issue-1996-08-02•Federal Register final rules — 1996-08-02
Federal Register final rules — 1996-08-02
issue-1996-08-02Federal Register final rules — 1996-08-02Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. X96-10802 Poison Prevention Packaging
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Page 40317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X96-10802]
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CONSUMER PRODUCT SAFETY COMMISSION
16 CFR Part 1700
Poison Prevention Packaging
CFR Correction
In Title 16 of the Code of Federal Regulations, parts 1000 to End,
revised as of January 1, 1996, on page 685, in Sec. 1700.14, paragraph
(a)(25) was inadvertently omitted. The omitted text should read as
follows:
Sec. 1700.14 Substances requiring special packaging.
(a) * * *
(25) Naproxen. Naproxen preparations for human use and containing
the equivalent of 250 mg or more of naproxen in a single retail package
shall be packaged in accordance with the provisions of Sec. 1700.15
(a), (b), and (c).
BILLING CODE 1505-01-M
Complete official Federal Register PDF
FR Doc. 96-19813 Plant Pesticide Inert Ingredient CP4 Enolpyruvylshikimate-3-D and the Genetic Material Necessary for Its Production in All Plants
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40338-40340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19813]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 180
[PP 5E4516/R2269; FRL-5391-2]
RIN 2070-AB78
Plant Pesticide Inert Ingredient CP4 Enolpyruvylshikimate-3-D and
the Genetic Material Necessary for Its Production in All Plants
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: This rule establishes an exemption from the requirement of a
tolerance for residues of the plant pesticide inert ingredient CP4
Enolpyruvylshikimate-3-D (CP4 EPSPS) and the genetic material necessary
for its production in all plants. A request for an exemption from the
requirement of a tolerance was submitted by Monsanto Company
(Monsanto). This
[[Page 40339]]
regulation eliminates the need to establish a maximum permissible level
for residues of these plant pesticide inert ingredients in all plants.
EFFECTIVE DATE: Effective on August 2, 1996.
ADDRESSES: Written objections and hearing requests, identified by the
document control number, [PP 5E4516/R2269], may be submitted to:
Hearing Clerk (1900), Environmental Protection Agency, Rm. M3708, 401 M
St., SW., Washington, DC 20460. A copy of any objections and hearing
requests filed with the Hearing Clerk should be identified by the
document control number and submitted to: Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, 401 M St., SW.,
Washington, DC 20460. In person, bring copy of objections and hearing
requests to Rm. 1132, CM #2, 1921 Jefferson Davis Hwy., Arlington, VA
22202. Fees accompanying objections shall be labeled ``Tolerance
Petition Fees'' and forwarded: EPA Headquarters Accounting Operations
Branch, OPP (Tolerance Fees), P.O. Box 360277M, Pittsburgh, PA 15251.
An electronic copy of objections and hearing requests filed with
the Hearing Clerk may be submitted to OPP by sending electronic mail
(e-mail) to: [email protected]
Copies of electronic objections and hearing requests must be
submitted as an ASCII file avoiding the use of special characters and
any form of encryption. Copies of electronic objections and hearing
requests will also be accepted on disks in WordPerfect 5.1 file format
or ASCII file format. All copies of electronic objections and hearing
requests must be identified by the docket number [PP 5E4516/R2269] . No
Confidential Business Information (CBI) should be submitted through e-
mail. Copies of electronic objections and hearing requests on this rule
may be filed online at many Federal Depository Libraries. Additional
information on electronic submissions can be found below in this
document.
FOR FURTHER INFORMATION CONTACT: By mail: Michael L. Mendelsohn,
Biopesticides and Pollution Prevention Division (7501W), Office of
Pesticide Programs, U. S. Environmental Protection Agency, 401 M St.,
SW., Washington, DC 20460. Office location and telephone number: 5th
Floor CS, 2800 Crystal Drive, Arlington, VA 22202, Telephone No. 703-
308-8715; e-mail: [email protected].
SUPPLEMENTARY INFORMATION: EPA issued a notice, published in the
Federal Register of October 25, 1995 (60 FR 54689)(FRL-4984-4), which
announced that Monsanto Company, 700 Chesterfield Parkway North, St.
Louis, MO 63198, had submitted a pesticide petition (PP) 5E4516 to EPA
requesting that the Administrator, pursuant to section 408(d) of the
Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a(d),
establish an exemption from the requirement of a tolerance for the
plant pesticide inert ingredient CP4 EPSPS and the genetic material
necessary for the production of this protein in or on all raw
agricultural commodities when used as a plant pesticide inert
ingredient. EPA has assigned these inert ingredients the name CP4 EPSPS
and the genetic material necessary for its production in plants.
``Genetic material necessary for its production'' means the genetic
material which comprise (1) genetic material encoding the CP4 EPSPS and
(2) its regulatory regions. ``Regulatory regions'' are the genetic
material that control the expression of the genetic material encoding
the CP4 EPSPS, such as promoters, terminators, and enhancers.
There were no adverse comments, or requests for referral to an
advisory committee received in response to the notice of filing of the
pesticide petition 5E4516.
Toxicology Assessment
Product Characterization
CP4 EPSPS protein produced in E. coli gave SDS-PAGE, western blot,
N-terminal amino acid sequence and enzyme activity similar to the
reference standard. The E. coli preparation lacked detectable
glycosylation based on the staining reaction compared to transferritin
and horseradish peroxidase positive controls.
CP4 EPSPS protein as expressed in either E. coli or corn line 523-
06-1 were compared by SDS-PAGE, western blot, N-terminal amino acid
sequence and specific enzyme activity against shikimate-3-phosphate and
shown to have essentially equivalent characteristics save the specific
activity which was lower in the plant preparation. The similarity of
the CP4 EPSPS expressed in corn line 523-06-1 and MON80100 were shown
to yield identical banding patterns indicating similar molecular weight
and immunoreactivity.
Western blot and enzymatic activity assays indicate that CP4 EPSPS
is readily degraded in less than 2 minutes by incubation in simulated
gastric fluid. In simulated intestinal fluid the enzyme activity and
immunoreactivity lasts longer being still detectable at 10 minutes and
undetectable by 270 minutes.
CP4 EPSPS is an enzyme involved in aromatic amino acid synthesis.
CP4 EPSPS is not closely related in amino acid homology to other
described EPSPS enzymes. CP4 EPSPS is no more than 51.1% similar and
26.0% identical to EPSPS in plants and 59.3% similar and 41.1%
identical to EPSPS in other bacteria. The unique character of CP4 EPSPS
is its ability to function in the presence of glyphosate which is a
competitive inhibitor with PEP for the active site of other EPSPS
enzymes.
Toxicology
In an acute oral toxicity test of bacterially-derived CP4 EPSPS
protein, no test substance related deaths occurred at a dose of 572 mg/
kg.
The Agency expects that proteins with no significant amino acid
homology to known mammalian protein toxins and which are readily
inactivated by heat or mild acidic conditions and are readily degraded
in an in vitro digestibility assay would have little likelihood for
displaying oral toxicity.
The data submitted and cited by Monsanto support the prediction
that the CP4 EPSPS protein would be non-toxic to humans. When proteins
are toxic, they are known to act via acute mechanisms and at very low
dose levels [Sjobald, Roy D., et al. ``Toxicological Considerations for
Protein Components of Biological Pesticide Products,'' Regulatory
Toxicology and Pharmacology 15, 3-9 (1992)]. Therefore, since no
significant acute effects were observed, even at relatively high dose
levels, the CP4 EPSPS is not considered acutely or chronically toxic.
Adequate information was submitted to show that the test material
derived from microbial cultures was biochemically similar to the CP4
EPSPS as produced by the plant-pesticide in corn. Production of
microbially produced protein was chosen in order to obtain sufficient
material for testing.
The genetic material necessary for the production of the CP4 EPSPS
are the nucleic acids (DNA) which comprise (1) genetic material
encoding the CP4 EPSPS and (2) its regulatory regions. ``Regulatory
regions'' are the genetic material that control the expression of the
genetic material encoding CP4 EPSPS, such as promoters, terminators,
and enhancers. DNA is common to all forms of plant and animal life and
the Agency knows of no instance where these nucleic acids have been
associated with toxic effects related to their
[[Page 40340]]
consumption. These ubiquitous nucleic acids as they appear in the
subject active ingredient have been adequately characterized by the
applicant. Therefore, no mammalian toxicity is anticipated from dietary
exposure to the genetic material necessary for the production of the
CP4 EPSPS in any plant.
Conclusion
Based on the information considered, the Agency concludes that
establishment of a tolerance is not necessary to protect the public
health. Therefore, the exemption from tolerance is established as set
forth below.
Any person adversely affected by this regulation may, within 30
days after publication of this document in the Federal Register, file
written objections to the regulation and may also request a hearing on
those objections. Objections and hearing requests must be filed with
the Hearing Clerk, at the address given above (40 CFR 178.20). A copy
of the objections and/or hearing requests filed with the Hearing Clerk
should be submitted to the OPP docket for this rulemaking. The
objections submitted must specify the provisions of the regulation
deemed objectionable and the grounds for the objections (40 CFR
178.25). Each objection must be accompanied by the fee prescribed by 40
CFR 180.33(i). If a hearing is requested, the objections must include a
statement of the factual issue(s) on which a hearing is requested, the
requestor's contentions on such issues, a summary of any evidence
relied upon by the objector as well as the other materials required by
40 CFR 178.27. A request for a hearing will be granted if the
Administrator determines that the material submitted shows the
following: There is genuine and substantial issue of fact; there is
reasonable possibility that available evidence identified by the
requestor would, if established, resolve one or more of such issues in
favor of the requestor, taking into account uncontested claims or facts
to the contrary; and resolution of the factual issue(s) in the manner
sought by the requestor would be adequate to justify the action
requested (40 CFR 178.32).
A record has been established for this rulemaking under the docket
number [PP 5E4516/R2269] (including any comments and data submitted
electronically). A public version of this record, including printed,
paper versions of electronic comments, which does not include any
information claimed as CBI, is available for inspection from 8 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The public
record is located in Room 1132 of the Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, Crystal Mall #2,
1921 Jefferson Davis Highway, Arlington, VA 22202.
Electronic comments can be sent directly to EPA at:
[email protected]
Electronic comments must be submitted as an ASCII file avoiding the
use of special characters and any form of encryption.
The official record for this rulemaking, as well as the public
version, as described above will be kept in paper form. Accordingly,
EPA will transfer any copies of objections and hearing requests
received electronically into printed, paper form as they are received
and will place the paper copies in the official rule-making record
which will also include all comments submitted directly in writing. The
official rulemaking record is the paper record maintained at the
address in ``ADDRESSES'' at the beginning of this document.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and, since this
action does not impose any information collection requirements as
defined by the Paperwork Reduction Act, 44 U.S.C . 3501 et seq., it is
not subject to review by the Office of Management and Budget. In
addition, this action does not impose any enforceable duty or contain
any unfunded mandate as described in the Unfunded Mandates Reform Act
of 1995 (Pub. L. 104-4), or require prior consultation with State
officials as specified by Executive Order 12875 (58 FR 58093, October
28, 1993), or special considerations as required by Executive Order
12898 (59 FR 7629, February 16, 1994).
Pursuant to the requirements of the Regulatory Flexibility Act
(Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601-612), the Administrator
has determined that regulations establishing new tolerances or raising
tolerance levels or establishing exemptions from tolerance requirements
do not have a significant economic impact on a substantial number of
small entities. A statement contianing the factual basis for this
certification was published in the Federal Register of May 4, 1981 (46
FR 24950).
Under 5 U.S.C. 801(a)(1)(A) of the Administrative Procedure Act
(APA) as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996 (Title II of Pub. L. 104-121, 110 Stat. 847), EPA submitted
a report containing this rule and other required information to the
U.S. Senate, the U.S. House of Representatives and the Comptroller
General of the General Accounting Office prior to publication of the
rule in today's Federal Register. This rule is not a ``major rule'' as
defined by 5 U.S.C. 804(2) of the APA as amended.
