * Realizing that these guidelines may be subject
to future modification, the Committee has acted to specify that the
basic elements of certain provisions now in effect are mandated,
including the need for comprehensive standards and procedures for
all aspects of laboratory testing of drugs * * * [and] the
establishment of standards and procedures
[[Page 37016]]
for the periodic review of laboratories and the development of
criteria for laboratory certification or revocation of such
certification. (Id. at 32)
It is noteworthy that Congress explicitly accepts an active DOT
role in establishing and carrying out the laboratory-related provisions
of the statute. What is mandatory is not that one agency or the other
play any particular administrative role in the process, but that the
protections embodied in the DHHS guidelines be applied, through DOT's
rules, to participants in the program. There is no bar in the statutory
language to a DOT rule assigning to DOT the task of reviewing and
certifying laboratories, so long as these actions by DOT are based on
the conformity of the laboratories to DOT's incorporation of DHHS
laboratory standards. Consequently, DOT has broad legal discretion to
take action in the area of drug testing procedures, extending to the
certification of laboratories.
DOT and DHHS are working closely together with respect to the
potential certification of foreign laboratories. As the two agencies
envision the process, there could be two different ways in which
foreign laboratories become certified. First, DHHS could review the
application of the foreign laboratory, in the same manner that it
reviews applications from U.S. laboratories. If the laboratory meets
DHHS standards, DHHS would recommend that DOT certify the laboratory
under DOT authority. (The direct certifying authority of DHHS extends
only to laboratories that would participate in the Federal employee
testing program.) Second, DHHS could review the standards and
procedures of a foreign certifying agency. If DHHS determined that the
foreign agency had standards, procedures, and authority equivalent to
those of DHHS, DHHS would recommend to DOT that DOT deem the foreign
agency to be an equivalent certifying authority. Laboratories that the
foreign agency certified would then be permitted to participate in the
DOT testing program.
DOT and DHHS have discussed laboratory issues with officials of
Transport Canada, the Canadian Trucking Association and its affiliates,
and the Standards Council of Canada (a potential laboratory
certification organization in Canada), as well as representatives of
some Canadian laboratories. We have also had discussions with Mexican
officials concerning program and laboratory matters. Following these
discussions, the Department proposed a change to 49 CFR 40.39 to
accommodate the possibility that foreign laboratories may be able to
participate in DOT-mandated drug testing (61 FR 13809; March 28, 1996).
The NPRM proposed to add a new paragraph to authorize the
participation of foreign laboratories in the DOT drug testing program
in the two circumstances outlined above (i.e., based on a
recommendation by DHHS that a particular laboratory meets DHHS
certification requirements, or based on a certification by a foreign
certifying organization whose standards and process had been deemed
equivalent to those of DHHS). The Department received three comments on
the proposal, all of which supported it. Two of the comments sought
assurances that the rule would result in foreign laboratories that
fully met all DHHS requirements, including periodic inspections and re-
certifications.
The Department is adopting the proposal without change. The rule
will result in full compliance with DHHS procedures and standards for
laboratory certification by foreign laboratories authorized to
participate in the program, including inspection and re-certification
provisions. It should be emphasized that the rule does not have the
effect of actually certifying any foreign laboratories. It simply puts
in place a mechanism that would allow such laboratories to participate,
if and when DOT and DHHS determine that all issues had been resolved
satisfactorily, in full compliance with DHHS requirements for
laboratory certification. Once authorized to participate in the DOT
drug testing program by this process, a Canadian or Mexican laboratory
would be on the same footing as any DHHS-certified laboratory
concerning program participation, including the ability to test
specimens collected in the U.S. by U.S. employers.
Regulatory Process Matters
The proposed rule is considered to be a nonsignificant rulemaking
under DOT Regulatory Policies and Procedures, 44 FR 11034. It also is a
nonsignificant rule for purposes of Executive Order 12886. The
Department certifies, under the Regulatory Flexibility Act, that the
rule does not have a significant economic effect on a substantial
number of small entities. The rule does not impose any costs or burdens
on regulated entities, since it deals with a subject (applying for
laboratory certification) that is completely voluntary. Laboratories
that are able to meet DHHS standards are typically not small entities,
in any case. The rule makes it possible for Canadian and Mexican motor
carriers to use laboratories that are closer to them than laboratories
in the U.S., which may result in somewhat lower costs for these
carriers, which include some small entities. The rule has also been
analyzed in accordance with the principles and criteria contained in
Executive Order 12612, and it has been determined that it does not have
sufficient federalism implications to warrant the preparation of a
Federalism Assessment.
The rule is being made effective immediately. The Department has
good cause to do so, on the basis that in order to give the Department
the opportunity to authorize foreign laboratories to participate in the
DOT drug testing program by the July 1, 1996, compliance date for
Canadian and Mexican motor carriers, the Department needs this rule to
be in place. Making this rule effective now will permit the Department
to respond in a timely way if DHHS determines that foreign laboratories
or certifying organizations meet DHHS standards. Even if foreign
laboratories are not in a position to be approved for participation by
July 1, it is important that the Department's authority to approve
foreign laboratories be in place, as a matter of good faith on our part
toward our trading partners.
List of Subjects in 49 CFR Part 40
Drug Testing, Alcohol Testing, Reporting and Recordkeeping
Requirements, Safety, Transportation.
For the reasons set forth in the preamble, 49 CFR part 40 is
amended as follows:
1. The authority citation for part 40 continues to read as follows:
Authority: 49 U.S.C. 102,301,322; 49 U.S.C. app. 1301nt., app.
1434nt., app. 2717, app. 1618a.
2. Section 40.39 is revised to read as follows:
Sec. 40.39 Use of certified laboratories.
(a) Except as provided in paragraph (b) of this section, employers
subject to this part shall use only laboratories certified under the
DHHS ``Mandatory Guidelines for Federal Workplace Drug Testing
Programs,'' April 11, 1988, and subsequent amendments thereto.
(b) Employers subject to this part may also use laboratories
located outside the United States if--
(1) The Department of Transportation, based on a written
recommendation from DHHS, has certified the laboratory as meeting DHHS
laboratory certification standards or deemed the laboratory fully
equivalent to a laboratory meeting DHHS laboratory certification
standards; or
(2) The Department of Transportation, based on a written
recommendation
[[Page 37017]]
from DHHS, has recognized a foreign certifying organization as having
equivalent laboratory certification standards and procedures to those
of DHHS, and the foreign certifying organization has certified the
laboratory, pursuant to those equivalent standards and procedures.
Issued this 9th day of July 1996, at Washington, DC.
Federico Pena,
Secretary of Transportation.
[FR Doc. 96-18063 Filed 7-15-96; 8:45 am]
BILLING CODE 4910-62-P
Complete official Federal Register PDF
FR Doc. 96-18058 Amendment to Class E Airspace; Ames, IA
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37001-37002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18058]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Airspace Docket No. 96-ACE-5]
Amendment to Class E Airspace; Ames, IA
AGENCY: Federal Aviation Administration [FAA], DOT.
ACTION: Final rule.
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SUMMARY: This amendment modifies the Class E airspace area at Ames, IA,
to accommodate a planned Global Positioning System (GPS) Standard
Instrument Approach Procedure (SIAP) at the Ames Municipal Airport.
This action will provide for additional controlled airspace necessary
for the aircraft utilizing the new SIAP.
EFFECTIVE DATE: 0901 UTC August 15, 1996.
FURTHER INFORMATION CONTACT:
Kathy Randolph, Air Traffic Operations Branch, ACE-530C, Federal
Aviation Administration, 601 E. 12th St., Kansas City, MO, 64106;
telephone (816) 426-3408.
[[Page 37002]]
SUPPLEMENTARY INFORMATION:
History
On May 13, 1996, the FAA proposed to amend Part 71 of the Federal
Aviation Regulations (14 CFR Part 71) by modifying the Class E airspace
area at Ames, IA (61 FR 21984). The proposed action would provide
additional controlled airspace to accommodate the new SIAP to Ames
Municipal Airport.
Interested parties were invited to participate in this rulemaking
proceeding by submitting written comments on the proposal to the FAA.
No comments objecting to the proposal were received. Class E airspace
areas extending from 700 feet or more above the surface of the earth
are published in paragraphs 6005 of FAA Order 7400.9C, dated August 17,
1995, and effective September 16, 1995, which is incorporated by
reference in 14 CFR 71.1. The Class E airspace designation listed in
this document will be published subsequently in the Order.
The Rule
This amendment to Part 71 of the Federal Aviation Regulations (14
CFR Part 71) amends the Class E airspace area at Ames, IA, by providing
additional controlled airspace for aircraft executing the new SIAP to
the airport.
The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
Therefore, this regulation (1) is not a ``significant regulatory
action'' under Executive Order 12866; (2) is not a ``significant rule''
under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,
1979); and (3) does not warrant preparation of a Regulatory Evaluation
as the anticipated impact is so minimal. Since this is a routine matter
that will only affect air traffic procedures and air navigation, it is
certified that this rule will not have a significant economic impact on
a substantial number of small entities under the criteria of the
Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 71
Aviation, Incorporation by reference, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR Part 71 as follows:
PART 71--[AMENDED]
1. The authority citation for Part 71 continues to read as follows:
Authority: 49 U.S.C. 106(g); 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending from 700 feet or
more above the surface of the earth.
* * * * *
ACE IA E5 Ames, IA
Ames Municipal Airport, IA
(lat. 41 deg.59'31''N., long. 93 deg.37'18W.)
Ames NDB
(lat. 41 deg.59'42''N., long. 93 deg.37'37''W.)
That airspace extending upward from 700 feet above the surface
within a 6.6-mile radius of the Ames Municipal Airport, and within
2.1 miles each side of the 197 deg. bearing from the Ames NDB
extending from the 6.6-mile radius to 7.4 miles south of the
airport, and within 2 miles each side of the 136 deg. bearing from
the airport extending from the 6.6-mile radius to 10 miles southeast
of the airport.
* * * * *
Issued in Kansas City, MO on June 25, 1996.
Christopher R. Blum,
Acting Manager, Air Traffic Division, Central Region.
[FR Doc. 96-18058 Filed 7-15-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-18020 Supplemental Standards of Ethical Conduct for Employees of the Office of Personnel Management
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 36993-36997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18020]
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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.
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Federal Register / Vol. 61, No. 137 / Tuesday, July 16, 1996 / Rules
and Regulations
[[Page 36993]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 1001
5 CFR Chapter XXXV
RIN 3206-AG87, 3209-AA15
Supplemental Standards of Ethical Conduct for Employees of the
Office of Personnel Management
AGENCY: Office of Personnel Management (OPM).
ACTION: Interim rule with request for comments.
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SUMMARY: The Office of Personnel Management, with the concurrence of
the Office of Government Ethics (OGE), is issuing an interim rule for
employees of OPM that supplements the executive branch-wide Standards
of Ethical Conduct (Standards) issued by OGE. The interim rule contains
a notice requirement designed to ensure that OPM employees do not use
their official positions or nonpublic information to obtain an
advantage for themselves or for certain other persons on competitive
and other examinations relating to Federal service, and a requirement
for OPM employees to obtain prior approval before engaging in certain
types of outside activities. The Office of Personnel Management is also
repealing that portion of its internal standards of conduct regulations
that was retained on an interim basis pending issuance of its
supplemental regulations, and those portions of its internal standards
of conduct regulations that were superseded by the new Standards or by
the executive branch financial disclosure regulations issued by OGE.
The Office of Personnel Management is retaining in its internal
standards of conduct regulation a separate Privacy Act conduct code and
adding a cross-reference to ethics and other conduct-related statutes
and regulations.
DATES: Interim rule effective July 16, 1996. Comments must be received
on or before August 15, 1996.
ADDRESSES: Send comments to: Lorraine Lewis, General Counsel, Office of
Personnel Management, Room 7353, Theodore Roosevelt Building, 1900 E
Street, NW., Washington, DC 20415.
FOR FURTHER INFORMATION CONTACT: Nancy Lee Gregg, Alternate Designated
Agency Ethics Official, Office of the General Counsel, Office of
Personnel Management, (202) 606-1701.
SUPPLEMENTARY INFORMATION:
I. Background
On August 7, 1992, OGE published new Standards of Ethical Conduct
for Employees of the Executive Branch. See 57 FR 35006-35067, as
corrected at 57 FR 48557, 57 FR 52583, and 60 FR 51667, with additional
grace period extensions for certain existing provisions at 59 FR 4779-
4780, 60 FR 6390-6391, and 60 FR 66857-66858. The Standards, codified
at 5 CFR part 2635 and effective February 3, 1993, established uniform
standards of ethical conduct that apply to all executive branch
personnel. With the concurrence of OGE, 5 CFR 2635.105 authorizes
executive branch agencies to publish agency-specific supplemental
regulations necessary to implement their respective ethics programs.
The Office of Personnel Management, with OGE's concurrence, has
determined that the following supplemental regulations, being codified
in new 5 CFR chapter XXXV, consisting of part 4501, are necessary in
light of OPM's unique programs and operations for the successful
implementation of OPM's ethics program.
The Office of Personnel Management is simultaneously repealing the
provisions of its internal employee responsibilities and conduct
regulations in 5 CFR part 1001 which have already been superseded or
which will be superseded upon issuance of these supplemental
regulations, and is replacing those provisions with a new section that
provides cross-references to 5 CFR part 2635 and other precepts that
pertain to employee conduct. A Privacy Act conduct code is also being
retained.
II. Analysis of the Regulations
Section 4501.101 General
Section 4501.101 explains that the regulations apply to all OPM
employees and supplement the executive branch-wide Standards in 5 CFR
part 2635. Section 4501.101 also provides a cross-reference to the
executive branch employee responsibilities and conduct regulations
contained in 5 CFR part 735, the OPM employee responsibilities and
conduct regulations in 5 CFR part 1001, the executive branch-wide
financial disclosure regulations contained in 5 CFR part 2634, and the
executive branch-wide regulation regarding outside employment at 5 CFR
part 2636.
Section 4501.102 Examination Information
Section 4501.102 supplements the prohibitions on use of public
office for private gain at 5 CFR 2635.702 and the prohibitions on use
of nonpublic information at 5 CFR 2635.703.
Under Sec. 4501.102(a), an OPM employee who takes part in the
construction of written tests or other assessment devices, has access
to such material, or is involved in the examination rating process must
notify his or her supervisor before filing to take a competitive
examination, an internal competitive examination or an Armed Services
entrance examination. Supervisory notification is also required when an
employee knows that the employee's spouse, minor child, or business
general partner intends to take such an examination.
As indicated by the supervisory responsibilities set forth in
paragraph (b) of Sec. 4501.102, the purpose of the notification
requirement is to ensure, either by the assignment of official duties
that will not place the employee in contact with information relating
to the examination to be taken or by substituting an examination about
which the employee does not have information, that the employee does
not have knowledge of questions on, answers to, or methods of scoring
the test or other assessment device in issue. Proper exercise of these
supervisory responsibilities will foreclose the possibility of any
suggestion that an OPM employee who has a role in devising tests or
other assessment devices has profited unfairly, or that the employee's
spouse, minor child, or general partner has profited unfairly,
[[Page 36994]]
from possible use of nonpublic information or other knowledge gained in
the course of the employee's official duties. It also protects the
integrity of the examination process and ensures that the prospects of
others subject to that process are not diminished by any OPM employee's
use of nonpublic information or use of public office for private gain.
The examination information provisions of Sec. 4501.102 are similar
to, but more specific than, those which had been in effect under OPM's
employee responsibilities and conduct regulations at 5 CFR 1001.735-
206, which is now being repealed (see below). Whereas Sec. 1001.735-206
had imposed the notice requirement on all OPM employees, Sec. 4501.102
applies only to those OPM employees who have some direct connection
with the examination process.
Section 4501.103 Prior Approval for Certain Outside Activities
Under 5 CFR 2635.803, agencies may, by supplemental regulations,
require employees to obtain approval before engaging in outside
employment and activities. Under 5 CFR 1001-735.203, which is now being
revoked, OPM employees have long been required to provide notice of, or
obtain approval for, proposed outside employment and activity under a
variety of circumstances. OPM has found this requirement useful in
ensuring that the outside employment activities of employees conform
with all applicable laws and regulations. In accordance with 5 CFR
2635.803, OPM has determined that it is necessary to the administration
of its ethics program to continue to require prior approval for certain
types of outside employment and activities that pose a potential for
employees to engage in conduct that might violate applicable laws and
regulations.
As compared to the requirement that has been imposed by 5 CFR 1001-
735.203, Sec. 4501.103(a) has been changed to clarify the requirement,
and to narrow its scope, consistent with the Standards. Section 1001-
735.203 has required OPM employees, other than special Government
employees, who engage in any kind of outside paid employment on a
substantially regular basis to provide notice of such employment to
their supervisors. In addition, Sec. 1001-735.203 has required OPM
employees to obtain approval before serving as members of committees or
boards which plan or advise on training courses or programs offered by
non-Government organizations; before accepting appointments as faculty
members for after-hours teaching; and in order to hold elective office
in the employee's local community government. In contrast to
Sec. 1001.735.203, Sec. 4501.-103(a) requires prior approval for four
types of outside activities on the part of OPM employees (again
excluding special Government employees).
Under Sec. 4501.103(a)(1), the first type of outside activity for
which OPM employees must obtain prior approval is the provision of
professional services that involve the application of the same
specialized skills or the same educational background as performance of
the employee's official duties. Such outside activities may raise a
strong possibility of a violation of the Standards. For purposes of
this section, ``professional services'' is defined in
Sec. 4501.103(d)(3) on the basis of the definition of ``profession''
established by OGE in its executive branch-wide regulations at 5 CFR
2636.305(b)(1), and means the provision of personal services by an
employee, including the rendering of advice or consultation, which
involves application of the skills of a profession. Secretarial and
clerical positions are not, for purposes of this requirement,
considered to provide ``professional services.''
Under Sec. 4501.103(a)(2), the second type of outside activity for
which OPM employees must obtain prior approval is teaching, speaking,
or writing that relates to the employee's official duties. Unlike the
requirement in 5 CFR 1001.735-203 for prior approval of after hours
teaching, this section requires prior approval of outside speaking and
writing, as well as outside teaching, but only if it ``relates to the
employee's official duties.'' Consistent with the Standards, the term
``relates to the employee's official duties'' is defined in
Sec. 4501.103(d)(5) as having the meaning given in 5 CFR 2635.-
807(a)(2)(i)(B) through (a)(2)(i)(E). Under that definition, teaching,
speaking, or writing relates to the employee's official duties if the
invitation to teach, speak, or write is extended primarily because of
the employee's official position; if the invitation or the offer of
compensation (when the employee is to be compensated for the activity)
is extended by a person whose interests may be affected substantially
by the employee's performance or nonperformance of his or her official
duties; if the activity draws substantially on ``nonpublic
information,'' a term which Sec. 4501.103(d)(2) defines as having the
meaning set forth in Sec. 2635.703(b) of the Standards and which
therefore includes information that the employee gains by reason of
Federal employment and that the employee knows or reasonably should
know has not been made available to the general public; if the subject
of the activity deals in significant part with OPM programs, operations
or policies or with the employee's current or recent assignments; or,
in the case of a noncareer employee as defined in 5 CFR 2636.303(a), if
the subject of the activity deals in significant part with the general
subject matter area, industry, or economic sector primarily affected by
the programs and operations of OPM.
Under Sec. 4501.103(a)(3), the third type of outside activity for
which OPM employees must obtain prior approval is certain service for a
``prohibited source.'' The term ``prohibited source'' is defined in
Sec. 4501.103(d)(4) as having the meaning set forth in Sec. 2635.203(d)
of the Standards, and therefore means any person who is (and also any
organization more than half of whose members are) seeking official
action by OPM, doing or seeking to do business with OPM, regulated by
OPM, or substantially affected by the performance or nonperformance of
the employee's duties. The kind of services for a prohibited source for
which Sec. 4501.103(a)(3) requires prior approval are those which could
raise a question of conflicting financial interests under subpart D of
the Standards or a question of loss of impartiality in performing
official duties under subpart E of the Standards. Those services
include service as an officer, director, trustee, general partner,
employee, agent, attorney, consultant, contractor, or ``active
participant.'' The term ``active participant'' is defined in
Sec. 4501.103(d)(1) as having the meaning set forth in subpart E of the
Standards, at 5 CFR 2635.502(b)(1)(v). In accordance with that
definition, payment of dues to an organization, or the donation or
solicitation of financial support, alone does not constitute active
participation.
An exception to the prior approval requirement in Sec. 4501.-
103(a)(3) excludes from the prior approval requirement therein a number
of uncompensated and volunteer activities that are unlikely to raise
issues under the Standards. Specifically, employees do not have to
obtain approval before providing the services listed in
Sec. 4501.103(a)(3), if the service is without compensation (other than
reimbursement of expenses) and the prohibited source for which the
service is to be provided is a nonprofit charitable, religious,
professional, social, fraternal, educational, recreational, public
service, or civic
[[Page 36995]]
organization. However, prior approval for such an activity is required
if the activity is covered by another of the prior approval
requirements in this section. In addition, because OPM exercises
general supervision over all operations of the Combined Federal
Campaign (CFC), through which nonprofit organizations receive or seek
to receive charitable fundraising support in the Federal workplace,
prior approval is required by Sec. 4501.103(a)(3) if the organization
that is a prohibited source receives or seeks to receive fundraising
support through the CFC, and the employee's official duties would
involve him in administration of the CFC program.
Under Sec. 4501.103(a)(4), the fourth type of outside activity for
which OPM employees must obtain prior approval is the provision of
services, other than clerical services or service as a fact witness, on
behalf of any other person in connection with a particular matter in
which the United States is a party, or in which the United States has a
direct and substantial interest, or if the provision of services
involves the preparation of materials for submission to, or
representation before, a Federal court or executive branch agency.
Under 5 CFR 2635.805, employees are required to obtain authorization
before acting as expert witnesses, other than on behalf of the United
States, in any proceeding before a Federal court or agency in a matter
in which the United States is a party or has a direct and substantial
interest. Paragraph (a)(4) of Sec. 4501.103 is intended to cover such
testimony as an outside activity, thus eliminating the need to create a
separate procedure for the required authorization. In addition,
requiring prior approval under these circumstances will help employees
to avoid violating the representational bars in 18 U.S.C. 203 and 205.
Consistent with the Federal Service Labor Management Relations Statute
(5 U.S.C. chapter 71) and the ``personnel administration proceedings''
exception at 18 U.S.C. 205(d), an exception in Sec. 4501.103(a)(4)
provides that prior approval is not required for OPM employees acting
on behalf of the labor organization that is the exclusive
representative of the OPM employees in the unit it represents to
represent an employee who is the subject of disciplinary, loyalty, or
other personnel administration proceedings in connection with those
proceedings.
Section 4501.103(b) sets forth the procedures for submitting a
request for approval of an outside activity, specifying the information
to be included in the employee's request, and the contents of a
certification the employee is to submit with the request for approval.
Section 4501.103(c) specifies the standard for granting approval.
Approval shall be granted only upon a determination by the agency
official designated authority to make such a determination that the
outside employment is not expected to involve conduct prohibited by
statute or Federal regulation.
Section 4501.103(d) defines the terms ``active participant,''
``nonpublic information,'' ''professional services,'' ``prohibited
source,'' and ``relates to the employee's official duties,'' for
purposes of the section, as explained above, consistent with the
Standards and other regulations issued by OGE.
Requiring prior approval will give OPM managers the opportunity to
review the proposed employment or activity in light of the employee's
official duties and to consult with an agency ethics official
concerning the applicability of Federal conflict of interest statutes
and ethics regulations to the proposed activity. The executive branch-
wide Standards, at 5 CFR 2635.802, explain that an activity conflicts
with an employee's official duties if it is prohibited by statute or by
an agency supplemental regulation, or if, under the standards set forth
in Secs. 2635.402 and 2635.502 of the Standards, it would require the
employee's disqualification from matters so central or critical to the
performance of the employee's official duties that the employee's
ability to perform the duties of his or her position would be
materially impaired. Even where prior approval is not required,
conflict of interest statutes and the Standards may restrict the
actions of employees in connection with participation in such
activities or organizations.
III. Repeal of Portions of OPM's Internal Regulations Regarding
Employee Conduct and Related Modifications
The interim rule repeals those portions of the regulations at 5 CFR
part 1001 governing OPM employees' responsibilities and conduct that
were superseded by the executive branch-wide Standards of Ethical
Conduct at 5 CFR part 2635, or by the financial disclosure regulations
at 5 CFR part 2634, the requirement for prior approval of outside
employment at 5 CFR 1001.735-203 (which now appears, in revised form,
at 5 CFR 4501.103), and 5 CFR 1001.735-208, which was in the nature of
a directive to OPM procurement personnel. It also repeals portions of
part 1001 that duplicate the employee responsibilities and conduct
regulations contained in 5 CFR part 735.
These actions leave in 5 CFR part 1001 only the code of conduct
required by the Privacy Act of 1974, at 5 U.S.C. 552a(e)(9). The
Privacy Act code of conduct for OPM employees, previously contained at
5 CFR 1001.735-206a, is redesignated as Sec. 1001.102 and follows a new
Sec. 1001.101 which provides a cross-reference to ethics and other
conduct-related statutes and regulations.
IV. Matters of Regulatory Procedure
Administrative Procedure Act
Under 5 U.S.C. 1103(b)(1) and 1105, these regulations are not
subject to the rulemaking requirements of the Administrative Procedure
Act, at 5 U.S.C. 553 (b), (c), and (d), because they apply solely to
OPM or its employees. Furthermore, OPM finds good cause that it is in
the public interest that these internal regulations take effect as an
interim rule upon the date of publication of this Federal Register
rulemaking document.
Executive Order 12866
In promulgating these interim regulations, OPM has adhered to the
regulatory philosophy and the applicable principles of regulation set
forth in section 1 of Executive Order 12866, Regulatory Planning and
Review. These regulations have not been reviewed by the Office of
Management and Budget under that Executive order, as they deal with
agency management and personnel matters and are not, in any event,
``significant'' thereunder.
Regulatory Flexibility Act
As Director of OPM, I certify that this regulation will not have
significant economic impact on a substantial number of small entities
within the meaning of the Regulatory Flexibility Act (5 U.S.C. chapter
6).
Paperwork Reduction Act
As Director of OPM, I have determined that the Paperwork Reduction
Act (44 U.S.C. chapter 35) does not apply because this regulation does
not contain any information collection requirements that require the
approval of the Office of Management and Budget.
List of Subjects
5 CFR Part 1001
Conflict of interests, Government employees.
5 CFR Part 4501
Conflict of interests, Government employees.
[[Page 36996]]
Dated: July 2, 1996.
James B. King,
Director, Office of Personnel Management.
Approved: July 5, 1996.
F. Gary Davis,
Deputy Director, Office of Government Ethics.
For the reasons set forth in the preamble, the Office of Personnel
Management, with the concurrence of the Office of Government Ethics, is
amending title 5 of the Code of Federal Regulations as follows:
CHAPTER I--OFFICE OF PERSONNEL MANAGEMENT
PART 1001--EMPLOYEE RESPONSIBILITIES AND CONDUCT
1. The authority citation for part 1001 is revised to read as
follows:
Authority: 5 U.S.C. 552a, 7301.
Subparts A, B, C and D [Amended]
2. Subpart A, consisting of Secs. 1001.735-101 through 1001.735-
103; Secs. 1001.735-201 through 1001.735-206 and 1001.735-207 through
1001.735-214 of subpart B; and subparts C and D, consisting of
Secs. 1001.735-301 through 1001.735-304 and 1001.735-401 through
1001.735-412, respectively, of part 1001 are removed.
3. A new Sec. 1001.101 is added to read as follows:
Sec. 1001.101 Cross-reference to financial disclosure requirements and
other conduct rules.
In addition to the regulations contained in this part, employees of
the Office of Personnel Management (OPM) should refer to:
(a) The Standards for Ethical Conduct for Employees of the
Executive Branch at 5 CFR part 2635;
(b) The OPM regulations at 5 CFR part 4501, which supplement the
executive branch-wide standards;
(c) The Employee Responsibilities and Conduct regulations at 5 CFR
part 735;
(d) The executive branch financial disclosure regulations at 5 CFR
part 2634;
(e) The executive branch outside employment regulations at 5 CFR
part 2636; and
(f) The restrictions upon use of political referrals in employment
matters at 5 U.S.C. 3303.
