issue-1996-08-16•Federal Register final rules — 1996-08-16
Federal Register final rules — 1996-08-16
issue-1996-08-16Federal Register final rules — 1996-08-16Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. 96-20973 Standard Instrument Approach Procedures; Miscellaneous Amendments
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42554-42556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20973]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 97
[Docket No. 28658; Amdt. No. 1746]
RIN 2120-AA65
Standard Instrument Approach Procedures; Miscellaneous Amendments
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment establishes, amends, suspends, or revokes
Standard Instrument Approach Procedures (SIAPs) for operations at
certain airports. These regulatory actions are needed because of
changes occurring in the National Airspace System, such as the
commissioning of new navigational facilities, addition of new
obstacles, or changes in air traffic requirements. These changes are
designed to provide safe and efficient use of the navigable airspace
and to promote safe flight operations under instrument flight rules at
the affected airports.
DATES: An effective date for each SIAP is specified in the amendatory
provisions.
Incoporation by reference--approved by the Director of the Federal
Register on December 31, 1980, and reapproved as of January 1, 1982.
ADDRESSES: Availability of matter incorporated by reference in the
amendment is as follows:
For Examination--
1. FAA Rules Docket, FAA Headquarters Building, 800 Independence
Avenue, SW., Washington, DC 20591;
2. The FAA Regional Office of the region in which affected airport
is located; or
3. The Flight Inspection Area Office which originated the SIAP.
For Purchase--Individual SIAP copies may be obtained from:
1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building,
800 Independence Avenue, SW., Washington, DC 20591; or
2. The FAA Regional Office of the region in which the affected
airport is located.
By Subscription--Copies of all SIAPs, mailed once every 2 weeks,
are for sale by the Superintendent of Documents, US Government Printing
Office, Washington, DC 20402.
FOR FURTHER INFORMATION CONTACT:
Paul J. Best, Flight Procedures Standards Branch (AFS-420), Technical
Programs Division, Flight Standards Service, Federal Aviation
Administration, 800 Independence
[[Page 42555]]
Avenue, SW., Washington, DC 20591; telephone (202) 267-8277.
SUPPLEMENTARY INFORMATION: This amendment to part 97 of the Federal
Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or
revokes Standard Instrument Approach Procedures (SIAPs). The complete
regulatory description on each SIAP is contained in the appropriate FAA
Form 8260 and the National Flight Data Center (FDC)/Permanent (P)
Notices to Airmen (NOTAM) which are incorporated by reference in the
amendment under 5 U.S.C. 552(a), 1 CFR part 51, and Sec. 97.20 of the
Federal Aviation Regulations (FAR). Materials incorporated by reference
are available for examination or purchase as stated above.
The large number of SIAPS, their complex nature, and the need for a
special format make their verbatim publication in the Federal Register
expensive and impractical. Further, airmen do not use the regulatory
text of the SIAPs, but refer to their graphic depiction of charts
printed by publishers of aeronautical materials. Thus, the advantages
of incorporation by reference are realized and publication of the
complete description of each SIAP contained in FAA form documents is
unnecessary. The provisions of this amendment state the affected CFR
(and FAR) sections, with the types and effective dates of the SIAPs.
This amendment also identifies the airport, its location, the procedure
identification and the amendment number.
The Rule
This amendment to part 97 of the Federal Aviation Regulation (14
CFR part 97) establishes, amends, suspends, or revokes SIAPs. For
safety and timeliness of change considerations, this amendment
incorporates only specific changes contained in the content of the
following FDC/P NOTAM for each SIAP. The SIAP information in some
previously designated FDC/Temporary (FDC/T) NOTAMs is of such duration
as to be permanent. With conversion to FDC/P NOTAMs, the respective
FDC/T NOTAMs have been cancelled.
The FDC/P NOTAMs for the SIAPs contained in this amendment are
based on the criteria contained in the U.S. Standard for Terminal
Instrument Approach Procedures (TERPS). In developing these chart
changes to SIAPs by FDC/P NOTAMs, the TERPS criteria were applied to
only these specific conditions existing at the affected airports. All
SIAP amendments in this rule have been previously issued by the FAA in
a National Flight Data Center (FDC) Notice to Airmen (NOTAM) as an
emergency action of immediate flight safety relating directly to
published aeronautical charts. The circumstances which created the need
for all these SIAP amendments requires making them effective in less
than 30 days.
Further, the SIAPs contained in this amendment are based on the
criteria contained in the TERPS. Because of the close and immediate
relationship between these SIAPS and safety in air commerce, I find
that notice and public procedure before adopting these SIAPs are
impracticable and contrary to the public interest and, where
applicable, that good cause exists for making these SIAPs effective in
less than 30 days.
Conclusion
The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore--(1) Is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. For the same reason, the FAA
certifies that this amendment will not have a significant economic
impact on a substantial number of small entities under the criteria of
the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 97
Air Traffic Control, Airports;, Navigation (Air).
Issued in Washington, DC on August 9, 1996.
Thomas C. Accardi,
Director, Flight Standards Service.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me, part 97 of
the Federal Aviation Regulations (14 CFR part 97) is amended by
establishing, amending, suspending, or revoking Standard Instrument
Approach Procedures, effective at 0901 UTC on the dates specified, as
follows:
PART 97--STANDARD INSTRUMENT APPROACH PROCEDURES
1. The authority citation for part 97 is revised to read as
follows:
Authority: 49 U.S.C. 40103, 40113, 40120, 44701; 49 U.S.C.
106(g); and 14 CFR 11.49(b)(2).
2. Part 97 is amended to read as follows:
97.23, 97.25, 97.27, 97.29, 97.31, 97.33, 97.35 [Amended]
By amending: Sec. 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or
TACAN; Sec. 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; Sec. 97.27
NDB, NDB/DME; Sec. 97.29 ILS, ILS/DME, ISMLS, MLS, MLS/DME, MLS/RNAV;
Sec. 97.31 RADAR SIAPs; Sec. 97.33 RNAV SIAPs; and Sec. 97.35 COPTER
SIAPs, identified as follows:
* * * Effective Upon Publication
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDC date State City Airport FDC No. SIAP
--------------------------------------------------------------------------------------------------------------------------------------------------------
06/25/96............. MN St Paul............. St. Paul Downtown FDC 6/4148 ILS RWY 32 AMDT 3... This Corrects Notam in
Holman Field. TL 96-15
07/24/96............. CA Los Angeles......... Los Angeles Intl.... FDC 6/5195 ILS RWY 7L, AMDT 3A...
07/24/96............. FL Panama City......... Panama City-Bay Co. FDC 6/5203 VOR or TACAN or GPS-A, AMDT 13B...
Intl.
07/24/96............. NY Rochester........... Greater Rochester FDC 6/5196 VOR/DME or GPS RWY 4 AMDT 1...
Intl.
07/25/96............. GA Americus............ Souther Field....... FDC 6/5236 NDB or GPS RWY 23, AMDT 2B...
07/25/96............. GA Americus............ Souther Field....... FDC 6/5237 LOC RWY 23, AMDT 2B...
07/25/96............. GA Atlanta............. Peachtree City- FDC 6/5239 NDB RWY 31 AMDT 1...
Falcon Field.
07/25/96............. GA Atlanta............. Peachtree City- FDC 6/5240 VOR/DME RNAV or GPS RWY 31 ORIG A...
Falcon Field.
07/25/96............. GA Atlanta............. Peachtree City- FDC 6/5241 LOC BC RWY 13, AMDT 2...
Falcon Field.
07/25/96............. GA Atlanta............. Peachtree City- FDC 6/5242 LOC RWY 31, AMDT 1...
Falcon Field.
07/25/96............. GA Gainesville......... Lee Gilmer Memorial. FDC 6/5244 NDB or GPS RWY 4, AMDT 4...
07/25/96............. GA Gainesville......... Lee Gilmer Memorial. FDC 6/5245 LOC RWY 4 AMDT 5...
[[Page 42556]]
07/25/96............. GA Jessup.............. Jessup-Wayne County. FDC 6/5234 NDB or GPS RWY 10, AMDT 1...
07/25/96............. GA Jessup.............. Jessup-Wayne County. FDC 6/5235 NDB or GPS RWY 28, AMDT 2...
07/25/96............. NH Lebanon............. Lebanon Muni........ FDC 6/5250 VOR/DME or GPS RWY 7, ORIG...
07/25/96............. NH Lebanon............. Lebanon Muni........ FDC 6/5251 VOR or GPS RWY 25 ORIG...
07/25/96............. NH Lebanon............. Lebanon Muni........ FDC 6/5252 NDB or GPS-B, AMDT 3...
07/25/96............. NJ Sussex.............. Sussex.............. FDC 6/5253 VOR or GPS-A, AMDT 5A...
07/26/96............. GA Swainsboro.......... Emanuel County...... FDC 6/5322 LOC RWY 13, ORIG...
07/26/96............. GA Swainsboro.......... Emanuel County...... FDC 6/5323 VOR/DME or GPS-A, AMDT 2B...
07/26/96............. GA Swainsboro.......... Emanuel County...... FDC 6/5324 NDB or GPS RWY 13, ORIG-A...
07/26/96............. GA Waycross............ Waycross-Ware County FDC 6/5296 ILS RWY 18 ORIG...
07/26/96............. GA Waycross............ Waycross-Ware County FDC 6/5319 VOR or GPS-A AMDT 7A...
07/26/96............. GA Waycross............ Waycross-Ware County FDC 6/5320 NDB RWY 18 ORIG...
07/26/96............. GA Waycross............ Waycross-Ware County FDC 6/5321 RNAV or GPS RWY 18, AMDT 4A...
07/26/96............. NH Lebanon............. Lebanon Muni........ FDC 6/5297 ILS RWY 18 AMDT 3...
07/26/96............. OH Dayton.............. James M Cox Dayton FDC 6/5287 ILS RWY 18, AMDT 8...
Intl.
07/26/96............. OH Dayton.............. James M Cox Dayton FDC 6/5288 ILS RWY 24L AMDT 8...
Intl.
07/29/96............. GA Statesboro.......... Statesboro Muni..... FDC 6/5387 NDB or GPS RWY 32, AMDT 4...
07/29/96............. GA Statesboro.......... Statesboro Muni..... FDC 6/5388 LOC RWY 32, AMDT 4...
07/29/96............. NH Manchester.......... Manchester.......... FDC 6/5420 VOR RWY 35, AMDT 15...
07/29/96............. NH Manchester.......... Manchester.......... FDC 6/5421 VOR RWY 17, ORIG...
07/29/96............. NH Manchester.......... Manchester.......... FDC 6/5422 VOR/DME or GPS RWY 17, ORIG...
07/29/96............. NH Manchester.......... Manchester.......... FDC 6/5423 ILS RWY 35, AMDT 17...
07/29/96............. NH Manchester.......... Manchester.......... FDC 6/5424 NDB or GPS RWY 35, AMDT 13...
07/30/96............. IA Keokuk.............. Keokuk Muni......... FDC 6/5439 NDB or GPS RWY 26, ORIG-A...
07/30/96............. IA Keokuk.............. Keokuk Muni......... FDC 6/5440 NDB or GPS RWY 14, AMDT 11A...
08/02/96............. MI Kalamazoo........... Battle Creek Intl... FDC 6/5571 GPS RWY 23 ORIG...
08/05/96............. KY Louisville.......... Louisville Intl- FDC 6/5697 ILS RWY 1 AMDT 11A...
Standiford Field.
--------------------------------------------------------------------------------------------------------------------------------------------------------
[FR Doc. 96-20973 Filed 8-15-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-20972 Standard Instrument Approach Procedures; Miscellaneous Amendments
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42551-42552]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20972]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 97
[Docket No. 28659; Amdt. No. 1747]
RIN 2120-AA65
Standard Instrument Approach Procedures; Miscellaneous Amendments
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment establishes, amends, suspends, or revokes
Standard Instrument Approach Procedures (SIAPs) for operations at
certain airports. These regulatory actions are needed because of the
adoption of new or revised criteria, or because of changes occurring in
the National Airspace System, such as the commissioning of new
navigational facilities, addition of new obstacles, or changes in air
traffic requirements. These changes are designed to provide safe and
efficient use of the navigable airspace and to promote safe flight
operations under instrument flight rules at the affected airports.
DATES: An effective date for each SIAP is specified in the amendatory
provisions.
Incorporation by references-approved by the Director of the Federal
Register on December 31, 1980, and reapproved as of January 1, 1982.
ADDRESSES: Availability of matters incorporated by reference in the
amendment is as follows:
For Examination--
1. FAA Rules Docket, FAA Headquarters Building, 800 Independence
Avenue, SW., Washington, DC 20591;
2. The FAA Regional Office of the region in which the affected
airport is located; or
3. The Flight Inspection Area Office which originated the SIAP.
For Purchase--Individual SIAP copies may be obtained from:
1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building,
800 Independence Avenue, SW., Washington, DC 20591; or
2. The FAA Regional Office of the region in which the affected
airport is located.
By Subscription--Copies of all SIAPs, mailed once every 2 weeks,
are for sale by the Superintendent of Documents, U.S. Government
Printing Office, Washington, DC 20402.
FOR FURTHER INFORMATION CONTACT:
Paul J. Best, Flight Procedures Standards Branch (AFS-420), Technical
Programs Division, Flight Standards Service, Federal Aviation
Administration, 800 Independence Avenue, SW., Washington, DC 20591;
telephone (202) 267-8277.
SUPPLEMENTARY INFORMATION: This amendment to part 97 of the Federal
Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or
revokes Standard Instrument Approach Procedures (SIAPs). The complete
regulatory description of each SIAP is contained in official FAA form
documents which are incorporated by reference in this amendment under 5
U.S.C. 552(a), 1 CFR part 51, and Sec. 97.20 of the Federal Aviation
Regulations (FAR). The applicable FAA Forms are identified as FAA Form
8260-5. Materials incorporated by reference are available for
examination or purchase as stated above.
The large number of SIAPs, their complex nature, and the need for a
special format make their verbatim publication in the Federal Register
expensive and impractical. Further, airmen do not use the regulatory
text of the SIAPs, but refer to their graphic depiction on charts
printed by publishers of aeronautical materials. Thus, the advantages
of incorporation by reference are realized and publication of the
complete description of each SIAP contained in FAA form documents is
unnecessary. The provisions of this amendment state the affected CFR
(and FAR) sections, with the types and effective dates of the SIAPs.
This amendment also identifies the airport, its location, the procedure
identification and the amendment number.
This amendment to part 97 is effective upon publication of each
separate SIAP as contained in the transmittal. The SIAPs contained in
this amendment are based on the criteria contained in the United States
Standard for Terminal Instrument Approach Procedures (TERPS). In
developing these SIAPs, the TERPS criteria were applied to the
[[Page 42552]]
conditions existing or anticipated at the affected airports.
The FAA has determined through testing that current non-localizer
type, non-precision instrument approaches developed using the TERPS
criteria can be flown by aircraft equipped with Global Positioning
System (GPS) equipment. In consideration of the above, the applicable
Standard Instrument Approach Procedures (SIAPs) will be altered to
include ``or GPS'' in the title without otherwise reviewing or
modifying the procedure. (Once a stand alone GPS procedure is
developed, the procedure title will be altered to remove ``or GPS''
from these non-localizer, non-precision instrument approach procedure
titles.) Because of the close and immediate relationship between these
SIAPs and safety in air commerce, I find that notice and public
procedure before adopting these SIAPs are, impracticable and contrary
to the public interest and, where applicable, that good cause exists
for making some SIAPs effective in less than 30 days.
The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore--(1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. For the same reason, the FAA
certifies that this amendment will not have a significant economic
impact on a substantial number of small entities under the criteria of
the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 97
Air Traffic Control, Airports, Navigation (Air).
Issued in Washington, DC on August 9, 1996.
Thomas C. Accardi,
Director, Flight Standards Service.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me, part 97 of
the Federal Aviation Regulations (14 CFR part 97) is amended by
establishing, amending, suspending, or revoking Standard Instrument
Approach Procedures, effective at 0901 UTC on the dates specified, as
follows:
PART 97--STANDARD INSTRUMENT APPROACH PROCEDURES
1. The authority citation for part 97 is revised to read as
follows:
Authority: 49 U.S.C. 40103, 40113, 40120, 44701; 49 U.S.C.
106(g); and 14 CFR 11.49(b)(2).
2. Part 97 is amended to read as follows:
Secs. 97.23, 97.27, 97.33, 97.35 [Amended]
By amending: Sec. 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or
TACAN; Sec. 97.27 NDB, NDB/DME; Sec. 97.33 RNAV SIAPs; and Sec. 97.35
COPTER SIAPs, identified as follows:
* * * Effective Oct 10, 1996
Kodiak, AK, Kodiak, VOR or TACAN or GPS-1 RWY 25, Amdt 5 Cancelled
Kodiak, AK, Kodiak, VOR or TACAN RWY 25, Amdt 5
St. Mary's, AK, St. Mary's NDB/DME or GPS RWY 16, Amdt 1A Cancelled
St. Mary's, AK, St. Mary's, NDB/DME RWY 16, Amdt 1A
St. Mary's, AK, St. Mary's, NDB or GPS RWY 34, Orig-A Cancelled
St. Mary's, AK, St. Mary's, NDB RWY 34, Orig-A
Holyoke, CO, Holyoke, NDB or GPS RWY 17, Amdt 1A Cancelled
Holyoke, CO, Holyoke, NDB RWY 17, Amdt 1A
Holyoke, CO, Holyoke, NDB or GPS RWY 35, Amdt 1A Cancelled
Holyoke, CO, Holyoke, NDB RWY 35, Amdt 1A
Dover/Cheswold, DE, Delaware Airpark, VOR or GPS RWY 27, Amdt 6
Cancelled
Dover/Cheswold, DE, Delaware Airpark, VOR RWY 27, Amdt 6
Canton, GA, Cherokee County, NDB or GPS RWY 4, Amdt 1 Cancelled
Canton, GA, Cherokee County, NDB RWY 4, Amdt 1
Erwin, NC, Harnett County, VOR/DME or GPS RWY 4, Amdt 1B Cancelled
Erwin, NC, Harnett County, VOR/DME RWY 4, Amdt 1B
Farmington, NM, Four Corners Regional, VOR or GPS RWY 25, Amdt 8A
Cancelled
Farmington, NM, Four Corners Regional, VOR RWY 25, Amdt 8A
Hobbs, NM, Lea County (Hobbs), VOR or TACAN or GPS RWY 3, Amdt 20
Cancelled
Hobbs, NM, Lea County (Hobbs), VOR or TACAN RWY 3, Amdt 20
Martinsville, VA, Blue Ridge, NDB or GPS RWY 30, Amdt. 1 Cancelled
Martinsville, VA, Blue Ridge, NDB RWY 30, Amdt. 1
[FR Doc. 96-20972 Filed 08-15-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-20971 Standard Instrument Approach Procedures; Miscellaneous Amendments
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42552-42554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20971]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 97
[Docket No. 28657; Amdt. No. 1745]
RIN 2120-AA65
Standard Instrument Approach Procedures; Miscellaneous Amendments
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment establishes, amends, suspends, or revokes
Standard Instrument Approach Procedures (SIAPs) for operations at
certain airports. These regulatory actions are needed because of the
adoption of new or revised criteria, or because of changes occurring in
the National Airspace System, such as the commissioning of new
navigational facilities, addition of new obstacles, or changes in air
traffic requirements. These changes are designed to provide safe and
efficient use of the navigable airspace and to promote safe flight
operations under instrument flight rules at the affected airports.
DATES: An effective date for each SIAP is specified in the amendatory
provisions.
Incorporation by reference-approved by the Director of the Federal
Register on December 31, 1980, and reapproved as of January 1, 1982.
ADDRESSES: Availability of matters incorporated by reference in the
amendment is as follows:
For Examination--
1. FAA Rules Docket, FAA Headquarters Building, 800 Independence
Avenue, SW., Washington, DC 20591;
2. The FAA Regional Office of the region in which the affected
airport is located; or
3. The Flight Inspection Area Office which originated the SIAP.
For Purchase--Individual SIAP copies may be obtained from:
1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building,
800 Independence Avenue, SW., Washington, DC 20591; or
2. The FAA Regional Office of the region in which the affected
airport is located.
By Subscription--Copies of all SIAPs, mailed once every 2 weeks,
are for sale by the Superintendent of Documents, U.S. Government
Printing Office, Washington, DC 20402.
FOR FURTHER INFORMATION CONTACT: Paul J. Best, Flight Procedures
Standards Branch (AFS-420), Technical Programs Division, Flight
Standards Service,
[[Page 42553]]
Federal Aviation Administration, 800 Independence Avenue, SW.,
Washington, DC 20591; telephone (202) 267-8277.
SUPPLEMENTARY INFORMATION: This amendment to part 97 of the Federal
Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or
revokes Standards Instrument Approach Procedures (SIAPs). The complete
regulatory description of each SIAP is contained in official FAA form
documents which are incorporated by reference in this amendment under 5
U.S.C. 552(a), 1 CFR part 51, and Sec. 97.20 of the Federal Aviation
Regulations (FAR). The applicable FAA Forms are identified as FAA Forms
8260-3, 8260-4, and 8260-5. Materials incorporated by reference are
available for examination or purchase as stated above.
The large number of SIAPs, their complex nature, and the need for a
special format make their verbatim publication in the Federal Register
expensive and impractical. Further, airmen do not use the regulatory
text of the SIAPs, but refer to their graphic depiction on charts
printed by publishers of aeronautical materials. Thus, the advantages
of incorporation by reference are realized and publication of the
complete description of each SIAP contained in FAA form documents is
unnecessary. The provisions of this amendment state the affected CFR
(and FAR) sections, with the types and effective dates of the SIAPs.
This amendment also identifies the airport, its location, the procedure
identification and the amendment number.
The Rule
This amendment to part 97 is effective upon publication of each
separate SIAP as contained in the transmittal. Some SIAP amendments may
have been previously issued by the FAA in a National Flight Data Center
(FDC) Notice to Airmen (NOTAM) as an emergency action of immediate
flight safety relating directly to published aeronautical charts. The
circumstances which created the need for some SIAP amendments may
require making them effective in less than 30 days. For the remaining
SIAPs, an effective date at least 30 days after publication is
provided.
Further, the SIAPs contained in this amendment are based on the
criteria contained in the U.S. Standard for Terminal Instrument
Approach Procedures (TERPS). In developing these SIAPs, the TERPS
criteria were applied to the conditions existing or anticipated at the
affected airports. Because of the close and immediate relationship
between these SIAPs and safety in air commerce, I find that notice and
public procedure before adopting these SIAPs are impracticable and
contrary to the public interest and, where applicable, that good cause
exists for making some SIAPs effective in less than 30 days.
The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore--(1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. For the same reason, the FAA
certifies that this amendment will not have a significant economic
impact on a substantial number of small entities under the criteria of
the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 97
Air Traffic Control, Airports, Navigation (Air).
Issued in Washington, DC on August 9, 1996.
Thomas C. Accardi,
Director, Flight Standards Service.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me, part 97 of
the Federal Aviation Regulations (14 CFR part 97) is amended by
establishing, amending, suspending, or revoking Standard Instrument
Approach Procedures, effective at 0901 UTC on the dates specified, as
follows:
PART 97--STANDARD INSTRUMENT APPROACH PROCEDURES
1. The authority citation for part 97 is revised to read as
follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120, 44701; and 14
CFR 11.49(b)(2).
2. Part 97 is amended to read as follows:
Secs. 97.23, 97.25, 97.27, 97.29, 97.31, 97.33, 97.35 [Amended]
By amending: Sec. 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or
TACAN; Sec. 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; Sec. 97.27
NDB, NDB/DME; Sec. 97.29 ILS, ILS/DME, ISMLS, MLS, MLS/DME, MLS/RNAV;
Sec. 97.31 RADAR SIAPs; Sec. 97.33 RNAV SIAPs; and Sec. 97.35 COPTER
SIAPs, identified as follows:
* * * Effective September 12, 1996
Los Angeles, CA, Los Angeles Intl, ILS RWY 25L, Amdt 4
Sandpoint, ID, Dave Wall Field, LOC/DME-A, Orig
Sioux City, IA, Sioux Gateway, NDB RWY 17, Orig
Kearney, NE, Kearney Muni, ILS RWY 36, Orig
Harlingen, TX, Rio Grande Valley Intl, VOR/DME OR TACAN RWY 31, orig
Harlingen, TX, Rio Grande Valley Intl, VOR/DME OR GPS RWY 31, Amdt
3, Cancelled
Salt Lake City, UT, Salt Lake City Intl, ILS RWY 34R, Orig
Salt Lake City, UT, Salt Lake City Intl, ILS/DME RWY 34R, Amdt 1B,
Cancelled
* * * Effective October 10, 1996
Dillingham, AK, Dillingham, MLS RWY 1, Orig
Brinkley, AR, Frank Federer Memorial, NDB OR GPS-A, Amdt 1
Brinkley, AR, Frank Federer Memorial, GPS RWY 20, Orig
Ontario, CA, Ontario Intl, ILS RWY 26L, Amdt 7
Kremmling, CO, Mc Elroy Airfield, GPS RWY 27, Orig
Cocoa, FL, Merritt Island, NDB-A, Orig, Cancelled
Baxley, GA, Baxley Muni, RNAV RWY 8, Amdt 3, Cancelled
Canton, GA, Cherokee County, GPS RWY 4, Orig
Independence, KS, Independence Muni, GPS RWY 17, Orig
Independence, KS, Independence Muni, GPS RWY 35, Orig
Mc Pherson, KS, Mc Pherson, GPS RWY 36, Orig
Springhill, LA, Springhill, NDB RWY 35, Orig
Springhill, LA, Springhill, NDB OR GPS RWY 17, Orig Cancelled
Plymouth, MA, Plymouth Muni, GPS RWY 6, Amdt 1
Corinth, MS, Roscoe Turner, NDB OR GPS RWY 17, Amdt 8, Cancelled
Corinth, MS, Roscoe Turner, NDB OR GPS RWY 35, Amdt 7, Cancelled
Manchester, NH, Manchester, GPS RWY 6, Orig
Readington, NJ, Solberg-Hunterdon, GPS RWY 4, Orig
Farmington, NM, Four Corners Regional, GPS RWY 25, Orig
Hobbs, NM, Lea County/Hobbs, GPS RWY 3, Orig
Hobbs, NM, Lea County/Hobbs, GPS RWY 30, Orig
Socorro, NM, Socorro Muni, GPS RWY 33, Orig
Truth or Consequences, NM, Truth or Consequences Muni, GPS RWY 31,
Orig
Saratoga Springs, NY, Saratoga County, GPS RWY 5, Orig
Aguadilla, PR, Rafael Hernandez, GPS RWY 8, Orig
San Juan, PR, Luis Munoz Marin Intl, GPS RWY 8, Orig
Sturgis, SD, Sturgis Muni, GPS RWY 29, Orig
Amarillo, TX, Amarillo Intl, LDA/DME RWY 22, Orig
Bridgeport, TX, Bridgeport Muni, VOR OR GPS-A, Amdt 4 Cancelled
[[Page 42554]]
Bridgeport, TX, Bridgeport Muni, VOR/DME RWY 17, Orig
Dallas, TX, Addison, NDB OR GPS RWY 15, Amdt 5
Dallas, TX, Addison, ILS RWY 15, Amdt 9
Dallas, TX, Addison, ILS RWY 33, Amdt 1
Dallas, TX, Addison, VOR/DME RNAV OR GPS RWY 33, Amdt 1
Denton, TX, Denton Muni, GPS RWY 35, Amdt 1
Ennis, TX, Ennis Muni, VOR/DME-A, Orig
Ennis, TX, Ennis Muni, VOR/DME OR GPS-A, Amdt 1 Cancelled
Fort Worth, TX, Fort Worth Alliance, ILS RWY 16, Amdt 2
Fort Worth, TX, Fort Worth Alliance, ILS RWY 34, Amdt 2
Fort Worth, TX, Fort Worth Alliance, GPS RWY 16, Orig
Fort Worth, TX, Fort Worth Alliance, GPS RWY 34, Orig
Fort Worth, TX, Fort Worth Meacham Intl, NDB OR GPS RWY 16L, Amdt 4
Fort Worth, TX, Fort Worth Meacham Intl, ILS RWY 16L, Amdt 6
Fort Worth, TX, Fort Worth Spinks, ILS RWY 35L, Amdt 1
Fort Worth, TX, Fort Worth Spinks, VOR/DME RNAV OR GPS RWY 35L, Orig
Fort Worth, TX, Fort Worth Spinks, RNAV OR GPS RWY 35L, Amdt 1A,
Cancelled
Gladewater, TX, Gladewater Muni, VOR/DME OR GPS RWY 13, Amdt 2
Graford, TX, Possum Kingdom, NDB OR GPS-A, Amdt 1
Graham, TX, Graham Muni, NDB OR GPS RWY 21, Amdt 2
Longview, TX, Gregg County, RADAR 1, AMDT 3, Cancelled
McKinney, TX, McKinney Muni, VOR/DME OR GPS-A, Orig
McKinney, TX, McKinney Muni, VOR/DME OR GPS-A, Amdt 3 Cancelled
McKinney, TX, McKinney Muni, ILS RWY 17, Amdt 1
Sherman/Denison, TX, Grayson County, VOR/DME-A, Orig
Sherman/Denison, TX, Grayson County, VOR/DME-A, OR GPS-A, Amdt 7
Cancelled
Sherman/Denison, TX, Grayson County, NDB OR GPS RWY 17L, Amdt 9
Sherman/Denison, TX, Grayson County, VOR/DME RNAV RWY 35R Orig
Sherman/Denison, TX, Grayson County, RNAV RWY 35R, Amdt 2 Cancelled
Stephenville, TX, Clark Field Muni, VOR/DME-A, Orig
Stephenville, TX, Clark Field Muni, VOR/DME OR GPS-A, Amdt 4
Cancelled
Sulphur Springs, TX, Sulphur Springs Muni, VOR/DME OR GPS-B, Amdt 6
Sulphur Springs, TX, Sulphur Springs Muni, NDB RWY 18, Amdt 5
Tyler, TX, Tyler Pounds Field, VOR/DME OR GPS RWY 4, Amdt 3
Tyler, TX, Tyler Pounds Field, VOR/DME OR GPS RWY 22, Amdt 3
Tyler, TX, Tyler Pounds Field, VOR OR GPS RWY 31, Amdt 1
Tyler, TX, Tyler Pounds Field, NDB OR GPS RWY 13, Amdt 17
Tyler, TX, Tyler Pounds Field, ILS RWY 13, Amdt 20
Waco, TX, TSTC Waco, NDB RWY 17L, Amdt 9
Waco, TX, TSTC Waco, NDB RWY 35R, Amdt 10
Waco, TX, TSTC Waco, ILS RWY 17L, Amdt 11
Waco, TX, TSTC Waco, GPS RWY 17L, Orig
Waco, TX, TSTC Waco, GPS RWY 35R, Orig
Waco, TX, TSTC Waco, RADAR-1, Amdt 3
Wichita Falls, TX, Kickapoo Downtown Airpark, NDB RWY 35, Amdt 3
Wichita Falls, TX, Kickapoo Downtown Airpark, RADAR-1, Amdt 3
Wichita Falls, TX, Kickapoo Downtown Airpark, VOR/DME RNAV OR GPS
RWY 35, Amdt 3
Wichita Falls, TX, Sheppard AFB/Wichita Falls Muni, VOR OR GPS-D,
Amdt 13
Wichita Falls, TX, Sheppard AFB/Wichita Falls Muni, LOC BC RWY 15R,
Amdt 11
Wichita Falls, TX, Sheppard AFB/Wichita Falls Muni, NDB OR GPS RWY
33L, Amdt 10
Wichita Falls, TX, Sheppard AFB/Wichita Falls Muni, ILS RWY 33L,
Amdt 12
Martinsville, VA, Blue Ridge, SDF RWY 30, Amdt 2
Martinsville, VA, Blue Ridge, NDB RWY 30, Amdt 2
Martinsville, VA, Blue Ridge, GPS RWY 12, Orig
Martinsville, VA, Blue Ridge, GPS RWY 30, Orig
Christiansted, VI, Alexander Hamilton, GPS RWY 9, Orig
Elkins, WV, Elkins-Randolph Co-Jennings Randolph Fld, GPS RWY 23,
Orig
Menomonie, WI, Score Field, VOR/DME RWY 27, Orig
* * * Effective December 5, 1996
Covington, LA, Greater St Tammany, GPS RWY 17, Orig
Note: The FAA published Procedures in Docket No. 28644, Amdt No.
1743 to Part 97 of the Federal Aviation Regulations (Vol 61, FR No.
149, Page 40151, dated August 1, 1996 Section 97.23 Effective 10 Oct
96 which is hereby amended:
Change effective date to 5 Dec 1996, for the following procedure:
Hammond, LA, Hammond Muni, GPS RWY 31, Orig
Note: The FAA published a Procedure in Docket No. 28644, Amdt
No. 1743 to part 97 of the Federal Aviation Regulations (Vol 61, FR
No. 149, Page 40151, dated August 1, 1996 Section 97.33 Effective 15
Aug 96 which is hereby amended:
Change effective date to 12 Sep 1996, for the following procedure:
Sioux City, IA, Sioux Gateway, VOR/DME RNAV RWY 17, Orig-A Cancelled
[FR Doc. 96-20971 Filed 8-15-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-20970 Changes to Restricted Areas R-6302A, B, C, D, and E, Fort Hood, TX
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42550-42551]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20970]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 73
[Airspace Docket No. 96-ASW-16]
RIN 2120-AA66
Changes to Restricted Areas R-6302A, B, C, D, and E, Fort Hood,
TX
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This action changes the internal boundary of Restricted Area
6302 (R-6302), Fort Hood, Texas (TX). Specifically, subareas R-6302C
and R-6302D are realigned to better accommodate training requirements
while simultaneously providing airspace for instrument approaches to
Runway 15, Gray Army Air Field (AAF), TX. Additionally, the using
agency for all subareas of R-6302 will be standardized to read: ``U.S.
Army, Commander, III Corps, Fort Hood, TX.''
EFFECTIVE DATE: 0901 UTC, October 10, 1996.
FOR FURTHER INFORMATION CONTACT: Steve Brown, Airspace and Rules
Division, ATA-400, Office of Air Traffic Airspace Management, Federal
Aviation Administration, 800 Independence Avenue, SW., Washington, DC
20591; telephone: (202) 267-8783.
SUPPLEMENTARY INFORMATION:
Background
In the early 1960's, R-6302 was established as a gunnery range for
the U.S. Army. Since its establishment, many refinements have been made
to the restricted area to reflect changing requirements as well as
administrative changes. The latest refinement occurred on July 20,
1995, when the FAA published a final rule (60 FR 37331), redefining the
vertical limits of R-6302B and the horizontal limits of R-6302E. These
changes, effective September 14, 1995, were instituted as part of the
Dallas/Fort Worth Metroplex Plan.
As a result of a recent review of R-6302 airspace, the U.S. Army
requested that the FAA take action to change the boundary separating
two subareas in R-6302 to enhance traffic management and increase the
efficiency of the airspace contained in R-6302. Currently,
participating aircraft operating within R-6302D also use R-6302C;
however, only the northwest corner of R-6302C is normally used for this
training. When R-6302C is active, aircraft cannot conduct instrument
approaches to Runway 15 at Gray AAF because the airspace contained in
R-6302C is required for the approach. This action incorporates the
northwestern corner of R-6302C into R-6302D, allowing both military
training in R-6302D and sufficient airspace for instrument approaches
to Gray AAF to occur simultaneously. Additionally, the U.S. Army
requested that the using agency for R-6302 be changed to reflect the
current chain-of-command at Fort Hood, TX.
The Rule
This rule amends Title 14 of the Code of Federal Regulations part
73 (14 CFR part 73) by redefining the boundary separating R-6302C and
R-6302D to enable more efficient use of airspace. Additionally, the
using agency for all subareas of R-6302 will read: ``U.S. Army,
Commander, III Corps, Fort Hood, TX.''
Since this action simply redefines the subdivision of an existing
restricted area and amends the published using agency, I find that
notice and public procedure under 5 U.S.C. 553(b) are unnecessary
because this action is a minor technical amendment in which the public
would not be particularly interested. This amendment will not change
the external boundary of, or activities within, R-6302. The coordinates
for this airspace docket are based on North American Datum 83. Section
73.63 of part 73 of the Federal Aviation Regulations was republished in
FAA Order 7400.8C dated June 29, 1995.
The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore--(1) Is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
will only affect air traffic procedures and air navigation, it is
certified that this rule will not have a significant economic impact on
a substantial number of small entities under the criteria of the
Regulatory Flexibility Act.
Environmental Review
This action redefines the internal boundary separating R-6302C and
R-6302D to enable more efficient use of airspace, and amends the
published using agency. There are no changes to air traffic control
procedures or routes as a result of this action. Additionally, this
action does not change the external boundary of, or the activities
conducted within, the restricted airspace.
[[Page 42551]]
Therefore, this action is not subject to environmental assessments and
procedures under FAA Order 1050.1D, ``Policies and Procedures for
Considering Environmental Impacts,'' and the National Environmental
Policy Act.
List of Subjects in 14 CFR Part 73
Airspace, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 73 as follows:
PART 73--[AMENDED]
1. The authority citation for part 73 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 73.63 [Amended]
2. Section 73.63 is amended as follows:
R-6302A Fort Hood, TX [Amended]
By removing the current using agency and substituting the
following: Using agency. U.S. Army, Commander, III Corps, Fort Hood,
TX.
R-6302B Fort Hood, TX [Amended]
By removing the current using agency and substituting the
following: Using agency. U.S. Army, Commander, III Corps, Fort Hood,
TX.
R-6302C Fort Hood, TX [Amended]
By removing the current boundaries and using agency and
substituting the following:
Boundaries. Beginning at lat. 31 deg.09'01''N., long.
97 deg.45'01''W.; to lat. 31 deg.09'01''N., long. 97 deg.55'01''W.; to
lat. 31 deg.16'01''N., long. 97 deg.54'01''W.; to lat.
31 deg.14'15''N., long. 97 deg.50'33''W.; to lat. 31 deg.10'01''N.,
long. 97 deg.48'01''W.; to the point of beginning.
Using agency. U.S. Army, Commander, III Corps, Fort Hood, TX.
R-6302D, Fort Hood, TX [Amended]
By removing the current boundaries and using agency and
substituting the following:
Boundaries. Beginning at lat. 31 deg.14'15''N., long.
97 deg.50'33''W.; to lat. 31 deg.16'01''N., long. 97 deg.54'01''W.; to
lat. 31 deg.19'01''N., long. 97 deg.51'01''W.; to lat.
31 deg.24'01''N., long. 97 deg.48'01''W.; to lat. 31 deg.23'01''N.,
long. 97 deg.43'01''W.; to lat. 31 deg.22'08''N., long.
97 deg.41'56''W.; to lat. 31 deg.22'09''N., long. 97 deg.43'27''W.; to
lat. 31 deg.20'00''N., long. 97 deg.45'23''W.; to lat.
31 deg.18'23''N., long. 97 deg.45'43''W.; to lat. 31 deg.18'25''N.,
long. 97 deg.48'48''W.; to the point of beginning.
Using agency. U.S. Army, Commander, III Corps, Fort Hood, TX.
R-6302E, Fort Hood, TX [Amended]
By removing the current using agency and substituting the
following:
Using agency. U.S. Army, Commander, III Corps, Fort Hood, TX.
Issued in Washington, DC, on August 8, 1996.
Jeff Griffith,
Program Director for Air Traffic Airspace Management.
