issue-1996-08-07•Federal Register final rules — 1996-08-07
Federal Register final rules — 1996-08-07
issue-1996-08-07Federal Register final rules — 1996-08-07Regulation
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. 96-20157 Amendment of Class E Airspace; New York, NY
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40961-40962]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20157]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Airspace Docket No. 96-AEA-03]
Amendment of Class E Airspace; New York, NY
AGENCY: Federal Aviation Administration (FAA) DOT.
ACTION: Final rule.
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SUMMARY: This amendment modifies the Class E airspace area at New York,
NY to accommodate a planned Global Positioning System (GPS) Standard
Instrument Approach Procedure (SIAP) at the Lincoln Park Airport,
Lincoln Park, NJ. This amendment also corrects the description of the
New York, NY Class E Airspace Area published as a Notice of Proposed
Rulemaking in the Federal Register April 30, 1996 (61 FR 19001). The
intended effect of this action is to provide adequate controlled
airspace for Instrument Flight Rules (IFR) operations at Lincoln Park
Airport.
EFFECTIVE DATE: 0901 UTC, October 10, 1996.
FOR FURTHER INFORMATION CONTACT:
Mr. Frances T. Jordan, Airspace Specialist, Operations Branch, AEA-530,
Air Traffic Division, Eastern Region, Federal Aviation Administration,
Federal Building #111, John F. Kennedy International Airport, Jamaica,
New York 11430, telephone: (718) 553-4521.
SUPPLEMENTARY INFORMATION:
History
On April 30, 1996, the FAA proposed to amend Part 71 of the Federal
Aviation Regulations (14 CFR Part 71) by establishing a Class E
airspace area at New York, NY (61 FR 19001). The
[[Page 40962]]
development of a GPS SIAP at Lincoln Park Airport, Lincoln Park, NJ
made this action necessary. This action also corrects the description
of the New York, NY Class E airspace as it was published in the Notice
Of Proposed Rulemaking.
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 designations are published in paragraph 6005 of FAA Order
7400.9C, dated August 17, 1995, and effective September 16, 1995, which
is incorporated by reference in 14 CFR 71.1. The Class E airspace
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 New York, NY. The
development of a GPS SIAP at Lincoln Park Airport, Lincoln Park, NJ has
made this action necessary. The intended effect of this action is to
provide adequate Class E airspace for aircraft executing the GPS RWY 19
SIAP at 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 10034; 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 significant economic impact on a
substantial number of small entities under the criteria of the
Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR Part 71 as follows:
PART 71--[AMENDED]
1. The authority citation for 14 CFR Part 71 continues to read as
follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; EO 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 upward from 700
feet or more above the surface of the earth.
* * * * *
AEA NY E5 New York, NY [Amended]
John F. Kennedy International Airport, New York, NY
(lat. 40 deg.38'25''N, long. 73 deg.46'40''W.)
Canarsie VOR/DME
(lat. 40 deg.36'45''N., long. 73 deg.53'40''W.)
LaGuardia Airport, New York, NY
(lat. 40 deg.46'38''N., long. 73 deg.52'21''W.)
LaGuardia VOR/DME
(lat. 40 deg.47'01''N., long. 73 deg.52'06'W.)
Teterboro Airport, NJ
(lat. 40 deg.51'00''N., long. 74 deg.03'40''W.)
Netwark International Airport, NJ
(lat. 40 deg.41'34''N., long. 74 deg.10'07''W.)
Morristown Municipal Airport, NJ
(lat. 40 deg.47'57''N., long. 74 deg.24'54''W.)
Chatham NDB
(lat. 40 deg.44'27''N., long. 74 deg.25'48''W.)
Essex County Airport, Caldwell, NJ
(lat. 40 deg.52'30''N., long. 74 deg.16'53''W.)
MOREE LOM
(lat. 40 deg.52'47''N., long. 74 deg.20'04''W.)
Paterson NDB
(lat. 40 deg.56'47''N., long. 74 deg.09'03''W.)
Lincoln Park Airport, NJ
(lat. 40 deg.56'51''N., long. 74 deg.18'52''W.)
That airspace extending upward from 700 feet above the surface
within a 7.9-mile radius of John F. Kennedy International Airport
and within 2.7 miles each side of the Canarsie VOR/DME 212 deg.
radial, extending from the Canarsie VOR/DME to 3.5 miles southwest
of the VOR and within a 6.9-mile radius of LaGuardia Airport and
within 3.1 miles each side of the LaGuardia VOR/DME 035 deg. radial
extending from the LaGuardia VOR/DME to 8.1 miles northeast of the
LaGuardia VOR/DME and within a 6.7-mile radius of Teterboro Airport
and within 3 miles either side of a 048 deg. bearing from the
northeast end of a northeast to southwest runway at Teterboro
Airport extending from the 6.7-mile radius area to 10 miles
northeast of the northeast end of the runway and within a 7-mile
radius of Newark International Airport and within a 6.6-mile radius
of Morristown Municipal Airport and within 8 miles northwest and 4
miles southeast of a 204 deg. bearing from the Chatham NDB extending
from the Chatham NDB to 16 miles southwest of the NDB and within a
6.6-mile radius of Essex County Airport and within 4 miles north and
8 miles south of a 276 deg. bearing from the MOREE LOM extending
from the MOREE LOM to 16 miles west of the LOM and within 8 miles
northwest and 4 miles southeast of a 057 deg. bearing from the
Paterson NDB extending from the Paterson NDB to 16 miles northeast
of the NDB and within a 7-mile radius of Lincoln Park Airport.
* * * * *
Issued in Jamaica, New York on July 9, 1996.
John S. Walker,
Manager, Air Traffic Division, Eastern Region.
[FR Doc. 96-20157 Filed 8-6-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-20125 Information Reporting and Backup Withholding; Correction
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Page 40993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20125]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 31 and 602
[TD 8664]
RIN 1545-AL99
Information Reporting and Backup Withholding; Correction
AGENCY: Internal Revenue Service, Treasury.
ACTION: Correction to final regulations.
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SUMMARY: This document contains corrections to final regulations [TD
8664] which were published in the Federal Register on Monday, April 22,
1996 (61 FR 17572). The final regulations provide rules regarding the
reporting on Form 1042-S of certain bank deposit interest paid with
respect to a United States bank account to an individual who is a
nonresident alien of the United States and a resident of Canada.
EFFECTIVE DATE: January 1, 1997.
FOR FURTHER INFORMATION CONTACT: Teresa Burridge Hughes, (202) 622-3880
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations which are the subject of these corrections
are under sections 3406 and 6049 of the Internal Revenue Code.
Need for Correction
As published, the final regulations (TD 8664) contain errors which
may prove to be misleading and are in need of clarification.
Correction of Publication
Accordingly, the publication of final regulations (TD 8664), which
are the subject of FR Doc. 96-9456 is corrected as follows:
1. On page 17572, column 3, in the preamble following the paragraph
heading ``Paperwork Reduction Act'', the first line of the column, the
language ``Washington DC 20224, and the Office of'' is corrected to
read ``Washington, DC 20224, and the Office of''.
2. On page 17573, column 1, in the preamble following the paragraph
heading ``B. Comments on Canadian Reporting Provisions'', the third
paragraph, line 5, the language ``the Form 1042-S to be the
transmittal'' is corrected to read ``the Form 1042 to be the
transmittal''.
PART 1--[CORRECTED]
3. On page 17573, column 2, in the authority citation, line 2, the
language ``Sections 1.6049-4 also issued under 26'' is corrected to
read ``Section 1.6049-4 also issued under 26''.
Sec. 1.6049-6 [Corrected]
4. On page 17574, column 1, Sec. 1.6049-6(e)(4), the fourth line
from the bottom of the paragraph, the language ``information on the
Form is being'' is corrected to read ``information on the form is
being''.
Cynthia E. Grigsby,
Chief, Regulations Unit, Assistant Chief Counsel (Corporate).
[FR Doc. 96-20125 Filed 8-6-96; 8:45 am]
BILLING CODE 4830-01-U
Complete official Federal Register PDF
FR Doc. 96-20102 Coordinated Party Expenditures
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40960-40961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20102]
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[[Page 40961]]
FEDERAL ELECTION COMMISSION
11 CFR Part 110
[Notice 1996-14]
Coordinated Party Expenditures
AGENCY: Federal Election Commission.
ACTION: Final rule; technical amendment
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SUMMARY: On June 26, 1996, the Supreme Court issued a decision in Colo.
Repub. Fed. Camp. Comm. et al. v. F.E.C. regarding coordinated party
expenditures. The Commission today is publishing a technical amendment
to conform its regulations to the decision. The Commission also is
publishing today a Notice of Availability for a Petition for Rulemaking
it received after the decision.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Ms. Susan E. Propper, Assistant
General Counsel, or Ms. Teresa A. Hennessy, Attorney, 999 E Street,
N.W., Washington, D.C. 20463, (202)219-3690 or (800) 424-9530.
SUPPLEMENTARY INFORMATION: The Federal Election Campaign Act of 1971
(``FECA'') governs, inter alia, coordinated party expenditures by party
committees. 2 U.S.C. 441a(d). A party committee is a political
committee that represents a political party and is part of the official
party structure. 11 CFR 100.5(e)(4). Pursuant to 11 CFR 110.7, a party
committee may make coordinated expenditures on behalf of a candidate
for Federal office who is affiliated with the party in addition to
direct contributions to the candidate under 2 U.S.C. 441a(a). The
Commission's regulations specifically provide that a national committee
of a political party, and a State committee of the party, may make
these expenditures in connection with the general election campaign of
a candidate for the U.S. House of Representatives (``House'') or the
U.S. Senate (``Senate''). 11 CFR 110.7(b)(1). The regulations also
provided that party committees may not make independent expenditures on
behalf of a candidate for the House or the Senate. 11 CFR 110.7(b)(4).
An independent expenditure is an expenditure that expressly advocates
the election or defeat of a candidate for Federal office, see 11 CFR
100.22(a), and is not coordinated with the candidate on whose behalf it
is made. 11 CFR 109.1.
In Colo. Repub. Fed. Camp. Comm. et al. v. F.E.C., 116 S.Ct. 2309
(1996), the Commission had alleged, inter alia, that the Colorado
Republican Federal Campaign Committee exceeded the Act's limits for
coordinated party expenditures when it financed advertisements
referring to a Democratic candidate for the U.S. Senate from Colorado.
The Court ruled that party committees are capable of making independent
expenditures on behalf of their candidates for Federal office and that
these expenditures are not subject to the coordinated party expenditure
limits at 2 U.S.C. Sec. 441a(d). 116 S.Ct. 2312-15. The Court also
stated that, because the coordinated party expenditure limits for
presidential elections were not at issue in the case, the decision did
not ``* * * address issues that might grow out of the public funding of
Presidential campaigns''. 116 S.Ct. 2314. Section 110.7(b)(4) of the
Commission's regulations has been deleted to follow the Supreme Court's
decision. Since the ruling is limited to congressional campaigns, the
Notice does not revise the provisions for coordinated party
expenditures on behalf of presidential candidates.
Therefore, the Commission is publishing this Notice to make the
necessary technical amendment to its regulations. The Notice amends 11
CFR 110.7 to conform to the Court's decision. Because the amendment is
merely technical, it is exempt from the notice and comment requirements
of the Administrative Procedure Act. See 2 U.S.C. 553(b)(B). It is also
exempt from the legislative review provisions of the FECA. See 2 U.S.C.
438(d). These exemptions allow the amendment to be made effective
immediately upon publication in the Federal Register. As a result, this
amendment is made effective on August 7, 1996.
Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory
Flexibility Act)
I certify that the attached final rule will not have a significant
economic impact on a substantial number of small entities. The basis of
the certification is that the rule's repeal is necessary to conform to
a recent Supreme Court decision. The repeal permits, but does not
require, the expenditure of funds in certain Federal campaigns.
Therefore, no significant economic impact is caused by the final rule.
List of Subjects in 11 CFR Part 110
Campaign funds, Political committees and parties.
For the reasons set out in the preamble, Subchapter A, Chapter I,
Title 11 of the Code of Federal Regulations is amended as follows:
PART 110--CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS
1. The authority citation for Part 110 continues to read as
follows:
Authority: 2 U.S.C. 431(8), 431(9), 432(c)(2), 437d(a)(8),
438(a)(8), 441a, 441b, 441d, 441e, 441f, 441g and 441h.
Sec. 110.7 Party Committee Expenditure Limitations (2 U.S.C.
441a(d)).
2. Section 110.7(b)(4) is removed.
Dated: August 2, 1996
John Warren McGarry,
Vice Chairman, Federal Election Commission.
[FR Doc. 96-20102 Filed 8-06-96; 8:45 am]
BILLING CODE 6715-01-P
Complete official Federal Register PDF
FR Doc. 96-20092 Pay Under the General Schedule; Locality Pay Areas for 1997
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40949-40950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20092]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 61, No. 153 / Wednesday, August 7, 1996 /
Rules and Regulations
[[Page 40949]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 531
RIN 3206-AG88
Pay Under the General Schedule; Locality Pay Areas for 1997
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management is issuing final
regulations to remove three metropolitan areas from the ``Rest of
U.S.'' locality pay area and establish three new locality pay areas in
January 1997 corresponding to these metropolitan areas. The three
metropolitan areas affected by these final regulations are: Milwaukee-
Racine, WI; Minneapolis-St. Paul, MN-WI; and Pittsburgh, PA. The
President's Pay Agent made the final determination on the boundaries of
the new locality pay areas after considering the recommendations of the
Federal Salary Council and public comments.
EFFECTIVE DATE: The regulations are effective on January 1, 1997, and
are applicable on the first day of the first pay period beginning on or
after January 1, 1997.
FOR FURTHER INFORMATION CONTACT:
Jeanne Jacobson, (202) 606-2858 or FAX: (202) 606-0824.
SUPPLEMENTARY INFORMATION: On October 16, 1995, the Office of Personnel
Management (OPM) published proposed regulations to remove three
metropolitan areas from the ``Rest of U.S.'' locality pay area and
establish three new locality pay areas in January 1997 corresponding to
these metropolitan areas based on the recommendations of the Federal
Salary Council. (See 60 FR 53545.) After considering the views of the
Federal Salary Council and comments from agencies, organizations, and
individuals, the President's Pay Agent (consisting of the Secretary of
Labor, the Director of the Office of Management and Budget (OMB), and
the Director of OPM) decided to adopt the Federal Salary Council's
recommendations on the three new locality pay areas. This determination
was reflected in the Pay Agent's November 29, 1995, report to the
President. These final regulations list the locality pay areas for
1997, including the three new locality pay areas corresponding to the
following Metropolitan Statistical Areas (MSA's) or Consolidated
Metropolitan Statistical Areas (CMSA's), as defined by OMB: (1)
Milwaukee-Racine, WI; (2) Minneapolis-St. Paul, MN-WI; and (3)
Pittsburgh, PA.
The definitions of the MSA's and CMSA's that comprise the locality
pay areas are found in OMB Bulletin No. 96-08, June 28, 1996. Based on
these definitions, the three new locality pay areas will be composed of
the following geographic areas:
(1) Milwaukee-Racine, WI--includes Milwaukee, Ozaukee, Washington,
Waukesha, and Racine Counties;
(2) Minneapolis-St. Paul, MN-WI--includes, in Minnesota, Anoka,
Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne,
Washington, and Wright Counties and, in Wisconsin, Pierce and St. Croix
Counties; and
(3) Pittsburgh, PA--includes Allegheny, Beaver, Butler, Fayette,
Washington, and Westmoreland Counties.
The boundaries of locality pay areas are subject to change if the
boundaries of the corresponding MSA's and CMSA's change, as determined
by OMB.
OPM received comments on the boundaries of the proposed locality
pay areas from nine agency field offices, four employee organizations,
and two individuals. Most commenters fully supported the boundaries of
the new locality pay areas. However, three commenters requested that
certain additional areas in the ``Rest of U.S.'' locality pay area be
included in the Minneapolis-St. Paul, MN-WI, locality pay area. These
areas are Waseca County, MN; the city of Rochester, MN; and Pine
County, MN. However, as explained below, none of these locations meets
all of the criteria set forth by the Federal Salary Council for removal
from the ``Rest of U.S.'' locality pay area and inclusion as an ``area
of application'' in the Minneapolis-St. Paul locality pay area.
Prior to the implementation of locality pay in 1994, the
President's Pay Agent adopted the Federal Salary Council's
recommendation that the boundaries of locality pay areas follow the
boundaries of MSA's and CMSA's, as defined by OMB. The Federal Salary
Council also recommended that certain areas outside the boundaries of
an MSA or CMSA (i.e., ``areas of application'') be included in the
locality pay area if they meet certain criteria.
In order for the Federal Safety Council to recommend an area as a
county-wide area of application for the January 1997 locality payments,
the affected county must--
1. Be contiguous to a pay locality;
2. Contain at least 2,000 GS-GM employees;
3. Have a significant level of urbanization, based on 1990 Census
data. A `significant level of urbanization'' is defined as a population
density of more than 200 per square mile or at least 90 percent of the
population in urbanized areas; and
4. Demonstrate some economic linkage with the pay locality, defined
as commuting at a level of 5 percent or more into or from the areas in
question. The areas in question are the contiguous county under
consideration and the central counties (or in the case of New England,
the central cores) identified by the Census Bureau for the process of
defining the CMSA's and MSA's involved.
In the case of Waseca County, criterion 1--that the county be
contiguous to the Minneapolis-St. Paul, MN-WI, locality pay area--is
not met.
With respect to the city of Rochester, MN, under established
policies, areas of application must comprise entire counties (except
where a Federal facility crosses pay area boundaries). Even if
individual cities could be considered, Rochester would not meet
criterion 1--that an area of application be contiguous to a pay
locality. Nor does Olmstead County, MN, meet this criterion.
In the case of Pine County, criterion 2--that it contain at least
2,000 GS-GM employees--and criterion 3--that it have a significant
level of urbanization--are not met.
Therefore, because the FSC's criteria for ``areas of application''
were not met
[[Page 40950]]
none of the those areas in question will be part of the Minneapolis-St.
Paul, MN-WI, locality pay area.
E.O. 12866, Regulatory Review
This rule has been reviewed by the Office of Management and Budget
in accordance with E.O. 12866.
Regulatory Flexibility Act
In certify that these regulations will not have a significant
impact on a substantial number of small entities because they will
apply only to Federal agencies and employees.
List of Subjects in 5 CFR Part 531
Government employees, Law enforcement officers, Wages.
Office of Personnel Management,
James B. King,
Director.
Accordingly, OPM is amending part 531 of title 5, Code of Federal
Regulations, as follows:
PART 531--PAY UNDER THE GENERAL SCHEDULE
1. The authority citation for part 531 continues to read as
follows:
Authority: 5 U.S.C. 5115, 5307, and 5338; sec. 4 of Pub. L. 103-
89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR, 1991 Comp., p.
316;
Subpart B also issued under 5 U.S.C. 5303(g), 5333, 5334(a), and
7701(b)(2);
Subpart C also issued under 5 U.S.C. 5304, 5305, and 5553;
sections 302 and 404 of FEPCA, Pub. L. 101-509, 104 Stat. 1462 and
1466; and section 3(7) of Pub. L. 102-378, 106 Stat. 1356;
Subpart D also issued under 5 U.S.C. 5335(g) and 7701(b)(2);
Subpart E also issued under 5 U.S.C. 5336;
Subpart F also issued under 5 U.S.C. 5304, 5305(b)(1), and 5553;
and E.O. 12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682;
Subpart G also issued under 5 U.S.C. 5304, 5305, and 5553;
section 302 of the Federal Employees Pay Comparability Act of 1990
(FEPCA), Pub. L. 101-509, 104 Stat 1462; and E.O. 12786, 56 FR
67453, 3 CFR, 1991 Comp., p. 376.
Subpart F--Locality-Based Comparability Payments
2. In Sec. 531.603, paragraph (b) is revised to read as follows:
Sec. 531.603 Locality pay areas.
* * * * *
(b) The following are locality pay areas for the purpose of this
subpart:
(1) Atlanta, GA--consisting of the Atlanta, GA MSA;
(2) Boston-Worcester-Lawrence, MA-NH-ME-CT--consisting of the
Boston-Worcester-Lawrence, MA-NH-ME-CT CMSA;
(3) Chicago-Gary-Kenosha, IL-IN-WI--consisting of the Chicago-Gary-
Kenosha, IL-IN-WI CMSA;
(4) Cincinnati-Hamilton, OH-KY-IN--consisting of the Cincinnati-
Hamilton, OH-KY-IN CMSA;
(5) Cleveland-Akron, OH--consisting of the Cleveland-Akron, OH
CMSA;
(6) Columbus, OH--consisting of the Columbus, OH MSA;
(7) Dallas-Fort Worth, TX--consisting of the Dallas-Fort Worth, TX
CMSA;
(8) Dayton-Springfield, OH--consisting of the Dayton-Springfield,
OH MSA;
(9) Denver-Boulder-Greeley, CO--consisting of the Denver-Boulder-
Greeley, CO CMSA;
(10) Detroit-Ann Arbor-Flint, MI--consisting of the Detroit-Ann
Arbor-Flint, MI CMSA;
(11) Houston-Galveston-Brazoria, TX--consisting of the Houston-
Galveston-Brazoria, TX CMSA;
(12) Huntsville, AL--consisting of the Huntsville, AL MSA;
(13) Indianapolis, IN--consisting of the Indianapolis, IN MSA;
(14) Kansas City, MO-KS--consisting of the Kansas City, MO-KS MSA;
(15) Los Angeles-Riverside-Orange County, CA--consisting of the Los
Angeles-Riverside-Orange County, CA CMSA, plus Santa Barbara County,
CA, and that portion of Edwards Air Force Base, CA, not located within
the Los Angeles-Riverside-Orange County, CA CMSA;
(16) Miami-Fort Lauderdale, FL--consisting of the Miami-Fort
Lauderdale, FL CMSA;
(17) Milwaukee-Racine, WI--consisting of the Milwaukee-Racine, WI
CMSA;
(18) Minneapolis-St. Paul, MN-WI--consisting of the Minneapolis-St.
Paul, MN-WI MSA;
(19) New York-Northern New Jersey-Long Island, NY-NJ-CT-PA--
consisting of the New York-Northern New Jersey-Long Island, NY-NJ-CT-PA
CMSA;
(20) Philadelphia-Wilmington-Atlantic City, PA-NJ-DE-MD--consisting
of the Philadelphia-Wilmington-Atlantic City, PA-NJ-DE-MD CMSA;
(21) Pittsburg, PA--consisting of the Pittsburgh, PA MSA;
(22) Portland-Salem, OR-WA--consisting of the Portland-Salem, OR-WA
CMSA;
(23) Richmond-Petersburg, VA--consisting of the Richmond-
Petersburg, VA MSA;
(24) Sacramento-Yolo, CA--consisting of the Sacramento-Yolo, CA
CMSA;
(25) St. Louis, MO-IL--consisting of the St. Louis, MO-IL MSA;
(26) San Diego, CA--consisting of the San Diego, CA MSA;
(27) San Francisco-Oakland-San Jose, CA--consisting of the San
Francisco-Oakland-San Jose, CA CMSA;
(28) Seattle-Tacoma-Bremerton, WA--consisting of the Seattle-
Tacoma-Bremerton, WA CMSA;
(29) Washington-Baltimore, DC-MD-VA-WV--consisting of the
Washington-Baltimore, DC-MD-VA-WV CMSA, plus St. Mary's County, MD; and
(30) Rest of U.S.--consisting of those portions of the continental
United States not located within another locality pay area.
[FR Doc. 96-20092 Filed 8-6-96; 8:45 am]
BILLING CODE 6325-01-M
Complete official Federal Register PDF
FR Doc. 96-20082 Guidelines for Evaluating the Environmental Effects of Radiofrequency Radiation
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 41006-41019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20082]
=======================================================================
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1, 2, 15, 24 and 97
[ET Docket No. 93-62; FCC 96-326]
Guidelines for Evaluating the Environmental Effects of
Radiofrequency Radiation
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Report and Order (``R&O'') amends the Commission's Rules
to adopt new guidelines and methods for evaluating the environmental
effects of radiofrequency (RF) radiation from FCC-regulated
transmitters, in accordance with The National Environmental Policy Act
(NEPA) of 1969. NEPA requires agencies of the Federal Government to
evaluate the effects of their actions on the quality of the human
environment. To meet the Commission's responsibilities under NEPA, the
Commission has adopted revised RF exposure guidelines for purposes of
evaluating potential environmental effects of RF radiation. The new
guidelines reflect more recent scientific studies of the biological
effects of RF radiation. Use of the new guidelines will ensure that the
public and workers receive adequate protection from exposure to
potentially harmful RF field.
EFFECTIVE DATE: August 6, 1996.
FOR FURTHER INFORMATION CONTACT: FCC RF Safety Program, (202) 418-2422,
Office of Engineering and Technology.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order in ET Docket No. 93-62, FCC 96-326, adopted August 1, 1996
and released August 1, 1996. The complete text of this Report and Order
is available for inspection and copying during normal business hours in
the FCC Reference Center (Room 239), 1919 M Street, N.W., Washington,
D.C., and also may be purchased from the Commission's copy contractor,
International Transcription Services, Inc., (202) 857-3800, 2100 M
Street, NW, Suite 140, Washington, DC 20037.
Summary of the Report and Order
1. By this action, we are amending the Commission's Rules to adopt
new guidelines and methods for evaluating the environmental effects of
radiofrequency (RF) radiation from FCC-regulated transmitters. We are
adopting Maximum Permissible Exposure (MPE) limits for electric and
magnetic field strength and power density for transmitters operating at
frequencies from 300 kHz to 100 GHz. Specifically, we are adopting
limits for field strength and power density that are generally based on
Sections 17.4.1 and 17.4.2 and the time-averaging provisions
recommended in Sections 17.4.1.1 and 17.4.3 of ``Biological Effects and
Exposure Criteria for Radiofrequency Electromagnetic Fields,'' NCRP
Report No. 86 (1986), National Council on Radiation Protection and
Measurements (NCRP). With the exception of the limits on exposure to
power density above
[[Page 41007]]
1500 MHz and the limits for exposure to lower frequency magnetic
fields, these MPE limits are also generally based on the guidelines
contained in the RF safety standard developed by the Institute of
Electrical and Electronic Engineers, Inc. (IEEE) and adopted by the
American National Standards Institute (ANSI). See Section 4.1 of ANSI/
IEEE C95.1-1992, ``Safety Levels with Respect to Human Exposure to
Radio Frequency Electromagnetic Fields, 3 kHz to 300 GHz''. We are also
adopting limits for localized (``partial body'') absorption that will
apply to certain portable transmitting devices. These guidelines are
based on those recommended by ANSI/IEEE and NCRP. See Sections 4.2.1
and 4.2.2 of ANSI/IEEE C95.1-1992 and Section 17.4.5 of NCRP Report No.
86. We believe that the guidelines we are adopting will protect the
public and workers from exposure to potentially harmful RF fields.
2. In reaching our decision on the adoption of new RF exposure
guidelines we have carefully considered the large number of comments
submitted in this proceeding, and particularly those submitted by the
U. S. Environmental Protection Agency (EPA), the Food and Drug
Administration (FDA) and other federal health and safety agencies. The
new guidelines we are adopting are based primarily on the
recommendations of those agencies, and we believe that these guidelines
represent a consensus view of the federal agencies responsible for
matters relating to the public safety and health.
3. The MPE limits adopted herein are based on exposure criteria
quantified in terms of specific absorption rate (SAR), a measure of the
rate of RF energy absorption. The basis for these limits, as well as
the basis for the 1982 ANSI limits that the Commission previously
specified in our rules, is an SAR limit of 4 watts per kilogram. The
new MPE limits are derived by incorporating safety factors that lead,
in some cases, to limits that are more conservative than the limits
specified by ANSI in 1982. The more conservative limits do not arise
from a fundamental change in the RF safety criteria for SAR, but from a
precautionary desire for more rigor in the derivation of factors which
allow limits for MPE to be derived from SAR limits.
4. This action satisfies the requirements of the Telecommunications
Act of 1996 for a timely resolution of this proceeding. We note that
research and analysis relating to RF safety and health is ongoing, and
changes in recommended exposure limits are possible in the future. In
that regard, we intend to continue our cooperative work with industry
and with the various agencies and organizations with responsibilities
in this area in order to ensure that our guidelines continue to be
appropriate and scientifically valid.
5. Accordingly, it is ordered that Parts 1, 2, 15, 24 and 97 of the
Commission's Rules and Regulations are amended as specified below,
effective August 6, 1996. Section 704(b) of the Telecommunications Act
of 1996 requires that the Commission complete action in this
proceeding, and prescribe and make effective rules regarding the
environmental effects of RF emissions, by no later than August 6, 1996
(180 days after enactment)]. We find that good cause exists, pursuant
to 5 U.S.C. Sec. 553 (d)(3), to make these rules effective upon their
release rather than follow the normal practice of making them effective
30 days after publication in the Federal Register. Congress directed
the Commission to make these rules effective within 180 days. Sec. 704
of the Telecommunications Act of 1996, Public Law 104-104, 110 Stat. 56
(1996) states that ``[w]ithin 180 days after the enactment of this Act,
the Commission shall complete action in ET Docket 93-62 to prescribe
and make effective rules regarding the environmental effects of radio
frequency emissions.'' Unlike other sections of that Act, see, e.g.,
Secs. 251(d)(d)(1), which directs us to ``complete'' action, and Sec.
254(a)(2), which directs us to ``promulgate'' rules, Sec. 704 requires
that the RF exposure guidelines be made effective within the prescribed
180 day time period. Completion of this rule making has required an
extensive amount of work to resolve some extremely complex issues. In
addition, coordination with the various federal agencies pursuant to
the Interdepartmental Radio Advisory Committee has consumed more time
than anticipated. The time required to review the comments, decide on
the best possible guidelines based on the scientific evidence and,
comments and to coordinate that decision with the other agencies has
made it impossible to delay the effective date for 30 days and still
meet the Congressionally imposed deadline. Thus, we have no alternative
but to make these rules effective immediately. The authority for
issuance of this Report and Order is contained in Sections 4(i), 7(a),
303(c), 303(f), 303(g), 303(r), and 332(c)(7) of the Communications Act
of 1934, as amended, 47 U.S.C. Sections 154(i), 157(a), 303(c), 303(f),
303(g), 303(r), and 332(c)(7) , unless otherwise noted.
Final Regulatory Flexibility Analysis
As required by Section 603 of the Regulatory Flexibility Act, 5
U.S.C. Sec. 603 (RFA), an Initial Regulatory Flexibility Analysis
(IRFA) was incorporated in the Notice.1 The Commission sought
written public comments on the proposals in the Notice, including on
the IRFA. The Commission's Final Regulatory Flexibility Analysis (FRFA)
in this Report and Order conforms to the RFA, as amended by the
Contract With America Advancement Act of 1996 (CWAAA), Pub. L. No. 104-
121, 110 Stat. 847 (1996).2
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\1\ See Notice of Proposed Rule Making, ET Docket No. 93-62, 8
FCC Rcd 2849 (1993), 58 FR 19393 (April 14, 1993).
\2\ Subtitle II of the CWAAA is ``The Small Business Regulatory
Enforcement Fairness Act of 1996'' (SBREFA), codified at 5 U.S.C.
Sec. 601 et seq.
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I. Need for and Purpose of this Action:
The National Environmental Policy Act (NEPA) of 1969 requires
agencies of the Federal Government to evaluate the effects of their
actions on the quality of the human environment. To meet its
responsibilities under NEPA, the Commission has adopted revised RF
exposure guidelines for purposes of evaluating potential environmental
effects of RF radiation from FCC-regulated facilities. The new
guidelines reflect more recent scientific studies of the biological
effects of RF radiation. Use of these new guidelines will ensure that
the public and workers receive adequate protection from exposure to
potentially harmful RF field.
II. Summary of Issues Raised by the Public Comments in Response to the
Initial Regulatory Flexibility Analysis
No comments were filed in direct response to the IRFA. In general
comments on the Notice, however, some commenters raised issues that
might affect small entities. In particular, some commenters argued that
the cost of complying with the radio frequency (RF) limits could be
overly burdensome, and this could negatively impact small businesses.
They express concern that the cost of testing, with respect to devices
operating in close proximity to the body, is extremely expensive and
obtaining testing equipment could be difficult for small businesses.
For example, the National Association of Business and Educational
Radio, Inc. (NABER) encourages us to categorically exclude land mobile
transmitters, expressing concern that if categorical exclusions for
land mobile services are eliminated, manufacturers would have to
institute unnecessary and costly
[[Page 41008]]
testing.3 They also request that we limit the amount of paperwork
that is necessary for demonstrating compliance with the limits. In
particular, the Broadcast Joint Commenters suggest that additional
paperwork should not be required to establish compliance with the new
policies because it would be needlessly burdensome to the broadcasters
and to the Mass Media Bureau.4 As discussed in Section V of this
FRFA, we have attempted to address these concerns.
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\3\ NABER Comments at 5-6.
\4\ Broadcast Joint Commenters Reply Comments at 39-40.
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III. Description and estimate of the Small Entities Subject to the
Rules:
The rules in this Report and Order will apply to the following
twelve industry categories and services. The RFA generally defines the
term ``small business'' as having the same meaning as the term ``small
business concern'' under the Small Business Act, 15 U.S.C. Sec. 632.
Based on that statutory provision, we will consider a small business
concern one which (1) is independently owned and operated; (2) is not
dominant in its field of operation; and (3) satisfies any additional
criteria established by the Small Business Administration (SBA). The
RFA SBREFA provisions also apply to nonprofit organizations and to
governmental organizations. Since the Regulatory Flexibility Act
amendments were not in effect until the record in this proceeding was
closed, the Commission was unable to request information regarding the
number of small business within each of these services or the number of
small business that would be affected by this action. We have, however,
made estimates based on our knowledge about applications that have been
submitted in the past. To the extent that a government entity may be a
licensee or an applicant, the impact on those entities is included in
the estimates for small businesses below.
As discussed below, under the rules we are adopting many radio
services are categorically excluded from having to determine compliance
with the new RF radiation limits that are being adopted. This exclusion
is based on a determination that there is little potential for these
services causing exposures in excess of the limits. Within the services
below, many transmitting facilities are also categorically excluded
based on antenna location and power. These categorical exclusions
significantly reduce the burden associated with these rules, and may
reduce the impact of these rules on small businesses.
A. Radiofrequency Devices
The radiofrequency devices affected by this rulemaking are low
power, unlicensed transmitters that will be used to provide, on
millimeter wave frequencies, a variety of services, including vehicle
collision avoidance and high data rate/short range wireless data
communications. Unlicensed personal communications service (PCS)
transmitters are also radiofrequency devices. Radiofrequency devices
are subject to compliance with the new RF radiation requirements at the
time of equipment authorization. Therefore, it will be the equipment
manufacturers and importers who will be affected by this action.
We expect most of the firms that would be interested in producing
millimeter wave and unlicensed PCS devices will be large businesses. We
note that Ford Motor and Hewlett Packard have expressed interest in
millimeter wave devices and filed comments in this proceeding. In
addition, Motorola and Ericsson Corporate, both large equipment
manufacturers, have expressed interest in manufacturing unlicensed PCS
devices. Nevertheless, it is conceivable that small businesses will
also want to manufacture these devices.
The Commission has not developed a definition of small entities
applicable to radiofrequency devices. Therefore, the applicable
definition of small entity is the definition under the SBA applicable
to the ``Communications Services, Not Elsewhere'' category. A small
millimeter wave device or unlicensed PCS entity under this definition
is one with less than $11.0 million in annual receipts.5
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\5\ 13 CFR Sec. 121.201, Standard Industrial Classification
(SIC) Code 4899.
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The Commission has not yet authorized any millimeter wave devices,
and has authorized fewer than ten unlicensed PCS devices. Both these
services are new, so we really don't know how many applications for
equipment authorization we may receive, nor how many small
manufacturers may be interested in producing these products. Since the
Regulatory Flexibility Act amendments were not in effect until the
record in this proceeding was closed, the Commission was unable to
request information regarding the number of small businesses in this
category. The Census Bureau estimates indicate that of the 848 firms in
the ``Communications Services, Not Elsewhere'' category, 775 are small
businesses. Based on this information, as well as our past experience
in granting equipment authorization for other types of radiofrequency
devices, we estimate that 50 percent of the applications for millimeter
wave and unlicensed PCS devices will be from small businesses.
The Commission anticipates that approximately 30 applications will
be filed annually for devices that operate in the millimeter band and
unlicensed PCS spectrum. All of these applications will require an
initial determination of compliance with our new RF guidelines. Of
these devices, ten will require specific absorption rate (SAR) modeling
or measurement, which adds cost to the authorization process.
B. Cellular Radio Telephone Service
The Commission has not developed a definition of small entities
applicable to cellular licensees. Therefore, the applicable definition
of small entity is the definition under the Small Business
Administration (SBA) rules applicable to radiotelephone companies. This
definition provides that a small entity is a radiotelephone company
employing fewer than 1,500 persons.6 Since the Regulatory
Flexibility Act amendments were not in effect until the record in this
proceeding was closed, the Commission was unable to request information
regarding the number of small cellular businesses and is unable at this
time to make a precise estimate of the number of cellular firms which
are small businesses.
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\6\ 13 C.F.R. Sec. 121.201, Standard Industrial Classification
(SIC) Code 4812.
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The size data provided by the SBA does not enable us to make a
meaningful estimate of the number of cellular providers which are small
entities because it combines all radiotelephone companies with 500 or
more employees.7 We therefore used the 1992 Census of
Transportation, Communications, and Utilities, conducted by the Bureau
of the Census, which is the most recent information available. That
census shows that only 12 radiotelephone firms out of a total of 1,178
such firms which operated during 1992 had 1,000 or more
employees.8 Therefore, even if all 12 of these large firms were
cellular telephone
[[Page 41009]]
companies, all of the remainder were small businesses under the SBA's
definition. We assume that, for purposes of our evaluations and
conclusions in the Final Regulatory Flexibility Analysis, all of the
current cellular licensees are small entities, as that term is defined
by the SBA. Although there are 1,758 cellular licenses, we do not know
the number of cellular licensees, since a cellular licensee may own
several licenses.
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\7\ U.S. Small Business Administration 1992 Economic Census
Employment Report, Bureau of the Census, U.S. Department of
Commerce, SIC Code 4812 (radiotelephone communications industry data
adopted by the SBA Office of Advocacy).
\8\ U.S. Bureau of the Census, U.S. Department of Commerce, 1992
Census of Transportation, Communications, and Utilities, UC92-S-1,
Subject Series, Establishment and Firm Size, Table 5, Employment
Size of Firms: 1992, SIC Code 4812 (issued May 1995).
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We assume that all of the current rural cellular licensees are
small businesses. Comments filed by small business associations, the
Organization for the Protection and Advancement of Small Telephone
Companies (OPASTCO), state that \2/3\ of its 440 members provide
cellular service,9 and comments filed by the Rural Cellular
Association (RCA) state that its members serve 80 cellular service
areas.10 We recognize that these numbers represent only part of
the current rural cellular licensees because there might be other rural
companies not represented by either association.
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\9\ OPASTCO Comments at 1-2 (filed January 9, 1995).
\10\ RCA Comments at 2 (filed January 9, 1995).
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The rules we are adopting generally require cellular stations to
make a determination, through calculation or measurement, as to whether
a transmitter facility will comply with the RF radiation exposure
limits. If the facility does not comply with the limits, then the
applicant (for a new license, a modification, or a renewal of an
existing license) must file an Environmental Assessment (EA) pursuant
to the National Environment Policy Act. The vast majority of applicants
will find their facilities in compliance with the limits, or take steps
such as controlling access around the transmitting facility, and will
only need to indicate on their application that they comply with the
limits. Many cellular transmission facilities are categorically
exempted from making a compliance determination based on power and/or
antenna height. The Commission processes roughly 700 applications for
cellular transmitters facilities, involving 7,000 site locations, per
year. Approximately 2,800 transmitting facilities will exceed
categorical exclusion criteria and will require a determination of
compliance with our new guidelines, based on calculations or
measurements.
Manufacturers of mobile and portable cellular transmitters will
have to make measurements, or in some cases calculations, as a
condition for equipment authorization. Many of these manufacturers are
likely to be the same as those that will manufacture unlicensed PCS
transmitters, as discussed in the radiofrequency device category above.
Based on the information presented for radiofrequency devices, as well
as our past experience in granting equipment authorization for other
types of radiofrequency devices, we estimate that 50 percent of the
applications for cellular telephones will be from small businesses. It
is estimated that 200 mobile and portable cellular transmitters will
require authorization per year.
C. Personal Communications Service
The broadband PCS spectrum is divided into six frequency blocks
designated A through F. Pursuant to 47 C.F.R. Sec. 24.720(b), the
Commission has defined ``small entity'' for Blocks C and F licensees as
firms that had average gross revenues of less than $40 million in the
three previous calendar years. This regulation defining `''small
entity'' in the context of broadband PCS auctions has been approved by
the SBA.11
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\11\ See Implementation of Section 309(j) of the Communications
Act--Competitive Bidding, PP Docket No. 93-253, Fifth Report and
Order, 9 FCC Rcd 5532, 5581-84 (1994), 59 FR 37566 (July 22, 1994).
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The Commission has auctioned broadband PCS licenses in Blocks A, B,
and C. We do not have sufficient data to determine how many small
businesses under the Commission's definition bid successfully for
licenses in Blocks A and B. As of now, there are 90 non-defaulting
winning bidders that qualify as small entities in the Block C auction.
Based on this information, we conclude that the number of broadband PCS
licensees affected by the rule adopted in this Report and Order
includes the 90 non-defaulting winning bidders that qualify as small
entities in the Block C broadband PCS auction.
At present, no licenses have been awarded for Blocks D, E, and F
for spectrum. Therefore, there are no small businesses currently
providing these services. However, a total of 1,479 licenses will be
awarded in the D, E, and F Block broadband PCS auctions, which are
scheduled to begin on August 26, 1996. Eligibility for the 493 F Block
licensees is limited to ``entrepreneurs'' with the average gross
revenues of less than $125 million. However, we cannot estimate how
many small businesses under the Commission's definition will win F
Block licenses, or D and E Block licenses. Given the facts that nearly
all radiotelephone companies have fewer than 1,000 employees and that
no reliable estimate of the number of prospective D, E, and F Block
licensees can be made, we assume, for purposes of our evaluations and
conclusions in this FRFA, that all of the licenses will be awarded to
small entities, as that term is defined by the SBA.
After all PCS licenses have been issued, the Commission expects to
receive approximately 1,000 applications per year involving 10,000
sites. We anticipate that 3000 sites will not meet the categorical
exclusion criteria and will involve a determination of compliance with
the RF exposure guidelines.
As in the case of cellular telephones, mobile and portable PCS
transmitters will have to undergo measurement or modeling to determine
compliance with the RF radiation limits as a condition of equipment
authorization. Again, we estimate that 50% of the manufacturers will be
small businesses. Although we have authorized fewer than ten PCS
transmitters, it is estimated that eventually 50 of such devices will
be authorized each year.
D. Private Land Mobile Radio Services, Specialized Mobile Radio
Pursuant to 47 C.F.R. Sec. 90.814(b)(1), the Commission has defined
``small entity'' for geographic area 800 MHz and 900 MHz SMR licenses
as firms that had average gross revenues of less than $15 million in
the three previous calendar years. This regulation defining ``small
entity'' in the context of 800 MHz and 900 MHz SMR has been approved by
the SBA.12
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\12\ See Amendment of Parts 2 and 90 of the Commission's Rules
to Provide for the Use of 200 Channels Outside the Designated Filing
Areas in the 896-901 MHz and the 935-940 MHz Bands Allotted to the
Specialized Mobile Radio Pool, PR Docket No. 89-553, Second Order on
Reconsideration and Seventh Report and Order, 11 FCC Rcd 2639, 2693-
702 (1995), 60 FR 48913 September 21, 1995 Amendment of Part 90 of
the Commission's Rules to Facilitate Future Development of SMR
Systems in the 800 MHz Frequency Band, PR Docket No. 93-144, First
Report and Order, Eighth Report and Order, and Second Further Notice
of Proposed Rulemaking, 11 FCC Rcd 1463 (1995), 61 FR 6212, February
16, 1996.
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The rule adopted in this Report and Order applies to SMR providers
in the 800 MHz and 900 MHz bands that either hold geographic area
licenses or have obtained extended implementation authorizations. We do
not know how many firms provide 800 MHz or 900 MHz geographic area SMR
service pursuant to extended implementation authorizations, nor how
many of these providers have annual revenues of less than $15 million.
Since the Regulatory Flexibility Act amendments were not in effect
until the record in this proceeding was closed, the Commission was
unable
[[Page 41010]]
to request information regarding the number of small businesses in this
category. We do know that one of these firms has over $15 million in
revenues. We assume, for purposes of our evaluations and conclusions in
this FRFA, that the remaining existing extended implementation
authorizations may be held by small entities, as that term is defined
by the SBA.
The Commission recently held auctions for geographic area licenses
in the 900 MHz SMR band. There were 60 winning bidders who qualified as
small entities under the Commission's definition in the 900 MHz
auction. Based on this information, we conclude that the number of
geographic area SMR licensees affected by the rule adopted in this
Report and Order includes these 60 small entities.
No auctions have been held for 800 MHz geographic area SMR
licenses. Therefore, no small entities currently hold these licenses. A
total of 525 licenses will be awarded for the upper 200 channels in the
800 MHz geographic area SMR auction. However, the Commission has not
yet determined how many licenses will be awarded for the lower 230
channels in the 800 MHz geographic area SMR auction. There is no basis
to estimate, moreover, how many small entities within the SBA's
definition will win these licenses. Given the facts that nearly all
radiotelephone companies have fewer than 1,000 employees and that no
reliable estimate of the number of prospective 800 MHz licensees can be
made, we assume, for purposes of our evaluations and conclusions in
this FRFA, that all of the licenses will be awarded to small entities,
as that term is defined by the SBA.
The Commission receives about 3,000 applications for covered SMR
transmitters facilities per year. Approximately 1,000 transmitters will
exceed categorical exclusion criteria and will require a determination
of compliance. In addition, as in the case of cellular telephones and
PCS, mobile and portable covered SMR transmitters will have to undergo
measurement or modeling to determine compliance with MPE and/or SAR
requirements. It is estimated that 200 of such devices will require
authorization per year.
E. Satellite Communications Services
The Commission has not developed a definition of small entities
applicable to satellite communications licensees. Therefore, the
applicable definition of small entity is the definition under the Small
Business Administration (SBA) rules applicable to radiotelephone
companies. This definition provides that a small entity is a
radiotelephone company employing fewer than 1,500 persons.
Satellite systems authorized by the Commission can be divided into
the following categories: mobile satellite service (MSS) non-
geostationary satellite orbit (NGSO) (low or medium orbit satellites);
mobile satellite service geostationary; mobile satellite service ship
stations; and fixed satellite service.
In the MSS NGSO category the commission has divided its spectrum
allocation into small and large NGSO. In the small NGSO or small low
Earth-orbit (LEO) satellite service there are three existing and three
pending or further licensees, all of which may be considered small
business entities in the context of this analysis. These licensees are
authorized in the VHF/UHF bands.
In the large LEO MSS category of MSS NGSO there are three existing
licensees and three pending or future licensees in the 1.6/2.5 GHz
band. The three existing are probably not small business entities and
the three pending are probably small business entities. In the category
of geostationary MSS the Commission has licensed one consortium, in the
1.5/1.6 GHz band, that comprises many small business entities.
The fixed satellite service (FSS) has generally been authorized in
the 4/6 and 11/12 GHz band. There are three FSS licensees, that serve
domestic US markets, none of which are small business entities. There
are also two licensees serving international markets with FSS
authorizations and these entities may be considered small business
entities.
It should be noted that in most of the satellite areas discussed
above the Commission issues one license to an entity but generally
issues blanket license authority for thousands or even hundreds of
thousands of earth stations or hand held transceivers. In this analysis
we have considered satellite companies that have less than 1500
employees to be small business entities. Therefore, we are concluding
that small business entities are largely affected by this proceeding in
the satellite area.
The Commission receives about 600 applications for satellite
facilities per year. All applicants must make a determination of
compliance with the limits, based on calculations or measurements.
F. Radio Broadcast Service
The SBA has defined small radio broadcast service entities based on
their ``annual receipts'' specifically in 13 CFR Sec. 104, and its
calculations include an averaging process. We do not currently require
submission of financial data from licensees that we could use to apply
the SBA's definition of a small business. Thus, for purposes of
estimating the number of small entities to which the rules apply, we
are limited to considering the revenue data that are publicly
available, and the revenue data on which we rely may not correspond
completely with the SBA definition of annual receipts.
Under SBA criteria for determining annual receipts, if a concern
has acquired an affiliate or been acquired as an affiliate during the
applicable averaging period for determining annual receipts, the annual
receipts in determining size status include the receipts of both firms.
13 CFR. Sec. 121.104(d)(1). The SBA defines affiliation in 13 CFR.
Sec. 121.103. While the Commission refers to an affiliate generally as
a station affiliated with a network, the SBA's definition of affiliate
is analogous to our attribution rules. Generally, under the SBA's
definition, concerns are affiliates of each other when one concern
controls or has the power to control the other, or a third party or
parties controls or has the power to control both. 13 CFR.
Sec. 121.103(a)(1). The SBA considers factors such as ownership,
management, previous relationships with or ties to another concern, and
contractual relationships, in determining whether affiliation exists.
13 CFR. Sec. 121.103(a)(2). Instead of making an independent
determination of whether radio and television stations were affiliated
based on SBA's definitions, we relied on the data bases available to us
to afford us that information.
We have performed a study based on the data contained in the BIA
Publications, Inc. Master Access Television Analyzer Database, which
lists a total of 1,141 full-power commercial television stations. Low
Power Television (LPTV) Stations and translator stations are discussed
in paragraph H below. It should be noted that the percentage figures
derived from the data base may be underinclusive because the data base
does not list revenue estimates for noncommercial educational stations,
and these are therefore excluded from our calculations based on the
data base. Non-commercial stations are subject to the requirements
adopted in the Report and Order. The data indicate that, based on 1995
revenue estimates, 440 full-power commercial television stations had an
estimated revenue of 10.5 million dollars or less. That represents 54
percent of commercial television stations with revenue estimates listed
in the BIA program. The data base does not
[[Page 41011]]
list estimated revenues for 331 stations. Using an extreme scenario, if
those 331 stations for which no revenue is listed are counted as small
stations, there would be a total of 771 stations with an estimated
revenue of 10.5 million dollars or less, representing approximately 68
percent of the 1,141 commercial television stations listed in the BIA
data base.
Alternatively, if we look at owners of commercial television
stations as listed in the BIA data base, there are a total of 488
owners. The data base lists estimated revenues for 60 percent of these
owners, or 295. Of these 295 owners, 156 or 53 percent had annual
revenues of less than $10.5 million. Using an extreme scenario, if the
193 owners for which revenue is not listed are assumed to be small, the
total of small entities would constitute 72 percent of owners.
In summary, based on the foregoing extreme analysis using census
data, we estimate that our rules will apply to as many as 1,150
commercial and non-commercial television stations (78 percent of all
stations) that could be classified as small entities. Using the extreme
analysis based on the data in the BIA data base, we estimate that as
many as approximately 771 commercial television stations (about 68
percent of all commercial televisions stations) could be classified as
small entities. As we noted above, these estimates are based on a
definition that we believe greatly overstates the number of television
broadcasters that are small businesses. Further, it should be noted
that under the SBA's definitions, revenues of affiliates that are not
television stations should be aggregated with the television station
revenues in determining whether a concern is small. The estimates
overstate the number of small entities since the revenue figures on
which they are based do not include or aggregate such revenues from
non-television affiliated companies.
In addition, according to the SBA's regulations, a radio
broadcasting station must have annual gross receipts of $5.0 million or
less in order to qualify as a small business concern.\13\ There are
approximately 10,250 commercial radio broadcasting stations and 1,810
noncommercial radio broadcast stations of all sizes in the nation, with
approximately 5,200 different commercial licensees. For the same
reasons as above, the exact number of small radio broadcasting entities
to which the elimination of the rule will apply is unknown. Based on
1996 revenue estimates, the BIA Publications, Inc. Master Access
Analyzer Database indicates that 3,314 commercial radio stations had an
estimated revenue of $5.0 million or less. That represents
approximately 32 percent of commercial radio stations with revenue
estimates listed in the BIA program. The data base does not list
estimated revenue for 6,571 stations. Using the most extreme scenario,
if those 6,571 stations for which no revenue estimates is listed are
counted as small stations, there would be a total of 9,885 stations
with an estimated revenue of $5.0 or less, representing approximately
96 percent of the 10,257 commercial radio stations listed in the BIA
data base.
---------------------------------------------------------------------------
\13\ 13 CFR. Sec. 121.201.
---------------------------------------------------------------------------
Alternatively, if we look at owners of commercial radio stations as
listed in the BIA data base, there are a total of 5,207 owners. The
data base lists estimated revenues for 29 percent of these owners, or
1,532. Of these 1,532 owners, 1,344 or 88 percent had annual revenue of
less than $5.0 million. Using the most extreme scenario, if the 3,675
owners for which revenue estimates are not listed are assumed to be
small businesses, then the total of small entities would constitute 96
percent of commercial radio station owners. Further, many noncommercial
radio broadcasters are considered to be small entities. Thus, a large
number of licensees of radio broadcast facilities of several types
(commercial AM, commercial FM, and noncommercial FM stations) could
benefit from the rule amendment herein adopted.
The Commission receives about 1,800 applications for broadcast
facilities per year. All applicants must make a determination of
compliance with the limits, either by calculation or measurement.
G. Stations in the Maritime Services
This item would require licensees and applicants for ship satellite
earth terminals to make a determination of compliance with the new RF
radiation requirements. The Commission has not developed a definition
of small entities applicable to ship satellite earth station licensees.
Therefore, the applicable definition of small entity is the definition
under the Small Business Administration (SBA) rules applicable to
radiotelephone companies. This definition provides that a small entity
is a radiotelephone company employing fewer than 1,500 persons.
Ship MSS is similar to geostationary MSS, as discussed above,
except that earth stations are aboard maritime vessels rather than
traditional earth stations in the MSS. In the area of ship MSS the
Commission has two pending licensees for operation of the satellite
service, one of which can be considered small business.
The Commission receives about 272 applications for ship earth
stations per year. All applicants must make a determination of
compliance with the new RF radiation limits.
H. Experimental, Auxiliary, and Special Broadcast and Other Program
Distribution Services
This service involves a variety of transmitters, generally used to
relay broadcast programming to the public (through translator and
booster stations) or within the program distribution chain (from a
remote news gathering unit back to the station). It also includes
Instructional Television Fixed Service stations, which are used to
relay programming to the home or office, similar to that provided by
cable television systems. The Commission has not developed a definition
of small entities applicable to broadcast auxiliary licensees.
Therefore, the applicable definition of small entity is the definition
under the Small Business Administration (SBA) rules applicable to
radiotelephone companies. This definition provides that a small entity
is a radiotelephone company employing fewer than 1,500 persons.
There are currently 2,637 FM translators and boosters, 4,910 TV
translators, and 1,903 Low Power TV stations which will be affected by
the new requirements.\14\ There are also 2,032 ITFS licensees. The FCC
does not collect financial information on any broadcast facility and
the Department of Commerce does not collect financial information on
these auxiliary broadcast facilities. We believe, however, that most,
if not all, of these auxiliary facilities, including Low Power TV
stations, could be classified as small businesses by themselves. We
also recognize that most translators and boosters are owned by a parent
station which, in some cases, would be covered by the revenue
definition of small business entity discussed above. These stations
would likely have annual revenues that exceed the SBA maximum to be
designated as a small business (either $5 million for a radio station
or $10.5 million for a TV station). As we indicated earlier, 96% of
radio stations and 78% of TV stations are designated as small.
---------------------------------------------------------------------------
\14\ FCC news release, Broadcast Station Totals as of June 30,
1996, released July 10, 1996.
---------------------------------------------------------------------------
The approximate number of annual applications processed by the
Commission for this service is 1,032. All of these applications would
be required to have a determination made regarding
[[Page 41012]]
compliance with the new RF radiation limits.
I. Multipoint Distribution Service (MDS)
This service involves a variety of transmitters, which are used to
relay programming to the home or office, similar to that provided by
cable television systems. The Commission has not developed a definition
of small entities applicable to MDS licensees. Therefore, the
applicable definition of small entity is the definition under the Small
Business Administration (SBA) rules applicable to radiotelephone
companies. This definition provides that a small entity is a
radiotelephone company employing fewer than 1,500 persons. There are
1,800 MDS stations currently licensed and 500 applications for
additional channels.
The approximate number of annual applications processed by the
Commission for MDS is 900. It is estimated that of the 900 processed,
only 113 will not meet the categorical exclusion criteria and have to
make a determination of compliance with the RF radiation limits.
J. Paging and Radiotelephone Service, and Private Land Mobile Radio
Services, Paging Operations
Since the Commission has not yet approved a definition for paging
services, we will utilize the SBA's definition applicable to
radiotelephone companies, i.e., an entity employing less than 1,500
persons.
The Commission anticipates that a total of 15,531 non-nationwide
geographic area licenses will be granted or auctioned. The geographic
area licenses will consist of 3,050 MTA licenses and 12,481 EA
licenses. In addition to the 47 Rand McNally MTAs, the Commission is
licensing Alaska as a separate MTA and adding three MTAs for the U.S.
territories, for a total of 51 MTAs. No auctions of paging licenses has
been held yet, and there is no basis to determine the number of
licenses that will be awarded to small entities. Given the fact that
nearly all radiotelephone companies have fewer than 1,000 employees,
and that no reliable estimate of the number of prospective paging
licensees can be made, we assume, for purposes of this FRFA, that all
the 15,531 geographic area paging licenses will be awarded to small
entities, as that term is defined by the Small Business Administration
(SBA).
We estimate that the approximately 600 current paging carriers
could take the opportunity to partition and or/ disaggregate a license
to obtain an additional license through partitioning or disaggregation.
We estimate that up to 48,393 licensees or potential licensees could
take the opportunity to partition and/or disaggregate a license or
obtain a license through partitioning or disaggregation. This number is
based on the total estimate of paging carriers (approximately 600) and
non-nationwide geographic area licenses to be awarded (15,531) and our
estimate that each license will probably not be partitioned and/or
disaggrageted to no more than three parties. Given the fact that nearly
all radiotelephone companies have fewer than 1,000 employees, and that
no reliable estimate of the number of future paging licensees can be
made, we assume for purposes of this FRFA that all of the licensees
will be awarded to small businesses. We believe that it is possible
that a significant number of up to approximately 48,393 licensees or
potential licensees who could take the opportunity to partition and/or
disaggregate a license or who could obtain a license through
partitioning and/or disaggregation will be a small business.
The Commission receives about 10,000 applications for paging
facilities per year. Approximately 1,176 transmitters will exceed
categorical exclusion criteria and will require a determination of
compliance with the new guidelines, either by measurement or
calculation.
K. Experimental Radio Service
The Commission has not developed a definition of small entities
applicable to experimental licensees. Therefore, the applicable
definition of small entity is the definition under the Small Business
Administration (SBA) rules applicable to radiotelephone companies. This
definition provides that a small entity is a radiotelephone company
employing fewer than 1,500 persons.15 Since the Regulatory
Flexibility Act amendments were not in effect until the record in this
proceeding was closed, the Commission was unable to request information
regarding the number of small experimental radio businesses and is
unable at this time to make a precise estimate of the number of
Experimental Radio Services which are small businesses.
---------------------------------------------------------------------------
\15\ 13 C.F.R. Sec. 121.201, Standard Industrial Classification
(SIC) Code 4812.
---------------------------------------------------------------------------
The majority of experimental licenses are issued to companies such
as Motorola and Department of Defense contractors such as Northrop,
Lockheed and Martin Marietta. Businesses such as these may have as many
as 200 licenses at one time. The majority of these applications, 70
percent, are from entities such as these. Given this fact, the
remaining 30 percent of applications, we assume, for purposes of our
evaluations and conclusions in this FRFA, will be awarded to small
entities, as that term is defined by the SBA.
The Commission processes approximately 1,000 applications a year
for experimental radio operations. About half or 500 of these are
renewals and the other half are for new licenses. Approximately 500 of
these applications will be required to make an initial determination of
compliance with our new RF guidelines.
IV. Summary of Projected Reporting, Recordkeeping and Other Compliance
Requirements:
Applicants that are subject to the new RF radiation guidelines
(i.e., not categorically excluded), are required to make a statement on
any application filed with the Commission indicating that they comply
with the RF radiation limits. Technical information supporting that
statement must be retained by the applicant, and provided to the
Commission upon request. In some cases, the applicant will be able to
determine compliance by making calculations or reading applicable
literature, including OST Bulletin No. 65. In other cases, detailed
measurements of the transmitting facility may be necessary. In
addition, steps to control access to the facility, such as warning
signs or fences, may be required. Manufacturers of radio transmitting
equipment will, as indicated above, need to make MPE and/or SAR
measurements that will need to form part of the manufacturer's records
for equipment authorization.
Reporting
Reporting requirements are limited to certain classes of applicants
and licensees for which the potential for human exposure to RF
emissions is the greatest. Most applicants and licensees are
categorically excluded from routinely evaluating their facilities,
operations or transmitters for compliance with the new RF exposure
guidelines. The National Environmental Policy Act (NEPA), upon which
our rules are based, allows ``categorical exclusion'' of large classes
of actions that generally do not provide an opportunity for causing
significant environmental impact, such as would result from human
exposure to RF emissions in excess of the guidelines. In this case, the
``actions'' excluded are the granting of Commission applications and
authorizations. Therefore, we are categorically excluding many
applications submitted to the
[[Page 41013]]
Commission from routine evaluation for compliance with the RF
guidelines. This exclusion significantly limits burden on our
regulatees, including many small businesses. The category exclusions
apply to all radio services except those listed in section IV above and
the radio amateur service. This means, for example, that all land
mobile and public safety two-way systems are categorically excluded.
Applicants in services that are not categorically excluded may also
be categorically excluded from determining compliance based on antenna
location or station power. Applicants who are not categorically
excluded are required to make a statement on certain application forms
filed with the Commission indicating whether they comply with our
environmental rules. This action by a licensee or applicant is the
primary reporting requirement. In addition, supporting information
(such as measurement data, site drawings, and calculations) may be
requested, in certain cases, to justify the statement made on a
Commission form.
Recordkeeping
The Commission has no specific recordkeeping requirements related
to compliance with the RF exposure guidelines. This has not changed
from the rules previously in place regarding compliance with RF
exposure guidelines. The Commission does reserve the right to request
information supporting the answer an applicant gives on a form. Such
information would normally be technical in nature and could involve a
report of calculations performed or measurements made to determine
compliance. Therefore, many applicants and licensees may keep
information related to their compliance on file in some form for their
own records. The Commission provides applicants with guidance on
performing calculations or measurements through its OST Bulletin No.
65, which is being updated to reflect the new guidelines. In many
cases, an applicant or licensee can easily use this bulletin to
determine compliance through the use of charts, figures and tables.
This largely eliminates the need for keeping a detailed analytic report
in many cases. Manufacturers of equipment who are required to evaluate
portable or mobile devices would likely have to perform more detailed
analysis and keep on file a specific technical report for review by the
Commission if requested. Also, in a few cases involving multiple
transmitters at large antenna farms detailed measurement studies may be
necessary. Reports of such studies would be retained by an applicant to
provide evidence of compliance if required.
Other Compliance Requirements
As was true for the previous rules, there are no specific
compliance requirements, as such. Under the Commission's NEPA rules,
applicants and licensees are required to submit an Environmental
Assessment (EA) if they do not comply with our RF exposure guidelines
(47 CFR Sec. 1.1311). An EA is a detailed accounting of the
consequences created by a specific action that may have a significant
environmental impact, in this case a Commission authorization of a
transmitter or facility that exceeds the RF guidelines. An EA would be
evaluated by the Commission to determine whether the authorization
should be granted in view of the environmental impact. In reality, this
leads to a de facto compliance requirement, since most applicants and
licensees who are not categorically excluded (see above) undertake
measures to ensure compliance before submitting an application in order
to avoid the preparation of a costly and time-consuming EA. For this
reason EAs are rarely filed with the Commission. This has not changed
from the existing rules. As for determining compliance, as mentioned
above, the Commission provides applicants with specific guidance in the
form of a technical bulletin. This bulletin is designed to minimize the
effort and burden required by an applicant to determine compliance with
the guidelines prior to submitting an application. Many options are
available for ensuring compliance, including restricting access to an
area where high RF levels exist, using warning signs or fences to
provide notice of potential RF exposure, use or protective shielding or
warning devices, reduction of power when people are in high RF areas
and, in the case of portable and mobile devices, designing devices to
minimize RF absorption in the body of the user.
Skills Needed to Meet Requirements
If a station is not categorically excluded, then the licensee or
applicant must make a determination of whether the station will comply
with the RF radiation limits. This study can be done by calculation or
measurement, depending upon the situation. The calculations can be done
in many cases by a radio technician or engineer familiar with radio
propagation. If measurements are necessary, then a radio technician or
engineer will also be required.
The applicant must indicate on its application that it meets the
NEPA requirements and, therefore, does not exceed the RF radiation
limits. This is usually done by checking a box on a form, which can be
done by a clerical person.
V. Steps Taken to Minimize the Economic Impact on Small Entities
The Commission has made every effort to devise ways to minimize the
impact of the new RF limits on small entities, while protecting the
health and safety of the public. However, we have incorporated
sufficient flexibility in the procedures to make compliance as
minimally burdensome as possible. We have taken the following steps to
ease the impact on small businesses.
1. The Commission has created a categorical exclusion that requires
only those transmitters that appear to have the highest potential to
create a significant environmental effect to perform an environmental
evaluation.
2. The Commission will revise OST Bulletin No. 65 to provide
guidance for determining compliance with FCC-specified RF limits. This
should be of particular assistance to small businesses since it will
provide straightforward information that should allow a quick
understanding of the requirements and a quick assessment of the
potential for compliance problems without the need for an expensive
consultant or measurement.
3. The Commission allows various methods for ensuring compliance
with RF limits such as fencing, warning signs, labels, and markings,
locked doors in roof-top areas, and the use of personal monitors and RF
protective clothing in an occupational environment.
4. The Commission has rejected its initial proposal to adopt
induced and contact currents limits due to the lack of reliable
equipment available.
5. The Commission has specified a variety of acceptable testing
methods and procedures that may be used to determine compliance. This
will allow each small business to choose a procedure that best meets
its needs in the manner that is least burdensome to it.
6. The Commission has always allowed multiple transmitter sites,
i.e., antenna farms, to pool their resources and have only one study
done for the entire site. This is very common at sites that have
multiple entities such as TV, FM, paging, cellular, etc. In most
circumstances, rather than each licensee hiring a separate consultant
and submitting a study showing their compliance with the guidelines,
one
[[Page 41014]]
consulting radio technician or radio engineer can be hired by the group
of licensees. The consultant surveys the entire site for compliance and
gives his recommendations and findings to each of the licensees at the
site. The licensees can then use the findings to show their compliance
with the guidelines. In this way the cost of compliance is minimized as
no one licensee has to pay the entire consulting fee, rather just a
portion of it.
The Commission has determined cost of performing an environmental
evaluation is minimal for 87 percent of the businesses required to
determine compliance. In normal situations, an environmental evaluation
can be performed within 1 hour or less with the use of the revised OST
Bulletin No. 65, ``Evaluating Compliance With FCC-Specified Guidelines
for Human Exposure to Radio Frequency Radiation.'' In situations
involving devices intended to be used in close proximity to the body,
only PCS, cellular, and SMR portable and mobile devices will be
required to evaluate compliance under the Commission's equipment
authorization process.
Report to Congress
The Commission shall send a copy of this Final Regulatory
Flexibility Analysis, along with this Report and Order, in a report to
Congress pursuant to the Small Business Regulatory Enforcement Fairness
Act of 1996, 5 U.S.C. Sec. 801(a)(1)(A). A copy of this FRFA will also
be published in the Federal Register.
List of Subjects
47 CFR Part 1
Environmental impact statement, Federal Communications Commission,
Radio, Reporting and recordkeeping requirements.
47 CFR Part 2
Federal Communications Commission, Radio, Reporting and
recordkeeping requirements.
47 CFR Part 15
Computer technology, Federal Communications Commission, Reporting
and recordkeeping requirements.
47 CFR Part 24
Federal Communications Commission, Personal communications service.
47 CFR Part 97
Communications equipment, Federal Communications Commission, Radio.
Federal Communications Commission
William F. Caton,
Acting Secretary.
Rule Changes
Title 47 of the Code of Federal Regulations, parts 1, 2, 15, 24 and
97 are amended as follows:
PART 1--PRACTICE AND PROCEDURE
1. The authority citation for part 1 continues to read as follows:
Authority: 47 U.S.C. 151, 154, 303 and 309(j) unless otherwise
noted.
2. Section 1.1307 is amended by revising paragraph (b), by removing
notes 1, 2 and 3 following paragraph (b), and by adding new paragraph
(e) to read as follows:
Sec. 1.1307 Actions that may have a significant environmental effect,
for which Environmental Assessments (EAs) must be prepared.
* * * * *
(b) In addition to the actions listed in paragraph (a) of this
section, Commission actions granting construction permits, licenses to
transmit or renewals thereof, equipment authorizations or modifications
in existing facilities, require the preparation of an Environmental
Assessment (EA) if the particular facility, operation or transmitter
would cause human exposure to levels of radiofrequency radiation in
excess of the limits in Sec. 1.1310 and Sec. 2.1093 of this chapter.
Applications to the Commission for construction permits, licenses to
transmit or renewals thereof, equipment authorizations or modifications
in existing facilities must contain a statement confirming compliance
with the limits unless the facility, operation, or transmitter is
categorically excluded, as discussed below. Technical information
showing the basis for this statement must be submitted to the
Commission upon request.