4. Section 1001.735-206a is redesignated as Sec. 1001.102, and the
heading is revised to read ``Privacy Act rules of conduct.''
5. A new chapter XXXV, consisting of part 4501, is added to read as
follows:
CHAPTER XXXV--OFFICE OF PERSONNEL MANAGEMENT
PART 4501--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE OFFICE OF PERSONNEL MANAGEMENT
Sec.
4501.101 General.
4501.102 Examination information.
4501.103 Prior approval for certain outside activities.
Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as
modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 5
CFR 2635.105, 2635.702, 2635.703, 2635.-802, 2635.803, 2635.805.
Sec. 4501.101 General.
In accordance with 5 CFR 2635.105, the regulations in this part
apply to employees of the Office of Personnel Management (OPM) and
supplement the Standards of Ethical Conduct for Employees of the
Executive Branch contained in 5 CFR part 2635. In addition to the
regulations in 5 CFR part 2635 and this part, OPM employees are subject
to the responsibilities and conduct regulations contained in 5 CFR
parts 735 and 1001, the executive branch-wide financial disclosure
regulations contained in 5 CFR part 2634, and the executive branch
regulations regarding outside employment at 5 CFR part 2636.
Sec. 4501.102 Examination information.
(a) An employee of OPM who takes part in the construction of
written tests or any other assessment device, has access to such
material, or is involved in the examination rating process, shall
notify his supervisor, in writing, when he intends to file for a
competitive examination, an internal competitive examination, or an
Armed Services entrance examination. The employee also must give such
notice if he knows that his spouse, minor child, or business general
partner intends to take any of these examinations.
(b) The employee's supervisor or other appropriate authority will
arrange the employee's duty assignments to prevent his contact with
materials related to the examination or examinations that will be
taken. If the test material involved in the forthcoming examination has
already been exposed to the employee, arrangements will be made for the
employee or other person concerned to be given an alternate test.
(c) The employee's supervisor is responsible for seeing that
notifications given by employees under this section are transmitted
promptly to the Test Security Officer in OPM's Employment Service.
Sec. 4501.103 Prior approval for certain outside activities.
(a) Prior approval requirement. An employee, other than a special
Government employee, shall obtain written approval before engaging--
with or without compensation--in the following outside activities:
(1) Providing professional services involving the application of
the same specialized skills or the same educational background as
performance of the employee's official duties;
(2) Teaching, speaking, or writing that relates to the employee's
official duties;
(3) Serving as an officer, director, trustee, general partner,
employee, agent, attorney, consultant, contractor, or active
participant for a prohibited source, except that prior approval is not
required by this paragraph (a)(3) to provide such service without
compensation (other than reimbursement of expenses) for a prohibited
source that is a nonprofit charitable, religious, professional, social,
fraternal, educational, recreational, public service, or civic
organization, unless prior approval for the activity is required by
paragraph (a)(1), (a)(2), or (a)(4) of this section, or unless the
organization receives or seeks to receive fundraising support through
the Combined Federal Campaign (CFC) under 5 CFR part 950 and the
employee's official duties involve the administration of the CFR
program; or
(4)(i) Except as provided in paragraph (a)(4)(ii) of this section,
providing services, other than clerical services or service as a fact
witness, on behalf of any other person in connection with a particular
matter:
(A) In which the United States is a party;
(B) In which the United States has a direct and substantial
interest; or
(C) If the provision of services involves the preparation of
materials for submission to, or representation before, a Federal court
or executive branch agency.
(ii) Prior approval is not required by paragraph (a)(4)(i) of this
section for OPM employees acting on behalf of the labor organization
that is the exclusive representative of the OPM employees in the unit
it represents to provide services as an agent or attorney for, or
otherwise to represent, such an OPM employee who is the subject of
disciplinary, loyalty, or other personnel administration proceedings in
connection with those proceedings.
(b) Submission of requests for approval. (1) Requests for approval
shall
[[Page 36997]]
be submitted in writing to the agency designee, through normal
supervisory channels. Such requests shall include, at a minimum, the
following:
(i) The employee's name and position title;
(ii) The name and address of the person or organization for whom
the outside activity is to be performed;
(iii) A description of the proposed outside activity, including the
duties and services to be performed while engaged in the activity; and
(iv) The proposed hours that the employee will engage in the
outside activity, and the approximate dates of the activity.
(2) Together with his request for approval, the employee shall
provide a certification that:
(i) The outside activity will not depend in any way on nonpublic
information;
(ii) No official duty time or Government property, resources, or
facilities not available to the general public will be used in
connection with the outside activity; and
(iii) The employee has read subpart H (``Outside Activities'') of 5
CFR part 2635.
(3) Upon a significant change in the nature or scope of the outside
activity or in the employee's official position, the employee shall
submit a revised request for approval.
(c) Approval of requests. Approval shall be granted only upon a
determination by the agency designee, in consultation with an agency
ethics official when such consultation is deemed necessary by the
agency designee, that the outside activity is not expected to involve
conduct prohibited by statute or Federal regulation, including 5 CFR
part 2635.
(d) Definitions. For purposes of this section:
(1) Active participant has the meaning set forth in 5 CFR
2635.502(b)(1)(v).
(2) Nonpublic information has the meaning set forth in 5 CFR
2635.703(b).
(3) Professional services means the provision of personal services
by an employee, including the rendering of advice or consultation,
which involves application of the skills of a profession as defined in
5 CFR 2636.305(b)(1).
(4) Prohibited source has the meaning set forth in 5 CFR
2635.203(d).
(5) Relates to the employee's official duties has the meaning set
forth in 5 CFR 2635.807(a)(2)(i)(B) through (a)(2)(i)(E).
[FR Doc. 96-18020 Filed 7-15-96; 8:45 am]
BILLING CODE 6325-01-M
Complete official Federal Register PDF
FR Doc. 96-17996 Technical Amendments (95R-008P)
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37002-37004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17996]
=======================================================================
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DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and Firearms
27 CFR Parts 18, 30, and 275
[T.D. ATF-381]
RIN 1512-AB47
Technical Amendments (95R-008P)
AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Treasury.
ACTION: Final rule, Treasury decision.
-----------------------------------------------------------------------
SUMMARY: This Treasury decision makes technical amendments and
conforming changes to chapter I of title 27 Code of Federal Regulations
(CFR). All changes are to provide clarity and uniformity throughout
title 27 CFR.
EFFECTIVE DATE: July 16, 1996.
FOR FURTHER INFORMATION CONTACT: Angela R. Shanks, Alcohol and Tobacco
[[Page 37003]]
Programs Division, Wine, Beer, and Spirits Regulations Branch, 650
Massachusetts Avenue, NW., Washington, DC 20226, (202-927-8230)
SUPPLEMENTARY INFORMATION: The Bureau of Alcohol, Tobacco and Firearms
(ATF) administers regulations published in chapter I of title 27 Code
of Federal Regulations (CFR). These regulations are updated April 1 of
each year to incorporate new or revised regulations that were published
by ATF in the Federal Register during the preceding year. Upon
reviewing title 27 CFR for the annual revision, ATF and the CFR Unit of
the Office of the Federal Register identified several amendments and
conforming changes that are needed to provide uniformity in chapter I
of title 27, CFR.
These amendments do not make any substantive changes and are only
intended to improve the clarity of title 27 CFR or relieve regulatory
requirements.
Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1995, Public Law
104-13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR
part 1320, do not apply to this final rule because there are no
recordkeeping or reporting requirements.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required for this rule,
the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
do not apply. A copy of this final rule was submitted to the Chief
Counsel for Advocacy of the Small Business Administration in accordance
with 26 U.S.C. 7805(f). No comments were received.
Executive Order 12866
It has been determined that this rule is not a significant
regulatory action because it will not: (1) Have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local or tribal
governments or communities; (2) Create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866.
Administrative Procedures Act
Because this final rule merely makes technical amendments and
conforming changes to improve the clarity of the regulations, it is
unnecessary to issue this final rule with notice and public procedure
under 5 U.S.C. 553(b). Similarly it is unnecessary to subject this
final rule to the effective date limitation of 5 U.S.C. 553(d).
Drafting Information
The principal author of this document is Angela R. Shanks, Wine,
Beer, and Spirits Regulations Branch, Bureau of Alcohol, Tobacco and
Firearms.
List of Subjects
27 CFR Part 18
Administrative practice and procedure, Authority delegations,
Excise taxes, Exports, Labeling, Reporting requirements, Security
measures, Spices and flavorings, Stills, Surety bonds.
27 CFR Part 30
Alcohol and alcoholic beverages, Measurement standards, Scientific
equipment.
27 CFR Part 275
Administrative practice and procedure, Authority delegations,
Cigarette papers and tubes, Cigars and cigarettes, Claims, Customs
duties and inspections, Electronic funds transfers, Excise taxes,
Imports, Labeling, Packaging and containers, Penalties, Reporting and
recordkeeping requirement, Seizures and forfeitures, Surety bonds, U.S.
Possessions, Warehouses.
Authority and Issuance
Title 27, Code of Federal Regulations is amended as follows:
PART 18--PRODUCTION OF VOLATILE FRUIT-FLAVOR CONCENTRATE
Par. 1. The authority citation for part 18 continues to read as
follows:
Authority: 26 U.S.C. 5001, 5172, 5178, 5179, 5203, 5511, 5552,
6065, 7805; 44 U.S.C. 3504(h).
Sec. 18.13, 18.14, 18.17, 18.21, 18.22, and 18.24 [Amended]
Par. 2. Sections 18.13, 18.14, 18.17, 18.21, 18.22 and 18.24 are
amended by adding, at the end of the section, the approved OMB Control
Number to read as follows:
(Approved by the Office of Management and Budget under control
number 1512-0046)
Sec. 18.26 [Amended]
Par. 3. Section 18.26 is amended by adding, at the end of the
section, the approved OMB Control Number to read as follows:
(Approved by the Office of Management and Budget under control
number 1512-0079)
Secs. 18.27, 18.31, 18.32, 18.33, 18.34, 18.35, 18.36, 18.37 and
18.38 [Amended]
Par. 4. Sections 18.27, 18.31, 18.32, 18.33, 18.34, 18.35, 18.36,
18.37 and 18.38 are amended by adding, at the end of the section, the
approved OMB Control Number to read as follows:
(Approved by the Office of Management and Budget under control
number 1512-0046)
Sec. 18.51 [Amended]
Par. 5. Section 18.51 is amended by adding, at the end of the
section, the approved OMB Control Number to read as follows:
(Approved by the Office of Management and Budget under control
number 1512-0098)
Sec. 18.52 [Amended]
Par. 6. Section 18.52 is amended by adding, at the end of the
section, the approved OMB Control Number to read as follows:
(Approved by the Office of Management and Budget under control
number 1512-0046)
Sec. 18.54 and 18.55 [Amended]
Par. 7. Section 18.54 and 18.55 are amended by adding, at the end
of the section, the approved OMB Control Number to read as follows:
(Approved by the Office of Management and Budget under control
number 1512-0098)
Sec. 18.56, 18.61, 18.62 and 18.63 [Amended]
Par. 8. Section 18.56, 18.61, 18.62 and 18.63 are amended by
revising the approved OMB Control Number at the end of the section to
read as follows:
(Approved by the Office of Management and Budget under control
number 1512-0098)
Sec. 18.65 [Amended]
Par 9. Section 18.65 is amended by adding, at the end of the
section, the approved OMB Control Number to read as follows:
(Approved by the Office of Management and Budget under control
number 1512-0098)
PART 30--GAUGING MANUAL
Par. 10. The authority citation for part 30 is revised to read as
follows:
Authority: 26 U.S.C. 7805.
Sec. 30.22 [Amended]
Par. 11. Section 30.22 is amended by removing the phrase
``furnished to ATF officers'' in the first sentence, and adding in its
place the word ``used''.
[[Page 37004]]
Sec. 30.23 [Amended]
Par. 12. Section 30.23 is amended by revising two computations in
the example which follows the text. The first revised computation
follows the introductory text of the example, and the second
computation appears in the paragraph before the last paragraph of the
example. As revised, they read as follows:
Sec. 30.23 Use of precision hydrometers and thermometers.
* * * * *
Example. * * *
From Table 1:
193.0 deg. at 72.0 deg. F. = 190.2 de
g
192.0 deg. at 72.0 deg. F. = 189.1 de
g
-------------
Difference = 1.1 deg.
192.0 deg. at 72.0 deg. F. = 189.1 de
g
192.0 deg. at 73.0 deg. F. = 188.9 de
g
-------------
Difference = 0.2 deg.
* * * * *
Proof at 60 deg. F.=189.1+0.902-0.03=189.972 deg.=190.0 deg..
* * * * *
Sec. 30.24 [Amended]
Par. 13. Section 30.24 is amended by removing the degree symbol
following the number ``0.0005'' from the concluding sentence in
paragraph (a).
Sec. 30.32 [Amended]
Par. 14. Section 30.32 is amended by removing the word
``distilate'' in the third sentence of paragraph (c) and adding in its
place the word ``distillate''.
Sec. 30.43 [Amended]
Par. 15. Section 30.43 is amended by removing the word ``wight'' in
the second sentence of the introductory text and adding in its place
the word ``weight''.
Sec. 30.51 [Amended]
Par. 16. The example following Sec. 30.51 is amended by removing
the number ``868'' from the line which begins ``Proof of spirits'' and
by adding in its place the number ``86.8'' and by removing the number
``995'' from the line which begins ``Temperature correction factor''
and adding in its place the number ``0.995''.
PART 275--IMPORTATION OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND
TUBES
Par. 17. The authority citation for part 275 continues to read as
follows:
Authority: 26 U.S.C. 5701, 5703, 5704, 5705, 5708, 5722, 5723,
5741, 5761, 5762, 5763, 6301, 6302, 6313, 6404, 7101, 7212, 7342,
7606, 7652, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.
Par. 18. Section 275.30 is revised to read as follows:
Sec. 275.30 Pipe tobacco.
On pipe tobacco imported or brought into the United States after
January 1, 1993, the tax imposed by law is 67.5 cents per pound and a
proportionate tax at the like rate on fractional parts of a pound. (See
26 U.S.C. 5701(f).)
Par. 19. Section 275.31 is revised to read as follows:
Sec. 275.31 Cigar tax rates.
(a) On cigars imported or brought into the United States on or
after January 1, 1993, the taxes imposed by law are:
(1) Small cigars. $1.125 per thousand.
(2) Large cigars. 12.75 percent of the sale price, but not more
than $30 per thousand.
(b) Cigars not exempt from tax under this part which are removed
but not intended for sale are taxed at the same rate as similar cigars
removed for sale. (See 26 U.S.C. 5701(a).)
Par. 20. Section 275.32 is revised to read as follows:
Sec. 275.32 Cigarette tax rates.
(a) On cigarettes imported or brought into the United States on or
after January 1, 1993, the taxes imposed by law are:
(1) Small cigarettes. $12 per thousand.
(2) Large cigarettes. $25.20 per thousand.
(b) Special rule for large cigarettes. If large cigarettes are more
than 6\1/2\ inches in length, the rate of tax is the rate prescribed
for small cigarettes, counting each 2 3/4 inches, or fraction thereof,
of the length of each as one cigarette. (See 26 U.S.C. 5701(b).)
Par. 21. Section 275.33 is revised to read as follows:
Sec. 275.33 Smokeless tobacco tax rates.
On smokeless tobacco imported or brought into the United States,
the following taxes are imposed by law:
(a) Snuff. Snuff removed on or after January 1, 1993, 36 cents per
pound and a proportional tax at a like rate on fractional parts of a
pound.
(b) Chewing tobacco. Chewing tobacco removed on or after January 1,
1993, 12 cents per pound and a proportional tax at the like rate on
fractional parts of a pound. (See 26 U.S.C. 5701(e).)
Par. 22. Section 275.34 is revised to read as follows:
Sec. 275.34 Cigarette papers.
(a) On each book or set of cigarette papers containing more than 25
papers imported or brought into the United States on or after January
1, 1993, the taxes imposed by law are 0.75 cent for each 50 papers or
fractional part thereof.
(b) Where cigarette papers measure more than 6\1/2\ inches in
length, they shall be taxable at the above rates, counting each 2\3/4\
inches, or fraction thereof, of the length of each as one cigarette
paper. (See 26 U.S.C. 5701(c).)
Par. 23. Section 275.35 is revised to read as follows:
Sec. 275.35 Cigarette tubes.
(a) On cigarette tubes imported or brought into the United States
on or after January 1, 1993, the taxes imposed by law are 1.5 cents for
each 50 tubes or fractional part thereof.
(b) Where cigarette tubes measure more than 6\1/2\ inches in
length, they shall be taxable at the above rates, counting each 2\3/4\
inches, or fraction thereof, of the length of each as one cigarette
tube. (See 26 U.S.C. 5701(d).)
Sec. 275.39 [Removed] and Sec. 275.39a [Redesignated as 275.39]
Par. 24. Section 275.39 is removed and section 275.39a is
redesignated as section 275.39.
Sec. 275.72a [Removed], Sec. 275.72b [Redesignated as 275.72a] and
Sec. 275.72c [Removed]
Par. 25. Section 275.72a is removed, section 275.72b is
redesignated as section 275.72a, and section 275.72c is removed.
Subpart H (Secs. 275.151-275.153) [Removed]
Par. 26. Subpart H consisting of Secs. 275.151 through 275.153, is
removed and reserved.
Sec. 275.183 [Removed]
Par. 27. Section 275.183 is removed and reserved.
Signed: June 3, 1996.
John W. Magaw,
Director.
Approved: June 10. 1996.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 96-17996 Filed 7-15-96; 8:45 am]
BILLING CODE 4810-31-P
Complete official Federal Register PDF
FR Doc. 96-17995 Manufacturers Excise TaxesFirearms and Ammunition (95R-055P)
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37004-37007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17995]
=======================================================================
-----------------------------------------------------------------------
[[Page 37005]]
DEPARTMENT OF THE TREASURY
27 CFR Part 53
[T.D. ATF-380]
RIN 1512-AB42
Manufacturers Excise Taxes--Firearms and Ammunition (95R-055P)
AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of
the Treasury.
ACTION: Temporary rule (Treasury decision).
-----------------------------------------------------------------------
SUMMARY: The Bureau of Alcohol, Tobacco and Firearms (ATF) is amending
the regulations in 27 CFR Part 53 to simplify the regulations relating
to exemption certificates. The regulations are being revised to give
taxpayers the option of using a preprinted document for use as
exemption certificates and vendor(vendee) statements or designing their
own certificates and statements using specified information. The
temporary rule will remain in effect until superseded by final
regulations.
These amendments are part of the Administration's Reinventing
Government effort to reduce burden and streamline requirements.
In the proposed rules section of this Federal Register, ATF is also
issuing a notice of proposed rulemaking inviting comments on the
temporary rule for a 90-day period following the publication date of
this temporary rule.
EFFECTIVE DATE: The temporary regulations are effective July 16, 1996.
ADDRESS: Send written comments to: Chief, Regulations Branch, Bureau of
Alcohol, Tobacco and Firearms, P.O. Box 50221, Washington, DC 20226-
0221.
FOR FURTHER INFORMATION CONTACT: Mary Lou Blake, Regulations Branch,
Bureau of Alcohol, Tobacco and Firearms, 650 Massachusetts Ave., NW,
Washington, DC 20226; (202-927-8210).
SUPPLEMENTARY INFORMATION:
Background
Under current regulations, persons who sell firearms or ammunition
tax-free must obtain certain exemption certificates or statements to
support such sales. Current regulations include suggested forms for
each type of statement and certificate. These certificates and
statements are now available through the Bureau's Distribution Center.
Taxpayers may order these preprinted documents and reproduce them as
needed.
Since the forms are available from ATF, there is no need to
reproduce them in the regulations. Accordingly, this Treasury Decision
removes the text of the forms from the regulations, but retains all
information required for taxpayers who wish to design and use their own
certificates or statements.
This temporary rule also includes technical amendments to the
regulations in 27 CFR Part 53.
Executive Order 12866
It has been determined that this temporary rule is not a
significant regulatory action as defined in E.O. 12866. Therefore, a
regulatory assessment is not required.
Administrative Procedure Act
Because this document merely furnishes the taxpayer with an
optional method of providing exemption certificates or statements and
does not change the existing regulatory requirements, it is found to be
impracticable to issue this Treasury decision with notice and public
procedure under 5 U.S.C. 553(b), or subject to the effective date
limitation in section 553(d).
Regulatory Flexibility Act
It is hereby certified that this regulation will not have a
significant economic impact on a substantial number of small entities
or impose or otherwise cause an increase in the reporting,
recordkeeping or other compliance burdens on a substantial number of
small entities. The factual basis for such certification is that this
revision does not add any new requirement for reporting or
recordkeeping. This revision serves only to clarify and streamline
current regulatory requirements. Pursuant to section 7805(f) of the
Internal Revenue Code, this proposed regulation has been submitted to
the Chief Counsel for Advocacy of the Small Business Administration for
comment on its impact on small business.
Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1980, Public Law
96-511, 44 U.S.C. chapter 35, and its implementing regulations, 5 CFR
part 1329, do not apply to this regulation because there are no new
reporting or recordkeeping requirements.
Drafting Information
The author of this document is Mary Lou Blake, Regulations Branch,
Bureau of Alcohol, Tobacco and Firearms.
List of Subjects in 27 CFR Part 53
Administrative practice and procedure, Arms and munitions,
Authority delegations, Exports, Imports, Penalties, Reporting and
recordkeeping requirements.
Authority and Issuance
27 CFR Part 53 is amended to read as follows:
PART 53--MANUFACTURERS EXCISE TAXES--FIREARMS AND AMMUNITION
Paragraph 1. The authority citation for 27 CFR Part 53 continues to
read as follows:
Authority: 26 U.S.C. 4181, 4182, 4216-4219, 4221-4223, 4225,
6001, 6011, 6020, 6021, 6061, 6071, 6081, 6091, 6101-6104, 6109,
6151, 6155, 6161, 6301-6303, 6311, 6402, 6404, 6416.
Par. 2. Section 53.3 is revised to read as follows:
Sec. 53.3 Exemption certificates.
Several sections of the regulations in this part, relating to sales
exempt from manufacturers excise tax, require the manufacturer to
obtain an exemption certificate from the purchaser to substantiate the
exempt character of the sale. Any form of exemption certificate will be
acceptable if it includes all the information required to be contained
in such a certificate by the pertinent sections of the regulations in
this part. These certificates are available as preprinted documents
which may be ordered from the Bureau's Distribution Center (see
Sec. 53.21 for the address of the Distribution Center). The preprinted
certificates may be reproduced as needed.
Par. 3. Section 53.131 is amended by revising the third sentence in
paragraph (a)(5) to read as follows:
Sec. 53.131 Tax-free sales; general rule.
(a) * * *
* * * * *
(5) * * * See paragraph (c) of this section for provisions relating
to evidence required in support of tax-free sales. * * *
* * * * *
Par. 4. Section 53.132 is amended by revising paragraph (c)(2)(i)
and by adding paragraph (c)(2)(iii) to read as follows:
Sec. 53.132 Tax-free sale of article to be used for, or resold for,
further manufacture.
* * * * *
(c) * * *
(2) * * *
(i) Certificate of purchaser. The proof of resale to be received by
the
[[Page 37006]]
manufacturer, as required under section 4221(b)(1) of the Code, may
consist of either a copy of the invoice of the manufacturer's vendee
directed to his purchaser which discloses the certificate of registry
number held by each party or a statement described in this paragraph.
In the case of an invoice of manufacturer's vendee, it must appear from
such invoice (or by statement attached thereto) that the article was in
fact resold for use in further manufacture. In lieu of such an invoice,
proof of resale may consist of a statement, executed and signed by the
manufacturer's vendee which includes the following:
(A) Date statement was executed.
(B) Name and address of manufacturer's vendee (if other than the
person executing statement).
(C) Certificate of registry number held by vendee.
(D) Specify article(s) purchased tax-free, by whom purchased,
certificate of registry number of second purchaser, date of
purchase(s), whether articles were purchased as material in the
manufacture or production of, or as a component part or parts of, an
article or articles taxable under Chapter 32 of the Code.
(E) Statement that person executing statement or manufacturer's
vendee possesses proof of tax-free resale of the article(s) in the form
of purchase orders and sales invoices and identifying the person who
will maintain custody of such proof for 3 years from the date of the
statement and will make such proof available for inspection by ATF
during such 3 year period.
(F) Statement that a previous statement has not been executed in
respect of such certificate of resale and that the person signing the
statement is aware that fraudulent use of the statement may subject the
person signing the statement and all parties making fraudulent use of
the statement to all applicable criminal penalties under the Code.
(G) Name, signature, and title of individual executing statement.
(ii) * * *
(iii) ATF I 5600.37. A preprinted statement, ATF I 5600.37,
Statement of Manufacturer's Vendee, is available from the Bureau's
Distribution Center which, when completed, contains all necessary
information for a properly executed statement. Extra copies of ATF I
5600.37 may be reproduced as needed.
Par. 5. Section 53.133 is amended by revising paragraph (d)(2) and
by adding paragraph (d)(4) to read as follows:
Sec. 53.133 Tax-free sale of article for export, or for resale by the
purchaser to a second purchaser for export.
* * * * *
(d) * * *
* * * * *
(2) In any case where the manufacturer is not the exporter, the
manufacturer must have in its possession a statement from the vendee to
whom the manufacturer sold the article stating the following:
(i) Date statement was executed.
(ii) Name and address of manufacturer's vendee (if other than the
person executing statement).
(iii) Certificate of registry number held by vendee.
(iv) Specify article(s) purchased tax-free, by whom purchased, and
date of purchase.
(v) Statement that article(s) was either exported in due course by
the vendee or was sold to another person who in due course exported the
article(s).
(vi) Name and address of vendee who will maintain possession of the
proof of exportation documents, description of the documents, and
statement that vendee will maintain documents for 3 years and make them
available to ATF for inspection.
(vii) Statement that a previous statement has not been executed in
respect of the articles covered by this statement and that fraudulent
use of this statement may subject person executing statement and all
parties making fraudulent use of statement to all applicable criminal
penalties under the Code.
(viii) Name, signature, title, and address of individual executing
certificate.
(3) * * *
(4) ATF I 5600.36. A preprinted statement, ATF I 5600.36, Statement
of Manufacturer's Vendee, is available from the Bureau's Distribution
Center which, when completed, contains all necessary information for a
properly executed statement. Extra copies of ATF I 5600.36 may be
reproduced as needed.
Par. 6. Section 53.134 is amended by revising paragraph (d)(2)(iii)
and by adding paragraph (d)(2)(iv) to read as follows:
Sec. 53.134 Tax-free sale of articles for use by the purchaser as
supplies for vessels or aircraft.
* * * * *
(d) * * *
(2) * * *
(iii) Acceptable form of exemption certificate. A certificate of
exemption to support tax-free sales under this section must include the
following:
(A) Name of owner, charterer, or authorized agent.
(B) Name of company and vessel.
(C) List article(s) covered by the certificate or beginning and
ending dates during which orders will be placed (not to exceed 12
calendar quarters).
(D) Statement that articles will be used only for fuel supplies,
ships' stores, sea stores, or legitimate equipment on a vessel
belonging to one of the class of vessels to which section 4221 of the
Code applies. Identify class of vessel certificate covers (see
paragraphs (a) and (b) of this section).
(E) If articles are purchased for use on civil aircraft engaged in
foreign trade or trade between the United States and any of its
possessions, state the country in which the aircraft is registered.
(F) Statement that it is understood that if any articles are used
for any purpose other than as stated in the certificate, or are resold
or otherwise disposed of, the person executing the certificate must
notify the manufacturer.
(G) Statement that the certificate shall not be used to purchase
tax-free articles for use as supplies, etc. on pleasure vessels or any
type of aircraft except: (1) Civil aircraft employed in foreign trade
or trade between the United States and any of its possessions; (2)
Aircraft owned by the United States or any foreign country and
constituting a part of the armed forces thereof.
(H) Statement that it is understood that any fraudulent use of the
certificate may subject person executing certificate and all parties
making fraudulent use of the certificate to all applicable criminal
penalties under the Code.