[FR Doc. 96-20970 Filed 8-15-96; 8:45 am]
BILLING CODE 4910-13-P
Complete official Federal Register PDF
FR Doc. 96-20966 Food Labeling; Guidelines for Voluntary Nutrition Labeling of Raw Fruits, Vegetables, and Fish; Identification of the 20 Most Frequently Consumed; and Policy for Data Base Review for Voluntary and Mandatory Nutrition Labeling
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42742-42762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20966]
[[Page 42741]]
_______________________________________________________________________
Part VII
Department of Health and Human Services
_______________________________________________________________________
Food and Drug Administration
_______________________________________________________________________
21 CFR Part 101
Food Labeling; Guidelines for Voluntary Nutrition Labeling of Raw
Fruits, Vegetables, and Fish and Policy for Data Base Review for
Voluntary and Mandatory Nutrition Labeling; Final Rule
Federal Register / Vol. 61, No. 160 / Friday, August 16, 1996 / Rules
and Regulations
[[Page 42742]]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 101
[Docket No. 94N-0155]
RIN 0910-AA19
Food Labeling; Guidelines for Voluntary Nutrition Labeling of Raw
Fruits, Vegetables, and Fish; Identification of the 20 Most Frequently
Consumed; and Policy for Data Base Review for Voluntary and Mandatory
Nutrition Labeling
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is revising the
guidelines for voluntary nutrition labeling of raw fruits, vegetables,
and fish and revising the nutrition labeling values for the 20 most
frequently consumed raw fruits, vegetables, and fish. This action is in
response to the requirements of the Nutrition Labeling and Education
Act of 1990 (the 1990 amendments) and will make the voluntary nutrition
labeling program (hereinafter referred to as the voluntary program)
more consistent with mandatory nutrition labeling of other foods
regulated by FDA. The agency is also setting out its policy on its
review of data bases in both the voluntary and mandatory nutrition
labeling programs.
EFFECTIVE DATE: August 18, 1997.
FOR FURTHER INFORMATION CONTACT: Mary M. Bender, Center for Food Safety
and Applied Nutrition (HFS-165), Food and Drug Administration, 200 C
St. SW., Washington, DC 20204, 202-205-5592.
SUPPLEMENTARY INFORMATION:
I. Background
In response to requirements of the 1990 amendments (Pub. L. 101-
535), FDA published final regulations in the Federal Register of
November 27, 1991 (56 FR 60880, and corrected at 57 FR 8174, March 6,
1992), that: (1) Identified the 20 most frequently consumed raw fruits,
vegetables, and fish in the United States; (2) established guidelines
for the voluntary nutrition labeling of these foods; and (3) set out
the criteria for substantial compliance by food retailers with the
guidelines for the voluntary nutrition labeling of these foods.
FDA stated in Sec. 101.45(i) (21 CFR 101.45(i)) that it would
publish and provide an opportunity for comment on updates of the
nutrition labeling values for the 20 most frequently consumed raw
fruits, vegetables, and fish (or a notice that nutrition labeling
values have not changed from the previous publication) at least every 2
years. In the preamble to the voluntary nutrition labeling final rule
(56 FR 60880 at 60881), FDA advised that once final regulations
governing nutrition labeling of processed, packaged foods (except for
those foods subject to regulation by the U.S. Department of Agriculture
(USDA)) were finalized, it would revise the guidelines for the
voluntary program to make them as consistent as possible with those
final rules. FDA published the final regulations implementing the 1990
amendments in the Federal Register of January 6, 1993, including
regulations on mandatory nutrition labeling of processed, packaged
foods (58 FR 2079); reference daily intakes and daily reference values
(58 FR 2206); and serving sizes (58 FR 2229). FDA made technical
changes in these final rules on August 18, 1993 (58 FR 44020).
FDA published a proposal in the Federal Register of July 18, 1994
(59 FR 36379) (hereinafter referred to as the July 1994 proposal), and
a correction notice in the Federal Register of July 21, 1994 (59 FR
37190), to update the nutrition labeling values for the 20 most
frequently consumed raw fruits, vegetables, and fish and to revise the
guidelines for the voluntary nutrition labeling of these foods to
reflect the January 6, 1993, final rules as modified. Interested
persons were given until September 16, 1994, to comment. In the Federal
Register of October 17, 1994 (59 FR 52275), FDA reopened the comment
period until November 16, 1994, in response to several requests for an
extension of the comment period.
FDA received 29 responses to the July 1994 proposal, each of which
contained one or more comments. The comments generally supported the
July 1994 proposal. A number of comments suggested modification and
revision in various provisions of the July 1994 proposal. A summary of
the suggested changes and the agency's responses follows.
One comment suggested changes in the definition of ``substantial
compliance'' in Sec. 101.43(c) (21 CFR 101.43(c)) and in the study
design for the required biennial surveys specified in Sec. 101.43(b) to
allow for separate levels of substantial compliance for large and small
stores.
FDA did not raise this issue in the July 1994 proposal. It is
therefore outside the scope of this rulemaking. Persons interested in
this issue may petition the agency in accordance with 21 CFR 10.30.
II. Compliance by Food Retailers
A. Good-Faith Effort/Flexibility
1. One comment encouraged FDA to continue to permit flexibility in
providing information to consumers. The comment stated that the most
appropriate way for retailers to provide information is dependent on
in-store space requirements as well as specific needs of consumers and
grocers. The comment stated that the continually changing rules of the
voluntary program distort compliance efforts and asked that FDA
consider the industry's efforts to comply with ever-changing rules and
to adopt a ``good faith effort'' approach in determining substantial
compliance. The comment stated that retailers are waiting for the
revised nutrition labeling values, that supplies of posters and
brochures that display the old nutrition labeling values have dwindled,
and that new stores may be unable to obtain display information until
sometime after the final rule issues with the new values.
FDA used a good faith effort approach in the survey conducted in
November and December 1994 by finding retailers to be in compliance
with the guidelines if they followed the November 27, 1991, regulations
or used the nutrition labeling values proposed in the July 1994
proposal (59 FR 36379 at 36388 and as corrected at 59 FR 37190).
These final regulations grant retailers flexibility in
disseminating the nutrition labeling information to consumers through
various means and materials. The regulations allow for the information
to be presented in a variety of ways (shelf labels, signs, posters,
brochures, notebooks, or leaflets) (Sec. 101.45(a)(1) (21 CFR
101.45(a)(1))) and provide guidance for retailers who choose to use a
chart format (Sec. 101.45(a)(3)) and for those who use an individual
label format (Sec. 101.45(a)(4)).
In addition, Sec. 101.43(a) recognizes that signs providing
nutrition information may be lost or damaged. Thus the regulation
provides that retailers will be considered to be in compliance if they
provide consumers with at least 90 percent of the nutrition labeling
values for the 20 most frequently consumed raw fruits, vegetables, and
fish. Further, Sec. 101.43(a) states that retailers need only provide
data for items among those most frequently consumed that are sold in
their stores. They need not have nutrition information on items not
sold in their stores.
Although the comment refers to ``continuously changing rules,'' the
agency does not foresee any additional major changes to the voluntary
program
[[Page 42743]]
except for the updating of the nutrition labeling values of the most
frequently consumed foods. The changes that FDA is making at this time
to the guidelines for the voluntary program are primarily to make them
as consistent as possible with the January 6, 1993, mandatory nutrition
labeling regulations for processed, packaged foods.
B. Use of FDA Data for Compliance
FDA proposed in Sec. 101.43(a)(3) and Sec. 101.45(b) that for
retailers to be in compliance with the voluntary program, they must
provide customers with the nutrition labeling values developed by FDA
in Appendices C and D to part 101 (21 CFR part 101) (except that
information on potassium is voluntary). FDA stated that its tentative
view was that use of these values will ensure consistency of values
among retail stores and thus prevent consumer confusion.
2. One comment supported retailer use of data provided by FDA.
Another comment supported the continued revisions to labeling values to
reflect newer data and changes in labeling to be consistent with
labeling of other foods. This comment endorsed providing consumers with
the most accurate and complete information in a consistent format to
alleviate customer confusion. However, another comment stated that the
proposed requirement that FDA's values be used for the voluntary
program was too restrictive. The comment supported the use of more
cost-effective, realistic, and workable standards in nutrition labeling
and suggested using food composition data from USDA to provide as much
information to consumers as possible. The comment said that no one
would argue that USDA's data are inaccurate and said that FDA's
nutrition labeling regulations are based on food consumption surveys
conducted by USDA.
FDA finds that its provision to retailers of the nutrition labeling
values for the voluntary program is the most cost-effective method to
transmit this information to consumers, and that this method promotes
consistency in the information received by consumers. Retailers will
incur no costs relating to sampling design, collection procedures,
laboratory analysis, or statistical evaluation of data. The costs that
will be incurred by retailers participating in the voluntary program
will be limited to the purchase or development of the charts,
brochures, or other materials for consumer use.
FDA does not agree that mean values from USDA data bases are
appropriate for nutrition labeling. The nutrition labeling regulations
in Sec. 101.9 (g)(4) and (g)(5) state that FDA will consider a product
misbranded if analyzed nutrient levels for naturally occurring
vitamins, minerals, protein, total carbohydrate, polyunsaturated fat,
monounsaturated fat, and potassium are not at least equal to 80 percent
of the value declared on the label, and if analyzed nutrient levels for
calories, sugars, total fat, saturated fat, cholesterol, and sodium are
more than 20 percent in excess of the value declared on the label. To
meet these requirements, the agency encourages manufacturers to use FDA
compliance calculations to determine the nutrition labeling values for
their products (Ref. 1). Use of mean values (such as those from USDA
data bases) for nutrition labeling, as suggested by the comment, is
less likely to assure manufacturers of being in compliance with FDA's
regulations.
Some of the USDA's food composition data are not truly
representative because they are based on small sample sizes or do not
take into account specific variables, such as geographic area. Thus,
mean food composition values available in various USDA publications
are, generally, not suitable for labeling purposes.
FDA has provided nutrition labeling values for the most frequently
consumed raw fruits, vegetables, and fish in Appendices C and D. The
agency did obtain data for some of these foods from the USDA National
Nutrient Databank and other USDA sources. However, where possible, FDA
applied compliance calculations to the data obtained from USDA (as well
as other data sources) and used the resulting, adjusted values.
It is true, as the comment states, that FDA used information from
USDA food consumption surveys to establish reference amounts
customarily consumed in Sec. 101.12 (quantities of foods commonly
consumed per eating occasions) for use by manufacturers in determining
serving sizes for nutrition labeling. However, FDA does not agree with
the comment that the use of USDA food consumption data by FDA for that
purpose necessitates FDA's use of USDA food composition data for
purposes of nutrition labeling if those data are not adequate for those
purposes. Based on the foregoing, having fully considered the comments,
FDA has adopted Secs. 101.43(a)(3) and 101.45(b) as proposed.
III. The 20 Most Frequently Consumed Raw Fruits, Vegetables, and Fish
A. Plural Versus Singular Food Names
3. One comment requested latitude in the use of plural versus
singular names for fruits and vegetables (e.g., peach versus peaches).
The comment stated that FDA was not consistent in the use of plural and
singular food names and asked for clarification.
In the July 1994 proposal, FDA used singular food names if the
serving was one whole unit (e.g., apple, banana) or part of a whole
unit (e.g., salmon, watermelon, avocado) and plural food names if the
serving was more than one unit (e.g., grapes, strawberries, green peas,
scallops). FDA requests that retailers (and trade associations that
provide nutrition labeling information to retailers) use the plural and
singular designations for food names for raw fruits, vegetables, and
fish provided by FDA in Appendices C and D to part 101 when they
provide nutrition labeling information to consumers. However, the
agency does not consider the use of singular or plural names to be an
issue for the biennial compliance surveys. Noncompliance of a retailer
will be judged as failure to provide the nutrition labeling values as
specified in this final rule.
B. Food Names
4. One comment requested name changes for three foods. The comment
wanted ``lettuce'' to be called ``iceberg lettuce,'' ``sweet cherries''
to be called ``cherries,'' and ``honeydew melon'' to be called
``honeydew.''
FDA notes that ``lettuce'' is specified as ``iceberg lettuce'' in
Sec. 101.44(b) and in Appendix C to part 101. FDA mistakenly used the
more general term ``lettuce'' in referring to this food in Appendix C
of the July 1994 proposal. FDA is not convinced that consumers would be
served by changing the name ``sweet cherries'' to ``cherries'' or
``honeydew melon'' to ``honeydew.'' Use of these alternate names for
sweet cherries and honeydew melon by retailers will not, however,
result in a finding of noncompliance.
C. Changes to the 20 Most Frequently Consumed Fish
FDA received no comments about its proposed changes to the list of
the 20 most frequently consumed fish. Therefore, the proposed changes
to the fish list (i.e., to list flounder and sole as one entry, to have
three subgroups for salmon, and to add swordfish) have been
incorporated in Sec. 101.44(c) and Appendix D to part 101.
[[Page 42744]]
IV. Presentation of the Nutrition Labeling Values
The July 1994 proposal was designed to make the guidelines for the
voluntary program more consistent with the January 6, 1993, nutrition
labeling regulations in terms of what information is required
(content), and how that information is to be presented (format). The
proposed guidelines would allow the information to be presented in a
chart format (Sec. 101.45(a)(3)) as well as in an individual label
format (Sec. 101.45(a)(4)) that is similar to that used for processed,
packaged foods.
There was general support among the comments for the proposed
content and format for the nutrition labeling of raw fruits,
vegetables, and fish. In particular, comments generally agreed that:
(1) Labels on produce should be as consistent as possible with those on
other foods; (2) saturated fat and cholesterol should be allowed to be
listed in a footnote rather than in columns for produce; (3) the entire
footnote for Daily Values (DV's) for two calorie levels should not be
required to be listed on charts; and (4) if producers and packers label
an individual product, they should comply with the format and other
regulations that apply to packaged foods.
A. Optional Nutrients
5. One comment requested that the word ``required'' be omitted from
proposed Sec. 101.45(a)(2) because it provides that only ``required
nutrients'' should be declared in accordance with Sec. 101.9(c) and
makes no provision for voluntary inclusion of information on other
micronutrients. The comment stated that, as long as it is done
accurately, vendors should be allowed to include information for any
essential vitamin or mineral listed in Sec. 101.9(c)(8)(iv), not only
the required nutrients, to the same extent that they are allowed to do
so for the same products in processed form. The comment stated that
removing the word ``required'' would allow for the listing of beta-
carotene under vitamin A (see Sec. 101.9(c)(8)(vi)), and that fruits
and vegetables are a good source of this nutrient.
Two other comments requested that FDA address the use of optional
nutrients in the voluntary program. They stated that information about
optional nutrients is allowed on processed foods, and that they
strongly supported the declaration of optional nutrients as part of the
voluntary program. Another comment requested that FDA permit inclusion
of data on the vitamin B-6 content of bananas because bananas are an
excellent source of this nutrient. The comment stated that inadequate
dietary intake of vitamin B-6 is a potential public health issue, and
that inclusion of vitamin B-6 on the nutrition label will serve an
important public health function.
FDA is persuaded by these comments that providing information on
optional nutrients for foods in the voluntary program will be useful.
Thus, FDA is providing for the declaration of information on optional
nutrients for raw fruits, vegetables, and fish, particularly on labels
for individual foods (e.g., on signs, brochures, or food packages).
Declarations of optional nutrients included on individual labels should
follow the requirements under Sec. 101.9(c). Therefore, FDA is removing
the word ``required'' in Sec. 101.45(a)(2), as suggested by the
comment.
However, FDA is concerned about the size and readability of charts
if they provide information on optional nutrients.
Including optional nutrients on charts will require extra columns
and thus make the charts larger. Some comments (discussed in section
IV.D. of this document) expressed concern that charts carrying only the
required information are too large and unreadable. Therefore, FDA urges
retailers to carefully consider the consequences of including optional
nutrients in charts.
If optional nutrients are included on charts (see
Sec. 101.45(a)(3)), retailers should provide values for the nutrients
for all foods and not leave blanks for some foods. FDA fears that
consumers might interpret blanks for optional nutrients in charts as
zeros. Alternatively, information can be provided on optional nutrients
in a footnote outside the column format of the chart (e.g., ``bananas
contain 35% of the DV for vitamin B-6'').
B. Use of Individual Labels on Posters
6. One comment stated that posters with horizontal and vertical
lines are difficult for consumers to read and provided an alternative
poster with 40 individual produce nutrition labels. The comment asked
whether the exceptions for chart format posters apply to other poster
formats.
In proposed Sec. 101.45(a)(3), FDA stated that when nutrition
labeling information is provided for raw fruits, vegetables, and fish
on signs, posters, brochures, notebooks, or leaflets, it may be
presented in charts in horizontal or vertical columns. This proposed
provision would not have required the use of horizontal or vertical
columns. However, to clarify that other formats may be used, FDA has
modified Sec. 101.45(a)(3) to provide for the optional use of a poster
containing a compilation of individual nutrition labels. FDA has also
modified the first sentence of Sec. 101.45(a)(3) to clarify that it
pertains to materials containing nutrition information for more than
one raw fruit, vegetable, or fish, whereas Sec. 101.45(a)(4) pertains
to nutrition labeling for individual raw fruits, vegetables, or fish.
The exceptions noted in Sec. 101.45 (a)(3)(i) through (a)(3)(iii) for
labeling materials containing nutrition information on more than one
item will apply to all such materials, i.e., signs, posters, brochures,
notebooks, or leaflets.
C. Use of Linear Formats
7. FDA proposed in Sec. 101.45(a)(3) to not permit the use of
linear formats in the voluntary program. One comment opposed this
restriction. The comment encouraged FDA to find retailers in compliance
even if nutrition information is provided in a different format from
those specified in Sec. 101.45 and stated that flexibility and
creativity should be encouraged. The comment said that alternate
formats may be preferable to reach specific populations. The comment
stated that the linear format can achieve the desired results as well
as the columnar format, and that the retailer should be granted the
flexibility to determine what format best suits the needs of its
customers. The comment stated that the other labeling requirements
regarding highlighting, type size, and other format elements will
ensure that the information displayed in a linear format will be
visible and readable.
FDA is not persuaded that the linear format (i.e., display) would
be useful for providing voluntary nutrition labeling. A linear display
is not particularly easy to read, and the difficulties would be
exacerbated on posters that a consumer may have to read from a
distance. Under Sec. 101.9(j)(13)(ii), linear displays can only be used
to present the nutrition label if the food package has less than 40
square inches of space available to bear labeling, and the package
shape and size cannot accommodate a standard vertical or tabular
display. Posters, brochures, and other means for providing nutrition
information under Sec. 101.45(a)(3) are not limited in size and
therefore do not meet these criteria. Thus, FDA has retained the
restriction on the use of linear displays in Sec. 101.45(a)(3). At the
same time, however, the agency modified Sec. 101.45(a)(3) to change
``linear format'' to ``linear display'' to use terminology
[[Page 42745]]
consistent with Sec. 101.9(j)(13)(ii)(A)(2) and to cross-reference that
section.
Linear displays are not precluded under Sec. 101.45(a)(4) for
individual labels as long as the labels meet the criteria in
Sec. 101.9(j)(13)(ii).
D. Use of Abbreviated Charts
To make the charts containing the nutrition labeling values for raw
fruits, vegetables, and fish more readable, FDA proposed in
Sec. 101.45(a)(3)(ii) that the full footnote required in
Sec. 101.9(d)(9)(i), which lists the DV for six nutrients for two
calorie levels, not be required. Because no comments opposed this
action, Sec. 101.45(a)(3)(ii) is included in the final rule as
proposed.
FDA proposed in Sec. 101.45(a)(3)(iii) to provide the option of
omitting the columns for saturated fat and cholesterol for fruits and
vegetables, omitting the columns for sugars and fiber for fish, and
instead providing the following footnotes: ``Most fruits and vegetables
provide negligible amounts of saturated fat and cholesterol; avocados
provide 1 gram (g) of saturated fat per ounce,'' and ``Fish provide
negligible amounts of dietary fiber and sugars.'' FDA proposed these
footnotes to reduce the size of the charts on which nutrition
information is presented (to make them more readable) without reducing
the amount of information provided to consumers.
8. One comment requested that the portion of the footnote regarding
the fat content of raw produce for the voluntary nutrition labeling
chart (i.e., ``* * * avocados provide 1 g of saturated fat per ounce'')
be changed to ``* * * avocados provide 1 g of saturated fat, 1 g of
polyunsaturated fat, and 3 grams of monounsaturated fat per ounce.''
The comment said that this additional information about avocados will
be useful for consumers, especially diabetics, because the new diabetes
guidelines recommend increasing consumption of monounsaturated fatty
acids.
Because information on polyunsaturated and monounsaturated fat may
be provided on processed foods, FDA has decided to revise
Sec. 101.45(a)(3)(iii) to permit the inclusion of information about the
level of these nutrients in avocados (as suggested by the comment) on
an optional basis by retailers. To provide the added flexibility, FDA
revised Sec. 101.45(a)(3)(iii) to make the subject footnote an example
of an appropriate footnote, rather than the required footnote, and
added a sentence stating that information about the polyunsaturated and
monounsaturated fat content of avocados may be included. In addition,
FDA clarified that if the listings of saturated fat and cholesterol are
left off of charts or off of individual nutrition labels used on signs,
posters, brochures, notebooks, or leaflets, the required information on
saturated fat and cholesterol must be included in a footnote.
9. One comment stated that the new charts proposed by FDA will be
less readable than the previous ones because there will be 22 columns
instead of 10, and that much of the information is repetitious because
there are dual listings (i.e., weight amounts and percent DV's) for
some nutrients. The comment stated that the new charts will have too
much information for consumers to handle. The comment stated that
current signs are manageable, but that the new ones will require either
smaller type (making it unreadable to consumers) or larger signs (which
are impractical to hang). Further, the comment stated that the firm
that submitted this comment planned to do away with signs and to use a
manual and leaflets if the July 1994 proposal becomes final. The
comment requested that FDA allow for the use of abbreviated charts as
signs in produce and seafood departments if complete information (e.g.,
in manuals or leaflets) is available to consumers elsewhere in the
store. It stated that a note on the chart could direct consumers to the
more detailed information. The comment suggested that abbreviated
charts for fruits and vegetables could omit calories from fat,
cholesterol, and saturated fat and list only the percent DV's (and not
weight amounts) for nutrients, and that for fish, such charts could
omit sugars, dietary fiber, and potassium and list only the percent
DV's for nutrients. The comment noted that declaration of percent DV's
is the most important information on the nutrition label, as reflected
in FDA's requirement that it be in bold face.
FDA acknowledges that the new charts containing nutrition labeling
for raw produce and fish will contain more information, and thus
require larger charts or smaller print, than the old charts. FDA has
addressed, in part, the issue of the size of the charts by allowing for
the omission of the columns for saturated fat and cholesterol for
fruits and vegetables and the columns for dietary fiber and sugars for
fish (Sec. 101.45(a)(3)(iii)). FDA does not feel that it is appropriate
to omit the column for calories from fat for fruits and vegetables, as
the comment suggests, because seven of these foods have values greater
than zero for calories from fat. Information on calories from fat is
important for consumers, and a footnote to the chart that specifies the
number of calories from fat for seven fruits and vegetables would be
lengthy and difficult to read.
In response to the suggestion that the column for potassium be
included on the chart for fruits and vegetables but omitted from the
chart for fish, FDA notes that the column for potassium is optional on
both charts. However, FDA also notes that potassium provided by fish is
as important as potassium provided by fruits and vegetables. Several
comments agreed that information on potassium is important for
consumers, and that it should be optionally provided.
Any inconsistency between abbreviated charts without columns
listing the quantitative amounts by weight for nutrients for which
percent DV's are declared, as suggested by the comment, and the
nutrition labeling of processed, packaged foods could lead to consumer
confusion. There was general agreement among the comments that
nutrition labeling information for fruits, vegetables, and fish should
be as consistent as possible with labeling provided for other foods.
Additionally, the quantitative amounts by weight continue to be
important to, and used by, many health professionals and consumers. For
instance, the results of FDA's 1995 Health and Diet Survey showed that,
among respondents who used the Nutrition Facts label to obtain
nutrition information on a food product, a majority use the g and
milligram (mg) amounts on the label solely or in combination with the
percent DV's (69 percent). Few of the respondents in the survey used
only the percent DV's (14 percent) (Ref. 4).
Because the size and readability of the charts are important
issues, the agency encourages retailers and educators to experiment
with various chart formats, to test and determine consumer responses to
them, and to share the results of these studies with FDA. However,
after considering the information needs of consumers and the comment's
expressed concern about chart size, FDA concludes that the requirement
that it is adopting strikes an appropriate balance between these
potentially competing factors.
E. Nutrient Values on Individual Labels
FDA proposed in Sec. 101.45(a)(4) that individual nutrition labels
(e.g., over bins or on packaging) for raw fruits, vegetables, and fish
provided by retailers meet the requirements of Sec. 101.9(d). This
proposed provision would have required that individual labels carry the
full footnote set forth in Sec. 101.9(d)(9), which provides
[[Page 42746]]
information about daily values for two calorie levels, rather than the
abbreviated footnote permitted for the chart format under
Sec. 101.45(a)(3)(ii), unless the package is otherwise exempt under
Secs. 101.9(f) or 101.9(j)(13) from such a requirement.
10. Several comments disagreed with the need for the full footnote
on individual labels provided by retailers above or close to food bins
or containers. The comments stated that the modified label, without the
lengthy DV's footnote, would be appropriate because of space and
readability concerns. One comment stated that the sign could direct the
consumer to a source of more complete information in the store. Another
comment noted that short, modified labels are allowed on some processed
foods and should be allowed for foods in the voluntary program.
FDA is persuaded by the comments that the footnote concerning
nutrient requirements at two calorie levels could create concerns about
space and readability for individual labels provided by retailers on
signs that are over or near food bins or containers for raw fruits,
vegetables, and fish. Therefore, FDA has added a sentence to
Sec. 101.45(a)(4) that reads, ``For individual labels provided by
retailers on signs and posters, the footnote required in
Sec. 101.9(d)(9) may be shortened to `Percent Daily Values are based on
a 2,000 calorie diet.' '' The agency also notes that foods that qualify
may use the simplified format (see Sec. 101.9(f)). Thus, FDA has
provided for the use 'of short, modified nutrition labels with
individual raw fruits, vegetables, and fish.
F. Nutrition Labeling Values for a Particular Commodity
11. A commodity group asked whether the nutrition label that was
developed and made available by the group in April 1993 could continue
to be used on bags and boxes of that commodity.
As discussed in section II.B. of this document, to be in compliance
with Sec. 101.45(b) of the guidelines for the voluntary program,
retailers must provide consumers with the nutrition labeling values
provided by FDA in Appendices C and D to part 101 for the most
frequently consumed raw fruits, vegetables, and fish. (As for the date
when use of these values must begin, see section VI. of this document.)
Individual nutrition labels used on raw fruits, vegetables, and fish
that are packaged by a grower, producer, or shipper should provide the
information listed in Sec. 101.45(a)(4). If growers, producers, or
shippers wish to provide individual nutrition labels on packaging
materials for foods included in the voluntary program, they should use
the labeling values provided by FDA.
However, if a nutrition label developed by a commodity group is for
a specific genus or species, then a more specific name for the product
should be used, as stated in Sec. 101.45(c)(1), and the commodity group
should have the data to support the labeling values used for the
product. The nutrition labeling values in Appendices C and D to part
101 are for generic commodities. If a commodity group wishes to amend
the nutrient values for a generic item, FDA encourages the group to
submit the values to the agency as specified in Sec. 101.45(b)(1) for
consideration for inclusion in the agency's next revision of Appendices
C and D. If upon review of the data, FDA decides to use the labeling
values for the generic item, those values will be made available for
public comment. Any nutrition labeling value for a generic item that
the agency decides to incorporate into Appendix C or D will have to be
used by retailers for them to be considered to be in compliance.
FDA is agreeable to having its labeling values used on bags of cut
raw produce that qualify for the voluntary program (e.g., they have
received no further processing or are not packaged with added
ingredients such as salad dressing or croutons).
V. Timeframe for Updating Nutrient Values
12. FDA stated in the July 1994 proposal that the nutrition
labeling values for the most frequently consumed raw fruits,
vegetables, and fish would be revised every 2 years (proposed
Sec. 101.45(b)). Several comments thought that this timeframe was too
short. One comment expressed concern about retailers keeping up with
the 2-year revisions and stated that too frequent changes in the values
will result in confusion in the marketplace. The comment stated that
changes will require education of retail store operators, and that it
is time-consuming and expensive for industry to prepare, obtain, and
display new compliance materials. The comment stated that new materials
cannot be adequately disseminated to the industry in less than 6 months
and asked that FDA consider the administrative and economic burden
imposed on the industry.
Four comments recommended updates every 4 years (every other
compliance reporting period) rather than every 2 years. Reasons given
for extending the time between revisions were: (1) To accommodate the
time lag in relaying information to retailers and industry members; (2)
to use up old packaging in stock; (3) difficulties for retailers,
shippers, and packaging companies in changing packaging materials; (4)
cost of printing educational materials; (5) the shelf life of
educational materials, which is longer than 2 years; and (6) FDA's
inability to complete revisions every 2 years. One comment stated that
growers will choose not to put nutrition labeling information on bags
of produce if the values are changed on a biennial basis.
FDA agrees that biennial updates of the nutrition labeling values
as well as the list of the 20 most frequently consumed raw fruits,
vegetables, and fish are difficult for both FDA and retailers, and that
updates every 4 years are more reasonable and cost-effective.
Accordingly, FDA has revised Sec. 101.45(b) to state that, if
necessary, revisions will be proposed every 4 years.
VI. Effective Date for Compliance
13. FDA proposed that any revision that is made in the voluntary
program would be effective 30 days after publication of the final rule.
A number of comments stated that this time period is too short for
retailers and for growers, shippers, and packers. The comments stated
that more time is needed to: (1) Finalize the updated charts and have
retailers print and distribute their materials throughout their stores;
(2) print labels and posters and devise new advertising campaigns; (3)
order and receive new packaging; and (4) avoid inventory disposal costs
and allow depletion, rather than destruction, of label inventory.
Several comments stated that the short effective date would be an
economic hardship for growers and shippers with nutrition labeling on
packaging materials. Two comments recommended an extended effective
date for growers and shippers who voluntarily label produce.
One comment requested that FDA expressly advise that any new
nutrient values for raw fish will not have to be used by manufacturers
in the nutrition labeling of retail-packaged, single-ingredient raw
fish products until, at a minimum, 180 days after publication of the
final rule. The comment stated that FDA focused on the effect of
voluntary nutrition labeling in retail stores but did not consider
manufacturers who use FDA values in nutrition labeling retail-packaged,
single-ingredient products. The comment stated that manufacturers of
packaged raw fish products must create new label plates, print labels,
[[Page 42747]]
package inventory, ship products bearing the new labels, and allow for
transit and holding time if the product is exported to the United
States.
Several comments noted that FDA allowed considerably more time (16
months and then 19 months as extended) in establishing the effective
date for the labeling provisions of the 1990 amendments for processed
foods and asked that the produce and fish industries be given more
time. Comments requesting a longer time period suggested 4 months (one
request), 6 months (one request), 1 year (four requests), 15 months
(one request), and 18 months (one request).
FDA agrees that an effective date of 30 days after publication of
the final rule is too short for retailers to get new nutrition labeling
materials in place. Taking the various suggestions for extended time
frames into consideration, FDA has set the effective date of this final
rule to be 1 year from the date of publication in the Federal Register.
Labeling values in Appendices C and D to part 101 may be and should be
used at the retail level as soon as possible, beginning on the date of
publication. However, because of the relatively short amount of time
before the 1996 FDA Compliance Survey, FDA will consider either the old
(1991) or new (1996) labeling values to be acceptable for retail stores
to be considered to be in compliance with the voluntary program during
the upcoming survey.
Likewise, growers, shippers, and packers who provide nutrition
labeling on packages of raw fruits, vegetables, and fish will have 1
year to come into compliance with this document. While growers,
shippers, and packers will not be assessed for compliance as a part of
the 1996 FDA Compliance Survey for the voluntary program, they will
need to be in compliance with Sec. 101.9 (as modified by
Sec. 101.45(a)(4)). Accordingly, those who use the generic nutrient
values in Appendix C or D to part 101 in nutrition labeling will have 1
year to update nutrient values on the food labels.
VII. Nutrition Labeling Values for the 20 Most Frequently Consumed Raw
Fruits, Vegetables, and Fish
In the July 1994 proposal, FDA stated that the information that it
used to arrive at the proposed nutrition labeling values for raw
fruits, vegetables, and fish included data provided by the Produce
Marketing Association (PMA), Nutrition Network (on behalf of the
International Banana Association), and USDA (for fish and produce). FDA
received a few comments in response to the July 1994 proposal that
included additional data for some foods from other sources. PMA
submitted new labeling values based upon their original raw data that
were referenced in the proposal. FDA considered data from all sources
and used those data, as appropriate, to calculate the labeling values
set forth in this document in Appendices C and D to part 101. In these
calculations, to the extent possible, FDA used the statistical
methodology that it recommends in the ``FDA Nutrition Labeling Manual:
A Guide for Developing and Using Data Bases'' (i.e., using compliance
calculations based on 95 percent prediction intervals) (Ref. 1).
Complete documentation for the nutrition labeling values for raw
fruits, vegetables, and fish is found in Reference 5.
A. Fat Values for Raw Fruits and Vegetables
14. One comment requested that the fat content of all raw fruits
and vegetables containing less than 1 g of fat be listed as zero g.
FDA is not aware of any basis for establishing rules on how
nutrient values are determined for raw fruits and vegetables that are
different from those for other foods. The nutrition labeling
regulations require that the amount of fat be expressed to the nearest
0.5 g increment below 5 g (Sec. 101.9(c)(2)). However, if the amount of
fat is less than 0.5 g, the label value of 0 g may be used. Thus, for
fruits and vegetables containing less than 1 g, but more than 0.5 g of
fat, FDA rounded to 0.5 g if the amount present was 0.74 g or less, and
rounded to 1 g if the amount present was 0.75 g or more. Thus, FDA has
not taken the action requested by the comment.
B. Fat Values for Grapefruit, Kiwifruit, Strawberries, and Tomatoes
15. One comment expressed concern about the fat values for
grapefruit, kiwifruit, strawberries, and tomatoes. The comment stated
that the analytical method (ether extract) that was used to obtain the
data overestimates fat when it is present in trace amounts compared to
current techniques such as high pressure liquid chromatography (HPLC)
or gas chromatography. The comment stated that, consequently, it may be
necessary to reanalyze the fat content for those commodities. Five
other comments questioned the fat content of grapefruit, and four of
those comments suggested that FDA had made an error in rounding. These
comments suggested that the fat content of grapefruit is 0 g rather
than 0.5 g.
FDA looks forward to receiving new data submissions for raw fruits
and vegetables (including grapefruit, kiwifruit, strawberries, and
tomatoes) based upon more current analytical methods. The agency will
consider those data and will make changes, if appropriate, at the next
opportunity for revision of the labeling values for these foods. For
the purposes of this final rule, however, FDA determined the fat
content of kiwifruit, strawberries, and tomatoes based on the PMA data,
using statistical methodology specified in the labeling manual. Revised
fat values are listed in Appendix C to part 101 for kiwifruit (1 g, 2
percent DV), strawberries (0 g, 0 percent DV), and tomatoes (0.5 g, 1
percent DV).
FDA acknowledges that it made an error in tentatively assigning a
0.5 g fat value for grapefruit. After reviewing the PMA data, FDA
concluded that the fat value for grapefruit is 0 g, 0 percent DV.
C. Fiber Values for 12 Fruits and Vegetables
16. One comment stated that FDA's fiber values in the July 1994
proposal were too low for bananas, cucumbers, and radishes and too high
for oranges, grapefruit, tangerines, sweet cherries, kiwifruit, onions,
sweet corn, sweet potatoes, and green beans. The comment provided only
mean values for dietary fiber for these foods based upon five methods.
FDA reviewed the information on dietary fiber provided by the
comment. Unfortunately, the comment did not include raw data, measures
of variance (e.g., standard deviations), or the number of samples or
composites analyzed, information required for FDA to perform compliance
calculations to determine appropriate nutrition labeling values.
Because the comment did not provide adequate information for revision
of the label values for dietary fiber, FDA will make no changes based
upon this comment.
FDA encourages the produce industry to do complete laboratory
analyses and welcomes submissions of data for fiber accompanied by
detailed information. The agency will consider those data and will make
changes, if appropriate, at the next opportunity for revision of the
labeling values for these foods. As discussed in sections VII.F. and
VII.H. of this document, FDA has revised the fiber values for some
foods in this document based on data submitted in other comments.
D. Nutrition Labeling Values for Apples
17. One comment provided FDA with data on the nutrient composition
of apples that, the comment claimed,
[[Page 42748]]
upgraded the data on file with FDA, which were provided by PMA in 1990.
The submission provided data describing the contribution of sugars to
total carbohydrate, the levels of saturated and unsaturated fatty
acids, and the total fatty acid content. The comment requested that
these newer data be included in FDA's revision of the nutrition
labeling values for raw apples because they are more complete and
accurate and reflect the use of more current analytical methods.
FDA reviewed the newer data for apples (Ref. 6) and used these
data, along with other available data, to derive labeling values using
compliance calculations based on 95 percent prediction intervals for
the levels of calories from fat, total fat, saturated fat, total
carbohydrate, and sugars in this final rule. The following summarizes
changes to the nutrition labeling values in Appendix C for apples based
on the data submitted in the comment:
Table 1
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Apple nutrient
(1) Proposed values
(1) Final rule values
----------------------------------------------------------------------------------------------------------------
Calories from fat................ 10 .................. 0
Total fat........................ 1 g 2% DV 0 g 0% DV
Total carbohydrate............... 24 g 8% DV 22 g 7% DV
Sugars........................... 20 g .................. 16 g .................
----------------------------------------------------------------------------------------------------------------
Note: The value for saturated fat remains the same as in the July 1994 proposal at 0 g, 0 percent DV.
FDA made additional changes to the nutrition labeling values for
apples based upon another comment, as described in section VII.H. of
this document.
E. Nutrition Labeling Values for Avocados
18. One comment provided new data for potassium, protein, and
vitamin C in California avocados. Based on the new data, the submission
requested that the value for potassium be changed from 105 mg, 3
percent DV to 170 mg, 5 percent DV; that the value for protein be
changed from 0 g to 1 g; and that the value for vitamin C be changed
from 2 percent DV to 4 percent DV.
FDA reviewed the newer data for avocados (Ref. 7), confirmed that
the label values suggested by the comment were correctly derived using
compliance calculations based on 95 percent prediction intervals, and
used these data in deriving the label values for potassium, protein,
and vitamin C for avocados in this final rule. The changes that FDA has
made to the nutrition labeling values in Appendix C for avocados based
on the comment are summarized below:
Table 2
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Avocado nutrient
(1) Proposed values
(1) Final rule values
----------------------------------------------------------------------------------------------------------------
Potassium........................ 105 mg 3% DV 170 mg 5% DV
Protein.......................... 0 g .................. 1 g .................
Vitamin C........................ .................. 2% DV .................. 4% DV
----------------------------------------------------------------------------------------------------------------
FDA made additional changes to the nutrition labeling values for
avocados based upon another comment, as described in section VII.H. of
this document.
F. Nutrition Labeling Values for Bananas
19. In developing the July 1994 proposal, FDA used data on the
composition of bananas that were submitted on behalf of the
International Banana Association. Those data were derived from data
from a 1982-1983 study by the United Fresh Fruit and Vegetable
Association (UFFVA) and from a 1990 PMA study. FDA calculated nutrition
labeling values for bananas using compliance calculations based on 95
percent prediction intervals and published these values in Appendix C
of the July 1994 proposal.
One comment stated that the 1982-1983 UFFVA data should not be used
for fiber and vitamin C, and that the FDA values for these two
nutrients in bananas should be revised based only on the PMA data. The
comment stated that there are statistically significant differences
between the two data sets for dietary fiber and vitamin C, which
suggests that only one data set may appropriately be used. The comment
stated that the differences are likely attributable to the different
analytical methods used in the surveys. The comment said that the 1982-
83 UFFVA data were based upon a method of analysis that measured crude
fiber, neutral detergent fiber, and pectin, while the 1990 PMA fiber
data were based on the AOAC Enzymatic-Gravimetric Method. The 1982-1983
UFFVA vitamin C data were obtained with a titrimetric assay that
measures ascorbic acid but not dehydroascorbic acid, while the 1990 PMA
data were based on a method that measures both active forms of vitamin
C. The comment stated that based on the 1990 PMA data alone, fiber
should be 4 g, 15 percent DV, and vitamin C should be 9 mg, 15 percent
DV.