(1) The exposure limits in Sec. 1.1310 are generally applicable to
all facilities, operations and transmitters regulated by the
Commission. However, a determination of compliance with the exposure
limits in Sec. 1.1310, and preparation of an EA if the limits are
exceeded, is necessary only for facilities, operations and transmitters
that fall into the categories listed in Table 1, or those specified in
paragraph (b)(2) of this section. All other facilities, operations and
transmitters are categorically excluded from making such studies or
preparing an EA, except as indicated in paragraphs (c) and (d) of this
section. For purposes of Table 1, ``rooftop'' means the roof or
otherwise outside, topmost level or levels of a building structure that
is occupied as a workplace or residence and where either workers or the
general public may have access. The term ``power'' in column 2 of Table
1 refers to total operating power of the transmitting operation in
question in terms of effective radiated power (ERP), equivalent
isotropically radiated power (EIRP), or peak envelope power (PEP), as
defined in Sec. 2.1 of this chapter. For the case of the Cellular
Radiotelephone Service, subpart H of part 22 of this chapter; the
Personal Communications Service, part 24 of this chapter and covered
Specialized Mobile Radio Service operations, part 90 of this chapter,
the phrase ``total power of all channels'' in column 2 of Table 1 means
the sum of the ERP or EIRP of all co-located simultaneously operating
transmitters of the facility. When applying the criteria of Table 1,
radiation in all directions should be considered. For the case of
transmitting facilities using sectorized transmitting antennas,
applicants and licensees should apply the criteria to all transmitting
channels in a given sector, noting that for a highly directional
antenna there is relatively little contribution to ERP or EIRP
summation for other directions.
Table 1.--Transmitters, Facilities and Operations Subject to Routine
Environmental Evaluation
------------------------------------------------------------------------
Service (Title 47 CFR Rule Part) Evaluation required if:
------------------------------------------------------------------------
Experimental Radio Services (part 5)... Power > 100W ERP (164W EIRP).
Radio Frequency Devices (part 15)...... Millimeter wave devices
operating in one of the
following bands 46.7-46.8 GHz,
59.0-64.0 GHz or 76.0-77.0 GHz
(see Secs. 15.253 and 15.255
of this chapter).
Unlicensed personal
communications service devices
operating under subpart D of
this chapter.
[[Page 41015]]
Multipoint Distribution Service Non-rooftop antennas: height
(subpart K of part 21). above ground level to
radiation center < 10 m and
power > 1640 W EIRP.
Rooftop antennas: Power > 1640W
EIRP.
Paging and Radiotelephone Service Non-rooftop antennas: height
(subpart E of part 22). above ground level to
radiation center < 10 m and
power > 1000W ERP (1640 W
EIRP).
Rooftop antennas: power > 1000W
ERP (1640W EIRP).
Cellular Radiotelephone Service Non-rooftop antennas: height
(subpart H of part 22). above ground level to
radiation center < 10 m and
total power of all channels >
1000W ERP (1640 W EIRP).
Rooftop antennas: total power
of all channels > 1000W ERP
(1640W EIRP).
Personal Communications Services (part (1) Narrowband PCS (subpart D):
24). non-rooftop antennas: height
above ground level to
radiation center <10 m and
total power of all channels >
1000W ERP (1640 W EIRP).
Rooftop antennas: total power
of all channels > 1000W (1640W
EIRP).
(2) Broadband PCS (subpart E):
non-rooftop antennas: height
above ground level to
radiation center <10 m and
total power of all channels >
2000W ERP (3280 W EIRP).
Rooftop antennas: total power
of all channels > 2000W (3280W
EIRP).
Satellite Communications (part 25)..... All included.
Radio Broadcast Services (part 73)..... All included.
Experimental, auxiliary, and special Subparts A, G, L: power > 100W
broadcast and other program ERP.
distributional services (part 74). Subpart I: non-rooftop
antennas: height above ground
level to radiation center < 10
m and power > 1640 W EIRP.
Rooftop antennas: power > 1640W
EIRP.
Stations in the Maritime Services (part Ship earth stations only.
80).
Private Land Mobile Radio Services Non-rooftop antennas: height
Paging Operations (part 90). above ground level to
radiation center < 10 m and
power > 1000W ERP (1640 W
EIRP).
Rooftop antennas: power > 1000W
ERP (1640W EIRP).
Private Land Mobile Radio Services Non-rooftop antennas: height
Specialized Mobile Radio (``covered'' above ground level to
providers only--see below)\1\ (part radiation center < 10 m and
90). total power of all channels >
1000W ERP (1640 W EIRP).
Rooftop antennas: total power
of all channels > 1000W ERP
(1640W EIRP).
Amateur Radio Service (part 97)........ Transmitter power > 50W PEP.
------------------------------------------------------------------------
\1\ Note: ``Covered'' SMR providers includes geographic area SMR
licensees in the 800 MHz and 900 MHz bands that offer real-time, two-
way switched voice service that is interconnected with the public
switched network and Incumbent Wide Area SMR licensees, as defined in
Sec. 20.3 of this chapter.
(2) Mobile and portable transmitting devices that operate in the
Cellular Radiotelephone Service, the Personal Communications Services
(PCS), the Satellite Communications Services, the Maritime Services
(ship earth stations only) and covered Specialized Mobile Radio Service
providers authorized under subpart H of part 22, part 24, part 25, part
80, and part 90 of this chapter are subject to routine environmental
evaluation for RF exposure prior to equipment authorization or use, as
specified in Secs. 2.1091 and 2.1093 of this chapter. All unlicensed
PCS and millimeter wave devices are also subject to routine
environmental evaluation for RF exposure prior to equipment
authorization or use, as specified in Sec. 15.253(f), Sec. 15.255(g),
and Sec. 15.319(i) of this chapter. All other mobile, portable, and
unlicensed transmitting devices are categorically excluded from routine
environmental evaluation for RF exposure under Secs. 2.1091 and 2.1093
of this chapter except as specified in paragraphs (c) and (d) of this
section.
(3) In general, when the guidelines specified in Sec. 1.1310 are
exceeded in an accessible area due to the emissions from multiple fixed
transmitters, actions necessary to bring the area into compliance with
the guidelines are the shared responsibility of all licensees whose
transmitters produce field strengths or power density levels at the
area in question in excess of 1% of the exposure limits applicable to
their particular transmitter.
(i) Applicants for proposed (not otherwise excluded) transmitters,
facilities or modifications that would cause non-compliance with the
limits specified in Sec. 1.1310 at an accessible area previously in
compliance must submit an EA if emissions from the applicant's
transmitter or facility would result in a field strength or power
density at the area in question that exceeds 1% of the exposure limit
applicable to that transmitter or facility.
(ii) Renewal applicants whose (not otherwise excluded) transmitters
or facilities contribute to the field strength or power density at an
accessible area not in compliance with the limits specified in
Sec. 1.1310 must submit an EA if emissions from the applicant's
transmitter or facility results in a field strength or power density at
the area in question that exceeds 1% of the exposure limit applicable
to that transmitter or facility.
(4) Transition Provisions. For applications filed with the
Commission prior to January 1, 1997, Commission actions granting
construction permits, licenses to transmit or renewals thereof,
equipment authorizations, or modifications in existing facilities
require the preparation of an Environmental Assessment if the
particular facility, operation or transmitter would cause human
exposure to levels of radiofrequency radiation that are in excess of
the requirements contained in paragraphs (b)(4) (i) through (iii) of
this section. These transition provisions do not apply to applications
for equipment authorization of mobile, portable, and unlicensed devices
specified in paragraph (b) (2) of this section.
(i) For facilities and operations licensed or authorized under
parts 5, 21 (subpart K), 25, 73, 74 (subparts A, G, I, and L), and 80
of this chapter, the ``Radio Frequency Protection Guides'' recommended
in ``American National Standard Safety Levels with Respect to
[[Page 41016]]
Human Exposure to Radio Frequency Electromagnetic Fields, 300 kHz to
100 GHz'', (ANSI C95.1-1982), issued by the American National Standards
Institute (ANSI) and copyright 1982 by the Institute of Electrical and
Electronics Engineers, Inc., New York, New York shall apply. With
respect to subpart K of part 21 and subpart I of Part 74 of this
chapter, these requirements apply only to multipoint distribution
service and instructional television fixed service stations
transmitting with an equivalent isotropically radiated power (EIRP) in
excess of 200 watts. With respect to subpart L of part 74 of this
chapter, these requirements apply only to FM booster and translator
stations transmitting with an effective radiated power (ERP) in excess
of 100 watts. With respect to part 80 of this chapter, these
requirements apply only to ship earth stations.
(ii) For facilities and operations licensed or authorized under
part 24 of this chapter, licensees and manufacturers are required to
ensure that their facilities and equipment comply with IEEE C95.1-1991
(ANSI/IEEE C95.1-1992), ``Safety Levels With Respect to Human Exposure
to Radio Frequency Electromagnetic Fields, 3 kHz to 300 GHz.''
Measurement methods are specified in IEEE C95.3-1991, ``Recommended
Practice for the Measurement of Potentially Hazardous Electromagnetic
Fields--RF and Microwave.'' Copies of these standards are available
from IEEE Standards Board, 445 Hoes Lane, P.O. Box 1331, Piscataway, NJ
08855-1331. Telephone: 1-800-678-4333. The limits for both
``controlled'' and ``uncontrolled'' environments, as defined by IEEE
C95.1-1991, will apply to all PCS base and mobile stations, as
appropriate.
(iii) Applications for all other types of facilities and operations
are categorically excluded from routine RF radiation evaluation except
as
FR Doc. 96-20082 Guidelines for Evaluating the Environmental Effects of Radiofrequency Radiation
provided in paragraphs (c) and (d) of this section.
* * * * *
(e) No State or local government or instrumentality thereof may
regulate the placement, construction, and modification of personal
wireless service facilities on the basis of the environmental effects
of radio frequency emissions to the extent that such facilities comply
with the regulations contained in this chapter concerning the
environmental effects of such emissions. For purposes of this
paragraph:
(1) The term ``personal wireless service'' means commercial mobile
services, unlicensed wireless services, and common carrier wireless
exchange access services;
(2) The term ``personal wireless service facilities'' means
facilities for the provision of personal wireless services;
(3) The term ``unlicensed wireless services'' means the offering of
telecommunications services using duly authorized devices which do not
require individual licenses, but does not mean the provision of direct-
to-home satellite services; and
(4) The term ``direct-to-home satellite services'' means the
distribution or broadcasting of programming or services by satellite
directly to the subscriber's premises without the use of ground
receiving or distribution equipment, except at the subscriber's
premises or in the uplink process to the satellite.
3. A new Section 1.1310 is added to read as follows:
Sec. 1.1310 Radiofrequency radiation exposure limits.
The criteria listed in Table 1 shall be used to evaluate the
environmental impact of human exposure to radiofrequency (RF) radiation
as specified in Sec. 1.1307(b), except in the case of portable devices
which shall be evaluated according to the provisions of Sec. 2.1093 of
this chapter. Further information on evaluating compliance with these
limits can be found in the FCC's OST/OET Bulletin Number 65,
``Evaluating Compliance with FCC-Specified Guidelines for Human
Exposure to Radiofrequency Radiation.''
Note to Introductory Paragraph: These limits are generally based
on recommended exposure guidelines published by the National Council
on Radiation Protection and Measurements (NCRP) in ``Biological
Effects and Exposure Criteria for Radiofrequency Electromagnetic
Fields,'' NCRP Report No. 86, Sections 17.4.1, 17.4.1.1, 17.4.2 and
17.4.3. Copyright NCRP, 1986, Bethesda, Maryland 20814. In the
frequency range from 100 MHz to 1500 MHz, exposure limits for field
strength and power density are also generally based on guidelines
recommended by the American National Standards Institute (ANSI) in
Section 4.1 of ``IEEE Standard for Safety Levels with Respect to
Human Exposure to Radio Frequency Electromagnetic Fields, 3 kHz to
300 GHz,'' ANSI/IEEE C95.1-1992, Copyright 1992 by the Institute of
Electrical and Electronics Engineers, Inc., New York, New York
10017.
Table 1.-- Limits for Maximum Permissible Exposure (MPE)
----------------------------------------------------------------------------------------------------------------
Electric field Magnetic field Power density Averaging time
Frequency range (MHz) strength (V/m) strength (A/m) (mW/cm\2\) (minutes)
----------------------------------------------------------------------------------------------------------------
(A) Limits for Occupational/Controlled Exposures
----------------------------------------------------------------------------------------------------------------
0.3-3.0............................. 614 1.63 *(100) 6
3.0-30.............................. 1842/f 4.89/f *(900/f\2\) 6
30-300.............................. 61.4 0.163 1.0 6
300-1500............................ ................. ................. f/300 6
1500-100,000........................ ................. ................. 5 6
----------------------------------------------------------------------------------------------------------------
(B) Limits for General Population/Uncontrolled Exposure
----------------------------------------------------------------------------------------------------------------
0.3-1.34............................ 614 1.63 *(100) 30
1.34-30............................. 824/f 2.19/f *(180/f\2\) 30
30-300.............................. 27.5 0.073 0.2 30
300-1500............................ ................. ................. f/1500 30
1500-100,000........................ ................. ................. 1.0 30
----------------------------------------------------------------------------------------------------------------
f = frequency in MHz
* = Plane-wave equivalent power density
Note 1 to Table 1: Occupational/controlled limits apply in
situations in which persons are exposed as a consequence of their
employment provided those persons are fully aware of the potential
for exposure and can exercise control over their exposure. Limits
for occupational/controlled exposure also apply in situations when
an individual is transient through a location where
[[Page 41017]]
occupational/controlled limits apply provided he or she is made
aware of the potential for exposure.
Note 2 to Table 1: General population/uncontrolled exposures
apply in situations in which the general public may be exposed, or
in which persons that are exposed as a consequence of their
employment may not be fully aware of the potential for exposure or
can not exercise control over their exposure.
PART 2--FREQUENCY ALLOCATIONS AND RADIO TREATY MATTERS; GENERAL
RULES AND REGULATIONS
1. The authority citation for part 2 continues to read as follows:
Authority: Sec. 4, 302, 303 and 307 of the Communications Act of
1934, as amended, 47 U.S.C. Sections 154, 302, 303 and 307, unless
otherwise noted.
2. A new center heading and Sec. 2.1091 are added to subpart J to
read as follows: Radiofrequency Radiation Exposure
Sec. 2.1091 Radiofrequency radiation exposure evaluation: mobile and
unlicensed devices.
(a) Requirements of this section are a consequence of Commission
responsibilities under the National Environmental Policy Act to
evaluate the environmental significance of its actions. See subpart I
of part 1 of this chapter, in particular Sec. 1.1307(b).
(b) For purposes of this section mobile devices are defined as
transmitters designed to be used in other than fixed locations and to
generally be used in such a way that a separation distance of at least
20 centimeters is normally maintained between radiating antennas and
the body of the user or nearby persons.
(c) Mobile devices that operate in the Cellular Radiotelephone
Service, the Personal Communications Services, the Satellite
Communications Services, the Maritime Services and the Specialized
Mobile Radio Service authorized under subpart H of part 22, part 24,
part 25, part 80 of this chapter (ship earth station devices only) and
part 90 of this chapter (``covered'' SMR devices only, as defined in
the note to Table 1 of Sec. 1.1307(b)(1) of this chapter), are subject
to routine environmental evaluation for RF exposure prior to equipment
authorization or use if their effective radiated power (ERP) is 1.5
watts or more. Unlicensed personal communications service and
unlicensed millimeter wave devices authorized under Sec. 15.253,
Sec. 15.255 and subpart D of part 15 of this chapter are also subject
to routine environmental evaluation for RF exposure prior to equipment
authorization or use, regardless of their power used, unless they meet
the definition of a portable device as specified in Sec. 2.1093(b). All
other mobile and unlicensed transmitting devices are categorically
excluded from routine environmental evaluation for RF exposure prior to
equipment authorization, except as specified in Secs. 1.1307(c) and
1.1307(d) of this chapter. Applications for equipment authorization of
mobile and unlicensed transmitting devices subject to routine
environmental evaluation must contain a statement confirming compliance
with the limits specified in paragraph (d) of this section as part of
their application. Technical information showing the basis for this
statement must be submitted to the Commission upon request.
(d) The limits to be used for evaluation are specified in
Sec. 1.1310 of this chapter. All unlicensed personal communications
service (PCS) devices shall be subject to the limits for general
population/uncontrolled exposure.
(1) For purposes of analyzing mobile transmitting devices under the
occupational/controlled criteria specified in Sec. 1.1310 of this
chapter, time-averaging provisions of the guidelines may be used in
conjunction with typical maximum duty factors to determine maximum
likely exposure levels.
(2) Time-averaging provisions may not be used in determining
typical exposure levels for devices intended for use by consumers in
general population/uncontrolled environments as defined in Sec. 1.1310
of this chapter. However, ``source-based'' time-averaging based on an
inherent property or duty-cycle of a device is allowed. An example of
this is the determination of exposure from a device that uses digital
technology such as a time-division multiple-access (TDMA) scheme for
transmission of a signal. In general, maximum average power levels must
be used to determine compliance.
(3) Compliance with exposure guidelines for mobile and unlicensed
devices can be accomplished by the use of warning labels and by
providing users with information concerning minimum separation
distances from transmitting structures and proper installation of
antennas.
4. A new section 2.1093 is added to subpart J to read as follows:
Sec. 2.1093 Radiofrequency radiation exposure evaluation: portable
devices.
(a) Requirements of this section are a consequence of Commission
responsibilities under the National Environmental Policy Act to
evaluate the environmental significance of its actions. See subpart I
of Part 1 of this chapter, in particular Sec. 1.1307(b).
(b) For purposes of this section portable devices are defined as
transmitters designed to be used within 20 centimeters of the body of
the user.
(c) Portable devices that operate in the Cellular Radiotelephone
Service, the Personal Communications Services, the Satellite
Communications services, the Maritime Services and the Specialized
Mobile Radio Service authorized under subpart H of part 22 of this
chapter, part 24 of this chapter, part 25 of this chapter, part 80 of
this chapter (ship earth station devices only), part 90 of this chapter
(``covered'' SMR devices only, as defined in the note to Table 1 of
Sec. 1.1307(b)(1) of this chapter), and portable unlicensed personal
communication service and millimeter wave devices authorized under
Sec. 15.253, Sec. 15.255 or subpart D of part 15 of this chapter are
subject to routine environmental evaluation for RF exposure prior to
equipment authorization or use. All other portable transmitting devices
are categorically excluded from routine environmental evaluation for RF
exposure prior to equipment authorization, except as specified in
Secs. 1.1307(c) and 1.1307(d) of this chapter. Applications for
equipment authorization of portable transmitting devices subject to
routine environmental evaluation must contain a statement confirming
compliance with the limits specified in paragraph (d) of this section
as part of their application. Technical information showing the basis
for this statement must be submitted to the Commission upon request.
(d) The limits to be used for evaluation are based generally on
criteria published by the American National Standards Institute (ANSI)
for localized specific absorption rate (``SAR'') in Section 4.2 of
``IEEE Standard for Safety Levels with Respect to Human Exposure to
Radio Frequency Electromagnetic Fields, 3 kHz to 300 GHz,'' ANSI/IEEE
C95.1-1992, Copyright 1992 by the Institute of Electrical and
Electronics Engineers, Inc., New York, New York 10017. These criteria
for SAR evaluation are similar to those recommended by the National
Council on Radiation Protection and Measurements (NCRP) in ``Biological
Effects and Exposure Criteria for Radiofrequency Electromagnetic
Fields,'' NCRP Report No. 86, Section 17.4.5. Copyright NCRP, 1986,
Bethesda, Maryland 20814. SAR is a measure of the rate of energy
absorption due to exposure to an RF transmitting source. SAR values
have been related to threshold levels for potential biological hazards.
The criteria to be used are
[[Page 41018]]
specified in paragraphs (d)(1) and (d)(2) of this section.
(1) Limits for Occupational/Controlled exposure: 0.4 W/kg as
averaged over the whole-body and spatial peak SAR not exceeding 8 W/kg
as averaged over any 1 gram of tissue (defined as a tissue volume in
the shape of a cube). Exceptions are the hands, wrists, feet and ankles
where the spatial peak SAR shall not exceed 20 W/kg, as averaged over
an 10 grams of tissue (defined as a tissue volume in the shape of a
cube). Occupational/Controlled limits apply when persons are exposed as
a consequence of their employment provided these persons are fully
aware of and exercise control over their exposure. Awareness of
exposure can be accomplished by use of warning labels or by specific
training or education through appropriate means, such as an RF safety
program in a work environment.
(2) Limits for General Population/Uncontrolled exposure: 0.08 W/kg
as averaged over the whole-body and spatial peak SAR not exceeding 1.6
W/kg as averaged over any 1 gram of tissue (defined as a tissue volume
in the shape of a cube). Exceptions are the hands, wrists, feet and
ankles where the spatial peak SAR shall not exceed 4 W/kg, as averaged
over any 10 grams of tissue (defined as a tissue volume in the shape of
a cube). General Population/Uncontrolled limits apply when the general
public may be exposed, or when persons that are exposed as a
consequence of their employment may not be fully aware of the potential
for exposure or do not exercise control over their exposure. Warning
labels placed on consumer devices such as cellular telephones will not
be sufficient reason to allow these devices to be evaluated subject to
limits for occupational/controlled exposure in paragraph (d)(1) of this
section.
(3) Compliance with SAR limits can be demonstrated by either
laboratory measurement techniques or by computational modeling.
Methodologies and references for SAR evaluation are described in
numerous technical publications including ``IEEE Recommended Practice
for the Measurement of Potentially Hazardous Electromagnetic Fields--RF
and Microwave,'' IEEE C95.3-1991.
(4) For purposes of analyzing portable transmitting devices under
the occupational/controlled criteria, the time-averaging provisions of
the MPE guidelines identified in Sec. 1.1310 of this chapter can be
used in conjunction with typical maximum duty factors to determine
maximum likely exposure levels.
(5) Time-averaging provisions of the MPE guidelines identified in
Sec. 1.1310 of this chapter may not be used in determining typical
exposure levels for portable devices intended for use by consumers,
such as hand-held cellular telephones, that are considered to operate
in general population/uncontrolled environments as defined above.
However, ``source-based'' time-averaging based on an inherent property
or duty-cycle of a device is allowed. An example of this would be the
determination of exposure from a device that uses digital technology
such as a time-division multiple-access (TDMA) scheme for transmission
of a signal. In general, maximum average power levels must be used to
determine compliance.
PART 15--RADIO FREQUENCY DEVICES
1. The authority citation for part 15 continues to read as follows:
Authority: Secs. 4, 302, 303, 304, 307 and 624A of the
Communications Act of 1934, as amended, 47 U.S.C. 154, 302, 303, 307
and 544A.
2. Section 15.253 is amended by revising paragraph (f) to read as
follows:
Sec. 15.253 Operation within the bands 46.7-46.9 GHz and 76.0-77.0
GHz.
* * * * *
(f) Regardless of the power density levels permitted under this
section, devices operating under the provisions of this section are
subject to the radiofrequency radiation exposure requirements specified
in Sec. 1.1307(b), Sec. 2.1091 and Sec. 2.1093 of this chapter, as
appropriate. Applications for equipment authorization of devices
operating under this section must contain a statement confirming
compliance with these requirements for both fundamental emissions and
unwanted emissions. Technical information showing the basis for this
statement must be submitted to the Commission upon request.
3. Section 15.255 is amended by revising paragraph (g) to read as
follows:
Sec. 15.255 Operation within the band 59.0-64.0 GHz.
* * * * *
(g) Regardless of the power density levels permitted under this
section, devices operating under the provisions of this section are
subject to the radiofrequency radiation exposure requirements specified
in Sec. 1.1307(b), Sec. 2.1091 and Sec. 2.1093 of this chapter, as
appropriate. Applications for equipment authorization of devices
operating under this section must contain a statement confirming
compliance with these requirements for both fundamental emissions and
unwanted emissions. Technical information showing the basis for this
statement must be submitted to the Commission upon request.
4. Section 15.319 is amended by revising paragraph (i), to read as
follows:
Sec. 15.319 General technical requirements.
* * * * *
(i) Unlicensed PCS devices are subject to the radiofrequency
radiation exposure requirements specified in Sec. 1.1307(b),
Sec. 2.1091 and Sec. 2.1093 of this chapter, as appropriate. All
equipment shall be considered to operate in a ``general population/
uncontrolled'' environment. Applications for equipment authorization of
devices operating under this section must contain a statement
confirming compliance with these requirements for both fundamental
emissions and unwanted emissions. Technical information showing the
basis for this statement must be submitted to the Commission upon
request.
PART 24--PERSONAL COMMUNICATIONS SERVICES
1. The authority citation for part 24 continues to read as follows:
Authority: 47 U.S.C. 154, 301, 302, 303, 309, and 332, unless
otherwise noted.
2. Section 24.52 is revised to read as follows:
Sec. 24.52 RF hazards.
Licensees and manufacturers are subject to the radiofrequency
radiation exposure requirements specified in Sec. 1.1307(b),
Sec. 2.1091 and Sec. 2.1093 of this chapter, as appropriate.
Applications for equipment authorization of mobile or portable devices
operating under this section must contain a statement confirming
compliance with these requirements for both fundamental emissions and
unwanted emissions. Technical information showing the basis for this
statement must be submitted to the Commission upon request.
PART 97--AMATEUR RADIO SERVICE
1. The authority citation for part 97 continues to read as follows:
Authority: 48 Stat. 1066, 1082, as amended; 47 U.S.C. Secs. 154,
303. Interpret or apply 48 Stat. 1064-1068, 1081-1105, as amended;
47 U.S.C. Secs. 151-155, 301-609, unless otherwise noted.
2. Section 97.13 is amended by adding paragraph (c) to read as
follows:
[[Page 41019]]
Sec. 97.13 Restrictions on station location.
* * * * *
(c) Before causing or allowing an amateur station to transmit from
any place where the operation of the station could cause human exposure
to levels of radiofrequency (RF) radiation in excess of that allowed
under Sec. 1.1310 of this chapter, the licensee is required to take
certain actions. A routine RF radiation evaluation, as discussed in
Sec. 1.1307(b) of this chapter, is required if the transmitter power
exceeds 50 watts peak envelope power; otherwise the operation is
categorically excluded from routine RF radiation evaluation except as
specified in Sec. 1.1307(c) and Sec. 1.1307(d) of this chapter. Where
the routine evaluation indicates that the RF radiation could be in
excess of the limits contained in Sec. 1.1310 of this chapter, the
licensee must take action to prevent such an occurrence. Further
information on evaluating compliance with these limits can be found in
the FCC's OST/OET Bulletin Number 65, ``Evaluation Compliance with FCC-
Specified Guidelines for Human Exposure to Radiofrequency Radiation.''
3. Section 97.503 is amended by revising paragraphs (b)(1), (b)(2),
and (b)(3), and adding entry 10 to the table in paragraph (c) to read
as follows:
Sec. 97.503 Element standards.
* * * * *
(b) * * *
(1) Element 2: 35 questions concerning the privileges of a Novice
Class operator license. The minimum passing score is 26 questions
answered correctly.
(2) Element 3(A): 30 questions concerning the privileges of a
Technician Class operator license. The minimum passing score is 22
questions answered correctly.
(3) Element 3(B): 30 questions concerning the privileges of a
General Class operator license. The minimum passing score is 22
questions answered correctly.
* * * * *
(c) * * *
------------------------------------------------------------------------
Topics 2 3(A) 3(B) 4(A) 4(B)
------------------------------------------------------------------------
* * * * * * *
(10) Radiofrequency
environmental safety practices
at an amateur station.......... 5 5 5 0 0
------------------------------------------------------------------------
[FR Doc. 96-20082 Filed 8-5-96; 2:01 pm]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-20080 Radio Broadcasting Services; Macomb, IL
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Page 41019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20080]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 96-87; RM-8782]
Radio Broadcasting Services; Macomb, IL
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Commission, at the request of WMS1, Inc., allots Channel
240A at Macomb, Illinois, as the community's third local commercial FM
transmission service See 61 FR 18540, April 26, 1996. Channel 240A can
be allotted to Macomb in compliance with the Commission's minimum
distance separation requirements with a site restriction of 0.5
kilometers (0.3 miles) south to avoid a short-spacing to the licensed
site of Station WMXG(FM), Channel 241C1, Clinton, Iowa. The coordinates
for Channel 240A at Macomb are North Latitude 40-27-09 and West
Longitude 90-40-12. With this action, this proceeding is terminated.
DATES: Effective September 16, 1996. The window period for filing
applications will open on September 16, 1996, and close on October 17,
1996.
FOR FURTHER INFORMATION CONTACT: Sharon P. McDonald, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order, MM Docket No. 96-87, adopted July 26, 1996, and
released August 2, 1996. The full text of this Commission decision is
available for inspection and copying during normal business hours in
the FCC Reference Center (Room 239), 1919 M Street, NW., Washington,
DC. The complete text of this decision may also be purchased from the
Commission's copy contractors, International Transcription Service,
Inc., (202) 857-3800, 2100 M Street, NW., Suite 140, Washington, DC
20037.
List of Subjects in 47 CFR Part 73
Radio broadcasting.
Part 73 of title 47 of the Code of Federal Regulations is amended
as follows:
PART 73--[AMENDED]
1. The authority citation for part 73 continues to read as follows:
Authority: Sections 303, 48 Stat., as amended, 1082; 47 U.S.C.
154, as amended.
Sec. 73.202 [Amended]
2. Section 73.202(b), the Table of FM Allotments under Illinois, is
amended by adding Channel 240A at Macomb.
Federal Communications Commission.
John A. Karousos,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-20080 Filed 8-6-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-20075 Food Labeling; Nutrition Labeling, Small Business Exemption
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40963-40981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20075]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 101
[Docket No. 94N-0031]
RIN 0910-AA19
Food Labeling; Nutrition Labeling, Small Business Exemption
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending its food
labeling regulations to modify the basis on which low-volume food
products of small businesses are exempted from the requirements for
nutrition labeling. The regulations also establish a notification
procedure for small businesses to claim exemption for qualifying food
products. This final rule is in response to the Nutrition Labeling and
Education Act Amendments of 1993 (the 1993 amendments), and it is
intended to provide an understanding of how the small business food
labeling exemption provisions of the 1993 amendments operate.
DATES: The effective date of this rule is October 7, 1996.
Submit written comments on the information collection requirements
by October 7, 1996. This information collection has been approved by
the Office of Management and Budget (OMB) for 90 days, under OMB
control no. 0910-0324.
ADDRESSES: Submit written comments on the information collection
requirements to the Dockets Management Branch (HFA-305), Food and Drug
Administration, 12420 Parklawn Dr., rm. 1-23, Rockville, MD 20857.
FOR FURTHER INFORMATION CONTACT: Gerad L. McCowin, Center for Food
Safety and Applied Nutrition (HFS-151), Food and Drug Administration,
200 C St. SW., Washington, DC 20204, 202-205-4561.
SUPPLEMENTARY INFORMATION:
I. Background
A. Procedural
On November 8, 1990, the Nutrition Labeling and Education Act of
1990 (Pub. L. 101-535) (the 1990 amendments) was enacted. This new law
amended the Federal Food, Drug, and Cosmetic Act (the act) in a number
of important ways. One of the most notable aspects of the 1990
amendments is that they added section 403(q) to the act (21 U.S.C.
343(q)). This section, as amended by the Nutrition Labeling and
Education Act Amendments of 1993 (Pub. L. 103-80) (the 1993 amendments)
and the Dietary Supplement Health and Education Act of 1994 (Pub. L.
103-417) (the DSHEA), provides that, with certain exceptions, a food,
including both conventional foods and dietary supplements, is
misbranded unless its label or labeling bears certain nutrition
information (nutrition labeling).
Among the exceptions that Congress made to the nutrition labeling
requirement was one for small businesses based upon the value of their
gross sales (section 403(q)(5)(D) of the act). Following the expression
of concerns by small businesses about the narrow coverage of the
exemption and about the problems that relatively small firms would have
in meeting the requirements of the new law, Congress passed the 1993
amendments establishing a new exemption for low-volume food products of
small businesses under section 403(q)(5)(E) of the act. This section
provides that low-volume products of small businesses need not be
nutrition labeled.
What constitutes a low-volume food product is defined in the act by
the number of units of the product sold per year; what constitutes a
small business is defined by the number of full-time equivalent
employees (FTE's) that the firm employs. For a food product to be
exempt under this section, a small business must file a notice with FDA
claiming the exemption and providing information as to: (1) The average
number of FTE's for itself and all of its affiliates and (2) the
approximate number of units of its sales in the United States for each
product for which an exemption is claimed. For products that were on
the market before May 8, 1994, the 1993 amendments provide a gradual
phase-down of what constitutes a low-volume food product of a small
business. The number of units decreases from ``fewer than 600,000'' for
the 12-month period before May 8, 1994; to ``fewer than 400,000'' for
the 12-month period before May 8, 1995; to ``fewer than 200,000'' for
the 12-month period before May 8, 1996; and to ``fewer than 100,000''
thereafter. The number of FTE's starts at ``fewer than 300'' through
May 8, 1995, decreases to ``fewer than 200'' for the year before May 8,
1996, and down to ``fewer than
[[Page 40964]]
100'' thereafter. Products that initially come onto the market after
May 8, 1994, are subject to the ``fewer than 100,000 unit and 100 FTE''
limit.
Thus, the 1993 amendments provide additional time before low-volume
food products of small businesses must conform with the requirements
for nutrition labeling. By doing so, the 1993 amendments permit small
businesses to use up stocks of labels, thereby reducing the costs of
label inventory disposal, and to avoid having to compete for design and
printing resources with larger firms. By providing that no food product
from a firm having fewer than 100 employees and for which there are
sales of fewer than 100,000 units per year will have to be nutrition
labeled (at least until after May 8, 2002), the 1993 amendments save
small firms the expense of nutrient analysis and preparation of new
labels for those products.
Under the provisions of the 1993 amendments, as noted above,
persons that claim an exemption for a low-volume food product must file
an annual notice with FDA claiming the exemption. For products on the
market before May 8, 1994, the first such notice was due May 7, 1994,
and a second notice was due on May 7, 1995 (section 403(q)(5)(E)(iii)
of the act). Although the filing of the notice is necessary for an
exemption, it does not entitle a firm to an exemption. Under section
403(q)(5)(E)(I)(I) and (q)(5)(E)(ii) of the act, a product is not
exempt if its labeling provides nutrition information or bears a
nutrient content or health claim.
One other aspect of the small business exemption is relevant for
background purposes. In providing the new exemption for low-volume food
products of small businesses (section 403(q)(5)(E) of the act),
Congress noted that FDA had misinterpreted its intent as related to the
small business exemption in the 1990 amendments, which is based upon
total gross sales, by applying it to manufacturers, packers, and
distributors in addition to retailers (section 403(q)(5)(D)). However,
recognizing that FDA had issued regulations that small businesses were
relying on, Congress provided that section 403(q)(5)(D) of the act
would apply to all firms through May 7, 1995, but only to firms that
sell directly to the consumer (i.e., retailers) after that date
(Statement of Explanation, H.R. 2900, 139 Congressional Record H6358
(August 6, 1993)).
The 1993 amendments were self-effectuating in establishing the
provisions for exemption from nutrition labeling for low-volume foods
of small businesses. In passing the 1993 amendments, Congress was
concerned that action be taken quickly. In discussing the need for
quick action, Senator Bumpers noted that: ``To come into compliance
with the May 1994, effective date of the Nutrition Labeling and
Education Act requirements, small businesses must in the very near
future begin to incur the cost of initiating product analysis and
labeling redesign.'' (139 Congressional Record S10818 (August 6, 1993.)
Further, in introducing H.R. 2900 (the bill that became the 1993
amendments) for consideration, Senator Kennedy stated that: ``No action
or response by the FDA is required for the exemption to be in place.
Businesses with fewer than 10 employees, which sell fewer than 10,000
units of products, are (not) required to file any notice with the
FDA.'' (139 Congressional Record S10817 (August 6, 1993).) The
provisions of the 1993 amendments became effective upon their enactment
on August 13, 1993.
Although FDA recognized that the 1993 amendments were self-
effectuating, it concluded that rulemaking would be useful in providing
a common understanding of how the exemption provisions operate. Thus,
to facilitate implementation of the 1993 amendments, FDA published in
the Federal Register of March 14, 1994, a proposal entitled ``Food
Labeling; Nutrition Labeling, Small Business Exemption'' (hereinafter
referred to as ``the small business exemption proposal'') (59 FR 11872)
to: (1) Modify Sec. 101.9(j)(1)(21 CFR 101.9(j)(1)) and
Sec. 101.36(f)(1) (21 CFR 101.36(f)(1)), which provide for a small
business exemption based upon gross sales, to reflect the provisions of
the new law, (2) incorporate the provisions for exemption of low-volume
food products of small businesses, and (3) establish procedures for the
filing with FDA of notices from small businesses claiming exemptions
for low-volume food products.
FDA received 30 letters, each containing one or more comments, to
the small business exemption proposal. The responses were received from
trade and retail associations, Federal and State government agencies,
and industry. A number of the comments supported various aspects of the
proposal. Several comments addressed issues outside the scope of this
proposal, which will not be responded to here. A number of comments
suggested modifications in, or were opposed to, various provisions of
the small business exemption proposal. A summary of the arguments and
changes suggested by these latter comments, and the agency's responses,
are provided below.
B. FDA's Experience with the Filing of Notices
Before responding to the comments, it may be informative to discuss
FDA's experience with the notices that have been submitted claiming
exemptions under the 1993 amendments. FDA began receiving notices
almost immediately after enactment of the 1993 amendments with
approximately 150 notices being received by March 14, 1994, when it
published the small business exemption proposal. Approximately, 3,600
more notices were received by May 7, 1994, the date when all such
notices were to have been filed for products already on the market. The
agency has continued to receive notices from firms claiming exemption
for products that had been on the market before May 8, 1994, as well as
notices for new firms and new products.
Although not required by the 1993 amendments to approve or even
review the notices, FDA has maintained a file on each notice and has
attempted to acknowledge receipt of the notice. One of FDA's first
steps following receipt of a notice has been to record the name and
address of the firm in a computer data base. In establishing and
maintaining its file of notices claiming an exemption, FDA has reviewed
each notice to determine whether it contained the basic information on
the number of employees and the number of units of food products sold
by the firm in the United States. Finally, FDA has issued a letter
acknowledging receipt of the notice for each notice that appeared to
contain complete information and appeared to, in fact, be qualified for
the exemption.
One of the intended uses of the computer data base information on
firms that had submitted notices to the agency was to develop for FDA
field offices and State enforcement agencies a list of firms that had
submitted notices claiming an exemption under the provisions of the
1993 amendments. Enforcement action under the 1990 amendments was
delayed until after August 8, 1994, by enactment of Pub. L. 103-261 on
May 26, 1994. This public law extended the time period for compliance
with the provisions of section 403(q) of the act until after August 8,
1994, for certain food products. By August 8, 1994, FDA had received
approximately 6,000 notices claiming exemption under the 1993
amendments. Between that time and the present, FDA has received
approximately 3,000 notices from
[[Page 40965]]
additional firms claiming exemptions under the 1993 amendments.
In August 1994, FDA made its data base of the names and addresses
of each firm that had submitted a notice under the provisions of the
1993 amendments available to its field offices and State enforcement
agencies through a computer bulletin board system called ``FDA PRIME
CONNECTION,'' which is maintained by the agency. FDA also placed
information concerning the names and addresses of foreign firms and
American importers filing notices on a second bulletin board system
called ``FIARS'' (``FDA Import Alert Retrieval System'') that is
available to FDA's import offices. FDA's enforcement offices were
advised to review these listings to determine whether a firm had
submitted a notice under the 1993 amendments if a product appeared to
be out of compliance with the nutrition labeling requirements of the
act.
As stated above, under the 1993 amendments, the notice claiming an
exemption must be resubmitted every 12 months. The anniversary date for
most such notices, i.e., those covering products on the market before
May 8, 1994, is May 7th of each year. By May 7, 1995, FDA had received
just over 1,100 notices claiming a continued exemption for food
products for the time period of May 8, 1995, to May 7, 1996, under the
provisions of section 403(q)(5)(E)(ii)(II) of the act. In the beginning
of June, the agency sent a letter to each firm that had not yet renewed
its exemption reminding it of the need to submit a new exemption notice
to claim exemption for eligible products for the time period of May 8,
1995, to May 7, 1996. The reminder letter asked that the notices be
submitted to the agency by July 10, 1995. By July 31, 1995, FDA had
received a total of approximately 4,000 notices for the time period of
May 8, 1995, to May 7, 1996. A small number of firms responded to the
June reminder letters by stating that they were out of business or had
revised the labels of their products to comply with the requirements
for nutrition labeling.
A small number of the notices submitted to the agency were
deficient, or inconsistent with the provisions of the 1993 amendments,
in one or more aspects. A small number of the notices were deficient in
that they did not supply information on the average number of FTE's or
the number of units of product sold in the United States. Others were
deficient in that they did not name the products sold in the United
States for which the firm was claiming exemption. Some notices were
inconsistent with the provisions of the 1993 amendments in that the
average number of FTE's was 300 or more, or the number of units sold in
the United States was 600,000 or more. To the extent that its resources
permitted, FDA contacted by telephone or by mail those firms that had
submitted notices that were deficient or contained information
inconsistent with the provisions of the 1993 amendments. In some cases,
products appeared to be ineligible for the exemption without further
clarification; e.g., a bakery claimed an exemption for ``cookies'' and
listed total sales of less than one million units. Upon questioning
concerning the information in the notice, the firm advised that it
produces several different types of cookies, none with sales of greater
than 100,000 units. While resolving such questions, FDA has retained
the firm's name and address in the data bases for exempt firms and for
products. There were some instances where FDA advised firms submitting
notices that one or more products listed in their notice were not
exempt from nutrition labeling because either they did not qualify as a
small business or the product was not a low-volume food product. In
such a case the firm or the product were removed from the computer
listing of exempt firms or exempt products.
II. The Final Rule
A. Provisions Rendered Moot by Passage of Time
Certain provisions contained in the small business exemption
proposal are subject to timeframes, after which they no longer have an
effect. Proposed Sec. 101.9(j)(1)(i) would have provided an exemption
until May 7, 1995, for food offered for sale by a manufacturer, packer,
or distributor based upon the firm's gross sales. Proposed
Sec. 101.9(j)(18)(i)(A) would have provided an exemption for low-volume
food products for the time period of May 8, 1994, to May 7, 1995. The
passage of time has rendered both of these proposed provisions moot.
Accordingly, FDA is not incorporating Sec. 101.9(j)(1)(i) and
(j)(18)(i)(A) as proposed on March 14, 1994 (59 FR 11880), and is
renumbering the remaining paragraphs in Sec. 101.9(j)(1) and (j)(18) in
this final rule. Because Sec. 101.9(j)(1)(ii) is identical to the
existing regulation, it will not be set out in this final rule.
B. Dietary Supplements
On January 4, 1994, before it issued the small business exemption
proposal, FDA issued final rules on nutrition labeling and nutrient
content claims for dietary supplements. At that time, the act provided
an exemption from nutrition labeling for dietary supplements of
vitamins or minerals but not for dietary supplements of herbs or other
nutritional substances. Thus, in the small business exemption proposal,
FDA included provisions for conventional foods and dietary supplements
of herbs and other nutritional substances under proposed
Sec. 101.9(j)(18) and for dietary supplements of vitamins and minerals
under proposed Sec. 101.36(f)(2).
The DSHEA amended section 403(q)(5)(F) of the act to eliminate the
distinction between dietary supplements of vitamins or minerals and
dietary supplements of herbs and other nutritional substances. In
addition, even though the nutrition labeling and nutrient content claim
requirements for dietary supplements were to go into effect on July 1,
1995, in the wake of the DSHEA, FDA published a notice on February 9,
1995 (60 FR 7711), in which it stated that, given the need to modify
its regulations on nutrition labeling and nutrient content claims for
dietary supplements to respond to the DSHEA, it did not intend to
enforce those regulations until after December 31, 1996. The agency
published a document proposing appropriate changes to its regulations
for the nutrition labeling and nutrient content claims for dietary
supplements on December 28, 1995 (60 FR 67194).
FDA notes that the DSHEA does not alter the exemption for low-
volume food products created by the 1993 amendments as they relate to
the submission of notices to claim exemption for dietary supplements.
The agency has received some notices claiming exemption for dietary
supplements under the provisions of the 1993 amendments even though the
agency has yet to enforce the labeling requirements with respect to
this class of products. FDA is unaware of any basis for not moving
forward to establish provisions for the exemption of dietary
supplements under the 1993 amendments. None of the comments on the
small business exemption proposal raised a question about its
application to dietary supplements. To streamline the regulations and
to be consistent with the manner in which other exemptions and special
labeling provisions are listed under Sec. 101.36(g)(21 CFR 101.36(g)),
FDA has modified Sec. 101.36(f) to cross-reference the small business
exemption in Sec. 101.9(j)(1) and the exemption for low-volume food
products of small businesses in Sec. 101.9(j)(18), rather than codify
those exemptions in Sec. 101.36.
[[Page 40966]]
C. Definition of ``Person''
1. Two comments stated that the agency should clarify that the
exemption is available to private label packers and distributors as
well as to manufacturers. The comments urged that FDA state that a
``person'' entitled to apply for the low-volume food product small
business exemption includes a manufacturer, a packer, or a distributor
of such food products. The comments stated that the clarification that
they suggested is consistent with the law and with the preamble to the
proposal and would prevent confusion over the exclusion of
manufacturers, packers, and distributors from the exemption based on
gross sales.
FDA agrees that the 1993 amendments should be interpreted to give
as much relief to small businesses as can fairly be provided. FDA
recognizes that, by tracking the language of the 1993 amendments and
using the term ``person'' in the proposal, the agency may not have made
clear that all types of small businesses are eligible to submit a
notice for the exemption for low-volume foods. The agency has modified
Sec. 101.9(j)(18) to clarify that a small business, whether it is a
manufacturer, a packer, a distributor, including an importer or a
retailer that introduces the food into interstate commerce, is eligible
to claim an exemption for a low-volume food product under the 1993
amendments.
2. One comment stated that the ``person'' claiming the exemption
for a product should not be limited to the manufacturer or the company
whose name is on the label of the food product. The comment argued that
the person that is the exclusive sales agent for a firm's products also
should be able to file the notice. The comment argued that, because the
1993 amendments consistently refer to the person who claims an
exemption for a food product, the exemption need not be linked to the
manufacturer of the product but can be claimed by the firm that makes
sales of the food product in the United States. The comment stated that
the focus of the 1993 amendments is on making accountable the person
who presents the product to the consumer. The comment identified three
provisions of the 1993 amendments that it stated supported its
position:
(1) The law does not mandate that one affiliate (manufacturing)
instead of another (marketing) file the notice,
(2) The very small business exemption from the notice requirement
applies to a person who sells fewer than 10,000 units of a food product
in a year, and
(3) A notice may be filed by importers, who of course are not
manufacturers of the products they handle.
The comment concluded that the exclusive sales agent knows the
total number of units of a food product sold in the United States and
can make an accurate statement of those sales on the notice.
As noted in response to the preceding comment, FDA agrees that the
law does not mandate that the ``person'' filing the claim be the
manufacturer or the company whose name is on the label. The agency
agrees that an exclusive sales agent can file a notice claiming an
exemption for a low-volume food product under the 1993 amendments.
This comment interprets the intent of the 1993 amendments too
narrowly, however, by linking the exemption directly to the seller of
the food product, as opposed to the manufacturer, repacker, or
distributor. The 1993 amendments are silent in defining what type of
small business constitutes the ``person'' that may submit a notice
claiming an exemption for a low-volume food product. The only specific
requirement that relates to that person is that the average number of
FTE's of the person, and of all of its affiliates, be fewer than the
number established as the standard by the statute (i.e., less than 300
between 1994 and 1995, less than 200 between 1995 and 1996, and less
than 100 after that date or less than 100 for any product initially
introduced into interstate commerce on or after May 8, 1994). The
modification to Sec. 101.9(j)(18) that FDA has made in response to
comment 1 in section II.C.1. of this document will adequately address
the concerns of this comment.
3. Several comments addressed the relationship of affiliated firms
to those firms claiming an exemption under the provisions of the 1993
amendments. One comment stated that the guiding notion in defining
``affiliate'' should be whether one entity actually exercises control
over a small food company. It stated that indirect and unexercised
control should not create the status of affiliate. The comments argued
that tenuous relationships linking far flung affiliates, and standard
contractual arrangements that permit small food companies to exist,
should not be considered an affiliation.
The Statement of Explanation presented by Mr. Waxman in presenting
the bill that became the 1993 amendments explains that:
Section 403(q)(5)(E)(vi)(III) defines person, in the case of a
corporation, to include all domestic and foreign affiliates of the
corporation. The FDA should consider the regulations issued by the
Small Business Administration on this issue. 13 CFR. 131.401 (sic)
(1993).
(139 Congressional Record H6358 (August 6, 1993).)
Section 121.401 of Title 13 of the Code of Federal Regulations (13
CFR 121.401) sets out the provisions established by the Small Business
Administration (SBA) concerning affiliation. (FDA presumes that the
reference in the Congressional Record to 13 CFR 131.401 was a
typographical error because that section does not involve the question
of affiliation.) 13 CFR 121.401 provides a general rule on the
determination of affiliation plus more specific instructions on how to
determine whether affiliation exists between two firms. Among other
things, 13 CFR 121.401 states that size determinations shall include
the applicant concern and all its domestic and foreign affiliates.
Moreover, all affiliates, regardless of whether organized for profit,
must be included. Concerns are affiliates of each other when either
directly or indirectly one concern controls or has the power to control
the other; or a third party or parties controls or has the power to
control both; or an identity of interest between or among parties
exists such that affiliation may be found. In determining whether
affiliation exists, consideration shall be given to all appropriate
factors, including common ownership, common management, and contractual
relationships.
FDA agrees with the comment that stated that standard contractual
arrangements, to the extent that they do not create an identity of
interest, should not be considered as evidence of affiliation. However,
the other comments on affiliation are inconsistent with the provisions
of 13 CFR 121.401. The other comments argued that affiliation is not
present if an entity is not actually exercising control over the
affiliate. The SBA regulation provides, however, that concerns are
affiliates of each other when one ``controls or has the power to
control.'' None of the comments attempted to explain how their
suggested interpretations of the term ``affiliation'' were consistent
with 13 CFR 121.401.
Because the suggestion for the interpretation of affiliation
presented in the comments is not consistent with the congressional
intent, as evidenced by the Statement of Explanation, FDA concludes
that modification of the meaning of ``affiliation'' as suggested by the
comments would be improper, and the agency is not making the suggested
change. To reduce the potential for confusion over the use of the term
[[Page 40967]]
``affiliate'' in its regulation, however, FDA is modifying the
definition of the term ``person'' in Sec. 101.9(j)(18)(vi)(C) to
include a reference to 13 CFR 121.401 as defining ``affiliate.''
4. One comment stated that FDA should not expand upon Congress'
definition of ``person'' to include, for companies that are not
corporations, all affiliates of that company.
FDA recognizes that the 1993 amendments specifically refer to
corporations when stating that: ``the term `person' in the case of a
corporation includes all domestic and foreign affiliates of the
corporation.'' Accepting the view that the 1993 amendments are silent
with respect to how entities other than corporations are to be treated,
the fact remains that section 201(e) of the act (21 U.S.C. 321(e))
states that the ``term `person' includes individual, partnership,
corporation, and association.'' Even though the 1993 amendments are
silent as to how persons other than corporations should be treated,
there is nothing that suggests that those persons should be treated
differently than corporations. None of the comments presented any basis
for treating these other persons differently than corporations.
Therefore, FDA concludes that the best approach would be to treat all
persons the same. Thus, in Sec. 101.9(j)(18)(vi)(C), the term
``person,'' as relates to an entity that is not a corporation, includes
all affiliates as defined in 13 CFR 121.401 for purposes of section
403(q)(5)(E) of the act.
D. Definition of ``Unit''
5. Some comments stated that whether a food is a low-volume food
product should be based upon the number of units of a food product for
which the packer or distributor is responsible, regardless of the
number of similar units produced by its manufacturer for other persons.
These comments stated that FDA has inadequately explained in the
proposal how the number of units criterion and the definition of ``food
product'' should be applied to private label food products. They stated
that a private label packer or distributor that is a small business
should be able to apply for, and claim the benefit of, the small
business exemption based on the number of units of food products the
packer or distributor sells annually under its own private label. They
reasoned that this approach would be consistent with the agency's
explanation of the application of the small business exemption based
upon gross sales, where the name of the firm on the label determines
responsibility for the label for the purpose of determining the firm
that must have sales of less than $500,000 for purposes of section
403(q)(5)(D) of the act, which was passed as part of the original 1990
amendments. The comments stated that FDA's interpretation of
eligibility for exemption under the 1993 amendments should be
consistent with its interpretation under the 1990 amendments.
Having evaluated these comments and the notices that it has
received over the past year, FDA concludes that there are some basic
misunderstandings about the products that are eligible for exemption
under the 1993 amendments, particularly with respect to how to count
units in determining whether a product is a low-volume food product.
The comments also evidence a belief that the agency has considerable
leeway in its interpretation of the 1993 amendments. To the contrary,
the 1993 amendments are highly specific and prescriptive in providing
an exemption from the requirements of mandatory nutrition labeling for
low-volume food products of small businesses and leave little room for
interpretation by FDA.
It is not clear that those submitting the comments understand fully
the differences between the exemption for small businesses under the
1990 amendments and the exemption under the 1993 amendments. In
presenting guidance on the 1990 small business exemption in ``Food
Labeling QUESTIONS AND ANSWERS'' (Office of Food Labeling, FDA, August,
1993), FDA stated that, for a food to be eligible for the exemption,
the firm that was responsible for the labeling of the food, i.e., the
firm whose name appeared on the label of the food product, would be the
firm whose total gross sales would be considered; that is, the firm
whose gross sales must be less than $500,000 for the product in
question to be eligible for exemption.
Under section 403(q)(5)(E) of the act, which was added by the 1993
amendments, however, whether a food product is eligible for exemption
is based on two factors, neither of which involves the value of the
firm's gross sales. One factor is the number of employees of the firm
that is submitting the notice claiming the exemption (see the
discussion above under section II.C. of this document on the definition
of ``person'' and the discussion under section II.F. of this document
on ``calculation of average number of FTE's.'' The other is the number
of units of the product that is sold in the United States. The latter
factor is the one that is not well-understood by the comments.
Under section 403(q)(5)(E) of the act, whether a food product is a
low-volume food product, and, thus, eligible for the exemption, is not
dependent on the identity of the firm claiming the exemption. This
determination depends only on the total number of units of that
specific food product that are sold in the United States (see, e.g.,
section 403(q)(5)(E)(I)(IV) of the act).
A specific food product is defined by three parameters: (1) Its
being from a single manufacturer or bearing the same brand name; (2)
bearing the same statement of identity; and (3) having a similar method
of preparation (section 403(q)(5)(E)(vi)(II) of the act). This
definition means that, in counting the number of units of a food
product, e.g., a cake mix, for purposes of claiming an exemption, firms
must consider: (1) The total number of units of the cake mix produced
by the manufacturer for sale to consumers in the United States
regardless of the brand name under which it is packaged and (2) the
total number of units of the cake mix labeled under one brand name,
regardless of the number of manufacturers that produced it. If either
number exceeds the low-volume criteria, the product is not eligible for
the exemption.
Presume, for example, that a manufacturer produces one million
packages or units of a cake mix for sale in the United States. The cake
mix is not a low-volume food product and, thus is not eligible for
exemption under the 1993 amendments, even if the manufacturer ships all
of the product in equal quantities to 20 small businesses, and each
puts its own brand name on the cake mix that it sells. Alternatively,
if one million packages of a cake mix are made in equal quantities by
20 different manufacturers, but all bear the same brand name, the cake
mix is not eligible for exemption under the 1993 amendments, even if
each of the manufacturers has less than 100 employees, because, again,
it is not a low-volume food product.
On the other hand, a food product could be eligible for the
exemption even though it is manufactured by a large firm, if the food
product qualifies as a low-volume food product. If a manufacturer with
too many employees to qualify for the exemption were to make a product
under another firm's brand name, the product may qualify as a low-
volume food product if the sales of that private formula food product
are less than the applicable number defining a low-volume food product.
In the case of the cake mix, for example, presume that a small
business with only 15 employees contracts with 1 large copacker or
manufacturer to
[[Page 40968]]
make 50,000 units annually of that small business's special private
formula cake mix which is not available to any other firm. In such a
case, the private formula cake mix would be exempt under the 1993
amendments upon the submission of a notice by the small business
claiming an exemption, regardless of the number of employees of the
copacker and regardless of the amounts of other products that the
copacker produces. The cake mix would be exempt because the firm
claiming the exemption is small (15 employees), and the cake mix is a
low-volume food product (neither the total number of units produced for
sale in the United States, nor the total number of units sold under the
brand name in question, exceed 50,000).
In summary, contrary to the assertions by the comments, under the
1993 amendments (section 403(q)(5)(E) of the act), and in contrast to
the small business exemption established in the 1990 amendments
(section 403(q)(5)(D) of the act), the size of the company listed on
the label of a food product is not necessarily determinative of whether
that product is exempt from the nutrition labeling requirement. While
that firm must be a small business (that is, have less than the
requisite number of employees) to be eligible to claim an exemption,
the number of products sold in the United States must be below the
requisite levels for the product to be eligible for the exemption, and
that number may include products sold by companies other than the
company that is seeking the exemption. A product qualifies for the
exemption under section 403(q)(5)(E) of the act only if the company
submitting the notice is small, and the product is a low-volume food
product.
6. Several comments stated that the suggested method for counting
products from a private label manufacturer that was in the small
business exemption proposal was inappropriate. One comment suggested
that the 600,000-unit exemption be based on the sales/production of the
firm that takes control of (i.e., owns) the label and packaging on
which nutrition information would otherwise be included. According to
the comments, in many cases, that firm will be the private-label
manufacturer; in other cases, that firm will be the distributor and
marketer.
Another comment stated that a private label distributor should be
able to claim an exemption if the number of units sold in the United
States under the distributor's own label meets the statutory
requirement. The comment explained that it would defeat the purpose of
the exemption to require a distributor to aggregate all units of a food
produced by a common manufacturer and sold by other firms. Such an
interpretation, according to the comment, would require a small
distributor that sells a food in a low-volume to provide nutrition
labeling, contrary to Congress's intent to relieve the burden on such
firms. The comment noted that the approach that it was suggesting is
the only feasible way in which the exemption provision can be
administered because a distributor cannot know how many units of the
food produced by the particular manufacturer were sold in the United
States by other distributors under other brand names. Another comment
stated that the proposed requirement that a private label manufacturer
count all production in determining whether it is eligible for the
exemption is inconsistent with the 1993 amendments and may produce a
hardship on ``mom and pop stores'' that cannot produce product on their
own, particularly if each has to supply labels to the manufacturer for
labeling of the product.
FDA agrees that the intent of the 1993 amendments was to provide
relief for small businesses. In considering the intent of the 1993
amendments, it is important to remember that Congress amended a section
of the act (section 403(q)) that was added by the 1990 amendments. The
overall intent of the 1990 amendments is to ensure that nutrition
information is available on almost all foods marketed in the United
States. The 1993 amendments were enacted to provide relief for small
businesses from the economic burden of having to nutrition label low-
volume food products. This fact does not mean, however, that Congress
intended to exempt all products that bear the name of small businesses.
Rather, Congress sought to exempt those products that, because of the
size of the firm that sold them and the number of units of the product
that were sold, would likely be discontinued by the firm because the
costs of relabeling would be too great to make continued marketing of
the product economically feasible. Thus, Congress tailored the
qualifications for an exemption to meet these goals.
Congress apparently felt that, in circumstances where a firm that
sells the product is small, but the firm that manufactures it is large
and manufactures it for other firms as well, in numbers that exceed the
``low-volume'' standard, it is reasonable to expect that the larger
company would assist the smaller company in coming into compliance with
the law by, for example, providing nutrition information for the
product. Regardless of whether it is reasonable to expect that a firm
will not place its suppliers or customers in jeopardy of violating the
law, it is FDA's responsibility to ensure that there is compliance with
the provisions of the 1993 amendments.
Section 403(q)(5)(E)(vi)(II) of the act states that a ``food
product'' means food in any sized package that is manufactured by a
single manufacturer, bears the same statement of identity, and has
similar methods of preparation. Thus, if a manufacturer makes 1,000,000
units of a ``cola'' for six private label soft drink firms, 1,000,000
must be used as the number of units for each firm for the purposes of
deciding whether that firm's ``cola'' is eligible for the small
business exemption for the purposes of section 403(q)(5)(E)(i) or
403(q)(5)(E)(ii) of the act. It is important to note that in both of
the latter provisions, the statute is talking about ``units of such
product [that] were sold in the United States,'' not about the units of
such product that were sold in the United States by the person seeking
the exemption.
7. Several comments addressed FDA's proposal that, in counting
units, a small business must total all units of all of the various
sizes in which a food is packaged and all of the ways it is sold
unpackaged. These comments claimed that this proposed definition of
``unit'' by the agency basically eliminated the exemption for their
firms. Noting that the intent of Congress was to mitigate cost to small
businesses, another comment stated that it would be severely damaged if
food in any sized package that is manufactured by a single
manufacturer, no matter what the brand name, is considered a unit of
that food. One comment complained that FDA's interpretation is blind to
the cost of changing each label size for low-volume packages, and that
it overlooked the congressional intent to mitigate the cost of labeling
conversion for small manufacturers. The comment proposed that the first
year exemption for small businesses under 300 employees be allowed on
all packages under 600,000 units of sales per year provided that
printing films are different. Another comment stated that the proposed
definition does not take into account exactly what is a ``Package/
Label.'' The comment stated that FDA should allow individual, distinct
packages of a food product, as defined by the UPC (Universal Product
Code) number, to be counted separately in determining exemption
eligibility, rather than the proposed combination of all types of
products and sizes of packages.
One comment supported the agency's definition of ``units.'' The
comment
[[Page 40969]]
stated that it would be absurd and contrary to congressional intent to
exempt the many identical products made by a private label manufacturer
on the theory that each individual brand label was produced at levels
below the regulatory maximum.
The agency agrees with the latter comment and finds that the others
present suggestions that are contrary to the 1993 amendments. FDA
understands the concerns that are being raised by the comments. FDA has
no desire to implement the 1993 amendments unfairly, but it is its duty
to enforce the law in accordance with its terms.
In the counting of units, it is the definition of ``food product''
that is controlling. That definition states that a food product
includes food in any sized package which is manufactured by a single
manufacturer or which bears the same brand name. Given that being
manufactured by a single manufacturer is alternative to bearing the
same brand name, it means that products manufactured by the same
manufacturer that do not bear the same brand name would still be
considered a single product as long as they meet the other aspects of
the definition of ``food product.'' Thus, FDA's definition is fully
consistent with the act.
FDA is aware of the various factors that pose economic burdens to
small businesses that are identified by these comments, but it still
has an obligation to implement the act as written. In the face of the
statute, given the use of the words ``in any sized package'' in the
definition of ``food product,'' it is apparent that Congress decided
not to take into account the additional factors to which the above
comments point. Although the agency recognizes that the use of
different printing films or different UPC numbers would provide greater
economic relief for small businesses, as noted above, FDA is bound by
the terms of the act. Neither of these considerations are permitted or
even addressed in the 1993 amendments. As explained above, FDA's
approach is fully consistent with, and responds to, the act.
8. One comment objected to FDA's definition of a unit for soft
drinks as being the individual bottle rather than the case, noting that
there might as well not be a small business exemption for their
industry.
FDA was well aware of the concern raised by this comment and
attempted to address it in the small business exemption proposal. In
that proposal, FDA stated that, if the individual cans or bottles of a
case or carton were labeled in accordance with the provisions for
multiunit packages under Sec. 101.9(j)(15), the case or carton could be
treated as a single unit for the purpose of counting units of food
product (59 FR 11872 at 11874). To be in compliance with
Sec. 101.9(j)(15), the individual can or bottle of a multiunit package
must bear the statement ``This Unit Not Labeled For Retail Sale.'' This
possibility still exists for producers of soft drinks.
However, as noted in the small business exemption proposal, soft
drinks are not normally packaged in this manner, but instead they are
packaged in bottles or cans that are amenable to sales either as
individual packages or as part of a carton or a case. Historically,
consumers have often been able to mix individual flavors of particular
soft drinks when purchasing them by the carton or case. Thus, FDA
tentatively concluded in the proposal that the total number of
individual cans or bottles of a soft drink is controlling for the
purpose of counting the number of units sold in the United States.
In considering this comment on how units of soft drinks should be
counted, the agency has reviewed its tentative conclusions on this
matter. FDA now finds that there is a basis for counting the cases or
cartons of cans or bottles of soft drinks as individual units for the
purposes of the 1993 amendments. FDA agrees that there may be instances
where a case of soft drinks should be considered to represent a unit.
In the proposal, FDA stated its tentative finding that the case is a
convenience used by the manufacturer to deliver 12 or 24 individual
units to the customer. As noted above, this finding was based on the
historical practice of the consumer being able to mix units of soft
drinks when purchasing a case of 24 bottles. However, upon considering
this matter as part of its review of the comment, FDA recognizes that
there may be instances where the unit being sold to the consumer is the
carton or the case of soft drinks. Such situations would be those where
soft drinks are sold in cartons or cases that are sealed or have
plastic over-wraps that deter individual sales or mixing of individual
cans or bottles in the carton or case. FDA agrees that a firm may count
such sealed cartons or cases as individual units for the purpose of a
claim under the 1993 amendments, regardless of whether the individual
units are labeled in accordance with Sec. 101.9(j)(15), if the firm has
evidence of the extent to which its soft drink is sold by the carton or
case instead of by the individual can or bottle. FDA notes that if a
firm intends to rely upon the provisions of the 1993 amendments to
claim an exemption from the requirements of nutrition labeling for one
of its products, then it is incumbent upon that firm, for the purpose
of reporting the number of units, to have knowledge of how the product
is sold to the consumer.
9. Two of the comments stated that FDA should clarify how units
should be counted for a product that is not sold in a package. One
comment representing foreign firms noted the potential differences in
marketing in the United States as compared to another country and the
difficulties a foreign firm faces in learning about U.S. marketing
practices. The comment suggested that FDA include in the final rule
that the counting of units could be based upon a person's reasonable
determination of U.S. marketing practices even if that determination
deviated somewhat from actual marketing practices in the United States.
Another comment requested that FDA clearly set forth in the preamble
accompanying the final regulation how this aspect of the ``unit''
definition (i.e., sales of food not in package) will be applied to
confectionery and similar items sold individually and priced by weight.
FDA recognizes that estimating the number of units of a product
that is sold to consumers in an unpackaged form may be difficult for a
firm seeking to submit a notice claiming exemption under the 1993
amendments, particularly for a foreign firm. This is especially true
for candies which were mentioned in these two comments. Depending upon
the type of candy and its quality, a particular product may be sold at
retail by the piece (either because it is expensive or for a low price,
such as penny candy); by the half-pound or by the pound; or by the
package. In such a case, the candy manufacturer would total the number
of units sold by the piece or by the half-pound (or the pound) with
those sold in packages to determine the total number of units of candy
sold in 12 months. It is incumbent upon the firm that provides an
approximation of the number of units of a product sold in the United
States as part of a claim for exemption from nutrition labeling under
the provisions of the 1993 amendments to have adequate knowledge of the
sales of that product in the United States. This knowledge is necessary
for the firm to be able to report accurately in its notice claiming
exemption the number of units that it sold.
FDA has modified the instructions contained in Appendix II to
provide more details on the counting of units of a food that is sold
unpackaged. The agency has retained in Sec. 101.9(j)(18) language from
the 1993 amendments as
[[Page 40970]]
the appropriate description of how to count units of a food that is
sold unpackaged. FDA is concerned that to be more specific in the
regulations may reduce the degree of flexibility available under the
definition of ``unit.'' This definition (section 403(q)(5)(E)(vi)(I) of
the act) provides that ``the term `unit' means the packaging or, if
there is no packaging, the form in which a food product is offered for
sale to consumers.'' Many foods are sold to the consumer in an
unpackaged form, such as by the piece, by the slice, or by a measured
amount. Thus, to comply with definition of ``unit,'' a small business
would include in its count of units in a notice claiming an exemption
under the 1993 amendments both packaged and unpackaged product. The
agency provided an example of counting units of unpackaged food
products for flour in the proposal (59 FR 11872 at 11874). As stated in
the proposal (59 FR 11872 at 11874), the small business should make its
determination of the specific ``unit'' to use as a basis for reporting
sales of unpackaged food products according to the normal sales
practice for that food product in the United States.
E. Definition of ``Food Product''
10. Although some comments commended FDA for its definition of
``similar method of preparation,'' discussed in the preamble of the
small business exemption proposal (59 FR 11872 at 11875), some comments
asked for further clarification of the definition, in particular as it
related to nutritive value. One comment stated that the definition of
``food product'' must be limited to the factors referred to in the 1993
amendments. The comment added that the 1993 amendments link the
definition of ``food product'' to the food's statement of identity and
neither explicitly nor implicitly permit the use of nutritive value as
a factor in distinguishing one food product from another. Other
comments, however, encouraged the use of the concept of ``nutritive
value.''
One comment stated that FDA should incorporate into the regulation
the preamble language that explains the intended meaning of ``similar
preparation methods,'' including an explanation of criteria that will
allow businesses to determine when the lack of similarity of their
products' nutritional profiles is such that they must consider products
to be different than each other. One comment stated that products that
have the same common or usual name, have identical nutrition profiles,
but that are subjected to different scheduled processes because of the
size of their container, should be counted as the same product. The
comment added that products that are basically the same but have
differing names for differing shapes/forms, such as taco shells and
chalupa shells, which are both forms of tortilla shells, should be
counted as the same product.
Another comment stated that FDA should clarify that variations of a
product with formulation differences, such as different flavors, are
considered different ``food products'' for purposes of the small
business exemption. The comment stated that the preamble to the
proposal stated that the term ``similar preparation methods'' included
``all aspects in the manufacture of the food product, from the initial
steps of determining the ingredients to be used, i.e., formulation * *
*'' (59 FR 11872 at 11875). The comment stated that this statement
should be set forth in the final regulatory text itself, along with
language to the effect that even minor formulation differences, such as
differences in flavor ingredients in some cases, result in two
different food products, regardless of whether the formulation
differences result in differences in nutrient profiles between the two
different food products. The comment noted that for many firms and many
products there will be no way of determining whether two similar
products have the same nutrient profile without nutrient analyses of
each product. The comment added that requiring small businesses to
undertake such analyses solely for the purpose of ascertaining whether
they qualify for the small business exemption would undermine much of
the benefit of the exemption and be contrary to the congressional
intent.
After considering the various comments seeking clarification of the
term ``similar method of manufacture,'' FDA has decided to adopt the
definition for ``food product'' that it proposed. Also, after reviewing
the comments, FDA is emphasizing that consideration of nutritive value
is not a necessary consideration in the definition of ``similar
preparation methods.'' The comments appear to have misinterpreted FDA's
intent as it relates to the use of ``nutritive value'' of foods.