(I) Statement that person executing certificate is prepared to
establish by satisfactory evidence the purpose for which the article(s)
was used.
(J) Date, name, signature, and address of person executing the
certificate.
(iv) ATF I 5600.34. A preprinted certificate, ATF I 5600.34,
Exemption Certificate, is available from the Bureau's Distribution
Center which, when completed, contains all necessary information for a
properly executed certificate. Extra copies of ATF I 5600.34 may be
reproduced as needed.
Par. 7. Section 53.135 is amended by revising paragraph (c)(1) and
by adding paragraph (c)(3) to read as follows:
Sec. 53.135 Tax-free sale of articles to State and local governments
for their exclusive use.
* * * * *
(c) * * *
(1) In the case of a State or local government which is registered
(see Sec. 53.141 for provisions under which a State or local government
may register if it so desires), the provisions of
[[Page 37007]]
paragraph (c) of Sec. 53.131 have application as to the evidence
required in support of tax-free sales. If a State or local government
is not registered, the evidence required in support of a tax-free sale
to the State or local government shall, except as provided in paragraph
(c)(2) of this section, consist of a certificate, executed and signed
by an officer or employee authorized by the State or local government
to execute and sign the certificate. If it is impracticable to furnish
a separate certificate for each order or contract because of frequency
of purchases, a certificate covering all orders between given dates
(such period not to exceed 12 calendar quarters) will be acceptable.
The certificates and proper records of invoices, orders, etc., relative
to tax-free sales must be retained by the manufacturer as provided in
Sec. 53.24(d). A certificate of exemption to support tax-free sales
under this section must contain the following:
(i) Title of official executing certificate, branch of government,
date executed, and statement that official is authorized to execute
certificate.
(ii) List articles covered by the certificate or beginning and
ending dates during which orders will be placed by the purchaser
(period not to exceed 12 calendar quarters).
(iii) Name of manufacturer from which articles purchased.
(iv) Governmental unit purchasing articles.
(v) Statement that is understood that articles purchased under this
certificate of exemption are limited to use exclusively by the
purchasing governmental entity.
(vi) Statement that is understood that any fraudulent use of this
certificate may subject the person executing the certificate and all
parties making fraudulent use of the certificate to all applicable
criminal penalties under the Code.
(vii) Name, address, and signature of person executing the
certificate.
(2) * * *
(3) ATF I 5600.35. A preprinted certificate, ATF I 5600.35,
Exemption Certificate, is available from the Bureau's Distribution
Center which, when completed, contains all necessary information for a
properly executed certificate. Extra copies of ATF I 5600.35 may be
reproduced as needed.
* * * * *
Par. 8. Section 53.179 is amended by revising paragraph (b)(1)(iii)
and by adding paragraph (b)(1)(iv) to read as follows:
Sec. 53.179 Supporting evidence required in case of manufacturers tax
involving exportations, uses, sales, or resales.
* * * * *
(b) * * *
(1) * * *
(iii) Certificate of ultimate vendor. Any certificate executed and
signed by an ultimate vendor as evidence to be retained by the person
who paid the tax as provided in paragraph (a)(4) of this section may be
executed with respect to any one or more overpayments by the person
which arose under section 6416(b)(2) and Sec. 53.178 by reason of
exportations, uses, sales or resales, occurring within any period of
not more than 12 consecutive calendar quarters, the beginning and
ending dates of which are specified in the certificate. A certificate
supporting a claim for credit or refund under this section shall
contain the following:
(A) Name of ultimate vendor if other than person executing the
certificate.
(B) Statement that article(s) was purchased by the ultimate vendor
tax-paid and was thereafter exported, used, sold, or resold.
(C) Description of proof which supports exportation or certificate
as to use executed by ultimate purchaser.
(D) Statement that ultimate vendor retains such proof for 3 years
from the date of the statement and will, upon request, supply such
proof at any time within such 3 year period to the taxpayer to
establish that credit or refund is due in respect of the article.
(E) Statement that to the best knowledge and belief of the person
executing the certificate, no statement in respect of the proof of
exportation or certificate has previously been executed and that the
person executing the certificate understands that any fraudulent use of
the certificate may subject the person executing the certificate or any
other party to all applicable criminal penalties under the Code.
(F) Name, title, address and signature of person executing
certificate and date signed.
(G) Description of all articles covered by the certificate, with
the corresponding vendor's invoice number, date of resale of article,
quantity, whether articles were exported or used and the use made of
article or to be made of article.
(iv) ATF I 5600.33. ATF I 5600.33, Statement of Ultimate Vendor, is
available from the Bureau's Distribution Center which, when completed,
contains all necessary information for a properly executed certificate.
Additional copies may be reproduced as needed.
* * * * *
Signed: May 30, 1996.
Bradley A. Buckles,
Acting Director.
Approved: June 10, 1996.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 96-17995 Filed 7-15-96; 8:45 am]
BILLING CODE 4810-31-P
Complete official Federal Register PDF
FR Doc. 96-17988 Regulations Governing Payments by Banks and Other Financial Institutions of United States Savings Bonds and United States Savings Notes (Freedom Shares)
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37196-37197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17988]
[[Page 37195]]
_______________________________________________________________________
Part VI
Department of the Treasury
_______________________________________________________________________
Fiscal Service
_______________________________________________________________________
31 CFR Part 321
Regulations Governing Payments by Banks and Other Financial
Institutions of United States Savings Bonds and United States Savings
Notes (Freedom Shares); Final Rule
Federal Register / Vol. 61, No. 137 / Tuesday, July 16, 1996 / Rules
and Regulations
[[Page 37196]]
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 321
[Department of the Treasury Circular, Public Debt Series No. 750]
Regulations Governing Payments by Banks and Other Financial
Institutions of United States Savings Bonds and United States Savings
Notes (Freedom Shares)
AGENCY: Bureau of the Public Debt, Fiscal Service, Department of the
Treasury.
ACTION: Final rule.
SUMMARY: The Department of the Treasury hereby publishes this final
rule amending the regulations to update procedures used by the Bureau
of the Public Debt for collecting debts owed by paying agents of United
States Savings Bonds and Savings Notes (collectively referred to herein
as savings bonds or bonds). These collection procedures are used when a
paying agent cannot be relieved of liability for a savings bond
transaction and the paying agent fails to reimburse Public Debt in a
timely manner.
Accounts designated or utilized by paying agents at Federal Reserve
Banks for receiving settlements for savings bond redemptions are
immediately credited upon the receipt of paid bonds with cash letters
by Federal Reserve Banks or Branches through the EZ CLEAR system. These
immediate settlements occur with the understanding that adjustments to
correct errors may later be necessary. This system has expedited the
process of crediting the accounts paying agents have designated or
utilized for receiving savings bond transaction settlements. However,
the system has also made it more cumbersome for Public Debt to collect
monies from paying agents, not relieved of liability, that fail to
reimburse Public Debt in a timely manner.
This amendment corrects this problem by providing that paying
agents are deemed to have authorized the debit of any overdue amount,
interest, administrative cost, and penalty assessed, directly from the
agents' Reserve, correspondent, or clearing accounts designated or
utilized at Federal Reserve Banks or Branches for settlement of
redeemed savings bonds.
EFFECTIVE DATE: July 16, 1996.
FOR FURTHER INFORMATION CONTACT: Wallace L. Earnest, Division Director,
Division of Staff Services (304) 480-6319, or Edward Gronseth, Deputy
Chief Counsel, Office of the Chief Counsel (304) 480-5192.
SUPPLEMENTARY INFORMATION:
I. Background
The final rule will update the debt collection process used by the
Bureau of the Public Debt. This update is necessitated by the automated
processing of redeemed savings bonds through EZ CLEAR.
Paying agents receive settlements for the value of savings bonds
redeemed via credits to Reserve, correspondent, and clearing accounts
with Federal Reserve Banks, or their Branches.
When a depository financial institution qualifies as a savings bond
paying agent, it agrees in writing to be bound by all of the provisions
set out in 31 CFR part 321 and the Appendix thereto, as revised and
amended, including any instructions promulgated by Treasury and its
fiscal agents.
Relief of a paying agent from liability for a loss related to the
redemption of a savings bond is a determination made under authority of
31 U.S.C. 3126(a).
The collection procedures will apply when a paying agent cannot be
relieved of liability under 31 U.S.C. 3126(a) for a loss resulting from
a payment of a savings bond pursuant to 31 CFR part 321. No change is
being made in the procedure for assessing liability under 31 U.S.C.
3126(a), or in the regulations with respect to such liability
determinations.
II. Summary of Amendments
Section 321.21 refers to collection procedures outlined in
Paragraph 21 of the appendix to this part.
Paragraph 21 of the appendix to this part provides a detailed
explanation of the consequences of a paying agent's failure to make
reimbursement within 30 days of Public Debt's mailing the first demand
letter, provided the paying agent cannot be relieved of liability under
31 U.S.C. 3126(a) for an erroneous payment.
A paying agent receiving settlement for the redemption value of
redeemed savings bonds via credits to a Reserve, correspondent, or
clearing account is deemed to have authorized the Federal Reserve Bank
or Branch to debit the amount due from that account. Such debits shall
be made if the paying agent fails to make timely reimbursement or
submit new evidence sufficient for Public Debt to change a
determination of liability within 120 days of the mailing of the first
demand letter. The amount due from the redemption of a security for
which the paying agent is not relieved of liability, under 31 U.S.C.
3126(a), shall include the amount of the final loss resulting from the
erroneous payment, interest, administrative costs, and penalty charges.
A financial institution designated by a paying agent to receive
settlement for redeemed savings bonds on behalf of that paying agent
via a credit to a Reserve, correspondent, or clearing account with a
Federal Reserve Bank or Branch is deemed to have authorized a debit
from such account to collect an amount due from the paying agent. The
consequences of a paying agent's failure to make timely reimbursement
include the paying agent's being required to pay:
(a) Interest charges accruing from the date the first demand letter
is mailed to the date of reimbursement, at the current value of funds
rate published by the Secretary of the Treasury annually or quarterly
in the Federal Register;
(b) Administrative costs (currently processing costs of $6.00) will
be assessed, if reimbursement is not made within 30 days of the date
the first demand letter is mailed;
(c) Penalty charges in accordance with 31 U.S.C. 3717(e), if
reimbursement is not made within 120 days of the date the first demand
letter is mailed. When assessed, the penalty charge will accrue and be
calculated from 30 days after the date the first demand letter is
mailed to the date of reimbursement.
Procedural Requirements
It has been determined that this final rule is not a ``significant
regulatory action'' pursuant to Executive Order 12866.
Although this rule was published in the Federal Register as a
proposed rule on April 1, 1996, to secure the benefit of public
comment, the rule relates to matters of public contract, as well as the
borrowing power and fiscal authority of the United States. The notice
and public procedures requirements of the Administrative Procedure Act
are inapplicable, pursuant to 5 U.S.C. 553(a)(2). As no notice of
proposed rulemaking is required, the provisions of the Regulatory
Flexibility Act (5 U.S.C. 601, et seq.) do not apply.
There are no collections of information required by this final
rule, therefore, the Paperwork Reduction Act does not apply.
Comments
No comments were received on the proposed rule published April 1,
1996, with a 30 day comment period.
List of Subjects in 31 CFR Part 321
Banks, Banking, Bonds, Government securities.
[[Page 37197]]
Dated: July 3, 1996.
John Kilcoyne,
Deputy Fiscal Assistant Secretary.
For the reasons set forth in the preamble, part 321 of title 31 of
the Code of Federal Regulations is amended to read as follows:
PART 321--PAYMENTS BY BANKS AND OTHER FINANCIAL INSTITUTIONS OF
UNITED STATES SAVINGS BONDS AND UNITED STATES SAVINGS NOTES
(FREEDOM SHARES)
1. The authority citation for part 321 is revised as follows:
Authority: 2 U.S.C. 901, 5 U.S.C. 301, 12 U.S.C. 391, 31 U.S.C.
3105, 31 U.S.C. 3126.
2. Section 321.21 is revised to read as follows:
Sec. 321.21 Replacement and recovery of losses.
(a) If a final loss results from the redemption of a security, and
the paying agent redeeming the security is not relieved of liability
for such loss under 31 U.S.C. 3126(a), the Bureau of the Public Debt
will demand that the paying agent promptly reimburse the United States
in the amount of the final loss and will take such other action as may
be necessary to collect such amount as set out in the procedure
described in Paragraph 21 of the appendix to this part.
(b) If a final loss has resulted from the redemption of a security,
and no reimbursement has been or will be made, the loss shall be
subject to replacement out of the fund established by the Government
Losses in Shipment Act, as amended.
3. Subpart E, paragraph 21 of the appendix to this part is revised
as follows:
21. Determination of liability. (Sec. 321.18 and Sec. 321.21)
(a) Upon completing the investigation, the Bureau of the Public
Debt will examine the available information and determine whether a
paying agent may be relieved of liability for any loss that may have
resulted. If the paying agent cannot be relieved of liability,
demand will be made upon the paying agent to reimburse the Treasury
promptly. Any amount not paid within 30 days following the mailing
of the first demand letter is subject to the following charges.
(1) Interest shall accrue from the date the first demand letter
is mailed to the date reimbursement is made. The rate of interest to
be used will be the current value of funds rate published annually
or quarterly in the Federal Register and in effect during the entire
period in which the remittance is late.
(2) Administrative costs shall be assessed as set out in the
first demand letter, if reimbursement is not made within 30 days of
the date the first demand letter is mailed.
(3) Penalty charges shall be assessed, in accordance with 31
U.S.C. 3717(e), if reimbursement is not made within 120 days of the
date the first demand letter is mailed. The penalty charge will
accrue and be calculated from 30 days after the date the first
demand letter is mailed to the date of reimbursement.
(b) When a paying agent fails, within 120 days of the date the
first demand letter is mailed, to make such reimbursement or to
submit new evidence sufficient for Public Debt to change the
determination of liability, by virtue of the paying agent's
acceptance of settlement via credits to a Reserve, correspondent, or
clearing account with a Federal Reserve Bank or Branch, the agent is
deemed to have authorized the Federal Reserve Bank to debit the
amount due from that account designated or utilized by the agent at
the Federal Reserve Bank or Branch. An institution, designated by a
paying agent to receive settlement on its behalf, in authorizing
such paying agent to utilize its Reserve, correspondent, or clearing
account on the books at the Federal Reserve Bank shall similarly be
deemed to authorize such debits from that account.
(c) Reconsideration of a determination of liability will be made
in any case when a paying agent so requests and presents additional
evidence and information regarding the transaction.
* * * * *
[FR Doc. 96-17988 Filed 7-15-96; 8:45 am]
BILLING CODE 4810-39-M
Complete official Federal Register PDF
FR Doc. 96-17896 Sale and Issue of Marketable Book-Entry Treasury Bills, Notes, and Bonds (Department of the Treasury Circular, Public Debt Series No. 1-93)
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37007-37011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17896]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 356
Sale and Issue of Marketable Book-Entry Treasury Bills, Notes,
and Bonds (Department of the Treasury Circular, Public Debt Series No.
1-93)
AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (``Department'') is issuing an
amendment to its regulations governing the sale and issue of marketable
book-entry Treasury securities (Uniform Offering Circular for the Sale
and Issue of Marketable Book-Entry Treasury Bills, Notes, and Bonds).
The amendment defines the term ``investment adviser'' and contains a
new section on bidding through investment advisers. The amendment also
makes certain technical and clarifying changes.
EFFECTIVE DATE: The amendment is effective on September 16, 1996.
FOR FURTHER INFORMATION CONTACT: Donald V. Hammond, Assistant Director,
Government Securities Regulations Staff, Bureau of the Public Debt
(202) 219-3632; or Margaret Marquette, Attorney-Adviser, Office of the
Chief Counsel, Bureau of the Public Debt (202) 219-3320.
SUPPLEMENTARY INFORMATION:
I. Background
31 CFR part 356, also referred to as the uniform offering circular,
sets out the terms and conditions for the sale and issuance by the
Department of the Treasury to the public of marketable book-entry
Treasury bills, notes, and bonds. The uniform offering circular was
originally published on January 5, 1993 (58 FR 412), as a comprehensive
statement of those terms and conditions. Amendments to the circular
were published on June 3, 1994 (59 FR 28773), and March 15, 1995 (60 FR
13906). In the time since the rule was
[[Page 37008]]
first published, several questions have arisen about the application of
the circular in situations where an investment adviser formulates a bid
or otherwise makes bidding decisions for a managed or controlled
account. In response, the Department is defining the term ``investment
adviser'' and is setting out the specific terms and conditions for
bidding through investment advisers.
Previously, the treatment of investment advisers was found in a
discussion in the preamble to the January 5, 1993, publication. The
preamble and rule did not specify how the various provisions of the
rule should be applied with respect to accounts that participate in
auctions through investment advisers, leaving ambiguous the answers to
a number of technical questions. Accordingly, the Department published
a proposed amendment on January 5, 1996,1 which provided a
definition of the term ``investment adviser'' and clarified how the
provisions of the uniform offering circular would be applied to bids
submitted for accounts that are managed by investment advisers
(controlled accounts). Additionally, the existing exclusion for certain
controlled accounts on whose behalf an investment adviser is not
bidding in an auction was proposed to be substantially modified. The
proposed modification would have reduced from $500 million to $10
million the dollar threshold applied to the position of a non-
participating controlled account in determining eligibility for the
exclusion.
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\1\ 61 FR 402 (January 5, 1996).
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Though not required to, the Department published the clarifications
and changes in proposed form in order to receive the full benefit of
input from affected auction participants. The comment period closed on
March 5, 1996.
II. Comments Received in Response to the Proposed Rule
The Department received one comment letter, from the Public
Securities Association (PSA), in response to the proposed
amendment.2 The PSA letter strongly supported the clarifications
and guidance that the proposed amendment provided but expressed
significant objections to the proposed modification of the exclusion
available for non-participating controlled accounts.
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\2\ March 4, 1996, letter from Stephanie Wolf, Assistant General
Counsel, Public Securities Association, to Kenneth R. Papaj,
Director, Government Securities Regulations Staff, Bureau of the
Public Debt.
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A. Definition of Investment Adviser
The PSA supported the definition for the term ``investment
adviser,'' which also describes what is meant by the phrase
``investment discretion.'' However, the PSA stated that the phrase ``or
otherwise exercises control,'' describing investment discretion in the
proposed definition, introduces an element of ambiguity. It was noted
that the current net long position reporting requirement, which the
definition seeks to clarify, uses the phrase ``exercising control''
which has been understood to mean the exercise of investment
discretion. With the addition of the definition of the term
``investment adviser,'' the commenter believes that inclusion of a
general provision such as ``or otherwise exercises control'' raises the
question as to what other types of control might exist and is contrary
to the intent behind the amendment. The Department agrees and has
deleted the phrase from the final definition.
B. Bidding Through Investment Advisers
The PSA expressed support for the codification and clarification of
the manner in which investment advisers may bid for their controlled
accounts. The commenter requested that the application of the
restriction against noncompetitive and competitive bidding in the same
auction be addressed for the situation in which an investment adviser
bids both competitively for its own proprietary account and
noncompetitively for its controlled accounts in the names of those
accounts. As stated in Sec. 356.15(a) of the proposed rule, an
investment adviser may bid for a controlled account either in the name
of the investment adviser, in which case the adviser is considered the
bidder, or in the name of the account, in which case the account is
considered the bidder. This means that, for purposes of bidding
noncompetitively, an investment adviser that bids for its controlled
accounts in the name of the adviser is limited to the maximum allowed
bid and award amount for a noncompetitive bid for that auction, e.g.,
$1 million total in a bill auction. An investment adviser that bids
noncompetitively for its controlled accounts in the names of the
accounts may bid for each account for the maximum allowed
noncompetitive amount, e.g., $1 million for each account in a bill
auction. Additionally, the investment adviser may not bid for the
controlled account both competitively and noncompetitively in the same
auction, regardless of whether the bidding is in the name of the
adviser or in the name of the controlled account.
The proposed rule did not specifically address, with respect to the
restriction against bidding both competitively and noncompetitively in
the same auction, the situation in which an investment adviser is
bidding for its own account in the same auction that it is bidding for
controlled accounts. It is the Department's intention that the
proprietary account of an investment adviser be treated in the same
manner as that of any other bidder.3 In other words, an investment
adviser may bid competitively in its own name for its proprietary
account so long as it is also not bidding noncompetitively in its own
name. Therefore, if a controlled account is being bid for
noncompetitively in the name of the account, the investment adviser may
bid competitively in its own name for its proprietary account. It may
also bid competitively, in the name of the investment adviser or the
account, for any controlled accounts that are not being bid for
noncompetitively. However, the investment adviser may NOT bid both
competitively and noncompetitively in its own name in the same auction,
regardless of whether the bids represent its own account or controlled
accounts. Also the investment adviser may not bid both competitively
and noncompetitively in the same auction for any one controlled
account, regardless of whether the bid is in the name of the investment
adviser or in the name of the account.
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\3\ An investment adviser, under the bidder definitions, may
itself need to be aggregated with its affiliates as part of a larger
bidder. The restriction against bidding both noncompetitively and
competitively in the same auction is applicable to all the
affiliates that are required to be aggregated since they form a
single bidder, i.e., if an entity is bidding competitively in an
auction, an affiliate of that entity may not bid noncompetitively in
the same auction, unless that affiliate has received recognition as
a separate bidder.
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C. Reporting Net Long Positions
The proposed rule stated that, in determining if it has reached the
$2 billion net long position reporting threshold, an investment adviser
must include in its calculation those bids and positions it controls in
addition to bids and positions it would otherwise have to include as a
bidder. This provision clarified the existing requirement for the
calculation of a net long position. The proposal also contained a
significant change from the current rule in the amount of a controlled
account's position that may be excluded from the investment adviser's
net long position calculation. The rule currently allows the adviser to
exclude net long positions
[[Page 37009]]
less than $500 million for certain controlled accounts that are not bid
for in an auction. The proposal provided for a similar type of
exclusion but decreased the amount to $10 million per controlled
account.
The PSA strongly objected to the proposed change. While
understanding the Department's objective of obtaining more information
than is currently provided about the positions that an investment
adviser may control, the commenter believed that this objective could
not justify the cost to auction participants of reporting on controlled
accounts at the significantly reduced amount. It was the commenter's
opinion that in order to include controlled accounts at a $10 million
threshold within the current net long position reporting timeframes,
auction participants would have to develop automated systems to track
the information. The PSA represented that the cost to develop such
systems would be prohibitive and might adversely affect investment
advisers' participation in auctions. Accordingly, the PSA recommended
that the Department retain the current exclusionary amount or set a
lower amount that would not impose such significant costs. The letter
did not provide any suggestions for an appropriate alternative amount.
Additionally, the commenter did not address the alternative approach
for an exclusion discussed in the proposal or offer any other
approaches for providing Treasury with better information about the
size of a position that an investment adviser might control.
The reduction in the exclusionary amount was proposed because the
Department believes that a lower amount is necessary to give a more
accurate picture of the amount of a security controlled by an
investment adviser. The Department is sensitive to the concerns of
auction participants about the cost of compliance with the auction
rules and recognizes, in particular, that the net long position
reporting provisions are costly because of the scope of the aggregation
provisions and the short reporting timeframe. Balanced against this
compliance cost is the Department's goal of avoiding undue
concentrations of ownership or control upon original issue. The net
long position report is an essential tool in achieving this goal.
In developing the proposal, the Department considered and rejected
alternatives, such as providing investment advisers an exclusion based
on an aggregate amount rather than separate position amounts in
specific accounts, because of a concern that they would be more
burdensome or costly for advisers. Nothing in the comment letter would
lead the Department to a different conclusion. Therefore, the approach
outlined in the proposal is believed to be the best approach for
excluding non-participating accounts.
However, a cost-effective exclusion threshold needs to be
determined. A tradeoff exists between the time and cost necessary for
an investment adviser to determine the holdings of non-participating
controlled accounts and the meaningfulness of the net long position
information submitted with the bid. The higher the exclusion amount the
less costly compliance is for the investment adviser, but also the less
useful the information is to the Department. The higher the threshold
the fewer number of nonparticipating controlled accounts that would be
needed to control a significant undisclosed position in the auctioned
security. After due consideration of the potential compliance costs
versus the usefulness of the net long position report, the Department
has determined that an exclusion threshold of $100 million is
appropriate. A $100 million threshold is at a high enough level that
relatively few managed accounts should be affected, thus minimizing
systems and compliance costs, and yet is low enough that Treasury will
receive useful information on the control of the security.
D. Other Comments
The PSA letter briefly discussed the modification that would allow
investment advisers to submit bids for their controlled accounts
directly to a Federal Reserve Bank or to the Bureau of the Public Debt.
The PSA did not object to the proposed change but observed that it had
no impact on its membership since its members are all either banks or
broker-dealers who are already authorized to submit bids for others
directly. The provision allowing an adviser to submit or forward bids
in the names of its controlled accounts is an exception to the
restriction against anyone other than a depository institution or
dealer submitting or forwarding bids for others. The Department
reiterates that it is not its intent to authorize an investment adviser
that does not also meet the definition of a depository institution or
dealer to submit or forward bids for customers. A controlled account is
not the same as a customer since, unlike a customer, the beneficial
owner of a controlled account is not involved in determining the terms
of the auction bid and is generally not aware of the bid until after
the fact. (See the definition of ``customer'' in Sec. 356.2 which
refers to directing a depository institution or dealer to bid for a
specified amount of securities in a specific auction.)
III. Changes from the Proposed Rule
In Sec. 356.2, the definition of ``investment adviser'' has been
modified to delete the phrase ``or otherwise exercises control'' in
response to a comment from the PSA. The Department believes that this
deletion does not affect the intended meaning of the definition and
that the change reduces possible confusion.
The language of Sec. 356.15(b) regarding competitive and
noncompetitive bidding has not been changed. However, the Department is
clarifying that the provision permits an investment adviser to bid
competitively for its proprietary account and noncompetitively for one
or more controlled accounts in the same auction provided that the
noncompetitive bids are in the names of the controlled accounts. The
investment adviser would not be permitted to bid both competitively and
noncompetitively in the adviser's name in the same auction, regardless
of which accounts the bids are for; nor would the adviser be allowed to
bid both competitively and noncompetitively for a controlled account.
(See Discussion in Section II.B. of this release.)
The only change to proposed Sec. 356.15(c) is the dollar level of
the exclusion threshold. The $10 million threshold proposed was
strongly criticized by auction participants as being at a level so low
as to cause them to incur substantial compliance costs which they
believed could not be justified by the benefits received by Treasury.
Upon due consideration of this comment and further discussions with the
commenter, the Department has concluded that a threshold of $100
million would be more appropriate. This revised threshold provides
sufficient additional information about the size of positions
controlled by an investment adviser while not imposing unreasonable
costs on affected entities. (See Discussion in Section II.C. of this
release.)
The proposed changes in Secs. 356.11, 356.13, 356.21, and 356.22,
as well as appendix A to part 356, are being adopted as proposed. Other
sections have been renumbered as a result of adding new Sec. 356.15.
Additionally, Sec. 356.36 has been amended to reflect approval under
the Paperwork Reduction Act of the new information collections in
Sec. 356.15.
[[Page 37010]]
IV. Procedural Requirements
The rule does not meet the criteria for a ``significant regulatory
action'' pursuant to Executive Order 12866.
Although the rule was published in proposed form to secure the
benefit of public comment, the notice and public procedures
requirements of the Administrative Procedure Act are inapplicable,
pursuant to 5 U.S.C. 553(a)(2). As no notice of proposed rulemaking is
required, the provisions of the Regulatory Flexibility Act (5 U.S.C.
601, et seq.) do not apply.
The collection of information contained in this rule, in
Sec. 356.15, has been reviewed and approved by the Office of Management
and Budget under section 3507(d) of the Paperwork Reduction Act of 1995
(44 U.S.C. Chapter 35) under Control Number 1535-0112. Under the Act,
an agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid OMB
control number.
This information is being collected by the Department in order to
determine the amount of a Treasury security controlled by an investment
adviser bidding competitively in an auction for that security. The
information will be used for the purpose of determining the award to be
made as the result of a competitive bid for a security. Responses to
the collection of information are required in order for the potential
respondent to purchase securities. Information concerning securities
holdings and transactions is protected against disclosure under
Treasury regulations (31 CFR Part 323) and in certain instances, the
Privacy Act. The information may be disclosed only as authorized by
law.