List of Subjects in 40 CFR Part 180
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.
Dated: July 30, 1996.
Daniel M. Barolo,
Director, Office of Pesticide Programs.
PART 180--[AMENDED]
Therefore, 40 CFR Part 180 is amended as follows:
1. The authority citation for part 180 continues to read as
follows:
Authority: 21 U.S.C. 346a and 371.
2. In subpart D, by adding new Sec. 180.1174, to read as follows:
Sec. 180.1174 CP4 Enolpyruvylshikimate-3-phosphate (CP4 EPSPS) and
the genetic material necessary for its production in all plants.
CP4 Enolpyruvylshikimate-3-phosphate (CP4 EPSPS) and the genetic
material necessary for its production in all plants are exempt from the
requirement of a tolerance when used as plant pesticide inert
ingredients in all raw agricultural commodities. ``Genetic material
necessary for its production'' means the genetic material which
comprise genetic material encoding the CP4 EPSPS and its regulatory
regions. ``Regulatory regions'' are the genetic material that control
the expression of the genetic material encoding the CP4 EPSPS, such as
promoters, terminators, and enhancers.
[FR Doc. 96-19813 Filed 8-1-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-19812 Phosphinothricin Acetyltransferase (PAT) and the Genetic Material Necessary for Its Production (Plasmid Vector pZ01502) in Corn; Exemption from Requirement of a Tolerance
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40336-40338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19812]
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ARMS CONTROL AND DISARMAMENT AGENCY
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[[Page 40337]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 180
[PP 5E4517/R2270; FRL-5391-4]
RIN 2070-AB78
Phosphinothricin Acetyltransferase (PAT) and the Genetic Material
Necessary for Its Production (Plasmid Vector pZ01502) in Corn;
Exemption from Requirement of a Tolerance
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule establishes an exemption from the requirement of a
tolerance for residues of the plant pesticide inert ingredient
phosphinothricin acetyltransferase and the genetic material necessary
for its production (plasmid vector pZ01502) in corn. A request for an
exemption from the requirement of a tolerance was submitted by Northrup
King Company (NK). This regulation eliminates the need to establish a
maximum permissible level for residues of this plant pesticide inert
ingredient in all raw agricultural commodities of field corn, sweet
corn, and popcorn.
EFFECTIVE DATE: Effective on August 2, 1996.
ADDRESSES: Written objections and hearing requests, identified by the
docket number [PP 5E4517/R2270] may be submitted to: Hearing Clerk
(1900), Environmental Protection Agency, Rm. M3708, 401 M St., SW.,
Washington, DC. 20460. A copy of any objections and hearing requests
filed with the Hearing Clerk should be identified by the docket number
and submitted to: Public Response and Program Resources Branch, Field
Operations Division (7506C), Office of Pesticide Programs,
Environmental Protection Agency, 401 M St. SW., Washington, Dc 20460.
In person, bring copy of objections and hearing requests to: Rm. 1132,
CM #2, 1921 Jefferson Davis Highway, Arlington, Va. 22202. Fees
accompanying objections shall be labeled ``tolerance Petition Fees''
and forwarded to: EPA Headquarters Accounting Operations Branch, OPP
(tolerance Fees) P.O. Box 360277M, Pittsburgh, PA 15251.
An electronic copy of objections and hearing requests filed with
the Hearing Clerk may be submiited to OPP by sending electronic mail
to: [email protected].
Copies of electronic objections and hearing requests must be
submitted as an ASCII file avoiding the use of special characters and
any form of encryption. Copies of electronic objections and hearing
requests be accepted on disks in WordPerfect 5.1 file format or ASCII
file format. All copies of electronic objections and hearing requests
must be identified by the docket number [PP 5E4517/R2270]. No
Confidential Business Information (CBI) should be submitted through e-
mail. Copies electronic objections and hearing requests on this rule
may be filed online at many Federal Depository Libraries. Additional
information on electronic submissions can be found below in this
document.
FOR FURTHER INFORMATION CONTACT: By mail: Michael L. Mendelsohn,
Biopesticides and Pollution Prevention Division (7501W), Office of
Pesticide Programs, U. S. Environmental Protection Agency, 401 M St.,
SW., Washington, DC 20460. Office location and telephone number: 5th
Floor CS, 2800 Crystal Drive, Arlington, VA 22202, (Telephone No. 703-
308-8715); e-mail: [email protected].
SUPPLEMENTARY INFORMATION: EPA issued a notice, published in the
Federal Register of October 25, 1995 (60 FR 54689)(FRL-4982-4), which
announced that Northrup King Company, 7500 Olson Memorial Hwy., Golden
valley, MN 55427, had submitted a pesticide petition (PP) 5E4517 to EPA
requesting that the Administrator, pursuant to section 408(d) of the
Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a(d),
establish an exemption from the requirement of a tolerance for the
plant pesticide inert ingredient phosphinothricin acetyltransferase
(PAT) as produced in corn by the PAT gene and its controlling sequences
as found on plasmid vector pZ01502. EPA has assigned the inert
ingredient of this product the name phosphinothricin acetyltransferase
and the genetic material necessary for its production (plasmid vector
pZ01502) in corn. ``Genetic material necessary for its production''
means the genetic material which comprise (1) genetic material encoding
the phosphinothricin acetyltransferase and (2) its regulatory regions.
``Regulatory regions'' are the genetic material that control the
expression of the genetic material encoding the phosphinothricin
acetyltransferase, such as promoters, terminators, and enhancers. There
were no adverse comments, or requests for referral to an advisory
committee received in response to the notice of filing of the pesticide
petition 5E4517.
Toxicology Assessment
Data regarding the in vitro digestibility of PAT as well as
information on the similarity of the PAT enzyme to other proteins were
cited and submitted. These data support the prediction that the PAT
protein would be non-toxic to humans and have a minimal potential for
allergenicity. Residue chemistry data were therefore not required.
The Agency expects that proteins with no significant amino acid
homology to known mammalian protein toxins and which are readily
inactivated by heat or mild acidic conditions and readily degraded in
an in vitro digestibility assay have little likelihood for displaying
oral toxicity. The in vitro digestibility studies indicate that the PAT
enzyme would be rapidly degraded following ingestion. Further, the PAT
enzyme was shown to have no significant amino acid homology to known
mammalian protein toxins.
Current scientific knowledge suggests that common food allergens
tend to be resistant to degradation by heat, acid, and proteases, are
glycosylated and are present at high concentrations in the food. The in
vitro digestibility studies indicate the PAT protein is rapidly
degraded in the gastric environment and is also readily denatured by
heat or low pH. Thus, the potential for PAT to be a food allergen is
minimal
The genetic material necessary for the production of PAT are the
nucleic acids (DNA) which comprise (1) genetic material encoding the
PAT and (2) its regulatory regions. ``Regulatory regions'' are the
genetic material that control the expression of the genetic material
encoding PAT, such as promoters, terminators, and enhancers. DNA is
common to all forms of plant and animal life and the Agency knows of no
instance where these nucleic acids have been associated with toxic
effects related to their consumption. These ubiquitous nucleic acids as
they appear in the subject active ingredient have been adequately
characterized. Therefore, no mammalian toxicity is anticipated from
dietary exposure to the genetic material necessary for the production
of PAT in corn.
Conclusions
Based on the information considered, the Agency concludes that
establishment of a tolerance is not necessary to protect the public
health. Therefore, the exemption from tolerance is established as set
forth below.
Any person adversely affected by this regulation may, within 30
days after publication of this document in the
[[Page 40338]]
Federal Register, file written objections to the regulation and may
also request a hearing on those objections. Objections and hearing
requests must be filed with the Hearing Clerk, at the address given
above (40 CFR 178.20). A copy of the objections and/or hearing requests
filed with the Hearing Clerk should be submitted to the OPP docket for
this rulemaking. The objections submitted must specify the provisions
of the regulation deemed objectionable and the grounds for the
objections (40 CFR 178.25). Each objection must be accompanied by the
fee prescribed by 40 CFR 180.33(i). If a hearing is requested, the
objections must include a statement of the factual issue(s) on which a
hearing is requested, the requestor's contentions on such issues, a
summary of any evidence relied upon by the objector as well as the
other materials required by 40 CFR 178.27. A request for a hearing will
be granted if the Administrator determines that the material submitted
shows the following: There is genuine and substantial issue of fact;
there is reasonable possibility that available evidence identified by
the requestor would, if established, resolve one or more of such issues
in favor of the requestor, taking into account uncontested claims or
facts to the contrary; and resolution of the factual issue(s) in the
manner sought by the requestor would be adequate to justify the action
requested (40 CFR 178.32).
EPA has established a record for this rulemaking under docket
number [PP 5E4517/R2271] (including any comments and data submitted
electronically). A public version of this record, including printed,
paper versions of electronic comments, which does not include any
information claimed as CBI, is available for inspection from 8 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The public
record is located in Room 1132 of the Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, Crystal Mall #2,
1921 Jefferson Davis Highway, Arlington, VA.
Electronic comments may be sent directly to EPA at:
[email protected].
Electronic comments must be submitted as an ASCII file avoiding the
use of special characters and any form of encryption.
The official record for this rulemaking, as well as the public
version, as described above will be kept in paper form. Accordingly,
EPA will transfer any copies of objections and hearing requests
received electronically into printed, paper form as they are received
and will place the paper copies in the official rulemaking record which
will also include all comments submitted directly in writing. The
official rulemaking record is the paper record maintained at the
address in ``ADDRESSES'' at the beginning of this document.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and, since this
action does not impose any information collection requirements as
defined by the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., it is
not subject to review by the Office of Management and Budget. In
addition, this action does not impose any enforceable duty or contain
any unfunded mandate as described in the Unfunded Mandates Reform Act
of 1995 (Pub. L. 104-4), or require prior consultation with State
officials as specified by Executive Order 12875 (58 FR 58093, October
28, 1993), or special considerations as required by Executive Order
12898 (59 FR 7629, February 16, 1994).
Pursuant to the requirements of the Regulatory Flexibility Act (5
U.S.C. 601-612), the Administrator has determined that regulations
establishing new tolerances or raising tolerance levels or establishing
exemptions from tolerance requirements do not have a significant
economic impact on a substantial number of small entities. A statement
containing the factual basis for this certification was published in
the Federal Register of May 4, 1981 (46 FR 24950).
Under 5 U.S.C. 801(a)(1)(A) of the Administrative Procedure Act
(APA) as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996 (Title II of Pub. L. 104-121, 110 Stat. 847), EPA submitted
a report containing this rule and other required information to the
U.S. Senate, the U.S. House of Representatives and the Comptroller
General of the General Accounting Office prior to publication of the
rule in today's Federal Register. This rule is not a ``major rule'' as
defined by 5 U.S.C. 804(2) of the APA as amended.
List of Subjects in 40 CFR Part 180
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.
Dated: July 30, 1996.
Daniel M. Barolo,
Director, Office of Pesticide Programs.
Therefore, 40 CFR part 180 is amended as follows:
PART 180--[AMENDED]
1. The authority citation for part 180 continues to read as
follows:
Authority: 21 U.S.C. 346a and 371.
2. In subpart D, by adding Sec. 180.1175, to read as
Sec. 180.1175 Phosphinothricin acetyltransferase (PAT) and the genetic
material necessary for its production (plasmid vector pZ01502) in corn;
exemption from the requirement of a tolerance.
Phosphinothricin acetyltransferase (PAT) and the genetic material
necessary for its production (plasmid vector pZ01502) in corn is exempt
from the requirement of a tolerance when used as a plant pesticide
inert ingredient in all raw agricultural commodities of field corn,
sweet corn, and popcorn. ``Genetic material necessary for its
production'' means the genetic material which comprise genetic material
encoding the phosphinothricin acetyltransferase and its regulatory
regions. ``Regulatory regions'' are the genetic material that control
the expression of the genetic material encoding the phosphinothricin
acetyltransferase, such as promoters, terminators, and enhancers.