Although the legislative history for the 1993 amendments discusses
what is meant by ``statement of identity,'' it provides no insight into
what factors led Congress to establish ``similar preparation methods''
as the third factor in the definition of ``food product.'' The agency
intended that the concept of ``nutritive value'' could be used by firms
as an informal guideline in determining whether the manufacturing
processes for food products meet the parameter of ``similar preparation
method.'' FDA had presumed that firms would be faced with situations
where there were minor differences in the method of preparation that
would lead them to question whether the food products should be counted
as being the same. FDA was stating that a firm could use nutritive
value as a determinant in resolving this question. The agency did not
mean to imply that if two foods prepared by dissimilar processes were
found to have the same nutritive value they should be considered to be
the same food product. Further, FDA did not intend that firms should
analyze foods to determine nutritional value to determine whether they
should be considered to be different foods because to expect firms to
do so would be contrary to the intent of the 1993 amendments.
The agency has included an additional discussion in Appendix II
concerning the term ``similar preparation methods'' to assist firms
that submit notices to FDA under the 1993 amendments. However, the
agency is not providing further explanation of the meaning of the term
``similar preparation methods'' in the regulations. FDA is concerned
that any attempt to elaborate on a definition of ``similar preparation
methods'' would only result in a regulation that is more restrictive
than the statutory definition.
FDA agrees with the comment that urged that minor differences in
scheduled processes or differences in shapes for the same product
should not be considered as resulting in different products. FDA does
agree, however, that differences in formula, even differences that
involve different flavors, would be sufficient to consider foods having
such differences to be different food products.
11. One comment requested that FDA clarify in any final rule that
similar foods whose preparation methods result in different nutritional
profiles represent only one example of different ``food products'' for
exemption eligibility purposes. The comment stated that the agency
should make clear that other significant differences in preparation
that do not affect nutrient content, such as kosher preparation, can
also serve to differentiate ``food products'' for exemption eligibility
purposes. The comment also noted that certain such differences, like
kosher preparation, but for being symbolically rather than expressly
declared in labeling, also would differentiate products in terms of a
distinguishing statement of identity (e.g., ``kosher green beans'' as
compared to ``green beans''), thereby contravening the second
[[Page 40971]]
element of the ``food product'' definition.
As discussed in response to the previous comment, this comment
misinterprets the way in which FDA had meant for the concept of
nutritive value to be used. FDA had never intended that the concept of
nutritional value should be used as a basis for concluding that food
products with differing methods of preparation but the same levels of
nutrients should be considered the same food product for the purpose of
counting units. However, the comment raises the issue of whether both
perceived and real differences in the method of preparation should be
considered in distinguishing between food products.
A determination of whether real and perceived differences
distinguish particular foods can only be made on a case-by-case basis.
It is not possible to provide guidelines that would cover every case.
FDA believes that real differences, such as differences in formulation
or differences in preparation, would be used to distinguish a
``Kosher'' product as a different food product. However, there may be
steps in the production of a ``Kosher'' product that would not
distinguish it from a nonkosher product; e.g., the comment mentioned
rabbi inspection as a step that distinguishes kosher food products from
other food products. FDA does not agree that rabbi inspection would be
sufficient to result in differing food products for the purposes of the
1993 amendments. As noted above, such distinctions will have to be made
on a case by-case-basis.
12. One comment suggested that identically formulated products in
different size packages or types of packages should be considered
different ``food products'' for purposes of the small business
exemption.
This suggested approach is contrary to the wording in the 1993
amendments themselves. The definition of food product states: `` `food
product' means food in any sized package'' (section
403(q)(5)(E)(vi)(II) of the act). This wording makes clear that, for
the purpose of counting units of a food product, all of the various
sizes and forms in which a food product is sold are to be combined.
Thus, FDA cannot modify the definition for ``food product'' in the
manner suggested in the comment because to do so would be contrary to
the 1993 amendments themselves. (See comment 7 in section II.D. of this
document.)
F. Calculation of the Average Number of FTE's
13. Three comments raised questions concerning the proposed
provision that the average number of FTE's should be based upon the
total number of individuals employed by the firm and by all of its
affiliates, both domestic and foreign. Two comments stated that, for
the purpose of calculating the average number of FTE's, the employees
that are considered should be limited to those of the firm claiming the
exemption and not of separately incorporated affiliates. One of the
comments contended that including employees of unrelated businesses
would severely undermine the purpose and scope of the amendment. The
comment stated that a fundamental assumption of the amendment is that
each product is an independent ``profit center,'' and, accordingly,
nutrition information is only mandated when it is economically feasible
given the economies pertaining to the production and sale of an
individual food item. Although family owned retail confectioners often
are involved in other business enterprises, the comment continued, the
size or nature of those outside business interests is irrelevant to
whether the retail confectioner can cover the cost of nutrition
labeling of a particular item.
One comment stated that, in the explanation of the term ``FTE,''
FDA added a discussion that links this definition with the definition
of ``person.'' The comment stated that the effect is to require that
the employees of a domestic company be combined with those of an
affiliate company regardless of whether their operations are related to
sales of food products in the United States. The comment stated that
there is nothing in the 1993 amendments that points to or requires this
conclusion. The comment argued that the relevant issue is how many
employees were employed in the United States, not overseas and not in
unrelated positions.
FDA disagrees with the conclusion that is reached in these
comments. Each of the above comments raises the same basic argument,
that the calculation of the average number of FTE's should be based
only on the employees of the company submitting a notice claiming an
exemption under the 1993 amendments and then only on those employees
involved in the production of the food product for sale in the United
States. Although the comments state that nothing in the 1993 amendments
supports the approach proposed by FDA, they do not provide specific
citations to language in the 1993 amendments or the legislative history
of the 1993 amendments that support their conclusions. One comment said
that a fundamental assumption of the 1993 amendments is that each
product is a ``profit center'' but did not offer a citation to where
this assumption is either explicit or implicit in the 1993 amendments.
FDA concludes that the approach suggested by the comments is contrary
to the clear meaning of the 1993 amendments.
In introducing H.R. 2900 (the bill that became the 1993
amendments), Congressman Waxman stated:
certain small businesses will have extreme difficulty complying with
the NLEA by May 8, 1994. * * * Under the amendments, qualifying
businesses will be given 1 to 3 additional years to comply with the
NLEA. After May 8, 1997, any business with fewer than 100 employees
can qualify for an exemption for any products for which it sells
fewer than 100,000 cans or other units per year.
(139 Congressional Record H6358 (August 6, 1993).)
The 1993 amendments state as criteria under which a product would
be exempt from the requirements for mandatory nutrition labeling that
``the person who claims for such product an exemption from such
paragraphs employed fewer than an average of 100 full-time equivalent
employees'' (section 403(q)(5)(E)(i)(II), or 300 or 200 in the cases of
subparagraphs I and II or III of section 403(q)(5)(E)(ii) of the act,
respectively). In describing the notice to be filed to claim an
exemption under the 1993 amendments, section 403(q)(5)(E)(iii) of the
act states that the notice shall ``state the average number of full-
time equivalent employees such person employed during the 12 months
preceding the date such person claims such exemption.'' In providing
for the exemption of low-volume food products from nutrition labeling,
the 1993 amendments state that ``the term `person' includes all
domestic and foreign affiliates of the corporation'' (section
403(q)(5)(E)(vi)(III) of the act). As noted above, the ``Statement of
Explanation'' for H.R. 2900 also explains: ``Section
403(q)(5)(E)(vi)(III) defines person, in the case of a corporation, to
include all domestic and foreign affiliates of the corporation. The FDA
should consider the regulations issued by the Small Business
Administration on this issue.'' FDA is unaware of any further
discussion on the calculation of the average number of FTE's in the
1993 amendments or related legislative history. Contrary to what was
suggested by one comment, there is no indication that FTE's should only
be determined based on those employees that are related to the
[[Page 40972]]
production of the food that is the subject of the notice. In fact, the
clear implication is to the contrary. Both the 1993 amendments and
their legislative history state that the term ``person'' includes both
domestic and foreign affiliates.
FDA finds that the above references in the 1993 amendments and
their legislative history are unambiguous as to the calculation of the
average number of FTE's for a firm or other person submitting notice
claiming an exemption under the 1993 amendments. Thus, the notice
claiming an exemption must state the average number of FTE's of the
firm or person submitting the notice, including the employees of all
domestic and all foreign affiliates as defined in 13 CFR 121.410.
Further, because neither the 1993 amendments nor their legislative
history make a distinction with respect to the business of the
affiliates, the average number of FTE's must be reported based on all
the employees of all affiliates regardless of the nature of the
business of the affiliate. Given the language of the 1993 amendments
and their legislative history, FDA finds that no other interpretation
of how the average number of FTE's is to be determined is reasonable.
14. One comment stated that the average number of FTE's should be
based on actual hours worked in a year, 1,824 (i.e., the time that a
person that is actually on the job) instead of the proposed 2,080. The
comment provided the following explanation of the derivation of 1,824
hours as the amount of actual hours worked in a year:
An hourly person paid only for amount of time on the job is on
the job only 1,824 hours (2,080-80 annual, -80 sick, -96 for 12
holidays = 1,824 hours). Using 2,080 hours instead of 1,824 would
allow a firm to omit the declaration of a ``ninth'' employee for
every eight full-time employees.
Another comment stated that FDA should retain its proposed method for
determining the number of employees and should maintain the 2,080 hour
denominator for the calculation.
There are any number of approaches that FDA could have used to
define ``full-time'' for use in calculating the average number of
FTE's. For any particular situation, however, each possible denominator
might over- or undercount the actual number of persons. For example, a
firm may hire large numbers of part-time employees for which it does
not provide vacation or sick leave hours. Other firms may have more
generous or less generous annual leave provisions. Still other
companies may recognize fewer or more holidays. For this reason, FDA
tentatively decided to simply take the standard full-time work week
established by the Department of Labor, 40 hours, and multiply by the
number of weeks in a year, 52, to obtain the number to be used in the
denominator for calculating the average number of full-time employees.
Although FDA recognizes the concern of the comment that suggested using
1,824 hours as the denominator, the use of 1,824 could result in a
hardship to those small businesses that provide less amount of time for
leave or holidays per employee than suggested by the comment in that it
would lead to an overcounting of employees. The agency concludes that
use of 2,080 as the denominator provides an equitable approach for a
formula to be used in determining the average number of full-time
equivalents and is retaining this value in its regulations.
15. One comment stated that FDA should consider as employees only
those persons for whom the small business pays income and social
security taxes. The comment stated that the calculation of average
number of FTE's should not include all ``individuals that render
service'' to a company, which would include lawyers, mail carriers, and
accountants that are not under the direct employ of the small business.
The comment stated that FDA should narrow the definition of employee,
and that, in case of doubt, the approach of the Internal Revenue
Service could provide guidance. Another comment stated that FDA should
reconsider who it counts as employees to exclude contract distribution
personnel. The comment explained that many small businesses use route
salesmen to service retail establishments. These route salesmen were
described by the comment as independent small businessmen who receive
compensation from the manufacturers usually as a percentage of the
sales. The comment stated that firms should not be precluded from
qualifying for the exemption because they chose this form of
distribution for their products.
The small business exemption proposal stated that the average
number of FTE's ``shall be determined by dividing the total number of
hours of salary paid directly to individuals, or companies that employ
those individuals, that render service to the person.'' In proposing
the definition in this way, FDA was attempting to ensure that persons
calculating the average number of FTE's considered all employees (e.g.,
all owners, officers, the secretarial staff, and part-time employees)
of the firm and not just those that are directly involved full-time in
the production and sales of food products. The agency had seen this as
a potential problem because some of the early notices submitted to the
agency had reported ``0,'' ``Zero,'' or ``None'' as the average number
of FTE's.
After reviewing the comments and the language of the proposed
definition for an FTE, FDA finds that the explanation for the
calculation of the average number of FTE's was overly broad and subject
to confusion. For example, FDA agrees that it is not normally necessary
to include in the determination of FTE's individuals that perform
services for the small business as part of the responsibilities of
their employment, such as the mailman, fireman, policeman, or even
grocery store clerk. FDA finds that such individuals need not be
included in the count of the average number of FTE's unless they work
for an affiliate of the firm.
The agency has modified the definition of the term an FTE in
Sec. 101.9(j)(18)(vi)(D) to narrow it to refer simply to ``employees''
instead of all individuals that render service to the firm. To ensure
that there is no misunderstanding of which employees to count, FDA is
also modifying the discussion of the calculation and reporting of the
average number in Appendix II to refer to the ``employees of the person
and of all of its affiliates.''
G. Small Business Food Labeling Exemption Notice
16. Two comments suggested changes in the model form that the
agency included as Appendix I to the proposal. One comment suggested
that the agency include a place on the form for the telephone and FAX
numbers of the firm. The comment stated that the form or instructions
should also contain the address to which the form is to be mailed. The
other comment stated that the small business food labeling exemption
notice should be modified, printed, and made available to the public.
The comment suggested use of a form prepared by the National
Association for the Specialty Food Trade, Inc. (NASFT) because it
claimed that the NASFT form is less confusing than the one that the
agency provided. The comment stated that the model form should make a
clear statement referencing the provisions of 18 U.S.C. 1001 that
prohibit the submission of false information to the Federal Government.
The comment also stated that FDA should make the modified form publicly
available.
FDA has modified the form in line with the comments and has
included the modified form in Appendix I to this
[[Page 40973]]
final rule. The agency contacted the NASFT to gain its agreement that
the agency could incorporate parts of NASFT's form into the form
supplied by FDA. FDA has modified the form to include spaces for a
telephone number and a FAX number. In reviewing notices, FDA has found
that use of the telephone is frequently an expeditious way of resolving
questions that arise. The agency has also made the address to which the
form should be sent more prominent in the instructions.
FDA has also modified the form to include specific spaces for the
date that the form was prepared and for the name of a contact person.
The agency has found that information on the date of preparation is
important to help keep multiple notice submissions separate. The name
of a specific contact person for a firm has helped the agency to
resolve rapidly questions that have arisen during its review of a
notice.
Because it has received numerous inquiries as to whether a form
exists for the submission of the notice, FDA is providing a model form
in Appendix I of this document, along with instructions for completing
it in Appendix II of this document. This model form may be used by
firms to claim exemptions. FDA advises, however, that it is not
necessary to use this form.
The agency also advises that the small business exemption for a
food p
FR Doc. 96-20075 Food Labeling; Nutrition Labeling, Small Business Exemption
roduct will be in effect once a notice has been filed with FDA,
even though it may be necessary for the Office of Food Labeling to work
with the firm that is filing the notice to address deficiencies in it.
Although no action by the agency is required, FDA will attempt to
review all notices to ensure that they are complete and to notify
companies of the receipt of the notice, and whether additional
information needs to be submitted.
FDA is initiating the steps necessary to obtain approval from the
Office of Management and Budget (OMB) for printing and distribution of
the ``model form'' as an official Government form. OMB approval is
required under provisions of the Paperwork Reduction Act of 1995.
17. One comment stated that the section of the notice requesting
information on the manufacturer of a product, if it is other than the
person claiming the exemption, is irrelevant and should not be
required. The comment stated that adding irrelevant information
increases the paperwork burden, forces companies to give the Government
unnecessary information, and enlarges the scope of the 1993 amendments.
The comment suggested that FDA may be asking for the name of the
manufacturer because it hopes to exclude from the small business
exemption small companies that have product made by a copacker.
The 1993 amendments require that the firm filing a notice provide
information on the total number of units that it sold in the United
States in the preceding year. As a number of comments stated, and as
FDA agrees, a firm can only be held responsible for knowing, and
reporting, the number of units that it sold, not the total number of
units of a product sold in the United States by all firms that might
sell the product. However, as noted above in response to comment 5 in
section II.D. of this document, whether a food product is eligible for
exemption under the 1993 amendments depends not on the total number of
units sold in the United States by the firm claiming the exemption, but
it depends on the total number of units sold in the United States by
all firms that sold the food product. In the case of a manufacturer or
exclusive sales agent, the total number of units sold in the United
States may well be the number reported by the firm claiming the
exemption. In the case of an own-label distributor, the total number of
units sold in the United States may include sales by firms other than
the firm claiming the exemption.
FDA has included space in the model form for the listing of the
manufacturer, if it is not the person submitting the notice, to enable
the agency, if necessary, to identify instances in which the total
number of units of a food product sold in the United States might
exceed the applicable number for eligibility for exemption under the
1993 amendments. FDA seeks this information not to unfairly harass
small businesses, but to ensure that there is a level playing field so
that firms are not at a competitive disadvantage. Equally importantly,
FDA is seeking the information to ensure that consumers have access to
nutritional information on products when they have a right to it.
In its discussion with firms that were preparing notices to claim
exemption under the 1993 amendments, FDA has become aware that firms
may not always know the identity of the manufacturer of the product,
particularly if it is an imported product. If this is the case, FDA is
asking the person that submits a notice under the 1993 amendments to
identify the firm from which they received the product if he or she is
unaware of the identity of the manufacturer of the product.
18. Some comments stated that FDA should allow additional time for
firms to submit the notice claiming the exemption. One comment
suggested 6 months in view of the short time span between the
publication of the proposal and the May 7, 1994, filing date for
notices. One comment raised a concern about the requirement that
notices be filed by May 7th of each year and the attendant lack of
flexibility. Another comment stated that no firm should have to refile
for exemption before May 8, 1995.
These comments seem to be based on a belief that FDA has more
flexibility in the establishment of the date for filing of the notice
claiming an exemption than is actually provided by the 1993 amendments.
Most of the concerns raised by these comments have become moot with the
passage of time. The concern about the inflexibility of the May 7 date
for the submission of notices apparently arose from the agency's
statement in the preamble that ``[A]ll notices must be filed by May 7,
1994, for the 12-month period beginning May 8, 1994, the date that the
new mandatory labeling regulations become effective'' (59 FR 11872 at
11876). FDA advises that the May 7, 1994, date derives directly from
section 403(q)(5)(E)(iii) of the act, which requires that the notice
claiming exemption under the 1993 amendments be submitted ``prior to
the beginning of the period during which the exemption under subclause
(i) or (ii) is to be in effect.'' Thus, May 7 was established as the
date for submitting the claim for exemption for the 12-month periods
beginning May 8th of 1994, 1995, or 1996. The agency has no authority
to change this requirement.
FDA notes that a person is not restricted to the May 7 date for the
submission of a notice claiming an exemption under the provisions of
section 403(q)(5)(E)(i) of the act. Such a notice may be submitted on
any date as long as it is submitted before the beginning of the period
during which the exemption is to be in effect.
19. Two comments stated that it should be permissible to submit a
claim for an exemption within a reasonable time after the marketing of
a new food product has begun.
As noted above, a food is misbranded if it does not bear nutrition
labeling and is not exempt under one of the exemptions provided by the
1990 and the 1993 amendments. Because the exemption for a firm's low-
volume food products provided by the 1993 amendments is not in effect
until the firm has submitted a notice to FDA claiming the exemption
(with the exception of firms other than importers that have less than
10 employees and do not sell more than 10,000 units of the
[[Page 40974]]
particular food product), a low-volume food product from a small
business would be misbranded if marketed without nutrition labeling
before the notice claiming exemption has been submitted.
The 1993 amendments do not give FDA the authority to provide for a
reasonable time after a product has been marketed for the submission of
a notice claiming an exemption under the 1993 amendments. If a firm
begins marketing a product without nutrition labeling before submitting
such a notice, the product is subject to regulatory action. As noted
above, FDA supplies its field personnel and State enforcement agencies
with a listing of all firms that have filed notice for exemption under
the 1993 amendments. Firms that wait to submit a notice until after
they have begun marketing a product run the risk of regulatory action
because their name does not appear on that list.
FDA recognizes that many small businesses may not have adequate
resources to be aware of all of the requirements for nutrition labeling
on their products or for claiming an exemption. Thus, during the past
year, FDA has exercised discretion and restraint with respect to firms
that have marketed products before having filed the necessary notice
claiming exemption. While the agency intends to continue to exercise
such restraint, the agency urges firms that expect to market a food
product that will not bear nutrition labeling because it is exempt
under section 403(q)(5)(E) of the act to notify the agency of this fact
before marketing the product.
20. In the small business exemption proposal, FDA described
generally the approach that it intended to take to review and verify
the various notices that it received from small businesses claiming the
exemption for low-volume food products (59 FR 11872 at 11876). The
agency asked for comments on this general approach, stating that it
might provide in the final rule specific requirements for the
verification of notices, including a provision for inspection.
Several comments asked that FDA clarify how it would verify the
appropriateness of notices claiming an exemption under the 1993
amendments. Most of these comments stated that a firm should be able to
supply the necessary verification by mail. Several comments expressed
their belief that no additional recordkeeping requirements should be
imposed.
In its review of the approximately 13,000 notices that it has
received since enactment of the 1993 amendments, FDA has attempted to
follow the general approach to reviewing and verifying notices that it
outlined in the proposal. The agency has considered notices to be
acceptable, regardless of their format or approach, as long as they
supplied the basic information, that is, the name and address of the
firm claiming the exemption, an estimate of the number of employees, a
listing of the products for which exemption was claimed, including
brand names, and the approximate number of units of each of those
products sold by the firm in the United States. Although the 1993
amendments do not require review and approval of the claim by FDA for
the exemption to be in effect, FDA is briefly reviewing each notice.
This review is directed at four areas: (1) Did the notice provide an
estimate of the number of employees; (2) did the notice provide the
identity of the specific food products for which an exemption was
claimed; (3) did the notice provide the approximate number of units of
each food product that the firm sold in the United States in the 12
months preceding the period for the exemption; and, (4) based on the
information in the notice, did the product appear to be a low-volume
food product (e.g., were total annual sales in the United States
between May 8, 1993, and May 7, 1994, less than 600,000 units)?
In its review, FDA has used a flexible approach to resolve
questions concerning the information contained in the notices. In the
first year, for approximately 90 percent of the notices, FDA found the
information in the notice itself to be adequate to justify the claimed
exemption. In the remainder, where questions arose concerning the
notices, FDA used two approaches for resolving questions. If the notice
raised a fairly straight-forward question, such as the number of
employees because the number was not included in the notice, the agency
called the firm by telephone if a telephone number was available and
asked that the firm supply the missing information, either over the
telephone or by mail. For more complex questions, such as whether the
notice included products that did not qualify as low-volume food
products, e.g., it listed products bearing brand names for large
national corporations, the agency contacted the firm either by
telephone or by letter and requested that the firm modify its notice to
include only those products that qualified as low-volume food products
based on total sales in the United States.
As noted above, the agency found it necessary during the first year
under the provisions of the 1993 amendments to ask for verification or
additional information for only a small percentage of the notices
submitted. Based on its experience to date, FDA finds that there is no
need to provide specific requirements in the final rule for the
verification of notices. As was stated in the small business exemption
proposal, companies should be prepared to provide information to FDA to
support their notices of exemption should FDA question the validity of
any information contained in those notices (59 FR 11872 at 11876).
21. A number of comments disagreed with the preamble discussion
that the 1993 amendments provide FDA access to firms' records for
verification of exemption notices and emphasized that FDA should not
use the 1993 amendments as a basis for gaining unintended access to
records.
Section 403(q)(5)(E)(iii)(IV) of the act provides that the notice
shall contain such information as the Secretary of Health and Human
Services (the Secretary) may require to verify the information that is
required to be in the notice if the Secretary has questioned the
validity of such information. In the preamble to the small business
exemption proposal, FDA stated that it might provide in the final rule
that companies claiming the exemption will be required to permit
inspection of supporting documentation. Because it has not had
sufficient experience to have developed a clear view of what such an
approach would involve, FDA is not including a requirement concerning
inspection of records in the regulations set forth below.
Although FDA continues to hold that the use of an inspection is an
appropriate means for obtaining verification information, it agrees
that section 403(q)(5)(E)(iii)(IV) of the act does not give it free
access to all records of a firm. There must be some question about the
validity of information in a notice claiming an exemption under section
403(q)(5)(E) of the act for the agency to obtain such access. Secondly,
the information sought must have a nexus to: (1) The number of
employees of the firm, (2) the number of units of product sold in the
United States, and (3) proof that the product is a low-volume food
product. Any other review of records is not authorized by the 1993
amendments.
The agency will normally first try to verify the validity of the
information, or otherwise resolve the question that arises, by
telephone or mail. However, contrary to the assertion of some comments,
there is nothing in the 1993 amendments that prohibits FDA from
obtaining through inspection the information necessary to verify the
validity of information in a notice. It is
[[Page 40975]]
FDA's intent only to use an inspection to obtain verifying information
if it is the way that is most likely to produce the information
necessary to verify the validity of the notice. FDA has yet to resort
to inspection of records as an approach to verifying the information in
a notice.
22. Several comments stated that the proposed verification process
appeared to be burdensome. Some comments stated that any question
concerning eligibility could be promptly and efficiently addressed by
requesting written verifying information. The comments noted that the
1993 amendments contemplate that firms will be entitled to the
exemption simply by claiming it, absent an FDA request for supporting
documentation. The comments stated that, if there is a need for
supporting documentation to resolve doubt about the propriety of the
claimed exemption, FDA may simply demand that the information be
provided, or else the exemption will be revoked.
These comments are mistaken in their concern that the proposed
verification process is overly burdensome. However, as noted above,
until it has more experience in what is necessary to verify the
validity of a notice, FDA is not revising the regulations to specify
how it will verify the accuracy of notices, or what information is
necessary for such verification. As noted above, the agency found it
necessary during the first year to ask for verification or additional
information for only a small percentage of the notices submitted. FDA
agrees with the various comments that supplemental information to
verify the validity of a notice should be limited to that information
that is already maintained by the firm and should not require the
development of new records.
23. A number of comments addressed the requirement for a
certification statement as part of the notice. One comment stated that
the requirement was burdensome because it would impose business costs
and legal liability not contemplated by Congress and not provided for
by the amendments. Another comment stated that the certification
requirement should be deleted, noting a number of factors that mitigate
against the need for the certification statement, including the fact
that FDA can request verification, that anybody providing false
information commits a punishable criminal offense, and that FDA can
declare the product misbranded. One comment stated that a firm should
not be put in the position of having to certify that second-hand
information, such as the amount of production of a copacker, that it
cannot verify, is true and accurate. One comment stated that the
certification requirement should be eliminated, particularly the part
about notifying FDA when it becomes ineligible, because it exceeds
statutory authority provided by the amendments, is contrary to
congressional intent, and imposes burdens on small businesses. One
comment stated that FDA should clarify that a company would only be at
risk of criminal prosecution if it had intentionally and knowingly
provided false information.
FDA included the certification statement as a requirement of the
notice claiming an exemption under the 1993 amendments as a
confirmation to the agency of the expected; that is, that the
information being submitted to the agency complied with the
requirements of 18 U.S.C. 1001 and contained only valid information.
FDA disagrees with the comments that this requirement creates
additional liabilities for the firms or is burdensome. Most comments
were aware of 18 U.S.C. 1001 and the prohibition that it contains on
the submission of false information to a Government agency. This
prohibition exists regardless of whether a notice contains a signed
certification from the firm.
Moreover, the certification statement serves as the initial
verification of the validity of the information in a notice. As
evidenced by the tone of some of the comments, firms will take greater
care to ensure the validity of the information in a notice if a
responsible individual has to certify to the accuracy of the
information. FDA notes that some of the forms that it has received that
were devised by firms and associations contain more expansive
certification statements than that proposed by FDA. Some of these
certifications, for example, contained a statement that there was no
nutrition information or claims on the label for any of the products
included in the notice.
FDA notes that the greatest concern seems to be over the
requirement that a firm notify FDA when a product is no longer eligible
for the exemption. FDA included this commitment as part of the
certification requirement to ensure that the firm is aware of the
provision in the 1993 amendments that the firm has 18 months after its
product no longer qualifies for the exemption to bring the label into
compliance. The requirement that a firm notify FDA if it becomes
ineligible for the exemption is thus fully consistent with the act and
the agency's authority to adopt regulations for its efficient
enforcement. (See section 701(a) of the act.)
The agency emphasizes that it is asking firms to certify the
accuracy of the information that they are submitting as it relates to
the operations of their firm only. This information should be readily
available to the firm in records maintained during the normal course of
its business. Contrary to what was stated by one comment, FDA is not
asking a firm to certify to information unknown to it such as the
volume of sales of a copacker that produces product for the firm.
24. One comment stated that FDA should take pains to explain its
plans for protecting confidential business information included in
notices.
FDA advises that any trade secret or confidential commercial
information submitted in notices is protected by the safeguards against
inappropriate release that are provided by the agency's regulations in
part 20 (21 CFR part 20) for the release of information under the
Freedom of Information Act.
H. Miscellaneous Issues
25. One comment stated that FDA should not single out imports for
enforcement of noncompliance.
FDA advises that it has been acting to ensure that there is
compliance with the new labeling regulations in as evenhanded a manner
as possible with respect to both foreign and domestic firms. The agency
initiated its enforcement efforts for domestic products on August 8,
1994, the date after which the nutrition labeling and nutrient content
claim requirements of the act became applicable (see Pub. L. 103-261,
enacted May 26, 1994). FDA initiated its import enforcement efforts on
September 19, 1994. The approach that the agency's district offices
take when they encounter a noncompliant label is similar for both
domestic product and imported products. Copies of the agency's domestic
and import enforcement assignments explaining the approaches being
taken have been placed on public display under this docket number.
26. One comment stated that FDA's proposal places too much emphasis
on enforcement, and that FDA should maintain a flexible enforcement
policy; e.g., a small company whose notice is deficient (or which is
found to exceed a ceiling) should be given a complete written
explanation of the deficiency and a reasonable time to submit a
compliance plan.
FDA has been maintaining a flexible, lenient enforcement policy,
particularly as regards companies whose notice is found to be
deficient. The first step that the agency takes upon receipt of a
notice is to place the name and address of the firm in its computer
data base of firms that have filed a notice and to make that
[[Page 40976]]
information available to its field offices by entering the information
into the PRIME Connection and FIARS computer bulletin boards. As noted
above, the agency next issues a letter acknowledging the receipt of the
notice, unless it has a question concerning the information in the
notice. If there is a deficiency in the information in the notice, or
the agency has some other question concerning it, the agency either
calls or writes the firm to ask for clarification of the information.
During this time, the name and address of the firm remain on the
listing of firms that have submitted a notice claiming exemption under
the 1993 amendments.
27. One comment stated that the agency should adopt specific
procedures to maintain a list of exempt firms and provide effective
means of disseminating the list to districts. This action should be
taken, the comment said, to minimize the possibility of needless
detention of products for which an exemption has been filed. A foreign
firm also commented that FDA should adopt a policy that would permit
the manufacturer or its importer to include a statement on the
particular import documents that it has filed for a particular
exemption, and that such a statement should bar the district from
detaining the imported product.
Before launching its enforcement efforts for domestic and imported
products, FDA developed a computerized data base listing the firms that
have submitted a notice claiming an exemption under the 1993 amendments
by name and address. As stated above, FDA made this data base available
to its district offices and to State enforcement agencies through an
FDA computer bulletin board system called ``PRIME Connection.'' A
similar data base listing the names and addresses of foreign firms and
recognized importers that filed a notice to claim an exemption for
their products was made available to FDA's import offices under FDA's
FIARS system. FDA has periodically updated these lists since they were
established. Additionally, FDA advises that it has recommended that,
and has permitted, statements that a particular product qualifies for
an exemption under the 1993 amendments be included in the shipping
records for an imported product. The presence of such additional
information with the shipping records is considered by FDA in
determining whether to release a particular import. Because each import
must be considered on a case-by-case basis, however, the presence of
such a statement will not serve as a de facto bar to detention.
28. Several comments suggested steps that the agency should take to
permit the continued use by small businesses of nutrition labeling in
compliance with FDA's former provisions for the voluntary nutrition
labeling of food. Most of these comments supported the use of
Sec. 101.9(g)(9) for small businesses to request, and FDA to grant,
alternative approaches that would enable them to use up labeling that
used the former type of nutrient labeling. Some comments suggested that
FDA should extend the exemption of the 1993 amendments in the proposed
regulation for low-volume food products to cover such products.
Other comments stated that FDA should consider establishing a
special rule permitting labels with pre-1990 amendments nutrition
information to be used by processors that otherwise would qualify for
the small business exemption. One comment noted that if it is barred
from using labels bearing pre-1990 amendments nutrition information, it
will be required to bear an economic loss for these label stocks, which
would be extreme for a company of its size. Other comments noted that
denying an extension to firms that had voluntarily cooperated in the
past would be unjust. Some comments suggested that limits be created on
the use of such pre-1990 amendments labeling; e.g., a certification
that the labeling was purchased before January 6, 1993, and that
compliance with the new requirements will be achieved by the end of the
extension period or the next printing whichever comes first; that there
are no claims; that there is no competitive advantage from improper
listing of serving sizes, calories from fat, saturated fat,
cholesterol, and sodium; and that the product was not introduced into
the marketplace since the new nutrition labeling regulations were
issued (since January 6, 1993).
Since issuance of the small business exemption proposal, FDA has
received a number of requests for permission under Sec. 101.9(g)(9) to
exhaust inventories of labels containing nutrition information that was
in compliance with FDA's regulations that were in effect before the
effective date of the 1990 amendments. FDA has required that these
requests contain information showing that the firm and the product
would be eligible for exemption under the provisions of the 1993
amendments but for the fact that the product's label bears the former
nutrition labeling. FDA has also asked that the requests include a copy
of the label for each product for which permission was being sought to
exhaust the old label, along with an estimate of the remaining
inventory of the label stocks and the estimated time required to
exhaust the inventory.
Within its limited resources, FDA has reviewed and granted
permission to firms to exhaust labels that contain only the former
voluntary nutrition information. In granting permission to exhaust
inventories of labeling by a specific date, FDA has advised the firms
that the label for the product is to be corrected by either removing
the old nutrition information or bringing the label into compliance
with new Sec. 101.9. FDA has advised firms requesting permission to
continue the use of labels containing nutrient content or health claims
that such permission would not be granted.
The process provided by Sec. 101.9(g)(9) appears to be adequate to
address the issue of granting permission to small businesses to exhaust
their stocks of old labeling. Also, FDA notes that it is using most of
the ``limits'' suggested by the one comment in evaluating requests for
additional time to exhaust inventories of labels under
Sec. 101.9(g)(9). However, the suggested limits on granting permission
to exhaust labels printed after January 6, 1993, or for products
introduced after January 6, 1993, have largely been rendered moot by
the passage of time. Thus, FDA concludes that a special rule permitting
labels with pre-1990 amendments nutrition information is unnecessary.
Also, FDA advises that it does not have authority to extend the
exemption provided by the 1993 amendments to cover products bearing
pre-1990 amendment nutrition information. Such products are
specifically excluded from the exemption by section 403(q)(5)(E(i)(2)
and (ii) of the 1993 amendments.
III. Economic Impact
FDA has examined the impacts of this final rule as required by
Executive Order 12866 and the Regulatory Flexibility Act (Pub. L. 96-
354). Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects; distributive impacts; and equity). The Regulatory Flexibility
Act requires agencies to analyze options for regulatory relief for
small businesses.
The agency reported in the small business exemption proposal its
finding that the net effect of this rule is the benefit that it creates
by reducing labeling costs for exempted companies. This benefit is the
result of statutory provisions and not FDA discretion.
[[Page 40977]]
There are two types of costs of this regulation: (1) Costs of lost
nutrition benefits because nutrition information is not available and
(2) costs to comply with the notification requirement.
FDA has estimated that the volume of food product eligible for
exemption constitutes less than one percent of the United States diet,
and that any lost nutrition benefits are likely to be small. Also, the
agency estimated that in the first year approximately 4,500 firms
claiming exemption would file notices at a cost of approximately
$1,656,000. The agency estimated that in the following 2 years the
number of firms filing notices would reduce to approximately 4,000 at a
cost of approximately $1,472,640 and approximately 3,200 at a cost of
approximately $1,177,640, respectively. However, in the first year that
the 1993 amendments have been in effect, the agency has received
approximately 9,000 notices claiming an exemption for one or more low-
volume food products. Assuming that the number of firms filing an
exemption will decrease for the next 2 years at the same rate as
previously estimated, then the costs to comply with the notification
requirements are estimated to be approximately $3,312,000 the first
year, approximately $2,947,000 the second year, and approximately
$2,358,000 in subsequent years as the number of firms filing notices
decreases. Federal costs for implementing the notification system are
estimated (as in the proposal) to be approximately $207,000. The total
costs of notification will be less than $4 million for the first year
and decrease substantially in subsequent years.
On the other hand, FDA estimates that the cost savings to small
businesses that were exempted from labeling to be between $275 and $360
million. These costs are estimated based on the Regulatory Impact
Analysis (RIA) (58 FR 2927, January 6, 1993) done for rules
implementing the 1990 amendments. In the RIA, FDA estimated relabeling
costs of approximately $3,000 per stock keeping unit (SKU). This rule
is expected to save costs for between 90,000 and 120,000 SKU's. Because
of this positive effect on the economy, this rule is economically
significant under Executive Order 12866, but because the rule will not
have any adverse effect on small business, the agency believes that,
under the Regulatory Flexibility Act, the rule will not have a
significant impact on a substantial number of small entities.
However,the preceding discussion of the costs and cost savings to small
business would constitute a final regulatory flexibility analysis under
the Regulatory Flexibility Act.
None of the comments to the small business exemption proposal
presented any information, nor is the agency aware of any information,
that would serve as a basis for significantly increasing the estimated
costs of this regulation or significantly decreasing the estimated cost
savings.
IV. Congressional Review
This final rule has been classified as a major rule subject to
congressional review. The effective date is October 7, 1996. If,
however, at the conclusion of the congressional review process the
effective date has been changed, FDA will publish a document in the
Federal Register to establish the actual effective date or to issue a
notice of termination of the final rule action.
V. Environmental Impact
The agency has previously considered the environmental effects of
the action being taken in this final rule. As announced in the small
business exemption proposal published in the Federal Register of March
14, 1994 (59 FR 11872), the agency has determined under 21 CFR
25.24(a)(8) and (a)(11) that these actions are of a type that do not
individually or cumulatively have a significant effect on the human
environment. No comments questioned this determination. Therefore,
neither an environmental assessment nor an environmental impact
statement is required.
VI. Paperwork Reduction Act
This final rule contains information collections that are subject
to review by OMB under the Paperwork Reduction Act of 1995 (Pub. L.
104-13). This information collection has been approved by OMB for 90
days, under 5 CFR 1320.13 and OMB control No. 0910-0324. Persons are
not required to respond to a collection of information unless it
displays a currently valid OMB control number.
Because OMB approval of this information collection is valid for
only 90 days, FDA is also taking the appropriate steps to obtain a
regular approval. Section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 (44 U.S.C. 3506(c)(2)(A)) requires Federal agencies to provide
a 60-day notice in the Federal Register concerning each collection of
information. ``Collection of information'' is defined in 44 U.S.C.
3502(3) and 5 CFR 1320.3(c). In accordance with 5 CFR part 1320, the
title, description, and respondent description of the information
requirement are shown below with an estimate of the annual collection
and information burden. Included in the estimate is the time for
reviewing instructions, gathering necessary information, and completion
and submission of the notice.
Title: Food Labeling; Nutrition Labeling, Small Business Exemption.
Description: The final rule provides the procedures for the
submission of a notice of a claim by a company for an exemption from
FDA's regulations for mandatory nutrition labeling. FDA action on the
notice will include review of notices for completeness and
acknowledgment that the notice had been received and was or was not
adequate. Additionally, FDA will provide to its field personnel and
State enforcement agencies a listing of firms that have submitted a
notice to FDA along with a listing of the products claimed to be
exempt.
The 1993 amendments revise the basis for a small business exemption
provided by section 403(q)(5)(E) of the act. This new provision
provides an exemption for a food product based on the number of
employees and the total number of units sold in the United States on an
annual basis. Under the 1993 amendments, to qualify for an exemption, a
person must file the notice mentioned in the preceding paragraph with
FDA before the time period for the claimed exemption. Sections
101.9(j)(18)(iv) and 101.36(f)(2) reflect the information identified in
section 403(q)(5)(E) of the act, as necessary, as part of the notice
for a claimed small business exemption.
Descriptions of Respondents: Persons and small businesses,
particularly small businesses.
Estimated Annual Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
Total
Average annual
Annual Annual burden Annual operating
Section number of frequency hours per burden and
respondents response hours maintenance
costs
----------------------------------------------------------------------------------------------------------------
101.9 and 101.36..................................... 10,000 1 8 80,000 $3,312,000
----------------------------------------------------------------------------------------------------------------
[[Page 40978]]
Since enactment of the 1993 amendments, FDA has received notices
from approximately 9,000 firms. Although FDA is uncertain how many
other firms may take advantage of the exemption provided by the 1993
amendments to file notice, it expects a maximum of 10,000 respondents
to file for the exemption. The agency expects that the number of
respondents and corresponding annual burden hours will decrease over
succeeding years as the basis for the exemption changes. By May 1997,
FDA estimates that approximately 5,000 companies may be filing notices
to claim the exemption with a corresponding annual burden hours of
approximately 40,000 hours. There are no capital costs created by this
final rule. As noted above in section III. Economic Impact, FDA
estimates that the total operating and maintenance costs to respondents
to submit notices to the agency during the first year to be
approximately $3,312,000. The agency does not believe that this
regulation requires any capital expenditures to comply with the
requirements for submitting a notice.
In the small business exemption proposal, FDA requested comments
regarding the estimated burden, including suggestions for reducing the
burden. Nine responses were received that contained one or more
comments concerning the information collection provisions that would be
established by the small business exemption proposal. A number of these
comments suggested modifications in, or were opposed to, various
provisions of the information collection portion of the small business
exemption proposal. A summary of the arguments and changes suggested by
these latter comments, and the agency's responses, are provided above.
None of the comments addressed FDA's estimates of the cost and hour
burden associated with the information collection.
As required by section 3507(d) of the Paperwork Reduction Act of
1995, FDA has submitted copies of the final rule to OMB for its review
of the recordkeeping requirements. In addition, the agency solicits
public comment on: (1) Whether the proposed collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility; (2) the
accuracy of the agency's estimate of the burden of the proposed
collection of information, including the validity of the methodology
and assumptions used; (3) ways to enhance the quality, utility, and
clarity of the information to be collected; and (4) ways to minimize
the burden of the collection of information on respondents, including
through the use of automated collection, techniques, or other forms of
information technology (e.g., permitting electronic submission of
responses).
Individuals and organizations may submit comments on the
information collection requirements of this final rule by October 7,
1996. These comments should be submitted to the Dockets Management
Branch (address above).
Under the Paperwork Reduction Act of 1995, persons are not required
to respond to a collection of information unless it displays a
currently valid OMB control number. This final rule contains
information collection requirements that have been submitted to OMB for
approval. FDA will publish a notice in the Federal Register of OMB's
decision to approve, modify, or disapprove the information collection
requirements established in this final rule prior to the effective date
of such requirements.
FDA advises that the statutory requirements of the 1993 amendments
for the filing of a notice with FDA take precedence over the provisions
of the Paperwork Reduction Act of 1995. Thus, if small businesses
desire to avail themselves of the exemption from nutrition labeling
that is provided by the 1993 amendments, they must file notice with FDA
as required by section 403(q)(5)(e)(i)(III) or (q)(5)(e)(ii) of the
act. Products that are not the subject of such notice will be
misbranded unless they bear nutrition labeling as required by section
403(q) of the act regardless of whether OMB has approved the
information requirements included in this final rule.
List of Subjects in 21 CFR Part 101
Food labeling, Nutrition, Reporting and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR part
101 is amended as follows:
PART 101--FOOD LABELING
1. The authority citation for 21 CFR part 101 continues to read as
follows:
Authority: Secs. 4, 5, 6 of the Fair Packaging and Labeling Act
(15 U.S.C. 1453, 1454, 1455); secs. 201, 301, 402, 403, 409, 701 of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321, 331, 342,
343, 348, 371).
2. Section 101.9 is amended by revising paragraph (j)(1)(i) and by
adding new paragraph (j)(18) to read as follows:
Sec. 101.9 Nutrition labeling of food.
* * * * *
(j) * * *
(1)(i) Food offered for sale by a person who makes direct sales to
consumers (e.g., a retailer) who has annual gross sales made or
business done in sales to consumers that is not more than $500,000 or
has annual gross sales made or business done in sales of food to
consumers of not more than $50,000, Provided, That the food bears no
nutrition claims or other nutrition information in any context on the
label or in labeling or advertising. Claims or other nutrition
information subject the food to the provisions of this section.
* * * * *
(18) Food products that are low-volume (that is, they meet the
requirements for units sold in paragraphs (j)(18)(i) or (j)(18)(ii) of
this section); that, except as provided in paragraph (j)(18)(iv) of
this section, are the subject of a claim for an exemption that provides
the information required under paragraph (j)(18)(iv) of this section,
that is filed before the beginning of the time period for which the
exemption is claimed, and that is filed by a person, whether it is the
manufacturer, packer, or distributor, that qualifies to claim the
exemption under the requirements for average full-time equivalent
employees in paragraphs (j)(18)(i) or (j)(18)(ii) of this section; and
whose labels, labeling, and advertising do not provide nutrition
information or make a nutrient content or health claim.
(i) For food products first introduced into interstate commerce
before May 8, 1994, the product shall be exempt for the period:
(A) Between May 8, 1995, and May 7, 1996, if, for the period
between May 8, 1994, and May 7, 1995, the person claiming the exemption
employed fewer than an average of 300 full-time equivalent employees
and fewer than 400,000 units of that product were sold in the United
States; and
(B) Between May 8, 1996, and May 7, 1997, if for the period between
May 8, 1995, and May 7, 1996, the person claiming the exemption
employed fewer than an average of 200 full-time equivalent employees
and fewer than 200,000 units of that product were sold in the United
States.
(ii) For all other food products, the product shall be eligible for
an exemption for any 12-month period if, for the preceding 12 months,
the person claiming the exemption employed fewer than an average of 100
full-time equivalent employees and fewer than 100,000 units of that
product were sold in the United States, or in the case of a food
product that was not sold in the 12-month period preceding the period
[[Page 40979]]
for which exemption is claimed, fewer than 100,000 units of such
product are reasonably anticipated to be sold in the United States
during the period for which exemption is claimed.
(iii) If a person claims an exemption under paragraphs (j)(18)(i)
or (j)(18)(ii) of this section for a food product and then, during the
period of such exemption, the number of full-time equivalent employees
of such person exceeds the appropriate number, or the number of food
products sold in the United States exceeds the appropriate number, or,
if at the end of the period of such exemption, the food product no
longer qualifies for an exemption under the provisions of paragraphs
(j)(18)(i) or (j)(18)(ii) of this section, such person shall have 18
months from the date that the product was no longer qualified as a low-
volume product of a small business to comply with this section.
(iv) A notice shall be filed with the Office of Food Labeling (HFS-
150), Center for Food Safety and Applied Nutrition, Food and Drug
Administration, 200 C St. SW., Washington, DC 20204 and contain the
following information, except that if the person is not an importer and
has fewer than 10 full-time equivalent employees, that person does not
have to file a notice for any food product with annual sales of fewer
than 10,000 total units:
(A) Name and address of person requesting exemption. This should
include a telephone number or FAX number that can be used to contact
the person along with the name of a specific contact;
(B) Names of the food products (including the various brand names)
for which exemption is claimed;
(C) Name and address of the manufacturer, distributor, or importer
of the food product for which an exemption is claimed, if different
than the person that is claiming the exemption;
(D) The number of full-time equivalent employees. Provide the
average number of full-time equivalent individuals employed by the
person and its affiliates for the 12 months preceding the period for
which a small business exemption is claimed for a product. The average
number of full-time equivalent employees is to be determined by
dividing the total number of hours of salary or wages paid to employees
of the person and its affiliates by the number of hours of work in a
year, 2,080 hours (i.e., 40 hours x 52 weeks);
(E) Approximate total number of units of the food product sold by
the person in the United States in the 12-month period preceding that
for which a small business exemption is claimed. Provide the
approximate total number of units sold, or expected to be sold, in a
12-month period for each product for which an exemption is claimed. For
products that have been in production for 1 year or more prior to the
period for which exemption is claimed, the 12-month period is the
period immediately preceding the period for which an exemption is
claimed. For other products, the 12-month period is the period for
which an exemption is claimed; and
(F) The notice shall be signed by a responsible individual for the
person who can certify the accuracy of the information presented in the
notice. The individual shall certify that the information contained in
the notice is a complete and accurate statement of the average number
of full-time equivalent employees of this person and its affiliates and
of the number of units of the product for which an exemption is claimed
sold by the person. The individual shall also state that should the
average number of full-time equivalent employees or the number of units
of food products sold in the United States by the person exceed the
applicable numbers for the time period for which exemption is claimed,
the person will notify FDA of that fact and the date on which the
number of employees or the number of products sold exceeded the
standard.
(v) FDA may by regulation lower the employee or units of food
products requirements of paragraph (j)(18)(ii) of this section for any
food product first introduced into interstate commerce after May 8,
2002, if the agency determines that the cost of compliance with such
lower requirement will not place an undue burden on persons subject to
it.
(vi) For the purposes of this paragraph, the following definitions
apply:
(A) Unit means the packaging or, if there is no packaging, the form
in which a food product is offered for sale to consumers.
(B) Food product means food in any sized package which is
manufactured by a single manufacturer or which bears the same brand
name, which bears the same statement of identity, and which has similar
preparation methods.
(C) Person means all domestic and foreign affiliates, as defined in
13 CFR 121.401, of the corporation, in the case of a corporation, and
all affiliates, as defined in 13 CFR 121.401, of a firm or other
entity, when referring to a firm or other entity that is not a
corporation.
(D) Full-time equivalent employee means all individuals employed by
the person claiming the exemption. This number shall be determined by
dividing the total number of hours of salary or wages paid directly to
employees of the person and of all of its affiliates by the number of
hours of work in a year, 2,080 hours (i.e., 40 hours x 52 weeks).
3. Section 101.36 is amended by revising paragraph (f) to read as
follows:
Sec. 101.36 Nutrition labeling of dietary supplements of vitamins and
minerals.
* * * * *
(f) Dietary supplements are subject to the exemptions specified as
follows in:
(1) Section 101.9(j)(1) for dietary supplements that are offered
for sale by a person who makes direct sales to consumers (i.e., a
retailer) who has annual gross sales or business done in sales to
consumers that is not more than $500,000 or has annual gross sales made
or business done in sales of food to consumers of not more than
$50,000, and whose labels, labeling, and advertising do not provide
nutrition information or make a nutrient content or health claim; or
(2) Section 101.9(j)(18) for dietary supplements that are low-
volume products (that is, they meet the requirements for units sold in
Sec. 101.9(j)(18)(i) or (j)(18)(ii)); that, except as provided in
Sec. 101.9(j)(18)(iv), are the subject of a claim for an exemption that
provides the information required under Sec. 101.9(j)(18)(iv); that is
filed before the beginning of the time period for which the exemption
is claimed; and that is filed by a person that qualifies to claim the
exemption under the requirements for average full-time equivalent
employees in Sec. 101.9(j)(18)(i) or (j)(18)(ii); and whose labels,
labeling, or advertising do not provide nutrition information or make a
nutrient content or health claim.
* * * * *
Dated: April 4, 1996.
David A. Kessler,
Commissioner of Food and Drugs.
Donna E. Shalala,
Secretary of Health and Human Services.
Note: The following Appendixes will not appear in the annual
Code of Federal Regulations.
Appendix I--Model Small Business Food
Labeling Exemption Notice
(Please type or clearly print)
1. Name of firm
----------------------------------------------------------------------
2. Address of firm:
Street address---------------------------------------------------------
----------------------------------------------------------------------
City State-------------------------------------------------------------
Zip or postal code-----------------------------------------------------
Country----------------------------------------------------------------
[[Page 40980]]
Telephone--------------------------------------------------------------
FAX--------------------------------------------------------------------
3. Type of firm (Check all that apply)
Manufacturer-----------------------------------------------------------
Packer/Repacker--------------------------------------------------------
Distributor------------------------------------------------------------
Importer---------------------------------------------------------------
Retailer---------------------------------------------------------------
4. Twelve-month time period for which you are claiming exemption
FROM: ____ / ____ / ____
MM DD YY
TO: ____ / ____ / ____
MM DD YY
5. Average number of full-time equivalent employees for 12-month
period______
6. Report of units sold (use continuation sheets if necessary)
Product
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
No. of units
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Manufacturer
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
7. Name and address of manufacturer(s) or distributor(s) of
product(s) in Item 6 if different from firm claiming exemption. (Use
continuation sheets if necessary.)
B Name of manufacturer or distributor
----------------------------------------------------------------------
Address----------------------------------------------------------------
----------------------------------------------------------------------
C Name of manufacturer or distributor
Address----------------------------------------------------------------
----------------------------------------------------------------------
8. Contact person
----------------------------------------------------------------------
9. The undersigned certifies that the above information is a true
and accurate representation of the operations of ________ (Name of
firm). The undersigned will notify the Office of Food Labeling of
the date on which the average number of full-time equivalent
employees or the number of units of food products sold in the United
States exceeds the applicable number for exemption which is being
claimed herein.
Signature--------------------------------------------------------------
Name (Type or clearly print)-------------------------------------------
----------------------------------------------------------------------
Title------------------------------------------------------------------
Date-------------------------------------------------------------------
Appendix II--Model Small Business Food
Labeling Exemption Notice
Instructions for completion
(Please type or clearly print)
1. Name of firm: Enter the recognized legal name of your firm.
2. Firm address: Enter the mailing address for the principal
location of your firm. Also, provide the telephone and FAX numbers.
3. Type of firm: Place a check mark or ``x'' in each block that
is applicable to your firm. For example, if your firm manufactures
all products that it sells place a check mark after
``Manufacturer.'' If your firm also distributes a product that is
manufactured by another firm, also place a check mark after
``Distributor.''
4. Twelve-month time period for which you are claiming
exemption: Enter the specific time period for which you are
requesting exemption for your products. For products initially
introduced into interstate commerce before May 8, 1994, this time
period will be from May 8 of the current year to May 7 of next year:
e.g., ``FROM 05/08/95 TO 05/07/96.'' For new products, the time
period should start with the date on which sales in the United
States are expected to begin: e.g., ``FROM 11/01//95 TO 10/31/96.''
5. Average number of full-time equivalent employees for 12-month
period: Enter the average number of full-time equivalent employees
of your firm and of all of its affiliates for the year preceding the
year for which an exemption is claimed under Item 4. The average
number should include all employees of your firm and of its
affiliates (e.g., owners; officers; and all other personnel such as
secretarial, production, and distribution employees). Firms are
affiliates of each other when, either directly or indirectly: (1)
One firm has the power to control the other, (2) a third party
controls or has the power to control both, or (3) an identity of
interest exists such that affiliation may be found.
The average number of full-time equivalent employees is to be
determined by using the following formula: Total number of employee/
hours paid divided by 2,080 hours = average number of full-time
equivalent employees. For example, 254,998 paid employee/hours
2,080 = 122. If the total number of actual employees for
your firm and its affiliates is less than 100, you may enter the
total number of actual employees instead of calculating the average
number of full-time employees; e.g., if your firm has 24 employees
that work full-time and 12 employees that work part-time, you may
report 36 total actual employees instead of calculating the average
number of full-time equivalent employees.
6. Report of units sold (Continuation sheets using the same
format for Item 6 may be used if necessary):
Product: Under the column for product, enter the name, including
the brand name, for each food product for which your firm is
claiming an exemption. A food product is a food in any sized package
which is manufactured by a single manufacturer or which bears the
same brand name; which bears the same statement of identity; and
which has a similar preparation method. In considering whether food
products have similar preparation methods, consider all steps that
go into the preparation of the food products, from the initial
formulation steps to any finishing steps; for example, products
having differing ingredients would be considered different food
products and counted separately in determining the number of units.
No. of Units: Provide the approximate sales of your firm, in
terms of units, for the product for the year immediately preceding
the time period for the exemption entered under Item 4. For example,
if the time period for which you are claiming exemption for a food
product is May 8, 1996, to May 7, 1997, provide an approximation of
your sales of that product from May 8, 1995, to May 7, 1996. If the
product was not sold for the entire 12 months preceding the time
period for the exemption entered under Item 4, provide an
approximation of the sales expected to be made during the time
period in Item 4. For example, if the time period being claimed in
Item 4 is November 1, 1995, to October 31, 1996, for a product that
is going to be sold beginning November 5, 1995, provide an
approximation of sales for the period from November 1, 1995, to
October 31, 1996.
The approximate total number of units is the summation of the
number of units of the various package sizes of the food product in
the form in which it is sold to consumers; for example, the total of
all 2-pound bags of flour plus all 5-pound bags of flour plus all
10-pound bags of flour should be provided as the number of units
sold by your firm in the United States. There may also be occasions
where a food is sold in bulk or by individual pieces rather than in
packaging; e.g., flour may be sold in bulk displays at grocery
stores. In such a case, the number of units should be determined on
the basis of the typical sales practice for the specific food
product; e.g., if 2,000 pounds of flour are sold from bulk displays
at grocery stores, and the typical practice for sales to consumers
is to price the flour on a per pound basis, then the bulk sales
would represent 2,000 units. If the firm sells the same product in
package form, then the bulk sales, 2,000 units in the above example,
should be added to the sum of the number of packages of the flour
sold to determine the total number of units of flour sold by the
firm in the United States.
Manufacturer: Under the column designated ``Manufacturer'' enter
the letter that corresponds with the name of the manufacturer of the
product. The letter ``A'' is used to designate the firm submitting
the notice if it is the manufacturer of the product. If the firm
submitting the notice is not the manufacturer of the product, use
the letter from Item 7 (B or C), or from the continuation sheets for
Item 7, that corresponds to the name and address of the manufacturer
of the product.
7. Name and address of manufacturer(s) or distributor(s) of
product(s) in Item 6 if different from firm claiming exemption:
Continuation sheets may be used if necessary. Provide the name and
addresses of the manufacturers of the food products for which
exemption is being claimed if they are different from the firm
claiming the exemption. If the name of the manufacturer is unknown,
provide the name of the firm from which the product is purchased.
Insert the letter corresponding to the name of the manufacturer
(``A'' corresponds to the firm submitting the notice) or distributor
in the appropriate block for the name of the product under Item 6.
[[Page 40981]]
8. Contact person: Enter the name of a person that can act as a
contact for your firm if any questions arise concerning the
information included in the notice.
9. Certification: The form is to be signed by a responsible
individual for the firm that can certify to the authenticity of the
information presented on the form. The individual signing the form
will commit to notify the Office of Food Labeling when the numbers
of full-time equivalent employees or total numbers of units of
products sold in the United States exceed the applicable number for
an exemption.
The completed form should be mailed to: Office of Food Labeling
(HFS-150), Food and Drug Administration, 200 C St., SW, Washington,
DC 20204. Questions concerning a claim may be directed to the Office
of Food Labeling at the above address or to 202-205-4561.
[FR Doc. 96-20075 Filed 8-6-96; 8:45 am]
BILLING CODE 4160-01-P
Complete official Federal Register PDF
FR Doc. 96-20056 Fisheries of the Exclusive Economic Zone Off Alaska; Northern Rockfish in the Eastern Gulf of Alaska
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Page 41024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20056]
=======================================================================
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 679
[Docket No. 960129018-6018-01; I.D. 073196A]
Fisheries of the Exclusive Economic Zone Off Alaska; Northern
Rockfish in the Eastern Gulf of Alaska
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Closure.
-----------------------------------------------------------------------
SUMMARY: NMFS is prohibiting retention of northern rockfish in the
Eastern Regulatory Area of the Gulf of Alaska (GOA). NMFS is requiring
that catches of northern rockfish in this area be treated in the same
manner as prohibited species and discarded at sea with a minimum of
injury. This action is necessary because the northern rockfish total
allowable catch (TAC) in the Eastern Regulatory Area of the GOA has
been reached.
EFFECTIVE DATE: 1200 hrs, Alaska local time (A.l.t.), August 1, 1996,
until 2400 hrs, A.l.t., December 31, 1996.
FOR FURTHER INFORMATION CONTACT: Thomas Pearson, 907-486-6919.
SUPPLEMENTARY INFORMATION: The groundfish fishery in the GOA exclusive
economic zone is managed by NMFS according to the Fishery Management
Plan for Groundfish of the GOA (FMP) prepared by the North Pacific
Fishery Management Council under authority of the Magnuson Fishery
Conservation and Management Act. Fishing by U.S. vessels is governed by
regulations implementing the FMP at subpart H of 50 CFR part 600 and 50
CFR part 679.
The TAC for northern rockfish in the Eastern Regulatory Area of the
GOA was established by the Final 1996 Harvest Specifications of
Groundfish (61 FR 4304, February 5, 1996), as 20 metric tons. (See
Sec. 679.20(c)(3)(ii).)
The Director, Alaska Region, NMFS, has determined, in accordance
with Sec. 679.20(d)(2), that the TAC for northern rockfish in the
Eastern Regulatory Area of the GOA has been reached. Therefore, NMFS is
requiring that further catches of northern rockfish in the Eastern
Regulatory Area of the GOA be treated as prohibited species in
accordance with Sec. 679.21(b).
Classification
This action is taken under 50 CFR 679.20 and is exempt from review
under E.O. 12866.
Authority: 16 U.S.C. 1801 et seq.
Dated: August 1, 1996.
Richard W. Surdi,
Acting Director, Office of Fisheries Conservation and Management,
National Marine Fisheries Service.
[FR Doc. 96-20056 Filed 8-1-96; 4:40 pm]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-20036 General Administrative Regulations; Reinsurance Agreement Standards for Approval
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40952-40954]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20036]
=======================================================================
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 400
General Administrative Regulations; Reinsurance Agreement--
Standards for Approval
AGENCY: Federal Crop Insurance Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Crop Insurance Corporation (FCIC) hereby amends
its General Administrative Regulations by revising the Disputes clause.
The intended effect of this rule is to provide reinsured companies with
an informal reconsideration process through an administrative officer
of FCIC and the right to appeal the administrative officer's
determination to the Board of Contract Appeals.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Diana Moslak, (202) 720-2832.
SUPPLEMENTARY INFORMATION:
Executive Order 12866 and Departmental Regulation 1512-1
This action has been reviewed under United States Department of
Agriculture (USDA) procedures established by Executive Order 12866 and
Departmental Regulation 1512-1. This action constitutes a review as to
the need, currency, clarity, and effectiveness of these regulations
under those procedures. The sunset review date established for these
regulations is March 31, 1999.
This rule has been determined to be not significant for the
purposes of Executive Order 12866 and, therefore, has not been reviewed
by the Office of Management and Budget (OMB).
Paperwork Reduction Act of 1995
This rule does not contain information collection requirements that
require approval by OMB under the Paperwork Reduction Act of 1995 (44
U.S.C. chapter 35). Unfunded Mandates Reform Act of 1995.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, FCIC
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, or tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. When such a statement is needed for a rule, section 205 of
the UMRA generally requires FCIC to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, more
cost-effective or least burdensome alternative that achieves the
objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, and tribal
governments of the private sector. Thus, this rule is not subject to
the requirements of sections 202 and 205 of the UMRA.
Executive Order 12612
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
policies and procedures contained in this rule will not have a
substantial direct effect on states or their political subdivisions, or
on the distribution of power and responsibilities among the various
levels of government.
Regulatory Flexibility Act Analysis
This regulation will not have a significant impact on a substantial
number of small entities. The amount of work required of the insurance
companies should not increase because this action only changes the
forum which determines the validity of decisions rendered by the
agency. Therefore, this action is determined to be exempt from the
provisions of the Regulatory Flexibility Act (5 U.S.C. Sec. 605) and no
Regulatory Flexibility Analysis was prepared.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372 which require 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
The Office of the General Counsel has determined that these
regulations meet the applicable standards provided in sections 2(a) and
2(b)(2) of Executive Order 12778. The provisions of this rule will
preempt State and local laws to the extent such state and local laws
are inconsistent herewith. The administrative appeal provisions
contained in these regulations and the appeal provisions promulgated by
the Board of Contract Appeals, 7 CFR part 24, subtitle A, must be
exhausted before action for judicial review may be brought.
Environmental Evaluation
This action is not expected to have any significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
National Performance Review
This regulatory action is being taken as part of the National
Performance
[[Page 40953]]
Review program to eliminate unnecessary or duplicative regulations and
improve those that remain in force.
Background
As a result of the Departmental reorganization mandated by the
Department of Agriculture Reorganization Act of 1994, FCIC must amend
its dispute provisions located at 7 CFR 400.169 to provide reinsured
companies with a mechanism to request reconsideration of appeal of
adverse decisions determined by FCIC.
On May 1, 1995, FCIC published an interim rule in the Federal
Register at 60 FR 21035 to amend the General Crop Insurance
Regulations, Subpart L, Reinsurance Agreement; Standards for Approval,
by revising the disputes clause to provide reinsured companies with an
informal appeal process through the FCIC, and a formal appeal process
through the United States Department of Agriculture Board of Contract
Appeals (BCA), for the purpose of resolving disputes between the FCIC
and reinsured companies on Standard Reinsurance Agreement (SRA) issues.
Following publication of that interim rule, the public was afforded 60
days to submit written comments, data, and opinions. On August 7, 1995,
FCIC extended the comment period for these regulations to August 18,
1995 (60 FR 40055). Three comments, two from private law firms and one
from a trade association were received in response to the requests for
comment on the interim rule.
Comment: All 3 comments questioned the jurisdiction of the United
States Department of Agriculture BCA over SRA issues in dispute since
the SRA is not a typical Federal procurement contract.
Response: The BCA continues to function as the agency board
pursuant to the Contract Disputes Act of 1978 (Act), and as the agency
board pursuant to jurisdiction outside the Act as set forth in 7 CFR
Sec. 24.4. The BCA's jurisdiction is not, and never has been, limited
to procurement disputes. Section 24.4 has been expanded to specifically
cover appeals of final administrative determinations of FCIC pertaining
to the SRAs under 7 CFR Sec. 400.169(d). Since BCA has jurisdiction
over these issues, the disputes are not ``adverse decisions'' subject
to appeal before the National Appeals Division according to 7 U.S.C.
Sec. 6991. They also are specifically excluded from the scope of Farm
Service Agency informal appeal regulations published at 7 CFR part 780.
Disputes involving SRAs raise factual and legal questions of a
contractual nature which fall within the express expertise of the BCA.
The rules of procedure for these appeals are the same as for all others
under 7 CFR part 24. There is no longer a distinction between
``statutory'' and ``nonstatutory'' appeals.
Comment: All 3 comments expressed concern with respect to the BCA's
jurisdiction to hear appeals of final determinations rendered under
Sec. 400.169.
Response: The BCA amended its jurisdictional provisions on November
7, 1995 (60 FR 56206) to provide the BCA with jurisdiction over final
administrative determinations of the FCIC pertaining to SRAs under 7
CFR Sec. 400.169(d). That is separate from its jurisdiction to hear
contract disputes under the Contract Disputes Act. Therefore, no change
will be made.
Comment: Two commentors questioned the nonappealability of FCIC
decisions rendered under bulletins and directives and complained that
FCIC was limiting the companies' due process rights by limiting the
types of disputes appealable.
Response: The interim rule does not limit the companies' due
process rights or their right to appeal any decision of FCIC based on
any bulletin or directive that affects, interprets, explains or
restricts any term of the SRA. FCIC has the right to limit the appeal
of any decision that is solely within its discretion and not required
under the SRA. Bulletins or directives that do not affect, interpret,
explain or restrict any term of the SRA include, but are not limited
to, those that provide changes in crop insurance policies before the
contract change date, the addition of new crop insurance policies or
programs, granting relief from requirements or sanctions if such
requirements or sanctions are not required by the SRA, and requiring
companies to take actions to protect the integrity of the program, even
if such action may cause the company to incur additional costs,
provided such requirement is implemented before the start of the
reinsurance year. No change will be made to the rule.
Comment: All three commentors expressed concern with respect to the
propriety of permitting the Director of Compliance and the Director of
Insurance Services to render final administrative decisions.
Response: Section 400.169 provides an informal mechanism for
companies to challenge decisions rendered by FCIC. Reconsideration of
these decisions allows the division that rendered the decision the
opportunity to correct any error prior to an appeal to the BCA. The
Directors of Compliance and Insurance Services are persons with the
most knowledge of the programs they administer and are most qualified
to render final determinations. Therefore, there is no need to amend
the rule to have the Deputy Manager make final determinations.
Comment: One commentor questioned whether a FCIC decision of
appealability itself should be reviewable or appealable.
Response: Nothing in this rule prohibits a company from seeking a
review of a determination of nonappealability from the BCA. The issue
on appeal would be limited to a determination of whether the decision
of FCIC was based on a provision of the SRA, a compliance review, or a
bulletin or directive which affects, interprets, explains or restricts
a term of the SRA.
Comment: Two comments were received with respect to the definition
of ``contracting officer.'' The commentors suggested that the term be
amended to include the Directors of Insurance Services and Compliance
and that these persons be given authority to settle disputes.
Response: The term ``contracting officer'' is not defined in FCIC's
regulations. Further, the Manager of FCIC has the authority to
designate contracting officers and provide these persons with the
authority to resolve disputes between reinsured companies and FCIC.
This rule provides a delegation to these Directors to resolve such
disputes. Therefore, no change is necessary.
Comment: One comment suggested that the rule be amended to permit
companies to bypass the BCA and go directly to the district court or
the National Appeals Division (NAD).
Response: It has been determined that the BCA is the best forum to
hear these appeals. Although the BCA may not be an expert with respect
to the SRA, it has extensive experience in contract matters. Since NAD
does not have jurisdiction to hear any matter over which the BCA has
jurisdiction, the BCA acquired jurisdiction over these cases. FCIC has
no authority to permit any appeal to NAD. Further, administrative
appeals provide the valuable service of permitting the Department to
correct any errors and, therefore, conserving judicial resources.
Therefore, the rule will not be amended to permit companies to appeal
directly to the Federal courts or to NAD.
Comment: One comment suggested that the rule be amended to specify
the forum for an appeal of a BCA decision.
Response: An amendment to the rule is not necessary. The
administrative appeals process ends with a BCA decision. The Department
of Agriculture
[[Page 40954]]
Reorganization Act provided that once the administrative appeals
process is complete, persons may bring suit. Section 506(d) of the
Federal Crop Insurance Act, as amended, states that the Federal
district court has exclusive original jurisdiction over any suit
brought against FCIC.
The comments did not result in any change to the final rule.