The burden hours estimated in the notice of proposed rulemaking
have been reduced as a result of a change in the final rules that
increases the number of accounts that would be eligible for the
reporting exclusion. This change was made in response to a comment
received from the public.
Estimated total annual reporting burden: 100 hours.
Estimated average annual burden hours per respondent: 5 hours.
Estimated number of respondents: 20.
Estimated annual frequency of responses: on occasion.
Comments on the accuracy of the estimate for this collection of
information or suggestions to reduce the burden should be sent to the
Office of Information and Regulatory Affairs of the Office of
Management and Budget, Attention: Desk Officer for Department of the
Treasury/Bureau of the Public Debt, Washington, D.C. 20503, with copies
to the Government Securities Regulations Staff, Bureau of the Public
Debt, Room 515, 999 E Street, NW, Washington DC 20239-0001.
List of Subjects in 31 CFR Part 356
Bonds, Federal Reserve System, Government securities, Securities.
For the reasons set forth in the preamble, 31 CFR chapter II,
subchapter B, part 356, is amended as follows:
PART 356--SALE AND ISSUE OF MARKETABLE BOOK-ENTRY TREASURY BILLS,
NOTES, AND BONDS (DEPARTMENT OF THE TREASURY CIRCULAR, PUBLIC DEBT
SERIES NO. 1-93)
1. The authority citation for part 356 is revised to read as
follows:
Authority: 5 U.S.C. 301; 31 U.S.C. 3102, et seq.; 12 U.S.C. 391.
2. Section 356.2 is amended by adding in alphabetical order the
definition of ``investment adviser'' to read as follows:
Sec. 356.2 Definitions.
* * * * *
Investment adviser means any person or entity that has investment
discretion for the bids or positions of a person or entity not
considered part of the investment adviser under the bidder definitions
in Appendix A of this part. Investment discretion includes determining
what, how many, and when securities shall be purchased or sold. A
person or entity managing investments for itself is not considered an
investment adviser for such investments. Where a person is employed or
supervised by an entity in connection with his activities as an
investment adviser, such person is considered to be part of that
entity.
* * * * *
3. Section 356.11(a)(1) is amended by revising the second sentence
to read as follows:
Sec. 356.11 Submission of bids.
(a) General.
(1) * * * Except as otherwise provided, tenders must be submitted
in an approved format, including the use of preassigned identification
numbers, where applicable. * * *
* * * * *
4. Section 356.13 is amended by removing paragraph (a)(2) and
redesignating paragraph (a)(1) as paragraph (a). The last two sentences
of newly redesignated paragraph (a) are revised to read as follows:
Sec. 356.13 Net long position.
(a) Reporting net long positions. * * * In cases where a bidder
that is required to report the amount of its net long position has more
than one bid, the bidder's total net long position should be reported
in connection with only one bid. A bidder that is a customer must
report its reportable net long position through only one depository
institution or dealer. (See Sec. 356.14(c).)
* * * * *
5. Sections 356.15 and 356.16 are redesignated as Secs. 356.16 and
356.17 respectively and new Sec. 356.15 is added to read as follows:
Sec. 356.15 Bidding through investment advisers.
(a) General. Where bids or positions of a person or entity are
controlled by an investment adviser, such bids or positions are
considered to be a controlled account, separate from the bids and
positions of any person or entity with which they would otherwise be
associated under the bidder definitions in Appendix A of this part. The
investment adviser may bid for controlled accounts by including, in a
bid in the adviser's name, amounts that it is investing for the
controlled accounts. The investment adviser may also bid for controlled
accounts in the names of such accounts. Where bids are in an investment
adviser's name, the investment adviser is considered the bidder for
such bids and, where bids are in the name of a controlled account, the
named controlled account is considered the bidder, for all purposes of
this part 356, except as specified in this Sec. 356.15.
(b) Noncompetitive and competitive bidding. Regardless of whether
the bid for a controlled account is in the name of the investment
adviser or in the name of the controlled account, such account may not
be bid for both noncompetitively and competitively in the same auction.
In addition, such account is subject to the noncompetitive bidding
restrictions and award limitations contained in Secs. 356.12(b) and
356.22(a).
(c) Reporting net long positions. In calculating the amount of its
bids and positions for purposes of the net long position reporting
requirement found in Sec. 356.13(a), the investment adviser must
include, in addition to what would otherwise be included for the
investment adviser as a bidder under the bidder definitions, all other
competitive bids and positions controlled by the investment adviser.
The investment adviser may exclude any net long position less than $100
million of any nonproprietary controlled account unless the adviser is
[[Page 37011]]
placing a competitive bid for that account either in the name of the
investment adviser or in the name of the account. However, if any net
long position less than $100 million of any nonproprietary account not
being bid for is excluded, then all net short positions less than $100
million of nonproprietary accounts not being bid for must also be
excluded. Regardless of whether the investment adviser bids in its own
name or in the name of its controlled accounts, if the net long
position is reportable, it must be reported as a total in connection
with only one bid in accordance with Sec. 356.13(a).
(d) Submitting bids for controlled accounts. Notwithstanding the
definition of submitter found in Sec. 356.2, and the restriction
against submitting bids for others found in Sec. 356.14, an investment
adviser may submit bids, whether in the adviser's own name or in the
names of its controlled accounts, directly to a Federal Reserve Bank or
the Bureau of the Public Debt, in which case the investment adviser is
considered a submitter. In the alternative, the investment adviser may
forward such bids to a depository institution or dealer.
(e) Certifications. By bidding for a controlled account, an
investment adviser is deemed to have certified that it is in compliance
with this part and the offering announcement governing the sale and
issue of the security. Further, the investment adviser is deemed to
have certified that the information provided on the tender or provided
to a submitter or intermediary with regard to bids for controlled
accounts is accurate and complete.
(f) Proration of awards. In auctions where bids at the highest
accepted yield or discount rate are prorated under Sec. 356.20(a)(2) of
this part, investment advisers that submit bids for controlled accounts
in the names of such accounts are responsible for prorating awards for
their controlled accounts at the same percentage as that announced by
the Department. The same prorating rules apply to controlled accounts
as apply to submitters. See Sec. 356.21 of this part.
6. Section 356.21 is amended by revising paragraph (a) to read as
follows:
Sec. 356.21 Proration of awards.
(a) Awards to submitters. In auctions where bids at the highest
accepted yield or discount rate are prorated under Sec. 356.20(a)(2) of
this part, the Federal Reserve Banks are responsible for prorating
awards for submitters at the percentage announced by the Department.
For example, if 80% is the announced percentage at the highest yield or
discount rate, then each bid at that rate or yield shall be awarded 80%
of the amount bid. Hence, a bid for $100,000 at the highest accepted
yield or discount rate would be awarded $80,000. In all cases, awards
will be for, at least, the minimum to hold, and awards must be in an
appropriate multiple to hold. Awards at the highest accepted yield or
rate are adjusted upwards, if necessary, to an appropriate multiple to
hold. For example, Treasury bills may be issued with a minimum to hold
of $10,000 and multiples of $1,000. Where an $18,000 bid is accepted at
the high discount rate, and the percent awarded at the high discount
rate was 88%, the award to that bidder would be $16,000, representing
an upward adjustment from $15,840 ($18,000 x .88) to an appropriate
multiple to hold. If tenders at the highest accepted rate were prorated
at, for example, a rate of 4%, the award for a $100,000 bid would be
$10,000, instead of $4,000, in order to meet the minimum to hold for a
bill issue.
* * * * *
7. Section 356.22(b) is amended by revising the last sentence to
read as follows:
Sec. 356.22 Limitation on auction awards.
* * * * *
(b) Awards to competitive bidders. * * * When the bids and net long
positions of more than one person or entity must be combined as
required by Sec. 356.15(c), such combined amount will be used for the
purpose of this award limitation.
8. Section 356.36 is revised to read as follows:
Sec. 356.36 Paperwork Reduction Act approval.
The collections of information contained in Secs. 356.11, 356.12,
356.13, 356.14, and 356.15 and in appendix A of this part have been
approved by the Office of Management and Budget under control number
1535-0112.
9. Appendix A to Part 356 is amended by adding to section (a) a new
paragraph between the second and third paragraphs of the introductory
text to read as follows:
Appendix A To Part 356--Bidder Definitions
* * * * *
(a) Corporation--* * *
For the purpose of this part, a business trust, such as a
Massachusetts business trust or a Delaware business trust, is
considered to be a corporation.
* * * * *
Dated: July 9, 1996.
John A. Kilcoyne,
Acting Fiscal Assistant Secretary.
[FR Doc. 96-17896 Filed 7-15-96; 8:45 am]
BILLING CODE 4810-39-P
Complete official Federal Register PDF
FR Doc. 96-17895 Medicare Program; Reporting of Interest From Zero Coupon Bonds
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37011-37015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17895]
=======================================================================
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 413
[BPD-647-F]
RIN 0938-AH11
Medicare Program; Reporting of Interest From Zero Coupon Bonds
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This final rule requires Medicare providers to report all
interest expense and interest income from zero coupon bonds in the cost
reporting period in which the interest was accrued. This final rule is
necessary to add provisions to the Medicare regulations that
specifically address the reporting by providers of interest expense and
income from zero coupon bonds.
EFFECTIVE DATE: This regulation is effective on August 15, 1996.
FOR FURTHER INFORMATION CONTACT: Ann Pash, (410) 786-4615.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1861(v)(1)(A) of the Social Security Act (the Act) defines
reasonable cost for any service under Medicare as the cost actually
incurred, excluding any cost unnecessary in the efficient delivery of
needed health services. That section of the Act also provides that
reasonable costs must be determined in accordance with regulations that
establish the methods to be used and the items to be included for
purposes of determining which costs are allowable for various types or
classes of institutions, agencies, and services. In addition, section
1861(v)(1)(A) of the Act specifies that regulations implementing the
principles of reasonable cost payment may provide for the use of
different methods in different circumstances. This section of the Act
is implemented by regulations at 42 CFR part 413. In particular,
Sec. 413.24 establishes the methods to be used and the adequacy of data
needed to determine allowable costs for various types or classes of
institutions, agencies, and services.
[[Page 37012]]
Under Medicare, providers are paid for inpatient and outpatient
services that they furnish to beneficiaries under Part A (Hospital
Insurance) or Part B (Supplementary Medical Insurance). Currently, most
hospitals are paid for their hospital inpatient operating costs and
capital-related costs under the prospective payment systems in
accordance with sections 1886 (d) and (g) of the Act and regulations at
42 CFR part 412. Under these systems, Medicare payment is made at a
predetermined, specific rate for inpatient operating costs and
inpatient capital-related costs for each hospital discharge based on
the information contained in actual bills submitted. Section
1886(f)(1)(A) of the Act requires us to maintain a system for reporting
costs of hospitals paid under the prospective payment systems. This
provision is implemented by regulations at Sec. 412.52. Section 412.52
requires all prospective payment system hospitals to meet the cost
reporting requirements of Secs. 413.20 and 413.24, which include
submitting a cost report for each 12-month period.
Hospital outpatient units and hospitals and hospital units that are
excluded from the prospective payment systems, as well as most other
providers, are generally paid an amount based on the reasonable cost of
items and services furnished to beneficiaries, in accordance with
section 1861 (v)(1)(A) of the Act, the regulations at 42 CFR part 413,
and the Provider Reimbursement Manual. These cost-based providers are
subject to the same cost reporting requirements of Secs. 413.20 and
413.24 and thus must maintain financial records and statistical data
sufficient for the proper determination of costs payable under the
Medicare program and submit cost reports on an annual basis.
For cost-based providers (and for prospective payment hospitals
during the capital prospective payment system transition period),
interest expense on capital indebtedness such as loans for acquiring
facilities and equipment or for making capital improvements and on
current indebtedness is an allowable cost as set forth at
Secs. 413.130(a)(7) and 413.153. Interest must be necessary--that is,
incurred on a loan made to satisfy the financial need of a provider,
and for a purpose reasonably related to patient care. It must also be
proper--that is, incurred at a rate not in excess of that which a
prudent borrower would have to pay in the money market when the loan
was made.
One source of financing for providers is the sale of zero coupon
bonds. Similarly, one source of provider investment income is the
purchase of zero coupon bonds. The name ``zero coupon bond'' is derived
from the fact that there are no coupons issued with these bonds. Zero
coupon bonds are issued by government agencies, corporations (including
Medicare providers), and banks at a price substantially below the face
value of the bond. The difference between the purchase price of a zero
coupon bond and the face amount payable at maturity reflects the actual
amount of interest and is neither a discount nor an adjustment to the
interest rate as with most other bonds. All interest is actually paid
when the bond is presented for redemption, at face value, on the date
of maturity.
II. Policy Changes
A. Interim Policy
As discussed in detail in our December 13, 1993 proposed rule (58
FR 65150), on December 22, 1989, we issued a Regional Office memorandum
for distribution to all intermediaries that allowed providers to choose
which method they would use to report interest expense or income from
zero coupon bonds--either at maturity in a lump sum, or each year as
the interest accrues, as long as their treatment of interest expense is
consistent with their treatment of interest income.
We stated that this interim policy would apply to all zero coupon
bonds issued or purchased on or after December 22, 1989, as well as to
any zero coupon bond interest reported on cost reports that could be
amended or reopened as of December 22, 1989. Thus, a provider's options
under the interim policy are as follows:
Bonds Issued before December 22, 1989: For interest from
zero coupon bonds issued before December 22, 1989, that is reportable
on cost reports that could be amended or reopened as of December 22,
1989, a provider could request amendment or reopening and specify the
method to be used for reporting interest expense and income on zero
coupon bonds. Conversely, by not requesting an amendment or reopening,
a provider could choose to continue the method already in use.
Bonds Issued on or after December 22, 1989, and before
February 22, 1991: For all zero coupon bonds issued on or after
December 22, 1989, but before February 22, 1991, a provider could
choose the method it would use to report interest expense or income, as
discussed above. Therefore, in cases where a provider's cost reports
are not amended, or cost report determinations are not reopenable, on
or after December 22, 1989, the provider's preference would be
evidenced by the choice the provider exercises for the first zero
coupon bonds issued or purchased on or after December 22, 1989, but
before February 22, 1991. In either case, once the provider has
exercised its choice, the method of reporting interest accrued on all
zero coupon bonds issued or purchased from that date through February
21, 1991, should be consistent with that choice.
B. Current Policy (Applicable to Bonds Issued on or after February 22,
1991)
We revised the Medicare Provider Reimbursement Manual (Transmittal
No. 358) in February 1991 to establish our current policy. In
developing the manual issuance, we concluded that it was not
appropriate to continue to permit the provider to report accrued
interest in a lump sum at maturity because the interest accrues during
the life of the bond. We now require that, for zero coupon bonds issued
or purchased by providers on or after February 22, 1991, all interest
expense and income must be reported in the cost reporting period in
which the interest accrues.
Neither the policy enunciated in our December 22, 1989, Regional
Office memorandum nor the one in the Provider Reimbursement Manual has
been set forth in regulation.
III. Provisions of the Proposed Rule
On December 13, 1993, we published in the Federal Register (58 FR
65150) a proposed rule to add to the Medicare regulations at 42 CFR
413.153 provisions that specifically address the reporting by providers
of interest expense and interest income from zero coupon bonds. We also
proposed to add the definition of ``zero coupon bond'' to the
regulations.
Under our proposal, for zero coupon bonds issued on or after the
effective date of a final regulation, interest expense incurred to
finance capital-related costs would be an allowable expense, and
interest income earned for investment purposes would be an allowable
offset, in the cost reporting period in which the interest accrues. We
proposed that earned interest from zero coupon bonds must be offset
against all allowable interest expense as set forth in
Sec. 413.130(g)(2). In addition, interest expense must meet the
definition of ``necessary'' in Sec. 413.153(b)(2)(iii).
For cost reporting purposes, we proposed to require the use of the
effective interest method rather than the straight line method. Under
the straight line method, the interest for a computation period is
computed by dividing the total interest payable (the
[[Page 37013]]
value at maturity less the amount paid) by the number of compensation
periods. This method recognizes the average interest expense or income
for each compensation period.
Under the effective interest method, we indicated that in each
computation period (as specified by the bond instrument) we would apply
the interest rate to the sum of the face amount and the accrued
interest from prior periods. If the interest computation period
involves portions of more than one cost reporting period, the amount of
interest for that computation period would be apportioned to each cost
reporting period. This method recognizes the actual accrual of interest
expense or income for each interest computation period (as specified by
the bond instrument) throughout the life of the bond to maturity. A
constant effective yield rate is determined and applied to the book
value (outstanding loan balance including prior accrued interest) of
the bond at the beginning of each period to determine the total
interest for the period. We also proposed to set forth in the
regulations under proposed Sec. 413.153(f)(3)(iv) an example of the
computation of interest using the effective interest method.
IV. Analysis of and Responses to Public Comments
We received two letters of comment on the December 22, 1993
proposed rule. These comments and our responses are discussed below.
Comment: One commenter questioned whether the effective date of the
final regulation would be the February 22, 1991, effective date of the
manual provisions. The commenter also wanted us to explain the current
applicability of the interim policies in the Regional Office memorandum
dated December 22, 1989, and in the Provider Reimbursement Manual for
the interim period before the effective date of this final rule. The
commenter stated that if the final rule has an effective date other
than February 22, 1991, the manual provisions would be inconsistent
with the regulation.
Response: This final rule is effective on August 15, 1996 and
applies to bonds issued on and after that date. This date is not
inconsistent with the effective dates of HCFA's prior policies
addressing reimbursement for zero coupon bond interest. The
reimbursement policies in existence before the effective date of this
final rule apply to cost reporting periods that precede the
promulgation of this final rule, and the policies continue in force
only with respect to bonds issued before August 15, 1996. The December
22, 1989 memorandum provided that for interest from zero coupon bonds
issued before December 22, 1989 (that is reportable on a cost report
that can be reopened on or after December 22, 1989), a provider could
request amendment or reopening to specify the method of reporting the
interest expense and income on the zero coupon bonds.
The memorandum did not establish a time limitation on these
requests. However, in order to effectuate an orderly implementation of
this rule, we are requiring providers to submit requests for reopening
or amendment within 60 days of publication of this final rule, that is
by September 16, 1996. Any request received after that date will not be
considered timely and will not be honored.
The provisions of this final rule supersede any agency policy that
is inconsistent with the regulation's terms.
Comment: One commenter stated that while the preamble and the
regulation text of the proposed rule referred to interest expense
incurred to finance capital-related costs, section 213(A) of the
Provider Reimbursement Manual refers to ``issuing zero coupon bonds for
a purpose related to patient care.'' The commenter asked for consistent
use of language as the Manual wording implies that interest expense for
operating purposes, such as working capital, is also an allowable cost.
Response: The language in section 213(A) of the Manual is correct.
Zero coupon bonds may be used to provide funds for either capital-
related costs or operating costs, as long as the costs are for a
purpose related to patient care. We have revised Sec. 413.153(f)(1) to
clarify that interest expense incurred to provide funds for ``patient
care-related costs'' is an allowable expense.
Comment: One commenter suggested that in the final rule we
reference a specific exception to our general policy on the liquidation
of liabilities, established at section 2305 of the Provider
Reimbursement Manual, since the actual payment of interest expense will
not be made until the bonds mature.
Response: Section 2305 of the Manual requires that short-term
liabilities be liquidated within 1 year of the end of the cost
reporting period in which the liability is incurred, subject to certain
specified exceptions. With zero coupon bonds, the interest accrues
during the life of the bond but is not payable until maturity or
redemption of the bond. Since there are no specified interest payments
due during the life of the bond, the liability for payment does not
occur until the bond matures or is redeemed. There is no short-term
liability. We note, in section 2305, that it does not apply to zero
coupon bonds until they mature or are redeemed.
Comment: One commenter objected to the language in
Sec. 413.153(f)(2), which specified that earned interest from zero
coupon bonds must be offset against all allowable interest expense. The
commenter's concern was that in the case of a bond defeasance (an
advance refunding of debt) there are specific guidelines regarding the
treatment of costs associated with advance refunding and with the
allocation of investment income. These guidelines are laid out in the
Provider Reimbursement Manual in sections 2806.G.1, 233, and 213. The
commenter believed that the proposed regulations are in conflict with
specific instructions for bond defeasance.
Response: The commenter is correct. In an advance refunding of debt
(which includes bond defeasance), the investment income is offset
against the interest expense of both the refunded debt and the
refunding debt and is included in determining the gain or loss on the
advanced refunding rather than included with other investment income
and prorated under Sec. 413.130(g)(2). We agree that some changes in
the language of the regulations are needed to better reflect the
treatment of investment income in an advance refunding. We have removed
the reference to ``all'' in Sec. 413.153(f)(2) and revised the section
to indicate that if zero coupon bonds are purchased with the proceeds
of an advance refunding, offset of the investment income is required
under Sec. 413.153(b)(2)(iii), but the investment income is not
prorated under Sec. 413.130(g)(2).
Comment: One commenter raised a question about the current
applicability of the section of the memorandum dated December 22, 1989,
that allowed a provider, under certain circumstances, to reopen or
amend a cost report to specify the method to be used for reporting
interest expense and income on zero coupon bonds issued before December
22, 1989.
Response: The memorandum dated December 22, 1989, provided that for
interest from zero coupon bonds issued before December 22, 1989, that
is reportable on a cost report that can be reopened on or after
December 22, 1989, a provider could request amendment or reopening to
specify the method of reporting the interest expense and income on the
zero coupon bonds. The memorandum did not contain a time limitation on
the requests. However, in order to effectuate an orderly implementation
of these provisions, we are requiring providers to submit request for
reopenings or amendments
[[Page 37014]]
within 60 days of publication of this final rule. Any request received
after that date will be considered not timely filed and will not be
honored.
V. Provision of the Final Regulations
This final rule adopts the provisions of the proposed rule as
final, with the following minor revisions:
In Sec. 413.153(f)(1), we have changed the phrases
``capital-related cost'' to ``patient care-related cost'' and to
``provide funds'' rather than ``finance''.
In Sec. 413.153(f)(2), we deleted the word ``all'',
rewrote part of the section for clarity, and added an appropriate
cross-reference provision for handling zero coupon bonds purchased with
the proceeds of an advance refunding of debt.
VI. Regulatory Impact
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA) (5. U.S.C. 601
through 612) unless we certify that a final rule will not have a
significant economic impact on a substantial number of small entities.
For purposes of the RFA, we consider providers to be small entities.
Also, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis for any final rule that will have a
significant impact on the operations of a substantial number of small
rural hospitals. Such an analysis must conform to the provisions of
section 603 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital as a hospital with fewer than 50 beds
located outside a metropolitan statistical area.
In the December 22, 1993 proposed rule, we concluded that the
proposed rule changes would not have a significant economic impact on a
substantial number of small entities, and would not have a significant
impact on the operations of a substantial number of small rural
hospitals. As discussed above, we received two letters of comments on
the proposed rule, neither of which objected to our conclusion that
these changes will not have a significant impact. This final rule
adopts the provisions at the proposed rule with only minor technical
changes. Therefore, we have determined, and certify, that this final
rule will not have a significant economic impact on a substantial
number of small entities. Also, this final rule will not have a
significant impact on the operations of a substantial number of small
rural hospitals. Therefore, we have not prepared a regulatory
flexibility analysis or a rural hospital impact analysis.
In accordance with the provisions of Executive Order 12866, this
final regulation was not reviewed by the Office of Management and
Budget.
Under the provisions of Public Law 104-121, we have determined that
this final rule is not a major rule.
VII. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, agencies are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of the agency;
The accuracy of the agency's estimate of the information
collection burden;
The quality, utility, and clarity of the information to be
collected; and
Recommendations to minimize the collection burden on the
affected public, including automated collection techniques.
The overall recordkeeping and information collection burden
associated with filing the provider cost report has been approved by
OMB through August 31, 1996 under OMB No. 0938-0050.
In the December 13, 1993, proposed rule (58 FR 65150), we indicated
that there would be no additional reporting burden on those providers
who have zero coupon bonds and solicited comments. No comments were
received.
Section 413.153 defines when interest expense is an allowable cost
and how interest income is treated. The changes to this section
represent a clarification of the current policy on interest expense and
income as it applies to zero coupon bonds. It does not change the
information collection and recordkeeping requirements. The information
and recordkeeping required is that which is already required to file a
cost report and approved by OMB as indicated above.
List of Subjects in 42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
42 CFR chapter IV, part 413, is amended as follows:
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES
A. The authority citation for part 413 is revised to read as
follows:
Authority: Secs. 1102, 1861(v)(1)(A), and 1871 of the Social
Security Act (42 U.S.C. 1302, 1395x(v)(1)(A), and 1395hh).
Subpart G--Capital-Related Costs
B. Section 413.153 is amended by adding paragraphs (b)(4) and (f)
to read as follows:
Sec. 413.153 Interest expense.
* * * * *
(b) Definitions--* * *
(4) Zero coupon bonds. Zero coupon bonds are issued by government
agencies, corporations, and banks at a price substantially below the
face value. The difference between the purchase price and the face
value reflects the actual amount of interest and is neither a discount
nor an adjustment to the interest rate as with other bonds. Interest is
paid at maturity when the bond is redeemed at face value.
* * * * *
(f) Zero coupon bonds--(1) Interest on bonds issued on or after
August 15, 1996. For zero coupon bonds issued on or after August 15,
1996, interest expense incurred to provide funds for patient care-
related costs is an allowable expense, and interest income earned for
investment purposes is an allowable offset, in the cost reporting
period in which the interest accrues.
(2) Interest income offset. Interest income from zero coupon bonds
must be offset against allowable interest expense as prescribed in
paragraph (b)(2) of this section and in Sec. 413.130(g)(2). If zero
coupon bonds are purchased with the proceeds of an advanced refunding
of debt, offset of the investment income is required under
Sec. 413.153(b)(2)(iii), but the investment income is not prorated
under Sec. 413.130(g)(2).
(3) Use of effective interest method. (i) Interest expense and
interest income from zero coupon bonds that are reported as they accrue
must be amortized using the effective interest method. This method
recognizes the actual accrual of interest expense or income for each
interest computation period (as specified by the bond instrument)
throughout the life of the bond.
[[Page 37015]]
(ii) A constant effective yield rate is determined and applied to
the book value (outstanding loan balance including prior accrued
interest) of the bond at the beginning of each period to determine the
total interest for the period.
(iii) If the interest computation period involves portions of more
than one cost reporting period, the amount of interest for that
computation period shall be apportioned to each cost reporting period.
(iv) An example of the computation of interest using the effective
interest method follows:
Facts
Life of zero coupon bond: 15 years.
Value at maturity: $50,000.
Bondholder pays $6,996 for the bond.
Annual interest rate is 13.5506% compounded semi-annually.
From the table below, interest for the first year would be $980.11
($474.00 plus $506.11).
------------------------------------------------------------------------
Col. 4
Col 2 Book value
Book value Col. 3 end of
Col 1 Six-month periods beginning Effective period
of period interest* (columns 2
+ 3)
------------------------------------------------------------------------
1 $6,996.00 $474.00 $7,470.00
2 7,470.00 506.11 7,976.11
3 7,976.11 540.40 8,516.51
4 8,516.51 577.02 9,093.53
29 43,855.94 2,971.37 46,827.31
30 46,827.31 3,172.69 50,000.00
------------------------------------------------------------------------
*Computed by multiplying the book value at the beginning of each period
(Column 2) by 6.7753% (the annual interest rate of 13.5506% 2 =
6.7753%).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: February 23, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 96-17895 Filed 7-15-96; 8:45 am]
BILLING CODE 4120-01-P
Complete official Federal Register PDF
FR Doc. 96-17757 Use and Occupancy Under the Mining Laws
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 37116-37130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17757]
[[Page 37115]]
_______________________________________________________________________
Part II
Department of the Interior
_______________________________________________________________________
Bureau of Land Management
_______________________________________________________________________
43 CFR Part 3710
Use and Occupancy Under the Mining Laws; Final Rule
Federal Register / Vol. 61, No. 137 / Tuesday, July 16, 1996 / Rules
and Regulations
[[Page 37116]]
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Part 3710
[WO-320-4130-02-24 1A]
RIN 1004-AC39
Use and Occupancy Under the Mining Laws
AGENCY: Bureau of Land Management, Interior.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Land Management (BLM) is adopting regulations
addressing the unlawful use and occupancy of unpatented mining claims
for non-mining purposes. This rule sets forth the restrictions on use
and occupancy of public lands open to the operation of the mining laws
that BLM administers in order to limit use and occupancy to those
involving prospecting or exploration, mining, or processing operations
and reasonably incidental uses. The rule establishes procedures for
beginning occupancy, standards for reasonably incidental use or
occupancy, prohibited acts, procedures for inspection and enforcement,
and procedures for managing existing uses and occupancies. It also
provides for penalties and appeals procedures. This rule is necessary
to prevent unnecessary or undue degradation of the public lands from
uses and occupancies not reasonably incident to mining. The rule does
not adversely affect bona fide mining operations or alter BLM's
regulations in 43 CFR Part 3800 pertaining to them. Terms used in this
preamble have the meaning given to them in the rule.