FDA accepts the explanation for the data discrepancies for dietary
fiber and vitamin C in bananas presented in the comment. The analytical
methods used by UFFVA in 1982-1983 to analyze fiber and vitamin C are
no longer appropriate for labeling purposes; however, the analytical
methods used for the more recent PMA data are appropriate. As a result,
FDA recalculated the nutrition labeling values for dietary fiber and
vitamin C based on PMA data only. The agency recalculated the nutrition
labeling values for bananas for all other nutrients based on both data
sources (UFFVA and PMA) (Ref. 8), using compliance calculations based
on 95 percent prediction intervals. The following summarizes the
differences between the proposed values and the values in Appendix C
set forth in this final rule:
[[Page 42749]]
Table 3
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Banana nutrient
(1) Proposed values
(1) Final rule values
----------------------------------------------------------------------------------------------------------------
Total fat........................ 0.5 g 1% DV 0 g 0% DV
Potassium........................ 390 mg 11% DV 400 mg 11% DV
Dietary fiber.................... 1 g 4% DV 4 g 16% DV
Vitamin C........................ .................. 0% DV .................. 15% DV
Iron............................. .................. 0% DV .................. 2% DV
----------------------------------------------------------------------------------------------------------------
G. Nutrition Labeling Values for Tangerines
20. One comment stated that FDA used incorrect values for calories,
calories from fat, fat, vitamin C, calcium, and vitamin A in
tangerines. It stated that, based on the PMA report on tangerines (Ref.
9), calories should be 45 (not 80), calories from fat should be 5 (not
10), fat should be 1 g (not 2 g), vitamin C should be 40 percent DV
(not 35 percent DV), and calcium should be 4 percent DV (not 2 percent
DV). The comment disagreed with the proposed value for vitamin A (which
FDA derived from PMA data) for tangerines. It stated that PMA only
tested for beta-carotene, but that the predominant carotenoid in
tangerines is beta-cryptoxanthin. The comment also provided numerous
scientific articles containing data, obtained by a variety of methods
including newer HPLC methods, for the beta-cryptoxanthin (3-hydroxy
beta carotene) content of tangerines. The comment recommended that FDA
use the mean vitamin A value from USDA Handbook 8-9 for its derivation
of the compliance value.
FDA would first like to note that the proposed value for total fat
in tangerines was 1 g, 2 percent DV, and not 2 g of fat, as stated by
the comment. For the tangerine values in Appendix C to part 101, FDA
derived the label values from raw data provided by a comment, using
compliance calculations based on 95 percent prediction intervals. Those
data were the only raw data available. The revised values for
tangerines are 50 calories; 0 calories from fat; 0.5 g, 1 percent DV
total fat; 50 percent DV vitamin C; and 4 percent DV for calcium.
FDA agrees that the method used by PMA measured only beta-carotene
and excluded the contribution of beta-cryptoxanthin to the vitamin A
activity for tangerines. The agency notes that there is more than one
AOAC method for the measurement of carotenes in foods, and that the
method that PMA stated that it used is specific for non-hydroxylated
carotenes and does not measure mono-hydroxylated carotenes such as
beta-cryptoxanthin. However, alternative AOAC methods do permit the
measurement of these substances and have been used historically to
obtain vitamin A values for food composition tables (Ref. 10). It
should be noted that the vitamin A activity of beta-cryptoxanthin has
been considered to be about 50 percent of that for beta-carotene (Ref.
11). As discussed in section II.B. of this document, FDA does not
consider the use of mean values, such as those in Handbook 8-9,
appropriate for labeling purposes.
FDA looks forward to receiving new data submissions for tangerines
based upon more comprehensive analytical methodology for vitamin A. The
agency will consider those data and will make changes, if appropriate,
at the next opportunity for revision of the labeling values. The
labeling value for vitamin A remains at 0 percent DV.
H. Statistical Methodology for Deriving Nutrition Labeling Values From
PMA Data
Before FDA published the July 1994 proposal, PMA provided the
agency with nutrition labeling values for 31 fruits and vegetables that
PMA had derived from the raw data it had compiled using 80 percent
prediction intervals. FDA included many of these nutrition labeling
values in the July 1994 proposal.
21. Several comments expressed concern about the rounding of the
nutrition labeling values for fruits and vegetables in the July 1994
proposal, specifically the values obtained from PMA. One comment stated
that FDA was inconsistent in rounding labeling values (e.g., in
calculating the values for total fat for grapefruit, apples, and
tangerines) and requested that FDA be consistent. Other comments
specifically questioned how percent DV's were derived from the rounded
or unrounded labeling values (e.g., dietary fiber and iron in onions).
FDA recalculated labeling values derived from the raw data that PMA
had submitted (described later in this section of this document) and is
using those recalculated values in this final rule. With respect to the
rounding issues raised by the comments, FDA points out that the
nutrition labeling regulations (Sec. 101.9(d)(7)(ii)) allow percent
DV's to be calculated from the original or rounded nutrient values. PMA
calculated percent DV's based on the original values. In recalculating
the percent DV's, FDA used rounded values. The agency did so to provide
consistency in the chart format (i.e., to be sure that the same
quantitative amount of a nutrient is associated with the same percent
DV). FDA notes that if percent DV's are calculated from original
values, it may lead to inconsistencies in the chart that would be
confusing to consumers. FDA applied the rounding rules (Sec. 101.9(c))
consistently to the data used for calculating the values in this final
rule. Therefore, FDA has responded fully to these comments.
22. Two comments expressed concern that FDA's use of PMA's
nutrition labeling values derived from 80 percent prediction intervals
was not consistent with the way the food industry develops nutrition
labeling values for processed, packaged foods. The comments stated that
fruits and vegetables will be placed at a marketing disadvantage
compared to other foods subject to the 1990 amendments, and that
consumers will receive less useful and consistent information.
FDA agrees with the comments. The 80 percent prediction values
provided by PMA and used in the July 1994 proposal were not entirely
appropriate because they were not based on 95 percent prediction
intervals. As stated elsewhere in this document, FDA recommends that
labeling values be derived from compliance calculations based on 95
percent prediction intervals and be consistent with statistical
methodology in the ``FDA Nutrition Labeling Manual: A Guide for
Developing and Using Databases'' (Ref. 1).
During the comment period, the agency received data from various
sources and considered all of those data in determining the final
values. In a comment, PMA submitted a new set of nutrition labeling
values for 31 raw fruits and vegetables and asked that those values be
used in the final rule. The nutrition labeling values in PMA's comment
were derived by using a
[[Page 42750]]
different statistical methodology than PMA used in its original
submission. Instead of values based upon 80 percent prediction
intervals, the nutrition labeling values in the comment were derived by
using 95 percent confidence intervals.
When the agency reviewed these values, it found the following
concerns with the statistical methodology (Ref. 12) that PMA had used:
(1) PMA used a one-sided 95 percent confidence interval to do the
compliance calculations rather than the FDA-recommended one-sided 95
percent prediction interval. (A confidence interval is used to
confidently bracket the true parameters of a population. A prediction
interval is associated with confidently bracketing the mean or any
number of future samples from the same population. A compliance value
based upon FDA laboratory analysis consists of a composite of 12 units.
The value is necessarily considered by the industry as the mean of 12
future units, which is expected to be in line with the labeled values.
The limit of the prediction interval is lower (or higher, depending on
the applications) than the corresponding limit of the confidence
interval for a given level of significance (Ref. 1).)
(2) PMA did not always use the minimum of the means and compliance
calculations for class II nutrients (naturally occurring vitamins,
minerals, protein, total carbohydrate, complex carbohydrate, dietary
fiber, unsaturated fat, and potassium) and the maximum of the means and
compliance calculations for third group nutrients, as listed in
Sec. 101.9(g)(5) (calories, sugars, total fat, saturated fat,
cholesterol, and sodium).
(3) In Sec. 101.9(g)(4)(ii), total carbohydrate is defined as a
class II nutrient. PMA derived total carbohydrate values under the
assumption that total carbohydrate is a third group nutrient (see
Sec. 101.9(g)(5)), rather than a class II nutrient.
FDA is grateful to PMA for submitting the nutrition labeling values
for 31 fruits and vegetables as a comment, but the agency has decided
not to use these values. Instead, FDA recalculated the nutrition
labeling values for those raw fruits and vegetables (Ref. 12) using the
raw data submitted by PMA, with 95 percent prediction intervals. These
nutrition labeling values are presented in Appendix C to part 101.
Additional differences between the nutrition labeling values in
this final rule and those provided by PMA in their comment can be
attributed to the following factors:
(1) Although PMA submitted revised data for bananas, the agency
used other data (described in section VII.F. of this document) that
were submitted during the comment period to update the nutrition
labeling values for this food.
(2) FDA used data from PMA and from other comments to update
nutrition labeling values for apples (described in section VII.D. of
this document) and avocados (described in section VII.E. of this
document).
(3) PMA calculated percent DV's based on the original values rather
than the rounded values. FDA recalculated the percent DV's based on
rounded values to avoid consumer confusion (as discussed in section
VII.H. of this document).
(4) FDA did not use the values for calories from fat provided by
PMA because PMA used 9 calories per g of fat rather than 8.37 calories
per g of fat, the appropriate factor to be used for fruits and
vegetables (Refs. 13 and 14).
(5) For watermelon, oranges, strawberries, tangerines, and leaf
lettuce, FDA adjusted the total carbohydrate value to reflect the sum
of dietary fiber and sugars. Total carbohydrate is generally determined
``by difference'' (i.e., it is the weight remaining when the weight of
the sum of protein, fat, water, and ash are subtracted from the total
weight of the food). In theory, the sum of dietary fiber and sugars
should be equal to or less than total carbohydrate because both dietary
fiber and sugars are forms of carbohydrate. However, for watermelon,
oranges, strawberries, tangerines, and leaf lettuce, the weight of
total dietary fiber (values derived from PMA data) and sugars (values
obtained from USDA (Ref. 15)) exceeded the weight of total
carbohydrate. In the July 1994 proposal, FDA explained that the agency
adjusted for this discrepancy in several foods by increasing the weight
of total carbohydrate to be at least equal to the sum of dietary fiber
and sugars (59 FR 36379 at 36383; Ref. 16). FDA explained that because
the values for dietary fiber and sugars are determined by laboratory
analysis, they are more accurate than the value for total carbohydrate,
which is determined by difference. The agency received no comments
expressing disapproval with this adjustment. Therefore, the agency made
this adjustment in calculating the values for total carbohydrate in
watermelon, oranges, strawberries, tangerines, and leaf lettuce in this
final rule.
(6) In order to have calories from fat consistent for a given total
fat value, FDA derived calories from fat for fruits and vegetables from
the rounded, rather than unrounded, total fat label value. The caloric
equivalent for fat is 8.37 calories per g for fruits and vegetables.
Thus, 0.5 g of fat is equivalent to 4.19 calories, and according to
Sec. 101.9(c)(1)(ii), ``* * * amounts less than 5 calories may be
expressed as zero.'' As a result, Appendix C consistently lists 0
calories for 0.5 g of total fat.
The following is a summary of changes from the proposed nutrition
labeling values for 30 raw fruits and vegetables that FDA derived from
the raw data provided by PMA during the comment period, using
compliance calculations based on 95 percent prediction intervals:
Table 4
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Food nutrient
(1)Proposed values
(1)Final rule values
----------------------------------------------------------------------------------------------------------------
Apple:
Potassium...................... 160 mg .................. 170 mg .................
Dietary fiber.................. 4 g 16% DV 5 g 20% DV
Vitamin A...................... .................. 0% DV .................. 2% DV
Vitamin C...................... .................. 6% DV .................. 8% DV
Iron........................... .................. 0% DV .................. 2% DV
Watermelon:
Calories....................... .................. 90 .................. 80
Total carbohydrate............. 26 g .................. 27 g .................
Dietary fiber.................. 1 g 4% DV 2 g 8% DV
Vitamin A...................... .................. 10% DV .................. 20% DV
Calcium........................ .................. 0% DV .................. 2% DV
Iron........................... .................. 2% DV .................. 4% DV
[[Page 42751]]
Orange:
Calories....................... .................. 80 .................. 70
Potassium...................... 250 mg .................. 260 mg .................
Dietary fiber.................. 5 g 20% DV 7 g 28% DV
Vitamin A...................... .................. 0% DV .................. 2% DV
Vitamin C...................... .................. 120% DV .................. 130% DV
Calcium........................ .................. 4% DV .................. 6% DV
Iron........................... .................. 0% DV .................. 2% DV
Cantaloupe:
Sodium......................... 35 mg .................. 25 mg .................
Potassium...................... 210 mg 6% DV 280 mg 8% DV
Total carbohydrate............. 13 g .................. 12 g .................
Vitamin A...................... .................. 80% DV .................. 100% DV
Grapefruit:
Calories....................... .................. 70 .................. 60
Potassium...................... 210 mg 6% DV 230 mg 7% DV
Total carbohydrate............. 18 g 6% DV 16 g 5% DV
Dietary fiber.................. 5 g 20% DV 6 g 24% DV
Vitamin A...................... .................. 10% DV .................. 15% DV
Vitamin C...................... .................. 80% DV .................. 110% DV
Calcium........................ .................. 4% DV .................. 2% DV
Strawberries:
Calories....................... .................. 70 .................. 45
Total Fat...................... 0.5 g 1% DV 0 g 0% DV
Potassium...................... 220 mg 6% DV 270 mg 8% DV
Total carbohydrate............. 17 g 6% DV 12 g 4% DV
Dietary fiber.................. 3 g 12% DV 4 g 16% DV
Vitamin C...................... .................. 130% DV .................. 160% DV
Iron........................... .................. 0% DV .................. 4% DV
Honeydew melon:
Sodium......................... 45 mg 2% DV 35 mg 1% DV
Potassium...................... 290 mg 8% DV 310 mg 9% DV
Total carbohydrate............. 14 g 5% DV 13 g 4% DV
Vitamin A...................... .................. 0% DV .................. 2% DV
Vitamin C...................... .................. 40% DV .................. 45% DV
Avocado:
Calories....................... .................. 60 .................. 55
Calories from fat.............. .................. 50 .................. 45
Total fat...................... 6 g 9% DV 5 g 8% DV
Total carbohydrate............. 2 g .................. 3 g .................
Dietary fiber.................. 1 g 4% DV 3 g 12% DV
Lemon:
Calories....................... .................. 20 .................. 15
Sodium......................... 10 mg .................. 5 mg .................
Potassium...................... 65 mg 2% DV 90 mg 3% DV
Total carbohydrate............. 6 g .................. 5 g .................
Vitamin C...................... .................. 35% DV .................. 40% DV
Pineapple:
FR Doc. 96-20966 Food Labeling; Guidelines for Voluntary Nutrition Labeling of Raw Fruits, Vegetables, and Fish; Identification of the 20 Most Frequently Consumed; and Policy for Data Base Review for Voluntary and Mandatory Nutrition Labeling
Calories....................... .................. 70 .................. 60
Potassium...................... 100 mg .................. 115 mg .................
Total carbohydrate............. 17 g 6% DV 16 g 5% DV
Protein........................ 0 g .................. 1 g .................
Calcium........................ .................. 0% DV .................. 2% DV
Iron........................... .................. 0% DV .................. 2% DV
Tangerine:
Calories....................... .................. 80 .................. 50
Calories from fat.............. .................. 10 .................. 0
Total fat...................... 1 g 2% DV 0.5 g 1% DV
Sodium......................... .................. 5 mg .................. 0 mg
Potassium...................... 120 mg 3% DV 180 mg 5% DV
Total carbohydrate............. 20 g 7% DV 15 g 5% DV
Protein........................ .................. 0 g .................. 1 g
Vitamin C...................... .................. 35% DV .................. 50% DV
Calcium........................ .................. 2% DV .................. 4% DV
Sweet cherries:
Calories from fat.............. .................. 10 .................. 0
Total fat...................... 1 g 2% DV 0.5 g 1% DV
Potassium...................... 260 mg 7% DV 300 mg 9% DV
Total carbohydrate............. 23 g 8% DV 22 g 7% DV
Protein........................ 1 g .................. 2 g .................
Vitamin A...................... .................. 0% DV .................. 2% DV
Vitamin C...................... .................. 8% DV .................. 15% DV
Iron........................... .................. 0% DV .................. 2% DV
[[Page 42752]]
Kiwifruit:
Calories from fat.............. .................. 15 .................. 10
Total fat...................... 1.5 g .................. 1 g .................
Potassium...................... 450 mg 13% DV 480 mg 14% DV
Total carbohydrate............. 25 g .................. 24 g .................
Vitamin C...................... .................. 200% DV .................. 240% DV
Potato:
Calories....................... .................. 120 .................. 100
Sodium......................... 5 mg .................. 0 mg .................
Potassium...................... 680 mg 19% DV 720 mg 21% DV
Total carbohydrate............. 27 g .................. 26 g .................
Dietary fiber.................. 2 g 8% DV 3 g 12% DV
Protein........................ 3 g .................. 4 g .................
Vitamin C...................... .................. 40% DV .................. 45% DV
Calcium........................ .................. 0% DV .................. 2% DV
Iceberg lettuce:
Calories....................... .................. 20 .................. 15
Potassium...................... 85 mg 2% DV 120 mg 3% DV
Vitamin A...................... .................. 2% DV .................. 4% DV
Vitamin C...................... .................. 4% DV .................. 6% DV
Calcium........................ .................. 0% DV .................. 2% DV
Iron........................... .................. 0% DV .................. 2% DV
Tomato:
Calories from fat.............. .................. 10 .................. 0
Total fat...................... 1 g 2% DV 0.5 g 1% DV
Potassium...................... 300 mg 9% DV 360 mg 10% DV
Vitamin A...................... .................. 15% DV .................. 20% DV
Vitamin C...................... .................. 35% DV .................. 40% DV
Calcium........................ .................. 0% DV .................. 2% DV
Onion:
Potassium...................... 200 mg 6% DV 240 mg 7% DV
Total carbohydrate............. .................. 16 g .................. 14 g
Protein........................ .................. 1 g .................. 2 g
Vitamin C...................... .................. 15% DV .................. 20% DV
Iron........................... .................. 0% DV .................. 2% DV
Carrot:
Calories....................... .................. 40 .................. 35
Sodium......................... .................. 50 mg .................. 40 mg
Potassium...................... 220 mg 6% DV 280 mg 8% DV
Total carbohydrate............. .................. 9 g .................. 8 g
Vitamin A...................... .................. 220% DV .................. 270% DV
Vitamin C...................... .................. 8% DV .................. 10% DV
Celery:
Calories....................... .................. 25 .................. 20
Sodium......................... 125 mg 5% DV 100 mg 4% DV
Potassium...................... 300 mg 9% DV 350 mg 10% DV
Vitamin C...................... .................. 10% DV .................. 15% DV
Broccoli:
Calories....................... .................. 50 .................. 45
Sodium......................... 70 mg 3% DV 55 mg 2% DV
Potassium...................... 480 mg 14% DV 540 mg 15% DV
Total carbohydrate............. .................. 9 g .................. 8 g
Dietary fiber.................. 4 g 16% DV 5 g 20% DV
Protein........................ 4 g .................. 5 g .................
Vitamin A...................... .................. 10% DV .................. 15% DV
Vitamin C...................... .................. 200% DV .................. 220% DV
Iron........................... .................. 4% DV .................. 6% DV
Green cabbage:
Sodium......................... 25 mg .................. 20 mg .................
Potassium...................... 170 mg .................. 190 mg .................
Total carbohydrate............. 6 g .................. 5 g .................
Vitamin C...................... .................. 60% DV .................. 70% DV
Iron........................... .................. 0% DV .................. 2% DV
Cucumber:
Potassium...................... .................. 160 mg .................. 170 mg
Dietary fiber.................. 0 g 0% DV 1 g 4% DV
Vitamin C...................... .................. 8% DV .................. 10% DV
Bell pepper:
Potassium...................... 240 mg 7% DV 270 mg 8% DV
Vitamin A...................... .................. 6% DV .................. 8% DV
Vitamin C...................... .................. 150% DV .................. 190% DV
Calcium........................ .................. 0% DV .................. 2% DV
Iron........................... .................. 0% DV .................. 2% DV
[[Page 42753]]
Cauliflower:
Sodium......................... 40 mg 2% DV 30 mg 1% DV
Potassium...................... 250 mg 7% DV 270 mg 8% DV
Leaf lettuce:
Sodium......................... 40 mg 2% DV 30 mg 1% DV
Potassium...................... 210 mg 6% DV 230 mg 7% DV
Total carbohydrate............. 3 g .................. 4 g .................
Dietary fiber.................. 1 g 4% DV 2 g 8% DV
Vitamin A...................... .................. 30% DV .................. 40% DV
Vitamin C...................... .................. 4% DV .................. 6% DV
Calcium........................ .................. 2% DV .................. 4% DV
Mushrooms:
Potassium...................... 280 mg 8% DV 300 mg 9% DV
Protein........................ 2 g .................. 3 g .................
Vitamin C...................... .................. 0% DV .................. 2% DV
Iron........................... .................. 0% DV .................. 2% DV
Green (snap) beans:
Potassium...................... 190 mg 5% DV 200 mg 6% DV
Vitamin A...................... .................. 2% DV .................. 4% DV
Vitamin C...................... .................. 8% DV .................. 10% DV
Iron........................... .................. 0% DV .................. 2% DV
Radishes:
Calories....................... .................. 20 .................. 15
Sodium......................... 30 mg .................. 25 mg .................
Potassium...................... 180 mg 5% DV 230 mg 7% DV
Total carbohydrate............. 4 g .................. 3 g .................
Protein........................ 0 g .................. 1 g .................
Calcium........................ .................. 0% DV .................. 2% DV
Summer squash:
Potassium...................... 240 mg .................. 260 mg .................
Dietary fiber.................. 1 g 4% DV 2 g 8% DV
Vitamin A...................... .................. 4% DV .................. 6% DV
Vitamin C...................... .................. 25% DV .................. 30% DV
Asparagus:
Calories....................... .................. 20 .................. 25
Potassium...................... 210 mg 6% DV 230 mg 7% DV
Total carbohydrate............. 5 g 2% DV 4 g 1% DV
Vitamin C...................... .................. 10% DV .................. 15% DV
Calcium........................ .................. 0% DV .................. 2% DV
Iron........................... .................. 0% DV .................. 2% DV
----------------------------------------------------------------------------------------------------------------
I. Fat and Calorie Values for Catfish
23. For the July 1994 proposal, FDA used data on catfish obtained
from the USDA National Nutrient Databank which included both farmed and
wild catfish. Three comments expressed concern that the proposed values
for fat (9 g) and calories (170) were too high and did not accurately
reflect the farmed catfish available in retail markets in the United
States, which constitute the vast majority of the catfish consumed in
the United States. The comments stated that the fat content of catfish
is affected by species, size of fish, diet of fish, season of year,
stocking rate of pond, pond size, and sex of fish. The comments also
provided data from Nettleton et al. (Ref. 17) on farmed catfish
composition and requested that FDA consider this information in
developing revised labeling values for this fish.
Based on the comments, FDA was concerned that the proposed labeling
values for catfish did not accurately reflect the farmed catfish
available in retail markets. FDA calculated new nutrition labeling
values from data for farm-raised catfish available from Nettleton et
al. (Ref. 17) and with 95 percent prediction intervals. Although the
comments had only pointed to problems with the values for fat and
calories, FDA applied compliance calculations to the other nutrients
for which information was available in reference 17 to be sure that the
full nutritional profile for this fish is accurate and consistent (Ref.
18). The resulting changes in labeling values are summarized below:
Table 5
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Catfish nutrient
(1) Proposed values
(1) Final rule values
----------------------------------------------------------------------------------------------------------------
Calories......................... 170 140
Saturated fat.................... 1.5 g 8% DV 2 g 10% DV
Cholesterol...................... 55 mg 18% DV 50 mg 17% DV
Potassium........................ 350 mg 10% DV 230 mg 7% DV
Protein.......................... 21 g .................. 17 g
----------------------------------------------------------------------------------------------------------------
[[Page 42754]]
Because FDA confirmed that the consumption of catfish in the United
States is predominantly farmed catfish (Ref. 19), the agency concluded
that the data from Nettleton et al. provided more accurate label values
for catfish and is thus adopting these values in this document. The
values for total fat did not change.
J. Fat and Calorie Values for Orange Roughy
24. Because of the lack of acceptable information concerning the
total fat content, inclusive of wax esters, of orange roughy, in the
July 1994 proposal, FDA used a fat value for this fish that did not
include wax esters. FDA requested information on the total fat content
of this fish and stated that it would provide a value for total fat in
the next revision of the nutrition labeling values if such a value were
available. This action would make the listing of total fat in orange
roughy consistent with the definition of total fat in Sec. 101.9(c)(2)
(i.e., the amount of total lipid fatty acids present expressed as
triglycerides).
No comments were received that provided information on the total
fat content of orange roughy. One comment questioned why FDA wanted a
value for total fat in orange roughy that includes the presence of wax
esters because wax esters are not a metabolizable source of energy in
humans and have no dietary significance. The comment stated that
nutrition labeling should provide consumers with information with which
to make dietary choices, and that it is misleading to add
nonmetabolizable fat to the value for fat in orange roughy. The comment
stated that the elevated levels of fat that would result from the
addition of wax esters would falsely suggest to consumers that orange
roughy was contributing a substantial amount of metabolizable fat to
daily intake. The comment said that providing such levels in the
nutrition label would be a disservice to consumers who are seeking
foods, such as orange roughy, that contribute a minimum amount of fat
to their diet. The comment recommended that FDA retain the fat value
for orange roughy presented in the July 1994 proposal.
Because FDA did not receive any data on the total fat content of
orange roughy, the agency will continue to use values for fat that do
not include the wax esters despite the fact that the labeling of total
fat for orange roughy remains an exception to the definition of total
fat in Sec. 101.9(c)(2). FDA continues to request information that
would provide a basis for revising the declaration of total fat to
reflect the presence of wax esters in orange roughy but that would not
be misleading to the consumer.
The agency understands the point made in the comment. It intends to
address the issue of declaration of available fat in a separate
rulemaking.
K. Saturated Fat Value for Atlantic/Pacific Mackerel
25. One comment stated that FDA's proposed value for saturated fat
for Atlantic/Pacific mackerel is 6 g, while USDA's mean value for 84 g
of cooked Atlantic mackerel is 3.5 g, and asked that this discrepancy
be examined.
The proposed value for saturated fat in Atlantic and Pacific
mackerel was based upon data obtained from the USDA National Nutrient
Databank. However, in response to the comment, FDA reviewed the data
for saturated fat. After consulting with USDA, FDA discovered that the
saturated fat data that FDA received were not in the units indicated in
the data file. The saturated fat data were actually presented as
percentages of the total fat content, rather than as g amounts. After
converting the saturated fat values to g, FDA applied compliance
calculations to the data (Ref. 20). As a result, the agency found that
the labeling value for saturated fat for Atlantic/Pacific mackerel is
1.5 g with 8 percent DV. Appendix D has been modified accordingly.
L. Sodium and Cholesterol in Ocean Perch
26. One comment disagreed with FDA's proposed values for sodium
(200 mg) and cholesterol (75 mg) for ocean perch. It stated that USDA's
mean sodium value for raw ocean perch from the National Nutrient
Databank is 78.80 mg, with a range of 59 to 109.02 mg, and that using
the 75 percent retention factor would result in a mean value of 88.26
and a range of 66.08 to 122.10 mg. This comment suggested that FDA set
the sodium value for ocean perch at 90 mg, the rounded mean value. The
comment said that USDA's mean value for cholesterol in ocean perch is
47.05 mg, with a range of 32.48 to 60.93 mg, and suggested that FDA use
a rounded value of 45 mg for this nutrient.
FDA applied compliance calculations based upon 95 percent
prediction intervals to data obtained from the USDA National Nutrient
Databank to develop the sodium and cholesterol values of ocean perch
that it included in Appendix D in the July 1994 proposal. In response
to this comment, FDA compared the statistical parameters (mean,
standard error, and sample size) in Handbook 8 to those derived from
data provided by USDA from the National Nutrient Databank.
After discovering these parameters did not match, FDA asked USDA to
review the data that it had sent to FDA. In its review, USDA discovered
that the data file sent to FDA contained entries for species of fish
other than ocean perch. Because this data file was incorrectly labeled,
FDA used inappropriate nutrient data to derive the nutrition labeling
values for ocean perch.
After consulting with USDA, FDA identified and extracted the
nutrient data for ocean perch from the data file and rederived
nutrition labeling values for this document (Ref. 21). In table 6 of
this document is a summary of changes to the nutrition labeling values
for ocean perch that FDA derived from these data, with compliance
calculations based on 95 percent prediction intervals.
Table 6
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Ocean perch nutrient
(1) Proposed values
(1) Final rule values
----------------------------------------------------------------------------------------------------------------
Calories from fat................ .................. 25 .................. 20
Total fat........................ 3.5 g 5% DV 2.0 g 3% DV
Cholesterol...................... 75 mg 25% DV 50 mg 17% DV
Sodium........................... 200 mg 8% DV 95 mg 4% DV
Potassium........................ 330 mg 9% DV 290 mg 8% DV
Protein.......................... 20 g .................. 21 g .................
Vitamin C........................ .................. 4% DV .................. 0% DV
Calcium.......................... .................. 4% DV .................. 10% DV
Iron............................. .................. 2% DV .................. 6% DV
----------------------------------------------------------------------------------------------------------------
[[Page 42755]]
M. Calories From Fat for Lobster
27. In the July 1994 proposal, FDA made an error in the
determination of calories from fat for lobster. Lobster contains 0.5 g
total fat, and the calories from fat should have been zero ((9.02
calories per g)(0.5 g fat)) = 4.51 calories, which rounds to zero
according to Sec. 101.9(c)(1)(ii)), instead of 5 calories as indicated
in the July 1994 proposal. FDA has corrected this error in Appendix D
of this document.
VIII. Nutrient Content Claims and Health Claims for Raw Fruits,
Vegetables, and Fish
28. One comment expressed concern about nutrient content and health
claims for raw fruits, vegetables, and fish and asked that FDA clarify
two points. The comment asked whether labeling information on a chart
in a retail store for a raw fruit or vegetable in the voluntary program
would suffice for a packaged commodity that has a claim on the package.
The comment also asked whether a nutrient content claim or health claim
for a raw fruit or vegetable not among the 20 most frequently consumed
follows the same rules applicable to produce within the voluntary
program (i.e., if point-of-purchase nutrition labeling suffices for
packaged commodities).
FDA addressed the question of the need for nutrition labeling for
packaged raw fruits and vegetables that bear a claim in a publication
on frequently asked questions that it issued in August 1993 (Ref. 22).
At that time it stated: ``Claims subject the food to nutrition labeling
in accordance with Sec. 101.45, which means that nutrition information
will have to be available at point of purchase although not necessarily
on the package.''
FDA encourages processors and packers of raw fruits, vegetables,
and fish who put nutrient content or health claims on their packaging
to also include nutrition label information because it is not possible
to predict whether the products will be sold in stores where retailers
make the nutrition information available to consumers. Even if
processors and packers are able to control the flow of their products
into specific retail stores, they will have no control over retailers'
decisions to display (or to continue to display) nutrition labeling
information for these products. Depending upon retailers to provide
nutrition labeling values to justify nutrient content or health claims
would be a gamble for the processors and packers, who assume liability
for their products with claims. FDA encourages processors and packers
who provide nutrient content or health claims on the packaging of these
foods to also include the nutrition information.
For raw fruits, vegetables, and fish that are not among the 20 most
frequently consumed, it is even less likely that nutrition information
for that particular commodity will be available in retail stores.
Therefore, FDA encourages processors and packers who provide nutrient
content or health claims on the packaging of these foods to also
include the nutrition information.
IX. FDA Review of Submitted Data Bases
FDA encourages industry to submit data for raw produce and raw fish
to the agency for consideration for the next revision of nutrition
labeling information for raw commodities. In addition, FDA continues to
request food manufacturers and trade associations representing products
falling under mandatory nutrition labeling regulations to submit
proposed studies to collect nutrient data for nutrition labeling data
base compilation. In the July 1994 proposal for the voluntary program,
the agency acknowledged that problems existed in the process for data
base review and sought feedback on how to improve upon that process (59
FR 36379 at 36387). The agency specifically solicited comments
regarding evaluation criteria related to: (1) The nature and rigor of
the evaluation process and (2) the policy of interim approvals, as well
as followup procedures and time frames to ensure long-term interest in
continued data collection.
In response, FDA received comments regarding all aspects of the
data base review process. Most comments expressed general support for a
modification of the data base review process. In addition, some
comments commended FDA for attempting to provide industry with a
nutrient data base policy that would reduce the costs of labeling their
products.
29. Several comments cited the enormous effort and expense needed
to abide by the requirements in the ``FDA Nutrition Labeling Manual: A
Guide for Developing and Using Databases'' (Ref. 1). One comment stated
that if the manual's requirements serve as the gold standard, and
companies will never be able to meet that standard, then the standard
must be changed into one that is more cost-effective, realistic, and
workable. Another comment recommended that FDA scale back its
evaluation criteria. It stated that the current manual's evaluation
criteria require enormous effort and expense for data base development,
primarily because the number of samples required for a single raw
commodity may be in the thousands. The number of samples selected for
analysis directly relates to the total cost of the nutrition labeling
of products.
Several comments presented estimates of the cost of analyzing
commodities based on the requirements in the manual. They argued that
these high costs were so burdensome to small businesses that the
manufacturers would opt not to nutrition label their products and thus
defeat the purpose of the 1990 amendments. Comments also argued that if
manufacturers could not afford nutrition labeling, they would have a
strong marketing disadvantage in selling their products. Another
comment suggested that if historical information indicates that the
level of a particular mandatory nutrient is zero, and it is generally
accepted as such, then no individual analyses should be necessary
(e.g., fiber in milk). Still another comment stated that sample sizes
need not be as large as the manual suggests to be statistically valid,
and that smaller sample sizes would reduce the total costs of analyses.
The comment stated that FDA did not balance the cost of a nutrient
analysis with the marginal increase in accuracy that may come from
doing more analyses.
FDA continues to acknowledge the potential usefulness of data bases
to reduce costs associated with nutrition labeling. A data base
compiled and submitted by a trade association representing a large
number of members would represent less cost than would be required if
each member company were to analyze its own products and submit its own
individual data base. The agency wishes to emphasize that submission of
a data base to FDA for the purpose of nutrition labeling is voluntary.
Each manufacturer, however, is responsible for ensuring the validity of
the nutrient values that appear on its label.
The manual provides generic guidelines for industry to use in
preparing and developing data bases. Industry may choose to follow
these guidelines or may use alternative procedures even though they are
not provided for in the manual. If industry wishes to submit a data
base to FDA, but chooses to use alternative procedures, the
organization preparing the data base may wish to discuss those
procedures with the agency to prevent expenditure of money and effort
on activities that the agency may later find unacceptable. The agency
recognizes that everything recommended in the manual cannot be achieved
at the present time for most
[[Page 42756]]
commodities, even by some of the larger trade associations. FDA does
expect, however, that all planned studies will continue to be based
upon consideration of the statistical random sampling, methodology,
design, and treatment of data that are described in the manual. The
agency has stated that analysis is not needed for nutrients where
reliable data bases or scientific knowledge establish that a nutrient
is not present in the product (58 FR 2109, January 6, 1993).
A great deal of information already exists for some foods regarding
factors that influence nutrient variability (e.g., variety, season,
species). As a result, it may be possible to reduce the number of
samples to be assayed on the basis of data and knowledge of which
nutrients vary with changing parameters. In addition, information
describing the effect of various factors on nutrient content of foods
may be obtained through the completion of experimental pilot studies.
These data in turn may provide information on nutrient variability that
will also provide a basis for reducing the number of samples necessary
for a valid data base.
30. Questions continue to arise over the issue of whether data base
submitters may use USDA Handbook 8 data, data obtained through
literature searches, or historical data with limited quality assurance
from manufacturers. Several comments were in favor of FDA allowing data
base developers to use USDA Handbook 8 values in their data base
submissions. Other comments suggested that the use of historical data
would add depth and broad coverage and would, therefore, provide a
positive aspect to the data bases. They argued that such allowances
would lessen the number of nutrient analyses needed to arrive at an
appropriate label value while reducing the total cost of conducting
nutrient analyses.
FDA continues to acknowledge the value of data available from USDA
Handbook 8 and from the scientific literature, but as stated in
response to comment 2, mean composition values derived from those
sources are generally not suitable for labeling purposes. The agency's
policy is to recommend that products be labeled according to nutrient
composition based upon laboratory analysis.
In response to the comments, FDA reassessed how best to consider
historical data submitted for review. The agency has decided to review
and to allow the use of historical data submitted for labeling
purposes, as long as those data are accompanied by a planned study to
collect additional data for updating the label values. FDA will
evaluate the historical data for completeness and reasonableness. If
analytical methods have changed substantially from those used in
gathering the data, or if it is obvious that the sampling design used
to develop the data is incorrect, the agency may choose not to accept
the historical data. Otherwise, if FDA determines that the historical
data are complete and reasonable, the agency will allow use of the
data, as long as the manufacturer plans to collect additional data to
update those values.
31. One comment suggested that data should be presented on a per
100-g basis as well as the reference amount.
FDA agrees with the suggestion and recommends that industry
submitting data bases to FDA provide those data on both the 100 g and
the reference amount bases. The agency continues to encourage industry
to submit data not only to FDA but also to USDA for use in compilations
such as Handbook 8. Data submitted for inclusion in Handbook 8 should
be provided on a mean 100-g basis and not as label values that have
been derived by FDA compliance algorithms.
32. One comment urged FDA to revise the analytical methods section
of the manual to make the text compatible with nutrition labeling
regulations in Sec. 101.9(g)(2). The comment noted that this regulation
allows for non-AOAC analytical methods if AOAC methods are neither
available nor appropriate. The comment further suggested that there
would be improvement in the accuracy of the data as a result of using
diverse analytical methods. Another comment suggested that FDA require
companies or trade associations to submit a table of proposed
analytical methods with accompanying information concerning specific
validation of the method used by the on-site or commercial lab for the
matrix of interest.
The manual's recommendations are consistent with Sec. 101.9(g)(2),
wherein the agency advises companies or associations to use non-AOAC
methods where no AOAC method is available or appropriate. The manual
recommends the use of non-AOAC methods only in the absence of AOAC-
validated methods. The agency agrees that the process of refining
methods of analysis will reduce variability in nutrient levels but does
not agree that use of diverse analytical methods will reduce
variability. FDA respects the worldwide consensus surrounding the
applicability, specificity, sensitivity, accuracy, precision, and
detectability of methods validated by AOAC International and continues
to recommend the use of those methods in obtaining measures of nutrient
content.
The agency agrees with the comment that suggested that data base
developers should submit a table delineating proposed analytical
methods for each nutrient, with accompanying information concerning
specific validation of the method used by the onsite or commercial lab
for the matrix of interest. In fact, in response to FDA's requests for
such data, several submissions to FDA have already included a table of
the analytical methods used and accompanying documentation validating
the use of the method.
33. One comment suggested that manufacturers should be able to send
data in an electronic format. The comment noted that if software were
developed in the form of a template, then FDA would greatly improve its
review process.
FDA strongly agrees with this comment and will consider use of
electronic methods for data collection as it continues to assess and
improve its data base submission and review process.
34. FDA received the greatest number of comments regarding interim
approvals for nutrient data bases. This issue relates specifically to
data bases for products having mandatory labeling. The comments
addressed the following three primary issues: (1) Whether submitters
should receive interim approvals; (2) if so, at what point in the
process; and (3) for what time period. All comments on the subject
expressed support for the issuance of interim approvals. Some comments
suggested that an interim approval should be granted if the submitter
has made a good faith effort to abide by the guidelines, as discussed
in the nutrition labeling manual. Several comments proposed various
criteria for granting interim approvals. One comment suggested a
grading scale for data bases that would also take into account the
length of time for an interim approval. Another comment proposed that
FDA create a checklist to serve as the basis for interim approvals and
thus expedite the review process. Suggested time periods for interim
approval ranged from 1 to 10 years.