Therefore, the interim rule as published on May 1, 1995, at 60 FR 21035
is hereby adopted as a final rule.
List of Subjects in 7 CFR Part 400
Crop insurance.
Final Rule
Accordingly, pursuant to the authority contained in the Federal
Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.), and for the
reasons set forth in the preamble, the Federal Crop Insurance
Corporation hereby adopts as a final rule, the interim rule as
published at 60 FR 21035 on May 1, 1995.
Signed in Washington, D.C., on August 1, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-20036 Filed 8-6-96; 8:45 am]
BILLING CODE 3410-FA-P
Complete official Federal Register PDF
FR Doc. 96-20035 Fresh Prunes Grown in Washington and Oregon; Handling Requirement Revision; Fruits; Import Regulations; Fresh Prune Import Requirements
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40956-40959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20035]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Parts 924 and 944
[Docket No. FV95-924-1FR]
Fresh Prunes Grown in Washington and Oregon; Handling Requirement
Revision; Fruits; Import Regulations; Fresh Prune Import Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule changes the effective period of the handling
regulations in effect for shipments of fresh prunes grown in specified
counties of Washington and in Umatilla County, Oregon under Marketing
Order No. 924 to coincide with the domestic shipping season. This final
rule also establishes grade, size, and quality requirements for prune
variety plums (fresh prunes) imported into the United States. The
import requirements are issued pursuant to the authority in section 8e
of the amended Agricultural Marketing Agreement Act of 1937.
EFFECTIVE DATE: This final rule becomes effective September 6, 1996.
FOR FURTHER INFORMATION CONTACT: Anne M. Dec, Marketing Order
Administration Branch, AMS, USDA, P.O. Box 96456, room 2526-S,
Washington, D.C. 20090-6456; telephone: (202) 720-5127; or Teresa
Hutchinson, Northwest Marketing Field Office, AMS, USDA, 1220 S.W.
Third Avenue, room 369, Portland, Oregon 97204; telephone: (503) 326-
2725. Small businesses may request information on compliance with this
regulation by contacting: Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, Room
2523-S, Washington, D.C. 20090-6456; telephone (202) 720-2491, FAX
(202) 720-5698.
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Order No. 924 (7 CFR Part 924), as amended, regulating the handling of
fresh prunes grown in Washington and Oregon, hereinafter referred to as
the ``order.'' The order is effective under the Agricultural Marketing
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter
referred to as the ``Act.''
This final rule is also issued under section 8e of the Act, which
provides that whenever certain specified commodities, including fresh
prunes, are regulated under a Federal marketing order, imports of these
commodities into the United States are prohibited unless they meet the
same or comparable grade, size, quality, and maturity requirements as
those in effect for the domestically produced commodities.
The Department of Agriculture (Department) is issuing this final
rule in conformance with Executive Order 12866.
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have retroactive
effect. This final rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. After the hearing the Secretary will rule on the petition.
The Act provides that the district court of the United States in any
district in which the handler is an inhabitant, or has his or her
principal place of business, has jurisdiction to review the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after date of the entry of the ruling.
There are no administrative procedures which must be exhausted
prior to any judicial challenge to the provisions of import regulations
issued under section 8e of the Act.
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has
considered the economic impact of this final rule on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility. Import regulations issued under
the Act are based on those established under Federal marketing orders.
There are approximately 5 handlers subject to regulation under the
order and about 350 producers of Washington-Oregon fresh prunes. There
are no known importers of fresh prunes. Small agricultural producers
are defined by the Small Business Administration (13 CFR 121.601) as
those whose annual receipts are less than $500,000 and small
agricultural service firms, which include fresh prune handlers and
importers, are defined as those whose annual receipts are less than
$5,000,000. A majority of these producers and handlers may be
classified as small entities.
Currently, the grade, size, and quality regulations under the order
are effective throughout the entire year. This final rule changes the
effective dates of these handling regulations to July 15 through
September 30 each year, so that the
[[Page 40957]]
regulatory period more closely coincides with the marketing season for
fresh prunes grown in Washington and Oregon. This period includes
additional time after the last day of harvest when some lots of fruit
may be kept in cold storage prior to shipment.
Consistent with section 8e of the Act, fresh prunes offered for
importation into the United States are to be regulated based on the
requirements under the order and during the same period of time when
Washington and Oregon fresh prunes are regulated. However, fresh prunes
are not, at this time, being imported into the United States.
This rule states that, from July 15 through September 30 each year,
fresh prunes imported into the United States are required to meet the
same minimum grade, size, and quality requirements as those for fresh
prunes under the order. In addition, the reporting requirements that
importers would be required to comply with are the same as those
required for the importation of other commodities.
Therefore, the AMS has determined that this action will not have a
significant economic impact on a substantial number of small entities.
Most of the prune variety plums (fresh prunes) grown in the United
States are produced in certain counties in Washington and in Umatilla
County, Oregon. Such fresh prunes are regulated under the order which
establishes minimum grade, size, and quality requirements for fresh
prunes. There is no other Federal marketing order regulating plums or
fresh prunes. The Washington and Oregon fresh prune industry ships
throughout the United States. Between 1990 and 1994, shipments of fresh
prunes from Washington and Oregon ranged from 8.4 to 22.6 million
pounds.
The grade, size, and quality of fresh prunes grown in Washington
and Oregon are regulated under the order. These handling requirements
do not change substantially from season to season, and they have been
issued on a continuing basis subject to amendment, modification, or
suspension as may be determined by the Secretary. Currently, the
handling regulations under the order are effective throughout the
entire year. This final rule changes the effective dates of the
handling regulations to July 15 through September 30 each year, so that
the regulatory period more closely coincides with the marketing season
for fresh prunes grown in Washington and Oregon. This period includes
additional time after the last day of harvest when some lots of fruit
may be kept in cold storage prior to shipment.
Fresh prunes offered for importation into the United States are
regulated based on the requirements under the order and during the same
period of time when Washington and Oregon fresh prunes are regulated.
However, fresh prunes are not, at this time, being imported into the
United States.
This rule states that, from July 15 through September 30 each year,
fresh prunes imported into the United States are required to meet the
same minimum grade, size, and quality requirements as those for fresh
prunes under the order.
This rule adds a new Sec. 944.700 under 7 CFR Part 944--Fruits;
Import Regulations to require that fresh prunes imported into the
United States, except for the Brooks and President varieties, meet
modified requirements of the U.S. No. 1 grade as set forth in the
United States Standards for Grades of Fresh Plums and Prunes (7 CFR
Parts 51.1520 through 51.1538), and a minimum size requirement of 1\1/
4\ inches in diameter. The modifications to the U.S. No. 1 standard are
as follows: (1) At least two-thirds of the surface must be purplish in
color; and (2) there cannot be more than 15 percent total defects in
any lot. These defects, by count, cannot exceed the following
tolerances: (a) A maximum of 10 percent of the defects may not meet
color requirements; (b) a maximum of 10 percent of the defects may not
meet the minimum diameter requirements; and (c) a maximum of 10 percent
of the defects may be in the remaining grade requirements (misshapen
and dirty fresh prunes). However, not more than 5 percent of the
remaining grade requirements may constitute serious damage, including a
maximum of 1 percent for decay.
This rule also establishes the period of time for the regulation of
imported fresh prunes. From July 15 through September 30 of each year,
fresh prunes imported into the United States will be subject to the
minimum grade, size and quality requirements effective under the order.
This is the same period that such requirements are to be in effect for
fresh prunes under the order. Imports arriving before the domestic
commodity's shipping season begins or after the domestic commodity's
shipping season ends will not be subject to the import requirements.
Importers are responsible for arranging for the required inspection
and certification prior to importation. Importation is defined to mean
release from custody of the United States Customs Service. Such
inspection services are available on a fee-for-service basis. This
action could therefore result in increased costs associated with
importing fresh prunes. The additional costs should be offset, however,
by the benefits accrued by ensuring that only acceptable quality fruit
is present in the U.S. marketplace. Such quality assurance promotes
buyer satisfaction and increased sales.
This rule also authorizes limited quantity exemptions from the
import requirements specified herein. Individual shipments of Stanley
and Merton variety fresh prunes of less than 500 pounds, and individual
shipments of other fresh prune varieties of less than 350 pounds, will
be excluded from the import requirements. Additionally, fresh prunes
imported for consumption by charitable institutions, distribution by
relief agencies, or commercial processing into products are exempt from
the import requirements. The marketing order provides similar
exemptions.
To ensure that fresh prunes imported exempt from the grade, size
and quality requirements are utilized in exempt outlets, this rule
provides that such fresh prunes are subject to the safeguard procedures
for imported fruit established in Sec. 944.350 (61 FR 13051, March 26,
1996).
Under these procedures, an importer wishing to import fresh prunes
covered herein for exempt uses shall complete in triplicate, prior to
importation, an ``Importer's Exempt Commodity Form.'' One copy will be
held by the importer or customs broker. The second copy shall be sent
to the Marketing Order Administration Branch (MOAB) of the Fruit and
Vegetable Division, AMS, within 2 days of the entry of the shipment.
The third copy shall accompany the exempt lot to the receiver.
The form can be obtained from the MOAB by calling (202) 720-6585 or
sending a fax to (202) 720-5698. The form shall be completed at the
time the commodity enters the United States. Information called for on
the ``Importer's Exempt Commodity Form'' shall include:
(1) the commodity and the variety (if known) being imported,
(2) the date and place of inspection, if used to enter failing
product or culls as exempt (including a copy of the inspection
certificate),
(3) identifying marks or numbers on the containers,
(4) identifying numbers on the railroad car, truck or other
transportation vehicle transporting product to the receiver,
(5) the name and address of the importer,
(6) the place and date of entry,
(7) the quantity imported (in pounds),
[[Page 40958]]
(8) the name and address of the intended receiver (e.g., processor,
charity, or other exempt receiver),
(9) the intended use of the exempt commodity,
(10) the U.S. Customs Service entry number and harmonized tariff
code number, and
(11) such other information as may be necessary to ensure
compliance with this regulation.
The third copy of the form shall accompany the exempt lot to its
intended destination. The exempt receiver shall certify that the lot
has been received and it will be utilized in an exempt outlet. After
the certification is signed by the receiver, the form would be returned
to MOAB by the receiver, within 2 days of receipt of the lot.
Lots that are exempt from the grade, size, and quality requirements
of the fresh prune import regulation will not be subject to the
inspection and certification requirements in such regulation. An
imported lot intended for non-exempt uses, or any portion of such a
lot, that fails established grade, size, and quality requirements, can
be exported, disposed of in an exempt outlet following the procedure
described above, or otherwise destroyed, under the supervision of the
Federal or Federal-State Inspection Service with the costs of
certifying the disposal of such fruit borne by the importer.
This rule also amends paragraph (a) of Sec. 944.400 (7 CFR Part
944). That paragraph designates the Federal or Federal-State Inspection
Service of the Fruit and Vegetable Division, Agricultural Marketing
Service, U.S. Department of Agriculture as the organization to perform
inspection and certification of imported fresh fruits specified in
section 8e of the Act. That paragraph also specifies procedures to be
followed for obtaining the required inspections. This final rule
designates the Federal or Federal-State Inspection Service and
Agriculture and Agri-Food Canada as the organizations authorized to
inspect and certify foreign produced fresh prunes as meeting import
requirements issued pursuant to section 8e.
Paragraphs (b), (c), and (d) of Sec. 944.400, specifying additional
procedures for obtaining inspection and certification of imported
fruits listed in the section, remain unchanged. These procedures are
followed by importers to obtain inspection and certification of those
fresh fruits specified in section 8e which are offered for importation
into the United States.
The information collection requirements contained in this final
rule have been previously approved by the Office of Management and
Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35), and have been assigned OMB number 0581-0167.
The proposed rule concerning this action was published in the
Federal Register on May 8, 1996 (61 FR 20756). A 30-day comment period,
which ended June 7, 1996, was provided for interested persons. No
comments were received.
In accordance with section 8e of the Act, the United States Trade
Representative has concurred with the issuance of this final rule.
After consideration of all relevant matter presented, it is hereby
found that this rule, as hereinafter set forth, will tend to effectuate
the declared policy of the Act.
List of Subjects
7 CFR Part 924
Marketing agreements, Plums, Prunes, Reporting and recordkeeping
requirements.
7 CFR Part 944
Avocados, Food grades and standards, Grapefruit, Grapes, Imports,
Kiwifruit, Limes, Olives, Oranges.
For the reasons set forth above, 7 CFR parts 924 and 944 are
amended as follows:
1. The authority citation for 7 CFR parts 924 and 944 continues to
read as follows:
Authority: 7 U.S.C. 601-674.
PART 924--FRESH PRUNES GROWN IN DESIGNATED COUNTIES IN WASHINGTON
AND IN UMATILLA COUNTY, OREGON
2. In section 924.319, the introductory text of paragraph (a) is
revised to read as follows:
Sec. 924.319 Prune Regulation 19.
(a) During the period beginning July 15 and ending September 30, no
handler shall handle any lot of prunes, except prunes of the Brooks
variety, unless:
* * * * *
PART 944--FRUITS; IMPORT REGULATIONS
3. In Sec. 944.350, the section heading and paragraphs (a)(1) and
(a)(2) are revised to read as follows:
Sec. 944.350 Safeguard procedures for avocados, grapefruit, kiwifruit,
limes, olives, oranges, prune variety plums (fresh prunes), and table
grapes, exempt from grade, size, quality, and maturity requirements.
(a) * * *
(1) Avocados, grapefruit, kiwifruit, limes, olives, oranges, and
prune variety plums (fresh prunes) for consumption by charitable
institutions or distribution by relief agencies;
(2) Avocados, grapefruit, kiwifruit, limes, oranges, prune variety
plums (fresh prunes), and table grapes for processing;
* * * * *
4. Section 944.400 is amended by revising the section heading and
the introductory text of paragraph (a) to read as follows:
Sec. 944.400 Designated inspection services and procedure for
obtaining inspection and certification of imported avocados,
grapefruit, kiwifruit, limes, oranges, prune variety plums (fresh
prunes), and table grapes regulated under section 8e of the
Agricultural Marketing Agreement Act of 1937, as amended.
(a) The Federal or Federal-State Inspection Service, Fruit and
Vegetable Division, Agricultural Marketing Service, United States
Department of Agriculture is hereby designated as the governmental
inspection service for the purpose of certifying the grade, size,
quality, and maturity of avocados, grapefruit, limes, nectarines,
oranges, prune variety plums (fresh prunes), and table grapes that are
imported into the United States. Agriculture and Agri-Food Canada is
also designated as a governmental inspection service for the purpose of
certifying grade, size, quality and maturity of prune variety plums
(fresh prunes) only. Inspection by the Federal or Federal-State
Inspection Service or the Agriculture and Agri-Food Canada, with
appropriate evidence thereof in the form of an official inspection
certificate, issued by the respective services, applicable to the
particular shipment of the specified fruit, is required on all imports.
Inspection and certification by the Federal or Federal-State Inspection
Service will be available upon application in accordance with the
Regulations Governing Inspection, Certification and Standards for Fresh
Fruits, Vegetables, and Other Products (7 CFR part 51) but, since
inspectors are not located in the immediate vicinity of some of the
small ports of entry, such as those in southern California, importers
of avocados, grapefruit, limes, nectarines, oranges, prune variety
plums (fresh prunes), and table grapes should make arrangements for
inspection
[[Page 40959]]
through the applicable one of the following offices, at least the
specified number of the days prior to the time when the fruit will be
imported:
* * * * *
5. A new Sec. 944.700 is added to read as follows:
Sec. 944.700 Fresh prune import regulation.
(a) Pursuant to section 8e of the Agricultural Marketing Agreement
Act of 1937, as amended, the importation into the United States of any
fresh prunes, other than the Brooks variety, during the period July 15
through September 30 of each year is prohibited unless such fresh
prunes meet the following requirements:
(1) Such fresh prunes grade at least U.S. No. 1, except that at
least two-thirds of the surface of the fresh prune is required to be
purplish in color, and such fresh prunes measure not less than 1\1/4\
inches in diameter as measured by a rigid ring: Provided, That the
following tolerances, by count, of the fresh prunes in any lot shall
apply in lieu of the tolerance for defects provided in the United
States Standards for Grades of Fresh Plums and Prunes (7 CFR 51.1520
through 51.1538): A total of not more than 15 percent for defects,
including therein not more than the following percentage for the defect
listed:
(i) 10 percent for fresh prunes which fail to meet the color
requirement;
(ii) 10 percent for fresh prunes which fail to meet the minimum
diameter requirement;
(iii) 10 percent for fresh prunes which fail to meet the remaining
requirements of the grade: Provided, That not more than one-half of
this amount, or 5 percent, shall be allowed for defects causing serious
damage, including in the latter amount not more than 1 percent for
decay.
(2) [Reserved]
(b) The importation of any individual shipment which, in the
aggregate, does not exceed 500 pounds net weight, of fresh prunes of
the Stanley or Merton varieties, or 350 pounds net weight, of fresh
prunes of any variety other than the Stanley or Merton varieties, is
exempt from the requirements specified in this section.
(c) The grade, size and quality requirements of this section shall
not be applicable to fresh prunes imported for consumption by
charitable institutions, distribution by relief agencies, or commercial
processing into products, but such prunes shall be subject to the
safeguard provisions in Sec. 944.350.
(d) The term ``U.S. No. 1'' shall have the same meaning as when
used in the United States Standards for Grades of Fresh Plums and
Prunes (7 CFR 51.1520 through 51.1538); the term ``purplish color''
shall have the same meaning as when used in the Washington State
Department of Agriculture Standards for Italian Prunes (April 28,
1978), and the Oregon State Department of Agriculture Standards for
Italian Prunes (October 5, 1977); the term ``diameter'' means the
greatest dimension measured at right angles to a line from the stem to
the blossom end of the fruit.
(e) The term ``Prunes'' means all varieties of plums, classified
botanically as Prunus domestica, except those of the President variety.
(f) The term ``importation'' means release from custody of the
United States Customs Service.
(g) Inspection and certification service is required for imports
and will be available in accordance with the regulation designating
inspection services and procedure for obtaining inspection and
certification (7 CFR 944.400).
(h) Any lot or portion thereof which fails to meet the import
requirements, and is not being imported for purposes of consumption by
charitable institutions, distribution by relief agencies, or commercial
processing into products, prior to or after reconditioning may be
exported or disposed of under the supervision of the Federal or
Federal-State Inspection Service with the costs of certifying the
disposal of such fresh prunes borne by the importer.
(i) It is determined that fresh prunes imported into the United
States shall meet the same minimum grade, size and quality requirements
as those established for fresh prunes under Marketing Order No. 924 (7
CFR part 924).
Dated: August 1, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-20035 Filed 8-6-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-20034 Spearmint Oil Produced in the Far West; Assessment Rate
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40959-40960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20034]
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DEPARTMENT OF AGRICULTURE
7 CFR Part 985
[Docket No. FV96-985-2 FIR]
Spearmint Oil Produced in the Far West; Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting as a
final rule, without change, the provisions of an interim final rule
establishing an assessment rate for the Spearmint Oil Administrative
Committee (Committee) under Marketing Order No. 985 for the 1996-97 and
subsequent fiscal periods. The Committee is responsible for the local
administration of the marketing order which regulates the handling of
spearmint oil produced in the Far West. Authorization to assess
spearmint oil handlers enables the Committee to incur expenses that are
reasonable and necessary to administer the program.
EFFECTIVE DATE: Effective on June 1, 1996.
FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369,
Portland, Oregon 97204-2807; telephone (503) 326-2724; or Tershirra T.
Yeager, Marketing Order Administration Branch, Fruit and Vegetable
Division, AMS, USDA, room 2525, South Building, P.O. Box 96456,
Washington, D.C. 20090-6456; telephone: (202) 720-5127. Small
businesses may request information on compliance with this regulation
by contacting: Jay Guerber, Marketing Order Administration Branch,
Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, Room 2523-S,
Washington, D.C. 20090-6456; telephone: (202) 720-2491, Fax (202) 720-
5698.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order
No. 985 (7 CFR part 985), regulating the handling of spearmint oil
produced in the Far West (Washington, Idaho, Oregon, and designated
parts of California, Nevada, Montana, and Utah), hereinafter referred
to as the ``order.'' The marketing order is effective under the
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the marketing order now in effect, Far West
spearmint oil handlers are subject to assessments. Funds to administer
the order are derived from such assessments. It is intended that the
assessment rate as issued herein will be applicable to all assessable
spearmint oil beginning June 1, 1996, and continuing until amended,
suspended, or terminated. This rule will not preempt any State or local
laws, regulations, or policies, unless they
[[Page 40960]]
present an irreconcilable conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. Such handler is afforded the opportunity for a hearing on
the petition. After the hearing the Secretary would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has his or
her principal place of business, has jurisdiction to review the
Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 260 producers of spearmint oil in the
production area and 8 handlers subject to regulation under the
marketing order. Small agricultural producers have been defined by the
Small Business Administration (13 CFR 121.601) as those having annual
receipts less than $500,000, and small agricultural service firms are
defined as those whose annual receipts are less than $5,000,000. The
majority of spearmint oil producers and handlers may be classified as
small entities.
The spearmint oil marketing order provides authority for the
Committee, with the approval of the Department, to formulate an annual
budget of expenses and collect assessments from handlers to administer
the program. The members of the Committee are producers of Far West
spearmint oil. They are familiar with the Committee's needs and with
the costs for goods and services in their local area and are thus in a
position to formulate an appropriate budget and assessment rate. The
assessment rate is formulated and discussed in a public meeting. Thus,
all directly affected persons have an opportunity to participate and
provide input.
The Committee met on February 27, 1996, and unanimously recommended
1996-97 expenditures of $230,752 and an assessment rate of $0.10 per
pound of spearmint oil. In comparison, last year's budgeted
expenditures were $233,272. The assessment rate of $.10 is the same as
last year's established rate. Major expenditures recommended by the
Committee for 1996-97 include $96,200 for administrative expenses,
$113,552 for salaries, and $21,000 for committee travel. Budgeted
expenses for these items in 1995-96 were $102,900, $107,372, and
$23,009, respectively.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of Far West
spearmint oil. Spearmint oil shipments for the year are estimated at
2,081,610 pounds which should provide $208,161 in assessment income.
Income derived from handler assessments, along with interest income and
funds from the committee's authorized reserve, will be adequate to
cover budgeted expenses. Funds in the reserve will be kept within the
maximum permitted by the order.
An interim final rule regarding this action was published in the
May 6, 1996, issue of the Federal Register (61 FR 20122). That rule
provided for a 30-day comment period. No comments were received.
While this rule will impose some additional costs on handlers, the
costs are in the form of uniform assessments on all handlers. Some of
the additional costs may be passed on to producers. However, these
costs will be offset by the benefits derived by the operation of the
marketing order. Therefore, the AMS has determined that this rule will
not have a significant economic impact on a substantial number of small
entities.
The assessment rate established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and information submitted by the
Committee or other available information.
Although this assessment rate is effective for an indefinite
period, the Committee will continue to meet prior to or during each
fiscal period to recommend a budget of expenses and consider
recommendations for modification of the assessment rate. The dates and
times of Committee meetings are available from the Committee or the
Department. Committee meetings are open to the public and interested
persons may express their views at these meetings. The Department will
evaluate Committee recommendations and other available information to
determine whether modification of the assessment is needed. The
Committee's 1996-97 budget and those for subsequent fiscal years will
be reviewed and as appropriate, approved by the Department.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Committee and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined that good
cause exists for not postponing the effective date of the rule until 30
days after publication in the Federal Register because: (1) The
Committee needs to have sufficient funds to pay its expenses which are
incurred on a continuous basis; (2) the 1996-97 fiscal period begins on
June 1, 1996, and the marketing order requires that the rate of
assessment for each fiscal period apply to all assessable spearmint oil
handled during such fiscal period; (3) handlers are aware of this
action which was unanimously recommended by the Committee at a public
meeting and is similar to other assessment rate actions issued in past
years; and (4) an interim final rule was published on this action and
provided for a 30-day comment period, no comments were received.
List of Subjects in 7 CFR Part 985
Spearmint Oil, Marketing agreements, Oils and fats, Reporting and
recordkeeping requirements.
PART 985--SPEARMINT OIL PRODUCED IN THE FAR WEST
Accordingly, the interim final rule amending 7 CFR 900 which was
published at 61 FR 20122 on May 6, 1996, is adopted as a final rule
without change.
Dated: August 1, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-20034 Filed 8-6-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-20019 Safety Zone Regulation; Seafair's U.S. Navy Blue Angels Air Show, Elliott Bay, Seattle, WA
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40994-40996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20019]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
33 CFR Part 165
[CGD13-96-015]
RIN 2115-AA97
Safety Zone Regulation; Seafair's U.S. Navy Blue Angels Air Show,
Elliott Bay, Seattle, WA
AGENCY: Coast Guard, DOT.
ACTION: Temporary final rule.
-----------------------------------------------------------------------
SUMMARY: The Coast Guard is adopting a temporary safety zone regulation
for the U.S. Navy Blue Angels Air Show sponsored by Seafair
Incorporated on 8, 9, 10, and 11 August, 1996, over Elliott Bay,
Seattle, Washington. The Captain of the Port Puget Sound, Seattle,
Washington, is taking this action to safeguard watercraft and their
occupants from the safety hazards associated with high performance
aircraft conducting difficult maneuvers at low altitudes. The safety
zone will encompass the area of Elliott Bay over which the air show
will take place. Entry into this safety zone will be prohibited unless
authorized by the Captain of the Port.
EFFECTIVE DATES: This regulation becomes effective on the following
dates and times: commencing August 8, 1996, at 1 p.m. (PDT) and
terminating August 8, 1996, at 4 p.m. (PDT); commencing August 9, 1996,
at 2 p.m. (PDT) and terminating August 9, 1996, at 4 p.m. (PDT);
commencing August 10, 1996, at 2 p.m. (PDT) and terminating August 10,
1996, at 4 p.m. (PDT); and commencing August 11, 1996, at 2 p.m. (PDT)
and terminating August 11, 1996, at 4 p.m. (PDT). The Captain of the
Port may
[[Page 40995]]
sooner terminate this safety zone each day if it becomes unnecessary.
ADDRESSES: Documents referred to in this preamble are available for
inspection or copying at U.S. Coast Guard Marine Safety Office Puget
Sound, 1519 Alaskan Way South, Building One, Seattle, WA 98134. Normal
office hours are between 7 a.m. and 5 p.m., Monday through Friday,
except federal holidays.
FOR FURTHER INFORMATION CONTACT:
LTJG A. Baribeau, c/o Captain of the Port Puget Sound, 1519 Alaskan Way
South, Seattle, Washington 98134, (206) 217-6232.
SUPPLEMENTARY INFORMATION:
Regulatory History
Pursuant to 5 U.S.C. 553, a notice of proposed rulemaking was not
published for this regulation. However, good cause exists for not
following normal rulemaking procedures. Publishing a NPRM would be
contrary to the public interest since immediate action is necessary to
ensure the safety of vessels and spectators operating in the area of
the Air Show. Due to the complex planning and coordination involved,
the sponsor of the event, Seafair Incorporated, was unable to provide
the Coast Guard with the final details for the show until 60 days prior
to the event. Therefore, sufficient time was not available to publish a
proposed rule in advance of the event. Following normal rulemaking
procedures in this case would be impracticable.
Background and Purpose
The Coast Guard is adopting a temporary safety zone regulation for
the U.S. Navy Blue Angels Air Show sponsored by Seafair, Incorporated.
The safety zone encompasses all waters of Puget Sound bounded by a line
beginning at position latitude 47 deg. 37.48.0' N, longitude 122 deg.
25.11.4' W; thence to latitude 47 deg. 37.21.7' N, longitude 122 deg.
25.31.6' W; thence to latitude 47 deg. 36.05.8' N, longitude 122 deg.
21.55.1' W' thence to latitude 47 deg. 36/47.9' N, longitude 122 deg.
21.22.8'W; and thence returning to the point of origin (NAD 83). The
zone is needed to protect watercraft and their occupants from safety
hazards associated with high performance aircraft conducting complex
maneuvers at high speeds and low altitudes. Many onlookers may attempt
to view the air show at close range, thereby increasing their exposure
to these hazards. Entry into the safety zone will be prohibited during
the air show and practice sessions. This safety zone will be enforced
by representatives of the Captain of the Port Puget Sound, Seattle,
Washington. The Captain of the Port may be assisted by other federal
agencies.
Regulator Evaluation
This temporary final rule is not a significant regulatory action
under section 3(f) of Executive Order 12866 and does not require an
assessment of potential costs and benefits under section 6(a)(3) of
that order. It has not been reviewed by the Office of Management and
Budget under that order. It is not significant under the regulatory
policies and procedures of the Department of Transportation (DOT) (44
FR 11040, February 26, 1979).
The Coast Guard expects the economic impact of this proposal to be
so minimal that a full regulatory evaluation under paragraph 10e of the
regulatory policies and procedures of DOT is unnecessary. The regulated
area established by the proposed regulation would encompass
approximately 4.75 square miles in Elliott Bay from Magnolia Bluff
across the Bay to the Coleman Dock on the Seattle waterfront. Entry
into the regulated area would be restricted for less than four hours
during each of the four days during the performances. Maritime commerce
can plan the transits of the area around the scheduled event.
Federalism
The Coast Guard has analyzed this action in accordance with the
principles and criteria contained in Executive Order 12612, and it has
been determined that the proposed rulemaking does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601) et seq.), the
Coast Guard must consider whether this proposal will have a significant
economic impact on a substantial number of small entities. For the
reasons set forth above the impacts of this proposal are expected to be
minimal, the Coast Guard certifies under section 605(b) of the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that this proposal
will not have a significant impact on a substantial number of small
entities.
Environment
The Coast Guard considered the environmental impact of this
proposed regulation and concluded that, under paragraph 2.B.2 of
Commandant Instruction M16475.1B (as revised by 59 FR 38654; July 29,
1994), this rule is categorically excluded from further environmental
documentation. Appropriate environmental analysis of the U.S. Navy Blue
Angels Air Show sponsored by Seafair Incorporated will be in
conjunction with the marine event permitting process. Any environmental
documentation required under the National Environmental Policy Act will
be completed prior to the issuance of a marine event permit for this
event.
List of Subjects in 33 CFR Part 165
Harbors, Marine safety, Navigation (water), Reporting and
recordkeeping requirements, Security measures, Waterways.
Regulation
For the reasons set out in the preamble, the Coast Guard amends
Part 165 of Title 33, Code of Federal Regulations, as follows:
PART 165--[AMENDED]
1. The authority citation for Part 165 continues to read as
follows:
Authority: 33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1(g),
6.04-1, 6.04-6, and 160.5; 49 CFR 1.46.
2. A new Section 165.T-3009 is added to read as follows:
Sec. 165.T1-3009 Safety Zone: Elliott Bay, Seattle, Washington.
(a) Regulated Area. The following area is a safety zone: All waters
of Elliott Bay, Seattle, Washington bounded by a line beginning at
position latitude 47 deg.37.48.0'N, longitude 122 deg.25.11.4'W; thence
to latitude 47 deg.37.21.7'N, longitude 122 deg.25.31.6'W; thence to
latitude 47 deg.36.05.8'N, longitude 122 deg.21.55.1'W; thence to
latitude 47 deg.36.47.9'N, longitude 122 deg.21.22.8'W; thence
returning to the point of origin.
(NAD 83) (b) Definitions. The designated representative of the
Captain of the Port is any Coast Guard commissioned, warrant or petty
officer who has been authorized by the Captain of the Port Puget Sound,
to act on his behalf. The following officers have or will be designated
by the Captain of the Port: The Commissioned, warrant, and petty
officers assigned to Coast Guard Station Seattle, USCGC CUTTYHUNK, and
USCGC POINT RICHMOND.
(c) Regulations. In accordance with the general regulations in
Sec. 165.23 of this part, entry into this zone is prohibited, unless
authorized by the Captain of the Port or his designated
representatives.
(d) Effective Dates. This regulation is effective on the following
dates and times: commencing August 8, 1996, at 1 p.m. (PDT) and
terminating August 8, 1996, at 4 p.m. (PDT); commencing August 9, 1996,
at 2 p.m. (PDT) and
[[Page 40996]]
terminating August 9, 1996, at 4 p.m. (PDT); commencing August 10,
1996, at 2 p.m. (PDT) and terminating August 10, 1996 at 4 p.m. (PDT);
and commencing August 11, 1996, at 2 p.m. (PDT) and terminating August
11, 1996, at 4 p.m. (PDT). The Captain of the Port may sooner terminate
this safety zone each day if it becomes necessary.
Dated: July 3, 1996.
Myles S. Boothe,
Captain, U.S. Coast Guard, Captain of the Port Puget Sound.
[FR Doc. 96-20019 Filed 8-6-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-20018 Anchorage Areas; Ashley River, Charleston, SC
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40993-40994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20018]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Coast Guard
33 CFR Part 110
[CGD07-96-017]
RIN 2115-AA98
Anchorage Areas; Ashley River, Charleston, SC
AGENCY: Coast Guard, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Coast Guard is establishing two new anchorage areas in the
Ashley River, Charleston, South Carolina. Due to pending construction
of two 1000 ft piers at the George M. Lockwood Municipal Marina, in
Charleston, the current anchorage in 33 CFR 110.72d will not be
available for anchoring recreational vessels. The Municipal Marina has
received a construction permit to build the piers from the U.S. Army
Corps of Engineers. The new anchorages are replacing the one described
in 33 CFR 110.72d. The new anchorages are across the Ashley River from
the current anchorage and though not designated as Federal anchorages,
they are already widely used by recreational vessels as overflow from
the current anchorage.
DATES: September 6, 1996.
ADDRESSES: Requests for further information should be mailed to the
Captain of the Port Charleston, Marine Safety Office Charleston, 196
Tradd Street, South Carolina 29401-1899.
FOR FURTHER INFORMATION CONTACT:
CWO4 R.M. Webber, Project Officer, Marine Safety Office Charleston,
South Carolina, Tel: (803) 724-7690.
SUPPLEMENTARY INFORMATION:
Regulatory History
On April 23, 1996, the Coast Guard published a notice of proposed
rulemaking entitled ``Special Anchorage Areas; Ashley River,
Charleston, SC'' (CGD07-96-017) in the Federal Register (61 FR 17861).
The comment period ended June 24, 1996. The Coast Guard received 11
comments during the proposed rulemaking period. Eight letters of no
objection and three letters in favor of the new anchorages were
received. The letters of no objection verified that the anchorages
would not impact the environment, historic sites, fisheries or
navigation. A public hearing was not requested and one was not held.
Discussion of Regulations
The City Marina Company and the City of Charleston have received a
U.S. Army Corps of Engineers permit to build two 1000 foot piers on the
south side of the Municipal Marina. Those piers will cross an existing
anchorage eliminating most of the anchorages within that area that have
over six feet of water at mean low water. As the existing anchorage is
extensively used by recreational vessels, the new anchorage areas will
accommodate vessels that will be displaced when the new piers are
built. There has been considerable public interest in establishing new
anchorages to replace the existing anchorage since the marina plans
were published in the local newspaper. The new anchorages are already
being used by recreational vessels as overflow from the existing
anchorage. To date, no problems have
[[Page 40994]]
arisen from recreational vessels anchoring in these areas.
Ashley River Anchorage Number One is located on the waters lying
within an area across the Ashley River Channel from the George M.
Lockwood Municipal Marine bounded by the southwest side of the channel
beginning at latitude 32 deg.46'43.7'' N, longitude 079 deg.57'19.3''
W; thence to latitude 32 deg.46'38.0'' N, longitude 079 deg.57'24.0''
W; thence to latitude 32 deg.46'32.0'' N, longitude 079 deg.57'15.5''
W; thence to latitude 32 deg.46'29.0'' N, longitude 079 deg.57'00.9''
W; thence back to the beginning following the southwest boundary of the
Ashley River Channel. All coordinates referenced use datum: NAD 1983.
Ashley River Anchorage Number Two is located on the waters lying
within an area across the Ashley River Channel from the Ashley Marina
bounded by the southwest side of the channel beginning at latitude
32 deg.46'53.0'' N, longitude 079 deg.57'34.5'' W; thence to latitude
32 deg.46'50.5'' N, longitude 079 deg.57'40.5'' W; thence to latitude
32 deg.46'46.0'' N, longitude 079 deg.57'34.5'' W; thence to latitude
32 deg.46'49.0'' N, longitude 079 deg.57'28.7'' W; thence back to the
beginning following the southwest boundary of the Ashley River Channel.
All coordinates referenced use datum: NAD 1983.
These anchorage areas provide that vessels no more than sixty-five
feet in length when anchored in the anchorage areas shall not be
required to carry or exhibit the white anchor lights required by the
Navigation Rules.
Regulatory Evaluation
This rule is not a significant regulatory action under section 3(f)
of Executive Order 12866 and does not require an assessment of
potential costs and benefits under section 6(a)(3) of that order. It
has been exempted from review by the Office of Management and Budget
under that order. It is not significant under the regulatory policies
and procedures of the Department of Transportation (DOT) (44 FR 11040;
February 26, 1979). The Coast Guard expects the economic impact of this
proposal to be so minimal that a full Regulatory Evaluation under
paragraph 10e of the regulatory policies and procedures of DOT is
unnecessary. These anchorage areas described in this notice are
currently being used by recreational vessels as overflow from the
existing anchorage.
Since the impact of this is expected to be minimal, the Coast Guard
certifies that it will not have a significant economic impact on a
substantial number of small entities.
Collection of Information
This rule contains no collection-of-information requirements under
the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Federalism
This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 12612, and it has been determined
that the rulemaking does not have sufficient federalism implications to
warrant the preparation of a Federalism Assessment.
Environmental Assessment
The Coast Guard has considered the environmental impact of this
rule and has determined pursuant to Section 2.B.2. of Commandant
Instruction M16475.1B, that this action is categorically excluded from
further environmental documentation. A Categorical Exclusion
Determination and Environmental Analysis Checklist are available in the
docket for inspection or copying at the same location listed in
ADDRESSES.
List of Subjects in 33 CFR Part 110
Anchorage grounds.
Regulations
In consideration of the foregoing, the Coast Guard amends Part 110
of Title 33, Code of Federal Regulations as follows:
PART 110--[AMENDED]
1. The authority citation for Part 110 continues to read as
follows:
Authority: 33 U.S.C. 471, 2030, 2035 and 2071; 49 CFR 1.46 and
33 CFR 1.05-1(g). Section 110.1a and each section listed in 110.1a
are also issued under 33 U.S.C. 1223 and 1231.
2. Section 110.72d is revised to read as follows:
Sec. 110.72d Ashley River anchorage areas, SC.
The following locations are special anchorage areas:
(a) Ashley River Anchorage 1. The waters lying within an area
across the Ashley River Channel from the George M. Lockwood Municipal
Marina bounded by the southwest side of the channel beginning at
latitude 32 deg.46'43.7''N, longitude 079 deg.57'19.3''W; thence to
latitude 32 deg.46'38.0''N, longitude 079 deg.57'24.0''W; thence to
latitude 32 deg.46'32.0''N, longitude 079 deg.57'15.5''W; thence to
latitude 32 deg.46'29.0''N, longitude 079 deg.57'00.9''W; thence back
to the beginning following the southwest boundary of the Ashley River
Channel. All coordinates referenced use datum: NAD 1983.
(b) Ashley River Anchorage 2. The waters lying within an area
across the Ashley River Channel from the Ashley Marina bounded by the
southwest side of the channel beginning at latitude 32 deg.46'53.0''N,
longitude 079 deg.57'34.5''W; thence to latitude 32 deg.46'50.5''N,
longitude 079 deg.57'40.5''W; thence to latitude 32 deg.46'46.0''N,
longitude 079 deg.57'34.5''W; thence to latitude 32 deg.46'49.0''N,
longitude 079 deg.57'28.7''W; thence back to the beginning following
the southwest boundary of the Ashley River Channel. All coordinates
referenced use datum: NAD 1983.
Dated: July 22, 1996.
John W. Lockwood,
U.S. Coast Guard, Commander, Seventh Coast Guard District.
[FR Doc. 96-20018 Filed 8-6-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-20017 Regulatory Review; Gas Pipeline Safety Standards; Correction
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 41019-41020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20017]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Research and Special Programs Administration
49 CFR Part 192
[Docket PS-124; Amdt. 192-78]
RIN 2137-AC25
Regulatory Review; Gas Pipeline Safety Standards; Correction
AGENCY: Research and Special Programs Administration (RSPA), DOT.
ACTION: Correction to final rule.
-----------------------------------------------------------------------
SUMMARY: This document contains a correction to the final rule (Docket
PS-124) changing miscellaneous gas pipeline safety regulations that was
published Thursday, June 6, 1996 (61 FR 28770) in the Federal Register.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Albert C. Garnett, at (202) 366-2036,
regarding this correction or the Dockets Unit, at (202) 366-5046,
regarding copies of this document or other material in the docket.
SUPPLEMENTARY INFORMATION:
Background
The final rule that includes the subject correction changed
miscellaneous gas pipeline safety regulations to provide clarity,
eliminate unnecessary or overly burdensome requirements, and foster
economic growth. As set out in the final rule under the heading
Executive Order 12866 and DOT Regulatory Policies and
[[Page 41020]]
Procedures, the miscellaneous changes resulted in an annual savings,
without associated costs or adverse effects on safety.
Need for Correction
The final rule in amendatory instruction 36. mistakenly did not
include the former C.6. as the new D.8. The effect of this inadvertency
is the omission of the ``ASME Boiler and Pressure Vessel Code, Section
IX * * *.''
Correction of Publication
Accordingly, the publication on June 6, 1996, of the final rule
(Docket PS-124), which was the subject of FR Doc. 96-13787, is
corrected as follows:
Appendix A to Part 192--[Corrected]
On page 28786, in the second column, lines 12 and 13, of the
amendatory instruction 36. are corrected to read ``through D.6. as
subsections D.5. through D.8., respectively, and by adding new''.
Issued in Washington, DC, August 1, 1996.
Richard B. Felder,
Associate Administrator for Pipeline Safety.
[FR Doc. 96-20017 Filed 8-6-96; 8:45 am]
BILLING CODE 4910-60-P
Complete official Federal Register PDF
FR Doc. 96-19971 Further Grace Period Extension for Certain Existing Agency Standards of Conduct
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40950-40952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19971]
=======================================================================
-----------------------------------------------------------------------
OFFICE OF GOVERNMENT ETHICS
5 CFR Part 2635
RINs 3209-AA04, 3209-AA15
Further Grace Period Extension for Certain Existing Agency
Standards of Conduct
AGENCY: Office of Government Ethics (OGE).
ACTION: Final rule; technical amendment.
-----------------------------------------------------------------------
SUMMARY: The Office of Government Ethics is granting one further
grandfathering grace period extension of just under three months for
certain existing executive agency standards of conduct, dealing with
regulatory financial interest prohibitions and prior approval for
outside employment and activities, which have been temporarily
preserved. This further action (three previous extensions have been
granted) is necessary because some agencies still have not been able to
issue, with OGE concurrence and co-signature, interim or final
supplemental regulations during the prior grace periods. This further
extension will help ensure that agencies which in conjunction with OGE
are actively working on draft supplementals will have adequate time to
issue, if they so desire, successor supplemental regulatory provisions
to replace grandfathered financial interest prohibitions and prior
approval requirements.
EFFECTIVE DATE: August 7, 1996.
FOR FURTHER INFORMATION CONTACT: William E. Gressman, Office of
Government Ethics; telephone: 202-208-8000, extension 1110; FAX: 202-
208-8037.
SUPPLEMENTARY INFORMATION: The Office of Government Ethics is granting,
under the executive branch standards of ethical conduct, an extension
of time until November 1, 1996 for certain
[[Page 40951]]
agencies' existing conduct standards dealing with regulatory prohibited
financial interests and prior approval for outside employment and
activities. When OGE published its ethical conduct standards for
executive branch employees in the Federal Register on August 7, 1992
(as now codified at 5 CFR part 2635), it provided that most existing
individual agency standards of conduct would be superseded once the
executive branchwide standards took effect on February 3, 1993.
However, OGE also provided, by means of notes following 5 CFR
2635.403(a) and 2635.803, that any existing agency standards dealing
with the two types of restrictions noted above would be preserved for
one year, until February 3, 1994, or until the agency concerned issued
(with OGE concurrence and co-signature) a supplemental regulation,
whichever occurred first. See 57 FR 35006-35067, as corrected at 57 FR
48557, 57 FR 52583 and 60 FR 51667. In February 1994, February 1995 and
December 1995, OGE extended that original grace period for a total of
some two and a half years, until August 7, 1996 (or until agency
issuance of a supplemental regulation), for those executive branch
departments and agencies that had not yet been able to issue final or
interim final successor rules. See 59 FR 4779-4780 (February 2, 1994),
60 FR 6390-6391 (February 2, 1995) and 60 FR 66857-66858 (December 27,
1995), as well as appendixes A, B and C which were added to part 2635.
Through OGE's liaison efforts, the Office of the Federal Register
(OFR) has assigned new chapters, including parts, at the end of title 5
of the Code of Federal Regulations to accommodate agencies' future
supplemental standards regulations (on these two and other appropriate
subject areas), as well as any supplemental agency regulations under
OGE's executive branchwide financial disclosure provisions at 5 CFR
part 2634. Almost 60 agencies have had such chapters reserved,
including those which have by now already issued, with OGE concurrence
and co-signature, interim final or final supplemental ethics
regulations. However, some agencies have still not issued their planned
supplemental standards regulations in interim or final form.
The Office of Government Ethics has therefore determined to permit
a further preservation of existing agency regulatory standards of
conduct provisions described above until November 1, 1996 (or until
issuance by each agency listed of its supplemental regulation,
whichever comes first), for those agencies which are actively working
in conjunction with OGE on draft supplemental standards regulations.
The agencies subject to this further grandfathering grace period
extension, as provided in the notes (which are hereby being further
amended) following 5 CFR 2635.403(a) and 2635.803, are enumerated at
new appendix D which OGE is adding to part 2635. The agencies are
listed in the order of the assignment of their chapter numbers at the
end of 5 CFR. Agencies not listed either have not expressed an interest
in issuing supplemental agency ethics regulations, have indicated to
OGE that they are no longer interested in a further grace period
extension, or have already issued final or interim final supplemental
standards. The agencies listed should take advantage of this final
further extension to complete the issuance, with OGE concurrence and
co-signature, of replacement regulations for grandfathered provisions
which otherwise will be superseded this fall at the end of this
extension.
The Office of Government Ethics does note that it is not by this
rulemaking, which only affects grandfathered provisions, setting a
deadline for agencies to submit supplemental ethics regulations.
Agencies can, with OGE concurrence and co-signature, issue
supplementals at any time. Further, they can, at any time, have new
title 5 CFR chapters reserved through OGE and OFR for such purpose if
they have not already done so. Moreover, if an agency's prohibited
financial interest (and/or prior approval) restrictions are based on
specific authority independent of 5 CFR part 2635, they are not
superseded by the 5 CFR part 2635 executive branchwide standards. If
any related regulatory provisions were located in its old agency
standards of conduct, the agency concerned could, after consultation
with OGE, retain them in their existing place in the agency's own CFR
title and chapter or move the provisions to another appropriate part of
its regulations. See 5 CFR 2635.105(c)(3).
Administrative Procedure Act
Pursuant to 5 U.S.C. 553(b) and (d), as Deputy Director of the
Office of Government Ethics, I find good cause exists for waiving the
general notice of proposed rulemaking and 30-day delay in effectiveness
as to this further grace period extension. The notice and delayed
effective date are being waived because this rulemaking concerns a
matter of agency organization, practice and procedure. Furthermore, it
is in the public interest that those agencies concerned have adequate
time to promulgate successor provisions to their existing standards of
conduct regulations in these two areas without a lapse in necessary
regulatory restrictions.
Executive Order 12866
In promulgating this grace period extension technical amendment,
the Office of Government Ethics 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.
This amendment has not been reviewed by the Office of Management and
Budget under that Executive order, as it is not deemed ``significant''
thereunder.
Regulatory Flexibility Act
As Deputy Director of the Office of Government Ethics, I certify
under the Regulatory Flexibility Act (5 U.S.C. chapter 6) that this
rulemaking will not have a significant economic impact on a substantial
number of small entities because it primarily affects executive branch
departments and agencies and their employees.
Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply
because this rulemaking does not contain information collection
requirements that require the approval of the Office of Management and
Budget.
List of Subjects in 5 CFR Part 2635
Conflict of interests, Government employees.
Approved: August 1st, 1996.
F. Gary Davis,
Deputy Director, Office of Government Ethics.
Accordingly, pursuant to its authority under title IV of the Ethics
in Government Act and Executive Order 12674/12731, the Office of
Government Ethics is amending 5 CFR part 2635 as follows:
PART 2635--[AMENDED]
1. The authority citation for part 2635 continues to read as
follows:
Authority: 5 U.S.C. 7351, 7353; 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.
2. The notes following both Secs. 2635.403(a) and 2635.803 are
amended by adding a new sentence at the end of each to read as follows:
Note: * * * Provided still further, that for those agencies
listed in appendix D to this part, the grace period for any such
existing
[[Page 40952]]
provisions shall be further extended until November 1, 1996 or until
issuance by each individual agency concerned of a supplemental
regulation, whichever occurs first.
3. A new appendix D is added at the end of part 2635 to read as
follows:
Appendix D to Part 2635--Agencies Entitled to Another Further (Fourth)
Grace Period Extension Pursuant to Notes Following Secs. 2635.403(a)
and 2635.803
1. Department of the Treasury
2. Federal Energy Regulatory Commission
3. Department of the Interior
4. Department of Commerce
5. Department of Justice
6. Federal Communications Commission
7. Securities and Exchange Commission
8. United States Information Agency
9. Occupational Safety and Health Review Commission
10. Department of State
11. Department of Labor
12. National Science Foundation
13. Small Business Administration
14. Department of Transportation
15. National Transportation Safety Board
16. General Services Administration
17. Board of Governors of the Federal Reserve System
18. National Labor Relations Board
19. Peace Corps
20. Consumer Product Safety Commission
21. Executive Office of the President
22. Department of Agriculture
23. Agency for International Development
24. Social Security Administration
[FR Doc. 96-19971 Filed 8-6-96; 8:45 am]
BILLING CODE 6345-01-P
Complete official Federal Register PDF
FR Doc. 96-19963 Endangered and Threatened Wildlife and Plants; Endangered Status for the Hawaiian Plant Pritchardia aylmer-robinsonii (wahane)
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 41020-41024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19963]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 17
RIN 1018-AB88
Endangered and Threatened Wildlife and Plants; Endangered Status
for the Hawaiian Plant Pritchardia aylmer-robinsonii (wahane)
AGENCY: Fish and Wildlife Service, Interior.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The U.S. Fish and Wildlife Service (Service) determines
endangered status pursuant to the Endangered Species Act of 1973, as
amended (Act), for the plant Pritchardia aylmer-robinsonii (wahane).
The species is endemic to the island of Niihau, Hawaiian Islands. The
species and its habitat have been affected and are currently threatened
by cattle, pigs, and sheep. Due to the small number of existing
individuals and their very narrow distribution, this species is subject
to reduced reproductive vigor and/or an increased likelihood of
extinction from naturally occurring events. This final rule implements
the Federal protection provisions provided by the Act.
EFFECTIVE DATE: This rule takes effect on September 6, 1996.
ADDRESSES: The complete file for this final rule is available for
public inspection, by appointment, during normal business hours, at the
U.S. Fish and Wildlife Service, Pacific Islands Ecoregion, 300 Ala
Moana Boulevard, Room 3108, P.O. Box 50088, Honolulu, Hawaii 96850.
FOR FURTHER INFORMATION CONTACT: Robert P. Smith, Pacific Islands
Ecoregion Manager, at the above address (808/541-2749).
SUPPLEMENTARY INFORMATION:
Background
In 1947, on one of his botanical collecting trips to Niihau, Harold
St. John discovered a new species of the only genus of palms native to
the Hawaiian Islands. He named it Pritchardia aylmer-robinsonii in
honor of Aylmer F. Robinson, a member of the family that owns the
island and a person who provided St. John with much information
regarding the island's plants (St. John 1959).
Historically, Pritchardia aylmer-robinsonii was found at three
sites in the eastern and central portions of the island of Niihau.
Trees were found on Kaali Cliff and in Mokouia and Haao Valleys at
elevations between 70 and 270 meters (m) (230 and 890 feet (ft))
(Hawaii Heritage Program (HHP) 1991a to 1991d). The most recent
observations indicate two plants still remain on Kaali Cliff (Read and
Hodel 1990). Originally a component of the Coastal Dry Forest, this
species now occurs only in a rugged and steep area where it receives
some protection from grazing animals. The substrate in the seepage area
is rocky talus. Prosopis pallida (kiawe), an introduced tree, is one of
the palm's few associated plant taxa. Other native plants that have
been found in the area include Brighamia insignis ('olulu), Cyperus
trachysanthos (pu'uka'a), Lipochaeta lobata var. lobata (nehe), and
Lobelia niihauensis (HHP 1991e; St. John 1959; Keith Woolliams, Waimea
Arboretum and Botanical Garden, pers. comm. 1980). Pritchardia aylmer-
robinsonii of the palm family (Arecaceae) is a fan-leaved tree about 7
to 15 m (23 to 50 ft) tall with a trunk approximately 20 to 30
centimeters (cm) (8 to 12 inches (in.)) in diameter. The upper and
lower leaf surfaces are green and hairless, and leaf segments are
rather thin and drooping. The lower surfaces of the petiole and the
leaf ribs are covered with dense, tan wool. The branched, hairless
flower clusters are located among the leaves and are no longer than the
petioles. Each flower is comprised of a cup-shaped, three-lobed calyx;
three petals; six stamens; and a three-lobed stigma. The spherical,
hard, black fruit is 1.8 to 2 cm (0.7 to 0.8 in.) in diameter. This
species is distinguished from others of the genus by the thin leaf
texture and drooping leaf segments; the tan woolly hairs on the
underside of the petiole and the leaf blade base; the stout hairless
flower clusters that do not extend beyond the fan-shaped leaves; and
the smaller spherical fruit (Read and Hodel 1990).
Hawaiian land practices prior to European contact probably
destroyed most of the forest on Niihau. Grazing animals were introduced
to the island beginning in the 1700s. Cattle (Bos taurus), goats (Capra
hircus), sheep (Ovis aries), and pigs (Sus scrofa) have decreased
available habitat for Pritchardia aylmer-robinsonii as well as directly
damaging trees, seedlings, and/or seeds. The entire island is now
classified an Agricultural District, and it is managed as a cattle and
sheep ranch. Although approximately 200 immature individuals have been
cultivated on Niihau and Kauai, extinction from naturally occurring
events and/or reduced reproductive vigor due to the small number of
reproductive plants are major threats. Because palms take many years to
mature, it is not known whether the immature plants now in cultivation
are capable of reproducing and sustaining a viable population.
Roof rats (Rattus rattus) are a potential threat to this species
since they eat the seeds of some palms of this genus and are found on
Niihau (Beccari and Rock 1921; Cuddihy and Stone 1990; Department of
Geography 1983; St. John 1959; Tomich 1986; Wagner et al. 1985; John
Fay, U.S. Fish and Wildlife Service, pers. comm. 1992).
Previous Federal Action
Federal action on these plants began as a result of section 12 of
the Endangered Species Act (Act) of 1973, as amended (16 U.S.C. 1531 et
seq.), which directed the Secretary of the Smithsonian Institution to
prepare a report on plants considered to be endangered, threatened, or
extinct in the United States. This report, designated as House Document
No. 94-51, was presented to Congress on January 9, 1975. In that
document, Pritchardia aylmer-robinsonii was considered to be
endangered. On July 1, 1975, the Service published a notice in the
Federal Register (40 FR 27823) of its acceptance of the Smithsonian
report as a petition within the context of section 4(c)(2) (now section
4(b)(3)) of the Act, and giving notice of its intention to review the
status of the plant taxa named
[[Page 41021]]
therein. As a result of that review, the Service published a proposed
rule on June 16, 1976, in the Federal Register (41 FR 24523) to
determine endangered status pursuant to section 4 of the Act for
approximately 1,700 vascular plant taxa, including Pritchardia aylmer-
robinsonii. The list of 1,700 plant taxa was assembled on the basis of
comments and data received by the Smithsonian Institution and the
Service in response to House Document No. 94-51 and the July 1, 1975,
Federal Register publication. General comments received in response to
the 1976 proposal are summarized in an April 26, 1978, Federal Register
publication (43 FR 17909). In 1978, amendments to the Act required that
all proposals over 2 years old be withdrawn. A 1-year grace period was
given to proposals already over 2 years old. On December 10, 1979, the
Service published a notice in the Federal Register (44 FR 70796)
withdrawing the portion of the June 16, 1976, proposal that had not
been made final, along with four other proposals that had expired. The
Service published updated notices of review for plants on December 15,
1980 (45 FR 82479), September 27, 1985 (50 FR 39525), and February 21,
1990 (55 FR 6183). In these notices, Pritchardia aylmer-robinsonii was
treated as a candidate for Federal listing.
Section 4(b)(3)(B) of the Act requires the Secretary to make
findings on petitions that present substantial information indicating
that the petitioned action may be warranted within 12 months of their
receipt. Section 2(b)(1) of the 1982 amendments further requires all
petitions pending on October 13, 1982, be treated as having been newly
submitted on that date. On October 13, 1983, the Service found that the
petitioned listing of Pritchardia aylmer-robinsonii was warranted but
precluded by other pending listing actions, in accordance with section
4(b)(3)(B)(iii) of the Act; notification of this finding was published
on January 20, 1984 (49 FR 2485). Such a finding requires the Service
to consider the petition as having been resubmitted, pursuant to
section 4(b)(3)(C)(i) of the Act. The finding was reviewed in October
of 1984, 1985, 1986, 1987, 1988, 1989, 1990, and 1991. Publication of
the proposed rule constituted the final 1-year finding for this
species.
On December 17, 1992, the Service published a proposal in the
Federal Register (57 FR 59970) to list the plant Pritchardia aylmer-
robinsonii as endangered. This proposal was based primarily on
information supplied by the Hawaii Heritage Program and observations by
botanists and naturalists. The Service determines Pritchardia aylmer-
robinsonii to be endangered with the publication of this rule.
The processing of this final listing rule conforms with the
Service's final listing priority guidance published in the Federal
Register on May 16, 1996 (61 FR 24722). The guidance clarifies the
order in which the Service will process rulemakings following two
related events: 1) the lifting, on April 26, 1996, of the moratorium on
final listings imposed on April 10, 1995 (Public Law 104-6), and 2) the
restoration of significant funding for listing through passage of the
omnibus budget reconciliation law on April 26, 1996, following severe
funding constraints imposed by a number of continuing resolutions
between November 1995 and April 1996. The guidance calls for giving
highest priority to handling emergency situations (Tier 1) and second
highest priority (Tier 2) to resolving the listing status of the
outstanding proposed listings. This final rule falls under Tier 2. At
this time there are no pending Tier 1 actions.
Summary of Comments and Recommendations
In the December 17, 1992, proposed rule and associated
notifications, all interested parties were requested to submit factual
reports or information that might contribute to the development of a
final rule. The public comment period ended February 16, 1993.
Appropriate State agencies, county governments, Federal agencies,
scientific organizations, and other interested parties were contacted
and requested to comment. A newspaper notice inviting public comment
was published in Kauai's ``The Garden Island'' on December 28, 1992.
Two letters of comment, including one from an organization and one from
an individual, were received and are discussed below.
One respondent supported the listing of Pritchardia aylmer-
robinsonii and one opposed the listing. One issue was raised in the
opposing respondent's letter. This issue and the Service's response is
discussed below.
Issue: Listing of this species will give Federal and State
governments authority to interfere with private landowners and to seize
private lands.
Response: Section 9 of the Act contains the prohibitions and, in
general, prohibits the sale of an endangered plant species in
interstate or foreign commerce, or importing or exporting such a plant
species. With regard to prohibitions applicable to private lands,
section 9 prohibits individuals on private lands from removing or
damaging an endangered plant species in knowing violation of State law.
Section 10 of the Act outlines some exceptions to these prohibitions.
In addition, while the Act authorizes land acquisition from a willing
seller as a tool to help protect and recover a listed species in some
cases, it does not provide for ``seizure'' of private lands. If
additional measures are needed to protect the species, such as
propagation of the species on Federal land, the Service will work
cooperatively with the landowner. Federally listed species are also
accorded listed status under Hawaii State law. In general, Hawaii law
prohibits the taking of listed species within that State and encourages
conservation measures by State agencies. For more information on
applicable provisions of State law, contact the Hawaii Department of
Land and Natural Resources.
Summary of Factors Affecting the Species
After a thorough review and consideration of all information
available, the Service has determined that Pritchardia aylmer-
robinsonii should be classified as an endangered species. Procedures
found at section 4(a)(1) of the Act and regulations (50 CFR part 424)
promulgated to implement the listing provisions of the Act were
followed. A species may be determined to be an endangered species due
to one or more of the five factors described in section 4(a)(1). These
factors and their application to Pritchardia aylmer-robinsonii St. John
(wahane) are as follows:
A. The present or threatened destruction, modification, or
curtailment of its habitat or range. The habitat of Pritchardia aylmer-
robinsonii has undergone extreme alteration because of past and present
land management practices, including agricultural use and introductions
of alien animals. The Hawaiians made extensive agricultural use of
Niihau before European contact. Modification of habitat by introduced
animals, currently cattle, pigs, and sheep and formerly goats, is one
of the major threats facing Pritchardia aylmer-robinsonii.
Cattle (Bos taurus) were introduced to the Hawaiian Islands in
1793. Feral cattle formerly occurred on Niihau and caused much damage
on the island. Goats (Capra hircus) were successfully introduced to the
Hawaiian Islands in 1792. All feral goats were removed from Niihau in
about 1910, but they had already caused considerable damage to the dry
and mesic forests. Sheep (Ovis
[[Page 41022]]
aries) were also introduced to Niihau, where they have and continue to
damage the native vegetation and substrate. Pigs (Sus scrofa) were
introduced to the Hawaiian Islands by the Polynesian immigrants and
later from European ships. Pigs presently on Niihau cause damage to the
substrate and plants and eat the seeds of Pritchardia aylmer-robinsonii
(Cuddihy and Stone 1990; Stone 1985; Tomich 1986; Wagner et al. 1985;
J. Fay, pers. comm. 1992).
B. Overutilization for commercial, recreational, scientific, or
educational purposes. Because the natural population is on a privately
owned island with limited public access, activities such as
unrestricted collecting for scientific or horticultural purposes and
excessive visits by individuals interested in seeing rare plants are
unlikely to occur.
C. Disease or predation. Niihau is used as a cattle and sheep ranch
with animals ranging in many areas of the island. Predation is a
probable threat since Pritchardia aylmer-robinsonii is not known to be
unpalatable to these ungulates. St. John noted damage to one tree
believed to have been caused by an animal (1959). The current
occurrence of plants only in a rocky area inaccessible to ungulates
indicates the effect that browsing mammals have had in restricting the
distribution of the species.
Roof and black rats (Rattus rattus), which occur on Niihau, have
been reported to damage the fruit of other species of Pritchardia and,
thus, pose a potential threat to Pritchardia aylmer-robinsonii (Beccari
and Rock 1921).
D. The inadequacy of existing regulatory mechanisms. The known
natural habitat of this species is located exclusively on privately
owned land. There is currently no existing regulatory mechanism or
other authority to prevent further decline of this species on private
land. Hawaii's Endangered Species Act states, ``Any species of aquatic
life, wildlife, or land plant that has been determined to be an
endangered species pursuant to the [Federal] Endangered Species Act
shall be deemed to be an endangered species under the provisions of
this chapter* * *'' (HRS, sect. 195D-4(a)). Federal listing
automatically triggers listing under Hawaii State law, which prohibits
taking of endangered plants in the State and encourages conservation by
State agencies (HRS, sect. 195D-4).
State laws relating to the conservation of biological resources
allow for the acquisition of land as well as the development and
implementation of programs concerning the conservation of biological
resources (HRS, sect. 195D-5(a)). The State may enter into agreements
with Federal agencies to administer and manage any area required for
the conservation, management, enhancement, or protection of endangered
species (HRS, sect. 195D-5(c)). Funds for these activities can be made
available under section 6 of the Federal Act (State Cooperative
Agreements). The Hawaii Department of Land and Natural Resources is
mandated to initiate changes in conservation district boundaries to
include ``the habitat of rare native species of flora and fauna within
the conservation district'' (HRS, sect. 195D-205-4). Currently, the
entire island of Niihau is within the Agricultural District. Listing of
this species will activate the protection available under the State Act
and other laws. The Federal Act offers additional protection to this
species because it is a violation of the Act for any person to remove,
cut, dig up, damage, or destroy any such plant in an area not under
Federal jurisdiction in knowing violation of State law or regulation or
in the course of any violation of a State criminal trespass law.
E. Other natural or manmade factors affecting its continued
existence. The small number of individuals of Pritchardia aylmer-
robinsonii increases the potential for extinction from naturally
occurring events. A single human-caused or natural environmental
disturbance could destroy the only two naturally occurring individuals
as well as a significant portion of the cultivated plants on Niihau and
Kauai. In addition, the limited gene pool may depress reproductive
vigor.
The Service has carefully assessed the best scientific and
commercial information available regarding the past, present, and
future threats faced by this species in this final rule. Based on this
evaluation, this rulemaking will list Pritchardia aylmer-robinsonii as
endangered. This species numbers only two naturally occurring
individuals in one population. Approximately 200 immature individuals
have been cultivated on Niihau and Kauai. The species is threatened by
habitat degradation, lack of legal protection, and/or predation by
cattle, pigs, and sheep. Small population size and limited distribution
make this species particularly vulnerable to reduced reproductive vigor
and/or extinction from naturally occurring events. Because this species
is in danger of extinction throughout all or a significant portion of
its range, it fits the definition of endangered as defined in the Act.
Critical habitat is not being designated for Pritchardia aylmer-
robinsonii for reasons discussed in the ``Critical Habitat'' section of
this final rule.
Critical Habitat
Section 4(a)(3) of the Act, as amended, requires that, to the
maximum extent prudent and determinable, the Secretary designate
critical habitat at the time a species is listed as endangered or
threatened. The Service finds that designation of critical habitat is
not presently prudent for Pritchardia aylmer-robinsonii. The Service's
regulations (50 CFR 424.12(a)(1)) state that designation of critical
habitat is not prudent when one or both of the following situations
exist: (1) the species is imperiled by taking or other human activity,
and identification of critical habitat can be expected to increase the
degree of such threat to the species; or (2) such designation of
critical habitat would not be beneficial to the species.
In the case of the Pritchardia aylmer-robinsonii, the second
criterion is met. All individuals of Pritchardia aylmer-robinsonii are
found on private lands where Federal involvement in land-use activities
does not generally occur. Critical habitat has legal significance to
actions authorized, funded, or carried out by Federal agencies under
section 7 of the Act. Since section 7 would not apply to wholly private
activities, critical habitat designation would not appreciably benefit
the species in this case.
Available Conservation Measures
Conservation measures provided to species listed as endangered
under the Act include recognition, recovery actions, requirements for
Federal protection, and prohibitions against certain activities.
Recognition through listing can encourage conservation actions by
Federal, State, and private agencies, groups, and individuals. The Act
provides for possible land acquisition and cooperation with the State
and requires that recovery plans be developed for listed species. The
requirements for Federal agencies and the prohibitions against certain
activities involving listed plants are discussed, in part, below.
Section 7 of the Act, as amended, requires Federal agencies to
evaluate their actions with respect to any taxon that is proposed or
listed as endangered and with respect to its critical habitat, if any
is being designated. Regulations implementing this interagency
cooperation provision of the Act are codified at 50 CFR part 402. When
a species is listed, section 7(a)(2) of the
[[Page 41023]]
Act requires Federal agencies to insure that activities they authorize,
fund, or carry out are not likely to jeopardize the continued existence
of such a species or to destroy or adversely modify its critical
habitat. If a Federal action may affect a listed species or its
critical habitat, the responsible Federal agency must enter into
consultation with the Service. No Federal activities are known to occur
within the habitat of Pritchardia aylmer-robinsonii.
The Act and its implementing regulations found at 50 CFR 17.61,
17.62, and 17.63 for endangered plant species, set forth a series of
general prohibitions and exceptions that apply to all endangered plant
species. With respect to Pritchardia aylmer-robinsonii, all
prohibitions of section 9(a)(2) of the Act, implemented by 50 CFR
17.61, apply. These prohibitions, in part, make it illegal for any
person subject to the jurisdiction of the United States to import or
export any endangered plant species; transport such species in
interstate or foreign commerce in the course of a commercial activity;
sell or offer for sale such species in interstate or foreign commerce;
remove and reduce to possession an endangered plant species from areas
under Federal jurisdiction; maliciously damage or destroy any such
species on any area under Federal jurisdiction; or remove, cut, dig up,
damage, or destroy any such species on any other area in knowing
violation of any State law or regulation or in the course of any
violation of a State criminal trespass law. Certain exceptions apply to
agents of the Service and State conservation agencies. The Act and 50
CFR 17.62 and 17.63 also provide for the issuance of permits to carry
out otherwise prohibited activities involving endangered plant species
under certain circumstances.
It is the policy of the Service, published in the Federal Register
on July 1, 1994 (59 FR 34272), to identify to the maximum extent
practicable those activities that would or would not constitute a
violation of section 9 of the Act at the time of listing. The intent of
this policy is to increase public awareness of the effect of listing on
proposed or ongoing activities. Pritchardia aylmer-robinsonii exists as
two individuals in one population on privately owned land. Since there
is no Federal ownership, and the species is not in commercial trade,
the only potential section 9 involvement would relate to removing or
damaging the plant in knowing violation of State law. Hawaii's
Endangered Species Act states, ``Any species of aquatic life, wildlife,
or land plant that has been determined to be an endangered species
pursuant to the [Federal] Endangered Species Act shall be deemed to be
an endangered species under the provisions of this chapter * * *''
(HRS, sect. 195D-4(a)). Federal listing automatically triggers listing
under Hawaii State law, which prohibits taking of endangered plants in
the State and encourages conservation by State agencies (HRS, sect.
195D-4). The Service is not aware of any other activities being
conducted that will be affected by this listing and result in a
violation of section 9. Questions regarding whether specific activities
will constitute a violation of section 9 should be directed to the
Ecoregion Manager of the Service's Pacific Islands Office (see
ADDRESSES section). Requests for copies of the regulations concerning
listed plants and inquiries regarding prohibitions and permits may be
addressed to the U.S. Fish and Wildlife Service, Ecological Services,
Endangered Species Permits, 911 N.E. 11th Avenue, Portland, Oregon,
97232-4181 (telephone 503/231-2063; Facsimile 503/231-6243).