[FR Doc. 96-19812 Filed 8-01-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-19811 Bacillus Thuringiensis CryIA(b) Delta-Endotoxin and the Genetic Material Necessary for Its Production in All Plants; Exemption from Requirement of a Tolerance
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40340-40343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19811]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 180
[PP 5F4473/R2270; FRL-5391-3]
RIN 2070-AB78
Bacillus Thuringiensis CryIA(b) Delta-Endotoxin and the Genetic
Material Necessary for Its Production in All Plants; Exemption from
Requirement of a Tolerance
AGENCY: Environmental Protection Agency (EPA).
[[Page 40341]]
ACTION: Final rule.
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SUMMARY: This rule establishes an exemption from the requirement of a
tolerance for residues of the plant pesticide active ingredients
Bacillus thuringiensis CryIA(b) delta-endotoxin and the genetic
material necessary for its production in all plants. A request for an
exemption from the requirement of a tolerance was submitted by Monsanto
Company. This regulation eliminates the need to establish a maximum
permissible level for residues of these plant pesticides in all plant
raw agricultural commodities.
EFFECTIVE DATE: Effective on August 2, 1996.
ADDRESSES: Written objections and hearing requests, identified by the
docket number [PP 5F4473/R2270] may be submitted to: Hearing Clerk
(1900), Environmental Protection Agency, Rm. M3708, 401 M St., SW.,
Washington, DC. 20460. A copy of any objections and hearing requests
filed with the Hearing Clerk should be identified by the docket number
and submitted to: Public Response and Program Resources Branch, Field
Operations Division (7506C), Office of Pesticide Programs,
Environmental Protection Agency, 401 M St. SW., Washington, DC 20460.
In person, bring copy of objections and hearing requests to: Rm. 1132,
CM #2, 1921 Jefferson Davis Highway, Arlington, VA. 22202. Fees
accompanying objections shall be labeled ``Tolerance Petition Fees''
and forwarded to: EPA Headquarters Accounting Operations Branch, OPP
(tolerance Fees) P.O. Box 360277M, Pittsburgh, PA 15251.
Comments and data may also be submitted electronically by sending
electronic mail (e-mail) to: [email protected]. Electronic
comments must be submitted as an ASCII file avoiding the use of special
characters and any form of encryption. Comments and data will also be
accepted on disks in WordPerfect 5.1 file format or ASCII file format.
All comments and data in electronic form must be identified by the
docket number [PP 5F4473/R2270]. No Confidential Business Information
(CBI) should be submitted through e-mail. Electronic comments on this
proposed rule may be filed online at many Federal Depository Libraries.
Additional information on electronic submissions can be found below in
this document.
FOR FURTHER INFORMATION CONTACT: By mail: Michael L. Mendelsohn,
Biopesticides and Pollution Prevention Division (7501W), Office of
Pesticide Programs, U. S. Environmental Protection Agency, 401 M St.,
SW., Washington, DC 20460. Office location and telephone number: 5th
Floor CS, 2800 Crystal Drive, Arlington, VA 22202, Telephone No. 703-
308-8715), e-mail: [email protected].
SUPPLEMENTARY INFORMATION: Monsanto has genetically modified corn
plants to produce a truncated version of the pesticidal CryIA(b) delta-
endotoxin protein (derived from the soil microbe Bacillus
thuringiensis). EPA issued a notice, published in the Federal Register
of October 25, 1995 (60 FR 54689)(FRL-4982-4), which announced that the
Monsanto Company, 700 Chesterfield Parkway North, St. Louis, MO 63198
had submitted a pesticide petition (PP) 5F4473 to EPA requesting that
the Administrator, pursuant to section 408(d) of the Federal Food,
Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a(d), establish an
exemption from the requirement of a tolerance for the Bacillus
thuringiensis subsp. kurstaki Insect Control Protein (CryIA(b)) as
produced in plant cells. EPA has described the active ingredients
covered by this description as Bacillus thuringiensis CryIA(b) delta-
endotoxin and the genetic material necessary for its production in all
plants. ``Genetic material necessary for its production'' means the
genetic material which comprise (1) genetic material encoding the
CryIA(b) delta-endotoxin and (2) its regulatory regions. ``Regulatory
regions'' are the genetic material that control the expression of the
genetic material encoding the CryIA(b) delta-endotoxin, such as
promoters, terminators, and enhancers.
There were no adverse comments, or requests for referral to an
advisory committee received in response to the notice of filing of the
pesticide petition 5F4473.
Product Analysis
Data was presented which showed that the truncated CryIA(b) toxin
can be extracted from corn leaf tissue and this purified material
displays characters and activities similar to that produced in E. coli
which has been transformed to produce CryIA(b). The similarities are
shown for the tryptic core proteins in molecular weight after SDS-PAGE,
immunorecognition in Western blots and ELISA, partial amino acid
sequence analysis, lack of glycosylation and bioactivity against either
European corn borer or corn earworm. This analysis justifies the use of
the microbially produced toxin as an analogue for the plant produced
protein in mammalian toxicity testing.
Toxicology Assessment
Toxicity
The toxicology data provided are sufficient to demonstrate that
there are no foreseeable human health hazards likely to arise from the
use of Bacillus thuringiensis CryIA(b) delta-endotoxin and the genetic
material necessary for its production in all plants.
The data submitted regarding potential health effects include
information on the characterization of the expressed CryIA(b) delta-
endotoxin in corn, the acute oral toxicity, and in vitro digestibility
of the delta-endotoxin. In an acute oral toxicity test of bacterially-
derived CryIA(b) protein, no test substance related deaths occurred at
a dose of 4,000 mg/kg.
The Agency expects that proteins with no significant amino acid
homology to known mammalian protein toxins and which are readily
inactivated by heat or mild acidic conditions and are readily degraded
in an in vitro digestibility assay would have little likelihood for
displaying oral toxicity, as demonstrated.
The data submitted by Monsanto support the prediction that the
CryIA(b) protein would be non-toxic to humans. When proteins are toxic,
they are known to act via acute mechanisms and at very low dose levels
[Sjobald, Roy D., et al. ``Toxicological Considerations for Protein
Components of Biological Pesticide Products,'' Regulatory Toxicology
and Pharmacology 15, 3-9 (1992)]. Therefore, since no significant acute
effects were observed, even at relatively high dose levels, the
CryIA(b) delta-endotoxin is not considered acutely toxic. Adequate
information was submitted to show that the test material derived from
microbial cultures were biochemically and insecticidally similar to the
delta-endotoxin as produced by the plant-pesticide in corn. Production
of microbially produced CryIA(b) delta-endotoxin was chosen in order to
obtain sufficient material for testing. In addition, the in vitro
digestibility studies indicate the delta-endotoxin would be rapidly
degraded following ingestion.
The genetic material necessary for the production of the Bacillus
thuringiensis CryIA(b) delta-endotoxin are the nucleic acids (DNA)
which comprise (1) genetic material encoding the CryIA(b) delta-
endotoxin and (2) its regulatory regions. ``Regulatory regions'' are
the genetic material that control the expression of the genetic
material encoding the CryIA(b) delta-endotoxin, such as promoters,
terminators, and enhancers. DNA is common to all forms of plant and
animal life and the Agency knows
[[Page 40342]]
of no instance where these nucleic acids have been associated with
toxic effects related to their consumption. These ubiquitous nucleic
acids as they appear in the subject active ingredient have been
adequately characterized by the applicant. Therefore, no mammalian
toxicity is anticipated from dietary exposure to the genetic material
necessary for the production of the Bacillus thuringiensis CryIA(b)
delta-endotoxin in any plants.
Allergenicity
Current scientific knowledge suggests that common food allergens
tend to be resistant to degradation by heat, acid, and proteases, are
glycosylated and present at high concentrations in the food. Monsanto
has submitted data demonstrating that the CryIA(b) delta-endotoxin is
rapidly degraded by gastric fluid in vitro and is non-glycosylated.
Studies submitted to EPA done in laboratory animals also have not
indicated any potential for allergic reactions to Bacillus
thuringiensis or its components, including the delta-endotoxin in the
crystal protein. Recent in vitro studies also confirm that the delta-
endotoxin would be readily digestible in vivo, unlike known food
allergens that tend to be resistant to degradation.
Despite decades of widespread use of Bacillus thuringiensis as a
pesticide (it has been registered since 1961), there have been no
confirmed reports of immediate or delayed allergic reactions to the
delta-endotoxin itself despite significant oral, dermal and inhalation
exposure to the microbial product. Several reports under FIFRA section
6(a)2 have been made for various Bacillus thuringiensis products
claiming allergic reactions. However, the Agency determined these
reactions were not due to Bacillus thuringiensis itself or any of the
cry toxins.
Residue Chemistry Data
Residue chemistry data were not required because of the lack of
mammalian toxicity of this active ingredient. In the acute mouse oral
toxicity study, the CryIA(b) delta-endotoxin was shown to have an
LD50 greater than 4,000 mg/kg. When proteins are toxic, they are
known to act via acute mechanisms and at very low dose levels [Sjobald,
Roy D., et al. ``Toxicological Considerations for Protein Components of
Biological Pesticide Products,'' Regulatory Toxicology and Pharmacology
15, 3-9 (1992)]. Therefore, since no significant acute effects were
observed, even at relatively high dose levels, the CryIA(b) delta-
endotoxin is not considered acutely. This is similar to the Agency
position regarding toxicity and the requirement of residue data for the
microbial Bacillus thuringiensis products from which this plant
pesticide was derived. [See 40 CFR 158.740(b)] For microbial products,
further toxicity testing to verify the observed effects and clarify the
source of the effects (Tiers II and III) and residue data are triggered
by significant acute effects in studies such as the mouse oral toxicity
study.
The genetic material necessary for the production of the Bacillus
thuringiensis CryIA(b) delta-endotoxin are the nucleic acids (DNA)
which comprise: (1) Genetic material encoding the CryIA(b) delta-
endotoxin and (2) its regulatory regions. ``Regulatory regions'' are
the genetic material that control the expression of the genetic
material encoding the CryIA(b) delta-endotoxin, such as promoters,
terminators, and enhancers. As stated above, no mammalian toxicity is
anticipated from dietary exposure to the genetic material necessary for
the production of the Bacillus thuringiensis CryIA(b) delta-endotoxin
in any plant. Therefore, no residue data are required in order to grant
an exemption from the requirements of a tolerance for the plant
pesticides, Bacillus thuringiensis CryIA(b) delta-endotoxin and the
genetic material necessary for its production in plants.
Conclusions
Based on the information considered, the Agency concludes that
establishment of a tolerance is not necessary to protect the public
health. Therefore, the exemption from tolerance is established as set
forth below.
Any person adversely affected by this regulation may, within 30
days after publication of this document in the Federal Register, file
written objections to the regulation and may also request a hearing on
those objections. Objections and hearing requests must be filed with
the Hearing Clerk, at the address given above (40 CFR 178.20). A copy
of the objections and/or hearing requests filed with the Hearing Clerk
should be submitted to the OPP docket for this rule making. The
objections submitted must specify the provisions of the regulation
deemed objectionable and the grounds for the objections (40 CFR
178.25). Each objection must be accompanied by the fee prescribed by 40
CFR 180.33(i). If a hearing is requested, the objections must include a
statement of the factual issue(s) on which a hearing is requested, the
requestor's contentions on such issues, a summary of any evidence
relied upon by the objector as well as the other materials required by
40 CFR 178.27. A request for a hearing will be granted if the
Administrator determines that the material submitted shows the
following: There is genuine and substantial issue of fact; there is
reasonable possibility that available evidence identified by the
requestor would, if established, resolve one or more of such issues in
favor of the requestor, taking into account uncontested claims or facts
to the contrary; and resolution of the factual issue(s) in the manner
sought by the requestor would be adequate to justify the action
requested (40 CFR 178.32).