FDA has carefully examined and fully considered the thoughtful
comments submitted in response to this issue. Based on its review of
the comments, FDA has decided to modify its approach to data bases that
are submitted to the agency for review. The new policy directly
addresses concerns relevant to interim review and approval of data
bases. FDA implemented a new
[[Page 42757]]
discretionary enforcement strategy for those manufacturers who submit
interim data to the agency for approval. Interim data in the form of
nutrition label values should be accompanied by raw data. If there are
data that the manufacturer has determined to be unsuitable, they should
also be submitted with explanation. FDA will continue to evaluate
interim data (i.e., historical or newly collected) submitted for review
if those data are accompanied by a plan to collect additional data for
the purpose of updating label values. However, in order to facilitate
the use of the developing nutrient data base and to limit the
uncertainty that could result from an unforeseen delay in agency review
of the data base, firms are free upon submission to begin use of the
nutrient label values and to initiate the planned studies to collect
and update nutrient values. During this interim period, FDA does not
anticipate that it will take action against a product bearing label
values included in a data base submitted to the agency for review. If
any product is identified through FDA compliance activities as
including label values that are out of compliance, contingent on the
company's willingness to come into compliance, the agency intends to
work with both the manufacturer and the data base developer to
understand and correct the problem label values.
When FDA receives the interim data and planned studies referred to
above, it will first evaluate the label values relative to the raw
data. FDA will recalculate label values based solely on the raw data
that have been submitted. The agency will derive label values using
compliance calculations based upon 95 percent prediction intervals and,
when appropriate, will use weighting procedures, as recommended in the
nutrition labeling manual. FDA will evaluate the data for completeness
and reasonableness, e.g., it will consider whether or not there are
enough samples, and whether all nutrients are included. FDA requests
that supporting documentation, such as analytical methodology and a
sampling plan, accompany interim data. The agency acknowledges,
however, that a large amount of the interim data available from
manufacturers and trade associations are based upon historical data,
where the analytical methodology and sampling plan are not available.
Hence, FDA will not refuse to accept data solely on the basis that it
is not accompanied by comprehensive documentation, so long as the
reason such documentation is not provided is fully explained and is
acceptable to the agency.
FDA will review the accompanying planned studies to collect
additional data, concentrating on analytical methodology and on the
reasonableness of the factors that could account for nutrient
variability (e.g., style, region), rather than on the rigor of sampling
design or statistical treatment of the data. FDA cautions, however,
that data base submitters should follow FDA's recommendations regarding
sampling strategies, weighting procedures, and statistical treatment of
data that are described in the nutrition labeling manual.
FDA will respond in writing after review of the data and the
planned studies. FDA will address the nutrient label values that were
submitted and will indicate whether it has any objection to continuing
the planned studies or to continued use of the label values for 2 years
from the date of the agency response.
After those 2 years, manufacturers will be expected to provide the
agency with a summary update that reassesses the interim label values
based upon completion of the planned laboratory analyses. The agency
will evaluate how the study findings bear on the interim label values
and will consider whether it would have any objection to continued use
of the updated interim values for up to an additional 5 years. At the
same time, however, the agency may suggest modifications to the ongoing
plan of study. If after review of data and planned studies, FDA
determines that the label values or studies are not appropriate, as
indicated above, the agency will notify the manufacturer of that
decision.
Please note that a primary focus of FDA's compliance review of
product labels is on nutrient content claims (e.g., ``high fiber'',
``low fat'') that are used. FDA will continue to closely monitor
products making such claims and expects that the manufacturer, packer,
or distributor will have sufficient data to support the validity of
such claims.
X. Environmental Impact
The agency has determined under 21 CFR 25.24(a)(11) that this
action is of a type that does not individually or cumulatively have a
significant effect on the human environment. Therefore, neither an
environmental assessment nor an environmental impact statement is
required.
XI. Analysis of Impacts
FDA has examined the economic implications of the final rule as
required by Executive Order 12866 and the Regulatory Flexibility Act (5
U.S.C. sections 601 and 612). 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, and other advantages; distributive impacts;
and equity).
If a rule has a significant economic impact on a substantial number
of small entities, the Regulatory Flexibility Act requires agencies to
analyze regulatory options that would minimize the economic impact of a
rule on small entities. FDA finds that this final rule is not a
significant rule as defined by Executive Order 12866, and finds under
the Regulatory Flexibility Act, that the final rule will not have a
significant impact on a substantial number of small entities.
A. Costs of the Regulation
The costs of a labeling regulation are the incremental
administrative, analytical, redesign, and label inventory disposal
costs associated with the regulatory action. Because FDA is requiring
that retailers use the nutrition values provided by FDA, there are not
expected to be any analytical costs or other costs of obtaining the
information. FDA has information that the typical sign, which is the
most frequently used form of labeling of raw products, has an expected
useful life of 6 months. Therefore, there will be no label inventory
disposal costs because existing signs normally would have been replaced
during the compliance period. However, FDA does not believe that signs
normally would have been redesigned during that period. Therefore, the
costs of the regulation are administrative and redesign costs.
In the July 1994 proposal, FDA estimated that the average cost of
redesigning signs to label raw fruits, vegetables, and fish is $100 per
year per store. There are approximately 31,000 chain stores and 68,000
independent grocery stores that fall under the compliance guidelines.
Therefore, if those stores currently complying with the guidelines
continue to do so, annual costs of compliance will be approximately
$7.5 million. Because these regulations require that the nutrition
values for raw fruits, vegetables, and fish be readdressed and possibly
revised every 4 years, FDA anticipates that stores may need to incur
these redesign costs as frequently as once every 4 years.
[[Page 42758]]
B. Costs Incurred by the Federal Government
Executive Order 12866 requires agencies also to estimate costs to
Government. The 1990 amendments require that FDA determine every 2
years whether there is substantial compliance with the labeling
guidelines. If substantial compliance does not exist, FDA must make
compliance mandatory. FDA estimates that the costs incurred by
Government are approximately $150,000 every 2 years to establish a
contract to survey food retailers, oversee the contract, and publish a
report on the status of voluntary compliance. Total costs incurred by
Government, discounted to infinity at 7 percent are $1 million.
If compliance with the guidelines becomes mandatory, costs incurred
by the Government would not significantly change because the costs
associated with determining whether there is substantial compliance
would be replaced by enforcement costs. Also, if FDA were to make
compliance mandatory, costs incurred by retailers would increase to
$9.9 million in the first year and recurring every 4 years as values
are modified, or $42 million discounted to infinity at 7 percent.
Total costs of this regulation are $7.5 million in the first year,
or $32 million discounted to infinity at 7 percent.
C. Benefits of this Regulation
In the Regulatory Impact Analysis of the Proposed Rules to Amend
the Food Labeling Regulations (56 FR 60856, November 27, 1991), FDA
stated that the benefit of labeling raw fruits, vegetables, and fish is
a change in purchase behavior that would happen if the information
presented was new to some consumers and was important to their
consumption decision. At present, however, the majority of consumers
have been exposed to the labeling on these products. Based on results
of the 1992 survey, 76 percent of retailers (representing 77 percent of
annual sales) of raw fruits and vegetables were in compliance with
current nutrition labeling guidelines. In addition, 73 percent of
retailers (representing 74 percent of annual sales) of raw fish were in
compliance. Results from the 1994 survey establish that compliance is
75 percent for raw produce (representing 81.4 percent of annual sales)
and 75 percent for raw fish (representing 77 percent of annual sales).
The actions in this document are designed to produce consistency
between voluntary nutrition labeling of raw fruits, vegetables, and
fish and the nutrition labeling of processed, packaged foods.
Similarly, FDA is specifying that compliance requires that retailers
use the nutrition values provided by FDA for the 20 most frequently
consumed raw fruits, vegetables, and fish, thus providing consistency
among retailers. FDA has concluded that the flexibility of allowing
manufacturers to use other values does not outweigh the consumer
confusion caused by different values for the same food in different
stores. However, FDA is allowing commodity groups to develop a
nutrition label for a specific genus or species provided that they have
the data to support the labeling values presented to the consumer, and
they use a more specific name for the product. Therefore, the agency
intends to avoid a tradeoff between consistency and accuracy.
35. Comments supporting the proposed rules stated that making the
guidelines for the labeling of raw fruits, vegetables, and fish
consistent with the labeling of processed, packaged foods will reduce
opportunities for consumer confusion caused by the current
inconsistencies between retailers who use different nutrient values for
the same commodities. The comments stated that the rules will permit
meaningful comparisons between raw products and other foods. However,
FDA also received one comment that stated that the reduced confusion
that would result will not benefit consumers. The comment stated that
these costs would be borne by consumers for little or no benefit. Using
potatoes as an example, the comment stated that the new rounding rules
provide a disservice for consumers looking for reasonably priced,
readily available, well-liked foods high in potassium. The comment
argued that the new rules would prevent nutrient content claims on
potatoes, thus making it necessary for consumers to scrutinize the
label for information about the potassium content of potatoes.
The nutrition labeling values for potatoes presented in Appendix C
to part 101 are based on PMA data. The revised values for potassium for
potatoes would not preclude a ``high potassium'' claim, as stated by
the comment. Therefore, FDA notes that the comment's concerns that the
new rounding rules would reduce benefits to consumers by prohibiting
nutrient content claims is unwarranted.
D. Regulatory Flexibility
36. One comment stated that FDA should have prepared an initial
regulatory flexibility analysis for the July 1994 proposal and asks
that FDA do so prior to issuing a final rule. The comment stated that
the proposed regulations represent a significant restructuring of food
labeling of new commodities, and that businesses complying with the
regulations confront a number of economic hurdles. Finally, the comment
alleged that the failure of FDA to consider both the effects of the
short phase in period and less burdensome alternatives are inconsistent
with the requirements of the Regulatory Flexibility Act.
The nutrition labeling of raw fruits, vegetables, and fish is a
voluntary program. Retailers may decide whether they wish or do not
wish to participate in the program. However, the comment was concerned
that, in order for the program to remain voluntary, a number of small
retailers must choose to participate in the program.
For the purposes of this analysis, FDA defines a grocery store as
small if its annual sales are under $20 million. This definition is
consistent with the Small Business Administration's size standards (61
FR 3280, January 31, 1996). According to Dun and Bradstreet, as of June
1996, there are approximately 196,000 grocery stores in the United
States. Sales data were available for 183,000 stores. Of these, 99
percent (or 180,500 stores) meet the definition of a small grocery
store. Congress exempted stores with annual sales less than $500,000,
or 109,000 stores with sales data available. There are 71,000 grocery
stores for which data are available with annual sales between $500,000
and $20 million.
For purposes of determining substantial compliance, FDA samples
2,000 grocery stores weighted by size (above and below $2 million
annual sales). The sample is also distributed by sales, region/state,
and chain versus independent. Chain stores with less than $2 million
annual sales are not included in the sample because the majority are
convenience stores. FDA also does not include either fish markets or
fruit and vegetable markets. Substantial compliance was achieved in the
1992 and 1994 surveys without compliance by the smallest stores as a
group (sales under $2 million) because these stores constitute a small
percent of total sales. FDA notes, however, that in order for
substantial compliance to be achieved, many small grocery stores with
annual sales between $2 million and $20 million will have to continue
to comply with these regulations. Therefore, FDA finds that this rule
will impact on a substantial number of small entities. However, FDA has
determined that the cost of compliance per store is $100. This amount
is sufficiently small that it will not cause either a significant
increase in costs or a significant
[[Page 42759]]
decrease in revenues. Therefore, FDA concludes that this rule will not
result in a significant impact on a substantial number of small
entities.
As explained elsewhere in this document, FDA has been convinced by
the comment that it is not feasible for all the materials containing
nutrition labeling information on raw fruits, vegetables, and fish to
be changed before the next compliance survey of the industry. Thus, for
the purpose of determining substantial compliance, FDA will consider a
retail store to be in compliance if the nutrition labeling information
complies with either current (1996) values or values previously
published in the Federal Register (56 FR 60856 at 60880).
Therefore, the short compliance period should not result in any
undue burden.
37. One comment objected to the cost estimates presented in the
analysis of the July 1994 proposal. The comment stated that, although
the voluntary program only applies to the 20 most frequently consumed
raw fruits, vegetables, and fish for which FDA is providing data, the
producers of the other 150+ retail produce items offered would be
required to bear the cost of analyzing their products if they attempted
to provide the same type of information as required of the top 20
fruits and top 20 vegetables. The comment further stated that producers
of commodities not sold in large quantities, most of which are small
entities, cannot afford the cost associated with an analysis that would
be acceptable under FDA's data base review process. These producers
would be at a marketing disadvantage as compared with producers of the
top 20 fruits and vegetables.
FDA agrees that some producers of commodities not listed in the top
20 most frequently consumed fruits, vegetables, or fish may be placed
at a competitive disadvantage as retailers currently shift the costs of
determining the nutrient values of products to producers. However, FDA
is unaware of the extent to which this is a problem for small
businesses. Furthermore, FDA has no data to indicate the importance of
a nutrition profile in marketing these products. However, the more
important these profiles are, the more likely that increased sales
could cover the costs of analysis. FDA also notes that acceptable
nutrient data is available for many of these products through USDA's
Handbook 8 and other databases.
XII. The Paperwork Reduction Act of 1995
This final rule contains no information collection or recordkeeping
requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
et seq.).
XIII. References
The following references have been placed on display in the Dockets
Management Branch (HFA-305), Food and Drug Administration, 12420
Parklawn Dr., rm. 1-23, Rockville, MD 20857.
1. Food and Drug Administration, Center for Food Safety and
Applied Nutrition, ``FDA Nutrition Labeling Manual: A Guide for
Developing and Using Data bases,'' Washington, DC, 1993 ed.
2. Food and Drug Administration, Center for Food Safety and
Applied Nutrition, ``Report on Voluntary Compliance of Food
Retailers in Providing Nutrition Labeling Information for Raw Fruits
and Vegetables, and for Raw Fish,'' Washington, DC, May 8, 1993.
3. National Retail Tracking Index, ``Food and Drug
Administration, Nutrition Labeling Information Study, Raw Fruits/
Vegetables and Raw Fish,'' Englewood Cliffs, NJ, March 1, 1995.
4. FDA 1995 Health and Diet Survey, Food Label Use and Nutrition
Education Module, Food and Drug Administration, Center for Food
Safety and Applied Nutrition, Washington, DC, November 1995.
5. Food and Drug Administration, Center for Food Safety and
Applied Nutrition, ``Documentation for the 1996 Nutrition Labeling
Values for the 20 Most Frequently Consumed Raw Fruits, Vegetables,
and Fish,'' Washington, DC, June 1996.
6. O'Neill, K. R., ``Results of Raw Apple Nutritional Analyses
from PMA and IAI Submissions for Appendix C,'' CFSAN, FDA,
Washington, DC, September 5, 1995.
7. O'Neill, K. R., ``Results of Raw Avocado Nutritional Analyses
for PMA and CAC Submissions for Appendix C,'' CFSAN, FDA,
Washington, DC, September 6, 1995.
8. O'Neill, K. R., ``Results of Raw Bananas Nutritional Analyses
for International Banana Association, Inc., Submission for Appendix
C,'' CFSAN, FDA, Washington, DC, August 15, 1995.
9. Hegenauer, J., and E. Pivonka, ``Tangerine Nutrition Study,''
Produce Marketing Association Nutrition Labeling Program, Newark,
DE, August 3, 1992.
10. Simpson, K. L., and S. C. S. Tsou, ``Vitamin A and
Provitamin Composition of Foods,'' edited by Bauernfeind, J. C.,
Vitamin A Deficiency and Its Control, pp. 461-478, Academic Press,
Inc., 1986.
11. Bauernfeind, J. C., ``Carotenoid Vitamin A Precursors and
Analogs in Foods and Feeds,'' Journal of Agricultural Food
Chemistry, 20(3):456-473, 1972.
12. O'Neill, K. R., ``Results of Raw Fruit and Vegetable
Nutritional Analyses for Produce Marketing Association Submission
for Appendix C,'' FDA memo, August 31, 1995.
13. Gebhardt, S. E., R. Cutrufelli, and R. H. Matthews,
``Composition of Foods, Fruits and Fruit Juices, Raw, Processed,
Prepared,'' Agriculture Handbook No. 8-9, USDA, Washington, DC, p.
8, 120, August 1982.
14. Haytowitz, D. B., R. H. Matthews, ``Composition of Foods,
Vegetables and Vegetable Products, Raw, Processed, Prepared,''
Agriculture Handbook No. 8-11, USDA, p. 10, Washington, DC, 1984.
15. Matthews, R. H., P. R. Pehrsson, and M. Farhat-Sabet,
``Sugar Content of Selected Foods: Individual and Total Sugars.''
USDA Home Economics Research Report No. 48, September 1987.
16. Pennington, J. A. T., ``FDA Voluntary Nutrition Labeling
Program for Raw Fruits, Vegetables, and Fish: Documentation for the
Proposed Nutrition Labeling Values,'' CFSAN, FDA, Washington, DC,
October 1993.
17. Nettleton, J. A., W. H. Allen, L. V. Klatt, W. M. N.
Ratnayake, and R. G. Ackman, ``Nutrients and Chemical Residues in
One- to Two-Pound Mississippi Farm-raised Channel Catfish (Ictalurus
punctatus),'' Journal of Food Science, 55(4):954-958, 1990.
18. O'Neill, K. R., ``Results of Cooked Catfish Nutritional
Analyses for Appendix D to Part 101: Nutritional Facts for Cooked
Fish,'' CFSAN, FDA, Washington, DC, August 17, 1995.
19. Allen, B., Memo to FDA, The Catfish Institute, Belzoni, MS,
February, 9, 1996.
20. O'Neill, K. R., ``Results of Atlantic/Pacific Mackerel
Nutritional Analyses for Appendix D to Part 101: Nutritional Facts
for Cooked Fish (Revised),'' CFSAN, FDA, Washington, DC, March 15,
1996.
21. O'Neill, K. R., ``Results of Ocean Perch Nutritional
Analyses for Appendix D to Part 101: Nutritional Facts for Cooked
Fish,'' CFSAN, FDA, Washington, DC, March 7, 1996.
22. Food and Drug Administration, Center for Food Safety and
Applied Nutrition, Office of Food Labeling, ``Food Labeling
Questions and Answers,'' p. 21, Washington, DC, August 1993.
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 101.43 is amended by revising paragraphs (a)(1), (a)(2),
and (a)(3) to read as follows:
[[Page 42760]]
Sec. 101.43 Substantial compliance of food retailers with the
guidelines for the voluntary nutrition labeling of raw fruits,
vegetables, and fish.
(a) * * *
(1) Be presented in the store or other type of establishment in a
manner that is consistent with Sec. 101.45(a)(1);
(2) Be presented in content and format that are consistent with
Sec. 101.45(a)(2), (a)(3), and (a)(4); and
(3) Include data that have been provided by FDA in Appendices C and
D to part 101 of this chapter, except that the information on potassium
is voluntary.
* * * * *
3. Section 101.44 is amended by revising paragraph (c) to read as
follows:
Sec. 101.44 Identification of the 20 most frequently consumed raw
fruits, vegetables, and fish in the United States.
* * * * *
(c) The 20 most frequently consumed raw fish are: Shrimp, cod,
pollock, catfish, scallops, salmon (Atlantic/Coho, chum/pink, sockeye),
flounder/sole, oysters, orange roughy, Atlantic/Pacific mackerel, ocean
perch, rockfish, whiting, clam, haddock, blue crab, rainbow trout,
halibut, lobster, and swordfish.
4. Section 101.45 is revised to read as follows:
Sec. 101.45 Guidelines for the voluntary nutrition labeling of raw
fruits, vegetables, and fish.
(a) Nutrition labeling for raw fruits, vegetables, and fish listed
in Sec. 101.44 should be presented to the public in the following
manner:
(1) Nutrition labeling information should be displayed at the point
of purchase by an appropriate means such as by a label affixed to the
food or through labeling including shelf labels, signs, posters,
brochures, notebooks, or leaflets that are readily available and in
close proximity to the foods. The nutrition labeling information may
also be supplemented by a video, live demonstration, or other media.
(2) Serving sizes should be determined, and nutrients declared, in
accordance with Sec. 101.9 (b) and (c), respectively, except that the
nutrition labeling data should be based on the raw edible portion for
fruits and vegetables and on the cooked edible portion for fish. The
methods used to cook fish should be those that do not add fat,
breading, or seasoning (e.g., salt or spices).
(3) When nutrition labeling information is provided for more than
one raw fruit, vegetable, or fish on signs, posters, brochures,
notebooks, or leaflets, it may be presented in charts with horizontal
or vertical columns or as a compilation of individual nutrition labels.
Nutrition labeling that is presented in a linear display (see
Sec. 101.9(j)(13)(ii)(A)(2)) will not be considered to be in
compliance. The heading ``Nutrition Facts'' must be in a type size
larger than all other print in the nutrition label. The required
information (i.e., headings, serving sizes, list of nutrients,
quantitative amounts by weight (except for vitamins and minerals), and
percent of Daily Values (DV's) (except for sugars and protein) must be
clearly presented and of sufficient type size and color contrast to be
plainly legible, with numeric values for percent of DV highlighted in
contrast to the quantitative amounts by weight and hairlines between
all nutrients.
(i) Declaration of the number of servings per container need not be
included in the nutrition labeling of raw fruits, vegetables, and fish.
(ii) Except for the statement ``Percent Daily Values are based on a
2,000 calorie diet,'' the footnote required in Sec. 101.9(d)(9) is not
required. However, when labeling is provided in brochures, notebooks,
leaflets, or similar types of materials, retailers are encouraged to
include the footnote.
(iii) When the nutrition labeling information for more than one raw
fruit or vegetable is provided on signs, posters, brochures, notebooks,
or leaflets, the listings for saturated fat and cholesterol may be
omitted from the charts or individual nutrition labels so long as the
fact that most fruits and vegetables provide negligible amounts of
these nutrients, but that avocados contain 1 gram (g) of fat per ounce,
is stated in a footnote (e.g., ``Most fruits and vegetables provide
negligible amounts of saturated fat and cholesterol; avocados provide 1
g of saturated fat per ounce''). The footnote may also contain
information about the polyunsaturated and monounsaturated fat content
of avocados. When the nutrition labeling information for raw fish is
provided on a chart, the listings for dietary fiber and sugars may be
omitted if the following footnote is used, ``Fish provide negligible
amounts of dietary fiber and sugars.''
(4) When nutrition labeling is provided for individual raw fruits,
vegetables, or fish on packages or on signs, posters, brochures,
notebooks, or leaflets, it should be displayed in accordance with
Sec. 101.9, except that the declaration of the number of servings per
container need not be included. For individual labels provided by
retailers on signs and posters, the footnote required in
Sec. 101.9(d)(9) may be shortened to ``Percent Daily Values are based
on a 2,000 calorie diet.''
(b) Nutrition label values provided by the Food and Drug
Administration (FDA) in Appendices C and D to part 101 for the 20 most
frequently consumed raw fruits, vegetables, and fish listed in
Sec. 101.44 shall be used to ensure uniformity in declared values. FDA
will publish proposed updates of the 20 most frequently consumed raw
fruits, vegetables, and fish and nutrition label data for these foods
(or a notice that the data sets have not changed from the previous
publication) at least every 4 years in the Federal Register.
(1) The agency encourages the submission of data bases with new or
additional nutrient data for any of the most frequently consumed raw
fruits, vegetables, and fish to 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, for review and
evaluation. FDA may incorporate these data in the next revision of the
nutrition labeling information for the top 20 raw fruits, vegetables,
and fish.
(i) Guidance in the development of data bases may be found in the
``FDA Nutrition Labeling Manual: A Guide for Developing and Using Data
Bases,'' available from the FDA Office of Food Labeling.
(ii) The submission to FDA should include, but need not be limited
to, information on the following: Source of the data (names of
investigators, name of organization, place of analyses, dates of
analyses), number of samples, sampling design, analytical methods, and
statistical treatment of the data. Proposed quantitative label
declarations may be included. The proposed values for declaration
should be determined in accordance with the ``FDA Nutrition Labeling
Manual: A Guide for Developing and Using Data Bases.''
(2) [Reserved]
(c) Data bases of nutrient values for raw fruits, vegetables, and
fish that are not among the 20 most frequently consumed may be used to
develop nutrition labeling values for these foods. This includes data
bases of nutrient values for specific varieties, species, or cultivars
of raw fruits, vegetables, and fish not specifically identified among
the 20 most frequently consumed.
(1) The food names and descriptions for the fruits, vegetables, and
fish should clearly identify these foods as distinct from foods among
the most frequently consumed list for which FDA has provided data.
[[Page 42761]]
(2) Guidance in the development of data bases may be found in the
``FDA Nutrition Labeling Manual: A Guide for Developing and Using Data
Bases.''
(3) Nutrition labeling values computed from data bases are subject
to the compliance provisions of Sec. 101.9(g).
(i) Compliance with the provisions of Sec. 101.9(g) may be achieved
by use of a data base that has been developed following FDA guideline
procedures and approved by FDA.
(A) The submission to FDA for approval should include but need not
be limited to information on the following: Source of the data (names
of investigators, name of organization, place of analyses, dates of
analyses), number of samples, sampling design, analytical methods,
statistical treatment of the data, and proposed quantitative label
declarations. The values for declaration should be determined in
accordance with the ``FDA Nutrition Labeling Manual: A Guide for
Developing and Using Databases.''
(B) FDA approval of a data base and nutrition labeling values shall
not be considered granted until the Center for Food Safety and Applied
Nutrition has agreed to all aspects of the data base in writing.
Approvals will be in effect for a limited time, e.g., 10 years, and
will be eligible for renewal in the absence of significant changes in
agricultural or industry practices (e.g., a change occurs in a
predominant variety produced). FDA will take steps to revoke its
approval of the data base and nutrition labeling values if FDA
monitoring suggests that the data base or nutrition labeling values are
no longer representative of the item sold in this country. Approval
requests shall be submitted in accordance with the provision of
Sec. 101.30 of this chapter.
(ii) [Reserved]
5. Appendices C and D are added to part 101 to read as follows:
Appendix C to Part 101.--Nutrition Facts for Raw Fruits and Vegetables
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
FR Doc. 96-20966 Food Labeling; Guidelines for Voluntary Nutrition Labeling of Raw Fruits, Vegetables, and Fish; Identification of the 20 Most Frequently Consumed; and Policy for Data Base Review for Voluntary and Mandatory Nutrition Labeling
Total fat Saturated Cholesterol Sodium Potassium Total Dietary Sugars Protein Vitamin Vitamin Calcium Iron
Nutrition facts \1\ for raw fruits and vegetables edible Calories --------------- fat ------------------------------------------ Carbohydrate Fiber ----------------- A C ---------------
portion Calories from fat -------------- ---------------------------- ------------------
(g) (%) (g) (%) (mg) (%) (mg) (%) (mg) (%) (g) (%) (g) (%) (g) (g) (%) (%) (%) (%)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Banana, 1 medium (126 g/4.5 oz)............................... 110 0 0 0 0 0 0 0 0 0 400 11 29 10 4 16 21 1 0 15 0 2
Apple, 1 medium (154 g/5.5 oz)................................ 80 0 0 0 0 0 0 0 0 0 170 5 22 7 5 20 16 0 2 8 0 2
Watermelon, \1/18\ medium melon; 2 cups diced pieces (280 g/
10.0 oz)..................................................... 80 0 0 0 0 0 0 0 10 0 230 7 27 9 2 8 25 1 20 25 2 4
Orange, 1 medium (154 g/5.5 oz)............................... 70 0 0 0 0 0 0 0 0 0 260 7 21 7 7 28 14 1 2 130 6 2
Cantaloupe, \1/4\ medium (134 g/4.8 oz)....................... 50 0 0 0 0 0 0 0 25 1 280 8 12 4 1 4 11 1 100 80 2 2
Grapes, 1\1/2\ cups (138 g/4.9 oz)............................ 90 10 1 2 0 0 0 0 0 0 270 8 24 8 1 4 23 1 2 25 2 2
Grapefruit, \1/2\ medium (154 g/5.3 oz)....................... 60 0 0 0 0 0 0 0 0 0 230 7 16 5 6 24 10 1 15 110 2 0
Strawberries, 8 medium (147 g/5.3 oz)......................... 45 0 0 0 0 0 0 0 0 0 270 8 12 4 4 16 8 1 0 160 2 4
Peach, 1 medium (98 g/3.5 oz)................................. 40 0 0 0 0 0 0 0 0 0 190 5 10 3 2 8 9 1 2 10 0 0
Pear, 1 medium (166 g/5.9 oz)................................. 100 10 1 2 0 0 0 0 0 0 210 6 25 8 4 16 17 1 0 10 2 0
Nectarine, 1 medium (140 g/5.0 oz)............................ 70 0 0.5 1 0 0 0 0 0 0 300 9 16 5 2 8 12 1 4 15 0 2
Honeydew Melon, \1/10\ medium melon (134 g/4.8 oz)............ 50 0 0 0 0 0 0 0 35 1 310 9 13 4 1 4 12 1 2 45 0 2
Plums, 2 medium (132 g/4.7 oz)................................ 80 10 1 2 0 0 0 0 0 0 220 6 19 6 2 8 10 1 6 20 0 0
Avocado, California, \1/5\ medium (30 g/1.1 oz)............... 55 45 5 8 1 5 0 0 0 0 170 5 3 1 3 12 0 1 0 4 0 0
Lemon, 1 medium (58 g/2.1 oz)................................. 15 0 0 0 0 0 0 0 5 0 90 3 5 2 1 4 1 0 0 40 2 0
Pineapple, 2 slices, 3'' diameter, \3/4\'' thick (112 g/4 oz). 60 0 0 0 0 0 0 0 10 0 115 3 16 5 1 4 13 1 0 25 2 2
Tangerine, 1 medium (109 g/3.9 oz)............................ 50 0 0.5 1 0 0 0 0 0 0 180 5 15 5 3 12 12 1 0 50 4 0
Sweet cherries, 21 cherries; 1 cup (140 g/5.0 oz)............. 90 0 0.5 1 0 0 0 0 0 0 300 9 22 7 3 12 19 2 2 15 2 2
Kiwifruit, 2 medium (148 g/5.3 oz)............................ 100 10 1 2 0 0 0 0 0 0 480 14 24 8 4 16 16 2 2 240 6 4
Lime, 1 medium (67 g/2.4 oz).................................. 20 0 0 0 0 0 0 0 0 0 75 2 7 2 2 8 0 0 0 35 0 0
Potato, 1 medium (148 g/5.3 oz)............................... 100 0 0 0 0 0 0 0 0 0 720 21 26 9 3 12 3 4 0 45 2 6
Iceberg lettuce, \1/6\ medium head (89 g/3.2 oz).............. 15 0 0 0 0 0 0 0 10 0 120 3 3 1 1 4 2 1 4 6 2 2
Tomato, 1 medium (148 g/5.3 oz)............................... 35 0 0.5 1 0 0 0 0 5 0 360 10 7 2 1 4 4 1 20 40 2 2
Onion, 1 medium (148 g/5.3 oz)................................ 60 0 0 0 0 0 0 0 5 0 240 7 14 5 3 12 9 2 0 20 4 2
Carrot, 7'' long, 1\1/4\'' diameter (78 g/2.8 oz)............. 35 0 0 0 0 0 0 0 40 2 280 8 8 3 2 8 5 1 270 10 2 0
Celery, 2 medium stalks (110 g/3.9 oz)........................ 20 0 0 0 0 0 0 0 100 4 350 10 5 2 2 8 0 1 2 15 4 2
Sweet corn, kernels from 1 medium ear (90 g/3.2 oz)........... 80 10 1 2 0 0 0 0 0 0 240 7 18 6 3 12 5 3 2 10 0 2
Broccoli, 1 medium stalk (148 g/5.3 oz)....................... 45 0 0.5 1 0 0 0 0 55 2 540 15 8 3 5 20 3 5 15 220 6 6
Green cabbage, \1/12\ medium head (84 g/3.0 oz)............... 25 0 0 0 0 0 0 0 20 1 190 5 5 2 2 8 3 1 0 70 4 2
Cucumber, \1/3\ medium (99 g/3.5 oz).......................... 15 0 0 0 0 0 0 0 0 0 170 5 3 1 1 4 2 1 4 10 2 2
Bell pepper, 1 medium (148 g/5.3 oz).......................... 30 0 0 0 0 0 0 0 0 0 270 8 7 2 2 8 4 1 8 190 2 2
Cauliflower, \1/6\ medium head (99 g/3.5 oz).................. 25 0 0 0 0 0 0 0 30 1 270 8 5 2 2 8 2 2 0 100 2 2
Leaf lettuce, 1\1/2\ cups shredded (85 g/3.0 oz).............. 15 0 0 0 0 0 0 0 30 1 230 7 4 1 2 8 2 1 40 6 4 0
Sweet Potato, medium, 5'' long, 2'' diameter (130 g/4.6 oz)... 130 0 0 0 0 0 0 0 45 2 350 10 33 11 4 16 7 2 440 30 2 2
Mushrooms, 5 medium (84 g/3.0 oz)............................. 20 0 0 0 0 0 0 0 0 0 300 9 3 1 1 4 0 3 0 2 0 2
Green onion, \1/4\ cup chopped (25 g/0.9 oz).................. 10 0 0 0 0 0 0 0 5 0 70 2 2 1 1 4 1 0 2 8 0 0
Green (snap) beans, \3/4\ cup cut (83 g/3.0 oz)............... 25 0 0 0 0 0 0 0 0 0 200 6 5 2 3 12 2 1 4 10 4 2
Radishes, 7 radishes (85 g/3.0 oz)............................ 15 0 0 0 0 0 0 0 25 1 230 7 3 1 0 0 2 1 0 30 2 0
Summer squash, \1/2\ medium (98 g/3.5 oz)..................... 20 0 0 0 0 0 0 0 0 0 260 7 4 1 2 8 2 1 6 30 2 2
Asparagus, 5 spears (93 g/3.3 oz)............................. 25 0 0 0 0 0 0 0 0 0 230 7 4 1 2 8 2 2 10 15 2 2
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Raw, edible weight portion. Percent (%) Daily Values are based on a 2,000 calorie diet.
Appendix D to Part 101.--Nutrition Facts for Cooked Fish
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total fat Saturated fat Cholesterol Sodium Potassium Total Dietary
Calories ------------------------------------------------------------------------ carbohydrate fiber Sugars Protein Vitamin Vitamin Calcium Iron
Nutrition facts\1\ fish (84 g/3 oz) Calories from fat ---------------------------- (g) (g) A (%) C (%) (%) (%)
(g) (%) (g) (%) (mg) (%) (mg) (%) (mg) (%) (g) (%) (g) (%)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Shrimp....................................................... 80 10 1 2 0 0 165 55 190 8 140 4 0 0 0 0 0 18 0 0 2 15
Cod.......................................................... 90 0 0.5 1 0 0 45 15 60 3 450 13 0 0 0 0 0 20 0 0 2 2
Pollock...................................................... 90 10 1 2 0 0 80 27 110 5 360 10 0 0 0 0 0 20 0 0 0 2
Catfish...................................................... 140 80 9 14 2 10 50 17 40 2 230 7 0 0 0 0 0 17 0 0 0 0
Scallops, about 6 large or 14 small.......................... 120 10 1 2 0 0 55 18 260 11 280 8 2 1 0 0 0 22 0 0 2 2
Salmon, Atlantic/Coho........................................ 160 60 7 11 1 5 50 17 50 2 490 14 0 0 0 0 0 22 0 0 0 4
Salmon, Chum/Pink............................................ 130 35 4 6 1 5 70 23 65 3 410 12 0 0 0 0 0 22 2 0 0 2
Salmon, Sockeye.............................................. 180 80 9 14 1.5 8 75 25 55 2 320 9 0 0 0 0 0 23 4 0 0 2
[[Page 42762]]
Flounder/sole................................................ 100 14 1.5 2 0.5 3 60 20 90 4 290 8 0 0 0 0 0 21 0 0 2 2
Oysters, about 12 medium..................................... 100 35 3.5 5 1 5 115 38 190 8 390 11 4 1 0 0 0 10 0 0 6 45
Orange roughy................................................ 80 10 1 2 0 0 20 7 70 3 330 9 0 0 0 0 0 16 0 0 0 0
Mackerel, Atlantic/Pacific................................... 210 120 13 20 1.5 8 60 20 100 4 400 11 0 0 0 0 0 21 0 0 0 5
Ocean perch.................................................. 110 20 2 3 0 0 50 17 95 4 290 8 0 0 0 0 0 21 0 0 10 6
Rockfish..................................................... 100 20 2 3 0 0 40 13 70 3 430 12 0 0 0 0 0 21 4 0 0 2
Whiting...................................................... 110 25 3 5 0.5 3 70 23 95 4 320 9 0 0 0 0 0 19 2 0 6 0
Clams, about 12 small........................................ 100 15 1.5 2 0 0 55 18 95 4 530 15 0 0 0 0 0 22 10 0 6 60
Haddock...................................................... 100 10 1 2 0 0 80 27 85 4 340 10 0 0 0 0 0 21 0 0 2 6
Blue crab.................................................... 100 10 1 2 0 0 90 30 320 13 360 10 0 0 0 0 0 20 0 0 8 4
Rainbow trout................................................ 140 50 6 9 2 10 60 20 35 1 370 11 0 0 0 0 0 21 4 4 6 2
Halibut...................................................... 110 20 2 3 0 0 35 12 60 3 490 14 0 0 0 0 0 23 2 0 4 4
Lobster...................................................... 80 0 0.5 1 0 0 60 20 320 13 300 9 1 0 0 0 0 17 0 0 4 2
Swordfish.................................................... 130 35 4.5 7 1 5 40 13 100 4 310 9 0 0 0 0 0 22 2 2 0 4
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Cooked, edible weight portion. Percent (%) Daily Values are based on a 2,000 calorie diet.
* * * * *
Dated: July 31, 1996.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 96-20966 Filed 8-15-96; 8:45 am]
BILLING CODE 4160-01-P
Complete official Federal Register PDF
FR Doc. 96-20958 Procedures for Complaints of Employment Discrimination Filed Against Recipients of Federal Financial Assistance
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42556-42557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20958]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
28 CFR Part 42
RIN 1190 AA30
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
29 CFR Part 1691
RIN 3046 AA51
Procedures for Complaints of Employment Discrimination Filed
Against Recipients of Federal Financial Assistance
AGENCIES: Department of Justice and Equal Employment Opportunity
Commission.
ACTION: Notice of rescission of limitation on participation of the
Department of Education in procedures governing referral of certain
complaints of employment discrimination.
-----------------------------------------------------------------------
SUMMARY: This document informs the public that a limitation placed on
the participation of the Department of Education (ED) in the procedures
prescribed by a joint rule of the Department of Justice (DOJ) and the
Equal Employment Opportunity Commission (EEOC) for processing
complaints of employment discrimination filed against recipients of
Federal financial assistance no longer applies. 28 CFR Part 42, 29 CFR
Part 1691. The decision in Women's Equity Action League v. Cavazos, 906
F.2d 742 (D.C. Cir. 1990), has the effect of allowing ED to refer joint
complaints alleging a pattern or practice of employment discrimination
or joint complaints alleging discrimination in employment and in other
practices to the EEOC, when appropriate, under the joint DOJ and EEOC
rule.
FOR FURTHER INFORMATION CONTACT: Peggy R. Mastroianni, Associate Legal
Counsel, Office of Legal Counsel, Equal Employment Opportunity
Commission, 1801 L Street, N.W., 6th Floor, Washington, D.C. 20507.
Telephone: (202) 663-4638 (voice), (202) 663-7026 (TDD); or Merrily A.
Friedlander, Chief, Coordination and Review Section, Civil Rights
Division, U.S. Department of Justice, P.O. Box 66560, Washington, D.C.