National Environmental Policy Act
The Service has determined that an Environmental Assessment or
Environmental Impact Statement, as defined under the authority of the
National Environmental Policy Act of 1969, need not be prepared in
connection with regulations adopted pursuant to Section 4(a) of the Act
of 1973, as amended. A notice outlining the Service's reasons for this
determination was published in the Federal Register on October 25, 1983
(48 FR 49244).
References Cited
A complete list of all references cited herein is available upon
request from the Pacific Islands Ecoregion (see ADDRESSES section).
Authors
The authors of this final rule are Marie M. Bruegmann and Zella E.
Ellshoff, Pacific Islands Ecoregion, (see ADDRESSES section) (808/541-
2749).
List of Subjects in 50 CFR Part 17
Endangered and threatened species, Exports, Imports, Reporting and
recordkeeping requirements, and Transportation.
Regulation Promulgation
Accordingly, part 17, subchapter B of chapter I, title 50 of the
Code of Federal Regulations, is amended as set forth below:
PART 17--[AMENDED]
1. The authority citation for part 17 continues to read as follows:
Authority: 16 U.S.C. 1361-1407; 16 U.S.C. 1531-1544; 16 U.S.C.
4201-4245; Pub. L. 99-625, 100 Stat. 3500; unless otherwise noted.
2. Section 17.12(h) is amended by adding the following, in
alphabetical order under flowering plants, to the List of Endangered
and Threatened Plants, to read as follows:
Sec. 17.12 Endangered and threatened plants.
* * * * *
(h) * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Species
-------------------------------------------------------- Historic range Family Status When listed Critical Special
Scientific name Common name habitat rules
--------------------------------------------------------------------------------------------------------------------------------------------------------
Flowering Plants:
* * * * * * *
Pritchardia aylmer-robinsonii Wahane.............. U.S.A. (HI)......... Arecaceae........... E 586 NA NA
* * * * * * *
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[[Page 41024]]
Dated: July 19, 1996.
John G. Rogers,
Acting Director, Fish and Wildlife Service.
[FR Doc. 96-19963 Filed 8-6-96; 8:45 am]
BILLING CODE 4310-55-P
Complete official Federal Register PDF
FR Doc. 96-19961 Relocation of FIRMR Provisions Relating to the Use of Government Telephone Systems and GSA Services and Assistance
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 41003-41006]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19961]
-----------------------------------------------------------------------
GENERAL SERVICES ADMINISTRATION
41 CFR Part 101-35
[FPMR Interim Rule F-1]
RIN 3090-AG03
Relocation of FIRMR Provisions Relating to the Use of Government
Telephone Systems and GSA Services and Assistance
AGENCY: Office of Policy, Planning and Evaluation and the Federal
Telecommunications Service, GSA.
ACTION: Interim rule with request for comments.
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SUMMARY: This regulation reestablishes the Federal Property Management
Regulations (FPMR) certain telecommunications provisions of the Federal
Information Resources Management Regulation (FIRMR). These FIRMR
provisions will be maintained in the FPMR after August 7, 1996. This
change is precipitated by the passage of the Information Technology
Management Reform Act of 1996, which effectively disestablishes the
FIRMR.
DATES: This rule is effective August 8, 1996.
Comments are solicited and are due: October 7, 1996.
Expiration Date: August 8, 1998.
ADDRESSES: Comments may be mailed to General Services Administration,
Office of Policy, Planning and Evaluation, Strategic IT Analysis
Division (MKS), 18th & F Streets, NW., Room 3224, Washington, DC 20405
(for Part 101-35.1) or General Services Administration, Federal
Telecommunications Service (TCS), 7980 Boeing Court, 4th Floor, Vienna,
VA 22182-3988 (for Secs. 101-35.2-101-35.5).
FOR FURTHER INFORMATION CONTACT: Doris Farmer (for Part 101-35.1), GSA,
Office of Policy, Planning and Evaluation, Strategic IT Analysis
Division (MKS), 18th & F Streets, NW., Room 3224, Washington, DC 20405,
telephone FTS/Commercial (202) 501-3194 (v) or (202) 501-0657 (tdd), or
Internet ([email protected]) and James Cademartori (for Parts 101-
35.2 through 101-35.5), GSA, Federal Telecommunications Service, 7980
Boeing Court, 4th Floor, Vienna VA, 22182-3988, telephone FTS/
Commercial (703) 760-7545 (v) or (703) 760-7583 (FAX), or Internet
([email protected])
SUPPLEMENTARY INFORMATION: (1) Section 111 of the Federal Property and
Administrative Services Act of 1949, as amended (the Brooks Act) (40
U.S.C. 759) was the authority for many of the provisions in the FIRMR.
The passage of Public Law 104-106, the Information Technology
Management Reform Act of 1996, signed February 10, 1996, repealed
Section 111 and the General Services Administration's (GSA) authority
to issue Governmentwide regulations for managing, acquiring and
disposing of information technology. As a result, the FIRMR will be
abolished as of 12:00 midnight on August 8, 1996. The referenced FIRMR
provisions that apply to government telecommunications will be
maintained in the FPMR after August 7, 1996.
(2) Most of the language now contained in sections 201-20.306, 201-
21.600, 201-21.601, 201-21.602, 201-24.101, 201-24.101-1, 201-24.101-2,
201-24.101-3, 201-24.102, 201.24.106, and 201-24.203-1 of the FIRMR is
being moved almost verbatim to the FPMR. A few changes were needed to
correct out of date references.
(3) GSA has determined that this is not a significant rule for the
purposes of Executive Order 12866 of September 30, 1993, because it is
not likely to result in any of the impacts noted in Executive Order
12866, affect the rights of specified individuals, or raise issues
arising from the policies of the Administration. GSA has based all
administrative decisions underlying this rule on adequate information
concerning the need for and consequences of the rule; has determined
that the potential benefits to society from this rule outweigh the
potential costs; has maximized the net benefits; and has chosen the
alternative approach involving the least net cost to society.
List of Subjects in 41 CFR Part 101-35
Archives and records, Computer technology, Telecommunications,
Government procurement, Property management, Records management,
Information technology.
For the reasons set forth in the preamble, 41 CFR chapter 101 is
amended by adding subchapter F, consisting of part 101-35, to read as
follows:
SUBCHAPTER F--MANAGEMENT AND USE OF TELECOMMUNICATIONS RESOURCES
PART 101-35--TELECOMMUNICATIONS MANAGEMENT POLICY
Subpart 101-35.0--General Provisions
Sec.
101-35.0 Scope of part.
101-35.1-101-35.4 [Reserved]
101-35.5 Definitions.
Subpart 101-35.1--Use of Government Telephone Systems
101-35.100 Scope of subpart.
Subpart 101-35.2--Authorized Use of Long Distance Telephone Services
101-35.200 Scope of subpart.
101-35.201 Authorized use of long distance telephone services.
101-35.202 Collection for unauthorized use.
Subpart 101-35.3--The mandatory FTS Long Distance Network
101-35.300 Scope of subpart.
101-35.301 The mandatory FTS long distance network.
101-35.301-1 General.
101-35.301-2 Policies.
101-35.301-3 Procedures.
[[Page 41004]]
Subpart 101-35.4--Consolidated Local Telecommunications service
101-35.400 Scope of subpart.
101-35.401 General.
101-35.402 Policies.
Subpart 101-35.5--National Security and Emergency Preparedness (NSEP)
101-35.500 Scope of subpart.
101-35.501 General.
101-35.502 Policy.
101-35.503 Procedures.
Subpart 101-35.6--Delegation of GSA's Multiyear Contracting Authority
for Telecommunications Resources
101-35.600 Scope of subpart.
101-35.601 General.
Authority: 40 U.S.C. 486(c) and 1424(b).
Subpart 101-35.0--General Provisions
Sec. 101-35.0 Scope of part.
This part prescribes policies and procedures about
telecommunications resources.
Secs. 101-35.1-101-35.4 [Reserved]
Sec. 101-35.5 Definitions.
Consolidated local telecommunication service means local
telecommunications service to all Federal agencies located in a
building, complex, or geographical area.
Executive agency means any executive department or independent
establishment in the executive branch of the Government, including any
wholly owned Government corporation (see 40 U.S.C. 472(a)).
Federal Telecommunications System (FTS) means the umbrella of local
and long distance telecommunications services, including FTS2000 long
distance telecommunications services, provided, operated, managed, or
maintained by GSA for the common use of all Federal agencies and other
authorized users.
Interoperability means the ability of telecommunications resources
to provide services to and accept services from other
telecommunications resources and to use the services so exchanged to
enable them to operate effectively together.
Long distance telephone service means any service or facility
purchased with Government funds for completing telephone calls outside
of the local service area.
National security and emergency preparedness (NSEP) means those
physical, technical, and administrative characteristics of
telecommunications systems that will ensure a prescribed level of
survivability in times of national or other emergency mission needs of
the Government entities that use them.
Subpart 101-35.100--Use of Government Telephone Systems
Sec. 101-35.100 Scope of subpart.
This subpart discusses the policies and procedures for using long
distance telephone service.
Subpart 101-35.2--Authorized Use of Long Distance Telephone
Services
Sec. 101-35.200 Scope of subpart.
This subpart discusses authorized use of telephone systems and
facilities provided, paid for, or reimbursed by the Federal Government.
Sec. 101-35.201 Authorized use of long distance telephone services.
(a) Scope. This section describes policies and procedures for the
use of Government-provided and commercial long distance telephone
service paid for by the Government.
(b) General. Agencies should be familiar with the Office of
Management and Budget (OMB) ``Guidance on the Privacy Act Implications
of Call Detail Programs to Manage Employees' Use of the Government's
Telecommunications Systems'' (52 FR 12990, April 20, 1987).
(c) Policy. (1) Telephone calls placed over Government-provided and
commercial long distance systems that will be paid for or reimbursed by
the Government, shall be used to conduct official business only.
(2) To the maximum extent practicable, Federal employees shall
place calls on Government-provided long distance telephone systems and
services instead of using commercial toll services.
(3) In accordance with 5 CFR 2635.704, the following practices are
prohibited and a willful violation may result in criminal, civil, or
administrative action, including suspension or dismissal:
(i) Use of any Government system or service, or any other telephone
service, where the Government pays the cost of the long distance call,
for other than official business, except emergency calls and calls the
agency determines are necessary in the interest of the Government.
(ii) Making an unauthorized long distance telephone call with the
intent to later reimburse the Government.
(iii) Unauthorized use of telephone call detail data.
(d) Procedures. Official business calls may include emergency calls
and other calls the agency determines are necessary in the interest of
the Government.
(1) Telephone calls may properly be authorized when they--
(i) Do not adversely affect the performance of official duties by
the employee or the employee's organization;
(ii) Are of reasonable duration and frequency; and
(iii) Could not reasonably have been made at another time; or
(iv) Are provided for in a collective bargaining agreement that is
consistent with this part.
(2) Personal long distance calls that must be made during working
hours may be made over the commercial long distance network if
consistent with the criteria in paragraph (d)(1) of this section and
are:
(i) Charged to the employee's home phone number or other non-
Government number (third-number call);
(ii) Made to an 800 toll-free number;
(iii) Charged to the called party if a non-Government number
(collect call); or
(iv) Charged to a personal telephone credit card.
(3) Agencies shall issue directives on using telephone facilities
and services. Agencies' contractor-operated facilities shall be covered
by these directives. The directives may provide further definition of
calls necessary in the interest of the Government and shall include
procedures for collection and reimbursement for unauthorized calls.
Sec. 101-35.202 Collection for unauthorized use.
(a) Agencies shall collect for any unauthorized calls if it is
cost-effective to do so. Reimbursing the Government for unauthorized
calls does not exempt an employee from appropriate administrative,
civil, or criminal action.
(b) Agency collections shall include--
(1) The value of the call, computed on the basis of commercial long
distance rates rounded to the nearest dollar; and
(2) An additional amount rounded to the nearest dollar to cover the
administrative costs of determining that the call was unauthorized and
processing the collection.
Subpart 101-35.3--The Mandatory FTS Long Distance Network
Sec. 101-35.300 Scope of subpart.
This subpart describes the GSA FTS program and contracts that are
mandatory-for-use by agencies.
Sec. 101-35.301 The mandatory FTS long distance network.
Sec. 101-35.301-1 General.
(a) In accordance with section 629 of Public Law 104-52, (109 Stat.
468, 504, November 19, 1995), executive agencies must use the FTS long
distance network.
[[Page 41005]]
(b) GSA will grant exceptions to the use of the FTS long distance
network when:
(1) The agency's procurement requirements are unique and cannot be
satisfied by the FTS long distance network; and
(2) The agency procurement would be cost-effective and would not
adversely affect the cost-effectiveness of the FTS long distance
network.
(c) The FTS long distance network provides Federal agencies modern
up-to-date intercity telecommunications services over the life of the
program. GSA will enhance existing services and add features to the FTS
long distance network to maintain technologically current services and
to improve services to user agencies. GSA will make service
improvements in accordance with agencies' needs, contract provisions,
governing regulations and statutes.
(d) As used in this FPMR, the terms intercity and long distance
have the same meaning.
Sec. 101-35.301-2 Policies.
(a) Executive agencies shall use the FTS long distance network to
satisfy intercity telecommunications requirements within the United
States, Guam, Puerto Rico, or the Virgin Islands for requirements which
are within the scope of the FTS long distance network voice, data, and
video services as such services become available unless:
(1) The agency requests and obtains from GSA an exception to the
use of the FTS long distance network based on a GSA determination that:
(i) The agency's procurement requirements are unique and cannot be
satisfied by the FTS long distance network; and
(ii) The agency procurement would be cost-effective and would not
adversely affect the cost-effectiveness of the FTS long distance
network;
(2) The agency requests and obtains from GSA an interim exception
to the use of the FTS long distance network based on an established
date for transition to the FTS long distance network; or
(3) An exception to the use of the FTS long distance network for
the agency is otherwise provided by law.
(b) Unless any of the exceptions listed in paragraph (a) of this
section apply to the procurement, and when overall procurement
requirements include any agency long distance telecommunications
requirements which are within the scope of FTS services, executive
agencies shall require offerors in new awards to satisfy those
requirements by using the Government furnished services of the FTS long
distance network as such services become available.
(c) For ease of determining and evaluating Government costs,
executive agencies also shall require offerors to unbundle FTS long
distance services in their offers by separately describing and pricing
the FTS services that satisfy Government requirements. However, the
agency solicitation may prescribe an expected solution for the use of
the FTS long distance network. Offerors would then be required to
separately price the Government-furnished services of FTS only if their
offers show a different use of FTS than the Government's expected
solution.
(d) Notwithstanding paragraphs (a) and (b) of this section,
agencies may continue to use intercity telecommunications services and
facilities provided under contracts previously authorized and awarded
without obtaining an exception to the use of the FTS long distance
network. However, agencies shall use available FTS long distance
services that can satisfy their procurement requirements upon
expiration of such contracts. Before exercising renewal options under
existing contracts that will result in the provision of intercity
telecommunications services, agencies shall obtain an interim exception
to the use of the FTS long distance network. This interim exception
will allow GSA and the agencies to plan an orderly transition to the
FTS long distance network.
(e) In planning for transition to the FTS long distance network,
agencies shall be responsible for determining customer premises
equipment requirements to achieve efficient interfaces with the type of
FTS services needed. However, agencies shall avoid duplicating FTS
services. Agencies shall avoid incorporating inherently intercity
features (i.e., features that can be provided only as part of an
intercity network) of the FTS long distance network in agency networks.
An exception to the use of the FTS long distance network is hereby
provided to agencies with requirements for non-inherently intercity
features to satisfy such features within a local network.
Sec. 101-35.301-3 Procedures.
(a) GSA will provide assistance in understanding and pricing the
services available from the FTS long distance network and in developing
plans for transition to the FTS long distance network. For assistance
and information concerning the FTS network, agencies should contact the
General Services Administration, Federal Telecommunications Service
(T), 7980 Boeing Court, 4th Floor, Vienna VA, 22182-3988.
(b) Agencies seeking an exception to the use of the FTS long
distance network are responsible for documenting their case. A complete
agency request for an exception to the use of the FTS long distance
network shall establish to the satisfaction of GSA that:
(1) The agency's procurement requirements are unique and cannot be
satisfied by the FTS long distance network;
(2) The agency's procurement would be cost-effective; and
(3) The agency's procurement would not adversely affect the cost-
effectiveness of the FTS long distance network. (The rebuttable
presumption is that, if an agency procurement requirement is unique and
the resultant procurement would be cost-effective, the agency
procurement would not adversely affect the cost-effectiveness of the
FTS long distance network.)
(c) An agency request for an interim exception to the use of the
FTS long distance network shall be based on a GSA established date for
transition of agency requirements to the FTS long distance network.
(d) Any agency exception request shall be sent to the General
Services Administration/Federal Telecommunications Service (T).
(e) Agencies may conduct procurements for long distance
telecommunications services and facilities without prior approval of
GSA when the agency's requirements are within the scope of an exception
to the use of the FTS long distance network provided by GSA.
(f) An agency may appeal a GSA denial of a request for an exception
to the Office of Management and Budget (OMB).
(g) If an agency has a requirement for long distance
telecommunications within the United States, Guam, Puerto Rico, or the
Virgin Islands that may be outside the scope of FTS, the requirement
shall be submitted to GSA/T prior to initiating acquisition action. An
exception to the mandatory use of the FTS long distance network will be
given if GSA determines the service cannot be provided by the FTS.
Subpart 101-35.4--Consolidated Local Telecommunications Service
Sec. 101-35.400 Scope of subpart.
This subpart discusses local telecommunications facilities and
services provided to executive agencies by GSA and other agencies.
[[Page 41006]]
Sec. 101-35.401 General.
Consolidated local telecommunications service is available in most
buildings occupied by concentrations of Federal employees. Local
telecommunications includes any access services which provide, for a
monthly fee, electronic connectivity to a larger telecommunications
network and those support services which provide for the acquisition,
operation and management of attached systems. Information on the use of
consolidated local telecommunications services may be obtained from:
GSA, Federal Telecommunications Service, Office of Regional Services
(TR), 1730 M Street, NW., Suite 200, Washington, DC 20036.
Sec. 101-35.402 Policies.
(a) All executive agencies shall evaluate sharing Government owned
or contracted local telecommunications facilities and services.
Evaluation criteria and associated decisions must be documented as
appropriate.
(b) Executive agencies receiving local telecommunications services
from another agency, e.g., a GSA consolidated switch, must acknowledge
their shared responsibility to that community of agencies in exchange
for those services. Such a community shall be considered a
telecommunications ``Shared Resource Community.'' The agency primarily
responsible for providing telecommunications service(s) to members of
this community shall be the ``Lead Agency.'' Lead agencies must
acknowledge their responsibility(s) to provide services until an
alternative arrangement has been coordinated with the community.
Different agencies may take the lead in providing different services.
Memoranda of Agreement will identify responsibilities and cost-recovery
mechanisms.
(c) GSA charges to agencies for consolidated local
telecommunications service will cover expenses for installation,
changes in service, a common distributable charge, and termination.
Subpart 101-35.5--National Security and Emergency Preparedness
(NSEP)
Sec. 101-35.500 Scope of subpart.
This subpart discusses NSEP services and assistance provided by GSA
to executive agencies.
Sec. 101-35.501 General.
Executive Order 12472 (49 FR 13471, 3 CFR, 1984 Comp., p. 193),
requires that GSA ensure that the NSEP requirements of agencies are
met. GSA incorporates NSEP safeguards and support features in networks
and services it provides for agencies. GSA also provides emergency
telecommunications for the special needs of agencies and helps agencies
plan, obtain, and maintain continuity of telecommunications during
wartime and non-wartime emergencies.
Sec. 101-35.502 Policy.
Agencies shall use available GSA telecommunications systems and
services to meet their NSEP requirements.
Sec. 101-35.503 Procedures.
Before acquiring services or facilities to meet special NSEP
requirements, agencies shall review GSA-provided services. Agencies
shall coordinate their special NSEP requirements with: General Services
Administration, Federal Telecommunications Service, Office of Service
Delivery, NSEP Center (TOS), 18th & F Streets, NW, Washington, DC
20405.
Subpart 101-35.6--Delegation of GSA's Multiyear Contracting
Authority for Telecommunications Resources
Sec. 101-35.600 Scope of subpart.
This subpart discusses the delegation of GSA's multiyear
contracting authority to executive agencies.
Sec. 101-35.601 General.
Executive agencies are authorized to enter into multiyear contracts
for telecommunications resources subject to the following conditions:
(a) The agency shall notify GSA/T prior to using GSA's multiyear
contracting authority.
(b) The contract life including options, shall not exceed 10 years.
(c) Agencies shall comply with OMB budget and accounting procedures
relating to appropriated funds.
Dated: July 31, 1996.
David J. Barram,
Acting Administrator of General Services.
[FR Doc. 96-19961 Filed 8-6-96; 8:45 am]
BILLING CODE 6820-25-P
Complete official Federal Register PDF
FR Doc. 96-19960 Relocation of FIRMR Provisions Relating to GSA's Role in the Records Management Program
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 41000-41003]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19960]
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GENERAL SERVICES ADMINISTRATION
41 CFR Part 101-11
[FPMR Interim Rule B-1]
RIN 3090-AG02
Relocation of FIRMR Provisions Relating to GSA's Role in the
Records Management Program
AGENCY: Office of Policy, Planning and Evaluation, GSA.
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This regulation reestablishes certain Federal Information
Resources Management Regulation (FIRMR) provisions regarding records
management in the Federal Property Management Regulations (FPMR). This
action is necessary because the FIRMR is being abolished as of 12
midnight on August 8, 1996.
DATES: This rule is effective August 8, 1996. Comments are solicited
and are due October 7, 1996.
Expiration Date: December 31, 1997.
ADDRESSES: Comments may be mailed to General Services Administration,
Office of Policy, Planning and Evaluation, Strategic IT Analysis
Division (MKS), 18th & F Streets, NW., Room 3224, Washington, DC 20405.
FOR FURTHER INFORMATION CONTACT: R. Stewart Randall or Pat Smith of the
[[Page 41001]]
Office of Policy, Planning and Evaluation, Strategic IT Analysis
Division (MKS), 18th & F Streets, NW., Room 3224, Washington, DC 20405,
telephone FTS/Commercial (202) 501-4469 or (202) 501-0657 (tdd), or
Internet ([email protected]. or [email protected]).
SUPPLEMENTARY INFORMATION: (1) The President signed the National
Defense Authorization Act (NDAA) for Fiscal Year 1996, Pub. L. 104-106,
on February 10, 1996. Included in the NDAA was the Information
Technology (IT) Management Reform Act of 1996 (ITMRA). Section 5101 of
the Act repeals section 111 of the Federal Property and Administrative
Services Act of 1949, as amended (the Brooks Act) (40 U.S.C. 759). The
Brooks Act was the authority for most of the provision in GSA's Federal
Information Resources Management Regulation so that the Brooks Act
repeal effectively disestablishes the FIRMR. Therefore, any FIRMR
provisions that are still needed, such as Part 201-9-Records
Management, are being removed from the FIRMR and reestablished in the
appropriate regulation.
(2) GSA has determined that this rule is not a significant rule for
the purposes of Executive Order 12866 of September 30, 1993, because it
is not likely to result in any of the impacts noted in Executive Order
12866, affect the rights of specified individuals, or raise issues
arising from the policies of the Administration. GSA has based all
administrative decisions underlying this rule on adequate information
concerning the need for and consequences of this rule; has determined
that the potential benefits to society from this rule outweigh the
potential costs; has maximized the net benefits; and has chosen the
alternative approach involving the least net cost to society.
List of Subjects in 41 CFR Part 101-11
Archives and records, Computer technology, Telecommunications,
Government procurement, Property management, Records management, and
Federal information processing resources activities.
For the reasons set forth in the preamble, 41 CFR Chapter 101 is
amended by adding subchapter B, consisting of part 101-11, to read as
follows:
SUBCHAPTER B--MANAGEMENT AND USE OF INFORMATION AND RECORDS
PART 101-11--CREATION, MAINTENANCE, AND USE OF RECORDS
Subpart 101-11.0 General Provisions
Sec.
101-11.0 Scope of part.
101-11.1 General.
Subpart 101-11.1--Agency Programs
101-11.100 Scope of subpart.
101-11.101 General.
101-11.102 Policy.
101-11.103 Procedures.
Subpart 101-11.2--GSA Governmentwide Programs
101-11.200 Scope of subpart
101-11.201 General.
101-11.202 Governmentwide programs.
101-11.203 Standard and Optional Forms Management Program.
101-11.204 Interagency Reports Management Program.
Authority: 40 U.S.C. 486(c).
Subpart 101-11.0 General Provisions
Sec. 101-11.0 Scope of part.
This part prescribes policies and procedures for the creation,
maintenance, and use of Federal agencies' records. Unless otherwise
noted, the policies and procedures of this part apply to all records,
regardless of medium (i.e., paper, electronic, or other).
Sec. 101-11.1 General.
(a) Chapters 29 and 31 of title 44 of the United States Code
(U.S.C.), require the establishment of standards and procedures to
ensure efficient and effective records management by Federal agencies.
The statutory goals of these standards and procedures include:
(1) Accurate and complete documentation of the policies and
transactions of the Federal Government;
(2) Control of the quantity and quality of records produced by the
Federal Government;
(3) Establishment and maintenance of mechanisms of control with
respect to records creation in order to prevent the creation of
unnecessary records and with respect to the effective and economical
operations of an agency;
(4) Simplification of the activities, systems, and processes of
records creation, maintenance, and use;
(5) Judicious preservation and disposal of records; and
(6) Direction of continuing attention on records from their initial
creation to their final disposition, with particular emphasis on the
prevention of unnecessary Federal paperwork.
(b) The law assigns records management responsibilities to the
Administrator of General Services (the Administrator), the Archivist of
the United States (the Archivist), and the heads of Federal agencies.
(1) The Administrator is responsible for providing guidance and
assistance to Federal agencies to ensure economical and effective
records management. Records management policies and guidance
established by GSA are contained in FPMR Part 101-11, records
management handbooks, and other publications issued by GSA.
(2) The Archivist is responsible for providing guidance and
assistance to Federal agencies to ensure adequate and proper
documentation of the policies and transactions of the Federal
Government and to ensure proper records disposition. Records management
policies and guidance established by the Archivist are contained in
regulations in 36 CFR chapter XII and in bulletins and handbooks issued
by the National Archives and Records Administration (NARA).
(3) The heads of Federal agencies are responsible for complying
with the policies and guidance provided by the Administrator and the
Archivist.
Subpart 101-11.1--Agency Programs
Sec. 101-11.100 Scope of subpart.
This subpart prescribes policies and procedures for establishing
and maintaining an agency records management program.
Sec. 101-11.101 General.
Section 3102 of title 44 of the U.S.C. requires each Federal agency
to establish an active and continuing records management program.
Sec. 101-11.102 Policy.
Each Federal agency shall establish and maintain an active,
continuing program for managing agency records, commensurate with
agency size, organization, mission, and recordkeeping activity.
Sec. 101-11.103 Procedures.
Each Federal agency shall take the following actions to establish
and maintain the agency's records management program:
(a) Assign specific responsibility for the development and
implementation of agencywide records management programs to an office
of the agency and to a qualified records manager.
(b) Consider the guidance contained in GSA and NARA handbooks and
bulletins when establishing and
[[Page 41002]]
implementing agency records management programs.
(c) Issue a directive establishing program objectives,
responsibilities, authorities, standards, guidelines, and instructions
for its records management program.
(d) Apply appropriate records management practices to all records,
irrespective of the medium (e.g., paper, electronic, or other) on which
the record resides.
(e) Control the creation, maintenance, and use of agency records
and the collection and dissemination of information to ensure that the
agency:
(1) Does not accumulate unnecessary records;
(2) Does not create forms and reports that collect information
inefficiently or unnecessarily;
(3) Periodically reviews all existing forms and reports (both those
originated by the agency and those responded to by the agency but
originated by another agency or branch of Government) to determine if
they need to be improved or canceled;
(4) Maintains its records cost effectively and in a manner that
allows them to be retrieved quickly and reliably; and
(5) Keeps its mailing and copying costs to a minimum.
(f) Standardize stationery in terms of size, letterhead design,
color (of originals, record copies, and envelopes), markings that are
permitted on envelopes and postcards, and number of stationery styles
permitted.
(g) Consider the voluntary standards contained in the Table of
Standard Specifications in the FPMR, when developing agency stationery
standards.
(h) Establish agency standards regarding the types of
correspondence to be used in official agency communications, and the
number and kind of copies required and their distribution and purpose.
(i) Strive to:
(1) Improve the quality, tone, clarity, and responsiveness of
correspondence, and provide for its creation in a timely, economical,
and efficient manner;
(2) Design forms that are easy to fill-in, read, transmit, process,
and retrieve; and reduce forms reproduction costs;
(3) Provide agency managers with the means to convey written
instructions to users and document agency policies and procedures
through effective directives management;
(4) Provide agency personnel with the information needed in the
right place, at the right time, and in a useful format;
(5) Eliminate unnecessary reports and design necessary reports for
ease of use;
(6) Provide rapid handling and accurate delivery of mail at minimum
cost; and
(7) Organize agency files:
(i) So that needed records can be found rapidly;
(ii) To ensure that records are complete; and
(iii) to facilitate the identification and retention of permanent
records and the prompt disposal of temporary records.
Subpart 101-11.2--GSA Governmentwide Programs
Sec. 101-11.200 Scope of subpart.
This subpart contains policies and procedures prescribed for the
following GSA-managed programs:
(a) The Standard and Optional Forms Management Program.
(b) The Interagency Reports Management Program.
Sec. 101-11.201 General.
(a) The Standard and Optional Forms Management Program was
developed and operated by OMB consistent with the authorities
prescribed by the Budget and Accounting Act of 1921. GSA assumed
responsibility for the program on May 29, 1967, through agreement with
OMB.
(b) The Interagency Reports Management Program implements 44 U.S.C.
chapters 29 and 31, recognizing OMB functions under 44 U.S.C. 3504(e)
and OMB implementation under 5 CFR 1320.16.
Sec. 101-11.202 Governmentwide programs.
Sec. 101-11.203 Standard and Optional Forms Management Program.
(a) General. (1) The Standard and Optional Forms Management Program
was established to achieve Governmentwide economies and efficiencies
through the development, maintenance and use of common forms.
(2) GSA will provide additional guidance on the Standard and
Optional Forms Management Program.
(b) Procedures. Each Federal agency shall--
(1) Designate an agency-level Standard and Optional Forms Liaison
Representative and Alternate, and notify GSA in writing of such
designees' names, titles, mailing addresses, and telephone numbers
within 30 days of the designation or redesignation at the address in
paragraph (b)(4) of this section;
(2) Promulgate Governmentwide Standard Forms pursuant to the
agency's statutory or regulatory authority and issue in the Federal
Register Governmentwide procedures on the mandatory use, revision, or
cancellation of these forms;
(3) Sponsor Governmentwide Optional Forms when needed in two or
more agencies and announce the Governmentwide availability, revision or
cancellation of these forms;
(4) Obtain GSA approval for each new, revised or canceled Standard
and Optional Form, 60 days prior to planned implementation, and certify
that the forms comply with all applicable laws and regulations. Send
approval requests to: General Services Administration, Forms Management
Branch (CARM), Washington, DC 20405;
(5) Provide GSA with a camera ready copy of the Standard and
Optional Forms the agency promulgates or sponsors prior to
implementation, at the address shown in paragraph (b)(4) of this
section;
(6) Obtain promulgator's or sponsor's approval for all exceptions
to Standard and Optional Forms prior to implementation;
(7) Annually review all Standard and Optional Forms which the
agency promulgates or sponsors, including exceptions, for improvement,
consolidation, or cancellation;
(8) When requested by GSA and OMB, submit a summary of the Standard
and Optional Forms used for collection of information covered by 5 CFR
part 1320;
(9) Request approval to overprint Standard and Optional Forms by
contacting GSA (CARM); and
(10) Coordinate all matters concerning health care related Standard
Forms through the Interagency Committee on Medical Records (ICMR). For
additional information on the ICMR, contact GSA (CARM).
Sec. 101-11.204 Interagency Reports Management Program.
(a) General. (1) GSA manages the Interagency Reports Management
Program to ensure that interagency reports and recordkeeping
requirements are based on need, are cost-effective, and comply with
applicable laws and regulations.
(2) GSA will provide additional guidance on the Interagency Reports
Management Program.
(b) Procedures. (1) Each agency shall:
(i) Obtain GSA approval for each new, revised, or extended
interagency report, prior to implementing the report;
(ii) Designate an agency-level interagency reports liaison
representative and alternate, and notify GSA in writing of such
designees' names, titles, mailing addresses, and telephone numbers
within 30 days of the designation or redesignation;
(iii) Use Standard Form 360, Request to Approve an Interagency
Reporting Requirement, to obtain GSA approval
[[Page 41003]]
for each new, revised, or extended interagency report;
(iv) Attach to each Standard Form 360, a justification statement
(signed by the official who requested the report) describing the need
for the report;
(v) Explain how the reporting costs shown on Standard Form 360 were
derived;
(vi) Make supporting documentation for cost estimates available for
GSA review;
(vii) Submit to GSA and OMB (see 5 CFR part 1320) simultaneously
for approval, interagency reports that collect information from Federal
agencies and from either the public or State or local governments;
(viii) Notify GSA and responding agencies when an interagency
report is no longer needed; and
(ix) Send requests for GSA approval and notifications regarding
interagency reports to: General Services Administration, Strategic IT
Analysis Division,(MKS), 18th and F Streets, NW., Washington, DC 20405.
(2) This section does not apply to the following interagency
reports: (However, interagency reports required by Federal agencies to
respond to these reports are subject to this section.)
(i) Legislative branch reports.
(ii) Office of Management and Budget (OMB) and other Executive
Office of the President reports.
(iii) Judicial branch reports required by court order or decree.
(iv) Reporting requirements for security classified information.
However, interagency reporting requirements for non-sensitive or
unclassified sensitive information are not exempt, even if such
information is later given a security classification by the requesting
agency.
Dated: July 31, 1996.
David J. Barram,
Acting Administrator of General Services.
[FR Doc. 96-19960 Filed 8-6-96; 8:45 am]
BILLING CODE 6820-25-P
Complete official Federal Register PDF
FR Doc. 96-19958 Indiana Dunes National Lakeshore: Zoning Standards
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Page 40996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19958]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
National Park Service
36 CFR Part 31
RIN 1024-AC51
Indiana Dunes National Lakeshore: Zoning Standards
AGENCY: National Park Service, Interior.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The National Park Service (NPS) is deleting Part 31 of Title
36 of the Code of Federal Regulations (CFR), Zoning Standards for
Indiana Dunes National Lakeshore. This deletion is necessary because
Section 5 of the enabling legislation for the National Lakeshore, which
authorized the Secretary of the Interior to promulgate minimum zoning
standards, which, if complied with by local governments, would exempt
private property within the boundaries of Lakeshore from condemnation
by the United States, has been repealed. Therefore, 36 CFR part 31 is
no longer needed.
EFFECTIVE DATE: The rule will become effective on August 7, 1996.
FOR FURTHER INFORMATION CONTACT: Superintendent, Indiana Dunes National
Lakeshore, 1100 N. Mineral Springs Road, Porter, IN 46304. Telephone
219-926-7561.
SUPPLEMENTARY INFORMATION:
Background
Section 5 of the enabling legislation for Indiana Dunes National
Lakeshore of November 5, 1966 (80 Stat. 1309), authorized the Secretary
of the Interior to promulgate minimum zoning standards which, if
complied with by local governments, would exempt private property
within the boundaries of the National Lakeshore from condemnation by
the United States. Section 1(9) of the Act of October 18, 1976 (90
Stat. 2533), repealed Section 5 of the enabling legislation. Therefore,
36 CFR part 31 is no longer in effect.
The purpose of this action is to delete the zoning standards for
Indiana Dunes National Lakeshore because they are no longer valid. The
regulations in this part were originally established in accordance with
the enabling legislation for the National Lakeshore in 1966 to assist
in administering, preserving and developing the unit. Subsequent
legislation passed in 1976 made these regulations obsolete.
Administrative Procedure Act
In accordance with the Administrative Procedure Act (5 U.S.C.
553(b)(B)), the NPS is promulgating this rule under the ``good cause''
exception of the Act from general notice and comment rulemaking. As
discussed above, the NPS believes this exception is warranted because
the existing rules are no longer in effect. This final rule will not
impose any additional restrictions on the public and comments on this
rule are deemed unnecessary. Based upon this discussion, the NPS finds
pursuant to 5 U.S.C. 533(b)(B) that it would be contrary to the public
interest to publish this rule through general notice and comment
rulemaking.
The NPS also believes that publishing this final rule 30 days prior
to the rule becoming effective would be counterproductive and
unnecessary for the reasons discussed above. A 30-day delay in this
instance would be unnecessary and contrary to the public interest.
Therefore, under the ``good cause'' exception of the Administrative
Procedure Act (5 U.S.C. 553(d)(3)), it has been determined that this
final rulemaking is excepted from the 30-day delay in the effective
date and will therefore become effective on the date published in the
Federal Register.
Drafting Information
The primary author of this rule is Dennis Burnett, Washington
Office of Ranger Activities, National Park Service.
Paperwork Reduction Act
This final rule does not contain collections of information
requiring approval by the Office of Management and Budget under the
Paperwork Reduction Act of 1995.
Compliance With Other Laws
This rule was not subject to Office of Management and Budget review
under Executive Order 12866. The Department of the Interior determined
that this document will not have a significant economic effect on a
substantial number of small entities under the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.). The economic effects of this rulemaking are
nonexistent.
The Service has determined and certifies pursuant to the Unfunded
Mandates Reform Act, 2 U.S.C. 1502 et seq., that this proposed rule
will not impose a cost of $100 million or more in any given year on
local, State, or tribal governments or private entities.
The NPS has determined that this interim rule will not have a
significant effect on the quality of the human environment, health and
safety because it is not expected to:
(a) Increase public use to the extent of compromising the nature and
character of the area or causing physical damage to it;
(b) Introduce non-compatible uses which compromise the nature and
characteristics of the area, or cause physical damage to it;
(c) Conflict with adjacent ownerships or land uses; or
(d) Cause a nuisance to adjacent owners or occupants.
Based on this determination, this final rule is categorically
excluded from the procedural requirements of the National Environmental
Policy Act (NEPA) by Departmental regulations in 516 DM 6 (49 FR
21438). As such, neither an Environmental Assessment (EA) nor an
Environmental Impact Statement (EIS) has been prepared.
List of Subjects in 36 CFR Part 31
National parks, Reporting and recordkeeping requirements.
In consideration of the foregoing, the NPS is amending 36 CFR
Chapter I as follows:
PART 31--INDIANA DUNES NATIONAL LAKESHORE: ZONING STANDARDS
1. The authority citation for part 31 continues to read as follows:
Authority: Sec. 5, 80 Stat. 1309, sec. 3, 39 Stat. 535; 16
U.S.C. 3, 460u.
PART 31--[REMOVED]
2. 36 CFR Part 31 is removed.
Dated: July 18, 1996.
George T. Frampton, Jr.,
Assistant Secretary for Fish and Wildlife and Parks.
[FR Doc. 96-19958 Filed 8-6-96; 8:45 am]
BILLING CODE 4310-70-P
Complete official Federal Register PDF
FR Doc. 96-19927 Standards for Business Practices of Interstate Natural Gas Pipelines
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40962-40963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19927]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 284
[Docket No. RM96-1-000; Order No. 587]
Standards for Business Practices of Interstate Natural Gas
Pipelines
July 31, 1996.
AGENCY: Federal Energy Regulatory Commission, Energy.
ACTION: Final rule; notice regarding electronic filing of pro forma
tariff sheets.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission is issuing a notice
regarding the filing of pro forma tariff sheets required by the final
rule, 61 FR 39053 (July 26, 1996), 76 FERC para.61,042 (July 17, 1996).
Pipelines should make such filings electronically in accordance with
Section 154.4 of the Commission's regulations.
DATES: This final rule is effective August 26, 1996. The pro forma
tariff filings will be made pursuant to a staggered schedule in October
through December of 1996.
ADDRESSES: Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426.
FOR FURTHER INFORMATION CONTACT:
Michael Goldenberg, Office of the General Counsel, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426,
(202) 208-2294.
Marvin Rosenberg, Office of Economic Policy, Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426, (202) 208-1283.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in Room 2A, 888 First Street
NE., Washington, DC 20426.
[[Page 40963]]
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing 202-208-1397 or 1-800-856-3920. To access CIPS, set your
communications software to use 19200, 14400, 12000, 9600, 7200, 4800,
2400, 1200, or 300 bps, full duplex, no parity, 8 data bits, and 1 stop
bit. The full text of this document will be available on CIPS in ASCII
and WordPerfect 5.1 format. The complete text on diskette in
WordPerfect format may also be purchased from the Commission's copy
contractor, La Dorn Systems Corporation, also located in Room 2A, 888
First Street NE., Washington, DC 20426.
The Commission's bulletin board system also can be accessed through
the FedWorld system directly by modem or through the Internet. To
access the FedWorld system by modem:
Dial (703) 321-3339 and logon to the FedWorld system
After logging on, type: /go FERC
To access the FedWorld system, through the Internet:
Telnet to: fedworld.gov
Select the option: [1] FedWorld
Logon to the FedWorld system
Type: /go FERC
Or:
Point your Web Browser to:
http://www.fedworld.gov
Scroll down the page to select FedWorld Telnet Site
Select the option: [1] FedWorld
Logon to the FedWorld system
Type: /go FERC
Standards for Business Practices of Interstate Natural Gas Pipelines;
Notice Regarding Electronic Filing of Pro Forma Tariff Sheets
[Docket No. RM96-1-000]
July 31, 1996.
In the Commission's July 17, 1996 order in this docket,\1\ the
Commission established a schedule for pipelines to file pro forma
tariff sheets to comply with the business practice standards adopted by
the Commission. Pipelines making pro forma tariff filings in response
to this order should make these filings electronically as provided in
Section 154.4 of the Commission's regulations.
---------------------------------------------------------------------------
\1\ Standards for Business Practices of Interstate Natural Gas
Pipelines, Order No. 587, 61 FR 39053 (July 26, 1996), 76 FERC
para.61,042 (July 17, 1996).
---------------------------------------------------------------------------
Lois D. Cashell,
Secretary.
[FR Doc. 96-19927 Filed 8-6-96; 8:45 am]
BILLING CODE 6717-01-M
Complete official Federal Register PDF
FR Doc. 96-19908 Office of the Assistant Secretary for Fair Housing and Equal Opportunity; Regulatory Reinvention; Certification and Funding of State and Local Fair Housing Enforcement Agencies
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 41282-41291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19908]
[[Page 41281]]
_______________________________________________________________________
Part VII
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Parts 111 and 115
Regulatory Reinvention; Certification and Funding of State and Local
Fair Housing Enforcement Agencies; Final Rule
Federal Register / Vol. 61, No. 153 / Wednesday, August 7, 1996 /
Rules and Regulations
[[Page 41282]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 111 and 115
[Docket No. FR-3322-F-02]
RIN 2529-AA60
Office of the Assistant Secretary for Fair Housing and Equal
Opportunity; Regulatory Reinvention; Certification and Funding of State
and Local Fair Housing Enforcement Agencies
AGENCY: Office of the Assistant Secretary for Fair Housing and Equal
Opportunity, HUD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: On February 28, 1996 (61 FR 7674), HUD published for public
comment an interim rule streamlining its regulations governing the
certification and funding of State and local fair housing enforcement
agencies. Previously, the requirements for substantially equivalent
certification and participation in the Fair Housing Assistance Program
had been set forth in different parts of title 24. The February 28,
1996 interim rule consolidated these regulations, thus providing all
necessary requirements in a single part and eliminating redundancy from
title 24. This rule finalizes the policies and procedures set forth in
the February 28, 1996 interim rule and takes into consideration the
public comments received on the interim rule. Further, this rule
removes from title 24 the unnecessarily codified preamble to the final
rule implementing the Fair Housing Amendments Act of 1988.
EFFECTIVE DATE: September 6, 1996.
FOR FURTHER INFORMATION CONTACT: Marcella Brown, Director, Fair Housing
Assistance Program Division, Office of Fair Housing and Equal
Opportunity, Room 5216, Department of Housing and Urban Development,
451 Seventh Street, SW, Washington, DC 20410, telephone (202) 708-0455.
(This is not a toll-free number.) Hearing- or speech-impaired
individuals may access this number via TTY by calling the toll-free
Federal Information Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
I. The February 28, 1996 Interim Rule
The Fair Housing Act (42 U.S.C. 3601-3619) (the Act) provides that
whenever a complaint alleges a discriminatory housing practice, arising
in the jurisdiction of a State or local agency which has been certified
by the Secretary under section 810(f) of the Act, HUD shall refer the
complaint to that State or local agency. HUD has implemented section
810(f) at 24 CFR part 115, which establishes the criteria the Secretary
will utilize to certify State and local fair housing enforcement
agencies.
Section 817 of the Act provides that the Secretary may reimburse
State and local fair housing enforcement agencies which assist the
Secretary in enforcing the Act. HUD has implemented section 817 at 24
CFR part 111, which sets forth the requirements for participation in
the Fair Housing Assistance Program (FHAP). Through the FHAP, HUD
provides assistance to certified State and local fair housing
enforcement agencies. This assistance is designed to provide support
for complaint processing, training, technical assistance, data and
information systems, and other fair housing projects.
On February 28, 1996 (61 FR 7674), HUD published for public comment
an interim rule streamlining its regulations governing the
certification and funding of State and local fair housing enforcement
agencies. Specifically, the rule consolidated parts 111 and 115. This
consolidation permitted HUD to provide all necessary requirements for
``substantially equivalent'' certification and FHAP participation in a
single part. The February 28, 1996 interim rule described in detail the
amendments made to 24 CFR parts 111 and 115.
II. This Final Rule
This rule finalizes the policies and procedures set forth in the
February 28, 1996 interim rule and takes into consideration the public
comments submitted on the interim rule. The public comment period on
the interim rule expired on April 29, 1996. Two comments were received.
This final rule makes three changes to the interim rule in response
to public comment. First, the final rule establishes a 180-day limit on
suspensions based on changes in the law. Further, this final rule
references the non-regulatory procedures which require that HUD provide
an agency with notice and an opportunity to respond before suspension.
The rule also clarifies the definition of ``covered multifamily
dwellings'' set forth in the February 28, 1996 interim rule. Section
III. of this preamble presents a summary of the significant issues
raised by the public commenters on the February 28, 1996 interim rule,
and HUD's responses to these comments.
In addition to the revisions made in response to public comment,
HUD determined it was necessary to make several other changes to the
interim rule. First, this final rule clarifies that an enforcement
agency may not receive Special Enforcement Effort (SEE) funds if it is
currently on a Performance Improvement Plan (PIP), or if it has been
suspended during the fiscal year in which SEE funds are sought. This
rule also clarifies that HUD may partially reimburse reinstated
agencies for cases processed during the suspension period. Further, the
final rule makes two amendments which will benefit enforcement agencies
by providing HUD with greater flexibility. Section IV. of the preamble
details these changes to the February 28, 1996 interim rule.
Additionally, this rule removes the unnecessarily codified preamble
to the January 23, 1989 final rule (54 FR 3232) implementing the Fair
Housing Amendments Act of 1988 (42 U.S.C. 3601 et seq.). This preamble
is codified in title 24 as appendix I to subchapter A of chapter I. The
preamble, although it provides helpful information to readers, is
readily available through other means and does not merit inclusion in
the CFR. The removal of this codified preamble will assist in HUD's
efforts to streamline the contents of title 24.
III. Discussion of the Public Comments on the February 28, 1996 Interim
Rule
A. The Suspension and Withdrawal of Certification Provisions Should be
Revised
Comment. Section 115.211 provided that HUD would suspend an
enforcement agency's certification if HUD had reason to believe that:
(1) A change in law, regulation, or procedure had limited the
effectiveness of the agency to enforce its fair housing law or
ordinance; or (2) the enforcement agency's performance did not comply
with 24 CFR part 115. If HUD's subsequent review demonstrated that the
agency no longer complied with the requirements of part 115, HUD would
withdraw the agency's certification. Section 115.212 set forth the
procedures governing withdrawal of certification.
One of the commenters was strongly opposed to Secs. 115.211 and
115.212. The commenter believed the conditions triggering suspension
were vague and might lead to arbitrary suspensions. Further, the
commenter suggested that Sec. 115.211 be revised to require that HUD
provide an agency with notice and an opportunity to respond before
suspension. This commenter also recommended that HUD establish a time
limit on suspensions based on changes in the law. The commenter noted
that the interim rule imposed a 180-day limit on suspensions based on
the agency's
[[Page 41283]]
performance. This commenter believed that HUD's administrative burden
would increase due to its inability to refer complaints during the
suspension period.
The commenter also questioned the adequacy of the reimbursement
provisions at Sec. 115.211. These provisions allowed HUD to reimburse
formerly suspended agencies for cases processed during the suspension
period. The commenter wrote that agencies should also be reimbursed for
lost special grant funding and the costs of halted investigations.
HUD Response. HUD disagrees with several of the assertions made by
the commenter. For example, the interim rule was sufficiently clear
regarding the conditions which might lead to an agency's suspension.
Further, the suspension provisions will not necessarily increase HUD's
administrative burden. HUD also notes that agencies presently have a
right to notice and an opportunity to respond prior to suspension.
These rights are outlined in non-regulatory HUD guidance, which is
currently being revised and updated. However, HUD agrees that this
guidance should be referenced in 24 CFR part 115 and has revised the
interim rule accordingly. HUD has adopted another of the commenter's
suggestions by limiting suspensions based on changes in the law to 180
days.
The commenter's recommendations solely concerned the suspension and
withdrawal of certification procedures at Secs. 115.211 and 115.212.
However, HUD has also revised Sec. 115.208, which governs interim
certification, to reference the non-regulatory guidance and to
establish the 180-day limit. HUD believes the issues raised by the
commenter are equally applicable to agencies with interim
certification. Further, these revisions are necessary to create
uniformity in the procedures for interim certification and
certification.
B. Definition of ``Covered Multifamily Dwellings'' Was Confusing
Comment. Paragraph (a)(5)(i) of Sec. 115.201 provided that ``the
term `covered multifamily dwellings' means buildings consisting of four
or more units if such buildings have one or more elevators and ground
floor units in other buildings consisting of four or more units.'' One
of the commenters complained about the awkward phrasing of this
provision. As this commenter noted, the correct interpretation of the
word ``and'' is unclear. The commenter correctly assumed that ``and''
was intended to be the conjunctive for the two independent meanings of
``covered multifamily dwellings.'' However, the word ``and'' could
easily be misinterpreted to be the conjunctive for the phrase ``if such
buildings.'' The commenter suggested that HUD clarify the wording of
this definition.
HUD Response. HUD agrees with the commenter. Section 804(f)(7) of
the Act provides a clear definition of the term ``covered multifamily
dwellings.'' Paragraph (a)(5) of Sec. 115.202 required that the
agency's fair housing law or ordinance ``[p]rovide the same protections
as those afforded by section 804 * * * of the Act.'' This reference to
section 804 encompassed the statutory definition of ``covered
multifamily dwellings.'' It is, therefore, unnecessary for the final
rule to set forth a separate definition. Accordingly, this final rule
simply removes 24 CFR 115.202(a)(5)(ii).
This final rule also removes Sec. 115.202(a)(5)(iii). The language
of this provision was also already encompassed in section 804 of the
Act. Specifically, the provision repeated the language of section
804(f)(4), which concerns the American National Standard for facilities
providing accessibility to persons with disabilities.
IV. Additional Changes to the February 28, 1996 Interim Rule
A. Limitation on SEE Fund Eligibility
Section 115.305 set forth the eligibility requirements for Special
Enforcement Efforts (SEE) funds. SEE funds are awarded to enforcement
agencies with proven experience and capability in administering their
fair housing laws and ordinances. Accordingly, paragraphs (a)(1)
through (a)(6) of Sec. 115.305 established fairly strict eligibility
criteria. For example, 24 CFR 115.305(a)(3) required that:
(3) At least ten percent of the agency's fair housing caseload
resulted in written conciliation agreements providing monetary
relief for the complainant as well as remedial action, monitoring,
reporting and public interest relief provisions[.]
Another example was provided by the criterion set forth in
paragraph (a)(5) of Sec. 115.305:
(5) The agency's administration of its fair housing law or
ordinance received meritorious mention for its complaint processing
or other fair housing activities that were innovative[.]
As the above examples illustrate, HUD intends to limit SEE funding
to those agencies which meet a high threshold of eligibility.
Accordingly, agencies which are experiencing difficulties in
administering their fair housing laws and ordinances are ineligible for
SEE funding. However, in order to prevent any possible confusion, this
final rule amends Sec. 115.305 to clarify that an enforcement agency
may not receive SEE funds if it is currently on a Performance
Improvement Plan (PIP), or if its interim certification or
certification has been suspended during the fiscal year in which SEE
funds are being sought. HUD wishes to note that agencies ineligible for
SEE funding may still, if otherwise eligible, apply for Complaint
Processing funds, and Administrative Cost funds.
B. Partial Reimbursement of Reinstated Agencies
As discussed in section III.A. of this preamble, the February 28,
1996 interim rule provided that HUD would reimburse an agency for cases
processed during the agency's suspension period. HUD may be unable to
fully reimburse reinstated agencies for these costs. Accordingly, this
final rule clarifies that HUD will provide full or partial
reimbursement for cases processed during the period of suspension.
C. Increased HUD Flexibility
This final rule also makes two amendments, designed to benefit
enforcement agencies, by providing HUD with greater flexibility. The
February 28, 1996 interim rule mandated that HUD suspend an agency if
the conditions set forth in Secs. 115.208 or 115.211 were satisfied.
HUD may, in certain circumstances, wish to postpone the suspension of
such an agency. The interim rule denied this ability to HUD. This final
rule provides HUD with the required flexibility by revising
Secs. 115.208 and 115.211 to state that HUD ``may'' suspend an agency
if the suspension conditions are triggered.
The interim rule prohibited the reimbursement of an agency who was
suspended due to its performance until HUD determined that the agency
complied with the performance standards in Sec. 115.203. However, in
certain cases speedier reimbursement of such agencies may be justified.
This final rule permits HUD to reimburse agencies prior to a
determination that the requirements of Sec. 115.203 are satisfied.
V. Other Matters
Environmental Impact
This rulemaking does not have an environmental impact. This
rulemaking simply amends an existing regulation by consolidating and
streamlining provisions and does not alter the environmental effect of
the regulations being amended. Findings of No
[[Page 41284]]
Significant Impact with respect to the environment were made in
accordance with HUD regulations in 24 CFR part 50 that implement
section 102(2)(C) of the National Environmental Policy Act of 1969 (42
U.S.C. 4332) at the time of development of regulations implementing
Sections 810(f) and 817 of the Act. Those Findings remain applicable to
this rule, and are available for public inspection between 7:30 a.m.
and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk, Room
10276, Department of Housing and Urban Development, 451 Seventh Street,
SW, Washington, DC 20410-0500.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official, under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
States or their political subdivisions, or the relationship between the
Federal government and the States, or on the distribution of power and
responsibilities among the various levels of government. This final
rule merely consolidates in a single part the requirements for
``substantially equivalent'' certification and participation in the
FHAP. It effects no changes in the current relationships between the
Federal government, the States and their political subdivisions in
connection with HUD programs.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this final rule will not
have a potential significant impact on family formation, maintenance,
and general well-being and, thus, is not subject to review under the
Order. This final rule only affects State and local fair housing
enforcement agencies which seek certification under section 810(f) of
the Act and participation in the FHAP. No significant change in
existing HUD policies or programs will result from promulgation of this
final rule, as those policies and programs relate to family concerns.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing
certifies that this final rule will not have a significant economic
impact on a substantial number of small entities. This rule finalizes
the policies and procedures set forth in the February 28, 1996 interim
rule. Specifically, it consolidates the requirements of 24 CFR parts
111 and 115, which govern the certification and funding of State and
local fair housing enforcement agencies. This consolidation will assist
enforcement agencies by providing all the necessary requirements for
certification and FHAP participation in a single part. This final rule
does not affect or establish substantive policy, and will not have any
economic impact on small entities.
List of Subjects 24 CFR Part 115
Administrative practice and procedure, Aged, Fair housing,
Individuals with disabilities, Intergovernmental relations, Mortgages,
Reporting and recordkeeping requirements.
Accordingly, the interim rule published on February 28, 1996 at 61
FR 7674, removing part 111 and revising part 115 of title 24 of the
Code of Federal regulations is confirmed as final with the following
change:
Part 115 is revised to read as follows:
PART 115--CERTIFICATION AND FUNDING OF STATE AND LOCAL FAIR HOUSING
ENFORCEMENT AGENCIES
Subpart A--General
Sec.
115.100 Definitions.
115.101 Program administration.
115.102 Public notices.
Subpart B--Certification of Substantially Equivalent Agencies
115.200 Purpose.
115.201 Basis of determination.
115.202 Criteria for adequacy of law.
115.203 Performance standards.
115.204 Consequences of certification.
115.205 Technical assistance.
115.206 Request for certification.
115.207 Procedure for interim certification.
115.208 Suspension of interim certification.
115.209 Denial of interim certification.
115.210 Procedure for certification.
115.211 Suspension of certification.
115.212 Withdrawal of certification.
Subpart C--Fair Housing Assistance Program (FHAP)
115.300 Purpose.
115.301 Agency eligibility criteria.
115.302 Capacity building funds.
115.303 Eligible activities for capacity building funds.
115.304 Agencies eligible for contributions funds.
115.305 Special enforcement effort (SEE) funds.
115.306 Training funds.
115.307 Additional requirements for participation in the FHAP.
115.308 Standards for FHAP program review.
115.309 Reporting and recordkeeping requirements.
115.310 Subcontracting under the FHAP.
115.311 Corrective and remedial action.
Authority: 42 U.S.C. 3601-19; 42 U.S.C. 3535(d)
Subpart A--General
Sec. 115.100 Definitions.
(a) The terms ``Fair Housing Act'' and ``HUD'', as used in this
part, are defined in 24 CFR 5.100.
(b) The terms ``Aggrieved person'', ``Complainant'',
``Conciliation'', ``Conciliation agreement'', ``Discriminatory housing
practice'', ``Dwelling'', ``Handicap'', ``Person'', ``Respondent'',
``Secretary'', and ``State'', as used in this part, are set forth in
section 802 of the Fair Housing Act (42 U.S.C. 3600-3620).
(c) Other definitions. The following definitions also apply to this
part:
Act means the Fair Housing Act, as defined in 24 CFR 5.100.
Assistant Secretary means the Assistant Secretary for Fair Housing
and Equal Opportunity.
Certified Agency is an agency to which the Assistant Secretary for
Fair Housing and Equal Opportunity has granted interim certification or
certification, in accordance with the requirements of this part.
Cooperative Agreement is the assistance instrument HUD will use to
provide funds. The Cooperative Agreement will contain attachments and
appendices establishing requirements relating to the operation or
performance of the agency.
Cooperative Agreement Officer (CAO) is the administrator of the
funds awarded pursuant to this part and is the Director of a Fair
Housing Enforcement Center in the Office of Fair Housing and Equal
Opportunity.
Director of FHEO means a Director of a Fair Housing Enforcement
Center.
Dual-Filed Complaint means a housing discrimination complaint which
has been filed with both the Fair Housing Enforcement Center and the
certified agency.
FHAP means the Fair Housing Assistance Program.
FHEO means the Office of Fair Housing and Equal Opportunity.
Sec. 115.101 Program administration.
(a) Authority and responsibility. The Secretary has delegated the
authority and responsibility for administering this part to the
Assistant Secretary.
(b) Delegation of Authority. The Assistant Secretary delegates the
authority and responsibility for administering this part to each
Director of a Fair Housing Enforcement Center. However, with respect to
the duties and responsibilities for administering subpart B of this
part, the Assistant
[[Page 41285]]
Secretary retains the right to make final decisions concerning the
granting and maintenance of substantial equivalency certification and
interim certification.
Sec. 115.102 Public notices.
(a) Periodically, the Assistant Secretary will publish the
following public notices in the Federal Register:
(1) A list of all agencies which have interim certification or
certification; and
(2) A list of agencies to which a notice of denial of interim
certification has been issued or for which withdrawal of certification
is being proposed.
(b) The Assistant Secretary will publish in the Federal Register a
notice soliciting public comment before granting certification to a
State or local agency. The notice will invite the public to comment on
the relevant State and local laws, as well as on the performance of the
agency in enforcing its law. All comments will be considered before a
final decision on certification is made.
Subpart B--Certification of Substantially Equivalent Agencies
Sec. 115.200 Purpose.
This subpart implements section 810(f) of the Fair Housing Act. The
purpose of this subpart is to set forth:
(a) The basis for agency interim certification and certification;
(b) The procedure by which a determination to certify is made by
the Assistant Secretary;
(c) The basis and procedures for denial of interim certification;
(d) The basis and procedures for withdrawal of certification;
(e) The consequences of certification;
(f) The basis and procedures for suspension of interim
certification or certification; and
(g) The funding criteria for interim certified and certified
agencies.
Sec. 115.201 Basis of determination.
A determination to certify an agency as substantially equivalent
involves a two-phase procedure. The determination requires examination
and an affirmative conclusion by the Assistant Secretary on two
separate inquiries:
(a) Whether the law, administered by the agency, on its face,
satisfies the criteria set forth in section 810(f)(3)(A) of the Act;
and
(b) Whether the current practices and past performance of the
agency demonstrate that, in operation, the law in fact provides rights
and remedies which are substantially equivalent to those provided in
the Act.
Sec. 115.202 Criteria for adequacy of law.
(a) In order for a determination to be made that a State or local
fair housing agency administers a law which, on its face, provides
rights and remedies for alleged discriminatory housing practices that
are substantially equivalent to those provided in the Act, the law or
ordinance must:
(1) Provide for an administrative enforcement body to receive and
process complaints and provide that:
(i) Complaints must be in writing;
(ii) Upon the filing of a complaint the agency shall serve notice
upon the complainant acknowledging the filing and advising the
complainant of the time limits and choice of forums provided under the
law;
(iii) Upon the filing of a complaint the agency shall promptly
serve notice on the respondent or person charged with the commission of
a discriminatory housing practice advising of his or her procedural
rights and obligations under the law or ordinance together with a copy
of the complaint;
(iv) A respondent may file an answer to a complaint.
(2) Delegate to the administrative enforcement body comprehensive
authority, including subpoena power, to investigate the allegations of
complaints, and power to conciliate complaints, and require that:
(i) The agency commence proceedings with respect to the complaint
before the end of the 30th day after receipt of the complaint;
(ii) The agency investigate the allegations of the complaint and
complete the investigation within the time-frame established by section
810(a)(1)(B)(iv) of the Act or comply with the notification
requirements of section 810(a)(1)(C) of the Act;
(iii) The agency make final administrative disposition of a
complaint within one year of the date of receipt of a complaint, unless
it is impracticable to do so. If the agency is unable to do so it shall
notify the parties, in writing, of the reasons for not doing so;
(iv) Any conciliation agreement arising out of conciliation efforts
by the agency shall be an agreement between the respondent, the
complainant, and the agency and shall require the approval of the
agency;
(v) Each conciliation agreement shall be made public unless the
complainant and respondent otherwise agree and the agency determines
that disclosure is not required to further the purposes of the law or
ordinance.
(3) Not place any excessive burdens on the complainant that might
discourage the filing of complaints, such as:
(i) A provision that a complaint must be filed within any period of
time less than 180 days after an alleged discriminatory housing
practice has occurred or terminated;
(ii) Anti-testing provisions;
(iii) Provisions that could subject a complainant to costs,
criminal penalties or fees in connection with filing of complaints.
(4) Not contain exemptions that substantially reduce the coverage
of housing accommodations as compared to section 803 of the Act.
(5) Provide the same protections as those afforded by sections 804,
805, 806, and 818 of the Act, consistent with HUD's implementing
regulations found at 24 CFR part 100.
(b) In addition to the factors described in paragraph (a) of this
section, the provisions of the State or local law must afford
administrative and judicial protection and enforcement of the rights
embodied in the law.
(1) The agency must have authority to:
(i) Grant or seek prompt judicial action for appropriate temporary
or preliminary relief pending final disposition of a complaint if such
action is necessary to carry out the purposes of the law or ordinance;
(ii) Issue and seek enforceable subpoenas;
(iii) Grant actual damages in an administrative proceeding or
provide adjudication in court at agency expense to allow the award of
actual damages to an aggrieved person;
(iv) Grant injunctive or other equitable relief, or be specifically
authorized to seek such relief in a court of competent jurisdiction;
(v) Provide an administrative proceeding in which a civil penalty
may be assessed or provide an adjudication in court at agency expense,
allowing the assessment of punitive damages against the respondent.
(2) Agency actions must be subject to judicial review upon
application by any party aggrieved by a final agency order.
(3) Judicial review of a final agency order must be in a court with
authority to:
(i) Grant to the petitioner, or to any other party, such temporary
relief, restraining order, or other order as the court determines is
just and proper;
(ii) Affirm, modify, or set aside, in whole or in part, the order,
or remand the order for further proceedings; and
(iii) Enforce the order to the extent that the order is affirmed or
modified.
(c) The requirement that the state or local law prohibit
discrimination on the basis of familial status does not require
[[Page 41286]]
that the state or local law limit the applicability of any reasonable
local, state or Federal restrictions regarding the maximum number of
occupants permitted to occupy a dwelling.
(d) The state or local law may assure that no prohibition based on
discrimination because of familial status applies to housing for older
persons substantially as described in 24 CFR part 100, subpart E.
(e) A determination of the adequacy of a state or local fair
housing law ``on its face'' is intended to focus on the meaning and
intent of the text of the law, as distinguished from the effectiveness
of its administration. Accordingly, this determination is not limited
to an analysis of the literal text of the law but must take into
account all relevant matters of state or local law. Regulations,
directives, rules of procedure, judicial decisions, or interpretations
of the fair housing law by competent authorities will be considered in
making this determination.
(f) A law will be found inadequate ``on its face'' if it permits
any of the agency's decision-making authority to be contracted out or
delegated to a non-governmental authority. For the purposes of this
paragraph, ``decision-making authority'' shall include:
(1) Acceptance of the complaint;
(2) Approval of the conciliation agreement;
(3) Dismissal of a complaint;
(4) Any action specified in Secs. 115.202(a)(2)(iii) or
115.202(b)(1); and
(5) Any decision-making regarding whether the matter will or will
not be pursued.
(g) The state or local law must provide for civil enforcement of
the law or ordinance by an aggrieved person by the commencement of an
action in an appropriate court at least one year after the occurrence
or termination of an alleged discriminatory housing practice. The court
must be empowered to:
(1) Award the plaintiff actual and punitive damages;
(2) Grant as relief, as it deems appropriate, any temporary or
permanent injunction, temporary restraining order or other order; and
(3) Allow reasonable attorney's fees and costs.
Sec. 115.203 Performance standards.
A state or local fair housing enforcement agency must meet all of
the performance standards listed in this section in order to obtain or
maintain certification.
(a) Engage in timely, comprehensive and thorough fair housing
complaint investigation, conciliation and enforcement activities. The
performance assessment will consider the following to determine the
effectiveness of an agency's fair housing complaint processing,
consistent with such guidance as may be issued by HUD:
(1) The agency's case processing procedures;
(2) The thoroughness of the agency's case processing;
(3) A review of cause and no cause determinations for quality of
investigations and consistency with appropriate standards;
(4) A review of conciliation agreements and other settlements;
(5) A review of the agency's administrative closures; and
(6) A review of the agency's enforcement procedures.
(b)(1) Commence proceedings with respect to a complaint:
(i) Before the end of the 30th day after receipt;
(ii) Carry forward such proceedings with reasonable promptness;
(iii) Make final administrative disposition within one year; and
(iv) Within 100 days of receipt of the complaint complete the
identified proceedings.
(2) To meet this standard, the performance assessment will consider
the timeliness of the agency's actions with respect to its complaint
processing, including, but not limited to:
(i) Whether the agency began its processing of fair housing
complaints within 30 days of receipt;
(ii) Whether the agency completes the investigative activities with
respect to a complaint within 100 days from the date of receipt or, if
it is impracticable to do so, notifies the parties in writing of the
reason(s) for the delay;
(iii) Whether the agency administratively disposes of a complaint
within one year from the date of receipt or, if it is impracticable to
do so, notifies the parties in writing of the reasons for the delay;
and
(iv) Whether the agency completed the investigation of the
complaint and prepared a complete final investigative report.
(3) The performance assessment will also consider documented
conciliation attempts and activities and a review of the bases for
administrative disposition of complaints.
(c) Conduct compliance reviews of settlements, conciliation
agreements and orders issued by or entered into to resolve
discriminatory housing practices. The performance assessment will
include, but not be limited to:
(1) An assessment of the agency's procedures for conducting
compliance reviews;
(2) Terms and conditions of agreements and orders issued;
(3) Application of its authority to seek actual damages, as
appropriate; and
(4) Application of its authority to seek and assess civil penalties
or punitive damages.
(d) Consistently and affirmatively seek and obtain the type of
relief designed to prevent recurrences of such practices. The
performance assessment will include, but not be limited to:
(1) An assessment of the types of relief sought and obtained by the
agency with consideration of the inclusion of affirmative provisions
designed to protect the public interest;
(2) The adequacy of the disposition of the complaint;
(3) The relief sought and awarded;
(4) The number of complaints closed with relief and the number
closed without relief; and
(5) Whether all the issues and bases were investigated adequately
and appropriately disposed of.
(e) Consistently and affirmatively seek the elimination of all
prohibited practices under its fair housing law. An assessment under
this standard will include, but not be limited to:
(1) A discussion and confirmation of the law or ordinance
administered by the agency;
(2) The identification of any amendments, court decisions or other
rulings or documentation that may affect the agency's ability to carry
out provisions of its fair housing law or ordinance;
(3) Identification of the education and outreach efforts of the
agency; and
(4) Identification and discussion of any special requirements of
the fair housing law or ordinance.
Sec. 115.204 Consequences of certification.