EFFECTIVE DATE: August 15, 1996.
FOR FURTHER INFORMATION CONTACT: Richard Deery, (202) 452-0353.
SUPPLEMENTARY INFORMATION:
I. Background.
II. Discussion of Final Rule and Response to Comments.
III. Procedural Matters.
I. Background
The mining industry has played a key role in both the settlement
and development of the American West. The problem of occupancy of
mining claims on public lands by those who have no intention of
conducting legitimate hardrock mineral prospecting, exploration or
extraction activities has long been recognized. These occupancies waste
valuable resources by hampering and discouraging the activities of
those who are engaged in the legitimate development of our mineral
resources or other legitimate uses of the public lands. This rule
establishes a framework for distinguishing between bona fide uses and
occupancies and those that represent abuse of the mining laws. The
purpose of this rule is to strengthen BLM's use of its enforcement
authority to combat abuse of the Mining Law of 1872 for non-mining
pursuits.
The Mining Law of 1872
The Mining Law of 1872 is the Act of May 10, 1872 (17 Stat. 91, 30
U.S.C. 22 et seq.) together with its judicial interpretations. The law
established the basic statutory framework governing the location of
mining claims that is still in practice today.
Under the law, a person can acquire an interest in the public lands
by the proper location of a mining claim. A prospector can go out on
the public lands, search for minerals and, upon discovery of a valuable
mineral deposit, locate a claim to the lands upon which the discovery
is made. A prospector can locate a claim by staking the corners of the
claim, posting a notice of the claim, and filing or recording the claim
according to state and federal law.
The law did not operate without conflict and controversy. After
all, the ``claim jumper'' has become as much a part of the folklore of
the West as the prospector and his mule. Two noteworthy cases were
decided in the early part of this century that helped define the scope
of activities allowed on unpatented mining claims.
One, Teller v. United States, 113 F. 273 (8th Cir. 1901), involved
the cutting of timber on an unpatented mining claim. The court found
that the owner of the claim had the right to work the claim for its
minerals, but had no right to cut timber or engage in other surface
activities unless the activities were reasonably necessary to the
mining operation. The second case, United States v. Rizzinelli, 182 F.
675 (D. Idaho 1910), involved the establishment of saloons on
unpatented mining claims. This case stands for the principle that
surface uses of a claim can only be for purposes ``connected with or
incident to'' exploration for, and recovery of, minerals.
Surface Resources Act of 1955
In spite of all good intentions, by the 1950's it had become clear
that widespread abuse of the general mining law was taking place.
People were locating mining claims who either had no intention of
mining or who never got around to it. Some of the uses taking place on
unpatented claims included permanent residences, summer homes,
townsites, orchards, farms, a nudist colony, restaurants, a rock
museum, a real estate office, hunting and fishing lodges, filling
stations, curio shops and tourist camps. To deal with this, Congress
passed the Surface Resources Act of 1955 (69 Stat. 367, 30 U.S.C. 601-
615), which included a provision that any unpatented mining claim may
not be used for purposes other than prospecting, mining or processing
operations and reasonably incident uses.
Federal Land Policy and Management Act of 1976
The Federal Land Policy and Management Act of 1976 (90 Stat. 2743,
43 U.S.C. 1701 et seq.), also known as FLPMA, directed the Secretary of
the Interior to take any action necessary to prevent unnecessary or
undue degradation of the public lands. FLPMA established a federal
mining claim recording system, which requires an annual filing of an
affidavit of assessment work or a notice of intention to hold a mining
claim. It also strengthened the Secretary's enforcement authorities by
authorizing the Secretary to issue regulations necessary to implement
FLPMA, the violation of which are punishable by civil and criminal
penalties. In 1980, BLM adopted regulations outlining procedures and
standards designed to prevent hardrock mining operations from causing
unnecessary or undue degradation of the public lands.
BLM's 1980 Regulations
The 1980 regulations, found at 43 CFR part 3800, address the
management of surface impacts from exploration and mining operations,
treating mining operations differently depending on the level of mining
activity the operator proposes. At the lowest level of activity, called
``casual use,'' prospectors or part-time miners who cause only
negligible surface disturbance need not contact BLM. An operator who
exceeds this negligible level of surface activity, but keeps the amount
of surface disturbance below five acres per year, is required only to
file a notice with BLM 15 days before commencing operations. The
operator does not have to obtain BLM's approval of the notice, nor
obtain bonding, except in special circumstances. Operators proposing
mining operations causing more than five acres of surface disturbance
per year are required to file a plan of operations which sets out the
details of those operations. The operator must also file a plan of
operations if special categories of land are involved, even if
[[Page 37117]]
less than five acres per year will be disturbed. BLM must approve the
plan before the operator may commence operations.
Development of Proposed Regulations
In August 1990, the General Accounting Office issued a report that
found some holders of unpatented mining claims were using their claims
for unauthorized residences, non-mining commercial operations, illegal
activities, or speculative activities not related to legitimate mining.
See Unauthorized Activities on Hardrock Claims, GAO/RCED-90-111. These
unauthorized activities result in a variety of problems, including
blocked access to public land; safety hazards, including threats of
violence; environmental contamination; investment scams; and increased
costs to reclaim the land. The report recommended that BLM revise its
regulations to clearly state that residency and nonmining commercial
activities are normally not authorized, thereby shifting the burden of
proof to the claim holder to show that an activity is incidental to
mining. At a follow-up hearing before the Subcommittee on Mining and
Natural Resources, House Interior and Insular Affairs Committee, in
September 1990, the Director of BLM and the Subcommittee agreed that
while occupancy reasonably incident to prospecting, mining, and
production is legitimate, BLM field staff need a satisfactory process
for administering and enforcing legal requirements.
After the September 1990 hearing, BLM established a task force of
headquarters and field staff to strengthen BLM's ability to prevent
unauthorized uses and occupancies on the public lands under the mining
laws. The task force drafted a proposal in late 1990 and discussed it
in meetings with miners and environmentalists in Washington, D.C.;
Denver, Colorado; Spokane, Washington; and Sacramento, California.
Following these discussions, a proposed rule adding a new subpart 3715
to the regulations at 43 CFR part 3710 was published in the Federal
Register on September 11, 1992 (57 FR 41846). Refer to the Federal
Register notice cited above for a full discussion of the proposal. The
60-day comment period closed on November 10, 1992. BLM received 44
comments concerning the proposal: 16 from individuals, 4 from mining
businesses, 7 from associations, 16 from offices of federal agencies,
and 1 from a state government citizens' advisory commission. As
discussed in the next portion of the preamble to this final rule, BLM
gave full consideration to all comments received. Any changes in the
final rule from the proposed rules are identified in the following
detailed discussion of the final rule.
Regulatory Reform
In February 1995, the President outlined his regulatory reform
initiative, which is intended to reduce unnecessary regulatory burden
and overlap, create regulations with clearly stated goals and
objectives and stimulate partnerships with regulated parties. BLM
undertook a page-by-page review of its rules and identified about 1,000
pages in the Code of Federal Regulations that would be eliminated,
streamlined or rewritten in ``plain English.'' Plain English is a
specific writing technique that communicates the information and legal
requirements of regulations more effectively through the use of
question-and-answer headings, active voice, short sentences, and
tables, among other things.
Because the proposed rule was issued before the regulatory reform
initiative, it was not written in plain English. Readers of the final
rule will quickly note differences in the language and format of the
final rule as compared to the proposal. Readers will also note that
final Sec. 3715.4 addresses existing occupancies. In the proposed rule,
these provisions were generally located in Sec. 3715.7. BLM changed the
location of the existing occupancy provisions and renumbered the
intervening sections accordingly as part of a reorganization of the
final rule. The conversion to plain English does not affect the
substantive content of the rule. These changes are intended to increase
the clarity and understandability of the rule. Any substantive changes
that BLM has made in the final rule are fully described in the
following discussion.
To assist the reader in understanding the difference between the
proposed rule and the final rule adopted today, BLM has prepared the
following table:
Comparison of Proposed Rule and ``Plain English'' Final Rule
------------------------------------------------------------------------
Proposed Rule ``Plain English'' Final Rule
------------------------------------------------------------------------
Sec. 3715.0-1....................... Sec. 3715.0-1
Sec. 3715.0-2....................... Sec. 3715.0-1
Sec. 3715.0-3....................... Sec. 3715.0-3
Sec. 3715.0-5....................... Sec. 3715.0-5
Sec. 3715.0-6....................... Sec. 3715.0-1
Sec. 3715.0-7....................... Sec. 3715.0-1
None................................. Sec. 3715.0-9
Sec. 3715.1......................... Sec. 3715.1
Sec. 3715.2 (a) and (b)............. Sec. 3715.2
Sec. 3715.2(c)...................... Sec. 3715.2-1
Sec. 3715.2(d)...................... Sec. 3715.2-2
Sec. 3715.3 (a)-(e)................. Sec. 3715.3
Sec. 3715.3(f)...................... Sec. 3715.3-2
Sec. 3715.3(g)...................... Sec. 3715.3-2 and Sec. 3715.3-3
Sec. 3715.3(h)...................... Sec. 3715.3-4
Sec. 3715.3(h)(1)................... Sec. 3715.3-5(a) and Sec.
3715.7-1(a)
Sec. 3715.3 (h)(2) and (i).......... Sec. 3715.3-5(b)
Sec. 3715.3(j)...................... Sec. 3715.3-6
Sec. 3715.3(k)...................... Sec. 3715.1
Sec. 3715.4(a)...................... Sec. 3715.5(a)
Sec. 3715.4(b)...................... Sec. 3715.3-1(b)
Sec. 3715.4 (c)-(e)................. Sec. 3715.5 (b)-(e)
Sec. 3715.4(f)...................... Sec. 3715.5-1(a)
Sec. 3715.4(f)(1)................... Sec. 3715.5-1(b)
Sec. 3715.4(f)(2)................... Sec. 3715.5-2
Sec. 3715.5......................... Sec. 3715.6
Sec. 3715.6(a)...................... Sec. 3715.7 (a) and (b)
Sec. 3715.6(b)...................... Sec. 3715.7-1(a)
Sec. 3715.6(c)...................... Sec. 3715.4-3(c)
Sec. 3715.6(d)...................... Sec. 3715.7-1(c)
Sec. 3715.6(e)...................... Sec. 3715.7-1(d)
Sec. 3715.6(f)...................... Sec. 3715.7-2
Sec. 3715.7(a)...................... Sec. 3715.4(b)
Sec. 3715.7(b)...................... Sec. 3715.4-1
Sec. 3715.7(c)...................... Sec. 3715.4-2
Sec. 3715.7(d)...................... Sec. 3715.4(a)
Sec. 3715.7(e)...................... Sec. 3715.4-3
Sec. 3715.8(a)...................... Sec. 3715.8(a)
Sec. 3715.8(b)...................... Sec. 3715.8-1
Sec. 3715.9(a)...................... Sec. 3715.9
Sec. 3715.9(b)...................... Sec. 3715.9
Sec. 3715.9(c)...................... Deleted
Sec. 3715.9(d)...................... Deleted
Sec. 3715.9(e)...................... Deleted
3715.9(f)............................ Sec. 3715.9-1
Sec. 3715.9(g)...................... Deleted
------------------------------------------------------------------------
II. Discussion of Final Rule and Response to Comments
Legal Basis and Purpose of the Final Rule
These regulations carry out the statutory requirements of section 4
of the Surface Resources Act of 1955, which states that mining claims
are not to be used for any purposes other than prospecting, mining, or
processing operations, and uses reasonably incident thereto (30 U.S.C.
612). Even before 1955, the courts had long held that the Mining Law of
1872 itself entitled the mining claimant to use the surface only for
reasonably incident purposes. See, for example, United States v.
Rizzinelli, 182 F. 675 (D. Id. 1910) and Bruce W. Crawford, 92 I.D.
208, 216 (1985).
Uses that are not reasonably incident are not authorized by the
mining laws and should not be occurring on public lands, unless they
are authorized under other authorities. Because illegal uses should
never occur on public lands, the mere existence of an illegal use
[[Page 37118]]
inherently constitutes ``unnecessary or undue degradation'' of the
public lands. Consequently, these regulations clarify that unauthorized
uses and occupancies on public lands constitute ``unnecessary or undue
degradation'' of the public lands.
Section 302(b) of the Federal Land Policy and Management Act gives
the Secretary of the Interior the duty to take any action necessary to
prevent unnecessary or undue degradation of the public lands. This duty
arises in section 302(b) in the context of the Secretary's obligation
to manage the public lands by regulating the use, occupancy, and
development of the public lands. Accordingly, as applied to this rule,
``unnecessary or undue degradation'' includes those uses that are not
authorized by law, specifically those activities which are not
reasonably incident and are not authorized under any other applicable
law or regulation.
To the extent that uses are reasonably incident and do not involve
occupancy, the surface management requirements of 43 CFR part 3800
govern the conduct of those uses.
The purposes of the regulations in this subpart are to--
(a) Distinguish between the allowable and prohibited uses and
occupancies under the Mining Law of 1872 (30 U.S.C. 21 et seq.),
section 4(a) of the Surface Resources Act, (30 U.S.C. 612), the Federal
Land Policy and Management Act (43 U.S.C. 1701 et seq.), and other
applicable law, to ensure that mining claims and millsites are not
used, prior to issuance of patent therefor, for any purposes other than
prospecting or exploration, mining, or processing operations, and uses
reasonably incident thereto;
(b) Inform persons operating under the mining laws of their basic
rights and responsibilities relative to use and occupancy of public
lands;
(c) Identify mining laws and regulations applicable to use and
occupancy of public lands;
(d) Enumerate instances where use and occupancy of public lands are
authorized under the mining laws, and to set standards for such use or
occupancy;
(e) Enumerate prohibited acts relating to use and occupancy of
public lands under the mining laws; and
(f) Provide for administrative remedies and appropriate penalties
for cases of non-compliance with the regulations in this subpart.
The rule does not adversely affect bona fide mining operations or
alter BLM's regulations in 43 CFR Part 3800 pertaining to them.
General Comments
Several comments from individuals objected to the proposed rule as
an undue infringement on their use of a mining claim. The rule does
not, however, infringe on lawful uses of the public lands. Bona fide
mining operations will not be adversely affected by the rule. The rule
is necessary to carry out the statutory responsibility to manage the
public lands and to enforce the statutory restrictions on the use and
occupancy of the public lands for reasonably incident activities.
Enforcement authority is found in sections 302(c), 303(a), and 303(g)
of the Federal Land Policy and Management Act of 1976 (FLPMA), the
Unlawful Occupancy and Inclosures of Public Lands Act (43 U.S.C. 1201),
and 18 U.S.C. 1001.
Section 3715.0-1 What are the Purpose and Scope of This Subpart?
Final Sec. 3715.0-1(a) describes the purpose of subpart 3715. The
purpose is to manage the use of the public lands for the development of
locatable mineral deposits by limiting use and occupancy to that which
is reasonably incident.
One comment suggested a change in the policy provision, proposed
Sec. 3715.0-6, to provide added protection for valid uses of mining
claims. Another comment suggested a wording change in the policy
provision, pointing out that some older unpatented mining claims may
lie on lands that are withdrawn or otherwise not now open to the
operation of the mining laws. However, these claims are still subject
to regulation under the mining laws. BLM adopted these comments in the
final rule, with language added to final Sec. 3715.0-1 specifically to
provide for protection of valid uses of valid claims, regardless of
when created.
Final paragraph (b) states that the subpart applies to public lands
BLM administers.
Final paragraph (c) states that these regulations do not impair the
right of any person to engage in recreational activities or any other
authorized activity on public lands BLM administers. This paragraph was
added in response to concerns from commenters that legitimate
recreational activities would be affected by the regulations.
BLM formed this section of the final rule from proposed
Secs. 3715.0-2, 3715.0-6, and 3715.0-7.
Section 3715.0-3 What are the Legal Authorities for This Subpart?
This section enumerates the statutory authority for the
promulgation of these regulations. The primary authorities include the
Mining Law of 1872, the Surface Resources Act of 1955, the Federal Land
Policy and Management Act, and the Unlawful Occupancy and Inclosures of
Public Lands Act.
Section 1 of the Mining Law of 1872 (30 U.S.C. 22) provides that,
except as otherwise provided by law, all valuable mineral deposits in
lands belonging to the United States must be free and open to
exploration and purchase. It also provides that the lands containing
these deposits must be open to occupation and purchase under
regulations prescribed by law and the local customs or mining district
rules that are not inconsistent with the laws of the United States.
Section 15 of the Mining Law of 1872, as amended (30 U.S.C. 42),
provides that a patent application for a lode claim may include
nonmineral land not contiguous to the vein or lode only if it is used
or occupied for mining or milling purposes. It also provides that a
patent application for a placer claim may include nonmineral land only
if it is needed, used and occupied by the proprietor of a placer claim
for mining, milling, processing, beneficiation, or other operations in
connection with that claim.
Section 4 of the Surface Resources Act (30 U.S.C. 612) states that
any mining claim located after July 23, 1955, under the mining laws of
the United States must not be used, prior to issuance of patent, for
any purposes other than prospecting, mining, or processing operations,
and reasonably incident uses. Any such mining claim is also subject,
prior to issuance of patent, to the right of the United States, its
permittees, and licensees, to use so much of the surface as may be
necessary for management and disposition of vegetative surface
resources and management of other surface resources, or for access to
adjacent land.
Several comments argued that pre-1955 claims should be exempt from
the provisions of the rule. This position is not adopted in the final
rule. Such claims are subject to the portions of the regulations
establishing whether a use or occupancy is reasonably incident to
prospecting, mining, milling, and so forth. While Section 4(a) of the
Act of July 23, 1955 (30 U.S.C. 601 et seq.) (the 1955 Act), provides
that claims located after that date are not to be used before patenting
for any purpose other than prospecting, mining, or processing
operations, or uses reasonably incident thereto, this provision merely
restated the law as it existed prior to its enactment. (Bruce Crawford,
86 IBLA 325, 92 I.D. 208, 216, 221, n. 15). Cases
[[Page 37119]]
cited in Crawford held that, as long ago as 1910, uses of mining claims
were required to be reasonably incident to mining. See United States v.
Rizzinelli, 182 F. 675 (D. Id. 1910). The legislative history of the
1955 Act shows clearly that existing law prohibited uses of the Mining
Law for non-mineral-related occupancies, and that a purpose of the 1955
Act was only to strengthen existing tools for dealing with these
situations. See S. Rep. No. 554, 84th Cong., 1st Session (1955). The
Mining Law of 1872 itself states that ``all valuable mineral deposits
in lands belonging to the United States . . . shall be free and open .
. . to occupation . . . under regulations prescribed by law. . . .'' 30
U.S.C. 22. The patenting authority for millsites also defines valid
millsites as those used for mining, milling, processing, beneficiation,
or other operations. 30 U.S.C. 42. The citation to that authority for
millsites has been added to the rule. However, BLM concurrence that a
use or occupancy on a millsite is authorized under this rule does not
necessarily mean that the millsite is valid for purposes of complying
with 30 U.S.C. 42. A validity determination for patenting or for
establishing the underlying validity of a millsite is separate from a
BLM concurrence in a proposed use or occupancy on a millsite under this
subpart.
Section 302(b) of the Federal Land Policy and Management Act
(FLPMA) (43 U.S.C. 1732(b)) directs the Secretary to take all necessary
actions to prevent unnecessary or undue degradation in managing the
public lands to regulate use, occupancy, and development of the public
lands.
Section 302(c) of FLPMA (43 U.S.C. 1732(c)) directs the Secretary
to include in all land use instruments a provision authorizing
revocation or suspension, after notice and hearing, of such instrument
upon a final administrative finding of a violation of any term or
condition of the instrument. This section also provides that the
Secretary may order an immediate temporary suspension of use,
occupancy, or development prior to a hearing or final administrative
finding if such a suspension is necessary to protect health, safety, or
the environment.
Section 303(a) of FLPMA (43 U.S.C. 1733(a)) states that the
Secretary must issue regulations necessary to implement the provisions
of FLPMA with respect to the public lands, and sets forth basic
penalties for violation of such regulations.
Section 303(g) of FLPMA (43 U.S.C. 1733(g)) states that the use,
occupancy, or development of any portion of the public lands contrary
to any regulation of the Secretary or other responsible authority, or
contrary to any order issued under any such regulation, is unlawful and
prohibited.
Section 1 of the Unlawful Occupancy and Inclosures of Public Lands
Act (43 U.S.C. 1061 et seq.) prohibits inclosures and exclusive use and
occupancy of the public lands, without claim or color of title as
described in the Act. The same Act states, in summary, that no person,
by force, threats, intimidation, or by any fencing or any other
unlawful means, may prevent or obstruct peaceful entry, free passage or
transit over or through the public lands by another person.
43 U.S.C. 1201 states that the Secretary of the Interior, or such
officer as the Secretary may designate, is authorized to enforce and to
execute, by appropriate regulations, every part of the provisions
related to the public lands not otherwise specially provided for.
43 U.S.C. 1457 charges the Secretary with the supervision of public
business relating to the public lands, including mines.
18 U.S.C. 1001 states that whoever, in any matter within the
jurisdiction of any department or agency of the United States,
knowingly falsifies, conceals, or covers up by any trick, scheme, or
device a material fact, or makes any false, fictitious, or fraudulent
statements or representations, or makes or uses any false writings or
document knowing the same to contain any false, fictitious, or
fraudulent statement or entry, will be fined not more than $10,000 or
imprisoned not more than 5 years, or both.
The Sentencing Reform Act of 1984 (18 U.S.C. 3571 et seq.)
authorizes fines for Class A misdemeanors of up to $100,000 for
individuals and $200,000 for organizations.
Section 3715.0-5 How are Certain Terms in This Subpart Defined?
This section contains definitions of terms significant to this
rule. These terms include ``mining laws,'' ``mining operations,''
``occupancy,'' ``permanent structure,'' ``public lands,'' ``prospecting
or exploration,'' ``reasonably incident,'' ``substantially regular
work,'' and ``unnecessary or undue degradation.'' BLM has not adopted
the proposed definition of ``authorized officer.'' To simplify the
rule, BLM uses the term ``BLM'' instead of ``authorized officer'' in
the final rule.
BLM has added a definition of ``mining laws'' to the final rule in
order to make it clear that this term refers to all laws that apply to
hardrock mining on public lands and which make public lands available
for hardrock mineral development.
BLM has added a definition of ``public lands'' to the final rule in
order to eliminate possible confusion or misinterpretation regarding
the lands to which this rule applies. The definition also eliminates
repetitious language included throughout the proposed rule regarding
the rule's applicability to public lands, including mining claims and
millsites. In the context of this rule, ``public lands'' are defined as
BLM-administered lands open to the operation of the mining laws. These
lands specifically include mining claims and millsites on which most
mining activities occur. However, to the extent that mining-related
activities may occur to a certain extent on the public lands before a
proper mining claim or millsite is located, this rule also applies to
those public lands. In addition, to the extent that unauthorized uses
are occurring on public lands without the proper location of a mining
claim or millsite under the guise of a mining operation or mining-
related activity, this rule applies. Finally, to the extent
unauthorized uses are occurring or may occur on mining claims or
millsites located on public lands, this rule also applies.
One comment found the definition of ``occupancy'' overly broad and
confusing, stating that it blurred the distinction between activities
that justify occupancy and those that comprise occupancy. BLM does not
agree, but did modify the wording of the definition for clarity.
One comment pointed out that other multiple uses of the public
lands, such as recreation, are allowed as short-term temporary
encampments, usually 14 days or less, while conducting that use. The
comment suggested that mining-related activities should not be treated
differently. BLM has adopted this comment in the final rule and will
not treat temporary occupancies up to 14 days as occupancies required
to conform to the standards contained in the final rule. As discussed
below, Secs. 3715.1 and 3715.2 of the final rule provide that this
subpart is applicable only to occupancy for more than 14 calendar days
in any 90-day period within a 25-mile radius of the initially occupied
site.
One comment stated that tents and lean-tos should be excepted from
the definition of ``permanent structure,'' so that they can be used for
temporary encampments for assessment work or prospecting. Although, as
another comment pointed out, temporary encampments may be subject to
abuse through conversion or expansion to semi-permanent structures, BLM
has
[[Page 37120]]
adopted the comment in the final rule, which specifically excludes
tents and lean-tos from the definition of ``permanent structure.'' BLM
will rely on monitoring to prevent abuse of this provision.
One comment suggested that the use of the ``reasonably incident''
standard should not be read to discourage the continued development of
new technology, exploration techniques, or mining methods. It is not
the intent of the rule that the standard be limiting in this way. The
rule defines the uses of the public land authorized under the general
mining law in terms of the prudent miner and appropriate methods,
structures, and equipment, and is not designed to discourage the
development of new technology, exploration techniques, or mining
methods intended to discover, delineate, recover, or process locatable
minerals. Such new technologies may be more efficient, cost effective,
or environmentally sensitive. BLM will consider them to be reasonably
incident if the activity is a good faith effort to improve the methods
of prospecting or exploration, mining, or processing locatable
minerals.
Several comments stated that the use of the phrase ``substantially
regular and steady work'' in proposed Sec. 3715.2 could be construed to
prohibit occupancies associated with weekend or intermittent mining
activities that would otherwise be legitimate under the general mining
law. BLM has changed the phrase ``substantially regular and steady
work'' to ``substantially regular work'' and included a definition in
this section of the final rule. ``Substantially regular work'' means
work on, or that substantially and directly benefits, a mineral
property, including nearby properties under the control of the
operator. The work must be associated with the search for and
development of mineral deposits or the processing of ores. It includes
active and continuing exploration, mining, and beneficiation or
processing of ores. It also includes assembly or maintenance of
equipment, work on physical improvements, and procurement of supplies,
incidental to activities meeting the conditions of this subpart. It may
also include off-site trips associated with these activities. The term
encompasses a seasonal, but recurring, work program. This provision
does not prohibit weekend or intermittent mining activities. Such
activities, if carried out in good faith, may warrant occupancy under
certain circumstances. This requirement is not intended to preclude
activities that are reasonably undertaken to carry out the justified
occupancy.
One comment raised a concern that the rule was not adequately based
on the ``unnecessary or undue degradation'' standard and raised a
question about the ease of interpretation and enforcement of the
``unnecessary or undue degradation'' standard as applied to occupancy.
BLM's regulations at 43 CFR parts 3802 and 3809 define ``unnecessary
and undue degradation'' to mean, among other things, ``surface
disturbance greater than what would normally result when an activity is
being accomplished by a prudent operator in usual, customary, and
proficient operations of similar character.'' The purpose of the 43 CFR
parts 3802 and 3809 regulations is to establish procedures to prevent
unnecessary or undue degradation of public lands by mining operations.
43 CFR 3802.0-1 and 3809.0-1. However, the purpose of this rule is to
distinguish between those uses that are authorized by the mining laws
and those that are not and to prohibit those that are not authorized.
Because this rule covers regulation of those uses that are not
authorized, BLM has added a definition of ``unnecessary or undue
degradation'' to these rules to address unauthorized uses that are not
covered by the 43 CFR parts 3802 and 3809 definitions of ``unnecessary
or undue degradation.''