EPA has established a record for this rulemaking under docket
number [PP 5F4473/R2270] (including any comments and data submitted
electronically). A public version of this record, including printed,
paper versions of electronic comments, which does not include any
information claimed as CBI, is available for inspection from 8 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The public
record is located in Room 1132 of the Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, Crystal Mall #2,
1921 Jefferson Davis Highway, Arlington, VA.
Electronic comments may be sent directly to EPA at:
[email protected].
Electronic comments must be submitted as an ASCII file avoiding the
use of special characters and any form of encryption.
The official record for this rulemaking, as well as the public
version, as described above will be kept in paper form. Accordingly,
EPA will transfer any copies of objections and hearing requests
received electronically into printed, paper form as they are received
and will place the paper copies in the official rulemaking record which
will also include all comments submitted directly in writing. The
official rulemaking record is the paper record maintained at the
address in ``ADDRESSES'' at the beginning of this document.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and, since this
action does not impose any information collection requirements as
defined by the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., it is
not subject to review by the Office of Management and Budget. In
addition, this action does not impose any enforceable duty or contain
any
[[Page 40343]]
unfunded mandate as described in the Unfunded Mandates Reform Act of
1995 (Pub. L. 104-4), or require prior consultation with State
officials as specified by Executive Order 12875 (58 FR 58093, October
28, 1993), or special considerations as required by Executive Order
12898 (59 FR 7629, February 16, 1994).
Pursuant to the requirements of the Regulatory Flexibility Act
(Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601-612), the Administrator
has determined that regulations establishing new tolerances or raising
tolerance levels or establishing exemptions from tolerance requirements
do not have a significant economic impact on a substantial number of
small entities. A certification statement to this effect was published
in the Federal Register of May 4, 1981 (46 FR 24950).
Under 5 U.S.C. 801(a)(1)(A) of the Administrative Procedure Act
(APA) as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996 (Title II of Pub. L. 104-121, 110 Stat. 847), EPA submitted
a report containing this rule and other required information to the
U.S. Senate, the U.S. House of Representatives and the Comptroller
General of the General Accounting Office prior to publication of the
rule in today's Federal Register. This rule is not a ``major rule'' as
defined by 5 U.S.C. 804(2) of the APA as amended.
List of Subjects in 40 CFR Part 180
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and record
keeping requirements.
Dated: July 30, 1996.
Daniel M. Barolo,
Director, Office of Pesticide Programs.
Therefore, 40 CFR Part 180 is amended as follows:
PART 180--[AMENDED]
1. The authority citation for part 180 continues to read as
follows:
Authority: 21 U.S.C. 346a and 371.
2. In subpart D, by adding new Sec. 180.1173, to read as follows:
Sec. 180.1173 Bacillus thuringiensis CryIA(b) delta-endotoxin and
the genetic material necessary for its production in all plants.
Bacillus thuringiensis CryIA(b) delta-endotoxin and the genetic
material necessary for its production in all plants are exempt from the
requirement of a tolerance when used as plant pesticides in all plant
raw agricultural commodities. ``Genetic material necessary for its
production'' means the genetic material which comprise genetic material
encoding the CryIA(b) delta-endotoxin and its regulatory regions.
``Regulatory regions'' are the genetic material that control the
expression of the genetic material encoding the CryIA(b) delta-
endotoxin, such as promoters, terminators, and enhancers.
[FR Doc. 96-19811 Filed 8-1-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-19720 Change in Disease Status of The Netherlands Because of Hog Cholera and Swine Vesicular Disease
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40292-40293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19720]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection Service
9 CFR Part 94
[Docket No. 96-014-2]
Change in Disease Status of The Netherlands Because of Hog
Cholera and Swine Vesicular Disease
AGENCY: Animal and Plant Health Inspection Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: We are declaring The Netherlands free of hog cholera and swine
vesicular disease. As part of this action, we are adding The
Netherlands to the list of countries that, although declared free of
swine vesicular disease, are subject to restrictions on pork and pork
products offered for importation into the United States. Declaring The
Netherlands free of hog cholera and swine vesicular disease is
appropriate because there have been no confirmed outbreaks of hog
cholera or swine vesicular disease in The Netherlands since 1992 and
1994, respectively. This rule relieves certain restrictions on the
importation of pork and pork products into the United States from The
Netherlands. However, because The Netherlands shares common land
borders with countries affected by swine vesicular disease, the
importation into the United States of pork and pork products from The
Netherlands will continue to be restricted.
EFFECTIVE DATE: August 19, 1996.
FOR FURTHER INFORMATION CONTACT: Dr. John Cougill, Staff Veterinarian,
Products Program, National Center for Import and Export, VS, APHIS,
4700 River Road Unit 40, Riverdale, MD 20737-1231, (301) 734-8688; or
e-mail: [email protected].
SUPPLEMENTARY INFORMATION:
Background
The regulations in 9 CFR part 94 (referred to below as the
regulations) govern the importation into the United States of specified
animals and animal products in order to prevent the introduction of
various animal diseases, including rinderpest, foot-and-mouth disease,
African swine fever, hog cholera, and swine vesicular disease (SVD).
These are dangerous and destructive communicable diseases of ruminants
and swine.
Sections 94.9(a) and 94.10(a) of the regulations provide that hog
cholera exists in all countries of the world except those listed in
Secs. 94.9(a) and 94.10(a), which are declared to be free of hog
cholera. Section 94.12(a) of the regulations provides that SVD is
considered to exist in all countries of the world except those listed
in Sec. 94.12(a), which are declared to be free of SVD.
On April 4, 1996, we published in the Federal Register (61 FR
14999-15000, Docket No. 96-014-1) a proposal to amend the regulations
by adding The Netherlands to the lists of countries in Secs. 94.9(a),
94.10(a), and 94.12(a) of the regulations that have been declared free
of hog cholera and SVD. We further proposed to add The Netherlands to
the list of countries in Sec. 94.13 that, although declared free of
swine vesicular disease, are subject to restrictions on pork and pork
products offered for importation into the United States. These actions
would relieve certain restrictions on the importation of pork and pork
products into the United States from The Netherlands.
We solicited comments concerning our proposal for 60 days ending
June 3, 1996. We did not receive any comments. The facts presented in
the proposed rule still provide the basis for this final rule.
Therefore, based on the rationale set forth in the proposed rule,
we are adopting the provisions of the proposal as a final rule without
change.
Effective Date
This is a substantive rule that relieves restrictions and, pursuant
to the provisions of 5 U.S.C. 553, may be made effective less than 30
days after publication in the Federal Register. This rule relieves
certain restrictions on the importation of pork and pork products into
the United States from The Netherlands. We have determined that
approximately 2 weeks are needed to ensure that the Animal and Plant
Health Inspection Service personnel at ports of entry receive official
notice of this change in the regulations. Therefore, the Administrator
of the Animal and Plant Health Inspection Service has determined that
this rule should be effective 15 days after publication in the Federal
Register.
Executive Order 12866 and Regulatory Flexibility Act
This rule has been reviewed under Executive Order 12866. For this
action, the Office of Management and Budget has waived its review
process required by Executive Order 12866.
This rule amends the regulations in part 94 by adding The
Netherlands to the lists of countries that have been declared free of
hog cholera and SVD. This action relieves certain restrictions on the
importation of pork and pork products into the United States from The
Netherlands. However, the importation of pork and pork products into
the United States from The Netherlands will continue to be restricted
because The Netherlands shares a common land border with Belgium, where
SVD is considered to exist. While there are inspection and
certification procedures for ensuring that commingling of pork and pork
products from the two countries does not take place, these procedures
are not without cost. Therefore, recognition of The Netherlands as free
of hog cholera and SVD is not expected to significantly affect pork
exports to the United States. The total value of pork exported to the
United States from The Netherlands in 1994 was $13.2 million (less than
two percent of the value of all U.S. pork imports). There were no live
swine exported from The Netherlands to the United States in 1994.
Under these circumstances, the Administrator of the Animal and
Plant Health Inspection Service has determined that this action will
not have a significant economic impact on a substantial number of small
entities.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule: (1) Preempts all State and local laws and
regulations that are inconsistent with this rule; (2) has no
retroactive effect; and (3) does not require administrative proceedings
before parties may file suit in court challenging this rule.
[[Page 40293]]
Paperwork Reduction Act
This rule contains no new information collection or recordkeeping
requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
et seq.).
List of Subjects in 9 CFR Part 94
Animal diseases, Imports, Livestock, Meat and meat products, Milk,
Poultry and poultry products, Reporting and recordkeeping requirements.
Accordingly, 9 CFR part 94 is amended as follows:
PART 94--RINDERPEST, FOOT-AND-MOUTH DISEASE, FOWL PEST (FOWL
PLAGUE), VELOGENIC VISCEROTROPIC NEWCASTLE DISEASE, AFRICAN SWINE
FEVER, HOG CHOLERA, AND BOVINE SPONGIFORM ENCEPHALOPATHY:
PROHIBITED AND RESTRICTED IMPORTATIONS
1. The authority citation for part 94 continues to read as follows:
Authority: 7 U.S.C. 147a, 150ee, 161, 162, and 450; 19 U.S.C.
1306; 21 U.S.C. 111, 114a, 134a, 134b, 134c, 134f, 136, and 136a; 31
U.S.C. 9701; 42 U.S.C. 4331 and 4332; 7 CFR 2.22, 2.80, and
371.2(d).
Sec. 94.9 [Amended]
2. In Sec. 94.9, paragraph (a) is amended by adding ``The
Netherlands,'' immediately after ``Iceland,''.
Sec. 94.10 [Amended]
3. In Sec. 94.10, paragraph (a) is amended by adding ``The
Netherlands,'' immediately after ``Iceland,''.
Sec. 94.12 [Amended]
4. In Sec. 94.12, paragraph (a) is amended by adding ``The
Netherlands,'' immediately after ``Mexico,''.
Sec. 94.13 [Amended]
5. In Sec. 94.13, the introductory text, the first sentence is
amended by adding ``The Netherlands,'' immediately after
``Luxembourg,''.
Done in Washington, DC, this 29th day of July 1996.
A. Strating,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 96-19720 Filed 8-1-96; 8:45 am]
BILLING CODE 3410-34-P
Complete official Federal Register PDF
FR Doc. 96-19704 Supplemental Standards of Ethical Conduct for Employees of the Environmental Protection Agency
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40500-40504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19704]
[[Page 40499]]
_______________________________________________________________________
Part IV
Environmental Protection Agency
_______________________________________________________________________
5 CFR Ch. LIV
40 CFR Part 3
Supplemental Standards of Ethical Conduct for Employees of the
Environmental Protection Agency; Final Rule
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules
and Regulations
=======================================================================
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[[Page 40500]]
ENVIRONMENTAL PROTECTION AGENCY
5 CFR Chapter LIV
40 CFR Part 3
[FRL-5544-5]
RIN 3209-AA15
Supplemental Standards of Ethical Conduct for Employees of the
Environmental Protection Agency
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Environmental Protection Agency, with the concurrence of
the Office of Government Ethics (OGE), is issuing regulations for the
employees of EPA that supplement the Standards of Ethical Conduct for
Employees of the Executive Branch (Standards) issued by OGE. This final
rule is a necessary supplement to the executive branch-wide Standards
because it addresses ethical issues unique to EPA. This rule prohibits
certain financial interests, including compensated outside employment
with certain persons, and requires prior approval to engage in certain
categories of outside employment. The Agency is also revoking
superseded portions of its existing standards of conduct regulation, 40
CFR part 3, and, in their stead, inserting cross-references to the
executive branch-wide Standards and this supplemental regulation, as
well as to executive branch financial disclosure regulations.
EFFECTIVE DATE: These regulations are effective August 2, 1996.
FOR FURTHER INFORMATION CONTACT: Hale W. Hawbecker, Office of General
Counsel (2379), Environmental Protection Agency, 401 M Street, SW.,
Washington, DC 20460, (202) 260-4550.