(a) Whenever a complaint received by the Assistant Secretary
alleges violations of a state or local fair housing law or ordinance
administered by an agency that has been certified as substantially
equivalent, the complaint will be referred to the agency, and no
further action shall be taken by the Assistant Secretary with respect
to such complaint except as provided for by the Act, this part, 24 CFR
part 103, subpart C, and any written agreements executed by the Agency
and the Assistant Secretary.
(b) If HUD determines that a complaint has not been processed in a
timely manner in accordance with the performance standards set forth in
Sec. 115.203, HUD may reactivate the complaint, conduct its own
investigation and conciliation efforts, and make a determination
consistent with 24 CFR part 103.
[[Page 41287]]
(c) Notwithstanding paragraph (a) of this section, whenever the
Assistant Secretary has reason to believe that a complaint demonstrates
a basis for the commencement of proceedings against any respondent
under section 814(a) of the Act or for proceedings by any governmental
licensing or supervisory authorities, the Assistant Secretary shall
transmit the information upon which such belief is based to the
Attorney General, Federal financial regulatory agencies, other Federal
agencies, or other appropriate governmental licensing or supervisory
authorities.
Sec. 115.205 Technical assistance.
(a) The Assistant Secretary, through its FHEO Field Office, may
provide technical assistance to the agencies. The agency may request
such technical assistance or the FHEO Field Office may determine the
necessity for technical assistance and require the agency's cooperation
and participation.
(b) The Assistant Secretary, through FHEO Headquarters or Field
staff, will require that the agency participate in training conferences
and seminars that will enhance the agency's ability to process
complaints alleging discriminatory housing practices.
Sec. 115.206 Request for certification.
(a) A request for certification under this subpart shall be filed
with the Assistant Secretary by the State or local official having
principal responsibility for administration of the State or local fair
housing law. The request shall be supported by the following materials
and information:
(1) The text of the jurisdiction's fair housing law, the law
creating and empowering the agency, any regulations and directives
issued under the law, and any formal opinions of the State Attorney
General or the chief legal officer of the jurisdiction that pertain to
the jurisdiction's fair housing law.
(2) Organizational information of the agency responsible for
administering and enforcing the law.
(3) Funding and personnel made available to the agency for
administration and enforcement of the fair housing law during the
current operating year, and not less than the preceding three operating
years (or such lesser number during which the law was in effect).
(4) If available, data demonstrating that the agency's current
practices and past performance comply with the performance standards
described in Sec. 115.203.
(5) Any additional information which the submitting official may
wish to be considered.
(b) The request and supporting materials shall be filed with the
Assistant Secretary for Fair Housing and Equal Opportunity, Department
of Housing and Urban Development, 451 7th Street, SW., Washington, DC
20410. A copy of the request and supporting materials will be kept
available for public examination and copying at:
(1) The office of the Assistant Secretary;
(2) The HUD Field Office in whose jurisdiction the State or local
jurisdiction seeking recognition is located; and
(3) The office of the State or local agency charged with
administration and enforcement of the State or local law.
Sec. 115.207 Procedure for interim certification.
(a) Upon receipt of a request for certification filed under
Sec. 115.206, the Assistant Secretary may request further information
necessary for a determination to be made under this section. The
Assistant Secretary may consider the relative priority given to fair
housing administration, as compared to the agency's other duties and
responsibilities, as well as the compatibility or potential conflict of
fair housing objectives with these other duties and responsibilities.
(b) Interim certification. If the Assistant Secretary determines,
after application of the criteria set forth in Sec. 115.202 that the
State or local law or ordinance, on its face, provides substantive
rights, procedures, remedies, and judicial review procedures for
alleged discriminatory housing practices that are substantially
equivalent to those provided in the Act, the Assistant Secretary may
offer to enter into an Agreement for the Interim Referral of Complaints
and Other Utilization of Services (Interim Agreement). The interim
agreement will outline the procedures and authorities upon which the
interim certification is based.
(c) Such interim agreement, after it is signed by all appropriate
signatories, will result in the agency receiving interim certification.
(d)(1) Interim agreements shall be for a term of no more than three
years. The Assistant Secretary, through the FHEO Field Office, will
conduct one or more on-site assessments to determine whether the agency
administers its fair housing law or ordinance in a manner that is
substantially equivalent to the Act.
(2) Performance Improvement Plan. If the agency is not
administering its law or ordinance in a manner that is substantially
equivalent, the Assistant Secretary, may, but need not, offer a
Performance Improvement Plan (PIP) to the agency. The PIP will outline
the agency's deficiencies, identify necessary corrective actions, and
include a timetable for completion.
(3) If the agency receives a PIP, funding under the FHAP may be
suspended for the duration of the PIP. Once the agency has implemented
corrective actions to eliminate the deficiencies, and such corrective
actions are accepted by the Assistant Secretary, funding may be
reinstated.
Sec. 115.208 Suspension of interim certification.
(a) Suspension based on changes in the law. (1) The Assistant
Secretary may suspend the agency's interim certification if the
Assistant Secretary has reason to believe that the State or locality
may have limited the effectiveness of the agency's implementation of
the fair housing law or ordinance by:
(i) Amending the fair housing law or ordinance;
(ii) Adopting rules or procedures concerning the fair housing law
or ordinance; or
(iii) Issuing judicial or other authoritative interpretations of
the fair housing law or ordinance.
(2) If the Assistant Secretary suspends interim certification under
paragraph (a)(1) of this section, such suspension will remain in effect
until the Assistant Secretary conducts a review of the changes in
language and/or interpretation and determines whether the law or
ordinance remains substantially equivalent to the Act on its face or in
its operations. Such suspension shall not exceed 180 days.
(3) If the Assistant Secretary determines that, notwithstanding the
actions taken by the State or locality as described in paragraph
(a)(1), the law or ordinance remains substantially equivalent on its
face and in operation to the Act, the Assistant Secretary will rescind
the suspension and reinstate the agency's interim certification and/or
recommend the agency for certification. HUD will provide full or
partial reimbursement for cases processed during the period of the
suspension.
(4) If the Assistant Secretary determines that the actions taken by
the State or locality do limit the agency's effectiveness interim
certification will be denied pursuant to Sec. 115.209.
(b) Suspension based on agency performance. (1) The Assistant
Secretary may suspend the interim certification of an agency charged
with the administration of a fair housing law or ordinance if the
Assistant Secretary
[[Page 41288]]
has reason to believe that the agency's performance does not comply
with the criteria set forth by this part. Such suspension shall not
exceed 180 days.
(2) If the agency is suspended pursuant to paragraph (b) of this
section, the FHEO Field Office may elect not to provide payment for
complaints processed within that period of time unless and until the
Assistant Secretary determines that the agency is fully in compliance
with Sec. 115.203. The FHEO Field Office will provide technical
assistance to the agency during this period of time.
(3) During the period of a suspension the Assistant Secretary shall
not refer complaints to the agency.
(4) Suspension under paragraph (b) of this section renders the
agency ineligible to receive Fair Housing Assistance Program Funds
under subpart C of this part, pending correction of the deficiencies by
the agency.
(5) Before the end of the suspension, a final performance
assessment will be provided to the Assistant Secretary upon which a
determination will be made as to the adequacy of the agency's
performance.
(c) HUD will provide an agency with notice of the specific reasons
for the suspension of its interim certification and an opportunity to
respond, in accordance with the procedures set forth in HUD issued
guidance.
Sec. 115.209 Denial of interim certification.
(a) If the Assistant Secretary determines, after application of the
criteria set forth in this part that the State and local law or
ordinance, on its face or in its operation, does not provide
substantive rights, procedures, remedies, and availability of judicial
review for alleged discriminatory housing practices which are
substantially equivalent to those provided in the Fair Housing Act, the
Assistant Secretary shall inform the State or local official in writing
of the reasons for that determination.
(b) The agency, within 20 days from the date of the receipt of this
notice, may submit, in writing, any opposition to the planned denial of
interim certification to the Assistant Secretary. The Assistant
Secretary will evaluate all pertinent written comments, information,
and documentation. If, after reviewing all materials submitted by the
agency, the Assistant Secretary is still of the opinion that interim
certification should be denied, the Assistant Secretary will inform the
agency in writing of that determination.
(c) If the agency does not, within 20 days of receipt of the
Assistant Secretary's notice of denial of interim certification, make a
request of the Assistant Secretary under paragraph (b) of this section
to submit additional data, views, or comments, no further action shall
be required of the Assistant Secretary and denial of interim
certification shall occur.
Sec. 115.210 Procedure for certification.
(a) Certification. (1) If the Assistant Secretary determines, after
application of the criteria set forth in Secs. 115.202, 115.203 and
this section, that the State or local law or ordinance, both ``on its
face'' and ``in operation,'' provides substantive rights, procedures,
remedies, and judicial review procedures for alleged discriminatory
housing practices that are substantially equivalent to those provided
in the Act, the Assistant Secretary may enter into a Memorandum of
Understanding (MOU) with the agency.
(2) The MOU is a written agreement providing for the referral of
complaints to the agency and for communication procedures between the
agency and HUD that are adequate to permit the Assistant Secretary to
monitor the agency's continuing substantial equivalency certification.
(3) A MOU, after it is signed by all appropriate signatories, may
authorize an agency to be a certified agency for a period of not more
than five years.
(b) Performance Improvement Plan. (1) If the agency is not
administering its law or ordinance in a manner that is substantially
equivalent, the Assistant Secretary, may, but need not, offer a
Performance Improvement Plan (PIP) to the agency. The PIP will outline
the agency's deficiencies, identify necessary corrective actions, and
include a timetable for completion.
(2) If the agency receives a PIP, funding under the FHAP may be
suspended for the duration of the PIP. Once the agency has implemented
corrective actions to eliminate the deficiencies, and such corrective
actions are accepted by the Assistant Secretary, funding may be
reinstated.
(c) Annual assessments. The Assistant Secretary shall annually
assess the performance of an agency to determine whether it continues
to qualify for certification under this part. If the Assistant
Secretary affirmatively concludes that the agency's law and performance
have complied with the requirements of this part in each of the five
years, the Assistant Secretary may offer the agency an updated
Memorandum of Understanding.
(d) Interim certification required prior to certification. An
agency shall receive interim certification prior to receiving
certification.
Sec. 115.211 Suspension of certification.
(a) Suspension based on changes in the law. (1) The Assistant
Secretary may suspend the agency's certification if the Assistant
Secretary has reason to believe that the State or locality may have
limited the effectiveness of the agency's implementation of the fair
housing law or ordinance by:
(i) Amending the fair housing law or ordinance;
(ii) Adopting rules or procedures concerning the fair housing law
or ordinance; or
(iii) Issuing judicial or other authoritative interpretations of
the fair housing law or ordinance.
(2) If the Assistant Secretary suspends certification under
paragraph (a)(1) of this section, such suspension will remain in effect
until the Assistant Secretary conducts a review of the changes in
language and/or interpretation and determines whether the law or
ordinance remains substantially equivalent on its face and in its
operation to the Act. Such suspension shall not exceed 180 days.
(3) If the Assistant Secretary determines that the law or ordinance
remains substantially equivalent on its face and in operation to the
Act, the Assistant Secretary will rescind the suspension and reinstate
the agency's interim certification and/or recommend the agency for
certification. HUD will provide full or partial reimbursement for cases
processed during the period of the suspension.
(4) If the Assistant Secretary determines that the actions taken by
the State or locality do limit the agency's effectiveness,
certification will be withdrawn pursuant to Sec. 115.212.
(b) Suspension based on agency performance. (1) The Assistant
Secretary may suspend the certification of an agency charged with the
administration of a fair housing law or ordinance, if the Assistant
Secretary has reason to believe that the agency's performance does not
comply with the criteria set forth by this part. Such suspension shall
not exceed 180 days.
(2) If the agency is suspended pursuant to paragraph (b) of this
section, the FHEO Field Office may elect not to provide payment for
complaints processed within that period of time unless and until the
Assistant Secretary determines that the agency is fully in compliance
with Sec. 115.203. The FHEO Field Office will provide technical
assistance to the agency during this period of time.
[[Page 41289]]
(3) During the period of a suspension the Assistant Secretary shall
not refer complaints to the agency.
(4) Suspension under this paragraph also renders the agency
ineligible to receive Fair Housing Assistance Program Funds under
subpart C of this part, pending correction of the deficiencies by the
agency.
(5) Before the end of the suspension, a final performance
assessment will be provided to the Assistant Secretary upon which a
determination will be made as to the adequacy of the agency's
performance.
(c) HUD will provide an agency with notice of the specific reasons
for the suspension of its certification and an opportunity to respond,
in accordance with the procedures set forth in HUD issued guidance.
Sec. 115.212 Withdrawal of certification.
(a) If the Assistant Secretary finds, as a result of a review
undertaken in accordance with this part, that the agency's fair housing
law or ordinance no longer meets the requirements of this part, the
Assistant Secretary shall propose to withdraw the certification
previously granted.
(b) The Assistant Secretary will propose withdrawal of
certification under paragraph (a) of this section unless further review
and information or documentation establishes that the current law and/
or the agency's administration of the law meets the criteria set out in
this part.
(c) If the Assistant Secretary determines, after application of the
criteria set forth in this part, that the state or local law or
ordinance, in operation, does not provide substantive rights,
procedures, remedies, and availability of judicial review for alleged
discriminatory housing practices which are substantially equivalent to
those provided in the Fair Housing Act, the Assistant Secretary shall
inform the State or local official in writing of the reasons for that
determination.
Subpart C--Fair Housing Assistance Program (FHAP)
Sec. 115.300 Purpose.
The purpose of the Fair Housing Assistance Program (FHAP) is to
provide assistance to State and local fair housing enforcement
agencies. The intent of this funding program is to build a coordinated
intergovernmental enforcement effort to further fair housing and to
encourage the agencies to assume a greater share of the responsibility
for the administration and enforcement of their fair housing laws and
ordinances. This financial assistance is designed to provide support
for:
(a) The processing of dual-filed complaints;
(b) Training under the Fair Housing Act and the agencies' fair
housing law;
(c) The provision of technical assistance;
(d) The creation and maintenance of data and information systems;
and
(e) The development and enhancement of other fair housing
enforcement projects.
Sec. 115.301 Agency eligibility criteria.
Any agency with certification or interim certification under
subpart A of this part, and which has entered into a MOU or interim
agreement, is eligible to participate in the FHAP.
Sec. 115.302 Capacity building funds.
(a) Capacity building (CB) funds are funds that HUD may provide to
an agency with interim certification during the agency's first three
years of participation in the FHAP. Agencies receiving CB funds are not
eligible to receive contributions funds under Sec. 115.304.
(b) CB funds will be provided in a fixed annual amount to be
utilized for the eligible activities established pursuant to
Sec. 115.303. However, in the second and third year of the agency's
participation in the FHAP, HUD has the option to permit the agency to
receive CB funding on a per case basis, rather than in a single annual
amount.
(c) In order to receive CB funding, agencies will be required to
submit a statement of work which identifies:
(1) The objectives and activities to be carried out with the CB
funds received;
(2) A plan for training all of the agency's employees involved in
the administration of the agency's fair housing law or ordinance;
(3) A statement of the agency's intention to participate in HUD-
sponsored training in accordance with the training requirements set out
in the cooperative agreement;
(4) A description of the agency's complaint processing data and
information system or, alternatively, whether the agency plans to use
CB funds to purchase and install a data system; and
(5) A description of any other fair housing activities that the
agency will undertake with its CB funds. All such activities must
address matters affecting fair housing enforcement which are cognizable
under the Fair Housing Act. Any activities which do not address the
implementation of the agency's fair housing law or ordinance, and which
are therefore not cognizable under the Fair Housing Act, will be
disapproved.
Sec. 115.303 Eligible activities For capacity building funds.
The primary purposes of capacity building funding is to provide for
complaint activities and to support activities that produce increased
awareness of fair housing rights and remedies. All such activities must
support the agency's administration of its fair housing law or
ordinance and address matters affecting fair housing which are
cognizable under the Fair Housing Act. HUD will periodically publish a
list of eligible activities in the Federal Register.
Sec. 115.304 Agencies eligible for contributions funds.
(a) An agency that has received CB funds for three consecutive
years is eligible for contributions funding. Contributions funding
consists of three categories:
(1) Complaint Processing (CP) funds;
(2) Administrative Costs (AC) funds; and
(3) Special Enforcement Efforts (SEE) funds (Sec. 115.305 sets
forth the requirements for SEE funding).
(b) CP funds. (1) Agencies receiving CP funds will receive such
support based solely on the number of complaints processed by the
agency and accepted for payment by the Director of FHEO during a
consecutive, specifically identified, 12-month period. Normally this
period will be the previous year's funding cycle.
(2) Funding for agencies in their fourth year of participation in
the FHAP will be based on the number of complaints acceptably processed
by the agency during the agency's third year of participation in the
FHAP.
(c) Administrative Cost (AC) funds. (1) Agencies which acceptably
process 100 or more cases will receive no less than 10 percent of the
agency's annual FHAP payment amount for the preceding year, in addition
to case processing funds, contingent on fiscal year appropriations.
Agencies that acceptably process fewer than 100 cases will receive a
flat rate contingent on fiscal year appropriations.
(2) Agencies will be required to provide HUD with a statement of
how they intend to use the AC funds. HUD may require that some or all
AC funding be directed to activities designed to create, modify, or
improve local, regional, or national information systems concerning
fair housing matters (including the purchase of state of the art
computer systems and getting on line or internet access, etc.).
Sec. 115.305 Special enforcement effort (SEE) funds.
(a) SEE funds are funds that HUD will provide to an agency to
enhance
[[Page 41290]]
enforcement activities of the agency's fair housing law or ordinance.
SEE funds will be a maximum of 20% of the agency's total FHAP
cooperative agreement for the previous contract year, based on approval
of eligible activity or activities, and based on the appropriation of
funds. All agencies receiving contributions funds are eligible to
receive SEE funds if they meet three of the six criteria set out in
paragraphs (a)(1) through (6):
(1) The agency has taken action to enforce a subpoena or make use
of its prompt judicial action authority within the past year.
(2) The agency has held at least one administrative hearing or has
had at least one case on a court's docket for civil proceedings during
the past year.
(3) At least ten percent of the agency's fair housing caseload
resulted in written conciliation agreements providing monetary relief
for the complainant as well as remedial action, monitoring, reporting
and public interest relief provisions.
(4) The agency has had in the most recent three years, or is
currently handling, at least one major fair housing systemic
investigation requiring an exceptional amount of expenditure of funds.
(5) The agency's administration of its fair housing law or
ordinance received meritorious mention for its complaint processing or
other fair housing activities that were innovative.
(6) The agency must have fully investigated 10 fair housing
complaints during the previous funding year.
(b) Notwithstanding the eligibility criteria set forth in paragraph
(a) of this section, an agency is ineligible for SEE funds if:
(1) Twenty percent or more of an agency's fair housing complaints
result in administrative closures; or
(2) The agency is currently on a PIP, or if its interim
certification or certification has been suspended during the fiscal
year in which SEE funds are sought.
(c) SEE funding amounts are subject to the FHAP appropriation by
Congress and will be described in writing in the cooperative agreements
annually. HUD will periodically publish a list of activities eligible
for SEE funding in the Federal Register.
Sec. 115.306 Training funds.
(a) All agencies are eligible to receive training funds. Training
funds are fixed amounts based on the number of agency employees to be
trained and shall be allocated based on the FHAP appropriation.
Training funds may be used only for HUD-approved or HUD-sponsored
training. Agency initiated training or other formalized training may be
included in this category. However, such training must first be
approved by the Cooperative Agreement Officer (CAO) and the Government
Technical Representative (GTR). Specifics on the amount of training
funds that an agency will receive and, if applicable, amounts that may
be deducted, will be set out in the cooperative agreement each year.
(b) All staff of the agency responsible for the administration of
the fair housing law or ordinance must participate in mandatory FHAP
training sponsored by HUD at the national and field office levels. If
the agency does not participate in the mandatory national and field
office HUD-sponsored training, training funds will be deducted from
their overall training amount.
Sec. 115.307 Additional requirements for participation in the FHAP.
(a) Agencies which participate in the FHAP must:
(1) Conform to reporting and record maintenance requirements
determined by the Assistant Secretary;
(2) Agree to on-site technical assistance and guidance and
implementation of corrective actions set out by the Department in
response to deficiencies found during the technical assistance or
performance assessment evaluations of the agency's operations;
(3) Agree to implement and adhere to policies and procedures (as
their laws and ordinances will allow) provided to the agencies by the
Assistant Secretary, including but not limited to guidance on
investigative techniques, case file preparation and organization,
implementation of data elements for complaint tracking, etc.;
(4) Spend at least twenty (20) percent of its total annual budget
on fair housing activities; and
(5) Not unilaterally reduce the level of financial resources
currently committed to fair housing complaint processing (budget and
staff reductions or other actions outside the control of the agency
will not, alone, result in a negative determination for the agency's
participation in the FHAP).
(b) The agency's refusal to provide information, assist in
implementation, or carry out the requirements of paragraph (a) of this
section may result in the denial or interruption of its receipt of FHAP
funds.
Sec. 115.308 Standards for FHAP program review.
HUD will conduct reviews of the agency's cooperative agreement
implementation. This review will also identify:
(a) How the agency used the FHAP funds received;
(b) Whether its draw-down of funds was timely;
(c) Whether the agency has been audited and received copies of the
audit reports in accordance with applicable rules and regulations for
State and local governmental entities; and
(d) If the agency complied with all certifications and assurances
required by HUD in the cooperative agreement.
Sec. 115.309 Reporting and recordkeeping requirements.
(a) The agency shall establish and maintain records demonstrating:
(1) Its financial administration of the FHAP funds; and
(2) Its performance under the FHAP.
(b) In accordance with the cooperative agreement in effect between
the agency and HUD, the agency will provide to HUD the agency reports
maintained pursuant to paragraph (a) of this section. The agency will
provide reports to HUD in accordance with the cooperative agreement in
effect between the agency and HUD for frequency and content, regarding
complaint processing, training, data and information systems,
enforcement and other activities explaining how FHAP funds were
expended and used.
(c) The agency will permit reasonable public access to its records,
consistent with the jurisdiction's requirements for release of
information. Documents relevant to the agency's participation in FHAP
must be made available at the agency's office during normal working
hours (except that documents with respect to ongoing fair housing
complaint investigations are exempt from public review consistent with
Federal and/or State law).
(d) The Secretary, the Inspector General of HUD, and the
Comptroller General of the United States, or any of their duly
authorized representatives, shall have access to all pertinent books,
accounts, reports, files, and other payments for surveys, audits,
examinations, excerpts, and transcripts as they relate to the agency's
participation in FHAP.
(e) All files will be kept in such fashion as to permit audits
under applicable procurement regulations and guidelines and the Single
Audit requirements for State and local agencies.
(f) The FHAP financial records and files will be kept at least
three years on-site after any cooperative agreement has terminated.
Sec. 115.310 Subcontracting under the FHAP.
If an agency subcontracts to a public or private agency any
activity for which
[[Page 41291]]
the subcontractor will receive FHAP funds, the agency must ensure and
certify in writing that the subcontractor is:
(a) Using services and facilities that are accessible in accordance
with the Americans with Disability Act (ADA) (42 U.S.C. 12101) and
Section 504 of the 1973 Rehabilitation Act (29 U.S.C. 701);
(b) Complying with the standards of Section 3 of the Housing and
Urban Development Act of 1968 (42 U.S.C. 1441); and
(c) Furthering fair housing.
Sec. 115.311 Corrective and remedial action.
(a) If HUD makes a preliminary determination that an agency has not
complied with Sec. 115.309, the agency will be given written notice of
this determination and an opportunity to show, through demonstrable
facts and data, that it has done so within a time prescribed by HUD.
(b) If an agency fails to demonstrate to HUD's satisfaction that it
has met program review standards, HUD will request the agency to submit
and comply with proposals for action to correct, mitigate, or prevent
performance deficiencies, including, but not limited to:
(1) Preparing and/or following a schedule of actions for carrying
out the affected fair housing activities;
(2) Establishing and/or following a management plan that assigns
responsibilities for carrying out the actions required;
(3) Canceling or revising activities likely to be affected by a
performance deficiency before expending FHAP funds for the activities;
and
(4) Redistributing or suspending disbursement of FHAP funds that
have not yet been disbursed.
(c) HUD may condition the use of FHAP award amounts with respect to
an agency's succeeding fiscal year's allocation on the satisfactory
completion by the agency of appropriate corrective actions. When the
use of funds is so conditioned, HUD will specify the deficiency(ies),
the required corrective action(s), and the time allowed for taking
these actions. Failure of the agency to complete the actions as
specified will result in a reduction or withdrawal of the FHAP
allocation in an amount not to exceed the amount conditionally granted.
Appendix I [Removed]
3. Appendix I to subchapter A of chapter I of title 24 of the Code
of Federal Regulations is removed.
Date: July 29, 1996.
Elizabeth K. Julian,
Assistant Secretary for Fair Housing and Equal Opportunity.
[FR Doc. 96-19908 Filed 8-6-96; 8:45 am]
BILLING CODE 4210-28-P
Complete official Federal Register PDF
FR Doc. 96-19846 Removal of Exemption for Certain Pseudoephedrine Products Marketed Under the Federal Food, Drug, and Cosmetic Act (FD&C Act)
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40981-40993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19846]
=======================================================================
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1309, 1310 and 1313
[DEA-138F]
RIN 1117-AA32
Removal of Exemption for Certain Pseudoephedrine Products
Marketed Under the Federal Food, Drug, and Cosmetic Act (FD&C Act)
AGENCY: Drug Enforcement Administration (DEA), Justice.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule is issued by the Deputy Administrator of the Drug
Enforcement Administration (DEA) to remove the exemption for certain
products containing pseudoephedrine (which are lawfully marketed under
the Federal Food, Drug, and Cosmetic Act) from the regulatory chemical
control provisions of the Controlled Substances Act (CSA) and the
Controlled Substances Import and Export Act. This rule finalizes a
Notice of Proposed Rulemaking (NPRM) published in the Federal Register
on October 31, 1995 (60 FR 55348).
Due to the large scale utilization of over-the-counter (OTC)
pseudoephedrine products for the clandestine manufacture of controlled
substances, the DEA has determined that certain products should be
subject to recordkeeping, reporting, registration and notification
requirements of the CSA to prevent their diversion. Such products
include OTC tablets, capsules and powder packets containing
pseudoephedrine alone or in combination with antihistamines,
guaifenesin or dextromethorphan. This action also reduces the threshold
for pseudoephedrine to 48.0 grams pseudoephedrine base. Such a
threshold is sufficient to permit the purchase of up to a 244 day
supply of OTC pseudoephedrine drug products without the application of
regulatory requirements. In addition, the cumulative threshold
requirement for multiple transactions of pseudoephedrine drug products
in a calendar month will not apply to sales for personal use. To
further ensure the availability of pseudoephedrine products to
legitimate consumers at the retail level, this action also waives the
registration requirement for retail distributors of regulated
pseudoephedrine products.
EFFECTIVE DATES: October 7, 1996. Persons seeking registration must
apply on or before November 20, 1996, in order to continue to
distribute, import or export pseudoephedrine products for which
registration is required pending final action by the DEA on their
application.
FOR FURTHER INFORMATION CONTACT:
Howard McClain Jr., Chief, Drug and Chemical Evaluation Section, Office
of Diversion Control, Drug Enforcement Administration, Washington, DC
20537. Telephone (202) 307-7183.
SUPPLEMENTARY INFORMATION: On October 31, 1995, the DEA published a
Notice of Proposed Rulemaking (NPRM) which proposed the removal of the
exemption for certain over-the-counter (OTC) pseudoephedrine products
from the chemical control provisions of the Controlled Substances Act
(CSA). The NPRM documented the increasing problem of OTC product
diversion for use as precursor material in the clandestine production
of methamphetamine.
The clandestine manufacture and distribution of methamphetamine are
serious national public health problems which require Federal action.
Methamphetamine, a Schedule II Controlled Substance, is the most
prevalent controlled substance clandestinely synthesized in the United
States. Between January 1, 1994 and December 31, 1995, the DEA has been
involved in the domestic seizure of 587 methamphetamine laboratories.
Ephedrine and/or pseudoephedrine were utilized as the precursor
material at the vast majority of these laboratories.
The significance of the abuse of methamphetamine is well known and
documented. In recent years the problem has increased dramatically. In
1994. alone, there were over 700 methamphetamine related deaths in the
United States.
The DEA monitors Medical Examiner (ME) data from approximately 42
medical examiners located in major cities in the contiguous 48 states.
Nationally, ME reported deaths related to methamphetamine increased
145% from 1992 to 1994 and there were 1816 deaths for the period 1991
to 1994. In addition, methamphetamine emergency room episodes increased
significantly in 1993 and 1994. Current data indicate the illicit
production, distribution and abuse of methamphetamine remain a serious
problem.
In addition, evidence of the illicit utilization of pseudoephedrine
in clandestine laboratories is increasing. The identification of OTC
pseudoephedrine products at clandestine methamphetamine laboratories
increased dramatically in 1995.
The NPRM documented that pseudoephedrine was utilized in 22 percent
of the laboratories seized from January 1, 1995 through September 1995.
DEA thereby acted to place regulatory controls on these products in an
effort to further minimize the availability of widely used precursor
material and ultimately protect the public health. Since publication of
the NPRM, the extent of diversion of OTC pseudoephedrine products has
intensified in the United States. End of year data for 1995 indicates
that at least 28 percent of the clandestine methamphetamine
laboratories seized utilized pseudoephedrine.
In recent years, the diversion of OTC products has been the
predominant source of precursor material for the clandestine synthesis
of methamphetamine. As regulatory controls were implemented to counter
the diversion of specific types of OTC products, clandestine laboratory
operators have been successful in circumventing these controls to
obtain precursor material through the diversion of millions of OTC
dosage units of exempt products. The NPRM documents the progression of
the diversion from bulk ephedrine, to single entity OTC ephedrine
products, to OTC ephedrine combination products and OTC pseudoephedrine
products.
As stated in the NPRM, since 1989 ephedrine has been the primary
precursor used in the clandestine synthesis of methamphetamine in the
United States. Clandestine laboratory operators exploited the lack of
control on OTC ephedrine products (such as tablets/capsules) to
purchase millions of dosage units for the synthesis of methamphetamine
and methcathinone.
[[Page 40982]]
The Domestic Chemical Diversion Control Act (DCDCA) of 1993 (Pub.
L. 103-200) became effective on April 16, 1994. This Act further
amended the CSA and the Controlled Substances Import and Export Act and
removed the exemption for those transactions involving products which
are marketed or distributed lawfully in the United States under the
Federal Food, Drug, and Cosmetic Act, if these products contain
ephedrine (or its salts, optical isomers, or salts of optical isomers)
as the only active medicinal ingredient or contain ephedrine in
combination with therapeutically insignificant quantities of another
active medicinal ingredient. Thus, single entity ephedrine products
became subject to registration, reporting, recordkeeping and
notification requirements of the CSA. The DCDCA, however, did not
remove the exemption provided for pseudoephedrine OTC products, since
the known illicit use of pseudoephedrine was relatively infrequent when
the DCDCA was enacted.
The DCDCA also provided the Attorney General with the authority (21
U.S.C. 814) to remove the exemption for any drug product containing a
listed chemical upon a determination that the drug product is being
diverted for use in the illicit production of a controlled substance.
In addition, the DCDCA imposed registration requirements for List I
chemical distributors, importers and exporters.
The Chemical Diversion and Trafficking Act (CDTA) established a
system of thresholds for each listed chemical to determine which
transactions would be subject to regulatory controls. Reporting,
recordkeeping and notification requirements apply to all regulated
transactions which meet or exceed these threshold amounts of a listed
chemical. The threshold for ephedrine was originally established as 1.0
kilogram for domestic, import and export transactions. The threshold of
1.0 kilogram of ephedrine base is equivalent to greater than 48,800
ephedrine 25 mg dosage units. Even though the dosage form exemption was
eliminated by the DCDCA, a 1.0 kilogram threshold was not adequate to
prevent the significant diversion of ephedrine to clandestine
laboratories in the United States.
Given evidence of the large-scale diversion of ephedrine from
various types of outlets and the public health threat imposed by the
diversion of these products, the DEA determined that additional action
was needed to prevent further diversion. Effective November 10, 1994,
(59 FR 51365) the DEA eliminated the threshold for ephedrine.
Subsequently, all regulated transactions of ephedrine became subject to
reporting recordkeeping and notification requirements of the CSA
regardless of size.
In response to regulatory and other actions taken against single-
entity ephedrine products, clandestine laboratory operators have again
attempted to circumvent CSA chemical controls in an effort to obtain
precursor material. The search for unregulated sources of precursor
material has led to the diversion and illicit utilization of OTC
ephedrine combination products and OTC pseudoephedrine products. The
DEA is currently reviewing the regulatory options which address the
diversion of OTC ephedrine combination products. This issue will be
addressed in the near future.
Pseudoephedrine and ephedrine are related as disastereomers.
Because of this structural relationship, pseudoephedrine can serve as a
direct substitute for ephedrine in the synthesis of methamphetamine.
Clandestine laboratory operators are exploiting the lack of regulatory
controls on OTC pseudoephedrine products by obtaining pseudoephedrine
for use as precursor material for the synthesis of controlled
substances.
The DEA is aware of the large scale legitimate use of OTC
pseudoephedrine products and their widespread distribution. However,
the DEA believes that the registration, recordkeeping, reporting and
notification requirements that have been successfully used to limit the
diversion of other chemicals to clandestine laboratories are needed for
some pseudoephedrine products to control this problem.
The DEA has documented both mail order and retail diversion of OTC
pseudoephedrine products for use in the clandestine production of
methamphetamine. In proposing these regulations the DEA has
specifically attempted to target both sources of the problem. In order
for such regulatory action to be effective, it should include
provisions which directly target the problem of indiscriminate
distribution of wholesale level quantities by retail, mail order and
wholesale distributors.
While there is an urgent need to counter the diversion of OTC
pseudoephedrine products for the clandestine production of
methamphetamine, these regulations go to extreme lengths to protect the
availability of these pseudoephedrine decongestant products for
legitimate medical use. While all mail order and wholesale distributors
will be subject to the full extent of CSA chemical regulatory controls,
specific exemptions and waivers have been provided for retail
distributors selling personal use quantities so that these retail
distributors are not adversely impacted.
In writing the NPRM, the DEA proposed the inclusion of four
provisions which would eliminate potentially burdensome requirements
for practically all of the estimated 750,000 retail distributors who
would be impacted if pseudoephedrine products were made subject to the
full extent of the CSA chemical provision established by law. First,
the DEA has provided a waiver from registration for these distributors.
Secondly, the DEA has limited controls to a specific group of products.
Thirdly, the NPRM proposed the establishment of a threshold of 24.0
grams pseudoephedrine base and therefore would allow for the purchase
and sale of up to a 120 day supply of pseudoephedrine for personal
legitimate medical use, without the application of regulatory
requirements. In this final rule, this threshold has been increased to
48.0 grams. Such a threshold would allow for the purchase and sale of
up to a 244 day supply of pseudoephedrine without the application of
regulatory requirements. (A 244 day supply of pseudoephedrine at the
maximum recommended FDA dosage of 240 mg/day would be 976
pseudoephedrine 60 mg tablets.) Lastly, the proposal specifies that the
threshold quantity applies only to a single transaction. Therefore no
cumulative threshold for multiple transactions applies to OTC
pseudoephedrine transactions and there is no requirement to record each
transaction as long as the individual transaction is below the
threshold quantity.
Because of these provisions, no retail distributor will be required
to register or maintain records as long as they distribute only below-
threshold quantities in a single transaction. A retail distributor will
only be required to reports suspicious regulated transactions to the
DEA as per 21 CFR 1310.05.
Public Comments
Interested parties were provided with 60 days in which to comment
on the proposed regulations. The DEA received a total of 17 comments.
While the general tone of the comments was supportive of the need to
counter the clandestine production of controlled substances such as
methamphetamine, the commentors raised a number of concerns regarding
specific provisions of the proposed regulation as follows:
(1) Five commentors requested that the comment period be extended.
The
[[Page 40983]]
DEA responded that the 60 day comment period provided for in the NPRM
was adequate and provided sufficient time for comments. Therefore the
requests for extension were denied.
(2) In response to the NPRM, the National Association of Boards of
Pharmacy (NABP) submitted a letter of strong support for the proposed
regulations. NABP wrote that a nationwide Federal effort, under the
auspices of DEA, was necessary to deal with the diversion of such OTC
products and accordingly NABP supports the present effort to bring the
diversion of drug products containing pseudoephedrine under control.
(3) Numerous commentors expressed concern that the term ``threshold
quantity'' is not defined and that it is not clear in the NPRM whether
the threshold is calculated on a single transaction or on a cumulative
total of multiple purchases during a calendar month. These commentors
stated that the proposed rule will affect the availability of
pseudoephedrine products and retail distributors will be severely
impacted by this proposal if a cumulative threshold applies. Commentors
also expressed concerns that in order to ensure that a cumulative
threshold was not exceeded during a calendar month, retailers would
have to place non-exempt pseudoephedrine products behind the counter
(thus creating a third class of drug products), maintain records of
each and every transaction, register with the DEA and potentially pay
large fines in the event that the cumulative threshold was exceeded.
Several commentors stated that under such regulatory requirements they
feared that retailers would cease to carry non-exempt pseudoephedrine
products and these products would be placed at a competitive
disadvantage. Commentors also stated that most of the distributors will
not be able to afford or simply will not pay the registration fees and
increased costs of paperwork associated with DEA registration or
recordkeeping.
These commentors misread the proposal which states that the sale of
non-exempt pseudoephedrine products in quantities below 24.0 grams
pseudoephedrine base applies to a single transaction. The phrase ``in a
single transaction'' was specifically included in Sec. 1309.28
(Exemption for retail distributors) which states that the sale for
personal use means the sale of below-threshold quantities in a single
transaction to an individual for legitimate medical use. The cumulative
threshold requirements for multiple transactions of pseudoephedrine
products within a calendar month will not apply to sales for personal
use. Therefore, the DEA reemphasizes that retail sales of personal use
quantities for legitimate medical use in a single transaction will not
require (1) The placement of these pseudoephedrine products behind the
counter, (2) maintenance of records for each transaction, or (3)
registration with the DEA. In order to further clarify that the
cumulative threshold requirements for multiple transactions of
pseudoephedrine products within a calendar month will not apply to
sales for personal use, Secs. 1309.28 and 1310.04 have been modified
accordingly. In addition, Sec. 1309.71 has been modified to reflect
that the requirement that certain drug products to be stocked behind a
counter where only employees have access does not apply to drugs
containing List I chemicals that are regulated pursuant to
Sec. 1310.01(f)(1)(iv)(A)(2).
(4) Several commentors stated that the NPRM does not present
sufficient evidence of the scope, duration and significance of OTC
pseudoephedrine diversion to justify the proposed action.
The NPRM addresses each of these issues and includes a thorough
discussion of the evolution and extent of the diversion of OTC drug
products as precursor material for the clandestine synthesis of
methamphetamine in the United States. The NPRM also describes actions
taken to counter such diversion and specifically outlines steps taken
by clandestine laboratory chemist to circumvent controls implemented at
the Federal level.
On October 31, 1995, the DEA published the NPRM in an attempt to
counter the growing problem of pseudoephedrine diversion and thereby
protect the public health and safety. This NPRM notes that (as of the
date of publication) 22 percent of the methamphetamine laboratories
seized in 1995 in the United States utilized pseudoephedrine as the
precursor material. In addition, the NPRM documents specific increases
in the percentage of clandestine methamphetamine laboratories using
pseudoephedrine as precursor material between 1994 and 1995.
Since publication of the NPRM, all indicators show clear evidence
that the scope of the diversion of pseudoephedrine for the clandestine
synthesis of methamphetamine continues to grow.
Current data indicates that the DEA was involved in the seizure of
327 methamphetamine laboratories in calendar year 1995 and that at
least 28 percent of these laboratories utilized pseudoephedrine as the
precursor material. Smuggling of bulk powder has not been shown to be a
significant source of pseudoephedrine for use at these laboratories and
investigative data indicates that essentially all pseudoephedrine
utilized involved the diversion of OTC pseudoephedrine products.
In regard to the significance of the problem, the adverse impact of
methamphetamine abuse in the United States is clear. The NPRM clearly
documents that the production of methamphetamine is the United States'
most significant clandestine laboratory problem.
Nationally, over 700 methamphetamine related deaths were documented
in the United States in 1994. In addition, there is substantial
evidence that the abuse of methamphetamine is associated with violent
behavior and criminal activity. Coupled with the public health and
safety consequences from the abuse of methamphetamine, the extensive
use of pseudoephedrine as precursor material (in 28 percent of 1995
seized laboratories) provides overwhelming support for the need to
control OTC pseudoephedrine products in a manner which prevents their
use as precursor material while permitting the unencumbered sale for
legitimate use. In proposing these pseudoephedrine regulations, the DEA
acted in a timely manner to counter a growing public health and safety
problem. The increase in seizures of methamphetamine laboratories
utilizing pseudoephedrine further justifies the proposed regulations.
(5) Two commentors stated that the exemption for retail
distributors arbitrarily discriminates against other legitimate
distributors who provide consumers with convenience and savings of
shopping at home (such as mail order distributors). One of these
commentors further stated that the registration exemption is being
provided to businesses (such as retail distributors) which have the
least ability to monitor sales. In contrast, however, several
commentors stated the converse. Specifically these commentors stated
that the DEA should restrict its efforts to target mail order
distribution and not impact retail distribution activity.
The issue pertaining to the exclusion of mail order activities from
the definition of retail distributor was addressed in the June 22,
1995, Federal Register Notice (60 FR 32447) which implemented
provisions of the DCDCA. As stated in that notice, it has been DEA's
experience that mail order distributors deal with both individuals and
businesses, the volume of product
[[Page 40984]]
sales can be quite large, and such firms are often less readily able to
positively identify their customers. In addition, investigations will
be significantly more complex and time consuming for a mail order
distributor than a retail distributor. It is therefore appropriate that
mail order activities not be provided the same waiver as retail
distributors.
In addition several commentors stated that the DEA has no evidence
of retail diversion and instead should target the source of the problem
such as mail order distributors. In response to these comments, the DEA
has documented both mail order and retail diversion of OTC
pseudoephedrine products for use in the clandestine production of
methamphetamine. In implementing these regulations the DEA is
specifically attempting to target both sources of the problem. In order
for such regulatory action to be effective, it should include
provisions which directly target the problem of indiscriminate
distribution of wholesale level quantities by retail, mail order and
wholesale distributors.
While all mail order and wholesale distributors will be subject to
the full extent of CSA chemical regulatory controls, specific
exemptions and waivers have been provided for retail distributors
selling personal use quantities. However, the regulation will affect
large sales of non-exempt pseudoephedrine products by retail
distributors. The following are several anecdotal examples of the
diversion of pseudoephedrine which illustrate the need for regulating
large purchases of pseudoephedrine that are not consistent with
personal use quantities at all levels of distribution.
The following are several examples of retail diversion: DEA has
documented that individuals have successfully solicited pharmacists to
order and sell excessive quantities of 60 mg pseudoephedrine OTC
tablets. The DEA was initially notified by a pharmacist employee of a
large chain pharmacy of an excessive pseudoephedrine purchase. DEA met
with the pharmacist and was informed that the purchaser initially
requested 300 pseudoephedrine 60 mg tablets but gradually increased his
request to 10,000 pseudoephedrine 60 mg tablets. The pharmacist
subsequently ordered and received the 10,000 tablets which the
individual picked up and paid for in cash. The individual then
requested a second order be placed for 50,000 pseudoephedrine 60 mg
tablets which the pharmacist ordered and received. When the individual
telephoned to inquire whether the order had been received, the
pharmacist further questioned the individual about the intended
purpose. After this phone conversation, however, the individual neither
picked up his order or called the pharmacy again. DEA then conducted a
random survey of other pharmacists in the nearby area for
pseudoephedrine purchases. DEA investigators found that the same
individual had also ordered excessive quantities from three other
retail pharmacies. The individual ordered 20,000 pseudoephedrine 60 mg
tablets, 100,000 tablets and 100,000 tablets respectively from these
other pharmacies. At each of the retail distributors, the same
individual had given different reasons for needing the pseudoephedrine.
In an unrelated incident, the DEA was notified of a large purchase
of pseudoephedrine tablets by a large chain pharmacy in California.
Further investigation revealed that an individual had taken a bottle of
pseudoephedrine off the shelf and requested that the pharmacy staff
place a large order for the product on his behalf. Upon consultation
with the pharmacist-in-charge, an order for 4,000 bottles was placed.
According to pharmacy records, the pharmacy had purchased a total of
550,000 pseudoephedrine tablets in five separate orders over a 3 month
period. The individual never provided any identification, address or
telephone number and always called the pharmacy to ask if the order had
come in. After placing several orders, the pharmacist learned from a
third party that pseudoephedrine tablets may be used to manufacture
methamphetamine. At that point the pharmacist informed the individual
that she would not order any more tablets because of possible misuse.
In a separate action, the DEA was notified by a large retail drug
chain that individuals had just purchased about $800 worth of
pseudoephedrine tablets from four of their pharmacies. A license plate
check revealed that the vehicle utilized at the time of purchase
belonged to the wife of a DEA fugitive and subject of a state
methamphetamine investigation. During the investigation, investigators
also learned of an unrelated purchase from another retail pharmacy
whereby an individual attempted to order and purchase 100,000
pseudoephedrine tablets for ``export purposes'' to the Orient.
In an another incident, the DEA received a call from loss
prevention personnel for a large chain drug store advising of two
incidents of pseudoephedrine diversion that day. The entire inventory
of pseudoephedrine product was purchased off the shelf of the pharmacy
through 3 purchases. The purchases were made in cash.
In a separate case, DEA served an administrative subpoena on a
pharmacy for records of receipt and sales of pseudoephedrine tablets.
When the subpoena was served, DEA investigators found the pharmacy
manager hiding in an adjacent room. After a consent to search, the DEA
seized 300,000 pseudoephedrine tablets and $65,000 cash at the
pharmacy. Agents later seized an additional $50,000 cash from a vehicle
belonging to an individual who came to the pharmacy to buy
pseudoephedrine from the pharmacy manager.
In mid 1995, two retail distributors were identified as selling
large quantities of OTC pseudoephedrine. During an 8 month period one
retailer sold 70,000 pounds of pseudoephedrine tablets and the second
retail distributor sold approximately 8,500 pounds of pseudoephedrine
tablets. As a result of an investigation into these excessive sales,
several employees and individuals associated with these establishments
were arrested by DEA.
In another instance, with the arrest of an individual for
possession and manufacture of methamphetamine, DEA investigators found
3 liters of methamphetamine and sufficient chemicals for the production
of approximately one kilogram of methamphetamine. In addition,
investigators found pseudoephedrine/antihistamine combination OTC
tablets (consisting of pseudoephedrine 60 mg and triprolidine 2.5 mg)
and receipts for the purchase of OTC pseudoephedrine tablets from a
local chain drug store. Later, investigators interviewed the drug store
manager and reviewed store cash register receipts which documented the
sale of pseudoephedrine combination OTC tablets.
The following are several examples which illustrate the magnitude
of mail order diversion:
In October of 1995, the DEA seized a large methamphetamine
laboratory utilizing pseudoephedrine capable of manufacturing 200
pounds of methamphetamine per month. Precursor material was obtained
through the mail order purchase of OTC pseudoephedrine tablets.
In a long term DEA methamphetamine investigation, DEA seized 7.5
million dosage units of OTC pseudoephedrine and 1.8 million OTC
ephedrine dosage units and other chemicals used in the manufacture of
methamphetamine. The OTC products used as precursor material were
obtained through mail order distributors. In the course of the
investigation over 7.8 million dollars
[[Page 40985]]
was seized from the trafficking organization.
In another investigation, after the undercover purchase of 20
million pseudoephedrine tablets from an OTC manufacturer and
distributor, DEA seized 25 metric tons of pseudoephedrine, ephedrine
and phenylpropanolamine. Five tractor trailer trucks were required to
remove the material to a secure storage facility. The company, which
dealt extensively in mail order distribution, has been identified as
purchasing 191 metric tons of pseudoephedrine and ephedrine between
January 1994 and May 1995.
The above examples of significant diversion illustrate the need for
regulation at all levels of distribution of non-personal use
quantities, whether it be wholesale, retail or mail order distribution.
(6) One commentor noted that agencies are required to prepare and
make available for public comment an initial regulatory flexibility
analysis which describes the impact of a proposed rule on small
entities. This commentor states that the NPRM is therefore deficient in
that it does not adequately set forth such an analysis. The commentor
did, however, recognize that this provision does not apply to instances
where the head of the agency certifies that the rule will not have
significant impact on a substantial number of small entities.
The NPRM documents the various provisions which were specifically
provided in order to minimize the impact on small businesses. These
provisions were the result of a reasoned analysis of the potential
impact of implementation of the full extent of CSA regulations on the
affected industry and small businesses in particular. In providing for
these special provisions, DEA gave special care and consideration to
industry concerns and given these provisions, ensured that these
regulations ``will not have significant impact on a substantial number
of small entities''.
As previously stated in the NPRM, the DEA met with and consulted
with industry representatives prior to proposing these regulations in
an effort to minimize any adverse impact. In addition, the NPRM
specifically details provisions designed to eliminate the adverse
impact on small businesses at the retail level. First, the DEA proposed
that retail distributors not be subject to registration. Secondly, the
DEA has limited controls to a specific group of products. Thirdly, the
NPRM proposed the establishment of a threshold of 24.0 grams
pseudoephedrine base and therefore would allow for the purchase and
sale of up to a 120 day supply of pseudoephedrine for personal
legitimate medical use, without the application of regulatory
requirements. The proposed threshold was subsequently raised to 48.0
grams in this final rule. Lastly, the NPRM specifies that the threshold
quantity applies only to a single transaction.
(7) One commentor suggested that small package sizes would be
enormously expensive to divert and implied that these products
therefore would not be cost effective sources of pseudoephedrine as
precursor material for the synthesis of methamphetamine. Prior to
proposing these regulations, however, the DEA reviewed the cost of
various brand name pseudoephedrine products in various package sizes
and formulations. The DEA undertook this examination for the specific
purpose of determining whether certain products should remain exempt
from the proposed regulations based solely on the fact that their use
in the synthesis of methamphetamine would not be financially
profitable. This review indicated that even the most expensive brand
name pseudoephedrine dosage form products (including the more expensive
syrups and products containing multiple active ingredients) would be
cost effective sources of precursor material.
(8) Several commentors stated that the DEA has not provided a
rationale for its selection of the group of drugs whose legal exemption
would be revoked. These commentors stated that the NPRM provides
insufficient scientific explanation as to why the exemption was removed
for certain products. One commentor challenged that its scientists
state that removal of pseudoephedrine in combination with
antihistamines, guaifenesin and dextromethorphan is at least as
difficult, if not more so, than analgesics and less efficient than from
liquids, syrup and soft gelatin capsules. The commentor further stated
that the DEA must consider whether the drug or group of drugs are
formulated in such a way that cannot be easily used in the illicit
production of controlled substances.
As stated in the NPRM, the DEA performed a review of the various
pseudoephedrine dosage forms and available combinations of ingredients
to determine which products are (1) formulated in such a way that the
product itself cannot be easily used in the illicit production of
methamphetamine; and (2) whether pseudoephedrine can be readily
recovered from the product. In making determinations as to which
product formulations should be subject to control, the DEA laboratory
system undertook a study which utilized different types of OTC
pseudoephedrine dosage forms and combinations of ingredients to see
which of these formulations were most easily used in the clandestine
synthesis of controlled substances using the procedures most commonly
utilized by clandestine chemists. In addition, the study assessed
whether pseudoephedrine could be readily extracted using clandestine
laboratory techniques. In making its conclusions regarding which
products and formulations should be regulated, the DEA considered,
among other information, which products and formulations required
modifications to normal clandestine manufacturing or extraction
procedures and therefore required a more extension knowledge of
chemistry. In response to comments that the DEA should elaborate
further on its studies to determine the simplicity with which products
may be converted to methamphetamine, the disclosure of such information
would only serve to educate clandestine laboratory operators as to how
to better produce methamphetamine and reveal which pseudoephedrine
formulations provide the easiest source of precursor material.
(9) One commentor questioned the basis for DEA's claim that certain
formulations and products can not be readily recovered. The commentor
stated that liquids would be easier to convert and that the DEA
provided no explanation as to why aspirin, acetaminophen or ibuprofen
combinations are less likely to be diverted for clandestine use. In
response to this comment, in attempting to manufacture methamphetamine
from liquid formulations and combination products having formulations
which contained an analgesic, DEA found that when a typical clandestine
laboratory procedure was utilized, it was necessary to modify the
manufacturing procedure in order to achieve acceptable results.
In determining which products should be subject to CSA chemical
regulatory controls, the DEA has taken a conservative approach. As
such, exemptions are being removed only for those products which did
not require procedural changes when a typical methamphetamine
clandestine manufacturing procedure was utilized. The exemptions are
being retained for all pseudoephedrine products which required changes
in these procedures.
(10) Several commentors stated that the NPRM would require training
of employees to recognize a threshold transaction. The DEA acknowledges
that retail distributors will need to provide instruction to their
personnel so that
[[Page 40986]]
they are able to recognize an above-threshold transaction. In
consultation with industry, the DEA has been informed that the most
common package sizes range from 10 to 60 solid dosage units per package
at the retail level. In proposing the establishment of the threshold of
24.0 grams pseudoephedrine base the DEA specifically ensured that such
common package sizes are not adversely impacted.
DEA believes that the identification of above-threshold
transactions will not be difficult, given package sizes routinely sold
at the retail level. For example, one commentor stated that the vast
majority of their brand name pseudoephedrine product is sold in package
sizes of 24 dosage units or less with each unit containing 30 mg or 60
mg pseudoephedrine hydrochloride. Such packages would only contain
between 0.6 grams and 1.2 grams pseudoephedrine base. An above-
threshold purchase of greater than 24.0 grams of pseudoephedrine base
contained in such products would be conspicuous and thereby difficult
to conceal. An individual would have to purchase more than 976 dosage
units of a 30 mg/dosage unit product. In the package size indicated,
this would involve the purchase of more than 40 packages of such a
product in a single transaction. For a 60 mg per dosage unit product
packaged in bottles of 24 tablets, an above-threshold purchase would
involve the purchase of over 488 dosage units in greater than 20
packages. Given the large size of the above transactions, it is not
unreasonable to expect that retail distributors should be able to
instruct personnel to recognize such conspicuous quantities in a single
transaction.
Several commentors stated that in determining whether a transaction
is above-threshold, retail distributors would have to differentiate
between exempt and non-exempt pseudoephedrine products. These
commentors stated that in the event that exempt and non-exempt
pseudoephedrine products are both purchased in a single transaction, it
will be difficult to determine whether the threshold has been exceeded.
In response to this comment, if both exempt and non-exempt
pseudoephedrine products are purchased in a single transaction, the
quantities of OTC cough-cold medication necessary to exceed the
pseudoephedrine threshold would be even larger and more conspicuous
than the quantities outlined above. The comment submitted by the
National Association of Chain Drug Stores (NACDS) mentioned point of
sale scanning as a possible way to monitor threshold quantities in a
single transaction.
While the DEA believes that such transactions at the proposed
threshold of 24.0 grams would be conspicuous and therefore easy to
identify, the DEA has decided that in an effort to further reduce any
potential burden on retailers, the threshold for pseudoephedrine will
be increased to 48.0 grams. This quantity is double the proposed
threshold. This would allow for the below-threshold purchase of 976
dosage units of a pseudoephedrine 60 mg product or 1953 dosage units of
a 30 mg product in a single transaction. Such transactions would be
sufficient for at least a 244 day supply of pseudoephedrine in a single
transaction at the maximum recommended FDA dosage.
Concerns regarding the difficulty in providing instruction to
employees to recognize a threshold transaction are therefore minimized
by the implementation of the larger threshold and the magnitude of an
above-threshold transaction. To further assist retailers in providing
instruction to employees, the DEA will make available for distribution
through industry associations, notices which provide further
clarification of which pseudoephedrine products are regulated and
guidance in recognizing a threshold transaction.
Given the large quantities of product necessary to exceed a
threshold of 48.0 grams, it is not unreasonable to expect that retail
distributors should be able to provide the rudimentary instruction
necessary to recognize such conspicuous quantities. Retail distributors
dealing only in quantities below these levels will not have to register
with DEA and will not have to maintain records of transactions.
Therefore, any impact on retail distributors is minimal
While the DEA has established the threshold at 48.0 grams
(pseudoephedrine base) to permit the unregulated purchase of up to a
244 day supply at the maximum FDA recommended dosage of 240 mg
pseudoephedrine HCl per day, the DEA is in no way encouraging consumers
to exceed or ignore the warnings contained on the labeling of these
pseudoephedrine products. This labeling, which is required by the FDA,
warns that ``if symptoms do not improve within 7 days or are
accompanied by a fever, consult a doctor''. In addition, some
pseudoephedrine products warn the consumer ``Do not take this product
for more than 7 days.'' Therefore, when the product is used in a manner
consistent with its labeling, the purchase of a threshold quantity of
48.0 grams, will far exceed a 244 day supply of pseudoephedrine for
personal legitimate medical use.
(11) Several commentors stated that before taking action against
OTC pseudoephedrine products, the DEA should first use the enforcement
tools such as registration requirements that Congress imposed under the
DCDCA. In response to this comment, the DCDCA amended 21 U.S.C. 822 and
21 U.S.C. 823 to require registration of handlers of List I chemicals.
However, the DCDCA stated that registration ``shall not be required for
the distribution of a drug product that is exempted under section
102(39)(A)(iv).'' Therefore, registration requirements implemented
under the DCDCA would not pertain to handlers of OTC pseudoephedrine
products lawfully marketed under the Federal Food, Drug and Cosmetic
Act. Since the DEA has already seen a shift toward the utilization of
OTC pseudoephedrine products in clandestine laboratories, the
registration of only bulk handlers of pseudoephedrine and ephedrine
products would have no direct beneficial impact on preventing the
diversion of these products.
(12) One commentor raised concerns that under the CSA chemical
regulatory provisions, records will have to be maintained for a period
of 4 years rather than a 2 year period. The commentor further states
that while normal business records are adequate to meet the CSA
regulatory requirements, the retention requirement will increase the
recordkeeping burden. In response to this comment, the 4 year
recordkeeping requirement for the chemical control provisions of the
CSA was legislated by Congress (21 U.S.C. 830) and therefore is not
within DEA's authority to change.
(13) One commentor requested a 45 day grace period allowing sales
of covered products pending DEA action on registration applications.
The commentor noted that, as written, the NPRM appears to prohibit
above-threshold pseudoephedrine sales between the date the rule is
finalized and the date registration is approved by DEA.
DEA agrees. In response to this comment, DEA has determined that
each person required to obtain a registration because of implementation
of this rule will be temporarily exempted from the registration
requirement until the person has made proper application and the
Administration has approved or denied such application, provided that
the
[[Page 40987]]
application has been submitted within 45 days following the effective
date of this regulation. (Section 1310.09 has been modified to reflect
this.) This exemption only applies to the registration requirement; all
other chemical control requirements set forth under the CSA will be in
full force and effect as of the effective date of this regulation.
(14) One commentor noted that its independent distributors do not
squarely meet the definition of ``retail distributors'' as defined as
sales directly to ``walk-in'' customers for personal use. This
commentor stated that most of their transactions are face-to-face but
not walk-in. The commentor requested that the definition of retail
distributor as set forth in Section 1309.02(g) be modified.
DEA agrees. Therefore, the DEA is modifying Secs. 1309.28 and
1309.02(f) to reflect that the term retail distributor means a
distributor whose List I chemical activities are restricted to the sale
of drug products that are regulated as List I chemicals pursuant to
Sec. 1310.01(f)(1)(iv), in face-to-face transactions directly to
individuals for personal use. The intent of this provision is for the
distributor to be in the physical presence of the individual who is
acquiring the pseudoephedrine for personal use.
In addition, the commentor noted that some distributions are from
one of their independent distributors to another of their independent
distributors. The commentor requested that these sales also be exempt
since they are primarily below-threshold. However, the DEA has
determined that these types of transactions do not meet the definition
of retail distributor since such transactions would be intended for
further distribution and would not be intended for personal use.
(15) One commentor requested clarification of the registration
requirement for pharmacies. This commentor stated that because
pharmacies are already registered, it could be implied that they would
be subject to recordkeeping and reporting requirements.
In response to this request, pharmacies that do not engage in
above-threshold transactions are treated the same as other retail
distributors. However, pharmacies that sell above-threshold quantities
in a single transaction will not meet the definition of retail
distributor and will be required to register with DEA. In order to
avoid the imposition of duplicative registration requirements on these
registrants, 21 CFR 1309.25 provides for an exemption from chemical
registration for controlled substance registrants. Although these
entities will not be required to obtain a separate chemical
registration, they will be required to comply with other chemical
regulatory requirements such as recordkeeping and reporting
requirements. Therefore, these pharmacies which sell above-threshold
quantities of regulated pseudoephedrine products will be required to
maintain a record of each transaction which exceeds the threshold in a
single transaction and report any suspicious regulated transactions to
the DEA.
(16) Two commentors inquired whether the exemption for their
specific pseudoephedrine products could be reinstated if the products
were modified in such a way that prevented their use as precursor
material. In response to this comment, the DCDCA includes specific
provisions for reinstatement of exemptions for particular drug products
(21 U.S.C. 814). The DCDCA provides that upon application by a
manufacturer of a particular drug product that has been removed from
exemption, the exemption shall be reinstated with respect to the
particular drug product if it is determined to be manufactured and
distributed in a manner that prevents diversion. The DCDCA further
states that factors to be considered shall include (1) the package
sizes and manner of packaging of the drug product; (2) the manner of
distribution and advertising of the drug product; (3) evidence of
diversion of the drug product; (4) any actions taken by the
manufacturer to prevent diversion of the drug product; and (5) such
other factors as are relevant to and consistent with the public health
and safety.
One commentor raised concerns regarding the limitation that only
manufacturers may petition for reinstatement of the regulatory
exemption of a specific product. This commentor stated that the
regulations should be amended to allow distributors of private-brand
products or any interested party to submit applications for
reinstatement of exemption. In response to this request, please note
that this provision was legislated by Congress under the DCDCA (21
U.S.C. 814) and specifies that ``on application by a manufacturer of a
particular drug product'' the exemption may be reinstated if the
particular drug product is manufactured or distributed in a manner that
prevents diversion. Any such change would require Congressional
legislation.
(17) Two commentors requested a hearing on the proposal pursuant to
21 U.S.C. 875. In response to these requests, unlike other rulemaking
conducted pursuant to the CSA, the present rulemaking presents no
requirement that the rule be made on the record after opportunity for a
hearing. For example, 21 U.S.C. 811(a) requires the opportunity for a
hearing whenever there is a proposed rescheduling of controlled
substances. In addition, 21 U.S.C. 875 identifies general powers
available to the DEA when exercising its authority under the CSA. Thus,
21 U.S.C. 875 complements existing hearing provisions under the CSA
rather than conferring independent hearing authority. In any event, the
DEA believes that the notice and comment conducted pursuant to this
rulemaking enabled interested parties to provide meaningful comment on
the final rule.
(18) One commentor stated that the rule is a significant regulatory
action and should be reviewed by the Office of Management and Budget.
This commentor also noted that the rule could have an annual effect on
the economy of $100 million or more.
As outlined above, these regulations go to great lengths to avoid
impacting retail distribution of these OTC products. Since the vast
majority of distributors who handle these products will not need to
register or maintain records, the economic impact of this proposal is
extremely small. This rule is therefore not a significant regulatory
action.
Final Rule
After careful consideration of each of the above comments, this
regulation is finalized as follows:
Removal of Exemption
21 U.S.C. 814(a) provides that the Attorney General shall remove
from exemption under 21 U.S.C. 802(39)(A)(iv) and drug or group of
drugs that the Attorney General finds is being diverted to obtain a
listed chemical for use in the illicit production of a controlled
substance. 21 U.S.C. 814(b) further provides that in removing the
exemption for a drug or group of drugs, the Attorney General shall
consider (1) the scope, duration, and significance of the diversion,
(2) whether the drug or group of drugs is formulated in such a way that
it cannot be easily used in the illicit production of a controlled
substance and (3) whether the listed chemical can be readily recovered
from the drug or group of drugs.
Pseudoephedrine is available in a variety of dosage forms either as
single entity products or in combination with one or more other active
medicinal ingredients. While the majority of OTC pseudoephedrine
products currently used for the illicit production of
[[Page 40988]]
methamphetamine are single entity products, combination products have
been identified at clandestine laboratories. The DEA has reviewed the
various pseudoephedrine dosage forms and available combinations of
ingredients. Some of these products are formulated in such a way that
the product itself can be used in the illicit production of
methamphetamine; others are formulated in such a way that
pseudoephedrine can be readily recovered from the product; and some of
these products are formulated in such a way that the manufacture of
methamphetamine is impeded. Based on this analysis, the DEA has
determined that OTC solid dosage form products (i.e. tablets, capsules
and powder packets) lawfully marketed under the Federal Food, Drug, and
Cosmetic Act and which contain pseudoephedrine in combination with
acetaminophen, aspirin or ibuprofen are formulated in such a way that
pseudoephedrine cannot be readily recovered and these products are not
easily used as precursors for the illicit production of
methamphetamine. In addition, the DEA has determined that OTC liquids,
syrups and soft gelatin capsules, which are lawfully marketed under the
Federal Food, Drug, and Cosmetic Act and which contain pseudoephedrine
either as the sole active ingredient or in combination with other
active ingredients, are formulated in such a way that the
pseudoephedrine cannot be readily recovered and the products cannot be
easily used in the illicit production of methamphetamine.
Thus the DEA is removing the exemption under 21 CFR
1310.01(f)(1)(iv) and 21 CFR 1313.02(d)(1)(iv) for OTC solid dosage
form pseudoephedrine products (i.e. tablets, capsules and powder
packets) lawfully marketed under the Federal Food, Drug, and Cosmetic
Act, which do not contain therapeutically significant quantities of
acetaminophen, aspirin or ibuprofen. These products, which include
tablets, capsules and powder packets containing pseudoephedrine as the
sole active ingredient or in combination with one or more active
ingredients such as antihistamines, guaifenesin or dextromethorphan,
will be subject to the regulatory requirements of the CSA.
For purposes of this paragraph, the term ``therapeutically
significant quantities'' shall apply if the product formulation (i.e.
the qualitative and quantitative composition of active ingredients
within the product) is listed in current editions of the American
Pharmaceutical Association (APhA) Handbook of NonPrescription Drugs;
Drug Facts and Comparisons (published by Wolters Kluwer Company); or
USP DI (published by the authority of the United States Pharmacopeial
Convention, Inc.). For drug products having a formulation not found in
the above compendiums, the DEA Administrator shall determine, pursuant
to a written request as specified in Section 1310.14, whether the
active medicinal ingredients are present in quantities considered
therapeutically significant for purposes of this paragraph.
The exemption provided under 21 CFR 1310.01(f)(1)(iv) and 21 CFR
1313.02(d)(1)(iv) will remain for liquids, syrups, and soft gelatin
capsules containing pseudoephedrine (regardless of formulation) and any
type of solid dosage form product which contains pseudoephedrine in
combination with therapeutically significant quantities of either
acetaminophen, aspirin or ibuprofen provided that the product is
lawfully marketed under the Federal Food, Drug, and Cosmetic Act. In
addition, the final regulations allow pseudoephedrine prescription
products, regardless of the product formulation, to remain exempt from
the final regulations, given existing distribution and dispensing
requirements already imposed under the Federal Food, Drug and Cosmetic
Act.
While certain pseudoephedrine products remain exempt from the
regulatory controls of the CSA, all pharmaceutical products containing
pseudoephedrine are List I chemicals, and as such, are subject to the
criminal provisions of the CSA. Specifically, 21 U.S.C. 841(d) provides
that any person who possesses or distributes any listed chemical
knowing, or having reasonable cause to believe that it will be used to
manufacture a controlled substance, shall be fined in accordance with
Title 18, or imprisoned not more than 10 years, or both.
Pursuant to 21 U.S.C. 814(c), the DEA has considered the evidence
of diversion of the above listed pseudoephedrine products, the pattern
of diversion of ephedrine products, including combination products and
other relevant data, and has determined that the affected groups of
pseudoephedrine products is limited to that currently necessary to
prevent the diversion of pseudoephedrine products to illicit
methamphetamine laboratories.
Revision of Threshold
The threshold for pseudoephedrine is being changed from 1.0
kilogram to 48.0 grams pseudoephedrine base for domestic, import and
export transactions. Even if the exemption for certain OTC
pseudoephedrine products is eliminated, a 1.0 kilogram threshold is not
adequate to prevent the significant diversion of these pseudoephedrine
products to clandestine laboratories. The threshold of 1.0 kilogram of
pseudoephedrine base in equivalent to greater than 20,000
pseudoephedrine HCl 60 mg dosage units. Therefore the DEA is reducing
the threshold for pseudoephedrine. In order to ensure that OTC
pseudoephedrine products remain available to those individuals who
utilize these decongestants for legitimate medical purposes, the DEA is
establishing the threshold for pseudoephedrine at a level which will
have no impact on personal use. As such, individuals who purchase
below-threshold quantities intended for legitimate personal medical
use, and retailers who sell below-threshold quantities for use by
individuals for legitimate personal medical use, will not be adversely
impacted by these regulations.
The FDA has established a labeling requirement which sets the
maximum adult daily dosage of pseudoephedrine at 60 mg every 6 hours or
240 mg per day. A 244 day supply of pseudoephedrine at the maximum
daily recommended dose of 240 mg pseudoephedrine hydrochloride per day
is equivalent to 58.56 grams of pseudoephedrine hydrochloride or 47.97
grams pseudoephedrine base. Therefore the DEA is establishing a
threshold of 48.0 grams pseudoephedrine base. Such a threshold will
allow the purchase and sale of up to a 244 day supply of
pseudoephedrine for personal legitimate medical use at the maximum FDA
recommended dosage, without the application of regulatory requirements.
This will allow continued access to these products for legitimate use.
Waiver of Registration
In an effort to ensure the continued availability of
pseudoephedrine products for legitimate personal use at the retail
level, the DEA is providing a waiver from registration for any retail
distributor of regulated pseudoephedrine products. Therefore retail
distributors (defined under 21 CFR 1309.02) of regulated
pseudoephedrine products will not be required to obtain a DEA
registration to distribute personal use quantities of OTC
pseudoephedrine to individuals for legitimate medical use. The
authority for providing a waiver is clearly set forth in 21 U.S.C.