Section 3715.0-9 Information Collection
Final Sec. 3715.0-9 explains that BLM has submitted to the Office
of Management and Budget (OMB) the information collection requirements
contained in this subpart under 44 U.S.C. 3507 and the Paperwork
Reduction Act of 1995. BLM collects the information so that it may
manage use and occupancy of the public lands by prohibiting
unauthorized uses and occupancies. A response is mandatory and required
to obtain the benefit of occupying the public lands for reasonably
incident activities.
BLM inadvertently omitted this section from the proposal, but is
including it in the final rule because the Paperwork Reduction Act
requires it. This section is technical in nature and imposes no
requirements in addition to subpart 3715.
Section 3715.1 Do the Regulations in This Subpart Apply to My Use or
Occupancy?
Final Sec. 3715.1 consists of a table that provides information to
enable persons to determine if this subpart governs their activities.
This section of the final rule corresponds to Sec. 3715.1 of the
proposed rule, but has been reformatted for clarity. No comments were
received on this portion of the proposal.
Proposed Sec. 3715.3(k) exempted authorized occupancies from the
time limits of 43 CFR 8365.1-2. BLM has made some minor editorial
changes to that provision and moved it to the table in final
Sec. 3715.1.
Section 3715.2 What Activities Do I Have To Be Engaged in to Allow Me
To Occupy the Public Lands?
Final Sec. 3715.2 describes the circumstances warranting occupancy
of the public lands under this subpart.
In response to a comment on the definition of ``occupancy''
suggesting a need to treat uses and occupancies of less than 14-day
duration in a consistent manner, the final rule indicates that subpart
3715 governs uses and occupancies lasting for more than 14 calendar
days. In addition, the table in Sec. 3715.1 states that this subpart
does not apply to occupancy of 14 days or less in any 90-day period on
the same site or within a 25-mile radius of that site. This section of
the final rule is intended to prevent abusers of the mining laws from
circumventing its requirements by moving illegal occupancies (for
example, recreational vehicles) from one site to another nearby.
Section 3715.2-1 What Additional Characteristic(s) Must my Occupancy
Have?
Final Sec. 3715.2-1 provides that in addition to the requirements
specified in Sec. 3715.2, occupancies must involve at least one of five
qualifying activities in order to warrant an occupancy.
One comment suggested that equipment that requires protection from
theft or loss or that would constitute a danger to the public should
warrant occupancy of a mining claim if the equipment is not otherwise
readily portable, and if the equipment cannot reasonably be protected
through means other than site occupancy, or if the hazard could not be
prevented by reasonable means other than occupancy. BLM has adopted
this comment in the final rule and has revised Sec. 3715.2-1(b)
accordingly. A certain minimum amount of appropriate, operable
equipment is necessary to warrant an occupancy. This minimum amount may
vary among operations. The equipment you assert to justify an occupancy
should be in regular use and required for the operation. Equipment used
only infrequently should normally be stored at an off-site equipment
yard. Appropriate and operable equipment of such size and type that may
be easily placed in a three-quarter ton pickup truck and/or towed
utility trailer and
[[Page 37121]]
hauled away at the end of a work day will not by itself normally
justify an occupancy. Larger amounts of equipment may also be removable
at the end of a work day, depending on the situation. On the other
hand, nothing in this provision prevents the storage and use of
portable equipment and personnel for prospecting and exploration for 14
days or less. Unused or infrequently used equipment cannot be stored on
site or added to on-site equipment to justify an occupancy.
Final Sec. 3715.2-1(e) has been revised editorially to make it
clear that the work expected on an occupied site is that which is usual
and customary, which is ordinarily not less than 8 hours but not
necessarily an unbroken 8-hour shift or a rigid 8-hour shift every day.
For example, the first and last days of an occupancy may be short for
travel purposes, or shifts may be split overnight between two days.
Section 3715.2-2 How Do I Justify Occupancy by a Caretaker or
Watchman?
Final Sec. 3715.2-2 provides the conditions you must meet in order
to justify a caretaker or watchman. BLM received no comments on this
portion of the proposal, which is adopted with minor editorial changes
into the final rule.
Section 3715.2-3 Under What Circumstances Will BLM Allow Me To
Temporarily Occupy a Site for More Than 14 Days?
Final Sec. 3715.2-3 describes the circumstances under which BLM
will allow you to remain on a site temporarily beyond 14 days without
first having met all of the requirements in this subpart for beginning
occupancy. This provision was not part of the proposed rule, but BLM
added it to the final rule in response to a commenter's concern about
site security.
Section 3715.3 Must I Consult With BLM Before Occupancy?
This section of the final rule is organized as a table that lists
the requirements you must follow to consult with BLM regarding a
proposed occupancy before occupancy may begin in connection with a plan
of operations, notice-level activities, or casual use activities. The
table also notes that in some cases you may propose both to occupy the
public lands and to conduct notice-level or casual use activities that
do not involve occupancy. In those cases, any notice-level or casual
use activities that do not involve occupancy may proceed in accordance
with authorizing regulations without consulting BLM. For example, you
may propose both to build a cabin on a mining claim and to dig a small
pit subject to the notice provisions of 43 CFR part 3800, subpart 3809.
Under the final rule, you could dig the pit after giving notice to BLM
under subpart 3809, but would have to consult with BLM before building
the cabin.
One comment stated that, whereas the proposed rule is often
directed toward new operations, the rule should also address
modifications of plans of operations that are often necessitated by
changed conditions or operations. BLM adopted this comment and added
language to final Sec. 3715.3 making it applicable to plan
modifications as well as new plans. Plan modifications may call for
new, additional, or enhanced occupancy.
Several comments suggested that certain activities that are
incidental to justified occupancies, but are not themselves actually
reasonably incident, should be allowed if they do not cause unnecessary
or undue degradation. The activities of concern in this connection are
recreational in nature, done after regular work on the mining claim
during periods of occupancy. The rule is not intended to preclude such
activities where they are reasonably undertaken together with the
justified occupancy.
Section 3715.3-1 At What Point May I Begin Occupancy?
Final Sec. 3715.3-1 describes the requirements you must meet before
you may begin occupancy. This provision consolidates two proposed
provisions related to restrictions on initiating occupancy, proposed
Secs. 3715.3(b) and 3715.4(b).
One comment stated that it was unreasonable for proposed
Sec. 3715.4(b) to require operators to obtain all necessary state
permits before beginning use or occupancy of a claim. The comment
pointed out that this would require that all permits conceivably
necessary during the life of the mining operation be obtained in
advance rather than as needed. BLM accepted this comment and changed
final Sec. 3715.3-1(b) to require only those permits necessary for the
particular use or reasonably incident use justifying the occupancy.
Requiring compliance with building codes is not a matter of
technicalities; rather, it is important in protecting public health and
safety. A 1982 report of the General Accounting Office (GAO), for
example, described cases in which buildings on mining claims that did
not meet local building codes burned and caused death and injury. See
GAO, Illegal and Unauthorized Activities on Public Lands--A Problem
with Serious Implications, No. RCED-8248 (1982), pp. 30-32.
Section 3715.3-2 What Information Must I Provide to BLM About My
Proposed Occupancy?
Final Sec. 3715.3-2 describes the kinds of information that you
must provide to BLM regarding your proposed occupancy, including maps
and written descriptions of your occupancy. BLM received no comments on
this portion of the proposal, which is adopted with minor editorial
changes into the final rule.
Section 3715.3-3 How Does BLM Process the Information I Submit About
My Proposed Occupancy?
Final Sec. 3715.3-3 provides that BLM must review all proposed
occupancies, enclosures, fences, gates, or signs intended to exclude
the general public in order to make a concurrence or non-concurrence
determination. This section also describes the timing of BLM's review,
including any action that BLM must take to comply with the National
Environmental Policy Act (NEPA), the National Historic Preservation
Act, Section 7 of the Endangered Species Act, and/or other applicable
statutes. For example, under NEPA, BLM will analyze the environmental
impact of your proposed occupancy and document in writing its analysis
and findings. BLM received no comments on this portion of the proposal,
which is adopted with minor editorial changes into the final rule.
Section 3715.3-4 How Will BLM Notify Me of the Outcome of Its Review
Process?
Final Sec. 3715.3-4 describes the written determination of
concurrence or non-concurrence you will receive from BLM after its
review is complete. BLM received no comments on this portion of the
proposal, which is adopted with minor editorial changes into the final
rule.
Section 3715.3-5 What Will BLM's Notification Include?
Final Sec. 3715.3-5 describes what information BLM's written
determination of concurrence or non-concurrence will contain. BLM found
that the second sentence of proposed Sec. 3715.3(h)(1), which
identified the circumstances under which BLM would order an immediate,
temporary suspension of occupancy, to be redundant with the immediate,
temporary suspension provision in final Sec. 3715.7-1(a) and removed it
from proposed Sec. 3715.3. Also, BLM moved
[[Page 37122]]
the provision describing when BLM will assume that a risk to health,
safety, and the environment exists to final Sec. 3715.7-1(a).
Several comments suggested that proposed Sec. 3715.3(h)(2) should
be amended to state that BLM will allow a proposed occupancy to be
amended if the original proposal results in a non-concurrence. BLM
adopted this suggestion in Sec. 3715.3-5(b) of the final rule. It is in
the public interest to permit appropriate activity under the general
mining law if this activity can be planned through cooperation between
you and BLM, avoiding costly administrative appeals, if possible, in
cases where the initial proposal is not accepted.
Section 3715.3-6 May I Begin Occupancy if I Have Not Received
Concurrence From BLM?
Final Sec. 3715.3-6 prohibits beginning occupancy until a
concurrence from BLM is received. BLM received no comments on this
portion of the proposal, which is adopted with minor editorial changes
into the final rule.
Section 3715.4 What if I have an Existing Use or Occupancy?
Final Sec. 3715.4 describes how this subpart applies to existing
uses and occupancies. This section of the final rule combines proposed
Secs. 3715.7 (a) and (d). BLM revised this section to make it clear
that existing use or occupancy that is not reasonably incident may be
subject to an immediate, temporary suspension, if necessary to protect
health, safety, or the environment. BLM received no comments on this
part of the proposal, which is adopted with minor editorial changes
into the final rule.
Section 3715.4-1 What Happens After I Give BLM Written Notification of
My Existing Occupancy?
Final Sec. 3715.4-1 describes the actions BLM will take after it
receives a written notification of your existing occupancy. Paragraph
(a) of this section, which provides that BLM will visit your site
during the normal course of inspection to obtain the information
required under Sec. 3715.3-2, did not exist in the proposed rule.
However, BLM added it to the final rule in an effort to reduce the
paperwork burden on operators with existing occupancies. Final
Sec. 3715.4-1(b) was proposed as Sec. 3715.7(b) and is adopted with
minor editorial changes.
Taken together, Secs. 3715.4 and 4-1 allow your existing occupancy
a one-year grace period from compliance with this final rule if you
timely notify BLM of the occupancy, with the expectation that BLM will
visit your site within that one-year period to gather additional
information. If the year passes and BLM has not yet visited your site,
this final rule does not require you to take any further action with
regard to obtaining BLM's concurrence in your occupancy. At that point,
the ball would be in BLM's court.
Section 3715.4-2 What if I Do Not Notify BLM of My Existing Occupancy?
Final Sec. 3715.4-2 (proposed Sec. 3715.7(c)) states that you are
subject to the penalty and enforcement provisions of this subpart if
you do not file the written notice required in Sec. 3715.4. BLM
received no comments on this portion of the proposal, which is adopted
with minor editorial changes into the final rule.
Section 3715.4-3 What if BLM Does Not Concur in My Existing Use or
Occupancy?
Final Sec. 3715.4-3 describes the actions BLM may take after
inspection if it determines that your use or occupancy, or portion
thereof, is not reasonably incident. Final Sec. 3715.4-3 consolidates
provisions proposed at Secs. 3715.6 (b) and (c) as they apply to
existing operations. BLM moved proposed Sec. 3715.6(c) to final
Sec. 3715.4-3(b) because it deals with existing use and occupancy. BLM
received no comments on this part of the proposal, which is adopted
with minor editorial changes into the final rule.
Section 3715.4-4 What if There is a Dispute Over the Fee Simple Title
to the Lands on Which My Existing Occupancy is Located?
Final Sec. 3715.4-4 describes BLM's discretion in deferring a
determination regarding the status of your occupancy if the lands on
which the occupancy occurs are involved in a title dispute with the
United States regarding the underlying fee simple title to the land.
This provision was not part of the proposal, but BLM added it to the
final rule to make it clear that BLM has discretion to defer the point
at which it deals with occupancy on lands over which a title dispute
exists.
Section 3715.5 What Standards Apply to My Use or Occupancy?
Final Sec. 3715.5 describes the laws and standards which you must
comply with while engaging in any use or occupancy of the public lands.
Paragraph (b) of this section refers to the federal and state standards
that apply to uses of public lands under the mining laws. Paragraph (c)
refers to the standards applicable to occupancies. The paragraphs are
identical, except that occupancies are subject to the standards of this
final rule, while uses are not.
These provisions were included in the proposal as Secs. 3715.4 (a),
(c), (d), and (e) respectively. One comment addressed proposed
Sec. 3715.4(e), pointing out that, normally, residential structures
need only be in compliance with building and other codes in effect at
the time of construction, rather than, as the proposed rule implied,
with current codes. The final rule has been changed to require
structures to conform with ``applicable'' state or local codes. If, in
some areas, structures need only be in compliance with codes in effect
at the time of construction, those codes will be the only ones
applicable.
Several comments objected to BLM's adoption of state and local
building codes rather than promulgation of its own regulatory
requirements. BLM does not agree and did not adopt these comments in
the final rule. State and local building codes are a function of the
police powers held by state and local governments. In addition, the
building codes already exist and are tried and tested.
One comment pointed out that it may be a burden for state or local
officials to visit remote claims to inspect for code compliance, and
another suggested that the rule allow BLM to waive compliance with such
codes in truly remote areas. BLM does not agree and did not adopt these
comments in the final rule. If state or local agencies wish to waive
code compliance, BLM will recognize that waiver, but BLM has no
authority to independently allow you to ignore code requirements.
One comment called on the BLM to adopt a standard that combines the
reasonably incident standard with a ``required'' standard, that is, to
disallow use and occupancy that is not required in order to conduct
mining activities. The comment argued that United States v. Richardson,
599 F.2d 290 (9th Cir.), cert. denied, 444 U.S. 1014 (1980), serves as
a precedent for using this combined standard. BLM chooses to adopt the
standard of ``reasonably incident to'' rather than ``required for''
prospecting, mining, or processing operations. The statutory language
quoted in the comment is in section 4(c) of the 1955 Act and relates to
the severance and use of vegetative and other surface resources. Such
use must be required for mining, prospecting, or processing operations
and uses reasonably incident thereto. However, the general standard
applied in this rule is found in section 4(a) of the 1955 Act, which
prohibits the use of the claim itself for any purposes other than
[[Page 37123]]
prospecting, mining or processing operations and uses reasonably
incident thereto. Under section 4(c) of the 1955 Act, surface resources
may be used only if ``required'' for uses ``reasonably incident'' to
mining. The tighter standard for removal and use of trees and other
surface resources in section 4(c) is built upon the standard in section
4(a). The applicable standard for activities on the claims is the basic
``reasonably incident'' standard rather than the ``required'' standard
that is applicable only to removal and use of trees and other surface
resources. The burden of proving that activities are reasonably
incident to mining will remain on you, as it is under existing law, and
occupancies that are not reasonably incident will not be allowed.
Section 3715.5-1 What Standards Apply to Ending My Use or Occupancy?
Final Sec. 3715.5-1 describes what you must do with structures,
material, equipment or other personal property placed on the public
lands during your use or occupancy when your use or occupancy ends.
These provisions were included in the proposal as Secs. 3715.4 (f)
and (f)(1) respectively. BLM received no comments on this portion of
the proposal, which is adopted with minor editorial changes into the
final rule.
Section 3715.5-2 What Happens to Property I Leave Behind?
Final Sec. 3715.5-2 describes what BLM will do with property you
leave on the public lands after your use or occupancy ends. This
provision was included in the proposal as Sec. 3715.4(f)(2). BLM
received no comments on this part of the proposal, which is adopted
with minor editorial changes into the final rule.
Section 3715.6 What Things Does BLM Prohibit Under This Subpart?
Final Sec. 3715.6 (proposed Sec. 3715.5) describes those
activities, uses, or occupancies that are prohibited under this
subpart.
Two comments pointed out drafting errors in proposed Sec. 3715.5.
Paragraph (a), as proposed, would have required a violation of both the
conditions of occupancy under proposed Sec. 3715.2 and one or more of
the standards of occupancy under proposed Sec. 3715.4. The intent of
the rule is that uses or occupancies are not permitted that violate any
provision of Sec. 3715.2, Sec. 3715.2-1 or Sec. 3715.5. Also, paragraph
(b) as proposed could have been read to imply that occupancy might be
initiated after rejection of a plan of operation. Paragraphs (a) and
(b) of Sec. 3715.6 in the final rule have been revised to correct these
errors.
Some comments argued that claimants with claims located before 1955
are not barred from blocking access to or through the claims. The
Crawford case, supra, at pages 216-217, stated that section 4(b) of the
1955 Act substantially changed the mining law with regard to access.
Actions by owners of such claims to block reasonable access by the
public will, however, prompt a determination of surface rights under
section 5 of the 1955 Act and 43 CFR part 3710, subpart 3712, and/or a
validity examination.
One comment stated that proposed Sec. 3715.5(f) would not allow an
operator to exclude the public from hazardous areas or areas that need
to be secure for proprietary reasons. BLM has corrected this provision
at Sec. 3715.6(f) of the final rule to allow operators to take
reasonable security measures. Mining claimants have the right to
exclude the public from use of the land within the operation in order
to prevent material interference with the operation or to comply with
relevant state or federal law or regulations.
One comment noted that proposed Sec. 3715.5(i) should be amended to
prohibit non-mining related animal maintenance or pasturage. BLM has
adopted this comment, but has also revised Sec. 3715.6(i) of the final
rule to make it clear that the acts listed are prohibited unless they
are allowable under other applicable law or regulation. For example, a
non-mining activity on a mining claim could be authorized under 43 CFR
part 2920 under appropriate circumstances.
Section 3715.7 How Will BLM Inspect My Use or Occupancy and Enforce
This Subpart?
Final Sec. 3715.7 provides that BLM field staff is authorized to
physically inspect all structures, equipment, workings and uses located
on public lands and will not inspect the inside of structures used
solely as residences without permission from the occupant or a proper
court.
BLM included these provisions in the proposal at Sec. 3715.6(a).
One comment suggested that proposed Sec. 3715.6(a) should be amended to
provide BLM with discretion to inspect all occupancies on public lands
rather than obligate BLM to inspect all such occupancies. The proposed
rule language was not intended to obligate BLM to conduct inspections
within a certain timeframe. The language is merely to establish BLM's
authority to conduct inspections of all structures, equipment, workings
and uses located on public lands. Final Sec. 3715.6(a) has been amended
to make it clear that there is no time limitation placed on BLM for
inspections.
Section 3715.7-1 What Types of Enforcement Action Can BLM Take if I Do
Not Meet the Requirements of This Subpart?
Final Sec. 3715.7-1 discusses the four types of orders that BLM can
issue to you, depending on the circumstances, for not complying with
the provisions of this subpart.
Final paragraph (a) describes the circumstance under which BLM can
order an immediate, temporary suspension of use or occupancy prior to a
hearing if you are not in compliance with Secs. 3715.2, 3715.2-1,
3715.3-1(b), 3715.5 or 3715.5-1, if necessary to protect health, safety
or the environment. If you fail at any time to meet any of the
standards in paragraphs Secs. 3715.3-1(b) and 3715.5 (b), (c) and (d),
BLM will presume that a risk to health, safety or the environment
exists. BLM's assumption that breach of those sections creates a risk
to health, safety, or the environment is based on the nature of those
requirements. Readers should note that an appeal of an order issued
under this paragraph does not stay the effect of the order. This means
that if BLM orders you under this paragraph to immediately suspend your
occupancy, you must comply even if you file an appeal. Your activity
must remain suspended until the appeal has been decided.
Section 3715.3-1(b) requires you to be in possession of all
requisite federal, state and local mining, reclamation, and waste
disposal permits, approvals, or other authorizations before beginning
an occupancy. Sections 3715.5 (b) and (c) require your use or occupancy
to conform to all applicable federal, state and local environmental
standards and have all requisite permits and authorizations. In
addition, Sec. 3715.5(e) requires your buildings and structures to
comply with state and local building, fire and electrical codes and
occupational safety and health and mine safety standards. To the extent
that you do not possess the proper mining, reclamation, waste disposal,
building, fire, electrical or occupational safety or mine safety
permits or have not met related standards, BLM may reasonably assume
that you are creating a risk to health, safety or the environment. This
provision was included in the proposal at Secs. 3715.3(h)(1) and
3715.6(b). The final rule has been revised editorially at Sec. 3715.7-
1(a)(3) to make clear the corrective actions BLM may require you to
take to correct the noncompliance in
[[Page 37124]]
addition to suspension of the use or occupancy.
Final paragraph (b) was not included in the proposal, but BLM added
it to the final rule because, while the final rule provides for
immediate, temporary suspensions, no provision specifically provided
for cessation of unlawful use or occupancy, subject to normal appeal
procedures or for failure to comply with BLM notices of noncompliance.
Final paragraph (c) describes the circumstances under which BLM can
issue notices of noncompliance. BLM included paragraph (c) of the final
rule in the proposal at Sec. 3715.6(d). BLM received no comments on
this portion of the proposal, which is adopted with minor editorial
changes into the final rule.
Final paragraph (d) describes the circumstances under which BLM can
order you to apply within 30 days for authorization under the
regulations of 43 CFR Group 2900 or 8300, or, as to sites in Alaska, 43
CFR part 2560.
Section 3715.7-2 What Happens if I Do Not Comply With a BLM Order?
Final Sec. 3715.7-2 describes the legal remedies the Interior
Department may seek if you do not comply with a BLM order. This relief
may be in addition to the penalties described in Sec. 3715.8. BLM
included this paragraph in the proposal at Sec. 3715.6(f). BLM received
no comments on this part of the proposal, which is adopted with minor
editorial changes into the final rule.
Section 3715.8 What Penalties Are Available to BLM for Violations of
This Subpart?
Final Sec. 3715.8 describes the penalties BLM may seek against
individuals or corporations for knowingly and willfully violating
requirements of this subpart.
One comment suggested that the penalty provisions in proposed
Sec. 3715.8 be amended to incorporate the maximum penalties provided
for in the Sentencing Reform Act of 1984, as amended (18 U.S.C. 3571 et
seq.). BLM adopted this comment and made the penalties described in the
final rule consistent with the penalties that a court could otherwise
impose under the Sentencing Reform Act. Penalty provisions such as
those in both FLPMA and the Unlawful Occupancy and Inclosures of Public
Lands Act, which provide for up to a year in jail or a fine of $1,000
for violations, are classified as Class A misdemeanors under 18 U.S.C.
3559. The Sentencing Reform Act authorizes fines for Class A
misdemeanors of up to $100,000 for individuals and $200,000 for
organizations.
Section 3715.8-1 What Happens if I Make False Statements to BLM?
Final Sec. 3715.8-1 describes possible legal consequences if you
make false statements to BLM. BLM included this paragraph in the
proposal at Sec. 3715.8(b). BLM received no comments on this portion of
the proposal, which is adopted with minor editorial changes into the
final rule.
Section 3715.9 What Appeal Rights Do I Have?
Final Sec. 3715.9 describes the way in which you may appeal BLM
decisions, orders or determinations made under this subpart.
BLM has removed provisions included in the proposal which allowed
for appeals to the State Director. This change is made to make the
appeals provisions in this rule consistent with BLM's other appeals
provisions. In addition, because appeals from a BLM non-concurrence or
a cessation order may require a hearing, an appellant's rights are best
preserved by providing an opportunity for a hearing before an
administrative law judge or an administrative appeals board.
Section 3715.9-1 Does an Appeal to IBLA Suspend a BLM Decision?
Final Sec. 3715.9-1 describes the conditions under which a BLM
decision may be suspended while IBLA considers an appeal of that
decision.
BLM included these paragraphs in the proposal at Secs. 3715.9 (b)
and (f). BLM received no comments on this portion of the proposal and
adopts it with minor editorial changes into the final rule. BLM did not
include proposed Sec. 3715.9(g) in the final rule because it is
subsumed in the right to appeal a BLM decision to IBLA.
III. Procedural Matters
National Environmental Policy Act
BLM has determined that this final rule does not constitute a major
federal action significantly affecting the quality of the human
environment, and that no detailed statement pursuant to section
102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C.
4332(2)(C)) is required. BLM has determined that this final rule is
categorically excluded from further environmental review pursuant to
516 Departmental Manual (DM), Chapter 2, Appendix 1, Item 1.10, and
that the proposal would not meet any of the 10 criteria for exceptions
to categorical exclusion listed in 516 DM 2, Appendix 2. This
categorical exclusion includes rules that are of a financial, legal,
technical or procedural nature; or the environmental effects of which
are too broad, speculative, or conjectural to lend themselves to
meaningful analysis and will be subject later to the NEPA process,
either collectively or on a case-by-case basis. Under the Council on
Environmental Quality regulations (40 CFR 1508.4) and environmental
policies and procedures of the Department of the Interior, the term
``categorical exclusions'' means a categories of actions that do not
individually or cumulatively have a significant effect on the human
environment and that have been found to have no such effect in
procedures adopted by a federal agency and for which neither an
environmental assessment nor an environmental impact statement is
required.
Executive Order 12866 and Regulatory Flexibility Act
This rule was not subject to review by the Office of Management and
Budget under Executive Order 12866. No discernible economic impacts on
operations involving occupancy are expected from this final rule. All
operations involving occupancy are expected to occur under notices or
plans covered by 43 CFR part 3800, subparts 3802 or 3809. The BLM is
unaware of any specific casual use occupancies. The cost of complying
with the requirements of the final rule is indistinguishable from the
requirements imposed by the existing surface management regulations
found in 43 CFR part 3800, because the requirements of the final rule
limit uses and occupancies to those that are governed by 43 CFR part
3800. Further, for the same reasons, the Department has determined
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that the
rule will not have a significant economic impact on a substantial
number of small entities. The effect of the rule will be to curtail
occupancy activities by those whose occupancy of the public lands is
not reasonably incident to mining, prospecting or exploration, or
processing operations. Such activities are already, and have long been,
prohibited by law. Therefore, the only activities that would be
curtailed are those that are already unlawful.
Federal Paperwork Reduction Act
Under 44 U.S.C. 3507 and the Paperwork Reduction Act of 1995, the
Office of Management and Budget (OMB) has approved the information
collection requirements contained in this subpart. OMB has assigned
clearance number 1004-0169. BLM
[[Page 37125]]
collects the information so that it may manage use and occupancy of the
public lands under the mining laws. A response is mandatory and
required to obtain the benefit of occupying the public lands for
reasonably incidental activities.
BLM estimates the public reporting burden for this information to
average two hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding this burden estimate
or any other aspect of this collection of information, including
suggestions for reducing the burden, to the Information Collection
Clearance Officer (DW-110), Bureau of Land Management, Building 50,
Denver Federal Center, Denver, Colorado 80225-0047, and the Office of
Management and Budget, Paperwork Reduction Project, 1004-0169,
Washington, DC 20503.
Executive Order 12630
The Department certifies that this final rule does not represent a
governmental action capable of interference with constitutionally
protected property rights. The rule will not adversely affect lawful
occupancies. Therefore, as required by Executive Order 12630, the
Department of the Interior has determined that the rule would not cause
a taking of private property.
Unfunded Mandates Reform Act
BLM has determined that this regulation is not significant under
the Unfunded Mandates Reform Act of 1995, because it will not result in
the expenditure by State, local, and tribal governments, in the
aggregate, or by the private sector, of $100 million or more in any one
year. Further, this rule will not significantly or uniquely affect
small governments.
Authors
The principal author of this final rule is Richard E. Deery, Solid
Minerals Group, BLM. Patrick W. Boyd, Regulatory Management Team, BLM,
prepared the plain English version. Staff of the Division of Mineral
Resources, Office of the Solicitor, Department of the Interior,
provided assistance.
List of Subjects in 43 CFR Part 3710
Administrative practice and procedure, Mines, Public lands-mineral
resources.