SUPPLEMENTARY INFORMATION:
I. Background
On August 7, 1992, the Office of Government Ethics published the
Standards of Ethical Conduct for Employees of the Executive Branch. See
57 FR 35006-35067, as corrected at 57 FR 48557 and 57 FR 52583 with
additional extensions for certain existing provisions at 59 FR 4779-
4780 and 60 FR 6390 - 6391. The executive branch-wide Standards are now
codified at 5 CFR part 2635. Effective February 3, 1993, they
established uniform ethical conduct standards applicable to all
executive branch personnel.
With the concurrence of OGE, 5 CFR 2635.105 authorizes executive
branch agencies to publish agency-specific supplemental regulations
necessary to implement their respective ethics programs. The
Environmental Protection Agency, with OGE's concurrence, has determined
that the following supplemental regulations, for codification in new 5
CFR chapter LIV, to consist of part 6401, are necessary to implement
EPA's ethics program successfully, in light of EPA's unique programs
and operations. The Environmental Protection Agency is also
simultaneously revoking the provisions of its existing standards of
conduct regulations which have already been superseded or which are
superseded upon issuance of this supplemental regulation and replacing
them with a new section that provides a cross reference to these
supplemental regulations and to 5 CFR parts 2634 and 2635.
II. Analysis of the Regulations
Section 6401.101 General
Section 6401.101 explains that the regulations apply to all EPA
employees and supplement the executive branch-wide Standards. Employees
of the Environmental Protection Agency are also subject to the
Standards of Ethical Conduct for Employees of the Executive Branch at 5
CFR part 2635 and the executive branch financial disclosure regulations
at 5 CFR part 2634.
Section 6401.102 Prohibited Financial Interests
5 CFR 2635.403(a) authorizes agencies, by supplemental regulation,
to prohibit or restrict the acquisition or holding of financial
interests or classes of financial interests by agency employees based
on the determination that the acquisition or holding of such interests
would cause reasonable persons to question the impartiality and
objectivity with which agency programs are administered. As under 5 CFR
2635.802(a), this authority may be used to prohibit compensated outside
employment relationships.
In developing its supplemental regulation, EPA has determined that
the financial holdings of employees in manufacturers and others
impacted directly by the work of three EPA program offices would cause
reasonable persons to question the impartiality and objectivity with
which those program offices carry out their responsibilities. Thus, EPA
restricts certain outside employment and financial interests of
employees of the Office of Mobile Sources, the Office of Pesticide
Programs, and the Office of Information Resources Management. These
restrictions will help (1) To ensure public confidence in the
impartiality and objectivity with which these offices administer their
programs; (2) eliminate any reason for affected entities to be
concerned that information they provide to the three offices might be
used for private gain; and (3) avoid the disqualification of employees
from official matters to an extent that might result in the offices'
inability to administer their programs.
Section 6401.102(a)(1) prohibits employees in the Office of Mobile
Sources from having compensated employment relationships with or
holding stocks or other financial interests in automobile manufacturers
and manufacturers of mobile source pollution control equipment. Most of
those employees participate in matters that directly affect the
production and profitability of automobile manufacturers and
manufacturers of mobile source pollution control equipment.
Section 6401.102(a)(2) prohibits employees in the Office of
Pesticide Programs from having outside employment with or holding
stocks or other financial interests in companies that manufacture or
provide wholesale distribution of pesticides. This office is primarily
involved in the regulation of the pesticide industry. The prohibition
is not limited to employment with or other financial interests in a
company that itself engages in the manufacturing or wholesale
distribution of pesticides, but extends to employment with or financial
interests in any parent company of which that manufacturer or
distributor is a subsidiary. The regulation specifies, by way of
clarification, that the prohibition does not extend to employment with
or financial interests in any company or other entity simply because it
engages in the retail distribution of pesticides.
Section 6401.102(a)(3) prohibits employees in the Office of
Information Resources Management who are involved in contracting for
data management or computer-related services from having employment
with or holding stocks or other financial interests in data management,
computer, or information processing firms.
As reflected in 5 CFR 2635.403, certain prohibitions on outside
employment and financial interests are statutory. Section
6401.102(a)(4) reflects the provision of the Surface Mining Control and
Reclamation Act (SMCRA) at 15 U.S.C. 2603(e) which prohibits a Federal
employee who performs any function or duty under SMCRA from holding any
``direct or indirect'' interest in underground or surface coal mining.
[[Page 40501]]
The Office of Government Ethics has no authority to interpret SMCRA and
has concurred in Sec. 6401.102(a)(4) only to the extent of
incorporating a reference to and information about SMCRA to provide
affected EPA employees notice of the statutory prohibition to which
they are subject. The Office of Government Ethics' concurrence in this
final rule does not indicate its concurrence or other participation in
any language of proposed Sec. 6401.102(a)(4) that may appear to involve
interpretation or implementation of SMCRA.
Section 6401.102(a)(5) reflects the statutory prohibition which,
under the Toxic Substances Control Act (TSCA) at 15 U.S.C. 2603(e),
applies to members of the Interagency Testing Committee. Committee
members are prohibited from holding stocks, bonds, or other substantial
pecuniary interests in any person, including any corporation, engaged
in the manufacture, processing, or distribution in commerce of any
substance or mixture subject to any rule or order under the Act. The
regulation makes it clear that compensated outside employment of any
such person is encompassed by the prohibition on substantial pecuniary
interests. For one year after their service on the Committee has
ceased, members are subject to an additional statutory prohibition on
accepting employment or compensation from any person subject to any
requirement of the TSCA. Because these restrictions are imposed by a
statute for which OGE has no interpretative or other authority, OGE's
concurrence in proposed Sec. 6401.102(a)(5) does not extend to any
language which might be viewed as an interpretation of TSCA. It
reflects only OGE's concurrence in EPA's determination that these
employment and financial interest prohibitions should be reflected in
EPA's supplemental regulations to provide notice to affected employees.
Section 6401.102(b) permits the EPA Designated Agency Ethics
Official or the employee's Deputy Ethics Official, upon making the
appropriate determination, to waive in writing the prohibitions in
Sec. 6401.102 (a)(1)-(a)(3) precluding certain outside employment for
employees in the Office of Mobile Sources, employees in the Office of
Pesticide Programs, and employees in the Office of Information
Resources Management.
Section 6401.103 Outside Employment
The requirement for prior written approval is made pursuant to 5
CFR 2635.803 of the Executive Branch-wide Standards. EPA has determined
that in order to effectively avoid conflicts arising from outside
employment and activities, employees considering certain types of
employment or activities outside of the EPA must obtain written
approval before engaging in such employment or activities. Given the
breadth of the Agency's responsibilities, requiring prior written
approval of certain outside employment and activities provides a
necessary control to ensure that employees do not engage in outside
employment or activities in violation of applicable laws and
regulations.
Section 6401.103(a) listing the types of outside employment for
which the written approval of the employee's Deputy Ethics Official is
required is similar to those found in existing 40 CFR 3.508 that EPA is
hereby revoking. Employment requiring advance approval from the
employee's Deputy Ethics Official is listed in Sec. 6401.103(a) and
includes (1) consulting services; (2) the practice of a profession as
defined in 5 CFR 2636.305(b)(1); (3) holding State or local public
office; (4) employment regarding subject matter that deals in
significant part with EPA policies, programs, or operations to which
the employee is assigned or has been assigned during the previous one-
year period; and (5) the provision of services to an EPA contractor, to
a holder of an EPA assistant agreement, or to a firm regulated by the
EPA office in which the employee serves. Prior approval is required for
these activities because, by their nature, such activities tend to
raise questions under the Standards of Ethical Conduct. Section
6401.103(b) prescribes the content of the request for approval. Section
6401.103(c) makes clear that section 6401 is not itself authority to
deny permission to engage in any outside employment activity; that
approval for outside employment will be granted unless the prospective
outside employment is likely to involve conduct prohibited by statute
or Federal regulations, including 5 CFR part 2635 and this supplemental
regulation. To assure the integrity of the approval process,
Sec. 6401.103(d) requires that requests for approval be updated if
there is a change in the outside duties, or services performed, or the
nature of the employee's business. New approval also must be requested
when the employee transfers to an organization within the Agency for
which a different Deputy Ethics Official has responsibility and unless
the employee's Deputy Ethics Official specifies a longer period after
five years. Section 6401.103(e) broadly defines ``employment'' to cover
any form of non-Federal employment or business relationship involving
the provision of personal services, whether or not for compensation,
including personal services and writing when done under an arrangement
with another person for production or publication of the written
product. It does not, however, include participation in the activities
of a nonprofit charitable, religious, professional, social, fraternal,
educational, recreational, public service, or civic organization unless
such activities are for compensation other than reimbursement for
expenses.
III. Revocation of Superseded Portions of the EPA's Responsibilities
and Conduct Regulations
This final rule revokes those portions of EPA's employee
responsibility and conduct regulations at 40 CFR 3.100 through 3.605
now superseded. Some of those regulations were superseded when the
confidential financial disclosure provisions of the Executive Branch-
wide financial disclosure regulations at 5 CFR part 2634 took effect on
October 5, 1992 and many others were superseded when the Standards of
Ethical Conduct for Employees of the Executive Branch at 5 CFR part
2635 became effective on February 3, 1993. Those regulations at 40 CFR
2.304 and 3.305 which reflect statutory prohibitions on financial
interests are also superseded by this supplemental regulation, as is
EPA's requirement at 40 CFR 3.508 for prior approval of outside
employment which, as extended by 59 FR 4779-4780 and 60 FR 6390-6391,
remains in effect until no later than January 3, 1996.
Of its responsibilities and conduct regulations in 40 CFR 3.100-
3.508, the rule at new Sec. 3.101 retains only EPA's regulatory
conflict of interest waivers at existing 40 CFR 3.301(b), which remain
in effect under 5 CFR 2635.402(d)(1) until OGE has issued superseding
regulatory waivers under 18 U.S.C. 208(b)(2). In that regard, see OGE's
recent issuances at 60 FR 44706-44709 (August 29, 1995) and 60 FR
47208-47233 (September 11, 1995). This EPA residual standards rule also
replaces EPA's revoked regulations with a cross-reference at new
Sec. 3.100 to 5 CFR parts 2634, 2635, and 6401.
IV. Matters of Regulatory Procedure
Executive Order 12866
In issuing this rule, EPA has adhered to the regulatory philosophy
and the applicable principles of regulation set forth in Section 1 of
Executive Order 12866, Regulatory Planning and Review. This regulation
has not been reviewed by the Office of Management and
[[Page 40502]]
Budget under that Executive Order, as it deals with agency
organization, management, and personnel matters and is not, in any
event, deemed ``significant'' thereunder.
Paperwork Reduction Act
EPA has determined that the Paperwork Reduction Act (44 U.S.C.
chapter 35) does not apply because the proposed regulation does not
contain any information collection requirements that require the
approval of the Office of Management and Budget.
Administrative Procedure Act
EPA has found that good cause exists under 5 U.S.C. 553(b)(3) (A),
(B) and (d)(3) for waiving, as unnecessary and contrary to the public
interest, the general notice of proposed rulemaking and the 30-day
delay in effectiveness as to these rules and revocations. This
rulemaking is related solely to EPA's organization, procedure, and
practice. Further, the supplemental regulations are essentially a
restatement of rules previously contained in EPA's employee
responsibilities and conduct regulations, and EPA believes that it is
important to a smooth transition from EPA's regulations to the
executive branch standards that these rules become effective
immediately.
Regulatory Flexibility Act
EPA hereby certifies that this rule will not have significant
economic impact on a substantial number of small entities. This rule
affects only Federal employees and their immediate families.
List of Subjects
5 CFR Part 6401
Conflict of interests, Government employees.
40 CFR Part 3
Conflict of interests, Government employees.
Dated: June 13, 1996.
Carol M. Browner,
Administrator, Environmental Protection Agency.
Approved: July 19, 1996.
Stephen D. Potts,
Director, Office of Government Ethics.Q
For the reasons set forth in the preamble, the Environmental
Protection Agency, with the concurrence of the Office of Government
Ethics, amends title 5 of the Code of Federal Regulations and Title 40,
chapter I, part 3 of the Code of Federal Regulations as follows:
TITLE 5--[AMENDED]
1. A new chapter LIV, consisting of part 6401, is added to title 5
of the Code of Federal Regulations to read as follows:
CHAPTER LIV--ENVIRONMENTAL PROTECTION AGENCY
PART 6401--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE ENVIRONMENTAL PROTECTION AGENCY
Sec.