20035-6560, (202) 307-2222 (voice), (202) 307-2678 (TDD).
SUPPLEMENTARY INFORMATION: On January 25, 1983, DOJ and the EEOC
published a rule entitled ``Procedures for Complaints of Employment
Discrimination Filed Against Recipients of Federal Funds.'' 28 CFR Part
42, 29 CFR Part 1691 (joint rule). The joint rule generally sets forth
procedures for Federal agencies that grant financial assistance to
coordinate with the EEOC the processing of joint complaints involving
employment discrimination covered by Title VII of the Civil Rights Act
of 1964 or the Equal Pay Act, and by Title VI of the Civil Rights Act
of 1964, Title IX of the Education Amendments of 1972, the State and
Local Fiscal Assistance Act of 1972, as amended, or provisions similar
to Title VI and Title IX in Federal grant statutes.
By virtue of an order of the United States District Court in Adams
v. Bell, C.A. No. 3095-70, and Women's Equity
[[Page 42557]]
Action League v. Bell, C.A. No. 74-1720 (D.D.C., Order of December 29,
1977, as modified by D.D.C., Order of March 11, 1983) (hereinafter
referred to as ``Adams''), ED was obliged to process complaints of
discrimination within time limits specified by the court. Those time
limits did not apply to the EEOC or to other agencies that grant
financial assistance, nor were they required by the procedures of the
joint rule. As a result, DOJ and the EEOC published a rule-related
notice stating that ED was precluded by court order from referring
employment discrimination complaints to the EEOC under the procedures
of the joint rule. 48 FR 29686, June 28, 1983.
On January 17, 1985, the district court in Adams issued a modified
order permitting ED ``to refer individual, as opposed to systemic,
complaints of employment discrimination under Title VI and Title IX''
to the EEOC. As a result, DOJ and the EEOC published a rule-related
notice stating that ED was now permitted to refer joint complaints
alleging discrimination against an individual to the EEOC. However, the
notice indicated that ED would continue to be precluded from referring
to the EEOC joint complaints alleging a pattern or practice of
employment discrimination or alleging discrimination in both employment
and non-employment practices. The procedures of the joint rule permit
agencies to refer these complaints to the EEOC when warranted by
special circumstances. See 50 FR 8608, Mar. 4, 1985.
On June 26, 1990, the Court of Appeals for the District of Columbia
Circuit affirmed the district court's dismissal of the entire Adams
litigation and released ED from the prior limitations of the 1983 Adams
order referenced above. Women's Equity Action League v. Cavazos, 906
F.2d 742 (D.C. Cir. 1990). Accordingly, ED is now allowed to follow the
coordination procedures set forth in the joint rule in their entirety,
including those procedures governing the processing and referral of
joint complaints alleging a pattern or practice of employment
discrimination or discrimination in employment and non-employment
practices.
For the Department of Justice.
Dated: August 12, 1996.
Deval L. Patrick,
Assistant Attorney General, Civil Rights Division.
For the Equal Employment Opportunity Commission.
Dated: August 9, 1996.
Gilbert F. Casellas,
Chairman.
[FR Doc. 96-20958 Filed 8-15-96; 8:45 am]
BILLING CODE 4410-01-M
Complete official Federal Register PDF
FR Doc. 96-20906 Unlicensed Operation Above 40 GHz; Correction
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Page 42558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20906]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 15
[ET Docket No. 94-124; DA 96-1157]
Unlicensed Operation Above 40 GHz; Correction
AGENCY: Federal Communications Commission.
ACTION: Correction to final rule.
-----------------------------------------------------------------------
SUMMARY: This Erratum contains a correction to the final rule adopted
in the First Report and Order, which was published Tuesday, April 2,
1996, 61 FR 14500. The rule deals with unlicensed operation above 40
GHz. This correction adds an amendment to Part 15 of Title 47 of the
Code of Federal Regulations that was inadvertently omitted from the
Report and Order.
EFFECTIVE DATE: May 2, 1996.
FOR FURTHER INFORMATION CONTACT: John A. Reed, Office of Engineering
and Technology, (202) 418-2455.
SUPPLEMENTARY INFORMATION:
Background
This erratum adds an amendment to Section 15.245 of the
Commission's rules, 47 CFR Section 15.245, as modified in Unlicensed
Operation Above 40 GHz, First Report and Order, ET Docket No. 94-124,
FCC 95-499 (released December 15, 1996) 61 FR 14500, April 2, 1996,
This rule which deals with unlicensed operation above 40 GHz, was
published with an omission. After release of this item, the Commission
noted that it had omitted the amendment to the regulations concerning
the level of spurious emissions appearing above 40 GHz from unlicensed
field disturbance sensors.
Need for Correction
As published, this final rule contains an error that may prove to
be misleading and is in need of clarification.
Correction of Publication
Accordingly, the publication on April 2, 1996, of final rules in ET
Docket No. 94-124, which were the subject of FR Doc. 96-7689, is
corrected as follows.
PART 15--[CORRECTED]
On page 14503, in the first column, a new amendatory instruction
5a. is added immediately preceding amendatory instruction 6. to read as
follows:
5a. Section 15.245 is amended by revising paragraph (b)(1)
introductory text to read as follows: Sec. 15.245 Operation within the
bands 902-928 MHz, 2435-2465 MHz, 5785-5815 MHz, 10500-10550 MHz, and
24075-24175 MHz.
* * * * *
(b)(1) Regardless of the limits shown in the above table, harmonic
emissions in the restricted bands below 17.7 GHz, as specified in
Sec. 15.205, shall not exceed the field strength limits shown in
Sec. 15.209. Harmonic emissions in the restricted bands at and above
17.7 GHz shall not exceed the following field strength limits:
* * * * *
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-20906 Filed 8-15-96; 8:45 am]
BILLING CODE 6712-01-U
Complete official Federal Register PDF
FR Doc. 96-20872 Airworthiness Directives; Lockheed Model 382, 382B, 382E, 382F, and 382G Series Airplanes
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42549-42550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20872]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. 95-NM-10-AD; Amendment 39-9663; AD 96-12-20]
RIN 2120-AA64
Airworthiness Directives; Lockheed Model 382, 382B, 382E, 382F,
and 382G Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule; correction.
-----------------------------------------------------------------------
SUMMARY: This document corrects information that appeared in
airworthiness directive (AD) 96-12-20, amendment 39-9663, that was
published in the Federal Register on June 10, 1996 (61 FR 29279). This
AD is applicable to certain Lockheed Model 382, 382B, 382E, 382F, and
382G series airplanes. Among other things, it requires visual
inspections to detect loose, missing, or deformed fasteners in the
upper truss mounts of certain engines. This action corrects a reference
to the outboard and inboard engines, which should have referred to the
outboard and inboard truss mounts.
DATES: Effective July 15, 1996.
The incorporation by reference of certain publications listed in
the regulations was previously approved by the Director of the Federal
Register as of July 15, 1996 (61 FR 29279, June 10, 1996).
FOR FURTHER INFORMATION CONTACT: Thomas Peters, Aerospace Engineer,
ACE-116A, Flight Test Branch, FAA, Small Airplane Directorate, Atlanta
Aircraft Certification Office, Campus Building, Suite 2-160, 1701
Columbia Avenue, College Park, Georgia 30337-
[[Page 42550]]
2748; telephone (404) 305-7367; fax (404) 305-7348.
SUPPLEMENTARY INFORMATION: On June 3, 1996, the FAA issued AD 96-12-20,
amendment 39-9663; (61 FR 29279, June 10, 1996), to require visual
inspections to detect loose, missing, or deformed fasteners in the
upper truss mounts of certain engines, inspections to detect cracking
in the associated tangs, and replacement of cracked parts. That AD also
requires repetitive ultrasonic inspections of the upper tang and
replacement of cracked parts. Additionally, that AD provides an
optional terminating action for the repetitive inspections.
As published, paragraph (d)(2) of that AD refers to ``truss mounts
in the No. 1 outboard engine'' and refers to ``truss mounts of the No.
4 inboard engine.'' However, the correct references should have been to
``outboard truss mounts of the No. 1 engine'' and ``inboard truss
mounts of the No. 4 engine.'' In all other respects, as well as in
other references to these items in the AD, the originally-issued AD is
correct.
Since no other part of the regulatory information has been changed,
the final rule is not being republished.
The effective date of the AD remains July 15, 1996.
Accordingly, the final rule document (FR Doc. 96-14383), which was
published on June 10, 1996, at 61 FR 29279, is corrected as follows:
Sec. 39.13 [Corrected]
On page 29282, in the first column, the text of paragraph (d)(2) of
AD 96-12-20, amendment 39-9663, is corrected to read as follows:
* * * * *
(d) * * *
(1) * * *
(2) Replace the truss mount assembly with part number 360013-31 or
subsequent (for the outboard truss mounts of the No. 1 engine), or part
number 360017-31 or subsequent (for the inboard truss mounts of the No.
4 engine), as applicable, in accordance with SMP 583. Such replacement
constitutes terminating action for the requirements of this AD.
* * * * *
Issued in Renton, Washington, on August 9, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-20872 Filed 8-15-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-20865 Addition of Commercial Espionage to Mail Cover Regulations
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42557-42558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20865]
=======================================================================
-----------------------------------------------------------------------
POSTAL SERVICE
39 CFR Part 233
Addition of Commercial Espionage to Mail Cover Regulations
AGENCY: Postal Service.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the United States Postal Service's
national security mail cover regulations to add commercial espionage by
foreign sources as an activity for which national security mail covers
may be authorized. This change is effected by expanding the definition
of ``protection of the national security'' found at 39 CFR 233.3(c)(9)
to include commercial espionage.
EFFECTIVE DATE: August 16, 1996.
FOR FURTHER INFORMATION CONTACT: Henry J. Bauman, Counsel, Postal
Inspection Service, (202) 268-4415.
SUPPLEMENTARY INFORMATION: On May 10, 1996, the Postal Service
published in the Federal Register (61 FR 21404) a proposed rule to
amend its national security mail cover regulations to add commercial
espionage and a request for comments on the proposed rule. No comments
were received by the closing date of June 10, 1996. The Postal Service
therefore adopts the rule below as originally published.
Postal Service regulations on mail covers are published in Title 39
of the Code of Federal Regulations (CFR) at section 233. Paragraph
(c)(9) of Sec. 233.3 currently defines ``protection of the national
security'' as ``actual or potential threats to the security of the
United States of America by a foreign power or its agents.'' This
definition is expanded to include commercial espionage.
Commercial espionage by foreign sources has become an increasing
threat to the economic well-being and ability of the United States to
compete in the international market. For the purposes of this revision,
``commercial espionage'' is defined as either ``economic espionage'' or
``industrial espionage.'' According to the Federal Bureau of
Investigation (FBI) white paper, FBI Strategy to Address the Problem of
Economic Espionage and Industrial Espionage (Washington, DC: FBI
Headquarters, undated), ``economic espionage'' is ``government-
directed, sponsored, or coordinated intelligence activity, which may or
may not constitute violation of the law, conducted for the purpose of
enhancing that country's or another country's economic competitiveness
by the use of the information by the foreign government or by providing
it to a foreign business entity thereby giving that entity a
competitive advantage in the marketplace.'' ``Industrial espionage'' is
defined by the FBI as ``individual or private business entity
sponsorship or coordination of intelligence activity conducted for the
purpose of enhancing a private business and its competitive advantage
in the marketplace, which is a violation of law.''
Revising the Postal Service's national security mail cover
regulations to include commercial espionage will enhance the ability of
law enforcement to protect national security. The Postal Service has
determined that this change in its regulations is a matter of internal
practice and procedure that will not substantially affect the rights or
obligations of private parties.
List of Subjects in 39 CFR Part 233
Administrative practice and procedures, Banks and banking, Credit,
Crime, Law enforcement, Postal Service, Privacy, Seizure and
forfeiture.
Accordingly, 39 CFR 233 is amended as set forth below.
PART 233--INSPECTION SERVICE/INSPECTOR GENERAL AUTHORITY
1. The authority citation for part 233 continues to read as
follows:
Authority: 39 U.S.C. 101, 401, 402, 403, 404, 406, 410, 411,
3005(e)(1); 12 U.S.C. 3401-3422; 18 U.S.C. 981, 1956, 1957, 2254,
3061; 21 U.S.C. 881; Inspector General Act of 1978, as amended (Pub.
L. No. 95-452, as amended), 5 U.S.C. App.3.
2. Paragraph (c)(9) of Sec. 233.3 is revised to read as follows:
Sec. 233.3 Mail covers.
* * * * *
(c) * * *
(9) Protection of the national security means to protect the United
States from any of the following actual or potential threats to its
security by a foreign power or its agents:
(i) An attack or other grave, hostile act;
(ii) Sabotage, or international terrorism; or
[[Page 42558]]
(iii) Clandestine intelligence activities, including commercial
espionage.
* * * * *
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 96-20865 Filed 8-15-96; 8:45 am]
BILLING CODE 7710-12-P
Complete official Federal Register PDF
FR Doc. 96-20859 Implementation of Section 254(g) of the Communications Act of 1934, as Amended
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42558-42564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20859]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CC Docket No. 96-61; FCC 96-331]
Implementation of Section 254(g) of the Communications Act of
1934, as Amended
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Pursuant to Section 254(g) of the Communications Act of 1934,
which was added by Section 101(a) of the 1996 Telecommunications Act,
the Commission adopts a geographic rate averaging rule ``to require
that the rates charged by providers of interexchange telecommunications
services to subscribers in rural and high cost areas shall be no higher
than the rates charged by each such provider to its subscribers in
urban areas'' and a rate integration rule to require ``that a provider
of interstate interexchange services shall provide such services to its
subscribers in each State at rates no higher than the rates charged to
its subscribers in any other State.'' These rules will ensure that
subscribers in rural and high-cost areas will not be charged higher
rates for interexchange services than subscribers in urban areas, and
that interexchange carriers will offer services to all their service
areas--whether rural, high-cost or urban--on the same terms.
EFFECTIVE DATE: September 16, 1996.
FOR FURTHER INFORMATION CONTACT: Sherille Ismail or Neil Fried,
Competitive Pricing Division, Common Carrier Bureau, (202) 418-1530.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order adopted and released August 7, 1996. The full text of this
Commission decision is available for inspection and copying during
normal business hours in the FCC Public Reference Room (Room 239), 1919
M St., N.W., Washington, D.C. The complete text of this decision may
also be purchased from the Commission's copy contractor, International
Transcription Service, Suite 140, 2100 M Street, N.W., Washington, D.C.
20037.
Regulatory Flexibility Analysis
The Commission promulgates the rules in the Report and Order to
implement Section 254(g) of the Communication Act of 1934, as amended
by the Telecommunications Act of 1996. The objective of these rules is
``to incorporate the policies of geographic rate averaging and rate
integration of interexchange services in order to ensure that
subscribers in rural and high cost areas throughout the Nation are able
to continue to receive both intrastate and interstate interexchange
services at rates no higher than those paid by urban subscribers.''
The Regulatory Flexibility Act defines ``small entity'' to include
the definition of ``small business concern'' under the Small Business
Act, 15 U.S.C. 632. Under the Small Business Act, a ``small business
concern'' is one that (1) is independently owned and operated, (2) is
not dominant in its field of operation, and (3) meets any additional
criteria established by the Small Business Administration (SBA). Our
geographic averaging and rate integration rules will apply to all
providers of interexchange service. The SBA has not developed a
definition of small entities specifically applicable to providers of
interexchange service. The closest applicable definition under SBA
rules is for telephone communications companies other than
radiotelephone (wireless) companies. According to SBA regulations, a
telephone communications company other than a radiotelephone company is
a small business concern if it has fewer than 1,500 employees.
The most relevant employee data available from the SBA does not
enable us to make a meaningful estimate of the number of providers of
interexchange service that are small entities because it is based upon
a 1992 Census of Transportation, Communications, and Utilities survey
from which we can only
[[Page 42559]]
calculate the average number of people employed by various-sized
telephone entities other than radiotelephone companies. Based on a
Commission staff report entitled Long Distant Market Shares: Fourth
Quarter, 1995, however, we estimate that approximately 500 carriers
provide interexchange service. Some of these carriers are not
independently owned and operated, or have more than 1,500 employees.
Consequently, we estimate that our geographic averaging and rate
integration rules will apply to less than 500 ``small entities.'' We
are unable on the present record to estimate with more particularity
how many of these entities would be considered small for the purposes
of the Regulatory Flexibility Act.
No comments specifically addressed the Commission's initial
regulatory flexibility analysis. However, a number of associations that
represent, at least to some extent, the interests of small
telecommunications providers, generally supported the Commission's
proposed rules to implement geographic averaging and rate integration.
Other commenters asserted that these rules would harm small regional
providers of interexchange service in high-cost areas, arguing that
such providers would be unable to compete with nationwide carriers that
can charge lower rates by spreading their costs over a larger customer
base. A few suggested that subsidies or other support mechanisms might
alleviate their concerns. The record in this proceeding does not show
that small interexchange service providers will be disproportionately
harmed by implementation of rate integration. The practical impact of
our rules will be to require all providers of interexchange service,
including those that are small entities, to set rates on a
geographically averaged and rate-integrated basis.
To comply with our Report and Order, carriers must charge rural and
high-cost area customers for interexchange service no more than they
charge urban customers, and must charge customers for such services in
one state no more than they charge customers in any other state. The
Notice of Proposed Rulemaking (NPRM), 61 FR 14717, April 3, 1996,
proposed requiring providers of interexchange telecommunications
services to file certifications that they were complying with these
requirements in the event the Commission decides to mandate permissive
detariffing of interexchange services. We will consider later in this
proceeding what enforcement mechanisms may be necessary to support
geographic averaging and rate integration when the Commission addresses
the detariffing issue. We have proposed a requirement that AT&T,
Sprint, MCI, IT&E, GTE, and PCI submit preliminary plans no later than
February 1, 1997, to achieve rate integration for services provided to
Guam, the Northern Marianas, American Samoa, and other offshore points,
and final plans no later than June 1, 1997. The preliminary plans need
not include rates, but at a minimum should resolve service and rate-
band issues. Final plans shall include a rate schedule. Carriers
already have in place their own individualized rate schedules, which
they have presumably tailored to the areas they provide service.
Consequently, carriers' staff preparing the preliminary and final plans
will likely need no special skills other than general familiarity with
the new rate schedules that these entities are planning, or have
chosen, to adopt to comply with the rate averaging and rate integration
requirements.
Section 254(g) reflects a congressional determination that the
country's higher-cost, lower-volume markets should share in the
technological advances and increased competition characteristic of the
nation's telecommunications industry as a whole, and that interexchange
rates should be provided throughout the nation on a geographically
averaged and rate- integrated basis. As noted above, we have decided
that the statutory objectives of Section 254(g) require us to apply our
rules to all providers of interexchange service, including small ones.
We have chosen, however, to allow carriers to offer private line
service and temporary promotions on a deaveraged basis. In so doing, we
have minimized the impact our rules might otherwise have had, and
enable carriers to use such devices to enter new markets.
The Commission considered and rejected several significant
alternatives. We could have reduced burdens on small carriers by
exempting them from compliance through forbearance. However, we do not
believe that forbearing at this time would be consistent with the
congressional goals that underlie Section 254(g). We could also have
reduced burdens on small carriers by establishing cost-support
mechanisms. However, the present record does not justify any such cost-
support mechanisms. Accordingly, we decline to adopt these alternative
measures for small carriers.
Paperwork Reduction Analysis
We have decided to require AT&T, Sprint, MCI, IT&E, GTE, and PCI to
submit preliminary and final plans to achieve rate integration of Guam,
the Northern Marianas, and American Samoa by August 1, 1997. These one-
time plan requirements constitute new ``collections of information,''
within the meaning of the Paperwork Reduction Act of 1995, 44 U.S.C.
3501-3520. The public burden for these one-time collections of
information is estimated as follows:
------------------------------------------------------------------------
Burden
Title Hours per Annual per
response responses carrier
------------------------------------------------------------------------
Preliminary rate integration plan...... 30 1 30 hrs.
Final rate integration plan............ 40 1 40 hrs.
--------------------------------
Total One-Time Annual Burden: 70 hrs.
x 6 carriers = 420 hrs.
------------------------------------------------------------------------
The foregoing estimate includes the time the carriers will need to
spend: (1) Reviewing the portions of our Report & Order relevant to the
one-time plan requirements; (2) reviewing their current rate schedules;
(3) determining what rate adjustments they will need to make to their
rate schedules to comply with our rate integration rule; (4) revising
their rates in the case of the final plans; and (5) completing and
reviewing the collections of information. Send comments regarding this
burden estimate or any other aspect of the collection of information,
including suggestions for reducing the burden, to the Federal
Communications Commission, Records Management Branch, Paperwork
Reduction Project, Washington, D.C. 20554 and to the Office of
Management and Budget, Paperwork Reduction Project, Washington, D.C.
20503.
Summary of Report and Order
1. On February 8, 1996, the ``Telecommunications Act of 1996''
(1996 Act), Public Law No. 104-104, 110 Stat. 56 (1996), became law.
Section 101(a) of the 1996 Act adds Section 254(g) of the
Communications Act of 1934. Section 254(g) provides that within six
months of enactment of the 1996 Act the Commission shall adopt a
geographic rate averaging rule ``to require that the rates charged by
providers of interexchange telecommunications services to subscribers
in rural and high cost areas shall be no higher than the rates charged
by each such provider to its subscribers
[[Page 42560]]
in urban areas'' and a rate integration rule to require ``that a
provider of interstate interexchange services shall provide such
services to its subscribers in each State at rates no higher than the
rates charged to its subscribers in any other State.'' In our March 25,
1996, NPRM, we proposed rules to implement Section 254(g). In our
Report and Order we establish those rules.
I. Rate Averaging
A. General Rule
2. Although we have consistently endorsed a policy of geographic
rate averaging, we have not formally issued a rule requiring carriers
to geographically average rates. We adopt the rate averaging rule we
proposed in the NPRM that ``the rates charged by all providers of
interexchange telecommunications services to subscribers in rural and
high cost areas shall be no higher than the rates charged by each such
provider to its subscribers in urban areas.'' As required under the
1934 Act, as amended, our rule will apply to all providers of
interexchange telecommunications services and to all interexchange
``telecommunications services,'' as defined in the 1934 Act. This
definition does not create any exception for nonresidential services.
B. Contract Tariffs, Tariff 12 Offerings, Optional Calling Plans,
Discounts, Promotions, and Private Line Services
3. Section 254(g) and our geographic rate averaging rule will
require carriers to charge subscribers in rural and high-cost areas
rates for telecommunications services that are no higher than rates
offered to urban subscribers. The Commission's current policy as
reflected in AT&T tariffs, however, has permitted AT&T to offer
contract tariffs, Tariff 12 offerings, optional calling plans, and
temporary promotions, subject to some limitations. Contract tariffs and
Tariff 12 offerings generally involve discounts from basic rate
schedules. Optional calling plans offer customers discounts from basic
rate schedules, subject to terms and conditions specified in the
optional calling plan. Temporary promotions involve discounts from
basic rate schedules as well as limited sign-up periods for the
promotional discount rates. As noted, we have also permitted AT&T to
offer private line services at geographically deaveraged rates. AT&T
rates for private line services vary from LATA (Local Access and
Transport Area) to LATA, continuing pricing practices that AT&T has
historically used in setting rates for private line services.
4. The legislative history of Section 254(g) states that Congress
intended that section to ``incorporate'' our existing policy concerning
geographic rate averaging, and ``that the Commission, where
appropriate, could continue to authorize limited exceptions to the
general geographic rate averaging policy using the [forbearance]
authority provided by new section 10 of the Communications Act.''
Therefore, we will conduct a forbearance analysis to determine whether
we should permit IXCs to depart from geographic rate averaging where we
have permitted them to do so under current policy.
5. We do not believe that our current policy of allowing carriers
to offer contract tariffs and Tariff 12 options conflicts with
geographic averaging because we require that these offerings be
available to similarly situated customers throughout the carrier's
service area. The legislative history to Section 254(g), however,
indicates that the conferees viewed contract tariffs and Tariff 12
offerings, at least to some extent, as permissible exceptions to
geographic rate averaging that could be authorized through forbearance.
Accordingly, our forbearance analysis will encompass contract tariffs
and Tariff 12 offerings to ensure that our requirements implementing
Section 254(g) are consistent with congressional intent.
6. Section 10 requires the Commission to forbear from applying any
provision of the Act if we find that (1) enforcement of such provision
unnecessary to ensure that practices in connection with the relevant
telecommunications service are just and reasonable and are not unjustly
or unreasonably discriminatory; (2) enforcement of such provision is
unnecessary to protect consumers; and (3) forbearance from applying
such provision is consistent with the public interest. In addition, the
Commission, in making its public interest determination, must
``consider whether forbearance from enforcing the provision * * * will
promote competitive market conditions, including the extent to which
such forbearance will enhance competition among providers of
telecommunications services.''
7. We do not believe that permitting carriers to depart from
geographic rate averaging to the extent necessary to offer contract
tariffs, Tariff 12 offerings, optional calling plans, temporary
promotions, and private line services in accordance with our current
policy will subject rural and high-cost area customers to unjust or
unreasonable, or unjustly or unreasonably discriminatory, rates
because: (1) We will continue to require carriers to make these
services generally available under our current rules (e.g., contract
tariffs and Tariff 12 offerings must be available to similarly situated
customers) regardless of their geographic location, and (2) the only
``geographically-specific'' discounts that carriers may offer are
temporary promotions. Thus, except for temporary promotions and private
line services, interexchange telecommunications service offerings will
be available on the same terms throughout a carrier's service area. In
addition, we do not believe based on the record that allowing
geographically deaveraged private line rates will produce unjust or
unreasonable or unjustly or unreasonably discriminatory rates, as it is
our current practice and has not raised such concerns. Thus, we find
that enforcement of the geographic rate-averaging requirement for
contract tariffs, Tariff 12 offerings, optional calling plans,
temporary promotions, and private line services is not necessary to
ensure that charges, practices, and classifications are just and
reasonable and not unjustly and unreasonably discriminatory.
8. Enforcement of the geographic rate-averaging requirement for
these services is also not necessary to protect consumers because these
service offerings are generally beneficial to consumers. For example,
promotions, optional calling plans, and discounts facilitate
introduction of new and beneficial services to consumers. Indeed, we
are particularly concerned that carriers will cease to offer such
service offerings, to the clear detriment of all consumers, unless
carriers are permitted to offer them for a limited time on a narrower
scale than throughout their entire service areas. We believe that the
limited scope and nature of promotions offered on a geographically
specific basis will protect consumers and that, to the extent that
these service offerings promote new services, consumers will benefit,
including rural customers. We also believe that it is not necessary to
apply geographic averaging to private line services, contract tariffs,
and Tariff 12 offerings to protect residential consumers because these
services are normally provided to businesses. Business consumers
benefit from these services because in many cases the services are
provided at discounted rates. Thus, we conclude that enforcement of the
geographic rate-averaging requirement for contract tariffs, Tariff 12
options, optional calling plans, temporary promotions, and
[[Page 42561]]
private line services is not necessary to protect consumers.
9. Finally, we believe that forbearance from applying the
geographic rate averaging requirement to the extent permitted under our
rules is consistent with the public interest. We come to this
conclusion because we believe that allowing deaveraged rates, such as
for temporary promotions, will ultimately benefit consumers by
encouraging widespread offerings of new services. Moreover, it has been
our practice to allow these exceptions to our existing policy, and we
have no reason to believe this current practice is contrary to the
public interest. In addition, excepting these specific types of service
offerings from the geographic rate averaging requirement will continue
to stimulate competition for customers among interexchange carriers.
Limited departures from geographic rate averaging, such as for private
line services and temporary promotions available only in some areas,
are often designed to spur, or respond to, competition. For example,
interexchange carriers often offer promotional discounts as a response
to competition within the interexchange market. For these reasons, we
conclude that limited forbearance from applying the geographic rate
averaging requirement to contract tariffs, Tariff 12 offerings,
temporary promotions, and private line services is consistent with the
public interest.
10. Accordingly, we forbear from applying Section 254(g),
consistent with the intent of Congress, to the extent necessary to
permit carriers to depart from geographic rate averaging to offer
contract tariffs, Tariff 12 offerings, optional calling plans,
temporary promotions, and private line services in accordance with our
policy as previously applied to AT&T. As with current policy, we will
require carriers to offer the same basic service package to all
customers in their service areas, and permit carriers to offer contract
tariffs, Tariff 12 offerings, and optional calling plans provided they
are available to all similarly situated customers, regardless of their
geographic location. We will permit carriers to offer promotions that
may be ``geographically limited,'' provided that the promotions are
temporary, as discussed further below.
11. These requirements are fully consistent with the Commission's
past practices. Contrary to the claims of some IXCs, we have not in the
past exempted from our geographic rate averaging policy entire groups
of services, such as contract tariffs, negotiated arrangements, or
optional calling plans, where carriers offer discounted rates on a
permanent or long-term basis. The record is clear, in fact, that we
have required optional calling plans to be generally available
throughout a carrier's service area and prohibited geographic
restrictions in contract tariffs because a service package that is
available to only one customer ``unreasonably discriminates among
similarly situated customers,'' and is therefore unlawful. The only
type of geographic restriction in a contract tariff that we have
permitted is one that is necessary because of technical limitations
imposed by a LEC's switching equipment or billing capabilities, or
where the underlying basic service is limited.
12. As stated, we believe that temporary promotions benefit
consumers because they facilitate the introduction of new services. We
have permitted temporary promotions in the past for these reasons, and
believe that Congress intended us to continue to do so. We conclude,
however, that ``temporary'' promotions should, in fact, be temporary
and not the basis for repeated offerings by carriers. Before AT&T was
found nondominant for purposes of interexchange service, we proposed to
keep promotional rates outside of price caps as long as they were
offered for no longer than 90 days. Further, we find that a 90-day
period in which customers may receive discounted rates as part of a
promotion is sufficient time for a targeted promotional offering to
attract interest in new or revised services, but not so long as to
undermine our geographic rate averaging requirement. Accordingly, even
though AT&T has tariffed longer promotions in the past, we believe this
length of time for temporary promotions not available throughout a
carrier's service area best implements the statutory mandate for
geographic averaging. Further, rather than specifying a range of
permissible combinations of sign-up and discount periods, we believe
that specifying a single time period for promotional discounts will
facilitate administration of Section 254(g) and our implementing rules.
13. We will therefore permit carriers, as part of temporary
promotions not available throughout a carrier's service area, to offer
discounted promotional rates for no more than 90 days. We will not at
this time establish limits on the duration of sign-up periods for
promotions, but we expect them to be relatively brief. We can review at
a later time specific carriers' practices in this regard if necessary.
We also expect that carriers' temporary promotions will not, when
viewed over a number of years, reflect a pattern of undue
discrimination against rural or high-cost areas. Thus, we expect that,
viewed over time, temporary promotions will be offered in rural and
high-cost areas, as well as to urban customers. We find it unnecessary
to adopt advertising requirements concerning discounts and promotions.
We believe that consumers will be protected as long as long-term
discounts and promotions are available to all similarly situated
customers throughout a carrier's service area.
C. Forbearance in Competitive Conditions
14. We are not persuaded that we should establish an exception to
our general rate averaging rule based on the existence of competing
regional carriers that may be able to offer lower rates for
interexchange services because of lower access charges or other costs.
To establish such an exception we would need to forbear under Section
10 of the 1934 Act. As noted previously, we must forbear from applying
any provision of the 1934 Act, as amended, when (1) enforcement of that
provision is unnecessary to ensure that the relevant charges and
practices are just and reasonable and not unjustly or unreasonably
discriminatory; (2) enforcement of that provision is unnecessary to
protect consumers; and (3) forbearance from applying the provision is
consistent with the public interest.
15. Commenters have failed to justify this exception under Section
10 because they have based their claims entirely on generalized
assertions of the alleged need for a competitive exception to
geographic averaging requirements. With respect to the first prong of
the forbearance test, we believe that establishing a broad exception to
Section 254(g) for low-cost regions entails a substantial risk that
many subscribers in rural and high cost areas may be charged more than
subscribers in other areas. Accordingly, we cannot conclude that
enforcing our rate averaging requirements is unnecessary to ensure just
and reasonable and nondiscriminatory charges for subscribers. We also
see no basis in the record to conclude that it is unnecessary to
enforce Section 254(g) to ensure protection of consumers. We are
concerned that widespread deaveraged rates for interexchange services
could produce unreasonably high rates for some subscribers. Further,
commenters have not made a persuasive case that our geographic rate
averaging requirement may compel them to abandon service in some areas.
Finally,
[[Page 42562]]
we believe that, as part of our initial implementation of Section
254(g), it is not in the public interest to create the broad exception
urged by commenters. Accordingly, we conclude that commenters have not
justified forbearance to create a competitive exception to geographic
rate averaging. We also will not forbear from enforcing our rate
averaging policy against nondominant carriers. We note that Congress
knew at the time the 1996 Act was passed that all IXCs were nondominant
and we find that Congress would not have required us to adopt rules to
implement geographic rate averaging if it had intended us to abandon
this policy with respect to all IXCs so soon after enactment.
16. We are also not persuaded that we should forbear for smaller
carriers serving high-cost areas on the grounds that they might have
difficulty competing against nationwide carriers. These carriers have
provided only conclusory allegations of harm and have not shown that
they will be unable to compete with larger carriers in a rate-averaged
environment, much less that they have satisfied all three of the
requirements set forth in Section 10 for exercise of our forbearance
authority. Thus, these carriers, like the nationwide carriers, have
failed to justify forbearance on this record.
17. We also reject AT&T's suggestion that we delay implementing
Section 254(g) until access charges are lower and more cost based. We
believe that Congress was fully aware of geographic differences in
access charges when it adopted Section 254(g), and intended us to
require geographic rate averaging even under these conditions.
Moreover, nothing in the text or legislative history of Section 254(g)
suggests that the Congress intended to delay implementation of the
geographic rate averaging requirement.
II. State Authority
18. We conclude that Congress intended the states to play an active
role in enforcing Section 254(g) with respect to intrastate geographic
rate averaging. The Senate Report states that ``States shall continue
to be responsible for enforcing [intrastate geographic rate averaging],
so long as the State rules are not inconsistent with'' the regulations
the Commission adopts. We believe that intrastate rate structures that
are based on reasonable mileage bands will meet this requirement
because that is the method traditionally used by carriers to offer
geographically averaged rates. We will not, however, permit states to
establish special rate zones within states absent forbearance by the
Commission because we believe that would result in geographically
deaveraged rates in violation of Section 254(g). Section 254(g)
requires that rates be no higher in any rural or high-cost area than
they are in any urban area. To the extent that AT&T proposes to
associate some, but not all, rural areas with certain urban areas, we
presume that some rural areas will experience higher rates than some
urban areas, in violation of the statute.
III. Rate Integration
A. General Rule
19. Section 254(g) also requires the Commission to promulgate a
rate integration rule requiring that ``a provider of interstate
interexchange services shall provide such services to its subscribers
in each State at rates no higher than the rates charged to its
subscribers in any other State.'' The Commission has a well-established
policy of rate integration. Since 1972, the Commission has required any
carrier that provides domestic interstate interexchange service between
the contiguous forty-eight states and various offshore points to
integrate its rates pursuant to a plan to integrate the carrier's rates
and services for offshore points with its rates for similar services on
the mainland. In 1976, the Commission required carriers that offered
message toll, private line, and specialized services to or from Alaska,
Hawaii, Puerto Rico, and the Virgin Islands to integrate their rates
for those services into the rate structures and uniform mileage rate
patterns applicable to the mainland. This policy required IXCs to lower
their rates in the newly integrated areas to levels comparable to those
prevailing in the mainland for interexchange calls of similar distance,
duration, and time of day. To implement the statutory requirements of
Section 254(g), we will adopt the rate integration rule we proposed in
the NPRM that ``a provider of interstate interexchange
telecommunications services shall provide such services to its
subscribers in each State at rates no higher than the rates charged to
its subscribers in any other State.'' As with geographic rate
averaging, this rule will incorporate our existing policies. This rule
will apply to all domestic interstate interexchange telecommunications
services as defined in the 1996 Act, and all providers of such
services. As with our geographic rate averaging policy, carriers may
comply with this rule by establishing reasonable mileage bands for
calls.
20. We are not persuaded that we must forbear from requiring
carriers to comply with rate integration, either generally or in
competitive conditions, for the same reasons discussed with respect to
geographic rate averaging. Our rate integration policy has integrated
offshore points into the domestic interstate interexchange rate
structure so that the benefits of growing competition for interstate
interexchange telecommunications services, as well as regulatory and
other developments concerning interstate services, are available
throughout our nation. Furthermore, absent forbearance, the statute
requires us to incorporate our 1976 Integration of Rates and Services
Order requiring geographic rate integration.
21. We are also not persuaded that we should forbear from applying
rate integration to smaller carriers serving high-cost areas on the
grounds that they might have difficulty competing against nationwide
carriers. These carriers have provided only conclusory allegations of
harm and have not shown that they will be unable to compete with larger
carriers in a rate-integrated environment, much less that they have
satisfied all three of the requirements for exercise of our forbearance
authority. Thus, these carriers have failed to make a showing on this
record justifying forbearance.
22. We believe that AMSC, despite its arguments to the contrary, is
required by the plain terms of the 1996 Act to integrate the rates
charged for its offshore service into the rate structure for its
mainland rates. Further, as with rate averaging, we interpret Section
254(g) to extend to all providers of interexchange service the rate
integration policy that previously was applied only to AT&T. AMSC's
services would appear to fall within the definition of interstate
interexchange telecommunications services subject to Section 254(g). A
Bureau decision referred to by AMSC permitted an AMSC tariff to take
effect without any finding of lawfulness; it did not establish any
policy of excluding AMSC services from rate integration. Accordingly,
we reject AMSC's arguments on this issue.
B. U.S. Territories and Possessions
23. In the NPRM, we noted that ``State'' is defined in the
Communications Act to include U.S. territories and possessions. Thus,
in making the Section 254(g) rate integration provision applicable to
interstate interexchange services provided between ``states,'' as
defined in the Communications Act, 47 U.S.C. 153(40), Congress made
rate integration applicable to interexchange services provided to all
U.S. possessions and
[[Page 42563]]
territories, including Guam, the Northern Marianas, and American Samoa.
Further, rate integration applies to all interstate interexchange
telecommunications services as defined in the Communications Act, 47
U.S.C. 153(22), 153(46). Accordingly, under our rate integration rule
implementing 254(g), providers of interexchange service to these points
must do so on an integrated basis with services they provide to other
states.
24. We believe that the resolutions the Guam/Northern Marianas
Working Group adopted July 9, 1996, regarding rate integration for Guam
and the Northern Marianas provide a reasonable framework to guide
carriers towards implementing rate integration. Thus, a carrier should
establish rates for services provided to Guam and the Northern Marianas
consistent with the rate methodology it employs for services it
provides to other states. Similarly, to the extent that a provider of
interexchange service offers optional calling plans, contract tariffs,
discounts, promotions, and private line services to its subscribers on
the mainland, it should use the same ratemaking methodology and rate
structure when offering those services to its subscribers in Guam or
the Northern Marianas.
25. We also agree with the Working Group that cost support and
universal service issues should be addressed in the first instance by
the Universal Service Joint Board. Guam has specifically raised these
issues in CC Docket No. 96-45. Accordingly, we will address those
issues in the context of any Joint Board recommendation. For purposes
of our decision, however, we do not view establishment of cost-support
mechanisms as a precondition of rate integration. Nor have they been
justified on the present record. Thus, we reject requests that we
establish, or further consider, any cost-support mechanisms in this
docket.