Section 822(d) whereby ``The Attorney General may, by regulation, waive
the requirement for registration of certain manufacturers,
[[Page 40989]]
distributors, or dispensers if he finds it consistent with the public
health and safety.''
As discussed, it is estimated that there are approximately 750,000
retail distributors of pseudoephedrine in the United States. Such a
waiver will benefit the vast majority of these distributors. Firms
engaging in above-threshold transactions of non-exempt pseudoephedrine
products, however, will not be considered retail distributors.
Therefore they will be required to obtain a DEA registration as a
distributor, maintain records as specified in 21 CFR 1310.04 and report
suspicious regulated transactions as specified in 21 CFR 1310.05
notification requirement. In addition, all importers, exporters and
other types of distributors (such as mail order distributors) of non-
exempt pseudoephedrine products will be required to register with the
DEA and will be subject to the full regulatory provisions of the CSA
Act and the Controlled Substances Import and Export Act.
Conclusion
The clandestine manufacture and abuse of methamphetamine are
serious national public health problems which require Federal action.
Companies operating on the fringe of legitimate commerce are supplying
these clandestine laboratories with needed precursor material such as
ephedrine and pseudoephedrine. In an effort to minimize the impact of
the final regulations on the legitimate industry, the DEA has examined
various options available.
The DEA is aware of the large scale legitimate use of OTC
pseudoephedrine products and their widespread distribution at retail
outlets. However, the DEA believes that the registration,
recordkeeping, reporting and notification requirements that have been
successfully used to limit the diversion of other chemicals to
clandestine laboratories are needed to control this problem.
The Attorney General has delegated authority under the CSA and all
subsequent amendments to the CSA to the Administrator of the DEA (28
CFR 0.100). The Administrator, in turn, has redelegated this authority
to the Deputy Administrator pursuant to 28 CFR 0.104.
The Deputy Administrator has reviewed this regulation and by
approving it certifies that while this regulation will necessitate that
retail distributors of regulated pseudoephedrine products instruct
employees to recognize a threshold transaction, the level of
instruction needed is minimal, given the magnitude of the quantities
needed to exceed the threshold in a single transaction. In addition,
the vast majority of retail distributors deal only in quantities far
below the threshold in a single transaction and therefore will not need
to register with the DEA and will not need to maintain records.
Therefore the Deputy Administrator certifies that this regulation will
not have a significant economic impact on a substantial number of small
entities.
The Drug Enforcement Administration has determined that this rule
is not a ``significant regulatory action'' under Executive Order 12866
Section 3(f) and the Office of Management and Budget (OMB) has waived
its review under section 6(a)(3)(A) of the order.
This final action has been analyzed in accordance with the
principles and criteria in Executive Order 12612, and it has been
determined that the final rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment.
List of Subjects
21 CFR Part 1309
Administrative practice and procedure, Drug traffic control, List I
and List II chemicals, Security measures.
21 CFR Part 1310
Drug traffic control, List I and II chemicals, Reporting and
recordkeeping requirements.
21 CFR Part 1313
Drug Traffic Control, Exports, Imports, List I and II chemicals,
Transshipment and in-transit shipments.
For reasons as set out above, 21 CFR Parts 1309, 1310 and 1313 are
amended as follows:
PART 1309--[AMENDED]
1. The authority citation for part 1309 continues to read as
follows:
Authority: 21 U.S.C. 821, 822, 823, 824, 830, 871(b), 875, 877,
958.
2. Section 1309.02 is amended by revising paragraph (g) to read as
follows:
* * * * *
(f) The term retail distributor means a distributor whose List I
chemical activities are restricted to the sale of drug products that
are regulated as List I chemicals pursuant to Section 1310.01(f)(1)(iv)
of this chapter, in face-to-face transactions directly to individuals
for personal use. For purposes of Sec. 1309.28, sale for personal use
means the sale of below threshold quantities in a single transaction to
an individual for legitimate medical use.
3. Section 1309.28 is added to read as follows:
Sec. 1309.28 Exemption of retail distributors of certain
pseudoephedrine products.
The requirement of registration is waived for any retail
distributor, for the distribution of any product containing
pseudoephedrine that is regulated pursuant to
Sec. 1310.01(f)(1)(iv)(A)(2) of this chapter. The term retail
distributor, as defined in Sec. 1309.02(f), means a distributor whose
List I chemical activities are restricted to the sale of drug products
that are regulated as List I chemicals pursuant to
Sec. 1310.01(f)(1)(iv) of this chapter, in face-to-face transactions
directly to individuals for personal use. For purposes of this
paragraph, sale for personal use means the sale of below-threshold
quantities in a single transaction to an individual for legitimate
medical use. The cumulative threshold requirements for multiple
transactions within a calendar month will not apply to sales for
personal use of any product containing pseudoephedrine that is
regulated pursuant to Sec. 1310.01(f)(1)(iv)(A)(2) of this chapter.
(The threshold of 48.0 grams pseudoephedrine base is equivalent to 976
pseudoephedrine hydrochloride 60 mg dosage units.)
4. Section 1309.71 is amended by revising paragraph (a)(2) to read
as follows:
Sec. 1309.71 General security requirements.
* * * * *
(a) * * *
(2) In retail settings open to the public where drugs containing
List I chemicals that are regulated pursuant to
Sec. 1310.01(f)(1)(iv)(A)(1) of this chapter are distributed, such
drugs will be stocked behind a counter where only employees have
access. This requirement does not apply to drugs containing List I
chemicals that are regulated pursuant to Sec. 1310.01(f)(1)(iv)(A)(2)
of this chapter.
* * * * *
21 CFR part 1310 is amended as follows:
PART 1310--[AMENDED]
1. The authority citation for part 1310 continues to read as
follows:
Authority: 21 U.S.C. 802, 830, 871(b).
2. Section 1310.01 is amended by revising paragraph (f)(1)(iv)(A)
to read as follows:
[[Page 40990]]
Sec. 1310.01 Definitions.
* * * * *
(f) * * *
(1) * * *
(iv) * * *
(A)(1) The drug contains ephedrine or its salts, optical isomers,
or salts of optical isomers as the only active medicinal ingredient or
contains ephedrine or its salts, optical isomers, or salts of optical
isomers and therapeutically insignificant quantities of another active
medicinal ingredient. For purposes of this paragraph, the term
``therapeutically insignificant quantities'' shall apply if the product
formulation (i.e. the qualitative and quantitative composition of
active ingredients within the product) is not listed in current
editions of the American Pharmaceutical Association (APhA) Handbook of
NonPrescription Drugs; Drug Facts and Comparisons (published by Wolters
Kluwer Company); or USP DI (published by the authority of the United
States Pharmacopeial Convention, Inc.); or the product is not listed in
Section 1310.15 as an exempt drug product. For drug products having
formulations not found in the above compendiums, the Administrator
shall determine, pursuant to a written request as specified in Section
1310.14, whether the active medicinal ingredients are present in
quantities considered therapeutically significant for purposes of this
paragraph; or
(2) The drug is an over-the-counter (OTC) solid dosage form product
(tablet, capsule or powder packet) which contains pseudoephedrine or
its salts, optical isomers, or salts of optical isomers but does not
contain either acetaminophen, aspirin or ibuprofen in therapeutically
significant quantities. (This provision applies only to OTC
pseudoephedrine products and does not include those pseudoephedrine
products dispensed only pursuant to a prescription.) For purposes of
this paragraph, the quantities of either acetaminophen, aspirin or
ibuprofen present in a pseudoephedrine drug product shall be considered
to be present in ``therapeutically significant quantities'' if the
product formulation (i.e. the qualitative and quantitative composition
of active ingredients within the product) is listed in current editions
of the American Pharmaceutical Association (APhA) Handbook of
NonPrescription Drugs; Drug Facts and Comparisons (published by Wolters
Kluwer Company); or USP DI (published by the authority of the United
States Pharmacopeial Convention, Inc.); or the product is listed in
Sec. 1310.15 as an exempt drug product. For drug products having a
formulation not found in the above compendiums, the Administrator shall
determine, pursuant to a written request as specified in Sec. 1310.14,
whether the active medicinal ingredients (acetaminophen, aspirin or
ibuprofen) are present in quantities considered therapeutically
significant for purposes of this paragraph; or
* * * * *
3. Section 1310.04 is amended by revising the introductory text in
paragraph (f) and paragraph (f)(1)(x) to read as follows:
Sec. 1310.04 Maintenance of records.
* * * * *
(f) Except as provided in Sec. 1309.28 of this chapter for sales
for personal use, for those listed chemicals for which thresholds have
been established, the quantitative threshold or the cumulative amount
for multiple transactions within a calendar month to be utilized in
determining whether a receipt, sale, importation, or exportation is a
regulated transaction is as follows:
(1) List I Chemicals:
------------------------------------------------------------------------
Chemical Threshold by base weight
------------------------------------------------------------------------
(x) Pseudoephedrine, its salts, optical 48 grams.
isomers and salts of optical isomers.
------------------------------------------------------------------------
* * * * *
4. Section 1310.09 is revised to read as follows:
Sec. 1310.09 Temporary exemption from registration.
Each person required by section 3(b) of the Domestic Chemical
Diversion Control Act of 1993 (Pub. L. 103-200, effective April 16,
1994), to obtain a registration to manufacture, distribute, import, or
export a list I chemical (other than those list I chemicals exempted
under Sec. 1310.01(f)(1)(iv)), is temporarily exempted from the
registration requirement. The registration exemption will remain in
effect for each person until the person has made proper application for
registration and the Administration has approved or denied such
application, provided that the application has been submitted within 45
days following the effective date of the regulations in part 1309
implementing the Domestic Chemical Diversion Control Act of 1993. In
addition, each person required to obtain a registration to manufacture,
distribute, import, or export a drug or group of drugs removed from
exemption under Sec. 1310.01(f)(1)(iv) is also temporarily exempted
from the registration requirement. The registration exemption will
remain in effect for each person until the person has made proper
application for registration and the Administration has approved or
denied such application, provided that the application has been
submitted within 45 days following the effective date of the regulation
which eliminates the exemption under Sec. 1310.01(f)(1)(iv). These
registration exemptions apply only to registration; all other chemical
control requirements set forth in the Domestic Chemical Diversion
Control Act of 1993 and in parts 1310 and 1313 of this chapter remain
in full force and effect.
5. Section 1310.14 is amended by revising the heading and by
revising paragraph (a) to read as follows:
Sec. 1310.14 Exemption of certain ephedrine or pseudoephedrine
combination drug products.
(a) Any manufacturer of a drug product containing ephedrine in
combination with another active medicinal ingredient, the product
formulation of which is not listed in the compendiums set forth in
Sec. 1310.01(f)(1)(iv)(A)(1), or any manufacturer of a drug product
containing pseudoephedrine in combination with acetaminophen, aspirin
or ibuprofen, the product formulation of which is not listed in the
compendiums set forth in Sec. 1310.01(f)(1)(iv)(A)(2), may request that
the Administrator exempt the product as one which contains ephedrine
together with therapeutically significant quantities of the other
active medicinal ingredients or pseudoephedrine in combination with
therapeutically significant quantities of acetaminophen, aspirin or
ibuprofen.
* * * * *
6. Section 1310.15 is amended by revising the heading, by revising
paragraph (a), and by revising paragraph (d) to read as follows:
Sec. 1310.15 Exempt combination drug products containing ephedrine or
pseudoephedrine.
(a) The drug products containing ephedrine in combination with
therapeutically significant quantities of another active medicinal
ingredient, or pseudoephedrine in combination with therapeutically
significant quantities of acetaminophen, aspirin, or ibuprofen; listed
in paragraph (d) of this section, have been exempted by the
Administrator from application of sections 302, 303, 310, 1007, and
1008 of the Act (21 U.S.C. 822-3, 830, and 957-8) to the extent
described in
[[Page 40991]]
paragraphs (b), (c), and (d) of this section. * * *
(d) In addition to the drug products listed in the compendium set
forth in Secs. 1310.01(f)(1)(iv)(A)(1) and 1310.01(f)(1)(iv)(A)(2), the
following drug products, in the form and quantity listed in the
application submitted (indicated as the ``date'') are designated as
exempt drug products for the purposes set forth in this section:
Exempt Drug Products Containing Ephedrine in Combination With Therapeutically Significant Quantities of Another
Active Medicinal Ingredient and Exempt Drug Products Containing Pseudoephedrine in Combination With
Therapeutically Significant Quantities of Acetaminophen, Aspirin or Ibuprofen
----------------------------------------------------------------------------------------------------------------
Supplier Product name Form Date
----------------------------------------------------------------------------------------------------------------
[Reserved]........................... ....................... ....................... .......................
----------------------------------------------------------------------------------------------------------------
21 CFR part 1313 is amended as follows:
PART 1313--[AMENDED]
1. The authority citation for part 1313 continues to read as
follows:
Authority: 21 U.S.C. 802, 830, 871(b), 971.
2. Section 1313.02 is amended by revising paragraph (d)(1)(iv)(A)
to read as follows:
Sec. 1313.02 Definitions.
* * * * *
(d) * * *
(1) * * *
(iv) * * *
(A)(1) The drug contains ephedrine or its salts, optical isomers,
or salts of optical isomers as the only active medicinal ingredient or
contains ephedrine or its salts, optical isomers, or salts of optical
isomers and therapeutically insignificant quantities of another active
medicinal ingredient. For purposes of this paragraph, the term
``therapeutically insignifican
FR Doc. 96-19846 Removal of Exemption for Certain Pseudoephedrine Products Marketed Under the Federal Food, Drug, and Cosmetic Act (FD&C Act)
t quantities'' shall apply if the product
formulation (i.e. the qualitative and quanitative composition of active
ingredients within the product) is not listed in current editions of
the American Pharmaceutical Association (APhA) Handbook of
NonPrescription Drugs; Drug Facts and Comparisons (published by Wolters
Kluwer Company); or USP DI (published by the authority of the United
States Pharmacopeial Convention, Inc.); or the product is not listed in
Sec. 1310.15 as an exempt drug product. For drug products having
formulations not found in the above compendiums, the Administrator
shall determine, pursuant to a written request as specified in Section
1310.14, whether the active medicinal ingredients are present in
quantities considered therapeutically significant for purposes of this
paragraph; or
(2) The drug is an over-the-counter (OTC) solid dosage form product
(tablet, capsule or powder packet) which contains pseudoephedrine or
its salts, optical isomers, or salts of optical isomers, but does not
contain either acetaminophen, aspirin or ibuprofen in therapeutically
significant quantities. (This provision applies only to OTC
pseudoephedrine products and does not include those pseudoephedrine
products dispensed only pursuant to a prescription.) For purposes of
this paragraph, the quantities of either acetaminophen, aspirin or
ibuprofen present in a pseudoephedrine drug product shall be considered
to be present in ``therapeutically significant quantities'' if the
product formulation (i.e. the qualitative and quantitative composition
of the active ingredients within the product) is listed in current
editions of the American Pharmaceutical Association (APhA) Handbook of
NonPrescription Drugs; Drug Facts and Comparisons (published by Wolters
Kluwer Company); or USP DI (published by the authority of the United
States Pharmacopeial Convention, Inc.); or the product is listed in
Sec. 1310.15 as an exempt drug product. For drug products having a
formulation not found in the above compendiums, the Administrator shall
determine, pursuant to a written request as specified in Sec. 1310.14,
whether the active medicinal ingredients (acetaminophen, aspirin or
ibuprofen) are present in quantities considered therapeutically
significant for purposes or this paragraph; or
* * * * *
Dated: May 9, 1996.
Stephen H. Greene,
Deputy Administrator.
Note: The following text will not appear in the Code of Federal
Regulations.
Appendix
On May 9, 1996 the Deputy Administrator of the Drug Enforcement
Administration (DEA) signed the above rule which finalizes a Notice
of Proposed Rulemaking (NPRM) published in the Federal Register on
October 31, 1995 (60 FR 55348). At the request of the Office of
Management and Budget (OMB) Office of Information and Regulatory
Affairs, the rule was provided to OMB for review on May 16, 1996.
OMB cleared the final rule for publication on July 22, 1996. In the
interim, however, 5 U.S.C. 605(b) was amended to require that at the
time of publication of a final rule, the agency shall publish a
statement providing the factual basis for the certification that the
rule will not have a significant economic impact on a substantial
number of small entities. While the issue of whether this rule will
have a significant economic impact on a substantial number of small
entities was addressed in this final rule, DEA is providing the
information in this appendix to insure compliance with the
amendments to 5 U.S.C. 605(b), which became effective on June 27,
1996, after the final rule was signed.
In making a determination that the rule will not have a
significant economic impact on a substantial number of small
entities, the DEA conducted a review of the affected industry. In
performing this review, the DEA carefully considered regulatory
alternatives and the potential impact of each regulatory alternative
on the affected industry and small businesses in particular.
The clandestine manufacture and abuse of methamphetamine are
serious national public health problems which require Federal
action. Pseudoephedrine products produced to meet legitimate medical
needs are diverted by clandestine laboratory operators for use as
precursor material for the production of methamphetamine.
The DEA is aware of the large scale legitimate use of the over-
the-counter (OTC) pseudoephedrine products and their widespread
distribution at retail outlets. However, the DEA believes that the
registration, recordkeeping, reporting and notification requirements
that have been successfully used to limit the diversion of other
chemicals to clandestine laboratories are needed to control this
problem. In writing this regulation, the DEA considered various
levels of regulatory control on pseudoephedrine products. These
options ranged from the establishment of no controls on
pseudoephedrine products to the imposition of the full extent of
controls permitted under existing statutory authority. Given the
magnitude of documented deaths due to methamphetamine and the untold
cost of violence and crime associated with methamphetamine abuse,
the DEA determined that some measure of control is necessary and
therefore the establishment of no regulatory control on
pseudoephedrine products is not a viable option. However, the burden
associated with the application of the full extent of regulatory
controls, including the regulation of all pseudoephedrine products,
a threshold of zero (whereby records would be required for all
transactions regardless of size), and the imposition of a
registration requirement on all retailers, would produce an
excessive burden on legitimate industry. Given the potentially large
impact of such regulatory action, the DEA sought to impose less
stringent regulatory requirements so as not to adversely impact
legitimate businesses.
In the proposed regulation published in October of 1995, the DEA
documented that it had determined that approximately 750,000 retail
distributors and an
[[Page 40992]]
undetermined number of other distributors would be impacted if
pseudoephedrine products were made subject to the full extent of the
Controlled Substances Act (CSA) chemical regulatory provisions.
However, in recognizing the need to limit the regulatory impact on
handlers of pseudoephedrine products to a level adequate to prevent
the large scale diversion of these products of clandestine use, the
DEA has taken significant steps to reduce or eliminate the controls
on retailers who sell these pseudoephedrine products of legitimate
consumers.
First, given the large number of retail distributors who handle
these products in the United States, the DEA has provided a waiver
from registration for these distributors. Thus, the regulations
primarily impact distributors who are not classified as retail
distributors. These distributors include mail-order and wholesale
distributors. The DEA has attempted to identify the number of firms
which will be impacted by these regulations. This review included
consultation with industry associations and other Federal and local
government agencies. These entities were only able to identify a
limited number of firms which would become subject to regulatory
controls as a result of this rule.
Secondly, the DEA has limited controls to a specific group of
products which have been demonstrated to be most readily used for
illicit purposes. This approach provides effective protection
against diversion while minimizing the burden on industry. Thirdly,
the proposed regulations allowed for the purchase and sale of up to
a 120 day supply of pseudoephedrine for personal legitimate medical
use in a single transaction, without the application of regulatory
requirements. Based on comments, in the final rule the DEA doubled
the amount to a 244 day supply (976 pseudoephedrine 60 mg dosage
units) in a single transaction. Despite concerns that traffickers
may exploit this increased threshold, DEA allowed the increase to
ensure continued public access to the products for personal
legitimate medical use at the retail level. A secondary benefit of
this threshold is the fact that many retail outlets do not stock
such quantities of pseudoephedrine products, thus obviating concerns
regarding their regulation.
Prior to writing the proposed regulation, the DEA consulted with
the National Wholesale Druggists Association (NWDA) in an effort to
determine the potential size of the impacted industry. According to
NWDA sources, there are approximately 750,000 retail distributors in
the U.S. which sell over-the-counter pseudoephedrine products. In
addition, the DEA met with the Nonprescription Drug Manufacturers
Association (NDMA) regarding the U.S. pseudoephedrine market to
obtain input on the distribution of pseudoephedrine for legitimate
medical use. NDMA has further confirmed that there are approximately
750,000 retail distributors of over-the-counter products in the U.S.
NDMA, which stated that its members account for the manufacture of
over 90 percent of the over-the-counter drugs marketed domestically,
informed DEA that member companies primarily distribute
pseudoephedrine in package size ranging from 10 to 60 solid dosage
units per package. In an effort to reduce the impact upon those who
sell and purchase pseudoephedrine products at the retail level, the
DEA established a threshold that was well above the standard package
size manufactured by NDMA members and distributed by retail
distributors. The threshold of 48.0 grams pseudoephedrine base is
equivalent to 976 pseudoephedrine hydrochloride 60 mg dosage units.
To further quantify the potential impact of the regulations the
DEA has obtained data from the U.S. Bureau of the Census, 1992
Census of Retail Trade. This data documents the number of retail
trade establishments based upon Standard Industrial Classification
(SIC). This data documents a total of 552,000 potential retailers of
pseudoephedrine (to include 63,000 General Merchandise Stores SIC
Code 53, 278,000 Food Stores SIC Code 54, 120,000 Gas Service
Stations SIC Code 554, 51,000 Drug Stores and Proprietary Stores SIC
Code 591 and 40,000 Liquor Stores SIC Code 592).
In addition the DEA has obtained data from the U.S. Department
of Agriculture, Economic Research Service, Food Marketing Review
which breaks down the number of retail food stores by category for
1993. Of the 249,600 retail food stores documented, 49,500 are
classified as convenience stores and 89,800 as Superettes (defined
as being primarily self-service in operation, selling a wide variety
of food and non-food products with annual sales below $2.5 million.)
In addition, the data documents 3,100 Warehouse Stores (which are
defined as containing limited product variety and fewer services,
while incorporating case lot stocking and shelving practices) and
500 Superwarehouse Retail Outlets (defined as larger warehouses that
offer expanded product variety.)
Convenience Stores appear not to even shelf threshold quantities
of pseudoephedrine. Such entities which do not stock a threshold
quantity and therefore would not exceed the threshold quantities in
a single transaction, would not be impacted by these regulations.
The 3,600 Warehouse and Superwarehouse outlets, however, may choose
to distribute above threshold quantities and therefore would not
meet the definition of ``retail distributor''. These entities would
therefore be required to register with the DEA and maintain a record
of only those transactions which exceed the threshold of 48.0 grams
pseudoephedrine base.
Additionally, the National Association of Chain Drug Stores
(NACDS) noted point of sale scanning as a possible way to monitor
threshold quantities of regulated product in a single transaction.
The DEA has obtained data on the percent of Supermarkets having
point of sale scanning checkouts. A 1993 study performed by the
Maclean Hunter Media, Inc., Stamford, CT, 61st Annual Report of the
Grocery Industry indicated that approximately 85 percent of
independent and chain supermarkets had scanning checkouts. The
percent of Supermarkets having this capability was up from 71
percent in 1990. NACDS's suggestion, therefore, appears to be
applicable to the Supermarket industry as well.
The primary impact of the regulations will be upon those
entities not classified as retail distributors. Such entities
include mail-order distributors and wholesale distributors. The DEA
has attempted to quantify the number of these distributors in the
U.S. The NWDA informed the DEA that its 1993 Operating Survey
indicated that 70 full-line drug wholesalers (who distribute both
prescription and over-the-counter products) distributed nearly 80
percent of the prescription drugs in the U.S. in 1993. These full-
line drug wholesalers operated approximately 230 distribution
centers. Information provided by NWDA indicates that due to
consolidation within the drug wholesale industry, there are
currently only approximately 50 full-line wholesale distributors
supplying this market in the U.S.
These firms are already CSA registrants and as such would not
need to obtain a separate registration under the proposed
regulations (Title 21 Code of Federal Regulations 1309.25). In
addition, the impact upon these full-line distributors will be
minimized since, pursuant to Sec. 1310.06(b), normal business
records shall be considered adequate if they contain the information
required in 21 CFR 1310.06(a) and are readily retrievable from other
business records.
The NWDA was unable to provide estimates of the percentage of
the over-the-counter market supplied by these full-line distributors
but informed DEA of the existence of other smaller wholesale
distributors who only distribute over-the-counter pseudoephedrine
products. These wholesale distributors will be impacted by the
proposed regulations since they will be required to register with
DEA and ensure that records maintained are adequate to meet the
requirements under Section 1310.06.
In addition to contact with the industry associations, the DEA
has contacted the National Association of Boards of Pharmacy and
several State Boards of Pharmacy in an attempt to quantify the
number of these distributors currently operating in the U.S. which
will be impacted by these regulations. These various industry and
professional groups contacted by the DEA were unable to quantify the
number of these firms operating in the U.S. or identify a
professional association which represents these business entities.
However, in the instance where a state was able to identify the
number of firms licensed to distribute drug products into that
state, the number of firms was not large, (e.g. As stated in the
proposed rule, the State of Idaho licenses all business entities
which distribute over-the-counter products into or within the state.
The Idaho Board of Pharmacy indicated that the majority of the
distributors are actually outside of Idaho and that only 418
distributors are licensed to distribute drug products into Idaho.)
Conclusion
The DEA has substantially limited the impact the regulations
will have on pseudoephedrine handlers. The requirements have been
designed to ensure that the vast majority of retailers of
pseudoephedrine will not be subject to regulation. Retail
distributors will not be required to register or maintain records
unless they engage in
[[Page 40993]]
transactions involving a limited group of pseudoephedrine products
in quantities that exceed a 244 day supply in a single transaction.
Most retail distributors do not engage in such transactions and
therefore will not be subject to these regulations.
The proposed and final rule, in conjunction with this appendix
document the various provisions which were specifically provided in
order to minimize the impact on small businesses. These provisions
were the result of a reasoned analysis of the potential impact of
implementation of the full extent of CSA regulations on the affected
industry and small businesses in particular. In providing for these
special provisions, DEA gave special care and consideration to
industry concerns and given these provisions, ensured that these
regulations ``will not have significant impact on a substantial
number of small entities''.
Dated: July 30, 1996.
Stephen H. Greene,
Deputy Administrator.
[FR Doc. 96-19846 Filed 8-6-96; 8:45 am]
BILLING CODE 4410-09-M
Complete official Federal Register PDF
FR Doc. 96-19791 Regulation Relating to Definition of ``Plan Assets''Participant Contributions
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 41220-41235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19791]
[[Page 41219]]
_______________________________________________________________________
Part III
Department of Labor
_______________________________________________________________________
Pension and Welfare Benefits Administration
_______________________________________________________________________
29 CFR Part 2510
Regulation Relating to Definition of ``Plan Assets''--Participant
Contributions; Final Rule
Federal Register / Vol. 61, No. 153 / Wednesday, August 7, 1996 /
Rules and Regulations
[[Page 41220]]
DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Part 2510
RIN 1210-AA53
Regulation Relating to Definition of ``Plan Assets''--Participant
Contributions
AGENCY: Pension and Welfare Benefits Administration, Department of
Labor.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document contains a final regulation revising the
definition of when certain monies which a participant pays to, or has
withheld by, an employer for contribution to an employee benefit plan
are ``plan assets'' for purposes of Title I of the Employee Retirement
Income Security Act of 1974 (ERISA) and the related prohibited
transaction provisions of the Internal Revenue Code (the Code). The
final regulation provides that participant contributions to employee
pension benefit plans become plan assets on the earliest date that they
can reasonably be segregated from the employer's general assets, but in
no event later than the 15th business day of the month following the
month in which the participant contributions are withheld or received
by the employer. The final regulation establishes a procedure by which
an employer that sponsors a pension plan may obtain an extension of
this maximum period for an additional 10 business days with respect to
participant contributions received or withheld in a single month. With
respect to employee welfare benefit plans only, the final regulation
leaves unchanged the current regulation, which provides that
participant contributions become plan assets as of the earliest date on
which they can reasonably be segregated but in no event later than 90
days from the date on which the participant contributions were received
or withheld by the employer. This rule provides guidance to employers
that sponsor contributory pension and welfare plans, including plans
complying with section 401(k) of the Code, as well as fiduciaries,
participants, and beneficiaries of such plans.
DATES: Effective date. This regulation is effective on February 3,
1997.
Applicability dates. The regulation also establishes a procedure by
which an employer may obtain a postponement of the application of the
new maximum period for pension plans for up to 90 additional days
beyond the effective date. For collectively bargained plans, the new
maximum period for pension plans does not apply until the later of
February 3, 1997 or the first day of the plan year that begins after
the last to expire of any applicable collective bargaining agreement in
effect on August 7, 1996. Pending the application of the new maximum
period for pension plans, plans are subject to the same maximum period
that applies to employee welfare benefit plans. Except as described
above with respect to the postponement procedure and collectively
bargained plans, the requirements of the regulation are applicable to
all plans on the effective date.
FOR FURTHER INFORMATION CONTACT: Rudy Nuissl, Office of Regulations and
Interpretations, Pension and Welfare Benefits Administration, U.S.
Department of Labor, Washington, DC (202) 219-7461; or William W.
Taylor, Plan Benefits Security Division, Office of the Solicitor, U.S.
Department of Labor, Washington, DC (202) 219-9141. These are not toll-
free numbers.
SUPPLEMENTARY INFORMATION: On December 20, 1995, the Department of
Labor (the Department) published a notice of proposed rulemaking in the
Federal Register (60 FR 66036) to revise a regulation at 29 CFR 2510.3-
102 which had been issued by the Department in 1988. The 1988
regulation provided that the assets of the plan include amounts (other
than union dues) that a participant or beneficiary pays to an employer,
or amounts that a participant has withheld from his or her wages by an
employer, for contribution to the plan as of the earliest date on which
such contributions can reasonably be segregated from the employer's
general assets, but in no event to exceed 90 days from the date on
which such amounts are received by the employer (in the case of amounts
that a participant or beneficiary pays to an employer) or 90 days from
the date on which such amounts would otherwise have been payable to the
participant in cash (in the case of amounts withheld by an employer
from a participant's wages).1 This final rule was based on a
record developed with respect to a proposed regulation published in
1979. 44 FR 50363 (August 28, 1979).
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\1\ The Department's view is that elective contributions to an
employee benefit plan, whether made pursuant to a salary reduction
agreement or otherwise, constitute amounts paid to or withheld by an
employer (i.e., participant contributions) within the scope of
Sec. 2510.3-102, without regard to the treatment of such
contributions under the Internal Revenue Code. See 53 FR 29660 (Aug.
8, 1988).
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In the December 20, 1995 notice, the Department proposed to change
the maximum period during which participant contributions to an
employee benefit plan may be treated as other than ``plan assets'' to
the same number of days as the period in which the employer is required
to deposit withheld income taxes and employment taxes under rules
promulgated by the Internal Revenue Service (IRS). The Department
solicited comments on the advisability of other measures that the
Department might consider to address the problem of delays in
transmitting participant contributions to plans. The Department
received more than 600 written comments in response to the proposal.
The Department held a public hearing on the proposal on February 22 and
23, 1996, in Washington DC, at which time 21 organizations provided
testimony.
The following discussion summarizes the Department's proposal and
the major issues raised by the commenters. It also explains the
Department's reasons for the modifications reflected in the final
regulation which is published with this document.
Discussion of the Final Regulation and Comments
1. The Proposed Regulation
In issuing the proposed rule the Department stated that it did not
propose to change the general rule embodied in the 1988 regulation,
which is that participant contributions become plan assets as of the
earliest date that they can reasonably be segregated from the general
assets of the employer. Instead, the Department's proposal emphasized
that the maximum time period was not a safe harbor, and proposed to
drastically reduce the maximum period after which participant
contributions would be considered plan assets. Under the 1988
regulation, this maximum period was 90 days after the contributions
were received by the employer or would otherwise have been payable to
the participants in cash. The Department proposed to change the maximum
period to the same number of days as the period within which the
employer is required to deposit withheld income taxes and employment
taxes under rules promulgated by the IRS.
The currently applicable IRS rules are codified at 26 CFR 31.6302-
1. As explained in the preamble to the December 20, 1995 notice of
proposed rulemaking, the IRS deposit rules generally require employers
who have
[[Page 41221]]
reported more than $50,000 of withheld income taxes and employment
taxes for a prior 12-month ``lookback'' period (defined as ``semi-
weekly depositors'') to make tax deposits to a Federal Reserve Bank or
authorized financial institution within a few days of withholding from
wages. Employers who have reported $50,000 or less of withheld income
taxes and employment taxes in the lookback period are defined as
``monthly depositors'' and must make such deposits on or before the
15th day of the month following the month in which the employees' wages
are paid. The Department specifically solicited comments on the
appropriateness of including in the final regulation the following two
special rules that supplement the general tax deposit rules in the IRS
regulation: (1) An employer who has accumulated on any day $100,000 in
withheld income taxes and employment taxes must deposit such taxes by
the next banking day; (2) an employer who accumulates less than a $500
tax liability during a calendar quarter is not required to make
deposits; the tax is paid with the filing of the tax return for the
quarter.
The Department recognized that some employers would perceive
difficulties in transferring participant contributions to an employee
benefit plan that they do not have in the deposit of federal employment
taxes. The Department solicited comments as to any specific burdens and
associated costs of this kind. The Department also requested comments
on the transition period needed for employers and service providers,
especially small businesses, to make changes in practices that would be
necessary to comply with the proposal if it was adopted.
Although the Department did not propose a maximum period applicable
to all employers based on a fixed period of days (such as 15 days), it
stated in the December 20, 1995 notice that it would consider such a
rule if adopting the time periods in the IRS tax deposit rules would
place an undue burden on plan sponsors. The Department solicited
comments on the advantages or disadvantages of using a fixed period of
days or some other formulation for a maximum period as well as to the
advisability of other measures to address the problem of delays in
transmitting participant contributions to plans.
2. Comments Addressed to the Maximum Period Described in the Proposed
Regulation
In response to the proposed regulation, the Department received
many comments 2 objecting to the use of the time periods that
apply for the deposit of withheld income taxes and employment taxes as
the maximum period for segregating participant contributions from the
employer's general assets. Employers of different sizes represented
that they would face difficulty and greatly increased costs in
attempting to meet the foreshortened time frames for segregation of
participant contributions set forth in the proposal. Service providers
to plans stated that it would not be feasible for them to administer a
rule that had a different maximum time period based on the size of the
employer. There was general agreement that the 90 day maximum period in
the 1988 regulation should be reduced, but many commenters regarded the
proposed regulation as formulating an overly restrictive maximum period
with the effect of imposing more stringent requirements on larger
employers even though, they contended, most of the cases in which
participant contributions were mishandled appear to have involved
smaller employers.
---------------------------------------------------------------------------
\2\ References to ``comments'' and ``commenters'' includes both
written comment letters as well as prepared statements and oral
testimony at the public hearing.
---------------------------------------------------------------------------
The commenters generally represented that, under current practices,
there are significant differences between the processing of withheld
federal income taxes and employment taxes prior to deposit, and the
processing of participant contributions to employee benefit plans. Tax
deposits are made without providing any data regarding the allocation
of the deposit amounts to individual employees until the end of the
year. By contrast, commenters stated that each time participant
contributions are transmitted to the plan, eligibility must be
confirmed, contributions must be allocated to the participants'
individual accounts, and the individual amounts must be reconciled to
the aggregate amount. Commenters also pointed out that employees who
participate in 401(k) plans may select differing amounts for
contribution, and may frequently change both these amounts and the
vehicles to which they are allocated.
Many commenters represented that the process of reconciling and
allocating participant contribution amounts is time consuming. Because
of the work involved in preparing for the transmission of participant
contributions to the plan, many commenters stated that they customarily
make such transmissions once a month, rather than after each pay
period. The commenters stated that requiring participant contributions
to be segregated as often as twice a week or more would force employers
to conduct these reconciliations and allocations with the same
frequency and thus would add substantially to the costs and burdens of
handling participant contributions.
Other commenters maintain that the proposal would simply not allow
sufficient time for the necessary review and correction of errors
before the transmission of the participant contributions to the plans.
These commenters pointed out that accuracy in calculating and
allocating participant contributions is very important. Although some
commenters acknowledged that mistakes can be corrected, including the
return of mistaken contributions, frequent mistakes can present
significant employee relations problems and undermine participant
confidence. According to numerous commenters, it is less burdensome and
costly to take additional time to assure the accuracy of participant
contributions before they are transmitted to the plan than it is to
find and correct mistakes afterwards. They pointed out that the more
frequently reconciliation and allocation computations are made, the
greater the opportunity for committing errors.
The commenters also represented that many brokerage houses, banks
and mutual funds are not willing to accept lump sum payments of
participant contributions from employers without at the same time
receiving instructions as to the allocation of such amounts to the
participants individual accounts. Some commenters also stated that
investment vehicles would not be willing to accept participant
contributions more frequently than once a month, even with appropriate
individual participant data, without increased charges. In addition,
some commenters stated that the proposal would present particular
problems for plans that have participant accounts valued on a daily
basis.
Smaller employers represented that they use outside service
providers to assist in plan management. For such employers, participant
contribution data is transmitted to the service provider and then back
to the employer as part of the reconciliation process before the
contributions are transmitted to the plan. It was also represented that
many smaller employers handle their own payroll and participant
contribution processing but lack sophisticated automation systems for
this work. It was represented that, because of these factors, many
smaller employers would
[[Page 41222]]
have difficulty meeting the outside limits set forth in the proposed
rule.
A few very large companies with sophisticated computer payroll
systems indicated that they could comply with the proposed regulation.
Many large companies, however, especially those with employees at
various locations and decentralized payroll systems, represented that
additional time is needed for processing payroll information from
different locations. One commenter pointed out that the deposit
schedules in the proposal would present difficulties for companies that
are members of control groups. Employers which have multiple payrolls
with varying cut-off dates stated that the proposal would seriously
increase their costs. For such employers, the proposed rule would
impede the more economical consolidation of contribution data from
different payrolls into large batches for processing. Instead, it would
require the processing of smaller amounts of data on an almost
continuous basis.
Employers who must comply with the ``next banking day'' rule for
deposits of withheld income taxes and employment taxes informed the
Department that the proposed rule would not be administratively
feasible because the transmission of participant contributions is far
more labor intensive and time consuming than the deposit of payroll
taxes. Moreover, some employers may become subject to this special
deposit rule only when they have unusually large payrolls, such as when
they pay large bonuses to employees.
Many commenters recognized that participant contributions could be
segregated quickly and frequently into a trust established to
temporarily hold participant contributions until they could be
reconciled in a more practical and less costly manner. Some of these
commenters, however, represented that the costs of establishing and
administering a separate trust would be considerable, outweighing any
additional earnings gained from using a trust, and would not be
justified by the additional benefits they might produce.3 Some
commenters provided calculations to support their claim that any
additional earnings derived from more frequent deposits of participant
contributions, either to individual accounts or to a holding trust,
would be more than offset by the increased attendant expenses.
---------------------------------------------------------------------------
\3\ Some commenters assume that such earnings must be allocated
to the participants' individual accounts. This is not necessarily
so. A plan may provide that the earnings will be used to defray
reasonable plan expenses.
---------------------------------------------------------------------------
Some commenters expressed concern that fiduciaries of participant
directed plans designed in accordance with the Department's regulations
at 29 CFR 2550.404c-1 would not be relieved of liability under ERISA
section 404(c) for management of money deposited in these separate
holding trusts. The commenters stated that requiring plan fiduciaries
to manage assets of such plans is contrary to the purpose of plans
designed to comply with section 404(c), which is to permit the
participants to exercise control over the assets allocated to their
individual accounts.
3. Comments Relating to Welfare Plans
A number of commenters recommended that the 1988 regulation remain
unchanged as applied to assets of employee welfare benefit plans.
Others proposed that participant contributions to welfare plans not be
treated as plan assets unless the contributions are deposited with a
trust. According to these commenters, welfare plan participants would
derive very little benefit from application of the proposed regulation
to their contributions because participant contributions to most
welfare plans, particularly health benefit plans, are not meant to be
invested, but are used to purchase coverage (such as medical or
disability coverage or life insurance) for a given period of time,
either directly from the employer in the self-insured context, or
through a state-regulated insurer. For such plans, the commenters
argued, there is no need to determine when or if participant
contributions become plan assets because the coverage is immediately
available to the participant and all the assets of the employer or of
the insurer are available for the payment of the benefits under the
plan. Several commenters also maintained that for many welfare plans,
especially health benefit plans, the participant contributions merely
reimburse the employer for expenditures on benefits or premiums that
the employer has already made.
The Department does not agree that the concept of participant
contributions becoming plan assets as soon as they can reasonably be
segregated from the employer's general assets has no relevance to
welfare plans. In the view of the Department, employees who agree to
deductions from their wages for contributions to a plan are entitled to
have the assurance that when the employer decides to purchase an
insurance policy or medical services for the plan, it is acting as a
fiduciary of the plan and is governed by the fiduciary standards of
ERISA in so doing. The fact that the participant contributions may be
used to repay an employer for advancing funds for the plan's expenses
does not, in the view of the Department, change the character of the
participant contributions. Moreover, if participant contributions to a
welfare plan are not promptly devoted to benefits and expenses, the
prudence and exclusive purpose requirements of ERISA may require that
the contributions be invested.
In addition, the Department, in issuing the proposed regulations,
did not contemplate a change in the general rule that participant
contributions to pension and welfare plans become plan assets as of the
earliest date on which they can reasonably be segregated from the
employer's general assets. Nor were comments solicited on alternatives
to the general rule. A change in the general rule is thus beyond the
scope of this rulemaking. The Department, however, does not believe
that the record is sufficient to support a change in the maximum time
period for welfare plans. As a result, the Department has determined
not to change the current maximum period of 90 days with respect to
welfare plans.
The Department has recognized that for cafeteria plans and certain
other types of welfare plans, the trust and certain reporting
requirements of ERISA present special burdens. As a result, the
Secretary issued a technical release, T.R. 92-01, which provides that
the Department will not assert a violation of the trust or certain
reporting requirements in any enforcement proceeding, or assess a civil
penalty for certain reporting violations involving such plans solely
because of a failure to hold participant contributions in trust. 57 FR
23272 (June 2, 1992); 58 FR 45359 (Aug. 27, 1993). Several commenters
sought assurance that the promulgation of this regulation does not
affect the continued validity of the technical release. The Department
wishes to provide such assurance. T.R. 92-01 is not affected by the
final regulation contained in this document, and remains in effect
until further notice.
COBRA payments were the subject of a number of comments.4 The
record indicates that participants and beneficiaries generally make
COBRA payments in the form of separate checks, usually made out to the
employer, and which arrive at different
[[Page 41223]]
times over the course of each month. Commenters stated that such
payments contain a high rate of errors and that the reconciliation
process regarding eligibility and amount is time consuming. One
commenter alleged that welfare plans that use third party service
providers to receive and aggregate participant contributions, including
COBRA payments, before they are applied to plan purposes need a minimum
of 45 days before the participant contributions should be treated as
plan assets. Because the Department has determined not to change the
existing regulation as it applies to welfare benefit plans, the
Department has determined not to create a special rule for COBRA
payments or for welfare plans that use a third party service provider
to receive participant contributions.
---------------------------------------------------------------------------
\4\ COBRA payments are made for continuation of coverage under
certain group health plans pursuant to provisions of ERISA and the
Internal Revenue Code that were enacted as part of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA).
---------------------------------------------------------------------------
With regard to the continued application of T.R. 92-01, some
commenters questioned whether the technical release extended relief to
plans which receive COBRA contributions. It is the view of the
Department that the mere receipt of COBRA contributions or other after-
tax participant contributions (e.g., retiree contributions) by a
cafeteria plan would not by itself affect the availability of the
relief provided for cafeteria plans in the technical release.
Similarly, in the case of other contributory welfare plans, the mere
receipt of after-tax contributions by a plan would not affect the
availability of relief under the technical release provided that such
contributions are applied only to the payment of premiums in a manner
consistent with 29 CFR 2520.104-20(b)(2)(ii) or (iii) or 2520.104-
44(b)(1)(ii) or (iii).
4. The Final Regulation
After consideration of the comments and hearing testimony, the
Department has decided to modify the outside limit set forth in the
proposal. Under the final regulation, the general rule of the 1988
regulation remains unchanged for both pension and welfare benefit
plans: The assets of a plan include amounts paid by a participant or
withheld by an employer from a participant's wages as of the earliest
date on which such contributions can reasonably be segregated from the
employer's general assets. The final rule changes only the outer limit
beyond which participant contributions to employee pension benefit
plans become plan assets. The 1988 regulation had an outer limit of 90
days from the date of withholding from a participant's wages or from
the payment of the contribution by the participant to the employer. The
final regulation has an outer limit for pension benefit plans of the
15th business day of the month immediately following the month in which
the participant contributions are received by the employer (in the case
of amounts that a participant or beneficiary pays to an employer) or
the 15th business day of the month following the month in which such
amounts would otherwise have been payable to the participant in cash
(in the case of amounts withheld by an employer from a participant's
wages). Under the final rule the outside limit for welfare benefit
plans is the same time period as in the 1988 regulations, 90 days from
the date of the employer's withholding or receipt of the participant
contributions.
Substantially all of the commenters who addressed the issue
advocated a uniform maximum time period for all employers, large and
small. The maximum period for pension benefit plans contained in the
final regulation is slightly longer than the alternative by far the
most often proposed by commenters, which was 15 days after the end of
the month in which the participant contributions were received. Comment
letters received from a wide range of employers, third party
administrators, trustees and investment vehicles for plans indicated
that a 15 day rule would not impose undue costs or burdens, or
otherwise require them to change their current processes for handling
participant contributions. A comment recommended that the number of
days be measured in business days rather than calendar days. Because
the Department realizes that, for many employers, holidays and weekends
reduce the total number of days in which employers can perform the
functions necessary to segregate participant contributions from their
general assets in an orderly and cost efficient manner, the Department
has decided to adopt a maximum period measured by business days rather
than calendar days (i.e., excluding Saturdays, Sundays and national
legal holidays).
The final rule for pension benefit plans accommodates employers who
are unable reasonably to segregate participant contributions from their
general assets more frequently than in what appears to be a fairly
standard monthly processing cycle for participant contributions to
pension plans. The new rule thus should not increase the costs and
burdens for the great majority of employers who sponsor pension benefit
plans. In addition, as requested by most commenters, the rule would
apply to all such employers, regardless of size, and would simplify the
compliance monitoring function performed by service providers and the
Department.
At the same time, the final rule significantly reduces the maximum
period during which participant contributions to pension benefit plans
may be treated as other than plan assets (assuming that the participant
contributions could not reasonably be segregated from the employer's
general assets in a shorter time). Under the final rule, the maximum
period in which employers could commingle participant contributions to
pension benefit plans with their general assets would average about 35
days and would be no more than 52 days. Thus, in comparison to the 1988
regulation, the final rule enhances the security of employee retirement
benefits that are funded in whole or in part through participant
contributions.
The final rule does not change the requirement of the 1988 rule
that participant contributions become plan assets as of the earliest
date that they can reasonably be segregated from the employer's general
assets. Under the final rule this general requirement remains
applicable to both pension and welfare benefit plans. The final rule
also retains the emphasis of the proposed rule that the maximum period
does not operate as a safe harbor for either pension or welfare benefit
plans. As a result, for many plans, participant contributions will
become plan assets well in advance of the applicable maximum period.
Although the Department believes that the final regulation
establishes a maximum period that is sufficiently long to accommodate
the needs of employers that sponsor pension plans, employers who are
complying with the general rule, on occasion, may be unable to transmit
participant contributions to the plan within the maximum period. To
accommodate such a situation, the regulation includes a procedure for
an employer to extend the maximum period for an additional 10 business
days with respect to participant contributions for a single month.
Under this procedure, the employer must provide a true and accurate
written notice to the participants that the employer has elected to
take advantage of this extension period for the month. The notice must
also state the reasons why the employer cannot reasonably segregate the
participant contributions within the maximum time period for pension
plans, and state that the participant contributions in question have in
fact been transmitted to the plan and provide the date of such
transmission. The notice must be provided within 5 business days after
the end of the extension period. In addition, the employer must have
[[Page 41224]]
obtained, prior to the beginning of the extension period a performance
bond or irrevocable letter of credit in favor of the plan. Within 5
business days after the end of the extension period, a copy of the
notice provided to the participants must also be provided to the
Secretary along with a certification that the notice was distributed to
the participants and that the bond was obtained.5
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\5\ Such copy shall be addressed to: Participant Contribution
Regulation Extension Notification, Office of Enforcement, Pension
and Welfare Benefits Administration, U.S. Department of Labor, 200
Constitution Ave., NW., Washington, DC 20210.
---------------------------------------------------------------------------
The amount of the bond or letter of credit must be not less than
the amount of the participant contributions received or withheld by the
employer during the previous month. The Department is concerned that in
some cases, the reasons prompting the employer to elect an extension
under this procedure may recur in the immediately following months and,
if so, might put the participant contributions at risk of loss. In
addition, because the extensions will not be subject to prior approval
by the Department, the Department has determined that the bond or
letter of credit must remain in effect for at least three months
following the month in which the extension period expires in order to
give the Department sufficient time to confirm that the participant
contributions were actually transmitted to the plan as represented in
the notice.
The regulation provides that an employer may not elect an extension
under this procedure more than twice in any plan year, unless the
employer pays to the plan an amount representing interest on the
participant contributions that were subject to all the extensions
within the plan year. The interest amount is to be measured by the
greater of (1) the amount that the participant contributions would
otherwise have earned from the date of withholding or receipt by the
employer until the date of transmission to the plan if the
contributions had been invested during such period in the investment
alternative available under the plan which had the highest rate of
return, or (2) the underpayment rate defined in section 6621(a)(2) of
the Internal Revenue Code applied to such period.
The Department emphasizes that the extension procedure is available
only to extend the maximum period and has no effect on the employer's
obligation to comply with the general rule that participant
contributions become plan assets as soon as they can reasonably be
segregated from the employer's general assets. The Department also
notes that this extension procedure applies only with respect to
participant contributions to pension plans; it does not apply with
respect to participant contributions to welfare plans.
5. Comments Recommending Alternative Approaches
a. Other Maximum Time Periods
Many commenters recommended other maximum time periods. One
commenter recommended a maximum period of the 25th day of the month
following the month in which the employer withheld or received the
participant contributions. A significant number recommended that the
maximum period be the 30th day of the month following the month in
which the employer withheld or received the participant contributions.
A few recommended a maximum period of 60 days after the date of
withholding or receipt by the employer. Others suggested a maximum
period of 45 days after the date of withholding or receipt. Several
commenters recommended maximum time periods of less than 15 days after
participant contributions were withheld or received by the employer.
Nearly all employers who make monthly transmissions of participant
contributions to plans and who provided information concerning their
current practices indicated that they transmit participant
contributions to plans within several days after the end of the month
in which the participant contributions are withheld or received.
The final rule, which provides a maximum period of 15 business days
after the end of the month in which the employer withheld or received
the participant contributions for pension plans, provides additional
time for the resolution of errors or for other unforeseen delays. In
light of the above, the Department believes that the final regulation
provides a sufficient maximum time for employers who are not able
reasonably to segregate participant contributions from their general
assets and transmit them to pension plans more often than once a month.
b. Extended Maximum Time Periods When There is a Change in Trustees
Some commenters recommended that the Department provide an extended
maximum period for situations where the employer changes recordkeepers
or plan trustees for section 401(k) plans. One recommended that the
maximum period in this situation should be the end of the third month
following withholding of the participant contributions. Another
commenter suggested that a rule allowing a maximum period ending on the
last day of the month following the month in which the contribution is
made would accommodate this situation. According to these commenters,
additional time is often needed to accomplish a smooth changeover of
recordkeeping and trustee functions from one party to another. The
commenters, however, did not provide any detailed information as to why
participant contributions could not be directed to one trust or the
other during this time period. The final regulation does not contain an
extended maximum period for special situations. The Department
recognizes that a change in trustees or funds for a section 401(k) plan
may require a period during which the outgoing fund or trustee cannot
accept contributions and the participants are unable to direct changes
in investment choices or contribution amounts. The Department, however,
believes participant contributions should be transmittable to the new
fund or trustee within the maximum time provided. In the Department's
view, a change in recordkeepers or other service providers to a plan
should not affect the maximum allowable period before participant
contributions become plan assets. In addition, the extension procedure
would be available to an employer who was complying with the general
rule but, due to a change of trustees, needed a brief extension of the
maximum period.
c. Administrative Waivers
Other commenters suggested that, in the event that the regulation
provided a maximum period of less than 30 days after the end of the
month in which the contribution is received, the Department should
provide a procedure for obtaining waivers of the maximum period. These
comments fall into two categories. The first category of comments
asserts that certain employers may not be able to segregate participant
contributions within the outside time limitation for reasons unique to
the company, but the employer is nonetheless transmitting participant
contributions to the plan as soon as they may reasonably be segregated
from the employer's general assets and should be able to petition the
Department for a waiver of the limitation. The second category of
comments asserts that employers who would ordinarily remit participant
contributions to the plan within the maximum period may sometimes miss
the limit because they are changing trustees, or because of other
factors, such as computer failures, erratic mail delivery, and employee
illness.
[[Page 41225]]
With respect to the first category of comments, the Department
believes that it has provided a sufficiently delayed effective date to
enable the small percentage of employers who cannot currently transmit
participant contributions to pension plans within 15 business days
after the end of the month in which the employer received the
contribution to change their practices to come into conformity with the
regulation without incurring undue expense. Nevertheless, as described
in the discussion of the effective date, the final regulation includes
a procedure by which an employer who is complying with the general rule
may obtain a postponement of the application of the maximum period for
pension plans for up to 90 additional days beyond the effective date.
This optional postponement will allow such employers additional time to
make necessary changes in their operations to be able to comply with
the final rule.
With respect to the second category of comments, the Department
believes that the maximum period established by the final regulation is
sufficiently long to accommodate most unanticipated events.6 With
respect to events beyond the control of the employer, the Department
notes that a predicate for a prohibited transaction under section
406(a) is that the fiduciary cause the plan to engage in the prohibited
transaction in question. Therefore, if the event giving rise to the
delay in segregating participant contributions is, in fact, beyond the
control of the employer, there would be no prohibited transaction under
section 406(a). Nevertheless, as explained more fully above, in the
discussion of the final regulation, the Department decided to provide a
procedure by which an employer who was complying with the general rule
may, on occasion, obtain a brief extension of the maximum time period
for pension plans.
---------------------------------------------------------------------------
\6\ Where, for example, an employer mails a check to the plan,
the Department is of the view that the employer has segregated
participant contributions from plan assets on the day the check is
mailed to the plan, provided that the check clears the bank.
---------------------------------------------------------------------------
d. Special Rule for Simplified Employee Pensions
Two commenters stated that the proposed rule was particularly
inappropriate as applied to simplified employee pensions that allow
participants to elect salary reduction contributions. Although such
plans are available only to employers with less than 26 employees, the
commenters maintained that many sponsors of SEPs would be semi-weekly
depositors. According to these comments, some SEPs allow participants
to designate their own custodians and the sponsor must make separate
payments to the custodian for each participant's account. The comments
state that the amount deferred for a given pay period is often very
small, and may well be less than the minimum deposit amount permitted
by the custodian. One of these commenters recommended that, for SEPs,
the time period should be 15 days from the earlier of (1) any pay
period in which the largest single accumulated participant contribution
exceeded $1,000, (2) the earliest date on which the total of all
accumulated participant contributions exceeded $5,000, or (3) two
months from the last contribution.
The Department has determined not to create a special rule for
SEPs. The great majority of commenters, including third party
fiduciaries, stated that it is important to have a single rule for all
employers. The final rule would permit sponsors of SEPs to remit
participant contributions as infrequently as once a month, if
necessary. This should allow the remission of amounts sufficiently
large to be accepted by custodians of SEPs.
e. Maintain the 90 day Maximum Time Period
Some commenters expressed the opinion that the 1988 regulation
should remain unchanged. Many of these commenters stated that the
abuses against which the proposed regulation is directed could be
better addressed by non-regulatory measures. Foremost among such
recommended measures was stricter enforcement efforts to identify and
correct violations. Given the Department's broad enforcement
responsibilities, the Department has concluded it would not be
practical to rely entirely on enforcement efforts to address the abuses
at issue here. The Department seeks, by reducing the maximum period
during which participant contributions may be treated as other than
plan assets, to reduce the amount of participant contributions that are
at risk because they have not yet been deposited in trust. Participant
contributions which have not been transmitted to a pension plan run two
types of risk: interest lost due to delay in depositing contributions,
and loss of the contributions themselves if the employer becomes
bankrupt. These risks may result in sizeable losses. Through July 1,
1996, the Department's enforcement actions against 401(k) plan sponsors
have retrieved $10.01 million in plan assets on behalf of participants
and beneficiaries. While the Department's non-regulatory efforts have
made a difference in the safeguarding of pension plans, the growth in
the number of plans with participant contributions (including 401(k)
plans) has made it infeasible, given the scarcity of Departmental
resources, to audit or advise every plan that warrants correction. In
these circumstances, the Department believes that publishing new
guidelines is the appropriate and efficient method of improving pension
safety.
Other commenters suggested that improving disclosure of information
to participants would obviate the need for a shorter maximum period by
allowing participants to better monitor their employer's handling of
participant contributions. The Department believes that the
establishment of meaningful and timely disclosure requirements in this
area would require legislative changes to ERISA. Furthermore, imposing
such requirements on employers or plans may impose a burden on them,
particularly with respect to small plans that do not use third party
administrators already offering this disclosure. The Department
considered a suggestion that it offer enhanced disclosure as an option
for smaller plans who could not reasonably segregate plan assets within
the maximum period in the final regulation, but concluded that such an
option may be costly for employers and plans and could be difficult to
administer.
As described above, however, the Department has determined not to
change the maximum 90 day period with respect to participant
contributions to welfare benefit plans.
6. Other Comments
a. Comments Relating to General Rule
Several commentators suggested that the existing rule that amounts
that a participant or beneficiary pays to a plan or has withheld from
his wages by an employer for contribution to a plan become plan assets
as of the earliest date on which such amounts can reasonably be
segregated from the employer's general assets be replaced by a fixed
time safe harbor. Others suggested that the existing rule be replaced
by a rule that such amounts become plan assets as of the earliest date
that it would be administratively feasible to transmit the assets to
the plan.
The rationale generally set forth by the commenters for proposing
the elimination of the rule that participant contributions become plan
assets as of the earliest date on which they can reasonably be
segregated from the employer's general assets is that it is difficult
to determine with exactitude as to when that date is and that the rule,
[[Page 41226]]
if it means that participant contributions become plan assets as soon
as they can be mechanically segregated from the employer's general
assets, is costly and burdensome. The commenters who advocated changing
the rule to state that participant contributions become plan assets as
of the earliest date that it would be administratively feasible to
transmit such contributions to the plan also appear to be reading the
existing rule as meaning that participant contributions become plan
assets as soon as they can be mechanically segregated from the
employer's general assets.
After consideration of these comments, the Department has
determined not to change the existing general rule. As indicated in the
preamble to the proposed regulation, the Department did not propose to
change the existing rule. The test remains as stated in the preamble to
the 1988 regulation:
The revised general rule relating to participant contributions
is intended to reflect a balancing of the costs of promptly
transmitting such contributions to the plan relative to the
protections provided to participants by such transfers. In
formulating the final regulation, the Department has attempted to
remain consistent with one of the key purposes of the trust
requirement of section 403(a) of ERISA--the segregation of plan
assets so as to prevent commingling of such assets with an
employer's own property.
The regulation is not intended, however, to allow employers to
use participant contributions for their own purposes. The Department
is concerned that participant contributions be paid promptly into
the plan so as to begin earning interest or other investment return
and to be available for the payment of benefits. Employers should
examine their current payroll procedures to ascertain whether they
are indeed transmitting participant contribution amounts at the
earliest reasonable time. (53 FR 17629, May 17, 1988)
b. Comments Relating to Fiduciary Duties
Several commenters urged that the Department indicate its position
with respect to the fiduciary duties of the institutional trustee which
receives contributions. They stated that, typically, the standard form
of trust agreement provides that the trustee is accountable only for
funds actually deposited and that, in their view, the trustee has no
obligation to collect contributions. One commenter acknowledged that
while the institutional trustee which receives contributions does not
have any primary duty to enforce payment of contributions, section
405(a)(3) of ERISA imposes a fiduciary duty to remedy the breaches of
other fiduciaries of which it has knowledge, but stated that a trustee
would not necessarily have sufficient information to determine when
there has been such a breach with respect to timely deposit of employee
contributions. Finally, one commenter who receives employee
contributions from many sponsors of 401(k) plans stated its belief that
``each service provider has a fiduciary responsibility to plan
participants to blow the whistle on the abusers,'' and stated that its
service agreement ``specifies that we will contact the Department of
Labor if contributions are not made at least once a month.''
Although it is the view of the Department that the plan sponsor
(usually the employer) is primarily responsible for assuring that
participant contributions are transmitted to the trustee in a timely
manner, section 405(a)(3) would impose a fiduciary duty on plan
trustees in certain circumstances.7 Delineating those
circumstances is beyond the scope of this rulemaking.
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\7\ For the Department's views of the obligations imposed on a
fiduciary by section 405(a)(3) in another situation, see 29 CFR
2509.75-5, Q&A FR-10.
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c. Partnerships
Two comments were received relating to when contributions by
partners to section 401(k) plans become plan assets. The letters
represent that, under 26 CFR 1.401(k)-1(a)(6)(ii), a partner's
compensation is deemed currently available on the last day of the
taxable year, and an individual partner must make an election by the
last day of the year. They ask when the monies, which otherwise would
be paid to a partner, but for the partner's election, become plan
assets, inasmuch as partners do not receive wages. In the view of the
Department, the monies which are to go to a section 401(k) plan by
virtue of a partner's election become plan assets at the earliest date
they can reasonably be segregated from the partnership's general assets
after those monies would otherwise have been distributed to the
partner, but no later than 15 business days after the month in which
those monies would, but for the election, have been distributed to the
partner.
d. Bankruptcy Laws
Two commenters recommended that the Department seek to have the
bankruptcy laws amended to provide a preference for participant
contributions commingled with the employer's general assets. One
commenter stated that such contributions should be elevated to the same
priority as earned payroll. Because such a change cannot be
accomplished through the Department's regulatory authority, these
recommendations are beyond the scope of this rulemaking.
e. Participant Loans
Clarification was requested from a commenter that the time periods
applicable to determining when participant contributions become plan
assets also apply to determining when repayments of participant loans
that are withheld or received by the employer become plan assets.
Another commenter stated that monies withheld for repayment of
participant loans should be afforded at least 90 days after withholding
because many plans provide for quarterly repayment of loans.
The question of when participant loan repayments become plan assets
is beyond the scope of this rulemaking. The notice of proposed
rulemaking did not solicit comments on this matter. The record is
insufficient for the Department to address this matter in the final
regulation. In the Department's view, however, employers should
promptly transmit participant loan repayments to plans. An employer's
failure to transmit loan payments within a reasonable time after
withholding or receiving them could subject the employer to liability
for violations of the same provisions of ERISA and criminal law that
are violated when an employer is delinquent in forwarding participant
contributions to plans.
f. Bonding
Several commenters suggested that many of the problems with which
the Department is concerned could be addressed by requiring that the
withheld wages and participant contributions be covered by ERISA's
bonding requirements prior to their transmittal to the plan. While this
suggestion may have some merit with respect to safeguarding participant
contributions from losses due to acts of fraud and dishonesty, it would
not protect against participant contribution losses where fraud or
dishonesty could not be shown. This is because the bond required under
section 412 of ERISA (29 U.S.C. 1112) protects the plan only against
acts of fraud or dishonesty. However, participant losses due to an
employer's failure to quickly segregate participant contributions arise
from numerous causes, of which provable acts of fraud or dishonesty are
a relatively minor factor. In addition, it would require an amendment
to the Department's existing bonding
[[Page 41227]]
regulations,8 which currently require bonding with respect to
participant contributions made by withholding from employees' salaries
only at the point in time when they are segregated from the employer's
general assets within the meaning of 29 CFR 2580.412-5. Such an
amendment is beyond the scope of this regulation.9
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\8\ See 29 CFR 2580.412.
\9\ T.R. 92-1 does not extend to the enforcement of the bonding
requirements of ERISA.
---------------------------------------------------------------------------
g. Maritime Employers
Two commenters stated that the proposed regulation would present
particularly difficult compliance problems for maritime employers.
According to these commenters, participant contributions for 401(k)
plans in this industry are commonly not transmitted to the plan until
the end of the voyage in which the participant earned the amount of the
contribution. Such voyages may last several months. The comments did
not focus on when wages are withheld for transmission to the plan. If
the wages are not withheld until the end of the voyage, the maximum
period within which the withheld wages must be transmitted would begin
at the end of the voyage. If the wages were withheld during the course
of the voyage, the Department does not perceive any reason why the
employer cannot remit such withheld wages to the plan within the same
maximum period as any other employer.
h. Multiemployer Plans
Several commenters argued that, because of the unique nature of
multiemployer plans, in that the plan trustees are independent of any
individual employer, the regulation should either entirely exempt
elective contributions to multiemployer plans from its provisions or
exempt such contributions from the maximum period provision. The
commenters noted, however, that the collective bargaining agreements
governing most multiemployer plans provide for transmittal of such
contributions from the employer to the plan within a fixed period,
typically between 10 and 20 days after the month in which such
contributions are made. The Department determined that the maximum time
period for pension plans in the final regulation was sufficient to
accommodate multiemployer plans and determined not to create a special
rule or exemption for multiemployer plans. At the same time, and as
more fully explained below in the discussion of the effective date, the
Department recognized that transmission of participant contributions
may be controlled by collective bargaining agreements and has addressed
the special nature of collectively bargained plans, including
multiemployer plans, in connection with the applicability of the new
maximum period for pension plans in the final regulation.
7. Dues Financed Plans
The final regulation leaves undisturbed the effect of the 1988
regulation on amounts paid to employee organizations as union dues. It
continues to be the Department's position that amounts paid as union
dues should not be characterized as participant contributions merely
because a portion of such dues might be used to provide benefits under
a welfare or pension plan sponsored by the employee organization.
8. Consequences of Treatment of Participant Contributions as Plan
Assets Before Transmission to the Plan Trustee
a. ERISA
Once participant contributions become plan assets, they become
subject to the trust requirements of ERISA section 403, 29 U.S.C. 1103.
Although ERISA section 403(b) contains a number of exceptions to the
trust requirement for certain types of assets, including assets which
consist of insurance contracts, and for certain types of plans,
participant contributions generally must be held in trust by one or
more trustees once they become plan assets. ERISA section 403(a), 29
U.S.C. 1103(a). Although the Secretary has authority, pursuant to ERISA
section 403(b)(4), to grant exemptions for welfare plans, including
health plans, from the trust requirements, this exemptive authority
does not extend to most pension benefit plans. As noted above, the
Secretary has issued a technical release, T.R. 92-01, which provides
that, with respect to certain welfare plans (e.g., cafeteria plans),
the Department will not assert a violation of the trust or certain
reporting requirements in any enforcement proceeding, or assess a civil
penalty for certain reporting violations, involving such plans solely
because of a failure to hold participant contributions in trust. 57 FR
23272 (June 2, 1992), 58 FR 45359 (Aug. 27, 1993). As a result, except
for plans which come within T.R. 92-01, an employer's failure to
transmit participant contributions to a plan trustee or investment
manager by the applicable period described in the final regulation may
subject the employer to liability under ERISA for failure to hold plan
assets in trust.
In addition, ERISA's fiduciary responsibility provisions apply to
the management of plan assets. An employer who retains plan assets
commingled with its general assets would be exercising ``authority or
control respecting the management or disposition of [plan] assets'' and
would be a fiduciary with respect to those assets pursuant to ERISA
section 3(21)(A)(i). Among other things, ERISA's fiduciary
responsibility provisions make clear that the assets of a plan may not
inure to the benefit of any employer and shall be held for the
exclusive purpose of providing benefits to participants in the plan and
their beneficiaries, and defraying reasonable expenses of administering
the plan. ERISA sections 403-404, 29 U.S.C. 1103-1104. Fiduciaries who
violate these provisions are personally liable to the plan to, among
other things, make good losses resulting from such violations and to
restore to the plan any profits of such fiduciary which have been
gained through the use of plan assets. ERISA section 409(a), 29 U.S.C.
1109(a).
ERISA's fiduciary responsibility provisions also prohibit certain
transactions involving plan assets. ERISA sections 406-407, 29 U.S.C.
1106-1107. In particular, ERISA section 406(a)(1)(D), 29 U.S.C.
1106(a)(1)(D), provides that a plan fiduciary shall not cause the plan
to engage in a transaction if he knows or should know that such
transaction constitutes a direct or indirect transfer to, or use by, or
for the benefit of a party in interest of any assets of the plan. The
employer of employees covered by the plan is a party in interest with
respect to the plan. ERISA section 3(14)(C), 29 U.S.C. 1002(14)(C).
Violations of ERISA's prohibited transaction provisions subject the
fiduciaries and parties in interest to liability for the plan's losses
and other relief. In the case of pension plans qualified under the
Code, the parties in interest (referred to as disqualified persons) are
subject to excise taxes under IRC section 4975. In the case of other
employee benefit plans, particularly welfare plans, the parties in
interest are subject to civil penalties under ERISA section 502(i), 29
U.S.C. 1132(i).
b. Criminal Law
As was noted in the preamble to the final regulation published in
1988, the Department of Justice takes the position that, under 18
U.S.C. 664, the embezzlement, conversion, abstraction, or stealing of
``any of the moneys, funds, securities, premiums, credits, property, or
other assets of any employee welfare
[[Page 41228]]
benefit plan or employee pension benefit plan, or any fund connected
therewith'' is a criminal offense, and that under such language,
criminal prosecution may go forward in situations in which the
participant contribution is not a plan asset for purposes of title I of
ERISA. As with the 1988 regulation, the final regulation defines when
participant contributions become ``plan assets'' only for the purposes
of title I of ERISA and the related prohibited transaction excise tax
provisions of the Internal Revenue Code. The Department reiterates that
this regulation may not be relied upon to bar criminal prosecutions
pursuant to 18 U.S.C. 664.
Similarly, State criminal laws may apply when an employer converts
participant contributions to the plan to the employer's own use.