6401.101 General.
6401.102 Prohibited financial interests.
6401.103 Prior approval for outside employment.
Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government
Act of 1978); 42 U.S.C. 203(c)(1); E.O. 12674, 54 FR 15159, 3 CFR,
1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR,
1990 Comp., p. 306; 5 CFR 2635.105, 2635.403(a), 2635.802(a),
2635.803.
Sec. 6401.101 General.
In accordance with 5 CFR 2635.105, the regulations in this part
apply to employees of the Environmental Protection Agency and
supplement the Standards of Ethical Conduct for Employees of the
Executive Branch contained in 5 CFR part 2635.
Sec. 6401.102 Prohibited financial interests.
(a) The following employees are prohibited from holding the types
of financial interests described in this section:
(1) Employees in the Office of Mobile Sources are prohibited from
having outside employment with or holding stock or any other financial
interest in manufacturers of automobiles and mobile source pollution
control equipment.
(2) Employees in the Office of Pesticide Programs are prohibited
from having outside employment with or holding stock or any other
financial interest in companies that manufacture or provide wholesale
distribution of pesticide products registered by the EPA. These
restrictions apply to companies with subsidiaries in these areas but do
not include retail distributors to the general public.
(3) Employees in the Office of Information Resources Management
involved with data management contracting or computer contracting are
prohibited from having outside employment with or holding stock or any
other financial interest in data management, computer, or information
processing firms.
(4) Employees who perform functions or duties under the Surface
Mining Control and Reclamation Act (such as reviewing Environmental
Impact Statements of the Office of Surface Mining in the Department of
Interior) are prohibited by 30 U.S.C. 1211(f) from holding direct or
indirect interests in underground or surface coal mining operations.
(i) Implementing regulations of the Office of Surface Mining at 30
CFR 706.3 define the terms ``direct financial interest'' and ``indirect
financial interest'' as follows:
(A) Direct financial interest means ownership or part ownership by
an employee of land, stocks, bonds, debentures, warrants, a
partnership, shares, or other holding and also means any other
arrangement where the employee may benefit from his or her holding in
or salary from coal mining operations. Direct financial interests
include employment, pensions, creditor, real property and other
financial relationships.
(B) Indirect financial interest means the same financial
relationships as for direct ownership but where the employee reaps the
benefits of such interests, including interests held by the employee's
spouse, minor child or other relatives, including in-laws, residing in
the employee's home. The employee will not be deemed to have an
indirect financial interest if there is no relationship between the
employee's functions or duties and the coal mining operation in which
the spouse, minor child or other resident relative holds a financial
interest.
(ii) Violation of the restrictions in this section is punishable by
a fine of up to $2,500 or imprisonment for not more that one year, or
both.
(iii) Employees who perform functions or duties under the Surface
Mining Control and Reclamation Act are not prohibited thereunder from
holding interests in excepted investment funds as defined at 5 CFR
2634.310(c)(2) provided that such funds are widely diversified, that
is, hold no more than 5% of the value of their portfolios in the
securities of any one issuer (other than the United States Government)
and no more than 20% in any particular economic or geographic sector.
(5) Members of the Interagency Testing Committee established under
section 4(e) of the Toxic Substances Control Act (15 U.S.C. 2603(e))
are prohibited thereunder from holding any stocks or bonds, or having
any substantial pecuniary interest, in any person engaged in the
manufacture, processing, or distribution in commerce of any substance
or mixture subject to any requirement of the Act or any rule or order
issued under the Act and, for a period of twelve months after their
committee service has ceased, are prohibited thereunder from accepting
[[Page 40503]]
employment or compensation from any person subject to any requirement
of the Act or to any rule or order issued under the Act.
(i) The statutory prohibitions in this section are enforceable by
an action for a court order to restrain violations.
(ii) Members of the Interagency Testing Committee are not
prohibited thereunder from holding interests in excepted investment
funds as defined at 5 CFR 2634.310(c)(2) provided that such fund are
widely diversified, that is, hold no more than 5% of the value of their
portfolios in the securities of any one issuer (other than the United
States Government) and no more than 20% in any particular economic
sector.
(b) The Designated Agency Ethics Official or the cognizant Deputy
Ethics Official may grant a written waiver from the prohibitions in
paragraph (a)(1) through (a)(3) of this section based on a
determination that the waiver is not inconsistent with part 2635 of
this title or otherwise prohibited by law and that, under the
particular circumstances, application of the prohibition is not
necessary to avoid the appearance of misuse of position or loss of
impartiality, or otherwise to ensure confidence in the impartiality and
objectivity with which agency programs are administered. A waiver under
this paragraph may impose appropriate conditions, such as requiring
execution of a written disqualification.
Sec. 6401.103 Prior approval for outside employment.
(a) Requirement for approval. An employee shall obtain approval
from his or her Deputy Ethics Official before engaging in outside
employment, with or without compensation, that involves:
(1) Consulting services;
(2) The practice of a profession as defined in 5 CFR
2636.305(b)(1);
(3) Holding State or local public office;
(4) Subject matter that deals in significant part with the
policies, programs or operations of EPA or any matter to which the
employee presently is assigned or to which the employee has been
assigned during the previous one-year period; or
(5) The provision of services to or for:
(i) An EPA contractor or subcontractor;
(ii) The holder of an EPA assistance agreement or subagreement; or
(iii) A firm regulated by the EPA office or Region in which the
employee serves.
(b) Form and content of request. The employee's request for
approval of outside employment shall be submitted in writing to his or
her Deputy Ethics Official. The request shall be sent through the
employee's immediate supervisor (for the supervisor's information) and
shall include:
(1) Employee's name, title and grade;
(2) Nature of the outside activity, including a full description of
the services to be performed and the amount of compensation expected;
(3) The name and business of the person or organization for which
the work will be done (in cases of self-employment, indicate the type
of services to be rendered and estimate the number of clients or
customers anticipated during the next 6 months);
(4) The estimated time to be devoted to the activity;
(5) Whether the service will be performed entirely outside of
normal duty hours (if not, estimate the number of hours of absence from
work required);
(6) The employee's statement that no official duty time or
Government property, resources, or facilities not available to the
general public will be used in connection with the outside employment;
(7) The basis for compensation (e.g., fee, per diem, per annum,
etc.);
(8) The employee's statement that he or she has read, is familiar
with, and will abide by the restrictions described in 5 CFR part 2635
and Sec. 6401.102; and
(9) An identification of any EPA assistance agreements or contracts
held by a person to or for whom services would be provided.
(c) Standard for approval. Approval shall be granted only upon a
determination that the outside employment is not expected to involve
conduct prohibited by statute or Federal regulation, including 5 CFR
part 2635 and Sec. 6401.102. The decision must be in writing.
(d) Keeping the record up-to-date. If there is a change in the
nature or scope of the duties or services performed or the nature of
the employee's business, the employee must submit a revised request for
approval. Where an employee transfers to an organization for which a
different Deputy Ethics Official has responsibility, the employee must
obtain approval from the new Deputy Ethics Official. In addition, each
approved request is valid only for five years unless the employee's
Deputy Ethics Official specifies a longer time period.
(e) Definition of employment. For purposes of this section,
``employment'' means any form of non-Federal employment, business
relationship, or activity involving the provision of personal services
by the employee, whether or not for compensation. It includes but is
not limited to personal services as an officer, director, employee,
agent, attorney, consultant, contractor, general partner, trustee,
teacher, or speaker. It includes writing when done under an arrangement
with another person for production or publication of the written
product. It does not, however, include participation in the activities
of nonprofit charitable, religious, professional, social, fraternal,
educational, recreational, public service, or civic organizations,
unless such activities are for compensation other than reimbursement
for expenses.
TITLE 40--PROTECTION OF ENVIRONMENT
CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY
Part 3 of 40 CFR chapter I is revised to read as follows:
PART 3--EMPLOYEE RESPONSIBILITIES AND CONDUCT
Sec.
3.100 Cross-reference to employee ethical conduct standards and
financial disclosure regulations.
3.101 Waiver of certain financial interests.
Authority: 5 U.S.C. 7301 and 18 U.S.C. 208(b)(2).
Sec. 3.100 Cross-reference to employee ethical conduct standards and
financial disclosure regulations.
Employees of the Environmental Protection Agency (EPA) should refer
to the Standards of Ethical Conduct for Employees of the Executive
Branch at 5 CFR part 2635, the EPA regulations at 5 CFR part 6401 that
supplement those standards, and the Executive Branch financial
disclosure regulations at 5 CFR part 2634.
Sec. 3.101 Waiver of certain financial interests.
(a) The prohibition of 18 U.S.C. 208(a) may be waived by general
regulation. Financial interests derived from the following have been
determined to be too remote or too inconsequential to affect the
integrity of employee's services, and employees may participate in
matters affecting them:
(1) Mutual funds (including tax-exempt bond funds), except those
which concentrate their investments in particular industries;
(2) Life insurance, variable annuity, or guaranteed investment
contracts issued by insurance companies;
(3) Deposits in a bank, savings and loan association, credit union,
or similar financial institution;
(4) Real property used solely as the personal residence of an
employee;
(5) Bonds or other securities issued by the U.S. Government or its
agencies.
[[Page 40504]]
(b) This provision will be superseded when the Office of Government
Ethics publishes its Executive Branch-wide exemptions and EPA will
publish a document in the Federal Register revoking it at that time.
[FR Doc. 96-19704 Filed 8-1-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-19686 Groundfish of the Gulf of Alaska; ``Other Rockfish'' Species Group in the Eastern Regulatory Area
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40352-40353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19686]
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[[Page 40353]]
DEPARTMENT OF COMMERCE
50 CFR Part 679
[Docket No. 960129018-6018-01; I.D. 072696B]
Groundfish of the Gulf of Alaska; ``Other Rockfish'' Species
Group in the Eastern Regulatory Area
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Modification of a closure.
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SUMMARY: NMFS is opening the directed fishery for the ``other
rockfish'' species group in the Eastern Regulatory Area of the Gulf of
Alaska (GOA). This action is necessary to fully utilize the total
allowable catch (TAC) of the ``other rockfish'' in that area.
EFFECTIVE DATE: 1200 hours, Alaska local time (A.l.t.), July 31, 1996,
until 2400 hours, A.l.t., December 31, 1996.
FOR FURTHER INFORMATION CONTACT: Andrew Smoker, 907-586-7228.
SUPPLEMENTARY INFORMATION: The groundfish fishery in the GOA exclusive
economic zone is managed by NMFS according to the Fishery Management
Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North
Pacific Fishery Management Council under authority of the Magnuson
Fishery Conservation and Management Act. Fishing by U.S. vessels is
governed by regulations implementing the FMP at Subpart H of 50 CFR
part 600 and 50 CFR part 679.
The annual TAC for the ``other rockfish'' species group in the
Eastern Regulatory Area of the GOA, was established by the Final 1996
Harvest Specifications of Groundfish (61 FR 4304, February 5, 1996) as
750 metric tons (mt) (see Sec. 679.20(c)(3)(ii)). The Final 1996
Harvest Specifications of Groundfish also closed the directed fishery
for the ``other rockfish'' in the Eastern Regulatory Area of the GOA
(see Sec. 679.20(d)(1)(iii)) in anticipation that the TAC would be
needed as incidental catch to support other anticipated groundfish
fisheries during 1996. NMFS has determined that as of July 13, 1996,
700 mt remain in the directed fishing allowance.
The Director, Alaska Region, NMFS, has determined that the 1996
directed fishing allowance of the ``other rockfish'' species group in
the Eastern Regulatory Area of the GOA has not been reached. Therefore,
NMFS is terminating the previous closure and is opening directed
fishing for the ``other rockfish'' species group in the Eastern
Regulatory Area of the GOA.