26. The Working Group resolutions urge that rate integration for
services provided to Guam and the Northern Marianas should take place
concurrently with, or shortly after, the inclusion of Guam and the
Northern Marianas into the North American Numbering Plan, the
implementation of Feature Group D service, and the Guam Telephone
Authority's (GTA's) revision to its access charge structure. All three
events are expected to occur by July 1, 1997. We do not view these
developments as preconditions for rate integration of services provided
to these points. Rather, the statute requires rate integration
regardless of whether these developments occur. However, we believe
that these developments will facilitate rate integration. Inclusion of
Guam and the Northern Marianas in the North American Numbering Plan
(NANP) will help carriers integrate them into their nationwide service
plans. Implementation of Feature Group D will provide subscribers with
high-quality equal access to providers of interexchange service serving
Guam. Revision of access charges by GTA will help providers of
interexchange service set final rate schedules for service to and from
Guam. Accordingly, we require providers of interexchange service to
integrate services offered to subscribers in Guam and the Northern
Marianas with services offered in other states no later than August 1,
1997.
27. We additionally require that carriers submit preliminary plans
to achieve rate integration no later than February 1, 1997, and final
plans no later than June 1, 1997. These plans will permit the
Commission to review progress toward achieving rate integration, as
required by the 1996 Act. The preliminary plans need not include rates,
but at a minimum should resolve service and rate-band issues. Final
plans shall include a rate schedule. Carriers may integrate these
points by expanding mileage bands, adding mileage bands, offering
postalized rates, or other means that achieve rate integration. We also
require that any rate changes between the adoption date of this Report
and Order and August 1, 1997, must be consistent with achieving rate
integration by August 1, 1997. We also believe that it would facilitate
resolution of any further regulatory issues concerning rate integration
for these points if the Common Carrier Bureau addresses them in the
first instance. Accordingly, we will delegate to the Chief, Common
Carrier Bureau, authority to resolve any issues concerning carriers'
plans for rate integration for these offshore points.
28. We reject GTE's view that Section 254(g) does not require its
Micronesian Telecommunications Corp. subsidiary to integrate rates with
other GTE affiliates. The statute mandates that the Commission require
rate integration among all states, territories, and possessions, and
this goal is best achieved by interpreting ``provider'' to include
parent companies that, through affiliates, provide service in more than
one state. Moreover, nothing in the record supports a finding that
Congress intended to allow providers of interexchange service to avoid
rate integration by establishing or using their existing subsidiaries
to provide service in limited areas. Thus, we determine that GTE, for
the purposes of Section 254(g), constitutes a ``provider'' of
interexchange services within the meaning of that section, and that it
must integrate rates across affiliates. Accordingly, we require GTE to
comply with the same timetable and requirements as the other carriers
serving the Northern Marianas and Guam.
29. We reject the contentions of PCI and IT&E that they are not
subject to the rate-integration obligation. As noted, Section 254
applies to all providers of interexchange service. Therefore, PCI &
IT&E must provide Guam and the Northern Marianas service on a rate-
integrated basis. Based on the present record, however, there is
insufficient evidence to evaluate whether PCI's and IT&E's rates for
service originating in Guam and the Northern Marianas comply with
Section 254(g). Consequently, we will also require PCI and IT&E to
abide by the same timetable and requirements as the other carriers
serving the Northern Marianas and Guam. They may demonstrate with more
particularity that their current rates comply with rate integration
when they submit their plans.
30. Although carriers serving American Samoa are required to
provide service on a rate-integrated basis, American Samoa has stated
that it believes that rates for services provided to American Samoa are
already rate integrated. Nevertheless, we will also direct providers of
interexchange service serving American Samoa to submit plans for
American Samoa in order to ensure that they will comply with the
statute. To the extent services are provided to other U.S. possessions
and territories by carriers subject to Section 254(g), the record does
not reflect what carriers serve some of these points, such as Wake
Island and Midway Island, or whether service is provided in special
ways, such as in cooperation with military authorities, that might
affect provision of service on a rate-integrated basis to these points.
Accordingly, we are directing the Common Carrier Bureau to investigate
service arrangements for these points and to take such steps as are
necessary to assure compliance with Section 254(g) by August 1, 1997.
31. We also believe that AT&T's concerns about termination of
foreign traffic in Guam, the Northern Marianas, and American Samoa do
not justify delaying rate integration. Our decision to extend rate
integration to Guam is intended to benefit U.S. consumers. We do not by
this decision, however, affect the classification or treatment of the
underlying costs of facilities between these offshore points and other
U.S.
[[Page 42564]]
points for purposes of interconnection arrangements with foreign
carriers.
32. Our requirement that carriers implement rate integration by
August 1, 1997, complies with Section 254(g). That section requires us
to adopt rules requiring rate integration for Guam, the Northern
Marianas and American Samoa by August 8, 1996. We do not read this
provision as mandating rate integration for all points by that date.
Instead, we interpret the statute to permit a reasonable transition
period for the offshore points to which our rate integration policy is
being applied for the first time.
IV. AT&T's Commitments
33. The rules we adopt in this proceeding will require AT&T to
provide interexchange service at geographically averaged and integrated
rates. We believe these requirements incorporate the Commission's
existing rate averaging and rate integration policies and, thus, should
supersede the commitments AT&T made in the AT&T Reclassification
proceeding concerning rate averaging and rate integration. Accordingly,
we release AT&T from its commitments to continue to comply with the
Commission's orders regarding rate integration and to file any tariff
containing a geographically deaveraged rate on five business days'
notice. We do not release AT&T from its more specific commitments
concerning Hawaii and Alaska. AT&T is still affirmatively bound by the
rules we establish in this Report and Order, and by our prior opinions,
rules, and orders on geographic rate averaging and rate integration,
which the rules incorporate.
Ordering Clauses
Accordingly, it is ordered That pursuant to authority contained in
sections 1, 4(i), 10, 201-205, 214(e), 215 and 254(g) of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 160,
201-205, 214(e) and 254(g), Part 64 of the Commission's rules are
amended as set forth below.
It is further ordered That the policies, rules and requirements set
forth herein are adopted.
It is further ordered That the policies, rules and requirements
adopted herein shall be effective September 16, 1996.
It is further ordered That with respect to interexchange services
provided between any U.S. state, territory or, possession and Guam, the
Northern Marianas, or American Samoa, AT&T, GTE, MCI, Sprint, PCI, and
IT&E shall: (1) Submit to the Commission no later than February 1,
1997, preliminary plans to achieve rate integration by August 1, 1997,
with respect to those points; and (2) submit to the Commission no later
than June 1, 1997, final plans to achieve rate integration by August 1,
1997, with respect to those points.
It is further ordered That AT&T is released from the commitments it
made in the AT&T Reclassification proceeding concerning rate averaging
and rate integration, as described herein.
It is further ordered That the Chief, Common Carrier Bureau, is
delegated authority to resolve any regulatory issues concerning
implementation of rate integration for offshore points consistent with
this Report and Order. The Common Carrier Bureau is directed to
investigate service arrangements for offshore points and to take such
steps as are necessary to ensure compliance with Section 254(g), by
August 1, 1997, for such offshore points.
List of Subjects in 47 CFR Part 64
Communications common carriers, Telephone.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Part 64 of Title 47 of the Code of Federal Regulations is amended
as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
1. The authority citation for Part 64 continues to read as follows:
Authority: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154,
unless otherwise noted. Interpret or apply secs. 201, 218, 226, 228,
48 Stat. 1070, as amended, 1077; 47 U.S.C. 201, 218, 226, 228,
unless otherwise noted.
2. Subpart R is added to Part 64 to read as follows:
Subpart R--Geographic Rate Averaging and Rate Integration
Sec. 64.1801 Geographic rate averaging and rate integration.
Authority: 47 U.S.C. Secs. 151, 154(i), 201-205, 214(e), 215 and
254(g).
Subpart R--Geographic Rate Averaging and Rate Integration
Sec. 64.1801 Geographic rate averaging and rate integration.
(a) The rates charged by providers of interexchange
telecommunications services to subscribers in rural and high-cost areas
shall be no higher than the rates charged by each such provider to its
subscribers in urban areas.
(b) A provider of interstate interexchange telecommunications
services shall provide such services to its subscribers in each U.S.
state at rates no higher than the rates charged to its subscribers in
any other state.
[FR Doc. 96-20859 Filed 8-15-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-20789 Assessment Rates for Specified Marketing Orders
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42529-42530]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20789]
========================================================================
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
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========================================================================
Federal Register / Vol. 61, No. 160 / Friday, August 16, 1996 / Rules
and Regulations
[[Page 42529]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 927 and 931
[Docket No. FV96-927-2 IFR]
Assessment Rates for Specified Marketing Orders
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This interim final rule establishes assessment rates for
Marketing Order Nos. 927 and 931 for the 1996-97 and subsequent fiscal
periods. The Winter Pear Control Committee and the Northwest Fresh
Bartlett Marketing Committee (Committees) are responsible for local
administration of the marketing orders which regulate the handling of
winter pears grown in Oregon, Washington, and California and fresh
Bartlett pears grown in Oregon and Washington. Authorization to assess
winter pear and fresh Bartlett pear handlers enables the Committees to
incur expenses that are reasonable and necessary to administer the
programs.
DATES: Effective on July 1, 1996. Comments received by September 16,
1996, will be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent in triplicate to the Docket
Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room
2523-S, Washington, DC 20090-6456, FAX (202) 720-5698. Comments should
reference the docket number and the date and page number of this issue
of the Federal Register and will be available for public inspection in
the Office of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Tershirra Yeager, Marketing Assistant,
Marketing Order Administration Branch, Fruit and Vegetable Division,
AMS, USDA, P.O. 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, 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
Agreement and Order No. 927 [7 CFR part 927], regulating the handling
of winter pears in Oregon, Washington, and California; and Marketing
Order No. 931 [7 CFR part 931] regulating the handling of fresh
Bartlett pears in Oregon and Washington, 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
winter pears and fresh Bartlett pears beginning July 1, 1996, and
continuing until amended, suspended, or terminated. This rule will not
preempt any State or local laws, regulations, or policies, unless they
present an irreconcilable conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. Such 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 90 handlers of winter pears and 65 handlers
of fresh Bartlett pears subject to regulation under the marketing
orders. In addition, there are about 1,800 winter pear and fresh
Bartlett pear 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
winter pear and fresh Bartlett pear 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
[[Page 42530]]
Committees are producers and handlers of Oregon, Washington, and
California pears. They are familiar with the Committees' needs and with
the pears costs for goods and services in their local areas 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 Winter Pear Control Committee met on May 31, 1996, and
unanimously recommended 1996-97 expenditures of $5,887,084 and an
assessment rate of $0.405 per standard box. In comparison, last year's
budgeted expenditures were $7,384,440, respectively.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of winter pears
grown in Oregon, Washington, and California. Winter pear shipments for
the year are estimated at 12,465,800 standard boxes which should
provide $4,674,675 for paid advertising. 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.
Major expenditures recommended by the Winter Pear Control Committee
for the 1996-97 year include $154,387 for salaries, $16,893 for health
insurance, and $23,392 for office rent. Budgeted expenses for these
items in 1995-96 were $147,152, $16,634, and $17,357, respectively.
The Northwest Fresh Bartlett Marketing Committee met on May 30,
1996, and unanimously recommended 1996-97 expenditures of $89,774 and
an assessment rate of $0.0375 per western standard pear box. In
comparison, last year's budgeted expenditures were $92,254,
respectively.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of fresh Bartlett
pears grown in Oregon and Washington. Shipments for the year are
estimated at 1,842,000 packed boxes which should provide $69,075 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.
Major expenditures recommended by the Northwest Fresh Bartlett
Marketing Committee for the 1996-97 year include $46,306 for salaries,
$4,991 for health insurance, and $7,016 for office rent. Budgeted
expenses for these items in 1995-96 were $44,135, $4,989 and $5,206,
respectively.
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 periods began on July 1, 1996, and the marketing orders
require that the rates of assessment for each fiscal period apply to
all assessable winter pears and fresh Bartlett pears 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 927
Winter Pears, Marketing agreements, Reporting and recordkeeping
requirements.
7 CFR Part 931
Fresh Bartlett Pears, Marketing agreements, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, 7 CFR parts 927 and 931
are amended as follows:
1. The authority citation for 7 CFR parts 927 and 931 continue to
read as follows:
Authority: 7 U.S.C. 601-674.
Note: These sections will appear in the Code of Federal
Regulations.
PART 927--WINTER PEARS GROWN IN OREGON, WASHINGTON AND CALIFORNIA
2. A new center heading--Assessment Rate consisting of a new
Sec. 927.236 is added to read as follows:
Assessment Rate
Sec. 927.236 Assessment Rate.
On and after July 1, 1996, an assessment rate of $0.405 per
standard box is established for the Winter Pear Control Committee.
PART 931--FRESH BARTLETT PEARS GROWN IN OREGON AND WASHINGTON
3. A new center heading--Assessment Rate consisting of a new
Sec. 931.231 is added to read as follows:
Assessment Rate
Sec. 931.231 Assessment Rate.
On and after July 1, 1996, an assessment rate of $.0375 per western
standard pear box is established for the Northwest Fresh Bartlett
Marketing Committee.
Dated: August 9, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-20789 Filed 8-15-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-20487 Membership Approval
[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Rules and Regulations]
[Pages 42530-42549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20487]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 933
[No. 96-43]
Membership Approval
AGENCY: Federal Housing Finance Board.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Board (Finance Board) is amending
its regulation on membership in the Federal Home Loan Banks (Banks).
The final rule authorizes the 12 Banks, rather than the Finance Board,
to approve or deny all applications for Bank membership, subject to
certain criteria for determining compliance with the statutory
eligibility requirements for Bank membership currently used by the
Finance Board in approving applications. The final rule also provides
for streamlined application processing for certain types of membership
applications. The final rule is part of an effort by the Finance Board
and the Banks to transfer as many governance functions as possible from
the Finance Board to the Banks. The devolution of authority to the
Banks and streamlining of membership application requirements in the
final rule are consistent with the goals of the Regulatory Reinvention
Initiative of the National Performance Review.
EFFECTIVE DATE: September 16, 1996.
FOR FURTHER INFORMATION CONTACT: Amy R. Maxwell, Associate Director,
District Banks Secretariat, Office of the Managing Director, (202) 408-
2882, or Sharon B. Like, Senior Attorney-Advisor, Office of General
Counsel, (202) 408-2930, Federal Housing Finance Board, 1777 F Street,
N.W., Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
In its role as primary regulator of the savings association
industry and as overseer of the Banks, the Finance Board's predecessor
agency, the former Federal Home Loan Bank Board (FHLBB), reviewed and
approved all applications for Bank membership from federally chartered
savings associations, and from state chartered savings associations
seeking federal deposit insurance, institutions for which Bank
membership was required. The FHLBB delegated the authority to approve
membership applications from insurance companies and state chartered
savings banks insured by the Federal Deposit Insurance Corporation
(FDIC), for which Bank membership was voluntary, to the Principal
Supervisory Agents of the FHLBB, which generally were the Bank
presidents. See 12 U.S.C. 1437(a) (1989), repealed by Financial
Institutions Reform, Recovery and Enforcement Act of 1989, Pub. L. No.
101-73, 103 Stat. 183 (Aug. 9, 1989) (FIRREA); 12 CFR 523.3-3, 541.18
(1989).
FIRREA amended the Federal Home Loan Bank Act, 12 U.S.C.
Secs. 1421-1449 (Bank Act), by creating the Finance Board and
transferring from the FHLBB to the Finance Board the responsibility for
the supervision and regulation of the 12 Banks. See 12 U.S.C. 1422a(a).
The FHLBB's authority to charter federal savings associations was
transferred to the Office of Thrift Supervision (OTS), and the FHLBB's
authority to administer deposit insurance for savings associations was
transferred to the FDIC.
FIRREA also made significant changes to the membership eligibility
criteria in section 4 of the Bank Act. See 12 U.S.C. 1424. First,
FIRREA permitted commercial banks and credit unions to become Bank
members for the first time. Id. Sec. 1424(a). Second, FIRREA added the
requirement that an insured depository institution have at least 10
percent of its total assets in residential mortgage loans in order to
be eligible to become a Bank member. Id. Sec. 1424(a)(2)(A).
From the enactment of FIRREA in 1989 until July 1993, all Bank
membership applications were reviewed and approved by the Board of
Directors of the Finance Board. In July 1993, the Managing Director of
the Finance Board was delegated the authority to approve all
applications for Bank membership from institutions that met all of the
statutory eligibility criteria and received a composite rating of
``1,'' ``2'' or ``3'' under the regulatory examination rating system
known as the Uniform Financial Institutions Rating System. See
Chairman's Order No. 93-05 (July 19, 1993); Finance Board Res. No. 90-
143 (Dec. 18, 1990). The Board of Directors of the Finance Board has
not itself considered or acted upon any membership applications since
such authority was delegated to the Managing Director.
In August 1993, the Finance Board amended its membership regulation
in response to the changes made by FIRREA to the Bank Act. The revised
membership regulation established membership application procedures,
general eligibility requirements, criteria for determining the
appropriate Bank district for membership, stock requirements for
membership, requirements and procedures in connection with termination
of membership, and procedures concerning transfer of Bank stock in
consolidations involving member and nonmember institutions. Other than
defining certain terms, the membership regulation did not establish
specific standards for compliance with the statutory membership
eligibility criteria. See 58 FR 43522, 43542 (Aug. 17, 1993), codified
at 12 CFR part 933. Section 933.3(a) of the membership regulation
authorized the Banks' boards of directors to approve only applications
that met all criteria set forth in the Bank Act, the membership
regulation, and policy guidelines established by the Finance Board. See
12 CFR 933.3(a).
In November 1993, the Finance Board adopted policy guidelines to
assist Finance Board staff in processing applications for Bank
membership. See Federal Home Loan Bank System Membership Application
Guidelines, Finance Board Res. No. 93-88 (Nov. 17, 1993) (Guidelines).
The purpose of the Guidelines was to require certain documentation
review requirements, and to clarify and amplify the more subjective
membership eligibility criteria in the Bank Act, such as the financial
condition, character of management, and home financing policy
requirements. See 12 U.S.C. 1424(a)(2)(B), (C). The Guidelines also set
forth the specific criteria that must be satisfied in order for the
Banks to have the authority to approve membership applications, as
provided under Sec. 933.3(a) of the membership regulation. See also 59
FR 13485 (March 22, 1994).
The Guidelines contain specific, primarily financial, criteria that
must be met in order for an applicant to be deemed in compliance with
the statutory eligibility criteria. However, the Guidelines established
neither a minimum level of financial performance nor standards for
evaluating applicants that do not meet the requirements in the
Guidelines. So, for instance, an application from an institution with a
composite regulatory examination rating that did not satisfy the
criteria for approval by the Banks had to be evaluated by Finance Board
staff and approved by the Managing Director. Since December 1993, the
Banks have approved approximately 1,000 membership applications, and
the Finance Board's Managing Director has approved approximately 1,100
membership applications.
The Finance Board and the Banks have been considering ways to
transfer a variety of governance responsibilities from the Finance
Board to the Banks since the completion of studies required by the
Housing and Community Development Act of 1992, Pub. L. No. 102-550, 106
Stat. 3672 (Oct. 28, 1992),
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including the Finance Board's own study completed in April 1993. See
Report on the Structure and Role of the Federal Home Loan Bank System,
at 153 (Apr. 28, 1993). Finance Board staff and Bank staff have
consistently identified membership application approval as one of the
governance responsibilities that should be devolved from the Finance
Board to the Banks, because the Banks should be allowed broad
discretion to manage their affairs as long as the Banks comply with the
Bank Act and Finance Board regulations. This final rule transfers
authority to approve or deny all Bank membership applications from the
Finance Board to the Banks. The final rule codifies in large part the
criteria for determining compliance with the statutory eligibility
requirements contained in the Finance Board's Guidelines, which shall
be deemed rescinded upon effectiveness of the final rule.
II. Proposed Rulemaking
In October 1995, the Finance Board published for public comment a
notice of proposed rulemaking, which proposed transferring the
authority to approve or deny membership applications from the Finance
Board to the Banks, subject to certain criteria for determining
compliance with the statutory eligibility requirements for Bank
membership (proposed rule) (60 FR 54958) (Oct. 27, 1995). The proposed
rule provided for a 60-day comment period.
The Finance Board received letters from a total of 14 commenters,
including all 12 Banks, one bank trade association, and one insurance
company trade association. The commenters generally supported transfer
of membership approval authority from the Finance Board to the Banks.
Various comments were received on the proposed application procedures,
and the specific criteria that should be applied in determining
membership eligibility. A discussion of relevant comments is included
in the Analysis of the Final Rule. Where no comments were received on a
particular regulatory provision, or a provision was not controversial,
and the Finance Board has determined to adopt the provision as
proposed, the provision generally is not discussed in this preamble.
A few comments also were received on provisions of the current
membership regulation that were not the focus of this rulemaking, such
as the definition of ``state,'' and ``convenience'' applications for
membership in adjoining Bank districts. See 12 CFR 933.1(s),
933.5(a)(2). These comments are not discussed in this final rule, but
will be examined in connection with any future rulemaking on other
provisions of the membership regulation not addressed in this
rulemaking.
III. Analysis of the Final Rule
A. Membership Application Process--Secs. 933.2 to 933.5
1. Requirements--Sec. 933.2
Section 933.2 of the final rule sets forth the procedures for
submission and review of membership applications. Section 933.2(a)
requires an applicant to submit an application which satisfies the
requirements of part 933, and to provide a written resolution or
certification duly adopted by the applicant's board of directors, or by
an individual authorized to act on behalf of the board of directors of
the applicant, stating that the applicant satisfies the requirements
set forth in Sec. 933.2(a). The proposed rule required that the
application include a written certification by a majority of the
applicant's directors. A commenter pointed out that state corporate
laws may impose different requirements for a corporate board to take
valid action and, therefore, that the requirement should be a
resolution or certification duly adopted by the applicant's board,
rather than majority action of the board. The final rule adopts this
recommendation.
Section 933.2(b) of the final rule requires the Bank to prepare a
written digest for each applicant stating whether the applicant meets
each of the eligibility requirements, the Bank's findings, and the
reasons therefor.
Section 933.2(c) requires the Bank to maintain a membership file
for each applicant for at least three years, containing certain
documents as specified therein.
Section 933.2(d) of the proposed rule required the Bank to use
regulatory financial reports and other sources independent of the
applicant to evaluate and analyze all conclusions offered by the
applicant regarding its membership eligibility. This requirement is not
adopted in the final rule, as it is redundant with Sec. 933.11(a) of
the final rule, which also requires the use of regulatory financial
reports and other documents derived independently of the applicant.
Proposed Sec. 933.2(d) also required the Bank to make determinations on
membership eligibility independent of any representations made by the
applicant. The Finance Board intended this provision to ensure that the
Banks evaluate membership applications without relying unduly on simple
representations of compliance made by the applicants. However, as
several commenters pointed out, the rule requires reliance, in part, on
an applicant's representations by requiring that the Bank's membership
determinations be based on review of all available information in the
file, which includes information from the applicant. Accordingly, the
independent evaluation requirement is not adopted in the final rule.
2. Decision on Application--Sec. 933.3
Section 933.3(a) of the final rule authorizes the Banks to approve
or deny all membership applications, subject to the requirements of the
final rule, including the appeal procedure in Sec. 933.5. Eleven
commenters expressly supported transfer of membership approval
authority to the Banks.
Section 933.3(a) also permits a Bank to delegate the authority to
approve applications only to a committee of the Bank's board of
directors, the Bank president, or a senior officer who reports directly
to the Bank president other than an officer with responsibility for
business development. One commenter recommended that the Bank's board
of directors be permitted to delegate the authority to deny membership
applications. However, because of the consequences of membership
denial, the Finance Board believes that such decisions should be made
only by the Bank's board of directors.
Section 933.3(b) requires the Bank to prepare for each applicant a
written decision resolution duly adopted by the Bank's board of
directors, or by a committee of the board of directors or officer with
delegated authority to approve membership applications. The proposed
rule required that the decision resolution be signed by a majority of
the directors, or by an officer with delegated authority. A commenter
pointed out that state corporate laws impose different requirements for
a corporate board to take valid action and, therefore, that the
requirement should be a resolution duly adopted by the Bank's board or
committee of the board, rather than majority action of the board or
committee of the board. The final rule adopts this recommendation.
Section 933.3(c) of the final rule requires the Bank to act on an
application within 60 calendar days of the date the Bank deems the
application to be complete. Section 933.3(c) is intended to ensure
expeditious action on membership applications. A number of commenters
expressed concern that this timeframe may be too restrictive where
there is a need to obtain additional information about the applicant in
order to make a
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membership determination. The final rule clarifies that an application
is ``complete'' when the Bank has obtained all the information required
by this part, and any other information the Bank deems necessary, to
process the application.
Thus, the 60-day clock will not start running until the Bank has
obtained all information necessary to process the application. The
final rule also provides that if a ``complete'' application
subsequently becomes ``incomplete'' because the Bank determines, during
the review process, that additional information is necessary to process
the application, the Bank may stop the 60-day clock until the
application again is deemed complete, and then resume the clock where
it left off. The final rule requires the Bank to notify an applicant
when its application is deemed to be complete. The Bank also is
required to notify an applicant if the 60-day clock is stopped, and
when the clock is resumed.
3. Automatic Membership--Sec. 933.4
Section 933.4 provides for automatic Bank membership for
institutions seeking Bank membership under certain circumstances. Such
institutions need not file an application for membership.
Section 933.4(a) provides for automatic Bank membership for
institutions required by law to be Bank members.
Section 933.4(b) provides for automatic Bank membership for insured
depository institution members that convert from one charter type to
another, provided that the converting institution continues to be an
insured depository institution and the assets of the institution
immediately before and immediately after the conversion are not
materially different. In response to a commenter's suggestion, the
final rule modifies the requirement in the proposed rule that the
assets immediately before and after the charter conversion must be
identical, since there may be insignificant changes in asset
composition after a conversion in order to comply with new charter
requirements.
Section 933.4(c) of the final rule provides for automatic
membership in the Bank to which a member's membership is transferred
pursuant to Sec. 933.18(d).
4. Appeals--Sec. 933.5
Section 933.5 establishes a process by which applicants may appeal
Bank membership denials to the Finance Board. The appeal procedure is
intended to ensure that membership standards are applied fairly by the
Banks, and that similarly situated applicants are treated in a
consistent manner.
Section 933.5 (a), (b) and (c) establishes the procedures and
requirements for appeals by an applicant to the Finance Board.
The current membership regulation does not include the provision in
the proposed rule that would allow a Bank to appeal another Bank's
determination of the appropriate district for membership made pursuant
to Sec. 933.5, but permits applicants or members to appeal such
determinations to the Finance Board. See 12 CFR 933.5. Since the
applicant or member has the option under Sec. 933.18 of the final rule
to appeal the Bank's decision, an appeal by the other Bank is
unnecessary. Moreover, like the current membership regulation,
Sec. 933.18 sets forth specific, objective criteria for determining an
applicant's or member's appropriate district of membership, which
should obviate such conflicts in the application process. Accordingly,
this proposed amendment has not been adopted in the final rule.
B. Membership Eligibility Requirements--Secs. 933.6 to 933.18
1. Setting Membership Standards
Like the Guidelines, the final rule establishes objective standards
for approving applications for Bank membership. For the objective
statutory eligibility criteria, failure to comply with the standards
established by the final rule will render an applicant ineligible for
membership. For the subjective statutory eligibility criteria,
including the requirement that an applicant's financial condition be
such that advances may be safely made, see 12 U.S.C. 1424(a)(2)(B), and
that the character of an applicant's management and its home financing
policy be consistent with sound and economical home financing, see id.
Sec. 1424(a)(2)(C), the final rule, like the Guidelines, establishes
objective, yet flexible, standards.
Under Sec. 933.17(a) of the final rule, an applicant that complies
with the regulatory requirements is presumed to satisfy the statutory
eligibility criteria, but the Bank may rebut the presumption of
compliance, and deny membership to the applicant, if the Bank obtains
substantial evidence to overcome the presumption. Conversely, under
Sec. 933.17 (b) to (f), an applicant that does not comply with the
regulatory requirements is presumed not to satisfy the statutory
eligibility criteria, but, as under the Guidelines, the applicant may
rebut the presumption of noncompliance as provided in Sec. 933.17 (b)
to (f), and be deemed to meet the regulatory requirements.
The Finance Board considered establishing rigid, ``bright-line''
eligibility standards, but believes that the results--i.e., that an
applicant not meeting every standard would be ineligible for
membership, regardless of any other evidence the applicant could have
presented to demonstrate its compliance with the statutory eligibility
criteria--would be too harsh. Six commenters expressly supported a
presumption framework, rather than ``bright-line'' tests, for a similar
reason.
2. Section 4(a)(1) Criteria In General
Section 4(a)(1) of the Bank Act defines the types of financial
institutions eligible to become Bank members as any building and loan
association, savings and loan association, cooperative bank, homestead
association, insurance company, savings bank, or any insured depository
institution. See 12 U.S.C. 1424(a)(1). The definition of ``insured
depository institution'' in the Bank Act includes commercial banks and
credit unions. See id. Sec. 1422(12).
The eligibility criteria set forth in section 4(a)(1) of the Bank
Act apply to all applicants for Bank membership, including insurance
companies (section 4(a)(1) criteria). Under section 4(a)(1) of the Bank
Act, an institution is eligible for Bank membership if the institution:
(A) is duly organized under the laws of any State or of the United
States;
(B) is subject to inspection and regulation under the banking laws,
or under similar laws, of the State or of the United States; and
(C) makes such home mortgage loans as, in the judgment of the
[Finance] Board, are long-term loans * * *.
See id. Sec. 1424(a)(1) (A) to (C). Sections 933.7 to 933.9 of the
final rule apply the section 4(a)(1) criteria to all applicants for
membership.
3.-``Duly Organized'' Requirement--Sec. 933.7
Section 4(a)(1)(A) of the Bank Act requires that, in order to be
eligible for Bank membership, an applicant must be duly organized under
the laws of any State or of the United States. 12 U.S.C. 1424(a)(1)(A).
This general eligibility requirement is implemented by
Secs. 933.6(a)(1) and 933.7 of the final rule. Noncompliance by an
applicant with the ``duly organized'' requirement is not a rebuttable
presumption under Sec. 933.17.
4.-``Subject to Inspection and Regulation'' Requirement--Sec. 933.8
Section 4(a)(1)(B) of the Bank Act requires that, in order to be
eligible for
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Bank membership, an applicant must be subject to inspection and
regulation under the banking laws, or under similar laws, of the State
or of the United States. 12 U.S.C. 1424(a)(1)(B). This general
eligibility requirement is implemented by Secs. 933.6(a)(2) and 933.8
of the final rule. Noncompliance by an applicant with the ``subject to
inspection and regulation'' requirement is not a rebuttable presumption
under Sec. 933.17 except for insurance company applicants, as further
discussed under Sec. 933.17(c).
5. ``Makes Long-Term Home Mortgage Loans'' Requirement--Sec. 933.9
Section 4(a)(1)(C) of the Bank Act requires that, in order to be
eligible for Bank membership, an applicant must make long-term home
mortgage loans. This general eligibility requirement is implemented by
Secs. 933.6(a)(3) and 933.9 of the final rule.
a. Definitions of ``long-term'' and ``home mortgage loan.''
Section 933.1(n) of the final rule lists the specific types of
assets that qualify as ``home mortgage loans'' for purposes of the
``makes long-term home mortgage loans'' requirement. Section 933.1(n),
as well as the definition of ``long-term'' in Sec. 933.1(q), do not
include the Finance Board's current regulatory discretion to determine
that other types of loans not specifically listed in the definitions of
``home mortgage loan'' and ``long-term'' meet these definitions. See 12
CFR 933.1(i), (l).
One commenter noted that this discretionary authority would enable
a Bank first to seek an interpretation from the Finance Board on
whether a particular asset meets the definitions, which may be more
efficient than requiring the Bank to deny an application and the
applicant to appeal to the Finance Board before the Finance Board may
exercise its interpretive discretion. In the event of an appeal of a
Bank membership decision to the Finance Board, this approach would
enable the Finance Board to exercise its interpretive discretion on a
case-by-case basis without having to amend the regulation. However, the
Finance Board believes that the list of assets permitted under
Sec. 933.1(n) is comprehensive, and there is little likelihood that an
applicant will need a non-qualifying asset in order to meet the ``makes
long-term home mortgage loans'' requirement. Should questions arise
regarding particular assets, they could be resolved through amendment
of the regulation, rather than through Finance Board determinations on
a case-by-case basis. Accordingly, the commenter's recommendation is
not adopted in the final rule.
b. Noncompliance not rebuttable.
Noncompliance by an applicant with the ``makes long-term home
mortgage loans'' requirement is not a rebuttable presumption under
Sec. 933.17.
6. Section 4(a)(2) Criteria In General
Section 4(a)(2) of the Bank Act establishes the following
membership eligibility criteria for insured depository institutions
that were not Bank members on January 1, 1989 (section 4(a)(2)
criteria):
(A) the institution has at least 10 percent of its total assets in
residential mortgage loans;
(B) the institution's financial condition is such that advances may
be safely made to such institution; and
(C) the character of the institution's management and its home-
financing policy are consistent with sound and economical home
financing.
See 12 U.S.C. 1424(a)(2)(A) to (C). Although the section 4(a)(2)
criteria apply to ``insured depository institutions,'' Sec. 933.6(a)(4)
to (6) of the final rule applies the section 4(a)(2)(B) (financial
condition) and (C) (character of management and home financing policy)
criteria to insurance companies as well as insured depository
institutions. This is consistent with current membership regulatory
requirements. See 12 CFR 933.4(a)(4), (5). In addition, prior to the
enactment of FIRREA in 1989, the financial condition, character of
management and home financing policy criteria were applicable to
insurance companies. See 47 Stat. 726 (July 22, 1932).
The final rule does not apply the 10 percent requirement in section
4(a)(2)(A) to applicants that are not insured depository institutions,
such as insurance companies. The reasons for this approach are
discussed more fully below under the 10 Percent Requirement.
7. 10 Percent Requirement--Sec. 933.10
a. Insured depository institution applicants. -
Section 4(a)(2)(A) of the Bank Act requires that, in order to be
eligible for Bank membership, an insured depository institution must
have at least 10 percent of its total assets in residential mortgage
loans. See 12 U.S.C. 1424(a)(2)(A). This general eligibility
requirement is implemented by Sec. 933.6(b) of the final rule. Under
Sec. 933.10 of the final rule, an insured depository institution
applicant is deemed to comply with the 10 percent requirement in
section 4(a)(2)(A) of the Bank Act if, based on the applicant's most
recent regulatory financial report, the applicant has at least 10
percent of its total assets in ``residential mortgage loans,'' as
defined in Sec. 933.1(bb) of the final rule, except that any assets
used to secure mortgage debt securities as described in
Sec. 933.1(bb)(6) may not be used to meet this requirement.
b. Applicants that are not insured depository institutions.
The Finance Board's practice has been not to apply the 10 percent
requirement to applicants that are not insured depository institutions,
such as insurance companies. See 12 CFR 933.4(b)(1). Section 933.6(c)
of the final rule continues the current regulatory requirement that
such applicants must meet an alternative requirement that they have
mortgage-related assets reflecting a commitment to housing finance,
with such determination made by the Bank in its discretion, rather than
by the Finance Board. See 12 CFR 933.4(c). Several commenters
specifically supported application of this alternative test to
applicants that are not insured depository institutions.
In the notice of proposed rulemaking, the Finance Board
specifically requested comment on whether the 10 percent requirement
should apply to insurance company applicants, or whether a different
test, or asset test that would achieve the same objectives as the 10
percent requirement, should be applied to insurance company applicants.
The Finance Board questioned whether membership eligibility standards
should be applied consistently to all applicants, in order to ensure
that all Bank members demonstrate a quantifiable minimum commitment to
residential housing finance before they are admitted to membership. See
60 FR 54958, 54962 (Oct. 27, 1995).
Two commenters supported applying the 10 percent requirement to
insurance company applicants on the basis that all applicants for
membership should be treated equally. A majority of the commenters
opposed applying the 10 percent requirement to insurance company
applicants for a number of reasons, including: (1) inconsistency with
section 4(a)(2)(A) of the Bank Act which, on its face, is applicable
only to insured depository institutions; (2) insurance companies that
are active in mortgage lending or have significant investments in
housing-related assets may not be able to meet the 10 percent
requirement because of their asset size; and (3) insurance companies
are required by state law, regulators, and prudent investment standards
to invest in a wide variety of assets.
The Finance Board agrees that these are valid reasons for not
applying the 10
[[Page 42535]]
percent requirement to insurance company applicants, consistent with
current practice. Accordingly, the final rule applies the alternative
mortgage-related assets test, rather than the 10 percent requirement,
to institutions that are not insured depository institutions, including
insurance company applicants.
c. Definition of ``residential mortgage loans.''
The term ``residential mortgage loans'' is not defined in the Bank
Act. The definition of ``residential mortgage loans'' in the proposed
rule included the current definition, see 12 CFR 933.1(r), as well as
qualified private activity exempt facility bonds where 95 percent or
more of the net proceeds are used for qualified residential rental
projects, as defined in 26 U.S.C. 142(a)(7)(d). Under the current
membership regulation, the Finance Board has interpreted ``residential
mortgage loans'' to include such bonds.
Several commenters supported inclusion of such bonds in the
definition of ``residential mortgage loans.'' The Finance Board has
determined that such bonds are consistent with other assets that are
treated as ``residential mortgage loans.'' Further, treating such bonds
as ``residential mortgage loans'' is consistent with the purpose of the
10 percent requirement to ensure that new members hold at least 10
percent of their total assets in assets that facilitate home mortgage
lending. The Finance Board does not expect the Bank to verify the
actual usage of the bond proceeds for the qualified residential rental
projects. The Finance Board also recognizes that there may be other
similar types of bonds that should be permissible as ``residential
mortgage loans.'' Accordingly, the addition of the word
``substantially'' in the definition of ``residential mortgage loan'' in
Sec. 933.1(bb)(6)(i) of the final rule provides for the inclusion of
such bonds and other similar types of bonds that meet the definition.
In the proposed rule, the Finance Board specifically requested
comment on whether shares of open-end management companies, also known
as ``mutual funds,'' where the assets in the open-end management
company's portfolio are comprised solely of assets that are
``residential mortgage loans,'' should be included as ``residential
mortgage loans.'' Ownership of mutual fund shares could be considered
the functional equivalent of ownership of the mutual fund's underlying
assets. Several commenters specifically supported inclusion of shares
of such mutual funds within the definition of ``residential mortgage
loans.'' One commenter suggested that mutual fund shares be allowed
where the mutual fund has a small percentage of its capital in cash or
liquid assets. However, the Finance Board has not previously
interpreted ``residential mortgage loans'' to include mutual fund
shares, and is not seeking to expand the types of assets that may
qualify as ``residential mortgage loans'' at this time. Accordingly,
the definition of ``residential mortgage loans'' in the final rule does
not include mutual fund shares.
The current membership regulation and proposed rule required that
``residential mortgage loans'' be domestic loans. See 12 CFR 933.1(r).
However, the line items in regulatory financial reports corresponding
to such loans may include foreign as well as domestic loans. In order
to ease applicants' ability to rely on such line items for purposes of
determining their ``residential mortgage loans'' for the 10 percent
requirement, under the final rule, applicants may include foreign
residential mortgage loans.
For the same reasons discussed under part III.B.5.a. above,
Sec. 933.1(bb) of the final rule does not include the Finance Board's
current regulatory discretion to determine that other loans not
specifically listed in the definition of ``residential mortgage loan''
meet the definition. See 12 CFR 933.1(r)(8).
d. Definition of ``total assets.''
Section 4(a)(2)(A) of the Bank Act and Sec. 933.10 of the final
rule provide that, in order to be eligible for Bank membership, an
applicant must have at least 10 percent of its ``total assets'' in
residential mortgage loans. See 12 U.S.C. 1424(a)(2)(A). The proposed
rule listed the specific assets included in the definition of ``total
assets.'' Since the applicant will be relying on the total assets
reported on its regulatory financial report, the definition in
Sec. 933.1(dd) of the final rule is revised to mean total assets as
reported on the applicant's regulatory financial report.