Although the provisions of ERISA generally supersede State laws that
relate to employee benefit plans covered by title I of ERISA, generally
applicable State criminal laws are not preempted. ERISA section
514(b)(4), 29 U.S.C. 1144(b)(4). This regulation may not be relied upon
to bar criminal prosecutions under such generally applicable State
laws.
9. Effective Date of the Final Regulation
The effective date of this regulation is February 3, 1997. The
Department received relatively few comments addressing the
appropriateness of the proposed delayed effective date of 60 days after
the adoption of the final regulation, although the Department
specifically requested comments on this matter. Of those comments
received, the bulk of the comments addressing the effective date
recommended a one year delay if the proposed regulation was adopted
without significant change as a final rule, although several
organizations serving 401(k) plans indicated that a 180-day period
would not be inappropriate. However, most of the comments and hearing
testimony indicated that there would be little or no difficulty for the
vast majority of employers to meet the maximum period adopted in the
final rule for participant contributions to 401(k) plans. Some
commenters stated that while only a small percentage of employers would
have difficulty meeting the maximum period adopted in the final rule,
they would need a full year to change their processing systems.
The Department believes that the effective date for the regulation
has been sufficiently delayed to accommodate the needs of those
employers who will need to make significant changes in their payroll or
other systems in order to comply with the final regulation.
Nevertheless, the Department has determined to provide a procedure to
allow employers who are complying with the 1988 regulation to obtain up
to an additional 90 days postponement of the application of the new
maximum period for pension plans. Under this procedure, prior to the
effective date of the regulation, an employer must provide a true and
accurate written notice to the participants that the employer has
elected to postpone the application of the new maximum period for
pension plans, and providing the date that the postponement will
expire. The notice must also describe the reasons why the employer
cannot reasonably segregate the participant contributions within the
maximum time period for pension plans.
At the same time, the employer must obtain a performance bond or
irrevocable letter of credit in favor of the plan in an amount not less
than the total participant contributions withheld or received by the
employer during the previous three months. The bond or letter of credit
must be guaranteed by a government supervised bank or similar
institution. The Department is concerned that in some cases, the
reasons prompting the employer to elect a postponement under this
procedure may recur in the immediately following months and, if so,
might put the participant contributions at risk of loss. Because the
postponements will not be subject to prior approval by the Department,
the Department has also determined that the bond or letter of credit
must remain in effect for at least three months following the month in
which the postponement expires. A copy of the notice provided to the
participants must also be provided to the Secretary along with a
certification that the notice was distributed to the participants and
that the bond was obtained.10
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\10\ Such copy shall be addressed to: Participant Contribution
Regulation Extension Notification, Office of Enforcement, Pension
and Welfare Benefits Administration, U.S. Department of Labor, 200
Constitution Ave., N.W., Washington, DC 20210.
---------------------------------------------------------------------------
Finally, for each month in which the postponement is in effect, the
employer must provide a true and accurate notice to the participants
stating the date on which participant contributions received or
withheld by the employer during that month were transmitted to the
plan. This notice must be distributed so as to reach the participants
within 10 days after the transmission. While the postponement is in
effect with respect to a particular plan, the participant contributions
to the plan will be subject to the same maximum period under the final
regulation that applies to employee welfare benefit plans.
Many commenters representing organized labor and employer
organizations pointed out that a rule requiring a change in a provision
governed by a collectively bargained plan may require renegotiation of
the collective bargaining agreement. These commenters also noted that
the drafters of ERISA recognized the special needs of collectively
bargained plans by providing special effective dates for collectively
bargained plans with respect to ERISA's participation, vesting and
funding provisions.11 They asked that the Department provide a
special postponement of the application of the maximum period for
collectively bargained plans. The Department believes that the comments
have merit and has provided for a postponement of the application to
collectively bargained plans of the new maximum period for pension
plans. Under the final regulation, the maximum period for pension plans
does not apply to collectively bargained plans until the later of (1)
the effective date or (2) the first day of the plan year that begins
after the expiration of the last to expire of any applicable bargaining
agreement in effect when the final regulation is issued. During this
period of postponement of applicability, the maximum period for welfare
plans in the final regulation will apply to collectively bargained
plans.
---------------------------------------------------------------------------
\11\ See ERISA sections 211(c)(1) and 308(c)(1), (29 U.S.C. sec.
1061(c)(1) and 1086(c)(1)).
---------------------------------------------------------------------------
Economic Analysis Conducted in Accordance With Executive Order 12866
and OMB Guidelines
Under Executive Order 12866 (58 FR 51735, Oct. 4, 1993), the
Department must determine whether the regulatory action is
``significant'' and therefore subject to review by the Office of
Management and Budget (OMB) and the requirements of the Executive
Order. Under section 3(f), the order defines a ``significant regulatory
action'' as an action that is likely to result in, among other things,
a rule raising novel policy issues arising out of the President's
priorities. Pursuant to the terms of the Executive Order, the
Department has determined that this regulatory action is a
``significant regulatory action'' as that term is used in Executive
Order 12866 because the action would raise novel policy issues arising
out of the President's priorities. Thus, the Department believes this
notice is ``significant,'' and subject to OMB review on that basis.
[[Page 41229]]
Costs
In connection with the publication of the proposed regulation the
Department solicited comments on potential economic effects of the
proposed rule in the context of Executive Order 12866, and any evidence
with respect to whether or not the proposed rule might be
``economically significant.'' The Department received many comments
regarding the additional costs and burdens that would have attended the
proposed regulation. Some commenters asserted that there would be
increased costs but did not provide data and information to explain
their assertions. The Department assumed that the information provided
in the record by those who did set forth data is reflective of the
additional costs which others would incur.
The Department estimated compliance costs of the plan asset
regulation set forth in this notice by utilizing information placed in
the record and Departmental data on industry practices.12 Costs
are separated into initial costs and ongoing costs.13 Initial
costs represent up-front expenditures for plan revisions,
reprogramming, and other one-time costs; these costs were annualized
over a conservative estimate of the ``life'' of the regulation, 10
years, in order to show such costs on an annual basis. Ongoing
expenditures incurred annually include additional audits for those
plans which need to create supplemental trust accounts, and the cost of
performing administrative tasks more frequently. Total annualized
initial costs and ongoing costs were aggregated to estimate total
annual costs.
---------------------------------------------------------------------------
\12\ For the purposes of this analysis the Department referred
to data collected from the Form 5500, the annual return/report filed
by pension and welfare benefit plans. In addition, the analysis also
makes use of results of surveys on participant contribution plans
conducted by William M. Mercer, Incorporated, the Profit Sharing
Council of America, and Bankers Trust Company contained in the
record.
\13\ Costs are estimated based on information submitted to the
record both in the form of comment letters and testimony gathered at
the public hearing held on February 22 and 23, 1996.
---------------------------------------------------------------------------
The plan asset regulation as originally promulgated in 1988
provides that participant contributions become plan assets as soon as
they may reasonably be segregated from the employer's assets. The
regulation is now being modified to shorten the maximum length of time
employers would have to treat participant contributions to pension
plans as other than plan assets under Title I of ERISA from 90 days
after these contributions were withheld or submitted, to 15 business
days after the end of the month in which the contributions were
withheld or submitted. Therefore, the costs of this regulatory action
are limited to the costs associated with bringing into compliance those
employers that are not remitting participant contributions to pension
plans within 15 business days after the close of the month.14
---------------------------------------------------------------------------
\14\ The final rule does not change the requirement of the 1988
regulation that participant contributions become plan assets as of
the earliest date that they can reasonably be segregated from the
employer's general assets. The economic effects of these provisions
were accounted for in the issuance of the 1988 regulation.
Nevertheless, in estimating the economic effects of this regulation,
the Department has included the costs to plans which should have
been in compliance with the regulation as originally stated, as well
as with this revised regulation, but are not currently in compliance
because their administrators may have misunderstood the requirements
of the regulation as published in 1988.
---------------------------------------------------------------------------
Compliance costs were estimated using information from commenters
on current practices and analysis of Form 5500 annual report data to
develop an estimate of the number of plans out of compliance with the
revised regulation. The present value (using a 7 percent real discount
rate) of the cost of compliance expressed in constant 1995 dollars
ranges from $17 million for 1996 costs to $9 million for 2005 costs,
totalling $107 million over the 1996-2005 period, and with a value
expressed as a constant annuity of $15 million per year over ten years.
Comments and survey data in the record supplied information on how
different sponsors would have different burdens associated with coming
into compliance, reflecting different payroll practices. Many witnesses
testified that they would incur no additional burden if the standard
was revised to require deposit by the fifteenth day after the previous
month's end. Some testified that they would have to change their
payroll practices to come into compliance; others determined that they
would have to re
FR Doc. 96-19791 Regulation Relating to Definition of ``Plan Assets''Participant Contributions
design their payroll systems, or make use of a short-
term interest bearing trust. Comments and testimony were received
regarding financial institutions' practices, including fee structures;
information on compliance rates was taken from Form 5500 data, as
verified by survey data supplied in the record.15
---------------------------------------------------------------------------
\15\ The annual cost estimate is based on commenters' estimates
of $6,000-$10,000 per plan per year for those that will establish
and maintain a trust for holding participant contributions short
term, $4,000-$6,000 per plan that will modify its participant
contribution management systems to comply with the revised
regulation (a first year only cost), and $600 per plan per year for
those that will be required to increase the number of deposits of
participant contributions to come into compliance. Some plans that
already deposit on a monthly basis will have to accelerate their
deposit schedules to comply with the 15 business day rule, but will
not have to pay for additional transactions. The sources used were
comment letters or testimony from Bankers Trust Company, National
Fuel Gas Company, American Society of Pension Actuaries, Profit
Sharing Council of America, Louis Kravitz, Berry Petroleum, and
Southern Champion Tray Company.
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Data analysis indicated that approximately 15,000 (in 1996) to
27,000 (in 2005) contributory pension plans would need to take steps to
come into compliance with the new provisions on participant
contributions. Of an estimated 239,000 16 pension plans which
receive participant contributions, approximately 94 17 percent
already deposit participant contributions within 15 business days after
the end of the month in which contributions were withheld or paid.
---------------------------------------------------------------------------
\16\ Form 5500 data from 1992 (the most recent year for which
complete data is available) establishes that there are approximately
172,000 contributory pension plans subject to this regulation. Data
for 1989-1992 and preliminary data for 1993 show an average annual
increase of 22,000 in the number of contributory plans; assuming a
continuation of this rate of growth yields an estimate of 239,000
contributory plans subject to this regulation in 1995. Linear
extrapolation of this rate of growth yields an estimate of 461,000
plans in 2005.
\17\ This estimate is based on an analysis of Form 5500 data
utilizing 27,654 Form 5500 returns submitted for the 1992 plan year
by contributory plans, which showed 5% of large plans out of
compliance. Compliance rates of small plans were based on an
analysis of the behavior of the smallest Form 5500 filers; it is
estimated that 6% of small plans are out of compliance with the
revised regulation. This analysis represents the higher end of the
range of noncompliance rates based on survey data submitted by
commentators, none of which had a sample size of more than 317,
indicating a range of 2.5 to 8 percent of respondents are not in
compliance with contribution date limits in this regulation.
---------------------------------------------------------------------------
In addition to the annual costs quantified above, other
unquantified costs may be recognized by employers, plans and
participants. For example, certain employers or plans may be unable to
accommodate the changes required by this revised regulation, and
consequently may conceivably offer a different type of pension plan,
reduce the employer's contribution to the plan, or cease to offer any
plan. However, the marginal cost of complying with the final regulation
has not been conclusively shown to have a measurable effect on rates at
which employers establish or terminate plans.
Benefits
Wages which are withheld for contribution to a plan are regarded by
the Department as the property of the participant from the time when
they would otherwise be payable to the participant directly. Delays in
the transmittal of these funds into a trust result in lost earnings to
the participant. PWBA estimates that $82 million will be gained in 1997
by participants and beneficiaries through the increased
[[Page 41230]]
earnings by having their contributions placed in trust at an
accelerated rate.18 The present value (using a 7 percent real
discount rate) of the increased earnings on participant contributions
expressed in constant 1995 dollars ranges from $76 million in 1997 to
$69 million in 2005 totalling $661 million over the 1996-2005 period,
and with a 10-year annuitized value of $94 million.19 This
estimate of these savings to participants, which are a result of
earlier segregation, include what is effectively a transfer from
employers, some of whom are in full compliance with the 1988 regulation
and act properly under their fiduciary responsibilities.
---------------------------------------------------------------------------
\18\ This figure was reached by multiplying the additional
number of days funds will be in trust by the portion of the
estimated $63.7 billion (in 1997) in annual participant
contributions that would be deposited earlier by an annual rate of
return. A 2.1 percent annual real rate of return was used for
contributions deposited by those large plans which place funds in
short-term interest bearing trusts. A 10.1 percent real rate of
return was used for contributions deposited by the remainder of the
large plans and the small plans, representing an estimate of the
rate of return of 401(k) funds held in trust.
\19\ Although the Department expects plan sponsors to incur
costs in 1996 in anticipation of the final regulation's effective
date in 1997, the Department has assumed that no savings to
participants will accrue in 1996.
---------------------------------------------------------------------------
In addition, PWBA believes that the revised regulation will reduce
the likelihood that some participant contributions will be lost in
bankruptcy proceedings by being placed in trust sooner, which will put
these contributions out of reach of the sponsor's creditors,20
with an estimated annual savings, stated as a 10-year annuitized value,
to participants and beneficiaries of $4 million. Plans will receive
additional saving to participants through the reduced likelihood of
litigation (both from the Department and from private sources) due to
the shortened maximum time limit. Many other savings to participants
associated with the revised regulation, such as reduced anxiety among
participants, improved goodwill of employees toward the plan sponsors,
and increased pension savings rates, have not been quantified.
---------------------------------------------------------------------------
\20\ Several commenters recommended that the Bankruptcy Code be
amended to exclude participant contributions from the bankrupt
employer's estate. Such an amendment would require legislation and
is beyond the scope of this regulation.
---------------------------------------------------------------------------
Based on information submitted to the record and the Department's
data, the present value (using a 7 percent real discount rate) of the
quantified benefits expressed in constant 1995 dollars ranges from $79
million in 1997 to $71 million in 2005, totalling $686 million over the
1996-2005 period, and with a 10-year annuitized value of $98 million.
The present value (using a 7 percent real discount rate) of the net
savings to participants expressed in constant 1995 dollars ranges from
$69 million in 1997 to $62 million in 2005, totalling $579 million over
the 1996-2005 period, and with a 10-year annuitized value of $83
million.21 This projection of the net savings to participants
includes what is effectively a transfer from employers some of whom are
in full compliance with the 1988 regulation and act properly under
their fiduciary responsibilities.
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\21\ The costs and savings to participants resulting in the use
of the postponement of applicability and extension procedures are
not included here. It is expected that the incidence of utilization
of these procedures will be so minimal as to have no measurable or
material effect on aggregate costs and benefits.
---------------------------------------------------------------------------
Non-Regulatory Alternatives
The Department examined non-regulatory approaches for promoting the
prompt deposit of participant contributions into trust, including (1)
increased enforcement efforts by the Department, (2) issuance of non-
regulatory guidance, (3) educating participants on their rights, and
(4) seeking legislative guaranty of the protection of participant
contributions, as is done by the Pension Benefit Guaranty Corporation
for defined benefit plan assets. The increased enforcement approach
advocated by a number of comments is more fully addressed above in the
discussion of such comments.
Using its non-regulatory authority, the Department recently
announced a voluntary compliance program (61 FR 9203, March 7, 1996)
and a complementary class exemption (61 FR 9199, March 7, 1996) to
encourage plan sponsors who are delinquent in submitting participant
contributions to make their plans whole. This initiative, known as the
Pension Payback Program, is targeted at persons who failed to transfer
participant contributions to pension plans within the timeframes
mandated by regulation. Those who comply with this program will avoid
ERISA civil actions initiated by the Department, the assessment of
civil penalties under ERISA section 502(l), and related Federal
criminal prosecutions. The Department has received the cooperation of
the Department of Justice and the IRS in creating this program.
The Department has undertaken both an enforcement initiative and a
pension education campaign. One of the results of these two initiatives
was the demonstration of the need for a modified plan asset regulation.
An improved plan asset regulation will reduce the significant risk to
the pension assets of American workers caused by certain employers'
failure to modify their performance of their own accord. While most
plan sponsors have used technological improvements to accelerate the
date upon which participant contributions are placed in trust, the
failure of some plan sponsors to adopt improved industry procedures in
the years since the promulgation of the original plan asset regulation
has resulted in reduced retirement savings or actual losses for their
employees.22 While some elements of the 401(k) industry
voluntarily police employer transmittal of participant contributions
23, this appears to be rare, and thus fails to provide adequate
protection for employees' retirement contributions. Therefore, the
Department has determined that revision of the 1988 regulation is
necessary to provide greater protection against loss of pension income.
---------------------------------------------------------------------------
\22\ This is demonstrated by the interim results of the
enforcement initiative: over $10.01 million has been recovered for
contributory pension plans and their participants.
\23\ For example, a prominent third party administrator states
in its contract that it will notify the Department of Labor's
enforcement personnel should participant contributions become
overdue.
---------------------------------------------------------------------------
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires each
Federal agency to perform a Regulatory Flexibility Analysis for all
rules that are likely to have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, organizations, and governmental jurisdictions; under ERISA,
a ``small plan'' is one with less than 100 participants. ERISA section
104(a)(2), 29 U.S.C. 1024 (a)(2).
This notice describes the economic impact that the changes to the
existing regulation on participant contributions will have on small
entities. A summary of the analysis for this finding follows; these
points are explained in greater detail above:
(1) The Department is promulgating this regulation because it
believes that modifying the regulatory guidance in this area is
necessary to better protect the security of participant contributions
to pension benefit plans. Reducing the maximum period during which
participant contributions may be treated as other than plan assets is
expected to reduce the amount of plan contributions that are at risk
because they have not yet been deposited in trust. This regulation
preserves the existing rule that
[[Page 41231]]
participant contributions become plan assets as soon as they can
reasonably be segregated from the plan sponsor's general assets. Under
the 1998 regulation, this maximum period of time is 90 days from the
date of withholding from a participant's wages or from the payment of
the contribution by the participant to the employer; under the revised
regulation, this date is the 15th business day of the month following
the month in which the contribution would have been payable to the
participant. The revised regulation provides that the maximum time
period applicable for pension plans may be extended upon meeting
certain conditions specified in the regulation. The rule has not been
changed for welfare benefit plans.
(2) The proposed regulation requested comments on the initial
regulatory flexibility analysis and from small entities regarding what,
if any, special problems they anticipate they may encounter if the
proposal were to be adopted, and what changes, if any, could be made to
minimize these problems. In excess of half of the comments received
were received from small entities, their representatives, or businesses
that provide employee benefit services to small employers. Comments
received included concern about the increased administrative costs
associated with the need for an increased number of transactions, that
employers would respond to the increased costs by avoiding establishing
or terminating plans, and that costs would be passed on to employees.
Commenters also expressed concern that inaccuracies in the
reconciliation of accounts could be introduced by the number of
transactions and short time provided to contribute in the proposed
regulation. Two-thirds of the comments received from small businesses,
third party administrators, or their representatives recommended that
contributions to pension plans be made by the 15th day of the month
following the month of withholding. Some commenters recommended other
time periods, such as 30 to 60 days from the day of withholding, or the
last day of the month following the month of withholding. It was also
suggested that Department pursue a course of increased enforcement
rather than alter the regulation. A few commenters suggested that the
effective date be delayed, in some instances up to a year. Five
commenters suggested that a waiver or exemption procedure be
established. Most of the commenters did not distinguish between maximum
periods for compliance for large and small entities. Some commenters,
particularly service providers to small plans, advocated that the same
rule apply to large and small entities. Only three comments recommended
that a different period for transmittal be provided for large and small
entities. Other comments received requested special consideration for
COBRA payments or Simplified Employee Pensions (SEPs) (available only
to employers with fewer than 26 employees). A few commenters suggested
that a bonding or disclosure option be included as an alternate form of
compliance.
The Department believes that most of the comments expressing
concern about increased administrative costs were in response to the
time frames provided in the NPRM for transmittal of withheld
contributions to the plan. Commenters generally indicated that
additional time was needed for transactions and reconciliations of
accounts. Most small entities found that a fifteen day maximum period
for transmittal of contributions would address their concerns. The
provisions setting the maximum period at 15 business days address the
concerns of those plans that requested additional time for compliance
(including SEPs). Based on the comments and testimony received, the
Department decided not to determine the maximum period based on the
size of the plan (as was proposed), but did change the maximum period
based on the type of plan, i.e., the outer limit for welfare benefit
plans was not changed. Provisions permitting an extension of time to
comply with the regulation were included for entities that would, on
occasion, have difficulty meeting the maximum time period of the
regulation, and for those entities that would have difficulty revising
their benefits systems prior to the effective date of the regulation.
Based on the comments received, including many from small employers
and the businesses that provide payroll and plan administration
services to them, it was determined that there should be a single outer
limit, rather than a tiered regulation providing less rigid
alternatives for small plans. However, to the extent that the
provisions for extensions of time respond to small plan concerns, those
procedures may be considered an alternative form of compliance.
(3) Of the estimated 283,000 pension plans that will receive
participant contributions subject to the regulation (in 1997), an
estimated 245,800 are small plans (plans with less than 100
participants). Based on Form 5500 filings and comments received on the
proposed regulation, only six percent (14,748) will not be in
compliance with the revised regulation, and will therefore have to
change their practices to comply with the new standard. Testimony and
comments also indicate that a high percentage of small plans already
act in compliance with the revised standard. No small governmental
jurisdictions will be affected.
(4) In response to specific requests from employers, including
small employers, the Department is establishing procedures for
extension of the maximum time period for transmittal of contributions.
The disclosure and bonding provisions in the procedure provide an
alternative to plans that find compliance with the maximum period for
pension plans to be burdensome. The projected reporting, recordkeeping
and other compliance requirements of these procedures are described
below. The professional skills necessary for meeting these requirements
are those expected to be available to small plans in their ordinary
course of business.
(5) To the extent that small plan concerns have not been met by
setting the maximum period at 15 business days, several alternatives
which could minimize the impact on small entities have been identified,
and have been included in this final regulation. These alternatives
include a procedure allowing for a postponed application of the new
maximum period for pension plans, and a procedure allowing for an
occasional longer maximum period for transmittal of contributions, with
heightened disclosure and bonding requirements. In order to achieve the
Department's policy objectives, these alternative procedures require
significant safeguards for the security of participants' contributions.
It would be inappropriate to create an alternative with lower
compliance criteria, or an exemption under the proposed regulation, for
small plans because those are the entities which pose a higher degree
of risk of loss due to the delay in depositing participant
contributions into trust. The need for improved compliance by small
plans is demonstrated by the Department's findings, through its
employee contribution investigations, that of closed 401(k) plan cases
with monetary recovery, 75% of these cases involved plans with fewer
than 100 participants.
It should be noted that the Department's proposed regulation
created three tiers of compliance, based on the size of payroll.
However, the overwhelming majority of the comments, including those
from representatives of small plans,
[[Page 41232]]
specifically opposed that approach, asking that a single compliance
schedule remain in effect. Moreover, from the comments received, it
appears that creating a less stringent outside limit exclusively for
small plans might prove more costly because outside service providers
would then have to maintain two sets of software and protocols,
reducing economies of scale. The additional costs would be passed on to
their clients, including small plans.
In addition, many of the reasons set forth in the comments for
having alternative forms of compliance are based on the proposed
regulation, which had significantly more rigid time frames for
compliance. Because the requirements of the final regulation were
drafted in response to those comments, it is the Department's belief
that most of the concerns of small businesses have been addressed in a
manner favorable to them.
This modification of the existing plan asset regulation does not
eliminate protections already provided by the rule, but simply reduces
the outside limit on the existing rule to enhance compliance in light
of improved technology, thereby further improving employee protections.
The Department believes that it has minimized the economic impact
of the revised regulation on small entities in accordance with the
Regulatory Flexibility Act, while accomplishing the objectives of
ERISA.
Paperwork Reduction Act
The Department of Labor, as part of its continuing effort to reduce
paperwork and respondent burden conducts a preclearance consultation
program to provide the general public and Federal agencies with an
opportunity to comment on proposed and/or continuing collections of
information in accordance with the Paperwork Reduction Act of 1995 (PRA
95) (44 U.S.C. 3506(c)(2)(A)). This program helps to ensure that
requested data can be provided in the desired format, reporting burden
(time and financial resources) is minimized, collection instruments are
clearly understood, and the impact of collection requirements on
respondents can be properly assessed. Currently, the Pension and
Welfare Benefits Administration is soliciting comments concerning the
proposed new collection of the Notice of Extension of Time for
Compliance with 29 C.F.R. 2510.3-102.
Written comments must be submitted on or before October 7, 1996.
The Department of Labor is particularly interested in comments which:
evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
evaluate the accuracy of the agency's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used;
enhance the quality, utility, and clarity of the
information to be collected; and
minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submissions of responses.
Address comments to Mr. Gerald B. Lindrew, U.S. Department of
Labor, PWBA/OPLA, Room N-5647, 200 Constitution Avenue, N.W.,
Washington, DC 20210, telephone 202-219-4782 (this is not a toll-free
number).
I. Background
In response to comments received regarding the revised regulation
below, it was deemed appropriate to offer an optional procedure for
those plans that would incur difficulty or undue expense in complying
with the deadlines of the regulation. This notice-and-bonding procedure
serves as an alternate form of compliance while protecting the security
of the participant contributions to pension plans and providing the
Department with adequate notice of the plans' actions.
II. Current Actions
The collection has two components: the first provides a 90 day
extension of time for plans that cannot comply with the revised
regulation prior to the effective date of the regulation. This
effectively gives those plans 270 days to comply. The second component
extends the maximum time period under paragraph (b) by ten business
days.
In order to comply with one of these options, notice must be
provided to the participants of the plan, a performance bond or
irrevocable letter of credit at least equal to the amount of
participant contributions at risk must be secured, and the Department
must be given a copy of the notice and certification that the notice
was sent and the bond was secured.
Based on past experience, the staff believes that none of the
materials required to be submitted under the procedure for postponement
of application of the maximum period for pension plans will be prepared
by the respondents; rather, the respondents are expected to contract
with service providers such as attorneys, accountants, and third-party
administrators to prepare the materials. Therefore, the Department has
inserted one hour as a placeholder for the estimated burden, in light
of the current requirements that time spent by service providers not be
included in the hourly burden estimate, but rather as a cost. The
annual cost of using service providers for this collection of
information is estimated to be $249,000 in the first year only. In
contrast, because the Department believes that those respondents who
seek an extension of the maximum period are likely to seek such
extensions more than once and therefore are more likely to use their
own personnel, the Department has estimated the burden based wholly on
use of in-house personnel.
Type of Review: New.
Agency: U.S. Department of Labor, Pension and Welfare Benefits
Administration.
Title: Notice of Extension of Time for Compliance with 29 C.F.R.
2510.3-102.
Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions; Farms.
Burden:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Total
Cite/reference respondents Frequency responses Average time per response Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Extension of Effective Date......... 166 Occasionally.................... 166 ............................ 1 hour.
Extension of Maximum Time........... 166 Occasionally.................... 166 6 hours..................... 996 hours.
Totals........................ ........... ................................ 332 ............................ 997
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 41233]]
Estimated Total Burden Cost:
Applicability Postponement: $249,000 (first year only).
Extension of Maximum Time: $124,000.
Total: $373,000.
Comments submitted in response to this notice will be summarized
and/or included in the request for Office of Management and Budget
approval of the information collection request; they will also become a
matter of public record.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, this rule does not include
any Federal mandate that may result in increased expenditures by State,
local or tribal governments, and does not impose an annual burden
exceeding $100 million on the private sector.
Statutory Authority
The final regulation is adopted pursuant to the authority contained
in section 505 of ERISA (Pub. L. 93-406, 88 Stat. 894; 29 U.S.C. 1135)
and section 102 of Reorganization Plan No. 4 of 1978 (43 FR 47713,
October 17, 1978), effective December 31, 1978 (44 FR 1065, January 3,
1979), 3 CFR 1978 Comp. 332, and under Secretary of Labor's Order No.
1-87, 52 FR 13139 (Apr. 21, 1987).
List of Subjects in 29 CFR Part 2510
Employee benefit plans, Employee Retirement Income Security Act,
Pensions, Plan assets.
In view of the foregoing, Part 2510 of Chapter XXV of Title 29 of
the Code of Federal Regulations is amended as set forth below:
PART 2510--DEFINITIONS OF TERMS USED IN SUBCHAPTERS C, D, E, F, AND
G OF THIS CHAPTER
1. The authority citation for part 2510 continues to read as
follows:
Authority: Secs. 3(2), 111(c), 505, Pub. L. 93-406, 88 Stat.
852, 894, (29 U.S.C. 1002(2), 1031, 1135) Secretary of Labor's Order
No. 27-74, 1-86, 1-87, and Labor-Management Services Administration
Order No. 2-9.
Section 2510.3-101 is also issued under sec. 102 of
Reorganization Plan No. 4 of 1978 (43 FR 47713, October 17, 1978),
effective December 31, 1978 (44 FR 1065, January 3, 1978); 3 CFR
1978 Comp. 332, and sec. 11018(d) of Pub. L. 99-272, 100 Stat. 82.
Section 2510.3-102 is also issued under sec. 102 of
Reorganization Plan No. 4 of 1978 (43 FR 477133, October 17, 1978),
effective December 31, 1978 (44 FR 1065, January 3, 1978); 3 CFR
1978 Comp. 332.
2. Section 2510.3-102 is revised to read as follows:
Sec. 2510.3-102 Definition of ``plan assets''--participant
contributions.
(a) General rule. For purposes of subtitle A and parts 1 and 4 of
subtitle B of title I of ERISA and section 4975 of the Internal Revenue
Code only (but without any implication for and may not be relied upon
to bar criminal prosecutions under 18 U.S.C. 664), the assets of the
plan include amounts (other than union dues) that a participant or
beneficiary pays to an employer, or amounts that a participant has
withheld from his wages by an employer, for contribution to the plan as
of the earliest date on which such contributions can reasonably be
segregated from the employer's general assets.
(b) Maximum time period for pension benefit plans. With respect to
an employee pension benefit plan as defined in section 3(2) of ERISA,
in no event shall the date determined pursuant to paragraph (a) of this
section occur later than the 15th business day of the month following
the month in which the participant contribution amounts are received by
the employer (in the case of amounts that a participant or beneficiary
pays to an employer) or the 15th business day of the month following
the month in which such amounts would otherwise have been payable to
the participant in cash (in the case of amounts withheld by an employer
from a participant's wages).
(c) Maximum time period for welfare benefit plans. With respect to
an employee welfare benefit plan as defined in section 3(1) of ERISA,
in no event shall the date determined pursuant to paragraph (a) of this
section occur later than 90 days from the date on which the participant
contribution amounts are received by the employer (in the case of
amounts that a participant or beneficiary pays to an employer) or the
date on which such amounts would otherwise have been payable to the
participant in cash (in the case of amounts withheld by an employer
from a participant's wages).
(d) Extension of maximum time period for pension plans. (1) With
respect to participant contributions received or withheld by the
employer in a single month, the maximum time period provided under
paragraph (b) of this section shall be extended for an additional 10
business days for an employer who--
(i) Provides a true and accurate written notice, distributed in a
manner reasonably designed to reach all the plan participants within 5
business days after the end of such extension period, stating--
(A) That the employer elected to take such extension for that
month;
(B) That the affected contributions have been transmitted to the
plan; and
(C) With particularity, the reasons why the employer cannot
reasonably segregate the participant contributions within the time
period described in paragraph (b) of this section;
(ii) Prior to such extension period, obtains a performance bond or
irrevocable letter of credit in favor of the plan and in an amount of
not less than the total amount of participant contributions received or
withheld by the employer in the previous month; and
(iii) Within 5 business days after the end of such extension
period, provides a copy of the notice required under paragraph
(d)(1)(i) of this section to the Secretary, along with a certification
that such notice was provided to the participants and that the bond or
letter of credit required under paragraph (d)(1)(ii) of this section
was obtained.
(2) The performance bond or irrevocable letter of credit required
in paragraph (d)(1)(ii) of this section shall be guaranteed by a bank
or similar institution that is supervised by the Federal government or
a State government and shall remain in effect for 3 months after the
month in which the extension expires.
(3)(i) An employer may not elect an extension under this paragraph
(d) more than twice in any plan year unless the employer pays to the
plan an amount representing interest on the participant contributions
that were subject to all the extensions within such plan year.
(ii) The amount representing interest in paragraph (d)(3)(i) of
this section shall be the greater of--
(A) The amount that otherwise would have been earned on the
participant contributions from the date on which such contributions
were paid to, or withheld by, the employer until such money is
transmitted to the plan had such contributions been invested during
such period in the investment alternative available under plan which
had the highest rate of return; or
(B) Interest at a rate equal to the underpayment rate defined in
section 6621(a)(2) of the Internal Revenue Code from the date on which
such contributions were paid to, or withheld by, the employer until
such money is fully restored to the plan.
(e) Definition. For purposes of this section, the term business day
means any day other than a Saturday, Sunday or any day designated as a
holiday by the Federal Government.
[[Page 41234]]
(f) Examples. The requirements of this section are illustrated by
the following examples:
(1) Employer W is a small company with a small number of employees
at a single payroll location. W maintains a plan under section 401(k)
of the Code in which all of its employees participate. W's practice is
to issue a single check to a trust that is maintained under the plan in
the amount of the total withheld employee contributions within two
business days of the date on which the employees are paid. In view of
the relatively small number of employees and the fact that they are
paid from a single location, W could reasonably be expected to transmit
participant contributions to the trust within two days after the
employee's wages are paid. Therefore, the assets of W's 401(k) plan
include the participant contributions attributable to such pay periods
as of the date two business days from the date the employee's wages are
paid.
(2) Employer X is a large national corporation which sponsors a
section 401(k) plan. X has several payroll centers and uses an outside
payroll processing service to pay employee wages and process
deductions. Each payroll center has a different pay period. Each center
maintains separate accounts on its books for purposes of accounting for
that center's payroll deductions and provides the outside payroll
processor the data necessary to prepare employee paychecks and process
deductions. The payroll processing service has adopted a procedure
under which it issues the employees' paychecks when due and deducts all
payroll taxes and elective employee deductions. It deposits withheld
income and employment payroll taxes within the time frame specified by
26 CFR 31.6302-1 and forwards a computer data tape representing the
total payroll deductions for each employee, for a month's worth of pay
periods, to a centralized location in X, within 4 days after the end of
the month, where the data tape is checked for accuracy. A single check
representing the aggregate participant contributions for the month is
then issued to the plan by the employer. X has determined that this
procedure, which takes up to 10 business days to complete, permits
segregation of participant contributions at the earliest practicable
time and avoids mistakes in the allocation of contribution amounts for
each participant. Therefore, the assets of X's 401(k) plan would
include the participant contributions no later than 10 business days
after the end of the month.
(3) Assume the same facts as in paragraph (f)(2) of this section,
except that X takes 30 days after receipt of the data tape to issue a
check to the plan representing the aggregate participant contributions
for the prior month. X believes that this procedure permits segregation
of participant contributions at the earliest practicable time and
avoids mistakes in the allocation of contribution amounts for each
participant. Under paragraphs (a) and (b) of this section, the assets
of the plan include the participant contributions as soon as X could
reasonably be expected to segregate the contributions from its general
assets, but in no event later than the 15th business day of the month
following the month that a participant or beneficiary pays to an
employer, or has withheld from his wages by an employer, money for
contribution to the plan. The participant contributions become plan
assets no later than that date.
(4) Employer Y is a medium-sized company which maintains a self-
insured contributory group health plan. Several former employees have
elected, pursuant to the provisions of ERISA section 602, 29 U.S.C.
1162, to pay Y for continuation of their coverage under the plan. These
checks arrive at various times during the month and are deposited in
the employer's general account at bank Z. Under paragraphs (a) and (b)
of this section, the assets of the plan include the former employees'
payments as soon after the checks have cleared the bank as Y could
reasonably be expected to segregate the payments from its general
assets, but in no event later than the 90 days after a participant or
beneficiary, including a former employee, pays to an employer, or has
withheld from his wages by an employer, money for contribution to the
plan.
(g) Effective date. This section is effective February 3, 1997.
(h) Applicability date for collectively-bargained plans. (1)
Paragraph (b) of this section applies to collectively bargained plans
no sooner than the later of--
(i) February 3, 1997; or
(ii) The first day of the plan year that begins after the
expiration of the last to expire of any applicable bargaining agreement
in effect on August 7, 1996.
(2) Until paragraph (b) of this section applies to a collectively
bargained plan, paragraph (c) of this section shall apply to such plan
as if such plan were an employee welfare benefit plan.
(i) Optional postponement of applicability. (1) The application of
paragraph (b) of this section shall be postponed for up to an
additional 90 days beyond the effective date described in paragraph (g)
of this section for an employer who, prior to February 3, 1997--
(i) Provides a true and accurate written notice, distributed in a
manner designed to reach all the plan participants before the end of
February 3, 1997, stating--
(A) That the employer elected to postpone such applicability;
(B) The date that the postponement will expire; and
(C) With particularity the reasons why the employer cannot
reasonably segregate the participant contributions within the time
period described in paragraph (b) of this section, by February 3, 1997;
(ii) Obtains a performance bond or irrevocable letter of credit in
favor of the plan and in an amount of not less than the total amount of
participant contributions received or withheld by the employer in the
previous 3 months;
(iii) Provides a copy of the notice required under paragraph
(i)(1)(i) of this section to the Secretary, along with a certification
that such notice was provided to the participants and that the bond or
letter of credit required under paragraph (i)(1)(ii) of this section
was obtained; and
(iv) For each month during which such postponement is in effect,
provides a true and accurate written notice to the plan participants
indicating the date on which the participant contributions received or
withheld by the employer during such month were transmitted to the
plan.
(2) The notice required in paragraph (i)(1)(iv) of this section
shall be distributed in a manner reasonably designed to reach all the
plan participants within 10 days after transmission of the affected
participant contributions.
(3) The bond or letter of credit required under paragraph
(i)(1)(ii) shall be guaranteed by a bank or similar institution that is
supervised by the Federal government or a State government and shall
remain in effect for 3 months after the month in which the postponement
expires.
(4) During the period of any postponement of applicability with
respect to a plan under this paragraph (i), paragraph (c) of this
section shall apply to such plan as if such plan were an employee
welfare benefit plan.
[[Page 41235]]
Signed at Washington, DC, this 30th day of July 1996.
Olena Berg,
Assistant Secretary for Pension and Welfare Benefits, Department of
Labor.
[FR Doc. 96-19791 Filed 8-6-96; 8:45 am]
BILLING CODE 4510-29-P
Complete official Federal Register PDF
FR Doc. 96-19782 Assessment Rates for Specified Marketing Orders
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40954-40956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19782]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 922, 923, and 924
[Docket No. FV96-922-2 IFR]
Assessment Rates for Specified Marketing Orders
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This interim final rule establishes assessment rates for
Marketing Order Nos. 922, 923 and 924 for the 1996-97 and subsequent
fiscal periods. The Washington Apricot Marketing Committee, Washington
Cherry Marketing Committee, and Washington-Oregon Fresh Prune Marketing
Committee (Committees) are responsible for local administration of the
marketing orders which regulate the handling of apricots and cherries
grown in designated counties in Washington, and prunes grown in
designated counties in Washington and in Umatilla County, Oregon.
Authorization to assess apricot, cherry and prune handlers enables the
Committees to incur expenses that are reasonable and necessary to
administer the programs.
DATES: Effective on April 1, 1996. Comments received by September 6,
1996, will be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent in triplicate to the Docket
Clerk, Fruit and Vegetable Division, AMS, USDA, PO Box 96456, room
2523-S, Washington, DC 20090-6456, FAX (202) 720-5698. Comments should
reference the docket number and the date and page number of this issue
of the Federal Register and will be available for public inspection in
the Office of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Tershirra Yeager, Marketing Assistant,
Marketing Order Administrative Branch, Fruit and Vegetable Division,
AMS, USDA, PO Box 96456, Room 2522-S, Washington, DC 20090-6456,
telephone (202) 720-5127, FAX (202) 720-5698, or Teresa L. Hutchinson,
Marketing Specialist, Northwest Marketing Field Office, Fruit and
Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369,
Portland, OR 97204, telephone (503) 326-2724, FAX (503) 326-7440. Small
businesses may request information on compliance with this regulation
by contacting: Jay Guerber, Marketing Order Administration Branch,
Fruit and Vegetable Division, AMS, USDA, PO Box 96456, Room 2523-S,
Washington, DC 20090-6456; telephone: (202) 720-2491, Fax# (202) 720-
5698.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 922 (7 CFR part 922), regulating the handling
of apricots grown in designated counties in Washington; Marketing Order
No. 923 (7 CFR part 923) regulating the handling of sweet cherries
grown in designated counties in Washington; and Marketing Order No. 924
(7 CFR part 924) regulating the handling of fresh prunes grown in
designated counties in Washington and in Umatilla County, Oregon,
hereinafter referred to as the ``orders.'' The marketing agreements and
orders are effective under the Agricultural Marketing Agreement Act of
1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the
``Act.''
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the marketing orders now in effect, handlers in
designated areas are subject to assessments. Funds to administer the
orders are derived from such assessments. It is intended that the
assessment rates as issued herein will be applicable to all assessable
apricots, cherries, and prunes beginning April 1, 1996, and continuing
until amended, suspended, or terminated. This rule will not preempt any
State or local laws, regulations, or policies, unless they present an
irreconcilable conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. Such handlers are afforded the opportunity for a hearing on
the petition. After the hearing the Secretary would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has his or
her principal place of business, has jurisdiction to review the
Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 55 handlers of Washington apricots, 55
handlers of Washington sweet cherries, and 30 handlers of Washington-
Oregon fresh prunes subject to regulation under the marketing orders.
In addition, there are about 190 Washington apricot producers, 1,100
Washington sweet cherry producers, and 350 Washington-Oregon fresh
prune producers in the respective production areas. Small agricultural
producers have been defined by the Small Business Administration (13
CFR 121.601) as those having annual receipts of less than $500,000, and
small agricultural service firms are defined as those whose annual
receipts are less than $5,000,000. The majority of Washington apricot,
[[Page 40955]]
Washington cherry, and Washington-Oregon fresh prune producers and
handlers may be classified as small entities. Interested persons are
invited to submit information on the regulatory and informational
impacts of this action on small businesses.
The orders provide authority for the Committees, with the approval
of the Department, to formulate annual budgets of expenses and collect
assessments from handlers to administer the programs. The members of
the Committees are producers and handlers of designated counties in
Washington and in Umatilla County, Oregon. They are familiar with the
Committees needs and with the costs for goods and services in their
local area and are thus in a position to formulate appropriate budgets
and assessment rates. The assessment rates are formulated and discussed
in public meetings. Thus, all directly affected persons have an
opportunity to participate and provide input.
The Washington Apricot Marketing Committee met on May 16, 1996, and
unanimously recommended 1996-97 expenditures of $9,385 and an
assessment rate of $3.00 per ton of apricots. In comparison, last
year's budgeted expenditures were $9,594.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of apricots grown
in designated counties in Washington. Apricot shipments for the year
are estimated at 2,300 tons which should provide $6,900 in assessment
income. Income derived from handler assessments, along with interest
income and funds from the Committee's authorized reserve, will be
adequate to cover budgeted expenses. Funds in the reserve will be kept
within the maximum permitted by the order.
The Washington Cherry Marketing Committee met on May 17, 1996, and
unanimously recommended 1996-97 expenditures of $56,665 and assessment
rate of $1.00 per ton of cherries. In comparison, last year's budgeted
expenditures were $55,393.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of cherries grown
in designated counties in Washington. Shipments for the year are
estimated at 30,000 tons which should provide $30,000 in assessment
income. Income derived from handler assessments, along with interest
income and funds from the Committee's authorized reserve, will be
adequate to cover budgeted expenses. Funds in the reserve will be kept
within the maximum permitted by the order.
The Washington-Oregon Fresh Prune Committee met on May 29, 1996,
and unanimously recommended 1996-97 expenditures of $6,645 and an
assessment rate of $1.00 per ton of fresh prunes. In comparison, last
year's budgeted expenditures were $10,018.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of fresh prunes
grown in designated counties in Washington and Umatilla County, Oregon.
Fresh prune shipments for the year are estimated at 2,700 tons which
should provide $2,700 in assessment income. Income derived from handler
assessments, along with interest income and funds from the Committee's
authorized reserve, will be adequate to cover budgeted expenses. Funds
in the reserve will be kept within the maximum permitted by the order.
The Committees voted against having an assessment rate for their
respective programs for the 1995-96 fiscal year. Major expenditures
recommended by the Committees for the 1996-97 year include salary
expenses, and office expenses.
While this rule will impose some additional costs on handlers, the
costs are in the form of uniform assessments on all handlers. Some of
the additional costs may be passed on to producers. However, these
costs will be offset by the benefits derived by the operation of the
marketing orders. Therefore, the AMS has determined that this rule will
not have a significant economic impact on a substantial number of small
entities.
The assessment rates established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and information submitted by the
Committees or other available information.
Although these assessment rates are effective for an indefinite
period, the Committees will continue to meet prior to or during each
fiscal period to consider recommendations for modification of the
assessment rates. The dates and times of Committee meetings are
available from the Committees or the Department. Committee meetings are
open to the public and interested persons may express their views at
these meetings. The Department will evaluate Committee recommendations
and other available information to determine whether modification of
the assessment rates are needed. Further rulemaking will be undertaken
as necessary. The Committees' 1996-97 budgets and those for subsequent
fiscal periods will be reviewed and, as appropriate, approved by the
Department.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Committees and
other available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect, and that good cause exists for not postponing the effective
date of this rule until 30 days after publication in the Federal
Register because: (1) The Committees need to have sufficient funds to
pay their expenses which are incurred on a continuous basis; (2) the
1996-97 fiscal period began on April 1, 1996, and the marketing orders
require that the rates of assessment for each fiscal period apply to
all assessable apricots, cherries and prunes handled during such fiscal
period; (3) handlers are aware of the actions which were recommended by
the Committees at public meetings and are similar to other assessment
rate actions issued in past years; and (4) this interim final rule
provides a 30-day comment period, and all comments timely received will
be considered prior to finalization of this rule.
List of Subjects
7 CFR Part 922
Apricots, Marketing agreements, Reporting and recordkeeping
requirements.
7 CFR Part 923
Cherries, Marketing agreements, Reporting and recordkeeping
requirements.
7 CFR Part 924
Plums, Prunes, Marketing agreements, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR parts 922, 923,
and 924 are amended as follows:
1. The authority citation for 7 CFR parts 922, 923, and 924
continue to read as follows:
Authority: 7 U.S.C. 601-674.
Note: These sections will appear in the code of Federal
Regulations.
[[Page 40956]]
PART 922--APRICOTS GROWN IN DESIGNATED COUNTIES IN WASHINGTON
2. A new subpart--Assessment Rate consisting of a new Sec. 922.235
is added to read as follows:
Subpart--Assessment Rate
Sec. 922.235 Assessment rate.
On and after April 1, 1996, an assessment rate of $3.00 per ton is
established for the Washington Apricot Marketing Committee.
PART 923--SWEET CHERRIES GROWN IN DESIGNATED COUNTIES IN WASHINGTON
3. A new center heading--Assessment Rate consisting of a new
Sec. 923.236 is added to read as follows:
Assessment Rate
Sec. 923.236 Assessment Rate.
On and after April 1, 1996, an assessment rate of $1.00 per ton is
established for the Washington Cherry Marketing Committee.
PART 924--FRESH PRUNES GROWN IN DESIGNATED COUNTIES IN WASHINGTON
AND IN UMATILLA COUNTY, OREGON
4. A new subpart--Assessment Rate consisting of a new Sec. 924.236
is added to read as follows:
Subpart--Assessment Rate
Sec. 924.236 Assessment rate.
On and after April 1, 1996, an assessment rate of $1.00 per ton is
established for the Washington-Oregon Fresh Prune Marketing Committee.
Dated: July 30, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-19782 Filed 8-6-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-19713 Acquisition and Protection of Foreign Rights in Inventions; Licensing of Foreign Patents Acquired by the Government; Uniform Patent Policy for Rights in Inventions Made by Government Employees
[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40997-41000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19713]
[[Page 40997]]
DEPARTMENT OF COMMERCE
Patent and Trademark Office
37 CFR Parts 101 and 102
Under Secretary for Technology
37 CFR Part 501
[Docket No. 960604157-6157-01]
RIN 0692-AA15
Acquisition and Protection of Foreign Rights in Inventions;
Licensing of Foreign Patents Acquired by the Government; Uniform Patent
Policy for Rights in Inventions Made by Government Employees
AGENCY: Patent and Trademark Office; Under Secretary for Technology,
Commerce.
ACTION: Interim final rule with request for comments.
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SUMMARY: The interim final rule removes the regulation dealing with the
Government's foreign rights in inventions made by Government employees,
and expands the uniform patent policy for domestic rights in inventions
to include foreign rights in order to have a uniform patent policy for
all rights in inventions made by Government employees. The rule also
removes the regulation dealing with the licensing of foreign patents
acquired by the Government, which is inconsistent with 37 CFR Part 404
on the licensing of Government-owned inventions. This action is taken
in keeping with the goals of the National Performance Review and in
order to comply with recent Executive Orders that address regulatory
reforms.
The rule also revises the uniform patent policy to permit an agency
to impose certain conditions on the employee's title to the invention
where the agency decides not to file a patent application, some of
which are authorized by Sec. 15 of the Federal Technology Transfer Act
of 1986; to require agencies to provide the inventor, prior to appeal,
with a full explanation of the agency determination and a copy of 37
CFR Part 501 in all cases where the agency has determined that the
Government is entitled to title or a license in the invention in order
to reduce the number of appeals; and to require agencies to decide if
they should file any foreign patent applications within 8 months from
filing a patent application in the U.S. or to authorize agencies to use
an option to acquire foreign rights from the employee in order to avoid
the need to transfer back the foreign rights to the employee if the
agency does not file a foreign patent application within 8 months of
filing an unclassified patent application in the U.S.
DATES: This document is effective August 7, 1996.
Comments on the rule must be received on or before September 5,
1996.
The regulations will apply to any Rights Determination made after
August 7, 1996.
ADDRESSES: Comments on the rule may be mailed to Mr. John Raubitschek,
Patent Counsel, Office of the Chief Counsel for Technology, Room 4610,
Herbert C. Hoover Building, U.S. Department of Commerce, Washington, DC
20230.
FOR FURTHER INFORMATION CONTACT:
Mr. John Raubitschek at telephone: (202) 482-8010.
SUPPLEMENTARY INFORMATION: Under the authority of section 4, E.O.
10096, CFR, 1949-1953 Comp., p. 292, as amended by E.O. 10930, 3 CFR,
1959-1963 Comp., p. 456 and by E.O. 10695, 3 CFR, 1954-1958 Comp., p.
355; and the delegation by the Secretary of Commerce in DOO 10-17 and
DOO 10-18, the Under Secretary of Commerce for Technology is amending
37 CFR Part 501 to include the relevant portions of former 37 CFR Part
101 to reduce duplication and streamline the regulations.
On March 4, 1995, as part of the President's Regulatory Reform
Initiative, the President directed agencies to conduct a page-by-page
review of all regulations and eliminate or revise those that are
outdated or otherwise in need of reform.
Under the former rules, foreign rights in inventions made by
Government employees were covered by 37 CFR Part 101 while domestic
rights were covered by 37 CFR Part 501. After conducting a review of 37
CFR Parts 101 and 501, it was determined that some sections in Part 101
were no longer being followed by the agencies and others were
interpreted by agencies in an inconsistent manner. This review also
determined that Part 101 should be removed and Part 501 should be
amended to cover both foreign and domestic rights, so as to have a
uniform policy for the Government's domestic and foreign rights in
inventions made by Government employees. It is noted that E.O. 10096 is
not limited to domestic rights in invention made by Government
employees.
Accordingly, 37 CFR Part 101 is removed and reserved, and 37 CFR
Part 501 is amended as follows:
The title of Part 501 is changed to delete the reference to
``domestic'' rights so that this part will now cover both ``domestic''
and ``foreign'' rights.
The authority section is changed to make reference (1) to E.O.
10695, 3 CFR, 1954-1958 Comp., p. 355, which also amended E.O. 10096;
and (2) to the latest DOO 10-17 and 10-18, issued July 15, 1992, and
March 31, 1994, respectively.
Section 501.1 is changed to delete ``domestic'' so that this part
will now cover both ``domestic'' and ``foreign'' rights.
Section 501.3(a) is editorially amended by adding a comma (,) after
``Secretary.''
Section 501.3(b) retains the exclusion of the Department of Energy
although it follows the procedures in Part 501 because the exemption
for this agency is contained in E.O. 10096. Also, the Tennessee Valley
Authority and the Postal Service are excluded consistent with existing
practice.
Section 501.3(c) is changed to clearly indicate that the definition
of ``Government employee'' includes any special Government employee as
defined in 18 U.S.C. 202 or an individual working for a Federal agency
pursuant to the Intergovernmental Personnel Act (IPA), Pub. L. 91-648,
5 U.S.C. 1304 and 3371-3376. This section is also being changed to
provide a reference to the statute which defines the term ``part-time
employee.''
Section 501.3(d) is changed to further define the term ``art'' as a
``process'' which is the equivalent term used by the Patent and
Trademark Office (35 U.S.C. 100(b)).
New paragraph (e) is added to Sec. 501.3 to define the term
``made'' when used in relation to any invention as the conception or
first actual reduction to practice of such invention. See In re King, 3
USPQ2d (BNA) 1747 (Comm'r Pat. 1987).
Section 501.4 is changed to make reference to E.O. 10695, 3 CFR,
1954-1958 Comp., p. 355, which also amended E.O. 10096. This section is
also being editorially amended by deleting ``therein'' in the section
title; adding ``in and to the invention'' after ``rights;'' deleting
the words ``therein'' and ``herein;'' and adding ``Sec. '' before
``501.6.''
Section 501.6(a)(1) is changed to delete the reference to
``domestic'' rights so that this section will now cover both
``domestic'' and ``foreign'' rights.
Section 501.6(a)(1)(iii) is changed to delete the reference to 37
CFR Part 101 which is being removed.
Section 501.6(a)(2) is changed to delete ``domestic'' (twice) so
that this
[[Page 40998]]
section will now cover both ``domestic'' and ``foreign'' rights. Also,
the last five lines in the first sentence of this section is being
editorially amended by replacing ``purposes, such reservation, in terms
thereof, to appear'' with ``purposes. The terms of such reservation
will appear.''
Section 501.6(a)(3)(i) is changed to further define the term
``art'' as a ``process'' which is the equivalent term used by the
Patent and Trademark Office (35 U.S.C. 100(b)).
Section 501.6(a)(4)(i) is changed to delete ``domestic'' so that
this section will now cover both ``domestic'' and ``foreign'' rights.
Section 501.7(b) is revised to allow agencies to impose certain
conditions where the Government decides not to file a patent
application. Some of these conditions are contained in section 15 of
the Federal Technology Transfer Act (15 U.S.C. 3710(a)) which permits
an agency to condition the inventor's right to title on the timely
filing of a patent application in cases if it determines that the
Government has a need to practice the invention. Other conditions are
taken from the licensing regulation in 37 CFR Part 404.
Section 501.7(c) is revised to require the agency to provide to the
employee (inventor) a signed and dated statement of its determination
and reasons therefor, as well as a copy of 37 CFR 501 in all cases
where the agency has determined that the Government is entitled to
title or a license in the invention. It is expected that the revised
Sec. 501.7(c) will help reduce the number of appeals since an inventor
will now be provided with a full explanation for the initial
determination of the agency without having to file an appeal. Also, by
giving the inventor a copy of 37 CFR Part 501, it is ensured that the
inventor will become better aware of all his/her rights under 37 CFR
Part 501. It should be noted that some of the information previously
required by both Secs. 501.7(c) and 501.8(b) appears now only in
Sec. 501.8 (b)(2) and (b)(3) so that such information is needed only
when an appeal has been filed.
Section 501.8(a) is changed to clearly indicate that the Secretary
shall forward one copy of the appeal to the liaison officer of the
Government agency. This change will ensure conformance with Sec. 501.5.
Section 501.8(b) is changed to indicate that the agency liaison
officer will be the person in charge of furnishing the report to the
Secretary and the inventor.
Section 501.8(b)(1) is modified to delete the reference to
information which is no longer required by Sec. 501.7.
Section 501.8 (b)(2) and (b)(3) are added to include information
which was required by Secs. 501.(7) (c)(1) and (c)(2).
Section 501.8(b)(4) is former Sec. 501.8(b)(2) and changed to
indicate that a copy of the reply by the employee must be filed with
the agency liaison officer. This section is also being editorially
amended by deleting the words ``thereto'' and ``thereof'' and moving
the last sentence so that it is part of Sec. 501.8(b).
Section 501.9(a) is changed to require a ``prompt'' determination
by the agency about whether to seek patent protection in the United
States, which may include the filing of a provisional application. The
section would now explicitly allow any other agency or private law firm
authorized by the agency to seek patent protection on its behalf.
Section 501.9(b) is changed by replacing ``will'' with ``may'' to
remove the requirement that an agency determine whether patent
protection will be sought pending the Secretary's decision on the
dispute. The agency will now have the choice of seeking patent
protection pending the Secretary's decision on the dispute. This
section is also being editorially amended by dividing a long sentence
into two sentences.
Section 501.9(c) is editorially amended by adding a comma (,) after
``patent.''
New section 501.9(d) is added to give agencies 8 months from the
filing date of a patent application in the U.S. to decide if and where
they should file foreign patent applications. It is anticipated that
agencies will defer the selection of individual foreign countries by
filing an international application under the Patent Cooperation
Treaty. If an agency chooses not to file in any foreign country, then
the employee may request rights in that country subject to any of the
restrictions stated in Sec. 501.7(b) that may be imposed by the agency.
It should be noted that under this section, the rights would no longer
be retained by the inventor in any foreign country if the agency does
not cause a patent application to be filed in that country within
certain time periods previously set forth in 37 CFR 101.8. However,
Sec. 501.9(d) authorizes agencies to use an option to acquire foreign
rights from the employee similar to that in 37 CFR 101.8 except that
the time for exercising the option has been increased from 6 to 8
months from the filing of an unclassified application in the U.S.,
which is presently the practice in the Department of Army and National
Aeronautics and Space Administration. Use of such an option will avoid
the need to transfer back any foreign rights to the employee when the
agency chooses not to file a patent application in any foreign country
although such transfer is now authorized under section 6 of Pub. L.
104-113. If an agency determines that it wants to file a foreign patent
application after the 8-month option period has expired, it may do so
only after obtaining an assignment of the foreign rights from the
employee.
New section 501.11 is added to provide the address where any
submissions or inquiries should be sent.
Part 102 was established under the authority of Executive Order
9865 to provide for the administration of a uniform policy for the
licensing of foreign patents owned by the Government. In 1980 under
Pub. L. 96-517, all Government agencies were given authority to obtain
and license foreign and domestic patents. The procedures for granting a
license are contained in 37 CFR Part 404 and conflicts with Part 102 in
a number of respects. Since agencies no longer need the authority of
Executive Order 9865, it was determined to cancel Part 102.
Pursuant to Sec. 553(a)(2) of the Administrative Procedure Act (5
U.S.C. 553) (APA), the Under Secretary of Commerce for Technology finds
that the interim final rule involves a matter relating to agency
personnel since it concerns the foreign and domestic rights in
inventions made by Government employees; therefore, the rule is
exempted from the prior notice of proposed rulemaking and the delayed
effective date requirements. Furthermore, the rule provides a 30-day
comment period and any comments received will be considered prior to
finalization of the interim rule.
The rule has been determined to be not significant for purposes of
E.O. 12866.
The rule does not contain policies with Federalism implications
sufficient to warrant preparation of a Federalism assessment under E.O.
12612.
Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for the interim final rule
by section 553 of the APA (5 U.S.C. 553) or by any other law, under
sections 3(a) of the Regulatory Flexibility Act (5 U.S.C. 603(a) and
604(a)), no initial or final Regulatory Flexibility Analysis has to be
or will be prepared.
The interim final rule does not involve a collection of information
under the Paperwork Reduction Act.
[[Page 40999]]
List of Subjects
37 CFR Part 101
Foreign rights in inventions, Inventions made by Government
employees.
37 CFR Part 102
Licensing of foreign patents acquired by the Government.
37 CFR Part 501
Uniform patent policy, Domestic rights in inventions, Inventions
made by Government employees, Foreign rights in inventions.
For the reasons set forth in the preamble and under authority of 5
U.S.C. 301, 37 CFR chapters I and V are amended as follows:
CHAPTER I--PATENT AND TRADEMARK OFFICE, DEPARTMENT OF COMMERCE
PART 101--[REMOVED AND RESERVED]
1. Part 101 is removed and reserved.
PART 102--[REMOVED AND RESERVED]
2. Part 102 is removed and reserved.
CHAPTER V--UNDER SECRETARY FOR TECHNOLOGY, DEPARTMENT OF COMMERCE
PART 501--UNIFORM PATENT POLICY FOR RIGHTS IN INVENTIONS MADE BY
GOVERNMENT EMPLOYEES
3. The authority citation for 37 CFR part 501 is revised to read as
follows:
Authority: Sec. 4, E.O. 10096, 3 CFR, 1949-1953 Comp., p. 292,
as amended by E.O. 10930, 3 CFR, 1959-1963 Comp., p. 456 and by E.O.
10695, 3 CFR, 1954-1958 Comp., p. 355; DOO 10-17, July 15, 1992, and
DOO 10-18, March 31, 1994.
4. The heading of part 501 is revised as set forth above.
5. Section 501.1 is revised to read as follows:
Sec. 501.1 Purpose.
The purpose of this part is to provide for the administration of a
uniform patent policy for the Government with respect to the rights in
inventions made by Government employees and to prescribe rules and
regulations for implementing and effectuating such policy.
6. Section 501.3 is revised to read as follows:
Sec. 501.3 Definitions.
(a) The term Secretary, as used in this part, means the Under
Secretary of Commerce for Technology.
(b) The term Government agency, as used in this part, means any
Executive department or independent establishment of the Executive
branch of the Government (including any independent regulatory
commission or board, any corporation wholly owned by the United States,
and the Smithsonian Institution), but does not include the Department
of Energy for inventions made under the provisions of 42 U.S.C. 2182,
the Tennessee Valley Authority, or the Postal Service.
(c) The term Government employee, as used in this part, means any
officer or employee, civilian or military, of any Government agency,
including any special Government employee as defined in 18 U.S.C. 202
or an individual working for a Federal agency pursuant to the
Intergovernmental Personnel Act (IPA), 5 U.S.C. 1304 and 3371-3376, or
a part-time consultant or part-time employee as defined in 29 U.S.C.
2101(a)(8) except as may otherwise be provided by agency regulation
approved by the Secretary.
(d) The term invention, as used in this part, means any art or
process, machine, manufacture, design, or composition of matter, or any
new and useful improvement thereof, or any variety of plant, which is
or may be patentable under the patent laws of the United States.
(e) The term made as used in this part in relation to any
invention, means the conception or first actual reduction to practice
of such invention as stated in In re King, 3 USPQ2d (BNA) 1747 (Comm'r
Pat. 1987).
7. Section 501.4 is revised to read as follows:
Sec. 501.4 Determination of inventions and rights.
Each Government agency has the approval of the Secretary to
determine whether the results of research, development, or other
activity in the agency constitute an invention within the purview of
Executive Order 10096, as amended by Executive Order 10930 and
Executive Order 10695, and to determine the rights in and to the
invention in accordance with the provisions of Secs. 501.6 and 501.7.
8. Section 501.6 is amended by revising paragraphs (a)(1)
introductory text, (a)(1)(iii), (a)(2), (a)(3)(i) and (a)(4)(i) to read
as follows:
Sec. 501.6 Criteria for the Determination of rights in and to
inventions.
(a) * * *
(1) The Government shall obtain, except as herein otherwise
provided, the entire right, title and interest in and to any invention
made by any Government employee:
* * * * *
(iii) Which bears a direct relation to or is made in consequence of
the official duties of the inventor.
(2) In any case where the contribution of the Government, as
measured by any one or more of the criteria set forth in paragraph
(a)(1) of this section, to the invention is insufficient equitably to
justify a requirement of assignment to the Government of the entire
right, title and interest in and to such invention, or in any case
where the Government has insufficient interest in an invention to
obtain the entire right, title and interest therein (although the
Government could obtain same under paragraph (a)(1) of this section),
the Government agency concerned shall leave title to such invention in
the employee, subject however, to the reservation to the Government of
a nonexclusive, irrevocable, royalty-free license in the invention with
power to grant licenses for all governmental purposes. The terms of
such reservation will appear, where practicable, in any patent,
domestic or foreign, which may issue on such invention. Reference is
made to section 15 of the Federal Technology Transfer Act of 1986 (15
U.S.C. 3710d) which requires a Government agency to allow the inventor
to retain title to any covered invention when the agency does not
intend to file a patent application or otherwise promote
commercialization.
(3) * * *
(i) To invent or improve or perfect any art or process, machine,
design, manufacture, or composition of matter;
* * * * *
(4) * * *
(i) Obtains the entire right, title and interest in and to an
invention pursuant to the provisions of paragraph (a)(1) of this
section nor
* * * * *
9. Section 501.7 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 501.7 Agency determination.
* * * * *
(b) In the event that a Government agency determines, pursuant to
paragraph (a)(2) or (a)(4) of Sec. 501.6, that title to an invention
will be left with the employee, the agency shall notify the employee of
this determination. In cases pursuant to Sec. 501.6(a)(2) where the
Government's insufficient interest in the invention is evidenced by its
decision not to file a patent application, the agency may impose on the
employee any one or all of the following conditions or any other
conditions that may be necessary in a particular case:
(1) That a patent application be filed in the United States and/or
abroad, if
[[Page 41000]]
the Government has determined that it has or may need to practice the
invention;
(2) That the invention not be assigned to any foreign-owned or
controlled corporation without the written permission of the agency;
and
(3) That any assignment or license of rights to use or sell the
invention in the United States shall contain a requirement that any
products embodying the invention or produced through the use of the
invention be substantially manufactured in the United States. The
agency shall notify the employee of any conditions imposed.
(c) In the case of a determination under either paragraph (a) or
(b) of this section, the agency shall promptly provide the employee
with:
(1) A signed and dated statement of its determination and reasons
therefor; and
(2) A copy of 37 CFR part 501.
10. Section 501.8 is amended by revising paragraphs (a) and (b),
redesignating paragraphs (c) and (d) as paragraph (d) and (e), and
adding new paragraph (c) to read as follows:
Sec. 501.8 Appeals by employees.
(a) Any Government employee who is aggrieved by a Government agency
determination pursuant to Secs. 501.6(a)(1) or (a)(2), may obtain a
review of any agency determination by filing, within 30 days (or such
longer period as the Secretary may, for good cause shown in writing,
fix in any case) after receiving notice of such determination, two
copies of an appeal with the Secretary. The Secretary then shall
forward one copy of the appeal to the liaison officer of the Government
agency.
(b) On receipt of a copy of an appeal filed pursuant to paragraph
(a) of this section, the agency liaison officer shall, subject to
considerations of national security, or public health, safety or
welfare, promptly furnish both the Secretary and the inventor with a
copy of a report containing the following information about the
invention involved in the appeal:
(1) A copy of the agency's statement specified in Sec. 501.7(c);
(2) A description of the invention in sufficient detail to identify
the invention and show its relationship to the employee's duties and
work assignments;
(3) The name of the employee and employment status, including a
detailed statement of official duties and responsibilities at the time
the invention was made; and
(4) A detailed statement of the points of dispute or controversy,
together with copies of any statements or written arguments filed with
the agency, and of any other relevant evidence that the agency
considered in making its determination of Government interest.
(c) Within 25 days (or such longer period as the Secretary may, for
good cause shown, fix in any case) after the transmission of a copy of
the agency report to the employee, the employee may file a reply with
the Secretary and file one copy with the agency liaison officer.
* * * * *
11. Section 501.9 is revised to read as follows:
Sec. 501.9 Patent protection.
(a) A Government agency, upon determining that an invention coming
within the scope of Secs. 501.6(a)(1) or (a)(2) has been made, shall
promptly determine whether patent protection will be sought in the
United States by or on behalf of the agency for such invention. A
controversy over the respective rights of the Government and of the
employee shall not unnecessarily delay the filing of a patent
application by the agency to avoid the loss of patent rights. In cases
coming within the scope of Sec. 501.6(a)(2), the filing of a patent
application shall be contingent upon the consent of the employee.
(b) Where there is an appealed dispute as to whether Secs. 501.6
(a)(1) or (a)(2) applies in determining the respective rights of the
Government and of an employee in and to any invention, the agency may
determine whether patent protection will be sought in the United States
pending the Secretary's decision on the dispute. If the agency decides
that an application for patent should be filed, the agency will take
such rights as are specified in Sec. 501.6(a)(2), but this shall be
without prejudice to acquiring the rights specified in paragraph (a)(1)
of that section should the Secretary so decide.
(c) Where an agency has determined to leave title to an invention
with an employee under Sec. 501.6(a)(2), the agency will, upon the
filing of an application for patent, take the rights specified in that
paragraph without prejudice to the subsequent acquisition by the
Government of the rights specified in paragraph (a)(1) of that section
should the Secretary so decide.
(d) Where an agency has filed a patent application in the United
States, the agency will, within 8 months from the filing date of the
U.S. application, determine if any foreign patent applications should
also be filed. If the agency chooses not to file an application in any
foreign country, the employee may request rights in that country
subject to the conditions stated in Sec. 501.7(b) that may be imposed
by the agency. Alternatively, the agency may permit the employee to
retain foreign rights by including in any assignment to the Government
of an unclassified U.S. patent application on the invention an option
for the Government to acquire title in any foreign country within 8
months from the filing date of the U.S. application.
12. A new Sec. 501.11 is added to read as follows:
Sec. 501.11 Submissions and inquiries.
All submissions or inquiries should be directed to Chief Counsel
for Technology, telephone number 202-482-1984, Room H4835, U.S.
Department of Commerce, Washington DC 20230.
Dated: July 22, 1996.
Bruce A. Lehman,
Assistant Secretary of Commerce and Commissioner of Patents and
Trademarks.
Dated: July 26, 1996.
Mary L. Good,
Under Secretary of Commerce for Technology.
[FR Doc. 96-19713 Filed 8-6-96; 8:45 am]
BILLING CODE 3510-18-P; 3510-16-P
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