All other closures remain in full force and effect.
Classification
This action is taken under Sec. 679.20 and is exempt from review
under E.O. 12866.
Authority: 16 U.S.C. 1801 et seq.
Dated: July 29, 1996.
Richard W. Surdi,
Acting Director, Office of Fisheries Conservation and Management,
National Marine Fisheries Serivce.
[FR Doc. 96-19686 Filed 7-30-96; 12:40 pm]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-19685 Groundfish of the Bering Sea and Aleutian Islands Area; Atka Mackerel in the Central and Eastern Aleutian District and the Bering Sea Subarea
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Page 40353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19685]
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DEPARTMENT OF COMMERCE
50 CFR Part 679
[Docket No. 960129019-6019-01; I.D. 072696A]
Groundfish of the Bering Sea and Aleutian Islands Area; Atka
Mackerel in the Central and Eastern Aleutian District and the Bering
Sea Subarea
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Modification of a closure.
-----------------------------------------------------------------------
SUMMARY: NMFS is opening directed fishing for Atka mackerel in the
Central and Eastern Aleutian District and the Bering Sea subarea of the
Bering Sea and Aleutian Islands management area (BSAI). This action is
necessary to fully utilize the total allowable catch (TAC) of Atka
mackerel in these areas.
EFFECTIVE DATE: 1200 hours, Alaska local time (A.l.t.), July 31, 1996,
until 2400 hours, A.l.t., December 31, 1996.
FOR FURTHER INFORMATION CONTACT: Andrew N. Smoker, 907 586-7228.
SUPPLEMENTARY INFORMATION: The groundfish fishery in the BSAI exclusive
economic zone is managed by NMFS according to the Fishery Management
Plan for the Groundfish Fishery of the Bering Sea and Aleutian Islands
Area (FMP) prepared by the North Pacific Fishery Management Council
under authority of the Magnuson Fishery Conservation and Management
Act. Fishing by U.S. vessels is governed by regulations implementing
the FMP at 50 CFR parts 600 and 679.
The Final 1996 Harvest Specifications of Groundfish (61 FR 4311,
February 5, 1996) for the BSAI (see Sec. 679.20(c)(3)(iii)) and
subsequent reserve apportionment (61 FR 16085, April 11, 1996)
established 33,600 metric tons (mt) as the TAC of Atka mackerel for the
Central Aleutian District and 26,700 mt as the TAC for the Eastern
Aleutian District and the Bering Sea subarea, respectively.
The directed fisheries for Atka mackerel for the Central Aleutian
District (61 FR 16883, April 18, 1996; 61 FR 37403, July 18, 1996) and
the Eastern Aleutian District and the Bering Sea subarea (61 FR 6323,
February 20, 1996; 61 FR 36306, July 10, 1996) were closed to directed
fishing in order to reserve amounts anticipated to be needed for
incidental catch in other fisheries (see Sec. 679.20(d)(1)). NMFS has
determined that as of July 13, 1996, 1,000 mt in the Central Aleutian
District and 800 mt in the Eastern Aleutian District and Bering Sea
subarea remain in the respective directed fishing allowances.
The Director, Alaska Region, NMFS, has determined that the 1996
directed fishing allowances for Atka mackerel in the Central Aleutian
District and Eastern Aleutian District and the Bering Sea subarea have
not been reached. Therefore, NMFS is terminating the previous closures
and is reopening directed fishing for Atka mackerel in the Central
Aleutian District and Eastern Aleutian District and the Bering Sea
subarea.
All other closures remain in full force and effect.
Classification
This action is taken under Sec. 679.20 and is exempt from review
under E.O. 12866.
Authority: 16 U.S.C. 1801 et seq.
Dated: July 29, 1996.
Richard W. Surdi,
Acting Director, Office of Fisheries Conservation and Management,
National Marine Fisheries Service.
[FR Doc. 96-19685 Filed 7-30-96; 12:40 pm]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-19675 Establishment of Class E Airspace; Grants Pass, OR
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40315-40316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19675]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Airspace Docket No. 96-ANM-012]
Establishment of Class E Airspace; Grants Pass, OR
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This action establishes the Grants Pass, Oregon, Class E
airspace to accommodate a Global Positioning System (GPS) Standard
Instrument Approach Procedure (SIAP) to the Grants Pass Airport.
EFFECTIVE DATE: 0901 UTC, December 5, 1996.
FOR FURTHER INFORMATION CONTACT:
James C. Frala, Operations Branch, ANM-532.4, Federal Aviation
Administration, Docket No. 96-ANM-012, 1601 Lind Avenue, SW., Renton,
Washington 98055-4056; telephone number: (206) 227-2535.
SUPPLEMENTARY INFORMATION:
History
On June 12, 1996, the FAA proposed to amend part 71 of the Federal
Aviation Regulations (14 CFR part 71) to establish Class E airspace at
Grants Pass, Oregon, to accommodate a new GPS SIAP to the Grants Pass
Airport (61 FR 29699). Interested parties were invited to participate
in the rulemaking proceeding by submitting written comments on the
proposal. No comments were received.
[[Page 40316]]
The coordinates for this airspace docket are based on North
American Datum 83. Class E airspace areas extending upward from 700
feet or more above the surface of the earth are published in paragraph
6005 of FAA Order 7400.9C dated August 17, 1995, and effective
September 16, 1995, which is incorporated by reference in 14 CFR 71.1.
The Class E airspace listed in this document will be published
subsequently in the Order.
The Rule
This amendment to part 71 of Federal Aviation Regulations
establishes Class E airspace at Grants Pass, Oregon. The FAA has
determined that this regulation only involves an established body of
technical regulations for which frequent and routine amendments are
necessary to keep them operationally current. It, therefore, (1) is not
a ``significant regulatory action'' under Executive Order 12866; (2) is
not a ``significant rule'' under DOT Regulatory Policies and Procedures
(44 FR 11034; February 26, 1979); and (3) does not warrant preparation
of a regulatory evaluation as the anticipated impact is so minimal.
Since this is a routine matter that will only affect air traffic
procedures and air navigation, it is certified that this rule will not
have a significant economic impact on a substantial number of small
entities under the criteria of the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the FAA amends 14 CFR part 71 as
follows:
PART 71--[AMENDED]
1. The authority citation for 14 CFR part 71 continues to read as
follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending upward from 700
feet or more above the surface of the earth.
* * * * *
ANM OR E5 Grants Pass, OR [New]
Grants Pass Airport, OR
(lat. 42 deg.30'37''N, long. 123 deg.23'17''W)
That airspace extending upward from 700 feet above the surface
within a 7-mile radius of the Grants Pass Airport and within 7 miles
each side of a 331 deg. bearing from the Grants Pass Airport
extending from the 7-mile radius to 25 miles northwest of the
airport.
* * * * *
Issued in Seattle, Washington, on July 23, 1996.
Richard E. Prang,
Acting Assistant Manager, Air Traffic Division, Northwest Mountain
Region.
[FR Doc. 96-19675 Filed 8-1-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-19674 Establishment of Class E Airspace; Libby, MT
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40316-40317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19674]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 71
[Airspace Docket No. 96-ANM-013]
Establishment of Class E Airspace; Libby, MT
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This action establishes the Libby, Montana, Class E airspace
to accommodate a Global Positioning System (GPS) Standard Instrument
Approach Procedure (SIAP) to the Libby Airport.
EFFECTIVE DATE: 0901 UTC, December 5, 1996.
FOR FURTHER INFORMATION CONTACT:
James C. Frala, Operations Branch, ANM-532.4, Federal Aviation
Administration, Docket No. 96-ANM-013, 1601 Lind Avenue, SW., Renton,
Washington 98055-4056; telephone number: (206) 227-2535.
SUPPLEMENTARY INFORMATION:
History
On June 12, 1996, the FAA proposed to amend part 71 of the Federal
Aviation Regulations (14 CFR part 71) to establish Class E airspace at
Libby, Montana, to accommodate a new GPS SIAP to the Libby Airport (61
FR 29700). Interested parties were invited to participate in the
rulemaking proceeding by submitting written comments on the proposal.
No comments were received.
The coordinates for this airspace docket are based on North
American Datum 83. Class E airspace areas extending upward from 700
feet or more above the surface of the earth are published in paragraph
6005 of FAA Order 7400.9C dated August 17, 1995, and effective
September 16, 1995, which is incorporated by reference in 14 CFR 71.1.
The Class E airspace listed in this document will be published
subsequently in the Order.
The Rule
This amendment to part 71 of Federal Aviation Regulations
establishes Class E airspace at Libby, Montana. The FAA has determined
that this regulation only involves an established body of technical
regulations for which frequent and routine amendments are necessary to
keep them operationally current. It, therefore, (1) Is not a
``significant regulatory action'' under Executive Order 12866; (2) is
not a ``significant rule'' under DOT Regulatory Policies and Procedures
(44 FR 11034; February 26, 1979); and (3) does not warrant preparation
of a regulatory evaluation as the anticipated impact is so minimal.
Since this is a routine matter that will only affect air traffic
procedures and air navigation, it is certified that this rule will not
have a significant economic impact on a substantial number of small
entities under the criteria of the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the FAA amends 14 CFR part 71 as
follows:
PART 71--[AMENDED]
1. The authority citation for 14 CFR part 71 continues to read as
follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending upward from 700
feet or more above the surface of the earth.
* * * * *
ANM MT E5 Libby, MT [New]
Libby Airport, MT
(lat. 48 deg.17'02''N, long. 115 deg.29'25''W)
That airspace extending upward from 700 feet above the surface
within a 7-mile radius of the Libby Airport and within 4 miles each
side of the 345 deg. bearing from the Libby Airport extending from
the 7-mile radius to 10 miles northwest of the airport; that
airspace extending upward from 1,200 feet above the surface within
an area bounded by a line beginning at lat. 48 deg.19'00''N, long.
115 deg.50'00''W; to lat. 48 deg.19'00''N, long. 115 deg.16'00''W;
to lat. 48 deg.45'00''N, long.
[[Page 40317]]
115 deg.22'00''W; to lat. 48 deg.45'00''N, long. 115 deg.50'00''W,
to the point of beginning.
* * * * *
Issued in Seattle, Washington, on July 23, 1996.
Richard E. Prang,
Acting Assistant Manager, Air Traffic Division, Northwest Mountain
Region.
[FR Doc. 96-19674 Filed 8-1-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-19662 Compatibility of Wireless Services With Enhanced 911
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40348-40352]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19662]
=======================================================================
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 20
[CC Docket No. 94-102; FCC 96-264]
Compatibility of Wireless Services With Enhanced 911
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Federal Communications Commission has adopted a Report and
Order and Further Notice of Proposed Rulemaking that creates rules to
govern the availability of basic 911 services and the implementation of
Enhanced 911 (E911) for wireless services. (The summary of the Further
Notice of Proposed Rulemaking portion of this decision may be found
elsewhere in this edition of the Federal Register). The primary goal of
this proceeding is to promote safety of life and property through the
use of wireless communications, ensure broad availability of wireless
911 services, by creating a uniform, nationwide standard concerning the
processing of 911 calls from wireless handsets, and establish a
timetable for the development and deployment of technologies that will
enable wireless carriers and emergency service providers to identify
the location of wireless 911 callers.
EFFECTIVE DATE: October 1, 1996.
FOR FURTHER INFORMATION CONTACT: Peter G. Wolfe, Policy Division,
Wireless Telecommunications Bureau, (202) 418-1310.
SUPPLEMENTARY INFORMATION: This is a summary of the Report and Order
(``R&O'') portion of the Commission's Report and Order and Further
Notice of Proposed Rulemaking in CC Docket No. 94-104; FCC 96-264,
adopted June 12, 1996, and released July 26, 1996. The summary of the
Further Notice of Proposed Rulemaking portion of this decision may be
found elsewhere in this edition of the Federal Register. The complete
text of this R&O is available for inspection and copying during normal
business hours in the FCC Reference Center (Room 239), 1919 M Street,
N.W. Washington, D.C., and may be purchased from the Commission's copy
contractor, International Transcription Service, (202) 857-3800, 2100 M
Street, N.W., Suite 140, Washington, D.C. 20037.