The total assets line item in regulatory financial reports may
include foreign as well as domestic assets. In order to ease
applicants' ability to rely on such line item for purposes of
determining their ``total assets'' for the 10 percent requirement,
under the final rule, applicants may include foreign assets as part of
total assets.
e. Noncompliance not rebuttable.
Noncompliance by an applicant with the 10 percent requirement is
not a rebuttable presumption under Sec. 933.17.
8. Financial Condition Requirement for Applicants Other Than Insurance
Companies--Sec. 933.11
Section 4(a)(2)(B) of the Bank Act requires that, in order to be
eligible for Bank membership, an insured depository institution's
financial condition must be such that advances may be safely made to
it. 12 U.S.C. 1424(a)(2)(B). Section 933.6(a)(4) of the final rule
applies this general requirement to all applicants for membership,
including applicants that are not insured depository institutions such
as insurance companies. Section 933.11 implements this requirement by
establishing specific financial condition standards applicable to
applicants other than insurance companies, and is modeled on the
Guidelines. As discussed below, Sec. 933.16 implements this requirement
by establishing specific financial condition standards applicable to
insurance companies that recognize the specialized nature of the
insurance business.
a. Review requirement.
Section 933.11(a) describes the documents pertaining to financial
condition that must be reviewed for each applicant. Under
Sec. 933.11(a)(1), the Bank must obtain and review the applicant's
regulatory financial reports for at least the last six calendar
quarters and three year-ends. In response to a commenter's suggestion,
the definition of ``regulatory financial report'' in Sec. 933.1(aa) of
the final rule is revised to include a regulatory financial report
maintained by the primary regulator on a computer on-line database.
Section 933.11(a)(2) lists, in order of preference, the financial
statement that a Bank must obtain and review in evaluating the
applicant's financial condition. This provision has been revised from
the proposed rule to make it consistent with the financial statement
requirement in the Guidelines.
Under Sec. 933.11(a)(3) of the final rule, the Bank must obtain and
review the applicant's most recent available regulatory examination
report prepared by its primary regulator, as defined in Sec. 933.1(y),
or appropriate state regulator, as defined in Sec. 933.1(f), and
prepare a summary of the applicant's strengths and weaknesses as cited
in the regulatory examination report. The Bank or the applicant also
must prepare a summary of actions taken by the applicant to respond to
examination weaknesses.
Under Sec. 933.11(a)(4), the Bank also must obtain and review a
description of any outstanding enforcement actions against the
applicant, responses by the
[[Page 42536]]
applicant, reports as required by the enforcement action, and verbal or
written indications, if available, from the primary regulator or
appropriate state regulator, whichever is applicable, of how the
applicant is complying with the terms of the enforcement action. In
response to two comments, ``enforcement action'' is defined in
Sec. 933.1(l) of the final rule to exclude board of directors'
resolutions adopted by applicants in response to examination weaknesses
identified by the regulator.
Under Sec. 933.11(a)(5), the Bank also must obtain and review any
other relevant document or information concerning the applicant that
comes to the Bank's attention in reviewing the applicant's financial
condition. The proposed rule required that a Bank also consider other
relevant information that reasonably should come to the Bank's
attention in reviewing the applicant's financial condition. This was
intended to impose a measure of due diligence on the Bank as a part of
the membership approval process. Several commenters opposed this
requirement because: (1) it imposes an undefined or unreasonably high
standard that could be prohibitively costly (e.g., on-line database
searches); (2) the most valuable information comes from the applicant
and its regulator; and (3) the Banks could be exposed to liability for
reliance on inaccurate or insufficient information. For the reasons
cited by the commenters, the final rule does not incorporate this ``due
diligence'' requirement.
b. Standards of adequate ``financial condition.''
The Bank Act does not define the term ``financial condition'' for
purposes of membership eligibility, except to say that financial
condition must be ``such that advances may be safely made.'' 12 U.S.C.
1424(a)(2)(B). The Finance Board believes that specific, uniform and
quantifiable standards for evaluating financial condition are necessary
to ensure that Bank advances may be extended in a safe and sound
manner.
Under Sec. 933.11(b)(1), in order to be presumed to be in adequate
financial condition for purposes of section 4(a)(2)(B) of the Bank Act
and Sec. 933.6(a)(4) of the final rule, an applicant must have received
a composite regulatory examination rating from its primary regulator or
appropriate state regulator within two years preceding the date the
Bank receives the application. The Finance Board requires that the
applicant have been examined within this two-year period in order to
ensure the accuracy of critical information used for financial
condition eligibility determinations. Section 933.11(b)(3) establishes
the minimum performance standard the applicant must satisfy, based on
the applicant's most recent composite regulatory examination rating
from its primary regulator or appropriate state regulator.
The proposed rule required that the applicant have received such a
rating from its primary regulator. Several commenters supported
allowing the Banks to accept composite regulatory examination ratings
from state or federal regulators because: (1) state regulatory
examination reports containing ratings may be obtainable and just as
reliable as federal regulatory examination reports in reviewing an
applicant's financial condition; and (2) state and federal regulators
may alternate examination cycles or may conduct joint examinations for
some state chartered, federally insured institutions, and they
typically examine regulated entities at least every two years. In
response to these comments, the final rule allows use of the most
recent state or federal regulatory examination report containing a
composite regulatory examination rating.
Section 933.11(b)(2) of the final rule requires an applicant to
meet all of its minimum statutory and regulatory capital requirements
in order to satisfy the financial condition requirement.
Under Sec. 933.11(b)(3)(i), in order to be presumed to be in
adequate financial condition, the applicant's most recent composite
regulatory examination rating from its primary regulator or appropriate
state regulator within the past two years must be ``1;'' or must be
``2'' or ``3'' and the applicant also must satisfy certain performance
trend criteria.
The term ``composite regulatory examination rating'' is defined in
Sec. 933.1(j) of the final rule as a composite rating assigned to an
institution following the guidelines of the Uniform Financial
Institutions Rating System (UFIRS), including a CAMEL rating, a MACRO
rating or other similar rating, contained in a written regulatory
examination report. The composite regulatory examination rating for an
insured depository institution is determined according to the UFIRS,
commonly referred to as the CAMEL rating system. The UFIRS is an
internal supervisory rating system used by Federal regulatory agencies
for evaluating the soundness of financial institutions on a uniform
basis and for identifying those institutions requiring special
supervisory attention or concern. Under the UFIRS, each institution is
assigned a composite rating based on an evaluation and rating of five
essential components--capital, assets, management, earnings, and
liquidity--of an institution's financial condition and operations. The
composite rating reflects, in a comprehensive fashion, an institution's
overall financial condition, compliance with banking statutes and
regulations, and management capability. A composite rating of ``1'' is
the highest possible rating on a 5-point scale, indicating the
strongest performance and management practices. A composite rating of
``5'' indicates the weakest performance and management practices and,
therefore, the highest degree of supervisory concern. The Federal
Financial Institutions Examination Council recently proposed changes to
the UFIRS, including adding a sixth rating component addressing
sensitivity to market risks. See 61 FR 37472 (July 18, 1996). The
language in Sec. 933.1(j) and (z) of the final rule incorporates this
proposed change by referring generally to the UFIRS and removing
specific references to the five rating components.
The importance of the composite regulatory examination rating in
the membership approval process may be illustrated in the breakdown of
the ratings assigned to applicants approved by the Finance Board since
the enactment of FIRREA--all but one institution approved for
membership have been rated ``1,'' ``2'' or ``3''; the single ``4''-
rated institution approved for membership has since been upgraded. No
``5''-rated institutions have been approved for membership.
Using the UFIRS to evaluate membership applicants reduces the
documentation requirements for applicants, limits the potential for the
Banks to be perceived by applicants as another layer in the financial
regulatory structure, adds considerable efficiency to the application
process, and provides an independent assessment by those responsible
for the soundness of the entity.
Under Sec. 933.11(b)(3)(i) of the final rule, a composite
regulatory examination rating of ``2'' or ``3'' may be an acceptable
financial condition performance standard if the applicant also meets
certain additional performance trend criteria. These criteria are
designed to identify trends in the institution's key performance areas
by reviewing the six most recent calendar quarters of financial data.
The performance trend criteria are: (1) positive adjusted net income in
4 of the 6 most recent calendar quarters; (2) nonperforming loans,
leases and securities plus foreclosed and repossessed real estate not
exceeding 10
[[Page 42537]]
percent of performing loans, leases and securities plus foreclosed and
repossessed real estate, in the most recent calendar quarter; and (3) a
ratio of the allowance for loan and lease losses to nonperforming
loans, leases and securities of 60 percent or greater during 4 of the 6
most recent calendar quarters. These performance trend criteria are
derived from the criteria contained in the Guidelines.
The terms used in the ratios are more specifically defined in
Sec. 933.1(b), (d), (u), and (x) of the final rule, modeled after the
Guidelines, to aid applicants and the Banks in determining the
appropriate line items to use from the regulatory financial reports. In
some cases, the terminology is clarified to reflect that used in the
regulatory financial reports.
In the proposed rule, the denominator for the nonperforming assets
ratio was incorrectly identified as ``total assets.'' The Finance Board
intended to continue requiring use of a denominator consistent with
that used in the Guidelines, i.e., performing assets plus foreclosed
and repossessed real estate. This is corrected in the final rule.
In the proposed rulemaking, the Finance Board specifically
requested comment on whether the nonperforming assets ratio should be 8
percent, instead of the proposed 10 percent. Two commenters supported a
10 percent requirement, in order to provide maximum flexibility in
membership decisions and to prevent ``undue hardship'' in cases of
mergers and acquisitions. One commenter stated that the 10 percent
requirement was too liberal. The final rule adopts the 10 percent
requirement which, to date, has served as an adequate performance trend
indicator.
Two additional performance trend ratios included in the Guidelines
for applications reviewed by the Banks under the delegation criteria
are not included in the final rule. The Finance Board has determined
that the three ratios discussed above are adequate to determine
applicants' performance trends and that no additional criteria are
necessary for this purpose.
Various other comments were received recommending changes to some
of the performance trend criteria. The final rule does not adopt these
changes, as the Finance Board believes that the three ratios as
specified are sufficient for determining an institution's performance
trends.
A number of commenters stated that the financial condition
requirement in Sec. 933.11 is too stringent, arguing that such in-depth
financial review for membership decisions exceeds, and should not be
confused with, that which should be required for lending decisions.
However, the Bank Act requires that an institution have a ``financial
condition * * * such that advances may be safely made.'' 12 U.S.C.
1424(a)(2)(B). The argument was made that the Bank Act should be
interpreted to presume that any applicant with ``eligible collateral''
would meet the financial condition requirement of section 4(a)(2)(B) of
the Bank Act. However, in order to minimize the possibility of the
Banks becoming a liquidity source for weak or failing institutions, the
Finance Board has determined that a minimum level of financial analysis
should be required for all applicants as a prerequisite to membership.
Section 933.11(c) of the final rule states that the availability of
sufficient eligible collateral to secure advances to the applicant is
presumed and shall not be considered in determining whether an
applicant is in the financial condition required by section 4(a)(2)(B)
of the Bank Act and Sec. 933.6(a)(4) of the final rule. One commenter
expressly supported this provision in the rule.
c. Noncompliance is rebuttable.
As further discussed below under Sec. 933.17(d)(1), noncompliance
by an applicant with the financial condition requirement is a
rebuttable presumption.
9. Character of Management Requirement--Sec. 933.12
Section 4(a)(2)(C) of the Bank Act requires that the ``character of
[an applicant's] management'' be ``consistent with sound and economical
home financing.'' 12 U.S.C. 1424(a)(2)(C). Section 933.6(a)(5) of the
final rule applies this general requirement to all applicants,
including insurance companies. Section 933.12 implements this
requirement by establishing specific character of management standards
applicable to such applicants, modeled after the Guidelines.
a. Standards of adequate ``character of management.''
Section 933.12 has been simplified from the proposed rule by
removing the proposed review requirements and allowing the Bank to rely
solely on an unqualified written certification from the applicant that
it meets all of the specified standards.
Under Sec. 933.12(a), neither the applicant nor any of its
directors or senior officers may be subject to, or operating under, any
enforcement action instituted by its primary regulator or appropriate
state regulator. One commenter suggested that demonstrated full
compliance by an applicant with an enforcement action should be
sufficient to meet the standard. Section 933.17(e)(1) of the final rule
provides, instead, that an applicant may rebut the presumption of
noncompliance by showing substantial compliance with all aspects of the
enforcement action.
Under Sec. 933.12(b), neither the applicant nor any of its
directors or senior officers shall have been the subject of any
criminal, civil or administrative proceedings reflecting upon
creditworthiness, business judgment, or moral turpitude, since the most
recent regulatory examination report.
Under Sec. 933.12(c), there must be no known potential criminal,
civil or administrative monetary liabilities, material pending
lawsuits, or unsatisfied judgments against the applicant or any of its
directors or senior officers, since the most recent regulatory
examination report, that are significant to the applicant's operations.
This provision was revised in response to comments that the proposed
requirement was too burdensome unless it applied only to such
liabilities, lawsuits or judgments that are significant to an
applicant's operations.
The proposed rule required that the written certification be
provided by a majority of the applicant's board of directors, or by an
individual with authority to act on behalf of the board. A commenter
pointed out that state corporate laws impose different requirements for
a corporate board to take valid action and, therefore, that the
requirement should be a certification duly adopted by the applicant,
rather than majority action. The final rule adopts this recommendation.
The Finance Board has found the written certification to be the best
way to surface any character of management issues, and to get an
explanation of those issues because the burden of disclosure is placed
on the applicant.
b. Noncompliance is rebuttable.
As further discussed below under Sec. 933.17(e), noncompliance by
an applicant with the character of management requirement is a
rebuttable presumption.
10. Home Financing Policy Requirement--Sec. 933.13
Section 4(a)(2)(C) of the Bank Act requires that an applicant's
``home-financing policy'' be ``consistent with sound and economical
home financing.'' 12 U.S.C. 1424(a)(2)(C). Section 933.6(a)(6) of the
final rule applies this general requirement to all applicants,
including insurance companies. Section 933.13 implements this
requirement by
[[Page 42538]]
establishing specific home financing policy standards applicable to
such applicants, modeled after the Guidelines.
a. Standards of adequate ``home-financing policy.''
Under Sec. 933.13(a), an applicant that has received a Community
Reinvestment Act (CRA) rating of ``Satisfactory'' or better on its most
recent formal, or if unavailable, informal or preliminary, CRA
performance evaluation is deemed to meet the home financing policy
requirement. The proposed rule required an applicant to have a CRA
performance evaluation within four years from the date of application.
The Guidelines did not contain this requirement, and it is expected
that all applicants will have received such evaluations within the
four-year timeframe. Accordingly, this four-year requirement is not
adopted in the final rule. If a formal CRA performance evaluation is
unavailable, an informal or preliminary CRA performance evaluation from
the regulator should be permissible as an indicator of the applicant's
recent CRA performance. Allowing informal or preliminary evaluations
makes this requirement the same for other applicants as well as de novo
applicants, which were allowed to provide such evaluations under the
Guidelines.
Section 933.13(b) requires an applicant that is not subject to the
CRA, such as an insurance company, to demonstrate how and why its home
financing policy is consistent with the Bank System's housing finance
mission. The home financing policy requirements for de novo insured
depository institution applicants and recent merger or acquisition
applicants are discussed below under Secs. 933.14 (a)(4) and (b)(3),
and 933.15(b).
Several commenters supported use of CRA performance evaluations to
determine compliance with the home financing policy requirement. The
Finance Board acknowledges that CRA performance evaluations are not a
perfect method for evaluating whether an institution's home financing
policy is ``consistent with sound and economical home financing.'' CRA
performance evaluations are based on whether a financial institution
meets the credit needs of its assessment area through a variety of
lending activities, rather than solely on its mortgage lending
activity. See, e.g., 60 FR 22180 (May 4, 1995), 12 CFR 25.22. Further,
CRA performance evaluations do not consider whether a financial
institution's home financing policy is ``sound and economical.'' Id.
However, use of CRA performance evaluations as a proxy for the home
financing policy requirement appears to be the best method at the
present time for determining whether an applicant's home financing
policy meets this requirement.
Since neither the Congress nor the Finance Board have yet
specifically defined the Bank System's housing finance mission, the
Finance Board also acknowledges limitations in requesting a written
justification demonstrating how and why an applicant's home financing
policy is consistent with the Bank System's housing finance mission.
b. Noncompliance is rebuttable.
As further discussed below under Sec. 933.17(f), noncompliance by
an applicant with the home financing policy requirement is a rebuttable
presumption.
11. De Novo Insured Depository Institution Applicants--Sec. 933.14
Section 933.14 of the final rule establishes the membership
eligibility requirements for de novo, i.e., newly chartered, insured
depository institution applicants that have not yet commenced
operations or that have recently commenced operations.
a. Newly chartered applicants that have not yet commenced
operations.
(1) Streamlined requirements.
Section 933.14(a) includes a new provision not included in the
proposed rule, which provides for a streamlined application process for
newly chartered, insured depository institution applicants that have
not yet commenced operations. Since either or both the regulatory
agency that chartered the institution and the agency insuring the
deposits of an insured depository institution will have determined that
the institution's financial condition and character of management are
acceptable, or will have made their approval contingent on the
institution satisfying these and other requirements, the Banks should
be able to rely on the agency's determination without having to do a
duplicative review of these eligibility requirements. Accordingly,
Sec. 933.14(a)(1) provides that such institutions are deemed to meet
the requirements of Secs. 933.11 (financial condition) and 933.12
(character of management), as well as Secs. 933.7 (duly organized) and
933.8 (subject to inspection and regulation).
(2) ``Makes long-term home mortgage loans'' requirement.
Since the agency's charter or insurance approval is not contingent
on the institution agreeing to make long-term home mortgage loans, as
required by section 4(a)(1)(C) of the Bank Act and Sec. 933.9,
Sec. 933.14(a)(2) requires the applicant to file as part of its
application a written justification acceptable to the Bank of how its
home financing credit policy and lending practices will include
originating or purchasing long-term home mortgage loans. See 12 U.S.C.
1424(a)(1)(C).
(3) 10 percent requirement.
Section 933.14(a)(3) implements section 4(a)(2) of the Bank Act by
providing that the applicant shall have until one year after commencing
its initial business operations to meet the 10 percent requirement of
Sec. 933.10. See 12 U.S.C. 1424(a)(2).
(4) Home financing policy requirement.-
Since the agency's charter or insurance approval is not contingent
upon the institution having an adequate home financing policy, as
required by section 4(a)(2)(C) of the Bank Act and Sec. 933.6(a)(6),
Sec. 933.14(a)(4)(i) requires the applicant to file as part of its
application a written justification acceptable to the Bank of how and
why its home financing credit policy and lending practices will meet
the credit needs of its community. See 12 U.S.C. 1424(a)(2)(C).
However, the final rule makes the Bank's approval conditional upon the
applicant receiving a ``Satisfactory'' or better Community Reinvestment
Act (CRA) rating on its first formal, or if unavailable, informal or
preliminary, CRA performance evaluation. Noncompliance with this
requirement is a rebuttable presumption under Sec. 933.17(f). An
applicant that is conditionally approved for membership is subject to
the stock purchase requirements of Sec. 933.20, and is eligible to
receive advances, in the Bank's discretion, pursuant to 12 CFR part
935. Under Sec. 933.14(a)(4)(iii), if the applicant's first CRA rating
is ``Needs to Improve'' or ``Substantial Non-Compliance,'' and the
applicant is unable to rebut the presumption of noncompliance, the
applicant's conditional membership approval shall be deemed null and
void. In such event, Sec. 933.14(a)(4)(iv) provides that the
liquidation of any outstanding indebtedness owed by the applicant to
the Bank and redemption of stock of such Bank shall be carried out in
accordance with Sec. 933.29 of this part.
b.-Newly chartered applicants that have recently commenced
operations.
Section 933.14(b) codifies certain exceptions in the Guidelines to
the membership eligibility standards for newly chartered applicants
that have recently commenced operations.
(1) 10 percent requirement.
Section 933.14(b)(1) of the final rule implements section 4(a)(2)
of the Bank Act by providing that the applicant shall
[[Page 42539]]
have until one year after commencing its initial business operations to
meet the 10 percent requirement of Sec. 933.10. See 12 U.S.C.
1424(a)(2).
(2) Financial condition requirement.
Section Sec. 933.14(b)(2)(i) provides that, for purposes of
Sec. 933.11(a)(1), an applicant that has not yet filed regulatory
financial reports for six calendar quarters and three year-ends shall
provide any regulatory financial reports that it has filed with its
primary regulator. As discussed earlier, ``regulatory financial
report'' is defined in Sec. 933.1(aa) to include such reports
maintained by the primary regulator on a computer on-line database.
Section 933.14(b)(2)(ii) provides that, for purposes of
Sec. 933.11(b) (1) and (3), an applicant that has not yet received a
composite regulatory examination rating from its primary regulator or
appropriate state regulator shall provide a preliminary or informal,
written composite regulatory examination rating, if available, from its
primary regulator or appropriate state regulator. The final rule has
been revised to take into account the availability of such rating,
consistent with the Guidelines.
Under Sec. 933.14(b)(2)(iii) of the final rule, an applicant that
has not yet filed regulatory financial reports for six calendar
quarters need not meet the performance trend criteria in
Sec. 933.11(b)(3)(i) (A) to (C), if: (1) the applicant has filed
regulatory financial reports with its primary regulator for at least
three calendar quarters of operation; and (2) the Bank determines that
the applicant is in substantial compliance with the terms of its
regulatory business plan. The proposed rule required that the applicant
have completed regulatory financial reports for at least six calendar
quarters of operation. Consistent with the Guidelines, the final rule
requires three, instead of six, calendar quarters of operation. The
proposed rule also required the Bank to determine such compliance
either through confirmation in writing by the de novo applicant's
primary regulator or based on a written analysis provided by the de
novo applicant. In response to a commenter's recommendation, the final
rule deletes this requirement, leaving documentation of the Bank's
determination to its discretion.
(3) Home financing policy requirement.
Section 933.14(b)(3) provides that, for purposes of Sec. 933.13, an
applicant that has not received its first formal, or if unavailable,
informal or preliminary, CRA performance evaluation, is subject to the
home financing policy requirements of Sec. 933.14(a)(4).
12. Recent Merger Applicants--Sec. 933.15
a.-``Pending merger applicants.'' The proposed rule, consistent
with the Guidelines, set forth specific eligibility requirements for
pending merger applicants. A ``pending merger applicant'' was defined
as an institution applying for membership that: (1) is a party to a
merger or acquisition agreement expected to be consummated within two
calendar quarters of submission of the membership application (timing
test); and (2) will account for 75 percent or less of the combined
assets of the resulting entity at the time of the merger or acquisition
(materiality test).
The proposed provisions applicable to pending merger applicants are
not adopted in the final rule. Since the merger or acquisition has not
yet been consummated and may never be consummated, the Finance Board
has determined that applicants expecting to shortly consummate a merger
or acquisition should be subject to the standard eligibility
requirements set forth in Secs. 933.7 to 933.13, and should not be
evaluated based on each party to the transaction or the pending
resulting entity.
b.-Recent merger or acquisition applicants. The proposed rule,
consistent with the Guidelines, set forth specific eligibility
requirements for recent merger applicants. A ``recent merger
applicant'' was defined as an institution applying for membership that:
(1) merged with or acquired another institution within the six calendar
quarters preceding submission of the membership application (timing
test); and (2) accounted for 75 percent or less of the combined assets
of the resulting entity at the time of the merger or acquisition
(materiality test). The proposed rule required that, for certain of the
eligibility requirements, each of the parties to the merger or
acquisition had to satisfy the requirements. The timing and materiality
tests for the definition of a recent merger or acquisition applicant
have been eliminated in the final rule.
Section 933.15 of the final rule streamlines the application
process by requiring that an applicant resulting entity must satisfy
the standard eligibility requirements of Secs. 933.7 to 933.13 except
as provided in Sec. 933.15. The Finance Board has determined that it is
not necessary to analyze each party to the transaction to determine
satisfaction of the eligibility requirements.
(1) Financial condition requirement.
Section 933.15(a)(i) of the final rule provides that, for purposes
of Sec. 933.11(a)(1), an applicant that, as a result of a merger or
acquisition prior to the date the Bank receives its membership
application, has not yet filed regulatory financial reports for the
last six calendar quarters and three year-ends (recent merger or
acquisition applicant), shall provide any regulatory financial reports
that the applicant has filed with its primary regulator.
Section 933.15(a)(ii) provides that, for purposes of
Sec. 933.11(b)(3)(i) (A) to (C), an applicant that, as a result of a
merger or acquisition, has not yet filed combined regulatory financial
reports for the last six calendar quarters, shall provide pro forma
combined financial statements for those calendar quarters in which
actual combined regulatory financial reports are unavailable.
(2) Home financing policy requirement.
Section 933.13(b) provides that, for purposes of Sec. 933.13, a
recent merger or acquisition applicant has not received its first
formal, or if unavailable, informal or preliminary, CRA performance
evaluation, must demonstrate how and why its home financing credit
policy and lending practices will meet the credit needs of its
community.
A recent merger or acquisition applicant may provide evidence to
rebut a presumption of noncompliance with an eligibility requirement,
as provided in Sec. 933.17 of the final rule.
13. Insurance Company Applicants--Secs. 933.8, 933.12, 933.13, 933.16
As discussed in part III.B.2. above, the Bank Act requires that an
insurance company applicant must meet the membership eligibility
requirements set forth in section 4(a)(1) of the Bank Act. See 12
U.S.C. 1424(a)(1); Sec. 933.6(a) (1), (2) and (3) of the final rule. As
further discussed in part III.B.6., 7., 9., 10., and 13., the final
rule applies all of the section 4(a)(2) criteria except the 10 percent
requirement to insurance company applicants, even though the Bank Act,
on its face, specifically applies the section 4(a)(2) criteria to
insured depository institution applicants. See 12 U.S.C. 1424(a)(2);
Secs. 933.12, 933.13, 933.16 of the final rule.
a.-``Subject to inspection and regulation'' requirement--
Sec. 933.8.
(1) Standard of adequate inspection and regulation.
Insurance companies are subject to state, not federal, regulation
and, therefore, the standards used to inspect and regulate insurance
companies from state to state are not uniform. Every United States
insurance company is subject to examination and regulation
[[Page 42540]]
by the state insurance department in its domiciliary state, as well as
to some level of regulation by the state insurance department in each
state where the insurance company applicant is licensed to do business.
State insurance laws are similar to federal banking laws in that they
require the appropriate state regulator to monitor whether the
insurance company has complied with minimum capital and reserve,
financial condition, asset valuation and various consumer-related
requirements.
Forty-seven states and the District of Columbia now adhere to the
financial regulation standards established by the National Association
of Insurance Commissioners (NAIC) and, thus, are accredited by the
NAIC. In its proposed rulemaking, the Finance Board specifically
requested comment on whether the degree of inspection and regulation
imposed by a particular state, e.g., whether the state insurance
commissioner is NAIC-accredited, should be a factor in determining
whether an insurance company applicant satisfies the ``subject to
inspection and regulation'' requirement of section 4(a)(1)(B) of the
Bank Act. See 12 U.S.C. 1424(a)(1)(B). Two commenters generally opposed
requiring an applicant to be subject to inspection and regulation by an
NAIC-accredited state insurance commissioner, because it could
discourage insurance company membership. One commenter supported
establishing such a requirement as a rebuttable presumption.
Section 933.8 of the final rule requires that an applicant's
appropriate state regulator be NAIC-accredited to meet the ``subject to
inspection and regulation'' requirement, in order to ensure some
minimum degree of inspection and regulation.
(2) Noncompliance is rebuttable.
As further discussed below under Sec. 933.17(c), noncompliance by
an insurance company applicant with the ``subject to inspection and
regulation'' requirement is a rebuttable presumption.
b. Financial condition requirement--Sec. 933.16.
Section 933.16 establishes specific financial condition
requirements applicable to insurance company applicants that differ
from those applicable to other applicants under Sec. 933.11, due to the
differences between the regulatory schemes for insurance companies and
depository institutions.
(1) Capital requirements.
Section 933.16 provides that an insurance company applicant shall
be deemed to meet the financial condition requirement of section
4(a)(2)(B) of the Bank Act and Sec. 933.6(a)(4), if the applicant meets
all of its minimum statutory and regulatory capital requirements and
the capital standards established by the NAIC, based on the information
contained in the applicant's most recent regulatory financial report
filed with its primary regulator. See 12 U.S.C. 1424(a)(2)(B).
Under the proposed rule, an insurance company applicant was deemed
to meet the financial condition requirement if: (1) the applicant
received a regulatory examination by its primary regulator within the
three years preceding the date of the membership application; (2) the
applicant's most recent regulatory examination indicated no major
adverse findings on financial condition; (3) the applicant received a
composite independent insurance company rating from one of the five
principal private companies that rate insurance companies within the
three years preceding the date of the membership application; (4) the
applicant's most recent composite independent insurance company rating
was ``strong,'' as defined therein; or alternatively, the applicant had
an ``adequate rating'' and ``adequate earnings,'' as defined therein;
(5) the applicant met all of its minimum statutory and regulatory
capital requirements and the NAIC capital standards, based on the
applicant's most recent regulatory financial report filed with its
primary regulator; and (6) the applicant met eight specified minimum
performance ratios during the most recent year-end or quarter-end
period. Insurance company regulators do not use the UFIRS to evaluate
the financial condition of insurance companies.
One commenter stated that the financial condition requirement
should be based on satisfaction of the NAIC capital standards, and not
on additional independent ratings and performance ratios. The commenter
noted that the NAIC capital standards are relied upon by insurers,
analysts and regulators to evaluate insurance companies, not all
insurers want to pay for independent ratings, and most rating services
do not rate life insurance companies.
The commenter also stated that the minimum performance ratios may
be too stringent even for financially strong applicants, are in some
cases inapplicable to life insurance companies, and where used in the
NAIC Insurance Regulatory Information System (IRIS), are only intended
as a screening tool to flag an insurance company for further financial
evaluation and not as a measure of its financial condition. The
commenter noted that the IRIS standards require regulatory action only
if there is an abnormal value in four or more of the IRIS ratios, while
the rule would deem an insurance company applicant ineligible for Bank
membership if it fails to meet only one of the rule's eight ratios.
The Finance Board believes that these points have merit and the
proposed rule may have applied overly stringent financial condition
criteria to insurance companies. While not all states have yet adopted
the NAIC capital standards, the Finance Board believes that these
standards are a useful measure of an insurance company's financial
condition. Satisfaction of these standards, as well as the applicant's
minimum statutory and regulatory capital requirements, should be
sufficient to deem an insurance company applicant in compliance with
the financial condition requirement of Sec. 933.6(a)(4). As discussed
earlier, the applicants also will be required to be subject to
inspection and regulation by an NAIC-accredited regulator, to ensure a
minimum degree of inspection and regulation.
(2) Noncompliance is rebuttable.
As further discussed below under Sec. 933.17(d)(2), noncompliance
by an insurance company applicant with the financial condition
requirement applicable to such applicants is a rebuttable presumption.
14. Rebuttable Presumptions--Sec. 933.17
Based on the Finance Board's general supervisory authority over the
Banks, 12 U.S.C. 1422a(a)(3), 1422b(a)(1), and its authority to
interpret the Bank Act's membership eligibility requirements, id.
Sec. 1424, the final rule establishes flexible requirements for each
membership eligibility criterion required by the Bank Act and this
part. An applicant that meets those requirements is presumed to be in
compliance with the statutory membership eligibility criteria.
So, too, an applicant not meeting the requirements is presumed not
to be in compliance with the Bank Act criteria. Section 933.17 of the
FR Doc. 96-20487 Membership Approval
final rule provides that certain presumptions may be rebutted if the
applicant provides, or the Bank otherwise obtains, substantial evidence
to overcome the presumption. This approach is modeled after the
Guidelines. A number of commenters expressly supported this approach,
rather than requiring applicants to meet rigid, ``bright line''
eligibility requirements, because it provides definite requirements
while still allowing the Banks to exercise discretion in appropriate
cases.
a. Rebutting presumptive compliance.
Under Sec. 933.17(a), the presumption that an applicant meeting the
[[Page 42541]]
requirements of Secs. 933.7 to 933.16 is in compliance with Sec. 933.6
(a) and (b), may be rebutted, and the Bank may deny membership to the
applicant, if the Bank obtains substantial evidence to overcome the
presumption of compliance.
b. Rebutting presumptive noncompliance.
Under Sec. 933.17(b), the presumption that an applicant not meeting
a particular requirement of Secs. 933.8, 933.11, 933.12, 933.13, or
933.16 is in noncompliance with Sec. 933.6(a) (2), (4), (5) or (6), may
be rebutted, and the applicant shall be deemed to meet such
requirement, if the applicable requirements of Sec. 933.17 are
satisfied.
(1) ``Subject to inspection and regulation'' requirement.-
Section 933.17(c) provides that an insurance company applicant may
rebut a presumption of noncompliance with the ``subject to inspection
and regulation'' requirement of Sec. 933.8 by providing substantial
evidence acceptable to the Bank that it is subject to inspection and
regulation as required by Sec. 933.6(a)(2), notwithstanding the lack of
NAIC accreditation.
(2) Financial condition requirement.
Section 933.17(d) sets forth the requirements for rebutting a
presumption of noncompliance with the financial condition requirements
of Secs. 933.11 and 933.16. Under Sec. 933.17(d)(1), for applicants
other than insurance companies, in the case of an applicant's lack of a
composite regulatory examination rating within the required two-year
period, a variance from the required rating, or a variance from a
required performance trend criterion, as required under Sec. 933.11,
the applicant or the Bank shall prepare a written justification
pertaining to such requirement that provides substantial evidence
acceptable to the Bank that the applicant is in the financial condition
required by Sec. 933.6(a)(4), notwithstanding the lack of rating or
variance. In response to a commenter's suggestion, the final rule
adopts a ``substantial,'' rather than the proposed ``compelling,''
evidence standard, which the Finance Board believes is sufficient for
purposes of determining an applicant's financial condition.
Under Sec. 933.17(d)(2) of the final rule, in the case of an
insurance company applicant's variance from a capital requirement or
standard of Sec. 933.16, the applicant or the Bank shall prepare a
written justification pertaining to such requirement or standard that
provides substantial evidence acceptable to the Bank that the applicant
is in the financial condition required by Sec. 933.6(a)(4),
notwithstanding the variance. The proposed rule did not provide for
rebuttals by insurance company applicants of a presumption of
noncompliance with the financial condition requirement. Making the
financial condition requirement a rebuttable presumption for insurance
companies is consistent with the treatment of other applicants, and is
reasonable because an insurance company applicant may otherwise be able
to show that it is in adequate financial condition to be a member of
the Bank System.
(3) Character of management requirement.
Section 933.17(e) sets forth the requirements for rebutting a
presumption of noncompliance with the character of management
requirement of Sec. 933.12.
(4) Home financing policy requirement.
Section 933.17(f) sets forth the requirements for rebutting a
presumption of noncompliance with the home financing policy requirement
of Secs. 933.13, 933.14(a)(4), and 933.14(b)(3), where an applicant
received a ``Substantial Non-Compliance'' rating on its most recent
formal, or if unavailable, informal or preliminary, CRA performance
evaluation, or a ``Needs to Improve'' CRA rating on its most recent
formal, or if unavailable, informal or preliminary, CRA performance
evaluation and a CRA rating of ``Needs to Improve'' or better on any
immediately preceding CRA performance evaluation. This section has been
revised to incorporate meeting the credit needs of the applicant's
community, since the provision is now being applied to depository
institution applicants and not to insurance company applicants. An
insurance company applicant or recent merger or acquisition applicant
would have no need for rebuttal, since Secs. 933.13(b) and 933.15(b),
respectively, already require such applicants to submit written
justifications regarding their home financing policies.
15. Conforming Changes to Citations
For the sake of brevity, conforming changes to the citations in
subparts D through I of part 933 are set out in a table at the end of
this final rule.
III. Regulatory Flexibility Act
The final rule largely implements statutory requirements binding on
applicants for Bank membership, regardless of their size. The Finance
Board is not at liberty to make adjustments to those statutory
requirements to accommodate small entities. The final rule does not
impose any additional regulatory requirements that will have a
disproportionate impact on small entities. The final rule will, to some
extent, reduce the criteria for determining compliance with statutory
eligibility requirements that currently are used by the Finance Board
in approving membership applications. Therefore, it is certified,
pursuant to section 605(b) of the Regulatory Flexibility Act, 5 U.S.C.
605(b), that this final rule will not have a significant economic
impact on a substantial number of small entities.
IV. Paperwork Reduction Act
The information collection requirements contained in the proposed
rule, as well as the information collection requirements in the
sections redesignated as Secs. 933.18, 933.22, 933.25, 933.26 and
933.31 of the final rule, which are not otherwise affected by this
final rule, were submitted to and approved by the Office of Management
and Budget (OMB) in accordance with the requirements of Sec. 3507(d) of
the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d), and assigned
OMB control number 3069-0004. The title, description of need and use,
and the respondent description for the information collection
requirements in this final rule are discussed elsewhere in
SUPPLEMENTARY INFORMATION. Any comments on this information collection
should be sent to: Office of Information and Regulatory Affairs of OMB,
Attention: Desk Officer for Federal Housing Finance Board, Washington,
DC 20503, and to the Executive Secretary, Federal Housing Finance
Board, 1777 F Street, N.W., Washington, DC 20006.
The following table discloses the estimated annual reporting and
recordkeeping burden:
a. Number of respondents..........................................6,412
b. Total annual responses.........................................6,412
Percentage of these responses collected electronically...............0%
c. Total annual hours requested................................59,152.1
d. Current OMB inventory.......................................38,889.6
e. Difference..................................................20,262.5
The estimated annual reporting and recordkeeping burden is:
a. Total annualized capital/startup costs.............................0
b. Total annual costs (O&M)...............................$1,683,923.95
c. Total annualized cost requested.........................1,683,923.95
d. Current OMB inventory...................................1,754,181.95
e. Difference.............................................( $70,258.00)
The approved information collection requirements will not otherwise
be adversely affected (and may be reduced) by the requirements of the
final rule.
[[Page 42542]]
List of Subjects in 12 CFR Part 933
Credit, Federal home loan banks, Reporting and recordkeeping
requirements.
Accordingly, the Board hereby amends title 12, chapter IX,
subchapter B, part 933, of the Code of Federal Regulations as follows:
PART 933--MEMBERS OF THE BANKS
1. The heading for part 933 is revised to read as set forth above.
2. The authority citation for part 933 continues to read as
follows:
Authority: 12 U.S.C. 1422a, 1422b, 1424, 1426, 1430, 1442.
3. The table of contents to part 933 is revised to read as follows:
Subpart A--Definitions
Sec.
933.1 Definitions.
Subpart B--Membership Application Process
933.2 Membership application requirements.
933.3 Decision on application.
933.4 Automatic membership.
933.5 Appeals.
Subpart C--Eligibility Requirements
933.6 General eligibility requirements.
933.7 Duly organized requirement.
933.8 Subject to inspection and regulation requirement.
933.9 Makes long-term home mortgage loans requirement.
933.10 10 percent requirement for insured depository institution
applicants.
933.11 Financial condition requirement for applicants other than
insurance companies.
933.12 Character of management requirement.
933.13 Home financing policy requirement.
933.14 De novo insured depository institution applicants.
933.15 Recent merger or acquisition applicants.
933.16 Financial condition requirement for insurance company
applicants.
933.17 Rebuttable presumptions.
933.18 Determination of appropriate Bank district for membership.
Subpart D--Stock Requirements
933.19 Par value and price of stock.
933.20 Stock purchase.
933.21 Issuance and form of stock.
933.22 Adjustments in stock holdings.
933.23 Purchase of excess stock.
Subpart E--Consolidations Involving Members
933.24 Consolidation of members.
933.25 Consolidations involving nonmembers.
Subpart F--Withdrawal and Removal From Membership
933.26 Procedure for withdrawal.
933.27 Procedure for removal.
933.28 Automatic termination of membership for institutions placed
in receivership.