Dated: May 20, 1996.
Bob Armstrong,
Assistant Secretary, Land and Minerals Management.
Under the authorities cited below, and for the reasons stated in
the preamble, part 3710, group 3700, subchapter C, chapter II, subtitle
B, title 43 of the Code of Federal Regulations is amended by adding a
new subpart 3715 to read as follows:
PART 3710--PUBLIC LAW 167; ACT OF JULY 23, 1955
Subpart 3715--Use and Occupancy Under the Mining Laws
Sec.
3715.0-1 What are the purpose and the scope of this subpart?
3715.0-3 What are the legal authorities for this subpart?
3715.0-5 How are certain terms in this subpart defined?
3715.0-9 Information collection.
3715.1 Do the regulations in this subpart apply to my use or
occupancy?
3715.2 What activities do I have to be engaged in to allow me to
occupy the public lands?
3715.2-1 What additional characteristic(s) must my occupancy have?
3715.2-2 How do I justify occupancy by a caretaker or watchman?
3715.2-3 Under what circumstances will BLM allow me to temporarily
occupy a site for more than 14 days?
3715.3 Must I consult with BLM before occupancy?
3715.3-1 At what point may I begin occupancy?
3715.3-2 What information must I provide to BLM about my proposed
occupancy?
3715.3-3 How does BLM process the information I submit about my
proposed occupancy?
3715.3-4 How will BLM notify me of the outcome of its review
process?
3715.3-5 What will BLM's notification include?
3715.3-6 May I begin occupancy if I have not received concurrence
from BLM?
3715.4 What if I have an existing use or occupancy?
3715.4-1 What happens after I give BLM written notification of my
existing occupancy?
3715.4-2 What if I do not notify BLM of my existing occupancy?
3715.4-3 What if BLM does not concur in my existing use or
occupancy?
3715.4-4 What if there is a dispute over the fee simple title to
the lands on which my existing occupancy is located?
3715.5 What standards apply to my use or occupancy?
3715.5-1 What standards apply to ending my use or occupancy?
3715.5-2 What happens to property I leave behind?
3715.6 What things does BLM prohibit under this subpart?
3715.7 How will BLM inspect my occupancy and enforce this subpart?
3517.7-1 What types of enforcement action can BLM take if I do not
meet the requirements of this subpart?
3715.7-2 What happens if I do not comply with a BLM order?
3715.8 What penalties are available to BLM for violations of this
subpart?
3715.8-1 What happens if I make false statements to BLM?
3715.9 What appeal rights do I have?
3715.9-1 Does an appeal to IBLA suspend a BLM decision?
Subpart 3715--Use and Occupancy Under the Mining Laws
Authority: 18 U.S.C. 1001, 3571 et seq.; 30 U.S.C. 22, 42, 612;
43 U.S.C. 1061 et seq., 1201, 1457, 1732 (b) and (c), 1733 (a) and
(g).
Sec. 3715.0-1 What are the purpose and the scope of this subpart?
(a) Purpose. The purpose of this subpart is to manage the use and
occupancy of the public lands for the development of locatable mineral
deposits by limiting such use or occupancy to that which is reasonably
incident. The Bureau of Land Management (BLM) will prevent abuse of the
public lands while recognizing valid rights and uses under the Mining
Law of 1872 (30 U.S.C. 22 et seq.) and related laws governing the
public lands, regardless of when those rights were created. BLM will
take appropriate action to eliminate invalid uses, including
unauthorized residential occupancy of the public lands.
(b) Scope. This subpart applies to public lands BLM administers.
They do not apply to state or private lands in which the mineral estate
has been reserved to the United States. They do not apply to Federal
lands administered by other Federal agencies, even though those lands
may be subject to the operation of the mining laws.
(c) This subpart does not impair the right of any person to engage
in recreational activities or any other authorized activity on public
lands BLM administers.
Sec. 3715.0-3 What are the legal authorities for this subpart?
The authorities for this subpart are 18 U.S.C. 1001, 3571 et seq.;
30 U.S.C. 22, 42, 612; 43 U.S.C. 1061 et seq., 1
FR Doc. 96-17757 Use and Occupancy Under the Mining Laws
201, 1457, 1732 (b) and
(c), 1733 (a) and (g).
Sec. 3715.0-5 How are certain terms in this subpart defined?
As used in this subpart the term:
Mining laws means all laws that apply to hardrock mining on public
lands and which make public lands available for hardrock mineral
development. This includes, but is not limited to, the general
authorities relating to hardrock mining or to the public lands on which
[[Page 37126]]
this rule is based and case law which interprets those authorities.
Mining operations means all functions, work, facilities, and
activities reasonably incident to mining or processing of mineral
deposits. It includes building roads and other means of access to a
mining claim or millsite on public lands.
Occupancy means full or part-time residence on the public lands. It
also means activities that involve residence; the construction,
presence, or maintenance of temporary or permanent structures that may
be used for such purposes; or the use of a watchman or caretaker for
the purpose of monitoring activities. Residence or structures include,
but are not limited to, barriers to access, fences, tents, motor homes,
trailers, cabins, houses, buildings, and storage of equipment or
supplies.
Permanent structure means a structure fixed to the ground by any of
the various types of foundations, slabs, piers, poles, or other means
allowed by building codes. The term also includes a structure placed on
the ground that lacks foundations, slabs, piers, or poles, and that can
only be moved through disassembly into its component parts or by
techniques commonly used in house moving. The term does not apply to
tents or lean-tos.
Public lands means lands open to the operation of the mining laws
which BLM administers, including lands covered by unpatented mining
claims or millsites.
Prospecting or exploration means the search for mineral deposits by
geological, geophysical, geochemical, or other techniques. It also
includes, but is not limited to, sampling, drilling, or developing
surface or underground workings to evaluate the type, extent, quantity,
or quality of mineral values present.
Reasonably incident means the statutory standard ``prospecting,
mining, or processing operations and uses reasonably incident thereto''
(30 U.S.C. 612). It is a shortened version of the statutory standard.
It includes those actions or expenditures of labor and resources by a
person of ordinary prudence to prospect, explore, define, develop,
mine, or beneficiate a valuable mineral deposit, using methods,
structures, and equipment appropriate to the geological terrain,
mineral deposit, and stage of development and reasonably related
activities.
Substantially regular work means work on, or that substantially and
directly benefits, a mineral property, including nearby properties
under your control. The work must be associated with the search for and
development of mineral deposits or the processing of ores. It includes
active and continuing exploration, mining, and beneficiation or
processing of ores. It may also include assembly or maintenance of
equipment, work on physical improvements, and procurement of supplies,
incidental to activities meeting the conditions of Secs. 3715.2 and
3715.2-1. It may also include off-site trips associated with these
activities. The term also includes a seasonal, but recurring, work
program.
Unnecessary or undue degradation, as applied to unauthorized uses,
means those activities that are not reasonably incident and are not
authorized under any other applicable law or regulation. As applied to
authorized uses, the term is used as defined in 43 CFR 3802.0-5 and
3809.0-5.
Sec. 3715.0-9 Information collection.
(a) BLM has submitted to the Office of Management and Budget the
information collection requirements contained in this subpart under 44
U.S.C. 3507 and the Paperwork Reduction Act of 1995 and assigned
clearance number 1004-0169. BLM collects the information so that it may
manage use and occupancy of public lands under the mining laws by
prohibiting unauthorized uses and occupancies. A response to BLM is
mandatory and required to obtain the benefit of occupying the public
lands for reasonably incident activities.
(b) BLM estimates the public reporting burden for this information
to average two hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding this burden estimate
or any other aspect of this collection of information, including
suggestions for reducing the burden, to the Information Collection
Clearance Officer (DW-110), Bureau of Land Management, Building 50,
Denver Federal Center, Denver, Colorado 80225-0047, and the Office of
Management and Budget, Paperwork Reduction Project, 1004-0169,
Washington, DC 20503.
Sec. 3715.1 Do the regulations in this subpart apply to my use or
occupancy?
To determine if the regulations in this subpart apply to your
activities, refer to Table 1 in this section.
Table 1
------------------------------------------------------------------------
Applicability of this subpart
------------------------------------------------------------------------
If your proposed use of the public Then--
lands--.
Includes occupancy and is ``reasonably The provisions of this subpart
incident'' as defined by this subpart. apply to you. You must seek
concurrence from BLM before
beginning this use and comply
with all provisions of this
subpart.
Involves the placement, construction, The provisions of this subpart
or maintenance of enclosures, gates, apply to you. You must seek
fences, or signs. concurrence from BLM before
beginning this use and comply
with all provisions of this
subpart.
Is reasonably incident, but does not The provisions of this subpart
involve occupancy. do not apply to you, except
for Secs. 3715.4, 3715.5 and
3715.7. You are subject to the
applicable regulations in 43
CFR part 3800.
Is not reasonably incident (involving The occupancy consultation
rights-of-way, for example), but may provisions of this subpart do
be allowed under the public land laws. not apply to you. Your use is
not allowed under this
subpart. You must seek
authorization under 43 CFR
Group 2900.
Is not allowed under the public land Your use is prohibited. You
laws, the mining laws, the mineral must not begin or continue
leasing laws, or other applicable laws. unauthorized uses.
Involves occupancy of a site, or any The provisions of this subpart
subsequent site within a 25-mile do not apply to you. Refer to
radius of the initially occupied site, the applicable regulations in
for 14 days or less in any 90-day 43 CFR part 8360 and pertinent
period. State Director supplementary
rules. 43 CFR part 8360 will
not otherwise apply to a
reasonably incident use or
occupancy that this subpart
allows.
------------------------------------------------------------------------
[[Page 37127]]
Sec. 3715.2 What activities do I have to be engaged in to allow me to
occupy the public lands?
In order to occupy the public lands under the mining laws for more
than 14 calendar days in any 90-day period within a 25-mile radius of
the initially occupied site, you must be engaged in certain activities.
Those activities that are the reason for your occupancy must:
(a) Be reasonably incident;
(b) Constitute substantially regular work;
(c) Be reasonably calculated to lead to the extraction and
beneficiation of minerals;
(d) Involve observable on-the-ground activity that BLM may verify
under Sec. 3715.7; and
(e) Use appropriate equipment that is presently operable, subject
to the need for reasonable assembly, maintenance, repair or fabrication
of replacement parts.
Sec. 3715.2-1 What additional characteristic(s) must my occupancy
have?
In addition to the requirements specified in Sec. 3715.2, your
occupancy must involve one or more of the following:
(a) Protecting exposed, concentrated or otherwise accessible
valuable minerals from theft or loss;
(b) Protecting from theft or loss appropriate, operable equipment
which is regularly used, is not readily portable, and cannot be
protected by means other than occupancy;
(c) Protecting the public from appropriate, operable equipment
which is regularly used, is not readily portable, and if left
unattended, creates a hazard to public safety;
(d) Protecting the public from surface uses, workings, or
improvements which, if left unattended, create a hazard to public
safety; or
(e) Being located in an area so isolated or lacking in physical
access as to require the mining claimant, operator, or workers to
remain on site in order to work a full shift of a usual and customary
length. A full shift is ordinarily 8 hours and does not include travel
time to the site from a community or area in which housing may be
obtained.
Sec. 3715.2-2 How do I justify occupancy by a caretaker or watchman?
If you assert the need for a watchman or caretaker to occupy the
public lands to protect valuable or hazardous property, equipment, or
workings, you must show that the need for the occupancy is both
reasonably incident and continual. You must show that a watchman or
caretaker is required to be present either whenever the operation is
not active or whenever you or your workers are not present on the site.
Sec. 3715.2-3 Under what circumstances will BLM allow me to
temporarily occupy a site for more than 14 days?
BLM may allow temporary occupancy at a single site to extend beyond
the 14-day period described in Sec. 3715.1 if you need to secure the
site beyond 14 days through the use of a watchman as allowed by
Sec. 3715.2-2, and you have begun consultation with BLM under
Sec. 3715.3. If BLM decides not to concur in the occupancy, the
temporary occupancy must stop.
Sec. 3715.3 Must I consult with BLM before occupancy?
Before beginning occupancy, you must consult with BLM about the
requirements of this subpart. See Table 2 in this section.
Table 2
------------------------------------------------------------------------
Consultation requirements
------------------------------------------------------------------------
If you are proposing a use that would Then.
involve occupancy.
Under a plan of operations or a You must include in the
modification submitted under 43 CFR proposed plan of operations
part 3800, subpart 3802 or subpart the materials required by Sec.
3809. 3715.3-2 describing any
proposed occupancy for BLM
review concurrently with
review of the plan of
operation.
BLM will determine whether you
have complied with the
requirements of this subpart
together with its decision
approving or modifying the
plan.
Under the notice provisions of 43 CFR You must submit the materials
part 3800, subpart 3809. required by Sec. 3715.3-2
together with the materials
submitted under 43 CFR 3809.1-
3 for BLM review concurrently
with its review of the
proposed activity.
Any activities in the notice
that do not involve occupancy
and are reasonably incident
may proceed in accordance with
43 CFR part 3800, subpart
3809.
And is a ``casual use'' under 43 CFR You are subject to the
3809.1-2 or does not require a plan of consultation provisions of
operations under 43 CFR 3802.1-2 and this subpart and must submit
3809.1-4 or a notice under 43 CFR the materials required by Sec.
3809.1-3. 3715.3-2 to BLM.
Any casual use activities that
do not involve occupancy and
are reasonably incident may
proceed in accordance with 43
CFR part 3800, subpart 3809.
Or enclosures, fences, gates, or signs You are subject to the
intended to exclude the general public. consultation provisions of
this subpart and must submit
the materials required by Sec.
3715.3-2 to BLM.
------------------------------------------------------------------------
Sec. 3715.3-1 At what point may I begin occupancy?
You must not begin occupancy until--
(a) You have complied with either 43 CFR part 3800, subpart 3802 or
3809 and this subpart, and BLM has completed its review and made the
required determinations under the applicable subparts, and
(b) You have obtained all federal, state and local mining,
reclamation, and waste disposal permits, approvals, or other
authorizations for the particular use or occupancy as required under
this subpart.
Sec. 3715.3-2 What information must I provide to BLM about my proposed
occupancy?
You must give BLM a detailed map that identifies the site and the
placement of the items specified in paragraphs (c), (d), and (e) of
this section, and a written description of the proposed occupancy that
describes in detail:
(a) How the proposed occupancy is reasonably incident;
(b) How the proposed occupancy meets the conditions specified in
Sec. 3715.2 and Sec. 3715.2-1;
(c) Where you will place temporary or permanent structures for
occupancy;
(d) The location of and reason you need enclosures, fences, gates,
and signs intended to exclude the general public;
(e) The location of reasonable public passage or access routes
through or around the area to adjacent public lands; and
[[Page 37128]]
(f) The estimated period of use of the structures, enclosures,
fences, gates, and signs, as well as the schedule for removal and
reclamation when operations end.
Sec. 3715.3-3 How does BLM process the information I submit about my
proposed occupancy?
BLM will review all proposed occupancies and all proposed
enclosures, fences, gates, or signs intended to exclude the general
public to determine if your proposed occupancy or use will conform to
the provisions of Secs. 3715.2, 3715.2-1 and 3715.5. BLM will complete
its review of a proposed occupancy not involving a plan of operations
within 30 business days of receipt of the materials, unless it
concludes that the determination cannot be made until:
(a) 30 business days after it prepares necessary environmental
documents, and
(b) 30 business days after it has complied with section 106 of the
National Historic Preservation Act, Section 7 of the Endangered Species
Act, and/or other applicable statutes, if applicable.
Sec. 3715.3-4 How will BLM notify me of the outcome of its review
process?
At the conclusion of the review, BLM will make a written
determination of concurrence or non-concurrence, and will send it to
you. For operations conducted under a plan of operations, BLM will
include this written determination in the decision that approves,
modifies, or rejects the plan.
Sec. 3715.3-5 What will BLM's notification include?
(a) BLM will include in each determination of concurrence a
statement requiring you to continue to comply with Secs. 3715.2,
3715.2-1 and 3715.5.
(b) BLM will specify in each determination of non-concurrence how
the proposed occupancy fails to meet the conditions of Sec. 3715.2,
Sec. 3715.2-1 or Sec. 3715.5, and will provide you an opportunity to
modify the proposed occupancy or appeal the determination under
Sec. 3715.9.
Sec. 3715.3-6 May I begin occupancy if I have not received concurrence
from BLM?
If you have not received concurrence from BLM, you must not begin
occupancy even though you have submitted, or plan to submit, an amended
occupancy proposal or an appeal.
Sec. 3715.4 What if I have an existing use or occupancy?
(a) By August 18, 1997, all existing uses and occupancies must meet
the applicable requirements of this subpart. If not, BLM will either
issue you a notice of noncompliance or order any existing use or
occupancy failing to meet the requirements of this subpart to suspend
or cease under Sec. 3715.7-1. BLM will also order you to reclaim the
land under 43 CFR part 3800, subpart 3802 or 3809 to BLM's satisfaction
within a specified, reasonable time, unless otherwise expressly
authorized.
(b) If you are occupying the public lands under the mining laws on
August 15, 1996, you may continue your occupancy for one year after
that date, without being subject to the procedures this subpart
imposes, if:
(1) You notify BLM by October 15, 1996 of the existence of the
occupancy using a format specified by BLM; and
(2) BLM has no pending trespass action against you concerning your
occupancy.
(c) The one-year grace period provided in paragraph (b) of this
section will not apply if at any time BLM determines that your use or
occupancy is not reasonably incident and the continued presence of the
use or occupancy is a threat to health, safety or the environment. In
this situation, BLM will order an immediate temporary suspension of
activities under Sec. 3715.7-1(a).
(d) If you have no existing occupancies, but are engaged in uses of
the public lands under the mining law, you are subject to the standards
in Sec. 3715.5. BLM will determine if your existing uses comply with
those standards during normal inspection visits to the area and during
BLM review of notices and plans of operations filed under 43 CFR part
3800.
Sec. 3715.4-1 What happens after I give BLM written notification of my
existing occupancy?
(a) BLM will visit your site during the normal course of inspection
to obtain the information described in Sec. 3715.3-2. After the visit,
BLM will make a determination of concurrence or non-concurrence.
(b) You must provide the information described in Sec. 3715.3-2 to
BLM. You may provide it either in writing or verbally during a site
visit by BLM field staff.
Sec. 3715.4-2 What if I do not notify BLM of my existing occupancy?
If you do not provide the written notice required in Sec. 3715.4,
you will be subject to the enforcement actions of Sec. 3715.7-1, the
civil remedies of Sec. 3715.7-2, and the criminal penalties of
Sec. 3715.8.
Sec. 3715.4-3 What if BLM does not concur in my existing use or
occupancy?
If BLM determines that all or any part of your existing use or
occupancy is not reasonably incident:
(a) BLM may order a suspension or cessation of all or part of the
use or occupancy under Sec. 3715.7-1;
(b) BLM may order the land to be reclaimed to its satisfaction and
specify a reasonable time for completion of reclamation under 43 CFR
part 3800; and
(c) BLM may order you to apply within 30 days after the date of
notice from BLM for appropriate authorization under the regulations in
43 CFR Group 2900.
Sec. 3715.4-4 What if there is a dispute over the fee simple title to
the lands on which my existing occupancy is located?
BLM may defer a determination of concurrence or non-concurrence
with your occupancy until the underlying fee simple title to the land
has been finally determined by the Department of the Interior. During
this time, your existing occupancy may continue, subject to
Sec. 3715.5(a).
Sec. 3715.5 What standards apply to my use or occupancy?
(a) Your use or occupancy must be reasonably incident. In all uses
and occupancies, you must prevent or avoid ``unnecessary or undue
degradation'' of the public lands and resources.
(b) Your uses must conform to all applicable federal and state
environmental standards and you must have obtained all required permits
before beginning, as required under 43 CFR part 3800. This means
getting permits and authorizations and meeting standards required by
state and federal law, including, but not limited to, the Clean Water
Act (33 U.S.C. 1251 et seq.), Clean Air Act (42 U.S.C. 7401 et seq.),
and the Resource Conservation and Recovery Act (42 U.S.C. 6901 et
seq.), as required under 43 CFR part 3800.
(c) Your occupancies must conform to all applicable federal and
state environmental standards and you must have obtained all required
permits before beginning, as required under this subpart and 43 CFR
part 3800. This means getting permits and authorizations and meeting
standards required by state and federal law, including, but not limited
to, the Clean Water Act (33 U.S.C. 1251 et seq.), Clean Air Act (42
U.S.C. 7401 et seq.), and the Resource Conservation and Recovery
[[Page 37129]]
Act (42 U.S.C. 6901 et seq.), as required under this subpart and 43 CFR
part 3800.
(d) If your prospecting or exploration activities involve only
surface activities, you must not place permanent structures on the
public lands. Any temporary structures you place on the public lands
during prospecting or exploration will be allowed only for the duration
of the activities, unless BLM expressly and in writing allows them to
remain longer. If your prospecting or exploration activities involve
subsurface activities, you may place permanent structures on the public
lands, if BLM concurs.
(e) All permanent and temporary structures you place on the public
lands must conform with the applicable state or local building, fire,
and electrical codes, and occupational safety and health and mine
safety standards. If state or local codes require, you must obtain a
certificate of occupancy or its equivalent before you begin use or
occupancy involving permanent structures. If state or local law
requires, you must also acquire appropriate sewerage and sanitation
permits before the occupancy or use of a permanent structure placed on
the public lands.
Sec. 3715.5-1 What standards apply to ending my use or occupancy?
Unless BLM expressly allows them in writing to remain on the public
lands, you must remove all permanent structures, temporary structures,
material, equipment, or other personal property placed on the public
lands during authorized use or occupancy under this subpart. You have
90 days after your operations end to remove these items. If BLM concurs
in writing, this provision will not apply to seasonal operations that
are temporarily suspended for less than one year and expected to
continue during the next operating season or to operations that are
suspended for no longer than one year due to market or labor
conditions.
Sec. 3715.5-2 What happens to property I leave behind?
Any property you leave on the public lands beyond the 90-day period
described in Sec. 3715.5-1 becomes property of the United States and is
subject to removal and disposition at BLM's discretion consistent with
applicable laws and regulations. You are liable for the costs BLM
incurs in removing and disposing of the property.
Sec. 3715.6 What things does BLM prohibit under this subpart?
Except where other applicable laws or regulations allow, BLM
prohibits the following:
(a) Placing, constructing, maintaining or using residences or
structures for occupancy not meeting:
(1) The conditions of occupancy under Secs. 3715.2 or 3715.2-1; or
(2) Any of the standards of occupancy under Sec. 3715.5;
(b) Beginning occupancy before the filing, review, and approval or
modification of a plan of operation as required under 43 CFR part 3800,
subparts 3802 or 3809;
(c) Beginning occupancy before consultation with BLM as required by
Sec. 3715.3 for activities that do not require a plan of operations
under 43 CFR part 3800, subpart 3802 or that are defined as casual use
or notice activities under 43 CFR part 3800, subpart 3809;
(d) Beginning occupancy without receiving a determination of
concurrence because the proposed occupancy or fencing will not conform
to the provisions of Sec. 3715.2, Sec. 3715.2-1 or Sec. 3715.5;
(e) Not complying with any order issued under this subpart within
the time frames the order provides;
(f) Preventing or obstructing free passage or transit over or
through the public lands by force, threats, or intimidation; provided,
however, that reasonable security and safety measures in accordance
with this subpart are allowed;
(g) Placing, constructing, or maintaining enclosures, gates, or
fences, or signs intended to exclude the general public, without BLM's
concurrence;
(h) Causing a fire or safety hazard or creating a public nuisance;
(i) Not complying with the notification and other requirements
under Sec. 3715.4 relating to an existing occupancy; and
(j) Conducting activities on the public lands that are not
reasonably incident, including, but not limited to: non-mining related
habitation, cultivation, animal maintenance or pasturage, and
development of small trade or manufacturing concerns; storage,
treatment, processing, or disposal of non-mineral, hazardous or toxic
materials or waste that are generated elsewhere and brought onto the
public lands; recycling or reprocessing of manufactured material such
as scrap electronic parts, appliances, photographic film, and
chemicals; searching for buried treasure, treasure trove or
archaeological specimens; operating hobby and curio shops; cafes;
tourist stands; and hunting and fishing camps.
Sec. 3715.7 How will BLM inspect my use or occupancy and enforce this
subpart?
(a) BLM field staff is authorized to physically inspect all
structures, equipment, workings, and uses located on the public lands.
The inspection may include verification of the nature of your use and
occupancy to ensure that your use or occupancy is, or continues to be,
reasonably incident and in compliance with Secs. 3715.2, 3715.2-1,
3715.4-1 and 3715.5.
(b) BLM will not inspect the inside of structures used solely for
residential purposes, unless an occupant or a court of competent
jurisdiction gives permission.
Sec. 3715.7-1 What types of enforcement action can BLM take if I do
not meet the requirements of this subpart?
BLM has four types of orders that it can issue depending on the
circumstances:
(a) Immediate suspension.
(1) BLM may order an immediate, temporary suspension of all or any
part of your use or occupancy if:
(i) All or part of your use or occupancy is not reasonably incident
or is not in compliance with Secs. 3715.2, 3715.2-1, 3715.3-1(b),
3715.5 or 3715.5-1, and
(ii) an immediate, temporary suspension is necessary to protect
health, safety or the environment.
(2) BLM will presume that health, safety or the environment are at
risk and will order your use or occupancy to be immediately and
temporarily suspended if:
(i) You are conducting an occupancy under a determination of
concurrence under this section; and
(ii) You fail at any time to meet any of the standards in
paragraphs Sec. 3715.3-1(b) or Sec. 3715.5 (b), (c) or (d).
(3) The suspension order will describe--
(i) How you are failing or have failed to comply with the
requirements of this subpart; and
(ii) The actions, in addition to suspension of the use or
occupancy, that you must take to correct the noncompliance and the time
by which you must suspend the use or occupancy. It will also describe
the time, not to exceed 30 days, within which you must complete
corrective action.
(4) The suspension order will not be stayed by an appeal.
(b) Cessation order.
(1) BLM may order a temporary or permanent cessation of all or any
part of your use or occupancy if:
(i) All or any part of your use or occupancy is not reasonably
incident but does not endanger health, safety or the environment, to
the extent it is not reasonably incident;
(ii) You fail to timely comply with a notice of noncompliance
issued under paragraph (c) of this section;
[[Page 37130]]
(iii) You fail to timely comply with an order issued under
paragraph (d) of this section; or
(iv) You fail to take corrective action during a temporary
suspension ordered under paragraph (a) of this section.
(2) The cessation order will describe--
(i) The ways in which your use or occupancy is not reasonably
incident; is in violation of a notice of noncompliance issued under
paragraph (c) of this section; or is in violation of an order issued
under paragraphs (a) or (d) of this section, as appropriate;
(ii) The actions, in addition to cessation of the use or occupancy,
that you must take to correct the noncompliance;
(iii) The time by which you must cease the use or occupancy, not to
exceed 30 days from the date the Interior Board of Land Appeals affirms
BLM's order; and
(iv) The length of the cessation.
(c) Notice of noncompliance.
(1) If your use or occupancy is not in compliance with any
requirements of this subpart, and BLM has not invoked paragraph (a) of
this section, BLM will issue an order that describes--
(i) How you are failing or have failed to comply with the
requirements of this subpart;
(ii) The actions that you must take to correct the noncompliance
and the time, not to exceed 30 days, within which you must start
corrective action; and
(iii) The time within which you must complete corrective action.
(2) If you do not start and complete corrective action within the
time allowed, BLM may order an immediate suspension under paragraph (a)
of this section, if necessary, or cessation of the use or occupancy
under paragraph (b) of this section.
(d) Other. If you are conducting an activity that is not reasonably
incident but may be authorized under 43 CFR Group 2900 or 8300, or, as
to sites in Alaska, 43 CFR part 2560, BLM may order you to apply within
30 days from the date you receive the order for authorization under the
listed regulations.
Sec. 3715.7-2 What happens if I do not comply with a BLM order?
If you do not comply with a BLM order issued under Sec. 3715.7-1,
the Department of the Interior may request the United States Attorney
to institute a civil action in United States District Court for an
injunction or order to prevent you from using or occupying the public
lands in violation of the regulations of this subpart. This relief may
be in addition to the enforcement actions described in Sec. 3715.7-1
and the penalties described in Sec. 3715.8.
Sec. 3715.8 What penalties are available to BLM for violations of this
subpart?
The penalties for individuals and organizations are as follows:
(a) Individuals. If you knowingly and willfully violate the
requirements of this subpart, you may be subject to arrest and trial
under section 303(a) of FLPMA (43 U.S.C. 1733(a)) and/or section 4 of
the Unlawful Occupancy and Inclosures of Public Lands Act (43 U.S.C.
1064). If you are convicted, you will be subject to a fine of not more
than $100,000 or the alternative fine provided for in the applicable
provisions of 18 U.S.C. 3571, or imprisonment not to exceed 12 months,
or both, for each offense.
(b) Organizations. If an organization or corporation knowingly or
willfully violates the requirements of this subpart, it is subject to
trial and, if convicted, will be subject to a fine of not more than
$200,000, or the alternative fine provided for in the applicable
provisions of 18 U.S.C. 3571.
Sec. 3715.8-1 What happens if I make false statements to BLM?
You are subject to arrest and trial before a United States District
Court if, in any matter under this subpart, you knowingly and willfully
falsify, conceal or cover up by any trick, scheme or device a material
fact, or make any false, fictitious or fraudulent statements or
representations, or make or use any false writings or document knowing
the same to contain any false, fictitious or fraudulent statement or
entry. If you are convicted, you will be fined not more than $250,000
or the alternative fine provided for in the applicable provisions of 18
U.S.C. 3571, or imprisoned not more than 5 years, or both.
Sec. 3715.9 What appeal rights do I have?
If you are adversely affected by a BLM decision, order or
determination made under this subpart, you may appeal the decision,
order or determination to the Interior Board of Land Appeals (IBLA)
under the provisions of 43 CFR part 4.
Sec. 3715.9-1 Does an appeal to IBLA suspend a BLM decision?
(a) An appeal to IBLA does not suspend an order requiring an
immediate, temporary suspension of occupancy issued under Sec. 3715.7-
1(a) before the appeal or while it is pending. In this case, the
provisions of 43 CFR 4.21(a) do not apply.
(b) The provisions of 43 CFR 4.21(a) apply to all other BLM
decisions, orders or determinations under this subpart.
[FR Doc. 96-17757 Filed 7-15-96; 8:45 am]
BILLING CODE 4310-84-P
Complete official Federal Register PDF
FR Doc. 96-17690 Amendments to the Peanut Poundage Quota Regulations
[Federal Register Volume 61, Number 137 (Tuesday, July 16, 1996)]
[Rules and Regulations]
[Pages 36997-37001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17690]
=======================================================================
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DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Part 729
RIN 0560-AE82
Amendments to the Peanut Poundage Quota Regulations
AGENCY: Farm Service Agency, USDA.
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This interim rule sets forth regulations for Federal farm
peanut poundage quotas in order to implement provisions of the
Agricultural Market Transition Act of 1996 (the 1996 Act) for the 1996
through 2002 crops of peanuts. The amendments to the regulations
adopted in this interim rule involve: eliminating the national poundage
quota floor; eliminating the undermarketing carryover provisions;
establishing temporary seed quota allocations; establishing the
ineligibility of certain farms for quota allocation; authorizing the
inter-county transfer of farm poundage quota in all States, subject to
certain percentage limitations on certain transfers in certain States;
eliminating the special allocations of increased quotas for certain
Texas counties; and establishing new provisions for ``considered-
produced'' credit with respect to a farm whose quota has been
transferred.
DATES: Effective April 4, 1996.
Comments must be received on or before August 15, 1996, to be
assured consideration.
ADDRESSES: Submit comments on the interim rule to: Director, Tobacco
and Peanuts Division, Farm Service Agency, U.S. Department of
Agriculture, Room 5750-S, Ag Code 0514, P.O. Box 2415, Washington, DC
20013-2415. All written submissions made pursuant to this rule will be
made available for public inspection in Room 5750 South Building, USDA,
between the hours of 8:15 a.m. and 4:45 p.m., during regular Federal
workdays.
FOR FURTHER INFORMATION CONTACT: David Kincannon, (202) 720-7914.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This interim rule has been determined to be significant and was
reviewed by OMB under Executive Order 12866.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this interim rule because the Farm Service Agency (FSA)
is not required by 5 U.S.C. 553 or any other provision of law to
publish a notice of proposed rulemaking with respect to the subject
matter of this rule. Environmental Evaluation
It has been determined by an environmental evaluation that this
action will have no significant impact on the quality of the human
environment. Therefore, neither an Environmental Assessment nor an
Environmental Impact Statement is needed.
Unfunded Federal Mandates
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the Unfunded Mandate Reform Act of 1995
(UMRA), for State, local, and tribal governments or the private sector.
Thus, this rule is not subject to the requirements of sections 202 and
205 of the UMRA.
Federal Assistance Program
The title and number of the Federal Assistance Program, as found in
the Catalog of Federal Domestic Assistance, to which this interim rule
applies are: Commodity Loans and Purchases--10.051.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which requires intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115 (June 24, 1983).
Executive Order 12778
This interim rule has been reviewed in accordance with Executive
Order 12778. The provisions of this interim rule do not preempt State
laws to the extent that such laws are inconsistent with the provisions
of this interim rule. Before any legal action is brought regarding
determinations made under provisions of 7 CFR part 729, the
administrative appeal provisions set forth at 7 CFR parts 11 and 780
must be exhausted. This rule has been made retroactive to April 4,
1996, in order to affirm determinations for the current crop year that
had to be made in advance of this notice because of the time of the
passage of the 1996 Act and the onset of the planting season for
peanuts.
National Appeals Division Rules of Procedure
The procedures set out in 7 CFR parts 11 and 780 apply to appeals
of adverse decisions made under the regulations adopted in this notice.
[[Page 36998]]
Small Business Regulatory Enforcement Fairness Act of 1996
Section 161(d) of the 1996 Act provides the regulation necessary to
implement Title I of the 1996 Act must be issued within 90 days of
enactment and that such regulations shall be issued without regard to
the notice and comment provisions of section 553 of the United States
Code. These regulations affect the immediate planting and marketing
decisions of an extraordinarily large number of agricultural producers
and previous decisions of the agency. Accordingly, as authorized by
section 808 of the Small Business Regulatory Enforcement Fairness Act
of 1996, this rule is effective as of April 4, 1996, the date of
enactment of the 1996 Act.
Paperwork Reduction Act
As provided in section 161(d) of the 1996 Act, the Paperwork
Reduction Act is not applicable to these regulations. However, the
forms necessary to conduct these programs have been previously
submitted for clearance to the Office of Management and Budget under
the provisions of 44 U.S.C. chapter 35.
Background
This rule addresses peanut quota amendments for the 1996 through
2002 crops which were enacted in section 155 of the 1996 Act.
A. Certain Farms Ineligible to Hold Peanut Poundage Quota
Section 358-1(b)(1) of the 1938 Act, as amended by the 1996 Act,
provides that, effective beginning with the 1998 crop of peanuts,
quotas shall not be established for farms owned or controlled by
municipalities, airport authorities, schools, colleges, refuges, and
other public entities (not including universities for research
purposes), or by a person who is not a producer and resides outside the
State in which the quota is allocated. Section 729.205 has been added
to the regulations accordingly and provides, consistent with the 1996
Act, that if a farm is ineligible for peanut poundage quota as of
August 1, 1997, under the provisions of the 1996 Act, the quota held by
such ineligible farms must be sold by October 1, 1997, or it will be
allocated to other farms within the same State, beginning with the next
crop year. Under the interim rule, if an ineligible party acquires a
quota farm after that date, no quota will be established for the farm,
but the quota, for subsequent crop years, may be sold to a qualifying
farm, provided that the normal conditions for sale are met.
B. Elimination of Quota Floor, Establishment of the National Poundage
Quota, and Peanut Quota Referendum
The 1996 Act provides for referenda for peanut quotas and amends
section 358-1(a)(1) of the 1938 Act to eliminate the floor for the
national quota. In addition, the 1996 Act excludes seed peanuts from
the calculation of the basic national quota. This rule revises section
729.216 (as redesignated) of the regulations accordingly.
C. Temporary Seed Quota Allocation
The 1996 Act amendments to the 1938 Act also, however, provide for
adding to a farm's basic quota a temporary allocation of quota for the
amount of seed peanuts planted on a farm. This rule amends the
definition of ``effective quota'' in section 729.103 of the regulations
accordingly.
This rule adopts a national seeding rate for each type of peanut
and provides that the quantity of temporary seed quota allocated to a
farm shall equal the amount determined by multiplying the acres planted
to peanuts by the national per-acre planting rate by peanut type. The
seed planted will be converted to farmers stock basis by multiplying,
by a factor of 1.5, the amount of seed so calculated. Another option
considered was setting a rate as a maximum with producers required to
prove actual seed purchases and use, with the lower of the standardized
maximum or the proven seed use establishing the seed quota allocation.
Comments are requested on these and any other options, and on: (a) the
issues of increased producer workload involved with proving seed use,
(b) the use of a standardized national seeding rate vs. a standardized
State seeding rate, and (c) the seeding rate amounts.
For purposes of determining seed use, the national per-acre
planting rate by type shall, for this calculation, be equal to:
(i) 95 pounds for Runner-type peanuts;
(ii) 110 pounds for Virginia peanuts;
(iii) 80 pounds for Spanish peanuts; and
(iv) 80 pounds for Valencia peanuts.
The temporary seed allocation will be made after the producer files
a proper certification of planted acres.
D. Elimination of ``Undermarketings'' From Quotas
In accord with the 1996 Act, this rule also eliminates previous
undermarketings from quota calculation for peanuts.
E. Reallocations in Texas of Increased Quota
The 1996 Act removes the special quota allocation provisions that
formerly applied to Texas only, in cases where the national quota is
increased. This rule amends section 729.206(f)(former 729.204(f)) of
the regulations, as redesignated, accordingly.
F. Inter-county Transfers
The 1996 Act removes the previous prohibition of inter-county quota
transfers in large-quota States to allow, with limits, the transfer of
farm poundage quota by sale or lease to any county within each of those
States. Such transfers are limited to an aggregate of 40 percent of the
total poundage quota within a county as of January 1, 1996, and may not
exceed a crop year limit of 15, 25, 30, and 35 percent for the 1996
through 1999 crops respectively and 40 percent for the 2000 and
subsequent crops. Further, however, in any county with a quota
allocation less than 50 tons for the preceding year's crop, all or any
part of a farm poundage quota may be transferred by sale or lease or
otherwise from a farm in the county to a farm in the same State. These
prescriptions are set by the 1996 Act.
This rule has adopted selection by lottery to implement the out-of-
county sale and lease limitation provisions in counties where the
amount of farm poundage quota requested for such sale and lease was
greater than the limitation for the current year. This rule amends
section 729.214 (former 729.212) of the regulations, as redesignated by
this rule, to implement the limitation requirements. Other options
considered with respect to administering the transfer limitation
included a first-come, first-considered basis and a proration of the
limited amount among all applicants. Time constraints and the
practicality of transferring only portions of a farm's quota were the
major determinants in selecting the lottery method. Comments are
requested on these or any other options for controlling the transfer
limitation and on the issue of giving priority to quota sales over
quota leases.
Also, current regulations in part 729 have prohibited the approval
of any transfers filed after January 31 and before August 1 if the
approval of such transfer would result in a transfer both to and from
either the transferring or receiving farm during such period. Although
this rule does not revise the regulation, comments are requested on
whether to allow a farm to make a transfer both ways in the same period
so
[[Page 36999]]
long as the transfer from the farm is a temporary transfer.
In addition, section 729.214(f)(3)(i), as redesignated, is amended
to ease the prohibition against permanent transfers of quota from a
farm to which quota had been transferred during the base period (the 3
immediately preceding crop years). The revised paragraph will limit the
prohibition to the amount of quota permanently transferred to the farm
during the 3-year period.
G. Considered-Produced Credit
Section 358-1(b) (3) and (4) of the 1938 Act provides that to the
extent practicable and on such fair and equitable basis as the
Secretary may provide, a farm will, generally, lose any quota which is
not produced or considered produced on the farm in 2 out of 3
consecutive years. That section contains a specific provision allowing
considered-produced credit for in-county transfers, but only once every
3 years. The new act leasing provisions in the 1996 Act, as indicated,
revamp the spring lease provisions for quotas and provide that the
transfer of quota under that paragraph will not reduce the quota of the
transferring farm if the quota is produced or considered produced on
the receiving farm. Since no change was made to the in-county transfer
provisions of 358-1(b)(3) (for those transfers which do not involve the
same owner or operator), it appears that the 1996 Act did not intend
for a modification to be made with respect to within-county transfers
as allowed prior to the 1996 Act. Accordingly, the interim rule
maintains the same considered-produced provisions, as in the past, for
such in-county transfers (that is, considered-produced credit for
leased quota will be allowed only once every 3 years). For inter-county
transfers, however, the rule allows the transferring farm to receive
considered-produced credit for any year in which the receiving farm
produces, or is considered to have produced, the quota. This is the
same rule that has been applied to out-of-county transfers in past
years when such transfers were only allowed in States with a small
total quota.
H. Other Provisions
The interim rule makes several technical changes including: (i)
changes necessitated by a recent USDA reorganization, and (ii) changes
to reflect applicability of the regulations through the 2002 crops.
Other provisions of the 1996 Act regarding peanuts will be the
subject of subsequent notices.
List of Subjects in 7 CFR Part 729
Peanuts, Penalties, Poundage quotas, Reporting and recordkeeping
requirements.
Interim Rule
Accordingly, 7 CFR Part 729 is amended as follows:
PART 729--[AMENDED]
1. The authority citation is revised to read as follows:
Authority: 7 U.S.C. 1301, 1357 et seq., 1372, 1373, 1375, and
7271.
2. Section 729.102 is amended by removing ``1991 through 1995'' and
adding ``1996 through 2002'' in its place, and by adding a sentence at
the end of the paragraph to read as follows:
Sec. 729.102 Applicability.
* * * The peanut marketing quota and disposition requirements for
peanuts for the 1991 through 1995 crops shall, as applicable, continue
to be governed by the regulations codified at 7 CFR Part 729, as of
April 1, 1996.
3. Section 729.103 is amended as follows:
a. The definition for ``FSA'' is moved to its proper place in
alphabetical order.
b. The definition of ``Considered-produced credit'' is amended by
revising paragraph (iii) to read as follows:
Sec. 729.103 Definitions.
* * * * *
(b) * * *
Considered-produced credit. * * *
(iii) A farm's basic quota that was not produced if the Farmers
Home Administration or the Farm Service Agency had control of, or title
to, such farm.
* * * * *
c. The definition of ``DASCO'' is removed, and the definition of
``Deputy Administrator'' is added in alphabetical order to read as
follows:
Deputy Administrator. The Deputy Administrator for Farm Programs,
Farm Service Agency.
d. The definition of ``Effective quota'' is amended by revising
paragraph (v) to read as follows:
Effective quota. * * *
(v) Temporary seed quota allocated to the farm.
e. The definition of ``First purchaser'' is added in alphabetical
order to read as follows:
First purchaser. Any person acquiring peanuts from a producer
except that in the case of peanuts forfeited by a producer to CCC or
bought from the price support loan inventory, the term means the person
acquiring the peanuts from CCC or the inventory.
f. The definition of ``Preliminary quota'' is revised to read as
follows:
Preliminary quota. For the current year and an eligible farm, the
basic quota established for the farm for the preceding year to the
extent that the farm is not subject to a reduction in quota.
g. The definition of ``Temporary seed quota'' is added in
alphabetial order to read as follows:
Temporary seed quota. Quota temporarily allocated for the current
crop year only and in an amount determined by FSA to account for the
amount of seed peanuts planted on the farm for production of peanuts,
excluding green peanuts and peanuts produced under the one-acre
exemption set forth in Sec. 729.306 of this part.
* * * * *
h. The definition of ``Undermarketings'' is removed.
4. Section 729.104(a) is revised to read as follows:
Sec. 729.104 Administration.
(a) The regulations in this part will be administered under the
general supervision of the Administrator, FSA, and shall be carried out
in the field by State and county FSA committees.
* * * * *
5. Section 729.104(c) is amended by removing the phrase ``committee
shall'' and adding ``committee'' in its place, and removing
``Instruct'' and adding ``Shall instruct'' in its place.
Sec. 729.108 [Amended]
6. Section 729.108 is amended by removing ``ASC'' and adding
``FSA'' in its place.
Sec. 729.201 [Amended]
7. Section 729.201 is amended by removing ``1991 through 1995''
wherever it appears and adding in its place ``1996 through 2002 and
removing ``1990'' wherever it appears and adding in its place``1995''.
Sec. 729.204-729.214 [Redesignated as Sec. 729.206-729.216]
8. Sections 729.204 through 729.214 are redesignated as sections
729.206 through 729.216 respectively, and new sections 729.204 and
729.205 are added to read as follows:
Sec. 729.204 Temporary seed quota allocation.
(a) Applicability. The temporary allocation of quota pounds, as
provided in this section shall be determined:
(1) For the marketing year only in which the crop is planted;
(2) For eligible producers for each of the 1996 through 2002
marketing years; and
[[Page 37000]]
(3) To exclude the production of green peanuts and peanuts produced
under the one-acre exemption provided for in 7 CFR 729.306.
(b) Quantity of allocation. The temporary quota allocated to a
producer shall be the farmers stock equivalent pounds of qualifying
seed peanuts considered planted on the farm as determined by FSA by
multiplying the acres determined planted to qualifying peanuts times
the per-acre planting rates of:
(1) 95 pounds for Runner-type peanuts;
(2) 110 pounds for Virginia peanuts;
(3) 80 pounds for Spanish peanuts; and
(4) 80 pounds for Valencia peanuts.
(c) Conversion factor. For the purpose of determining the farmers
stock basis for temporary seed quota allocations under this section,
the amount of seed planted as determined in accord with paragraph (b)
of this section shall be multiplied by a factor of 1.5.
(d) Time of notification. The notice of determination for temporary
seed quota allocations shall be made by the Deputy Administrator as
soon as practicable following the deadline for filing certifications of
planted acres.
Sec. 729.205 Farms ineligible for farm poundage quota.
(a) Ineligible farms. Except for quota allocated under the
provisions of Sec. 729.208 for experimental and research programs,
effective beginning with the 1998 crop year, farm poundage quotas shall
not be established for farms which are determined by FSA to be owned or
controlled by:
(1) Municipalities, airport authorities, schools, colleges,
refuges, and other public entities.
(2) A person:
(i) Who is not a peanut producer; and
(ii) Whose primary domicile, in the case of individual, or primary
place of business, in the case of an entity, as determined by FSA, is
located outside the State in which the quota is allocated.
(b) Determination of Residency and Related Rules. For purposes of
administering paragraph (a) of this section, with respect to farms
owned or controlled by a partnership or corporation or other entity,
the forfeiture in paragraph (a)(2) of this section shall not be deemed
to apply if a person or persons with at least a 20 percent interest in
any such entity are individuals whose primary residence is in the State
in which the quota is allocated; provided further, that paragraph
(a)(2) of this section shall not apply to any involuntary acquisition
of a farm by foreclosure, or otherwise, resulting directly from the
conduct of a public business in the State in which the quota is
allocated, or an acquisition resulting directly by reason of a death.
The exemption for involuntary farm acquisitions allowed under the
preceding sentence shall only apply to the establishment of quota in
the three crop years immediately following the date of the involuntary
acquisition of the quota farm. Further, for purposes of applying the
rules in paragraph (a) of this section as they regard production, the
determination of whether paragraph (a)(2) of this section applies shall
be made based on the crop last planted before the date on which the
determination is to be made.
(c) Allocating forfeited quota and sales of quotas subject to
paragraph (a). Any farm poundage quota held on or after August 1, 1997,
by an ineligible person as determined under paragraph (a) of this
section shall be allocated from the quota farm to other farms in the
same State in accordance with Sec. 729.206 of this part. In the event
that the ineligible party acquired the subject farm on or before August
1, 1997, such person shall have until October 1, 1997, to permanently
dispose of the quota by sale to another farm for subsequent crop years
in which case the transfer will be deemed to be effective as of August
1, 1997. If the farm in dispute was acquired after August 1, 1997, then
no quota shall be established for the farm until such time as the
ineligibility is removed provided further, however, that the quota may
be sold to another qualifying farm effective with the next crop year
following the sale or such later date as may be approved by FSA.
9. Redesignated Sec. 729.206 is amended:
a. In the heading of paragraph (f), by removing the phrase
``increased quota,'' and by removing the comma following the word
``nonproduction'';
b. In the first sentence of paragraph (f)(1), by removing the
phrase ``33 percent of any increase in the Texas peanut poundage quota
resulting from an increase in the national quota and'';
c. In paragraph (f)(3), by removing the phrase, ``, as determined
in accordance with paragraph (f)(2) of this section for the 1991
through 1995 crops'' and adding in its place ``granted under any
special rules for Texas under this section and its predecessor for the
1991 and subsequent crops''; and
d. In paragraph (f)(7), removing the phrase ``except for the 33
percent allocated to eligible Texas counties in accordance with
paragraph (f)(2) of this section,''.
10. Redesignated Sec. 729.207 is amended:
a. In paragraph (c), by removing ``Sec. 729.204(b)(2)'' and adding
``Sec. 729.206(b)(2)'' in its place;
b. In paragraph (d)(1)(ii)(B), by removing ``Sec. 729.212'' and
adding ``Sec. 729.214'' in its place; and
c. In paragraph (d)(2), by removing ``Sec. 729.204(e)'' and adding
``Sec. 729.206(e) in its place.
11. Redesignated Sec. 729.208 is amended by revising paragraph (d)
to read as follows:
Sec. 729.208 Allocation of quota for experimental and research
programs.
* * * * *
(d) Quota for 1996 through 2002 crops. For each institution with
continuing eligibility for which a 1995 basic quota was determined in
accordance with this section or its predecessor, a basic quota shall be
established for the 1996 through 2002 crops in the same manner as for
other farms within the State.
12. Redesignated Sec. 729.210 is amended by revising paragraph
(a)(1) to read as follows:
Sec. 729.210 Determining a farm's effective quota.
* * * * *
(a) Upward adjustment. * * *
(1) The temporary seed quota allocated to the farm;
* * * * *
13. Redesignated Sec. 729.213 is revised to read as follows:
Sec. 729.213 Erroneous notice of effective farm poundage quota.
If the official notice of effective quota issued for a farm
erroneously stated a quota larger than the correct effective quota, the
quota shown on the erroneous notice shall serve as the basis for
marketing penalty computations for the farm for the current marketing
year only if the county committee determines and the State Executive
Director concurs that:
(a) Extent of error. The error was not so substantial as to place
the operator on notice that such notice of quota was incorrect; and
(b) Response to notice. The operator, relying upon such notice and
acting in good faith:
(1) Has made plans, or is engaged in activities, to produce the
quota in the amount set forth on the erroneous notice (for example,
land preparation; purchase of seed, fertilizer, and other production
materials; or reducing the acreage of other crops); or
(2) Has planted the acreage of peanuts needed to produce the
erroneous farm poundage quota.
14. Redesignated Sec. 729.214 is revised:
[[Page 37001]]
a. In paragraph (a)(2) by removing ``with respect to the 1992 and
subsequent crops'';
b. By redesignating paragraphs (d) through (l) as (e) through (m);
and
c. By revising paragraph (c), adding a new paragraph (d), and
revising redesignated paragraphs (f)(1)(iii)(A), (f)(3)(i), and (l) to
read as follows:
Sec. 729.214 Transfer of quota by sale, lease, owner, or operator.
* * * * *
(c) Location of farms. In order to transfer poundage quota between
two farms, such farms must be located within the same State and, to the
extent required by paragraph (d) of this section, in the same county.
It is not necessary for the receiving farm to have had a basic quota in
the current or prior year, except as provided in paragraph (d)(4) of
this section.
(d) Limitations on transfer by sale or lease. Subject to the
provisions of paragraph (m) of this section:
(1) States with less than 10,000 tons of quota. With respect to
farms in any State for which the State's poundage quota for the year
preceding the current year was less than 10,000 tons, transfers of
peanut quota by sale or lease may be made to any other farm in any
county within the State.
(2) States with 10,000 tons or more of quota. For farms in States
with 10,000 tons or more of quota:
(i) Poundage quota may be transferred to any other farm within the
same county.
(ii) If the farm is in a county with less than a total of 50 tons
of quota, the poundage quota may be transferred to any other farm
within the same State without regard to the limitations set forth in
paragraph (d)(2)(iii) of this section.
(iii) If the farm is in a county with a total of 50 tons or more of
quota, poundage quota transferred out of county shall be limited to 40
percent of the quota in the transferring county as of January 1, 1996.
Further, the cumulative unexpired out-of-county transfers for a crop
year may not exceed the following percentages of the quota in the
transferring county as of January 1, 1996:
(A) 15 percent for the 1996 crop;
(B) 25 percent for the 1997 crop;
(C) 30 percent for the 1998 crop;
(D) 35 percent for the 1999 crop; and
(E) 40 percent for the 2000 and subsequent crops.
(iv) Selecting approved transfers. For purposes of administering
the limitations on the amount of transfers, the Director shall
establish a method for selecting, by lot, those applications which are
to be approved. The Director may give preference to permanent
transfers.
(3) Fall transfers. The limitations in paragraph (d)(2)(iii) of
this section do not apply to 1-year fall transfers, which may, in all
cases, be made to any farm in the same State, subject to such
restrictions as otherwise apply for fall transfers.
(4) Owner or operator transfer. Owner or operator transfers of
poundage quota are permitted to contiguous counties within the same
State without regard to the percentage limitations of paragraph
(d)(2)(iii) of this section; provided that, the receiving farm had a
basic quota established for the preceding year's crop and has the same
owner, in an owner transfer, or the same operator, in an operator
transfer.
* * * * *
(f) Other transfer provisions.--(1) Temporary transfer of quota
from a farm. * * *
(iii) Filed after July 31 and before February 1 (``Fall
transfers''). * * *
(A) The reported or determined acreage of peanuts plus prevented
planted credit for the transferring farm for the current year, when
multiplied by the larger of the farm yield or the highest actual yield
during the base period, is equal to or greater than 90 percent of the
farm's effective quota;
* * * * *
(3) Permanent transfer of quota from a farm. * * *
(i) Permanent transfer of quota to the farm. For the amount of
quota purchased or otherwise permanently transferred to the farm during
the base period, as adjusted for any increase or decrease in such quota
due to adjustment in the national quota during the base period.
* * * * *
(1) Adjustment of marketings. For the purpose of computing
production history for quota increase based on production, in the case
of temporary transfers by owner to the same owner or operator to the
same operator and all out-of-county transfers, if the current year's
produced or considered-produced credit from the receiving farm exceeds
such farm's basic quota, such produced or considered-produced credit on
the receiving farm shall be reduced by the amount of such excess, to
the extent of the quota temporarily transferred to such farm by owner
or operator, and such reduced amount shall be added to the current year
produced or considered-produced credit for the transferring farm.
* * * * *
Sec. 729.15 [Amended]
15. Redesignated Sec. 729.215 is amended in paragraph (f)(2) by
removing ``Sec. 729.204'' and adding ``Sec. 729.206'' in its place.
16. Redesignated Sec. 729.216 is revised to read as follows:
Sec. 729.216 National poundage quota.
(a) National poundage quota for 1996 and subsequent crop years. The
national poundage quota for the 1996 and subsequent crop years shall be
established by the Secretary at a level that is equal to the quantity
of peanuts that the Secretary estimates will be devoted in each
marketing year to domestic edible use (except seed), and related uses.
(b) Disapproval of quotas. No loan for quota peanuts may be made
available for any crop of peanuts with respect to which it is
determined by the Deputy Administrator that poundage quotas have been
disapproved by producers pursuant to a referendum conducted in
accordance with section 358-1(d) of the Agricultural Adjustment Act of
1938, as amended.
Signed at Washington, D.C., on July 5, 1996.
Bruce R. Weber,
Acting Administrator, Farm Service Agency.
[FR Doc. 96-17690 Filed 7-12-96; 2:18 pm]
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