Subpart G--Orderly Liquidation of Advances and Redemption of Stock
933.29 Orderly liquidation of advances and redemption of stock.
Subpart H--Reacquisition of Membership
933.30 Reacquisition of membership.
Subpart I--Bank Access to Information
933.31 Reports and examinations.
Subpart J--Membership Insignia
933.32 Official membership insignia.
Subparts C Through I of Part 933 [Redesignated as Subparts D
Through J]
4. Subparts C through I of part 933 are redesignated as Subparts D
through J, respectively.
Secs. 933.6 through 933.19 [Redesignated as Secs. 933.19 through
933.32]
5. Sections 933.6 through 933.19 are redesignated as Secs. 933.19
through 933.32, respectively.
6. Subpart A of part 933 is revised to read as follows:
Subpart A--Definitions
Sec. 933.1 Definitions.
For purposes of this part:
(a) Act means the Federal Home Loan Bank Act, as amended (12 U.S.C.
1421 through 1449).
(b) Adjusted net income means net income, excluding extraordinary
items such as income received from or expense incurred in sales of
securities or fixed assets, reported on a regulatory financial report.
(c) Aggregate unpaid loan principal means the aggregate unpaid
principal of a subscriber's or member's home mortgage loans, home-
purchase contracts, and similar obligations.
(d) Allowance for loan and lease losses means a specified balance-
sheet account held to fund potential losses on loans or leases, that is
reported on a regulatory financial report.
(e) Appropriate Federal banking agency has the same meaning as used
in 12 U.S.C. 1813(q) and, for federally insured credit unions, shall
mean the National Credit Union Administration.
(f) Appropriate state regulator means any state officer, agency,
supervisor or other entity that has regulatory authority over, or is
empowered to institute enforcement action against, an applicant for
Bank membership.
(g) Bank means a Federal Home Loan Bank established under the
authority of the Act.
(h) Board means the Federal Housing Finance Board.
(i) Combination business or farm property means real property for
which the total appraised value is attributable to residential, and
business or farm uses.
(j) Composite regulatory examination rating means a composite
rating assigned to an institution following the guidelines of the
Uniform Financial Institutions Rating System (Issued by the Federal
Financial Institutions Examination Council; for availability contact
the Federal Housing Finance Board, FOIA Office, 1777 F Street, NW.,
Washington, DC 20006.), including a CAMEL rating, a MACRO rating, or
other similar rating, contained in a written regulatory examination
report.
(k) Dwelling unit means a single room or a unified combination of
rooms designed for residential use.
(l) Enforcement action means any written notice, directive, order
or agreement initiated by an applicant for Bank membership or by its
primary regulator or appropriate state regulator to address any
operational, financial, managerial or other deficiencies of the
applicant identified by such regulator, but does not include a board of
directors resolution adopted by the applicant in response to
examination weaknesses identified by such regulator.
(m) Funded residential construction loan means the portion of a
loan secured by real property made to finance the on-site construction
of dwelling units on one-to-four family property or multifamily
property disbursed to the borrower.
(n) Home mortgage loan means:
(1) A loan, whether or not fully amortizing, or an interest in such
a loan, which is secured by a mortgage, deed of trust, or other
security agreement that creates a first lien on one of the following
interests in property:
(i) One-to-four family property or multifamily property, in fee
simple;
(ii) A leasehold on one-to-four family property or multifamily
property under a lease of not less than 99 years that is renewable, or
under a lease having a period of not less than 50 years to run from the
date the mortgage was executed; or
(iii) Combination business or farm property where at least 50
percent of the total appraised value of the combined property is
attributable to the residential portion of the property; or
(2) A mortgage pass-through security that represents an undivided
ownership interest in:
(i) Long-term loans, provided that, at the time of issuance of the
security, all of the loans meet the requirements of paragraph (n)(1) of
this section; or
[[Page 42543]]
(ii) A security that represents an undivided ownership interest in
long-term loans, provided that, at the time of issuance of the
security, all of the loans meet the requirements of paragraph (n)(1) of
this section.
(o) Institutions which are eligible to make application to become
members means, for purposes of 12 U.S.C. 1431(e)(2)(A), any building
and loan association, savings and loan association, cooperative bank,
homestead association, insurance company, savings bank, or any insured
depository institution, regardless of whether the institution applies
for or would be approved for membership.
(p) Insured depository institution means an insured depository
institution as defined in 12 U.S.C. 1422(12).
(q) Long-term means a term to maturity of five years or greater.
(r) Manufactured housing means a manufactured home as defined in
section 603(6) of the Manufactured Home Construction and Safety
Standards Act of 1974, as amended (42 U.S.C. 5402(6)).
(s) Member means an institution that has been approved for
membership in a Bank and has purchased capital stock in the Bank in
accordance with Secs. 933.20 or 933.25 of this part.
(t) Multifamily property means:
(1) Real property that is solely residential and includes five or
more dwelling units; or
(2) Real property that includes five or more dwelling units
combined with commercial units, provided that the property is primarily
residential; or
(3) Nursing homes, dormitories, or homes for the elderly.
(u) Nonperforming loans, leases and securities means the sum of the
following, reported on a regulatory financial report: loans, leases and
debt securities that have been past due for 90 days (60 days in the
case of credit union applicants) or longer but are still accruing;
loans, leases and debt securities on a nonaccrual basis; and
restructured loans and leases (not already reported as nonperforming).
(v) Nonresidential real property means real property that is not
used for residential purposes, including business or industrial
property, hotels, motels, churches, hospitals, educational and
charitable institution buildings or facilities, clubs, lodges,
association buildings, golf courses, recreational facilities, farm
property not containing a dwelling unit, or similar types of property.
(w) One-to-four family property means:
(1) Real property that is solely residential, including one-to-four
family dwelling units or more than four family dwelling units if each
dwelling unit is separated from the other dwelling units by dividing
walls that extend from ground to roof, such as row houses, townhouses
or similar types of property;
(2) Manufactured housing if applicable state law defines the
purchase or holding of manufactured housing as the purchase or holding
of real property;
(3) Individual condominium dwelling units or interests in
individual cooperative housing dwelling units that are part of a
condominium or cooperative building without regard to the number of
total dwelling units therein; or
(4) Real property which includes one-to-four family dwelling units
combined with commercial units, provided the property is primarily
residential.
(x) Performing loans, leases and securities means loans, leases and
debt securities, reported on a regulatory financial report, that do not
meet the definition of ``nonperforming loans, leases and securities,''
as provided in paragraph (u) of this section.
(y) Primary regulator means the chartering authority for federally-
chartered applicants, the insuring authority for federally-insured
applicants that are not federally-chartered, or the appropriate state
regulator for all other applicants.
(z) Regulatory examination report means a written report of
examination prepared by the applicant's primary regulator or
appropriate state regulator, containing, in the case of insured
depository institution applicants, a composite rating assigned to the
institution following the guidelines of the Uniform Financial
Institutions Rating System, including a CAMEL rating, a MACRO rating,
or other similar rating.
(aa) Regulatory financial report means a financial report that an
applicant is required to file with its primary regulator on a specific
periodic basis, including the quarterly call report for commercial
banks, thrift financial report for savings associations, quarterly or
semi-annual call report for credit unions, the National Association of
Insurance Commissioners' annual or quarterly report for insurance
companies, or other similar report, including such report maintained by
the primary regulator on a computer on-line database.
(bb) Residential mortgage loan means any one of the following types
of loans, whether or not fully amortizing:
(1) Home mortgage loans;
(2) Funded residential construction loans;
(3) Loans secured by manufactured housing whether or not defined by
state law as secured by an interest in real property;
(4) Loans secured by junior liens on one-to-four family property or
multifamily property;
(5) Mortgage pass-through securities representing an undivided
ownership interest in:
(i) Loans that meet the requirements of paragraphs (bb) (1) through
(4) of this section at the time of issuance of the security;
(ii) Securities representing an undivided ownership interest in
loans, provided that, at the time of issuance of the security, all of
the loans meet the requirements of paragraphs (bb) (1) through (4) of
this section; or
(iii) Mortgage debt securities as defined in paragraph (bb)(6) of
this section;
(6) Mortgage debt securities secured by:
(i) Loans, provided that, at the time of issuance of the security,
substantially all of the loans meet the requirements of paragraphs (bb)
(1) through (4) of this section;
(ii) Securities that meet the requirements of paragraph (bb)(5) of
this section; or
(iii) Securities secured by assets, provided that, at the time of
issuance of the security, all of the assets meet the requirements of
paragraphs (bb) (1) through (5) of this section; or
(7) Home mortgage loans secured by a leasehold interest, as defined
in paragraph (n)(1)(ii) of this section, except that the period of the
lease term may be for any duration.
(cc) State means a State of the United States, the District of
Columbia, Guam, Puerto Rico or the U.S. Virgin Islands.
(dd) Total assets means the total assets reported on a regulatory
financial report.
7. Subpart B of part 933 is revised to read as follows:
Subpart B--Membership Application Process
Sec. 933.2 Membership application requirements.
(a) Application. An applicant for membership in a Bank shall submit
to that Bank an application that satisfies the requirements of this
part. The application shall include a written resolution or
certification duly adopted by the applicant's board of directors, or by
an individual with authority to act on behalf of the applicant's board
of directors, of the following:
(1) Applicant review. Applicant has reviewed the requirements of
this part
[[Page 42544]]
and, as required by this part, has provided to the best of applicant's
knowledge the most recent, accurate and complete information available;
and
(2) Duty to supplement. Applicant will promptly supplement the
application with any relevant information that comes to applicant's
attention prior to the Bank's decision on whether to approve or deny
the application, and if the Bank's decision is appealed pursuant to
Sec. 933.5 of this part, prior to resolution of any appeal by the
Board.
(b) Digest. The Bank shall prepare a written digest for each
applicant stating whether or not the applicant meets each of the
requirements in Secs. 933.6 to 933.18 of this part, the Bank's findings
and the reasons therefor.
(c) File. The Bank shall maintain a membership file for each
applicant for at least three years after the Bank decides whether to
approve or deny membership and the resolution of any appeal to the
Board. The membership file shall contain at a minimum:
(1) Digest. The digest required by paragraph (b) of this section.
(2) Required documents. All documents required by Secs. 933.6 to
933.18 of this part, including those documents required to establish or
rebut a presumption under this part, shall be described in and attached
to the digest. The Bank may retain in the file only the relevant
portions of the regulatory financial reports required by this part. If
an applicant's primary regulator or appropriate state regulator
requires return or destruction of a regulatory examination report, the
date that the report is returned or destroyed shall be noted in the
file.
(3) Additional documents. Any additional document submitted by the
applicant, or otherwise obtained or generated by the Bank, concerning
the applicant.
(4) Decision resolution. The decision resolution described in
Sec. 933.3(b) of this part.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.3 Decision on application.
(a) Authority. The Board authorizes the Banks to approve or deny
all applications for membership, subject to the requirements of this
part. The Bank may delegate the authority to approve membership
applications only to a committee of the Bank's board of directors, the
Bank president, or a senior officer who reports directly to the Bank
president other than an officer with responsibility for business
development.
(b) Decision resolution. For each applicant, the Bank shall prepare
a written resolution duly adopted by the Bank's board of directors, by
a committee of the board of directors, or by an officer with delegated
authority to approve membership applications. The decision resolution
shall state:
(1) That the statements in the digest are accurate to the best of
the Bank's knowledge, and are based on a diligent and comprehensive
review of all available information identified in the digest; and
(2) The Bank's decision and the reasons therefor. Decisions to
approve an application should state specifically that: the applicant is
authorized under the laws of the United States and the laws of the
appropriate state to become a member of, purchase stock in, do business
with, and maintain deposits in, the Bank to which the applicant has
applied; and the applicant meets all of the membership eligibility
criteria of the Act and this part.
(c) Action on applications. The Bank shall act on an application
within 60 calendar days of the date the Bank deems the application to
be complete. An application is ``complete'' when a Bank has obtained
all the information required by this part, and any other information
the Bank deems necessary, to process the application. If an application
that was deemed complete subsequently is deemed incomplete because the
Bank determines during the review process that additional information
is necessary to process the application, the Bank may stop the 60-day
clock until the application again is deemed complete, and then resume
the clock where it left off. The Bank shall notify an applicant when
its application is deemed by the Bank to be complete. The Bank also
shall notify an applicant if the 60-day clock is stopped, and when the
clock is resumed. Within three business days of a Bank's decision on an
application, the Bank shall provide the applicant and the Board's
Executive Secretary with a copy of the Bank's decision resolution.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.4 Automatic membership.
(a) Automatic membership for mandatory members. Any institution
required by law to become a member of a Bank automatically shall become
a member of the Bank of the district in which its principal place of
business is located upon the purchase of stock in that Bank pursuant to
Sec. 933.20(b)(1) of this part.
(b) Automatic membership for certain charter conversions. An
insured depository institution member that converts from one charter
type to another automatically shall become a member of the Bank of
which the converting institution was a member on the effective date of
such conversion, provided that the converting institution continues to
be an insured depository institution and the assets of the institution
immediately before and immediately after the conversion are not
materially different. In such case, all relationships existing between
the member and the Bank at the time of such conversion may continue.
(c) Automatic membership for transfers. Any member whose membership
is transferred pursuant to Sec. 933.18(d) of this part automatically
shall become a member of the Bank to which it transfers.
Sec. 933.5 Appeals.
(a) Appeals by applicants--(1) Filing procedure. Within 90 calendar
days of the date of a Bank's decision to deny an application for
membership, the applicant may file a written appeal of the decision
with the Board.
(2) Documents. The applicant's appeal shall be addressed to the
Executive Secretary, Federal Housing Finance Board, 1777 F Street, NW.,
Washington, DC 20006, with a copy to the Bank, and shall include the
following documents:
(i) Bank's decision resolution. A copy of the Bank's decision
resolution; and
(ii) Basis for appeal. A statement of the basis for the appeal by
the applicant with sufficient facts, information, analysis and
explanation to rebut any applicable presumptions and otherwise support
the applicant's position.
(b) Record for appeal--(1) Copy of membership file. Upon receiving
a copy of an appeal, the Bank whose action has been appealed (appellee
Bank) shall provide the Board with a copy of the applicant's complete
membership file. Until the Board resolves the appeal, the appellee Bank
shall supplement the materials provided to the Board as any new
materials are received.
(2) Additional information. The Board may request additional
information or further supporting arguments from the appellant, the
appellee Bank or any other party that the Board deems appropriate.
(c) Deciding appeals. The Board shall consider the record for
appeal described in paragraph (b) of this section and shall resolve the
appeal based on the requirements of the Act and this part within 90
calendar days of the date the appeal is filed with the Board. In
deciding the appeal, the Board shall
[[Page 42545]]
apply the presumptions in this part, unless the appellant or appellee
Bank presents evidence to rebut a presumption as provided in
Sec. 933.17 of this part.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
8. Subpart C is added to part 933 to read as follows:
Subpart C--Eligibility Requirements
Sec. 933.6 General eligibility requirements.
(a) Requirements. Any building and loan association, savings and
loan association, cooperative bank, homestead association, insurance
company, savings bank, or insured depository institution, upon
application satisfying all of the requirements of the Act and this
part, shall be eligible to become a member of a Bank if:
(1) It is duly organized under the laws of any State or of the
United States;
(2) It is subject to inspection and regulation under the banking
laws, or under similar laws, of any State or of the United States;
(3) It makes long-term home mortgage loans;
(4) Its financial condition is such that advances may be safely
made to it;
(5) The character of its management is consistent with sound and
economical home financing; and
(6) Its home financing policy is consistent with sound and
economical home financing.
(b) Additional eligibility requirement for insured depository
institutions. In order to be eligible to become a member of a Bank, an
insured depository institution applicant also must have at least 10
percent of its total assets in residential mortgage loans.
(c) Additional eligibility requirement for applicants that are not
insured depository institutions. In order to be eligible to become a
member of a Bank, an applicant that is not an insured depository
institution also must have mortgage-related assets that reflect a
commitment to housing finance, as determined by the Bank in its
discretion.
(d) Ineligibility. Except as otherwise provided in this part, if an
applicant does not satisfy the requirements of this part, the applicant
is ineligible for membership.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.7 Duly organized requirement.
An applicant shall be deemed to be duly organized as required by
section 4(a)(1)(A) of the Act and Sec. 933.6(a)(1) of this part, if it
is chartered by a state or federal agency as a building and loan
association, savings and loan association, cooperative bank, homestead
association, insurance company, savings bank or insured depository
institution.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.8 Subject to inspection and regulation requirement.
An applicant shall be deemed to be subject to inspection and
regulation as required by section 4(a)(1)(B) of the Act and
Sec. 933.6(a)(2) of this part, if, in the case of a depository
institution applicant, it is subject to inspection and regulation by
the Federal Deposit Insurance Corporation, the Federal Reserve Board,
the National Credit Union Administration, the Office of the Comptroller
of the Currency, the Office of Thrift Supervision, or other appropriate
state regulator, and, in the case of an insurance company applicant, it
is subject to inspection and regulation by an appropriate state
regulator accredited by the National Association of Insurance
Commissioners.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.9 Makes long-term home mortgage loans requirement.
An applicant shall be deemed to make long-term home mortgage loans
as required by section 4(a)(1)(C) of the Act and Sec. 933.6(a)(3) of
this part, if, based on the applicant's most recent regulatory
financial report filed with its primary regulator, the applicant
originates or purchases long-term home mortgage loans.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.10 10 percent requirement for insured depository institution
applicants.
An insured depository institution applicant shall be deemed to be
in compliance with the 10 percent requirement of section 4(a)(2)(A) of
the Act and Sec. 933.6(b) of this part, if, based on the applicant's
most recent regulatory financial report filed with its primary
regulator, the applicant has at least 10 percent of its total assets in
residential mortgage loans, except that any assets used to secure
mortgage debt securities as described in Sec. 933.1(bb)(6) of this part
shall not be used to meet this requirement.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.11 Financial condition requirement for applicants other than
insurance companies.
(a) Review requirement. In determining whether an applicant other
than an insurance company has complied with the financial condition
requirement of section 4(a)(2)(B) of the Act and Sec. 933.6(a)(4) of
this part, the Bank shall obtain as a part of the membership
application and review each of the following documents:
(1) Regulatory financial reports. The regulatory financial reports
filed by the applicant with its primary regulator for the last six
calendar quarters and three year-ends preceding the date the Bank
receives the application;
(2) Financial statement. In order of preference: the most recent
independent audit of the applicant conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm which submits a report on the applicant; the most recent
independent audit of the applicant's parent holding company conducted
in accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated
holding company but not on the applicant separately; the most recent
Directors' examination of the applicant conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm; the most recent Directors' examination of the applicant performed
by other external auditors; the most recent review of the applicant's
financial statements by external auditors; the most recent Compilation
of the applicant's financial statements by external auditors; or the
most recent audit of other procedures of the applicant;
(3) Regulatory examination report. The applicant's most recent
available regulatory examination report prepared by its primary
regulator or appropriate state regulator, a summary prepared by the
Bank of the applicant's strengths and weaknesses as cited in the
regulatory examination report, and a summary prepared by the Bank or
applicant of actions taken by the applicant to respond to examination
weaknesses;
(4) Enforcement actions. A description prepared by the Bank or
applicant of any outstanding enforcement actions against the applicant,
responses by the applicant, reports as required by the enforcement
[[Page 42546]]
action, and verbal or written indications, if available, from the
primary regulator or appropriate state regulator, whichever is
applicable, of how the applicant is complying with the terms of the
enforcement action; and
(5) Additional information. Any other relevant document or
information concerning the applicant that comes to the Bank's attention
in reviewing the applicant's financial condition.
(b) Standards. An applicant other than an insurance company shall
be deemed to be in compliance with the financial condition requirement
of section 4(a)(2)(B) of the Act and Sec. 933.6(a)(4) of this part, if:
(1) Recent composite regulatory examination rating. The applicant
has received a composite regulatory examination rating from its primary
regulator or appropriate state regulator within two years preceding the
date the Bank receives the application;
(2) Capital requirement. The applicant meets all of its minimum
statutory and regulatory capital requirements as reported in its most
recent quarter-end regulatory financial report filed with its primary
regulator; and
(3) Minimum performance standard. (i) The applicant's most recent
composite regulatory examination rating from its primary regulatory or
appropriate state regulator within the past two years was ``1;'' or,
was ``2'' or ``3'' and, based on the applicant's most recent regulatory
financial report filed with its primary regulator, the applicant
satisfied all of the following performance trend criteria:
(A) Earnings. The applicant's adjusted net income was positive in
four of the six most recent calendar quarters;
(B) Nonperforming assets. The applicant's nonperforming loans,
leases and securities plus foreclosed and repossessed real estate, did
not exceed 10 percent of its performing loans, leases and securities
plus foreclosed and repossessed real estate, in the most recent
calendar quarter; and
(C) Allowance for loan and lease losses. The applicant's ratio of
its allowance for loan and lease losses to nonperforming loans, leases
and securities was 60 percent or greater during 4 of the 6 most recent
calendar quarters.
(ii) For applicants that are not required to report financial data
to their primary regulator on a quarterly basis, the information
required in paragraph (b)(3)(i) of this section may be reported on a
semiannual basis.
(c) Eligible collateral not considered. The availability of
sufficient eligible collateral to secure advances to the applicant is
presumed and shall not be considered in determining whether an
applicant is in the financial condition required by section 4(a)(2)(B)
of the Act and Sec. 933.6(a)(4) of this part.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.12 Character of management requirement.
An applicant shall be deemed to be in compliance with the character
of management requirement of section 4(a)(2)(C) of the Act and
Sec. 933.6(a)(5) of this part, if the applicant provides to the Bank an
unqualified written certification duly adopted by the applicant's board
of directors, or by an individual with authority to act on behalf of
the applicant's board of directors, that:
(a) Enforcement actions. Neither the applicant nor any of its
directors or senior officers is subject to, or operating under, any
enforcement action instituted by its primary regulator or appropriate
state regulator;
(b) Criminal, civil or administrative proceedings. Neither the
applicant nor any of its directors or senior officers has been the
subject of any criminal, civil or administrative proceedings reflecting
upon creditworthiness, business judgment, or moral turpitude since the
most recent regulatory examination report; and
(c) Criminal, civil or administrative monetary liabilities,
lawsuits or judgments. There are no known potential criminal, civil or
administrative monetary liabilities, material pending lawsuits, or
unsatisfied judgments against the applicant or any of its directors or
senior officers since the most recent regulatory examination report,
that are significant to the applicant's operations.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.13 Home financing policy requirement.
(a) Standard. An applicant shall be deemed to be in compliance with
the home financing policy requirement of section 4(a)(2)(C) of the Act
and Sec. 933.6(a)(6) of this part, if the applicant has received a
Community Reinvestment Act (CRA) rating of ``Satisfactory'' or better
on its most recent formal, or if unavailable, informal or preliminary,
CRA performance evaluation.
(b) Written justification required. An applicant that is not
subject to the CRA shall file as part of its application for membership
a written justification acceptable to the Bank of how and why the
applicant's home financing policy is consistent with the Bank System's
housing finance mission.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.14 De novo insured depository institution applicants.
(a)- Newly chartered applicants that have not commenced
operations--(1) Duly organized, subject to inspection and regulation,
financial condition and character of management requirements. An
insured depository institution applicant that is newly chartered and
has not yet commenced operations, is deemed to meet the requirements of
Secs. 933.7, 933.8, 933.11 and 933.12 of this part.
(2) Makes long-term home mortgage loans requirement. The applicant
shall be deemed to make long-term home mortgage loans as required by
Sec. 933.9 of this part, if it has filed as part of its application for
membership a written justification acceptable to the Bank of how its
home financing credit policy and lending practices will include
originating or purchasing long-term home mortgage loans.
(3) 10 percent requirement. The applicant shall have until one year
after commencing its initial business operations to meet the 10 percent
requirement of Sec. 933.10 of this part.
(4) Home financing policy requirement--(i) Conditional approval. An
applicant that has not received its first formal, or if unavailable,
informal or preliminary, Community Reinvestment Act (CRA) performance
evaluation, shall be conditionally deemed to be in compliance with the
home financing policy requirement of section 4(a)(2)(C) of the Act and
Sec. 933.6(a)(6) of this part, if the applicant has filed as part of
its application for membership a written justification acceptable to
the Bank of how and why its home financing credit policy and lending
practices will meet the credit needs of its community. An applicant
that receives such conditional membership approval is subject to the
stock purchase requirements of Sec. 933.20 of this part and the
advances provisions of 12 CFR part 935.
(ii) Approval. The applicant shall be deemed to be in compliance
with the home financing policy requirement of section 4(a)(2)(C) of the
Act and Sec. 933.6(a)(6) of this part upon receipt by the Bank of
evidence from the applicant that it received a CRA rating of
``Satisfactory'' or better on its first
[[Page 42547]]
formal, or if unavailable, informal or preliminary, CRA performance
evaluation.
(iii) Conditional approval deemed null and void. If the applicant's
first such CRA rating is ``Needs to Improve'' or ``Substantial Non-
Compliance,'' the applicant shall be deemed to be in noncompliance with
the home financing policy requirement of section 4(a)(2)(C) of the Act
and Sec. 933.6(a)(6) of this part, subject to rebuttal by the applicant
under Sec. 933.17(f) of this part, and its conditional membership
approval is deemed null and void.
(iv) Treatment of outstanding advances and Bank stock. If the
applicant's conditional membership approval is deemed null and void
pursuant to paragraph (a)(4)(iii) of this section, the liquidation of
any outstanding indebtedness owed by the applicant to the Bank and
redemption of stock of such Bank shall be carried out in accordance
with Sec. 933.29 of this part.
(b) Newly chartered applicants that have recently commenced
operations. An insured depository institution applicant that is newly
chartered and has commenced operations, is subject to the requirements
of Secs. 933.7 to 933.13 of this part except as provided in this
paragraph (b).
(1) 10 percent requirement. The applicant shall have until one year
after commencing its initial business operations to meet the 10 percent
requirement of Sec. 933.10 of this part.
(2) Financial condition requirement. (i) Regulatory financial
reports. For purposes of Sec. 933.11(a)(1) of this part, if the
applicant has not yet filed regulatory financial reports with its
primary regulator for the last six calendar quarters and three year-
ends preceding the date the Bank receives the application, the
applicant shall provide any regulatory financial reports that it has
filed with its primary regulator.
(ii) Recent composite regulatory examination rating. For purposes
of Sec. 933.11(b)(1) and (3) of this part, if the applicant has not yet
received a composite regulatory examination rating from its primary
regulator or appropriate state regulator, the applicant shall provide a
preliminary or informal, written composite regulatory examination
rating, if available, from its primary regulator or appropriate state
regulator.
(iii) Performance trend criteria. If the applicant has not yet
filed regulatory financial reports with its primary regulator for the
last six calendar quarters preceding the date the Bank receives its
application for membership, the applicant need not meet the performance
trend criteria in Sec. 933.11(b)(3)(i)(A) to (C) of this part, if:
(A) Reports for three quarters. The applicant has filed regulatory
financial reports with its primary regulator for at least three
calendar quarters of operation; and
(B) Business plan compliance. The Bank determines that the
applicant is in substantial compliance with the terms of its regulatory
business plan.
(3) Home financing policy requirement. For purposes of Sec. 933.13
of this part, an applicant that has not received its first formal, or
if unavailable, informal or preliminary, CRA performance evaluation, is
subject to the home financing policy requirements of paragraph (a)(4)
of this section.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.15 Recent merger or acquisition applicants.
An applicant that merged with or acquired another institution prior
to the date the Bank receives its application for membership is subject
to the requirements of Secs. 933.7 to 933.13 of this part except as
provided in this section.
(a) Financial condition requirement--(i) Regulatory financial
reports. For purposes of Sec. 933.11(a)(1) of this part, an applicant
that, as a result of a merger or acquisition preceding the date the
Bank receives its application for membership, has not yet filed
regulatory financial reports with its primary regulator for the last
six calendar quarters and three year-ends preceding such date, shall
provide any regulatory financial reports that the applicant has filed
with its primary regulator.
(ii) Performance trend criteria. For purposes of
Sec. 933.11(b)(3)(i)(A) to (C) of this part, an applicant that, as a
result of a merger or acquisition preceding the date the Bank receives
its application for membership, has not yet filed combined regulatory
financial reports with its primary regulator for the last six calendar
quarters preceding such date, shall provide pro forma combined
financial statements for those calendar quarters in which actual
combined regulatory financial reports are unavailable.
(b) Home financing policy requirement. For purposes of Sec. 933.13
of this part, an applicant that, as a result of a merger or acquisition
preceding the date the Bank receives its application for membership,
has not received its first formal, or if unavailable, informal or
preliminary, Community Reinvestment Act performance evaluation, shall
file as part of its application a written justification acceptable to
the Bank of how and why the applicant's home financing credit policy
and lending practices will meet the credit needs of its community.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.16 Financial condition requirement for insurance company
applicants.
An insurance company applicant shall be deemed to meet the
financial condition requirement of section 4(a)(2)(B) of the Act and
Sec. 933.6(a)(4) of this part, if, based on the information contained
in the applicant's most recent regulatory financial report filed with
its primary regulator, the applicant meets all of its minimum statutory
and regulatory capital requirements and the capital standards
established by the National Association of Insurance Commissioners.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.17 Rebuttable presumptions.
(a) Rebutting presumptive compliance. The presumption that an
applicant meeting the requirements of Secs. 933.7 to 933.16 of this
part is in compliance with section 4(a) of the Act and Sec. 933.6 (a)
and (b) of this part, may be rebutted, and the Bank may deny membership
to the applicant, if the Bank obtains substantial evidence to overcome
the presumption of compliance.
(b) Rebutting presumptive noncompliance. The presumption that an
applicant not meeting a particular requirement of Secs. 933.8, 933.11,
933.12, 933.13, or 933.16 of this part is in noncompliance with section
4(a) of the Act and Sec. 933.6(a) (2), (4), (5) or (6) of this part,
may be rebutted, and the applicant shall be deemed to meet such
requirement, if the applicable requirements in this section are
satisfied.
(c) Presumptive noncompliance by insurance company applicant with
``subject to inspection and regulation'' requirement of Sec. 933.8. If
an insurance company applicant is not subject to inspection and
regulation by an appropriate state regulator accredited by the National
Association of Insurance Commissioners (NAIC), as required by
Sec. 933.8 of this part, the applicant or the Bank shall prepare a
written justification that provides substantial evidence acceptable to
the Bank that the
[[Page 42548]]
applicant is subject to inspection and regulation as required by
Sec. 933.6(a)(2) of this part, notwithstanding the lack of NAIC
accreditation.
(d) Presumptive noncompliance with financial condition requirements
of Secs. 933.11 and 933.16--(1) Applicants other than insurance
companies. For applicants other than insurance companies, in the case
of an applicant's lack of a composite regulatory examination rating
within the two-year period required by Sec. 933.11(b)(1) of this part,
a variance from the rating required by Sec. 933.11(b)(3)(i) of this
part, or a variance from a performance trend criterion required by
Sec. 933.11(b)(3)(i) of this part, the applicant or the Bank shall
prepare a written justification pertaining to such requirement that
provides substantial evidence acceptable to the Bank that the applicant
is in the financial condition required by Sec. 933.6(a)(4) of this
part, notwithstanding the lack of rating or variance.
(2) Insurance company applicants. In the case of an insurance
company applicant's variance from a capital requirement or standard of
Sec. 933.16 of this part, the applicant or the Bank shall prepare a
written justification pertaining to such requirement or standard that
provides substantial evidence acceptable to the Bank that the applicant
is in the financial condition required by Sec. 933.6(a)(4) of this
part, notwithstanding the variance.
(e) Presumptive noncompliance with character of management
requirement of Sec. 933.12--(1) Enforcement actions. If an applicant or
any of its directors or senior officers is subject to, or operating
under, any enforcement action instituted by its primary regulator or
appropriate state regulator, the applicant shall provide or the Bank
shall obtain:
(i) Regulator confirmation. Written or verbal confirmation from the
applicant's primary regulator or appropriate state regulator, whichever
is applicable, that the applicant or its directors or senior officers
are in substantial compliance with all aspects of the enforcement
action; or
(ii) Written analysis. A written analysis acceptable to the Bank
indicating that the applicant or its directors or senior officers are
in substantial compliance with all aspects of the enforcement action.
The written analysis shall state each action the applicant or its
directors or senior officers are required to take by the enforcement
action, the actions actually taken by the applicant or its directors or
senior officers, and whether the applicant regards this as substantial
compliance with all aspects of the enforcement action.
(2) Criminal, civil or administrative proceedings. If an applicant
or any of its directors or senior officers has been the subject of any
criminal, civil or administrative proceedings reflecting upon
creditworthiness, business judgment, or moral turpitude since the most
recent regulatory examination report, the applicant shall provide or
the Bank shall obtain:
(i) Regulator confirmation. Written or verbal confirmation from the
applicant's primary regulator or appropriate state regulator that the
proceedings will not likely result in enforcement action; or
(ii) Written analysis. A written analysis acceptable to the Bank
indicating that the proceedings will not likely result in enforcement
action. The written analysis shall state the severity of the charges,
and any mitigating action taken by the applicant or its directors or
senior officers.
(3) Criminal, civil or administrative monetary liabilities,
lawsuits or judgments. If there are any known potential criminal, civil
or administrative monetary liabilities, material pending lawsuits, or
unsatisfied judgments against the applicant or any of its directors or
senior officers since the most recent regulatory examination report,
that are significant to the applicant's operations, the applicant shall
provide or the Bank shall obtain:
(i) Regulator confirmation. Written or verbal confirmation from the
applicant's primary regulator or appropriate state regulator that the
liabilities, lawsuits or judgments will not likely cause the applicant
to fall below its applicable capital requirements set forth in
Secs. 933.11(b)(2) and 933.16 of this part; or
(ii) Written analysis. A written analysis acceptable to the Bank
indicating that the liabilities, lawsuits or judgments will not likely
cause the applicant to fall below its applicable capital requirements
set forth in Secs. 933.11(b)(2) and 933.16 of this part. The written
analysis shall state the likelihood of the applicant or its directors
or senior officers prevailing, and the financial consequences if the
applicant or its directors or senior officers do not prevail.
(f) Presumptive noncompliance with home financing policy
requirements of Secs. 933.13, 933.14(a)(4), and 933.14(b)(3). If an
applicant received a ``Substantial Non-Compliance'' rating on its most
recent formal, or if unavailable, informal or preliminary, Community
Reinvestment Act (CRA) performance evaluation, or a ``Needs to
Improve'' CRA rating on its most recent formal, or if unavailable,
informal or preliminary, CRA performance evaluation and a CRA rating of
``Needs to Improve'' or better on any immediately preceding CRA
performance evaluation, the applicant shall provide or the Bank shall
obtain:
(1) Regulator confirmation. Written or verbal confirmation from the
applicant's primary regulator of the applicant's recent satisfactory
CRA performance, including any corrective action that substantially
improved upon the deficiencies cited in the most recent CRA performance
evaluation(s); or
(2) Written analysis. A written analysis acceptable to the Bank
demonstrating that the CRA rating is unrelated to home financing, and
providing substantial evidence of how and why the applicant's home
financing credit policy and lending practices meet the credit needs of
its community.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
Sec. 933.18 Determination of appropriate Bank district for
membership.
(a) Eligibility. (1) An institution eligible to become a member of
a Bank under the Act and this part may become a member only of the Bank
of the district in which the institution's principal place of business
is located, except as provided in paragraph (a)(2) of this section.
(2) An institution eligible to become a member of a Bank under the
Act and this part may become a member of the Bank of a district
adjoining the district in which the institution's principal place of
business is located, if demanded by convenience and then only with the
approval of the Board.
(b) Principal place of business. Except as otherwise designated in
accordance with this section, the principal place of business of an
institution is the state in which the institution maintains its home
office established as such in conformity with the laws under which the
institution is organized.
(c) Designation of principal place of business. (1) A member or an
applicant for membership may request in writing to the Bank in the
district where the institution maintains its home office that a state
other than the state in which it maintains its home office be
designated as its principal place of business. Within 90 calendar days
of receipt of such written request, the board of directors of the Bank
in the district where the institution maintains its home office shall
designate a state other than the state where the
[[Page 42549]]
institution maintains its home office as the institution's principal
place of business, provided all of the following criteria are
satisfied:
(i) At least 80 percent of the institution's accounting books,
records and ledgers are maintained, located or held in such designated
state;
(ii) A majority of meetings of the institution's board of directors
and constituent committees are conducted in such designated state; and
(iii) A majority of the institution's five highest paid officers
have their place of employment located in such designated state.
(2) Written notice of a designation made pursuant to paragraph
(c)(1) of this section shall be sent to the Bank in the district
containing the designated state, the Board and the institution.
(3) The notice of designation made pursuant to paragraph (c)(1) of
this section shall include the state designated as the principal place
of business and the resulting Bank to which membership will be
transferred.
(4) If the board of directors of the Bank in the district where the
institution maintains its home office fails to make the designation
requested by the member or applicant pursuant to paragraph (c)(1) of
this section, then the member or applicant may request in writing that
the Board make the designation.
(d) Transfer of membership. (1) No transfer of membership from one
Bank to another Bank shall take effect until the Banks involved reach
agreement on a method of orderly transfer.
(2) In the event that the Banks involved fail to agree on a method
of orderly transfer, the Board shall determine the conditions under
which the transfer shall take place.
(e) Effect of transfer. A transfer of membership pursuant to this
section shall be effective for all purposes including directorial
representation under section 7(c) of the Act, 12 U.S.C. 1427(c), and
Sec. 932.11 of this chapter, but shall not be subject to the provisions
on termination of membership set forth in section 6 of the Act, 12
U.S.C. 1426, or Secs. 933.26, 933.27 and 933.29 of this part, including
the restriction on reacquiring Bank membership set forth in Sec. 933.30
of this part.
(The information collection requirements contained in this section
have been approved by the Office of Management and Budget under
control number 3069-0004.)
9. In the list below, for each newly designated section indicated
in the left column, remove the reference indicated in the middle column
from where it appears and add the reference indicated in the right
column:
------------------------------------------------------------------------
Section Remove Add
------------------------------------------------------------------------
933.20(b)(1)................ Secs. 933.2(c) or Sec. 933.3, Sec.
933.3, Sec. 933.4(a).
933.2(d).
933.20(b)(2)................ Sec. 933.2(d)...... Sec. 933.4(a).
933.22(b)(1)................ Sec. 933.7(a), Sec. Sec. 933.20(a),
933.18(d). Sec. 933.31(d).
933.23...................... Sec. 933.7(a)...... Sec. 933.20(a).
933.24(a)(2)................ Sec. 933.7(a)...... Sec. 933.20(a).
933.24(b)(2)................ Sec. 933.16........ Sec. 933.29.
933.25(c)................... Sec. 933.2......... Subpart B.
933.25(d)(2) (ii) (A) and Sec. 933.7(a)...... Sec. 933.20(a).
(B), and (iii).
933.25(d)(3)................ Sec. 933.16........ Sec. 933.29.
933.26(c)................... Sec. 933.16........ Sec. 933.29.
933.27(e)................... Sec. 933.16........ Sec. 933.29.
933.28(b)................... Sec. 933.16........ Sec. 933.29.
933.29(a)(1)................ Secs. 933.13, Secs. 933.26,
933.14 or 933.15, 933.27 or 933.28,
Sec. 933.15, Secs. Sec. 933.28, Secs.
933.11(b), or 933.24(b) or
933.12(d)(3). 933.25(d)(3).
933.30 introductory text.... Sec. 933.13........ Sec. 933.26.
933.30(a)................... Sec. 933.5......... Sec. 933.18.
933.30(b)................... Sec. 933.2(d)...... Sec. 933.4(a).
933.31(d)................... Sec. 933.9(b)(1)... Sec. 933.22(b)(1).
------------------------------------------------------------------------
Dated: August 2, 1996.
By the Board of Directors of the Federal Housing Finance Board.
--------
Bruce A. Morrison,
Chairman.
[FR Doc. 96-20487 Filed 8-15-96; 8:45 am]
BILLING CODE 6725-01-U
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