Synopsis of the Report and Order
1. In the R&O, the Commission adopted several requirements and made
them applicable to all cellular licensees, broadband Personal
Communications Service (PCS), and certain Specialized Mobile Radio
(SMR) licensees.1 These SMR providers include 800 MHz and 900 MHz
SMR licensees that hold geographic area licensees, as well as incumbent
wide area SMR licensees defined as licensees who have obtained extended
implementation authorizations in the 800 MHz or 900 MHz SMR service,
either by waiver or under Section 90.629 of the Commission's Rules. The
covered SMR providers include only licensees that offer real-time, tow-
way switched voice service that is interconnected with the public
switched network, either on a stand-alone basis or packaged with other
telecommunications services. These classes of licensees are hereafter
referred to as ``covered carriers.'' Certain other SMR licensees and
Mobile Satellite Service (MSS) carriers are exempt from our
requirements.
---------------------------------------------------------------------------
\1\ The Notice of Proposed Rulemaking initiating this proceeding
may be found at 59 FR 54878, November 2, 1994.
---------------------------------------------------------------------------
2. For basic 911 services, the R&O first requires that, not later
than 12 months after the effective date of the rules adopted in this
proceeding, covered carriers must process and transmit to any
appropriate PSAPs all 911 calls made from wireless mobile handsets
which transmit a code identification,2 including calls initiated
by roamers. The processing and transmission of such calls shall not be
subject to any user validation or similar procedure that otherwise may
be invoked by the covered carrier.
---------------------------------------------------------------------------
\2\ The term ``code identification,'' when used in this Order in
conjunction with 911 calls, means (1) in the case of calls
transmitted over the facilities of a covered carrier other than a
Specialized Mobile Radio carrier that is subject to the requirements
of this Order, a call originated from a mobile unit which has a
Mobile Identification Number (MIN); and (2) in the case of calls
transmitted over the facilities of a Specialized Mobile Radio
carrier that is subject to the requirements of this Order, a call
originated from a mobile unit which has the functional equivalent of
a MIN. A MIN is a 34-bit binary number that a PCS or cellular
handset transmits as part of the process of identifying itself to
wireless networks. Each handset has one MIN, and it is derived from
the ten-digit North American Numbering Plan (NANP) telephone number
that is programmed into the handset by a CMRS provider generally
when it initiates service for a new subscriber. See, e.g., EIA/TIA
Standard 553, Mobile Station--Land Station Compatibility
Specification, September 1989, at 2.3.1.
---------------------------------------------------------------------------
3. In the case of 911 calls made from wireless mobile handsets that
do not transmit a code identification, not later than 12 months after
the effective date of the rules adopted in this proceeding, covered
carriers must process and transmit such calls to any appropriate PSAP
which previously has issued a formal instruction to the carrier
[[Page 40349]]
involved that the PSAP desires to receive such calls from the carrier.
4. Not later than 12 months after the effective date of the rules
adopted in this proceeding, covered carriers must be capable of
transmitting calls by individuals with speech or hearing disabilities
through devices used in conjunction with or as a substitute for
traditional wireless mobile handsets, e.g., through the use of Text
Telephone Devices (TTY) to local 911 services.
5. The implementation and deployment of enhanced 911(E911) features
and functions will be accomplished in two phases. Under Phase I, not
later than 12 months after the effective date of the rules adopted in
this proceeding, covered carriers must have initiated the actions
necessary to enable them to relay a caller's Automatic Number
Identification (ANI) and the location of the base station or cell site
receiving a 911 call to the designated PSAP. Not later than 18 months
after the effective date of the rules adopted in this R&O, such
carriers must have completed these actions. These capabilities will
allow the PSAP attendant to call back if the 911 call is disconnected.
6. Under Phase II, not later than five years after the effective
date of the rules adopted in this proceeding, covered carriers are
required to achieve the capability to identify the latitude and
longitude of a mobile unit making a 911 call, within a radius of no
more than 125 meters in 67 percent of all cases.
7. The E911 (Phase I and Phase II) requirements imposed upon
covered carriers in the Order shall apply only if (1) a carrier
receives a request for such E911 services from the administrator of a
PSAP that is capable of receiving and utilizing the data elements
associated with the services; and (2) a mechanism for the recovery of
costs relating to the provision of such services is in place. If the
carrier receives a request less than 6 months before the implementation
dates of Phase I and Phase II, then it must comply with the Phase I and
Phase II requirements within 6 months after the receipt of the notice
specifying the request.
8. Covered carriers, in coordination with the public safety
organizations, are also directed to resolve certain E911 implementation
issues, including grade of service and interface standards, through
industry consensus in conjunction with standard-setting bodies.
Final Regulatory Flexibility Analysis
9. As required by Section 603 of the Regulatory Flexibility Act, 5
U.S.C. 603 (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Notice. The Commission sought written public
comments on the proposals in the Notice, including on the IRFA. The
Commission's Final Regulatory Flexibility Analysis (FRFA) in this Order
conforms to the RFA, as amended by the Contract With America
Advancement Act of 1996, Public Law No. 104-121, 110 Stat. 847 (1996)
(CWAAA).3
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\3\ Subtitle II of the CWAAA is ``The Small Business Regulatory
Enforcement Fairness Act of 1996,'' (SBREFA), codified at 5 U.S.C.
Sec. 601.
---------------------------------------------------------------------------
I. Need For and Objective of the Rules
10. This Report and Order adopts policies concerning the operation
of 911 and enhanced 911 (E911) emergency calling service and the
services provided by cellular, broadband personal communications
services (PCS), and geographic area specialized mobile radio (SMR)
licensees. Commenters responding to the Notice in this proceeding have
identified a number of ways in which 911 and E911 might be available
through the use of wireless telephones, and have indicated that more
widely available 911 and E911 services will save lives and property.
Commenters also have indicated that various enhancements to wireless
911 service, such as the ability of the carrier to provide precise
caller location information to the public safety answering point
administrators, would make significant contributions to the
effectiveness of wireless 911 services.
11. We find that the benefit of providing for more widely available
and more effective 911 and E911 services for users of wireless
telephones exceed any negative effects that may result from the
promulgation of rules for this purpose. Thus, we conclude that the
public interest is served by requiring that wireless telephones operate
effectively with E911 systems.
II. Summary of Issues Raised by the Public Comments In Response to the
Initial Regulatory Flexibility Analysis
12. No comments were submitted in direct response to the Initial
Regulatory Flexibility Analysis. In general comments on the Notice,
however, a number of commenters raised issues that might affect small
entities. Most of the wireless industry supported exemption for site-
specific Specialized Mobile Radio (SMR) licensees due to their limited
interconnection with the public switched network. Rural cellular
providers argued that they should be exempted from E911 requirements
because of the high expense in low density markets, as well as the lack
of emergency service provider capabilities in such markets.
III. Projected Reporting, Recordkeeping and Other Compliance
Requirements of the Rule
13. There are no general reporting or recordkeeping requirements.
There are, however, requirements for a group of trade and consumer
organizations to report to the Commission on the status of industry
discussions of technical standards and other implementation issues. We
assume that these reports will be prepared by the professional staff of
these associations, and we do not intend to impose any unnecessary
burdens or costs on the entities involved in the preparation and
submission of the reports. The rule will require cellular, broadband
PCS, and geographic area SMR licensees to upgrade their equipment so
that:
(1) 911 calls from wireless mobile handsets which transmit a code
identification will be transmitted without delay or credit
verification.
(2) 911 calls from any mobile handset will be transmitted without
delay or credit verification to any emergency service provider who
requests that they be transmitted.
(3) 911 calls may be transmitted by speech or hearing impaired
individuals through Text Telephone Devices.
(4) Emergency service providers will be enabled to call back 911
calls which are disconnected.
(5) Emergency service providers will be sent the location of the
911 caller within a radius of 125 meters by longitude and latitude in
67 percent of all cases.
14. These upgrades will require engineering and construction work
on switches, protocols, and network architectures. We recognize that
full implementation of wireless E911 will incur additional expenses.
However, we have found that E911 service to be in the public interest
and that these relatively fixed costs will be spread over a widening
base of subscribers as wireless subscribership grows, lowering unit
costs per subscriber.
IV. Description and Estimate of Small Entities Subject to the Rules
15. The rule adopted in this Report and Order will apply to
providers of cellular, broadband PCS, and geographic area 800 MHz and
900 MHz Specialized Mobile Radio (SMR) services, including licensees
who have obtained extended implementation authorizations in the 800 MHz
or 900 MHz SMR services, either by waiver or under Section 90.629 of
the Commission's Rules. However, the rule will apply to SMR
[[Page 40350]]
licensees only if they offer real-time, two-way voice service that is
interconnected with the public switched network.
a. Estimates for Cellular Licensees
16. The Commission has not developed a definition of small entities
applicable to cellular licensees. Therefore, the applicable definition
of small entity is the definition under the Small Business
Administration (SBA) rules applicable to radiotelephone companies. This
definition provides that a small entity is a radiotelephone company
employing fewer than 1,500 persons.4 Since the Regulatory
Flexibility Act amendments were not in effect until the record in this
proceeding was closed, the Commission was unable to request information
regarding the number of small cellular businesses and is unable at this
time to make a precise estimate of the number of cellular firms which
are small businesses.
---------------------------------------------------------------------------
\4\ 13 CFR Sec. 121.201, Standard Industrial Classification
(SIC) Code 4812.
---------------------------------------------------------------------------
17. The size data provided by the SBA does not enable us to make a
meaningful estimate of the number of cellular providers which are small
entities because it combines all radiotelephone companies with 500 or
more employees.5 We therefore used the 1992 Census of
Transportation, Communications, and Utilities, conducted by the Bureau
of the Census, which is the most recent information available. That
census shows that only 12 radiotelephone firms out of a total of 1,178
such firms which operated during 1992 had 1,000 or more
employees.6 Therefore, even if all 12 of these large firms were
cellular telephone companies, all of the remainder were small
businesses under the SBA's definition. We assume that, for purposes of
our evaluations and conclusions in the Final Regulatory Flexibility
Analysis, all of the current cellular licensees are small entities, as
that term is defined by the SBA. Although there are 1,758 cellular
licenses, we do not know the number of cellular licensees, since a
cellular licensee may own several licenses.
---------------------------------------------------------------------------
\5\ U. S. Small Business Administration 1992 Economic Census
Employment Report, Bureau of the Census, U.S. Department of
Commerce, SIC Code 4812 (radiotelephone communications industry data
adopted by the SBA Office of Advocacy).
\6\ U.S. Bureau of the Census, U.S. Department of Commerce,
1992 Census of Transportation, Communications, and Utilities, UC92-
S-1, Subject Series, Establishment and Firm Size, Table 5,
Employment Size of Firms: 1992, SIC Code 4812 (issued May 1995).
---------------------------------------------------------------------------
18. We assume that all of the current rural cellular licensees are
small businesses. Comments filed by small business associations, the
Organization for the Protection and Advancement of Small Telephone
Companies (OPASTCO), state that \2/3\ of its 440 members provide
cellular service, and comments filed by the Rural Cellular Association
(RCA) state that its members serve 80 cellular service areas. We
recognize that these numbers represent only part of the current rural
cellular licensees because there might be other rural companies not
represented by either association.
b. Estimates for Broadband PCS Licensees
19. The broadband PCS spectrum is divided into six frequency blocks
designated A through F. Pursuant to 47 CFR Sec. 24.720(b), the
Commission has defined ``small entity'' for Blocks C and F licensees as
firms that had average gross revenues of less than $40 million in the
three previous calendar years. This regulation defining ``small
entity'' in the context of broadband PCS auctions has been approved by
the SBA.7
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\7\ See Implementation of Section 309(j) of the Communications
Act--Competitive Bidding, PP Docket No. 93-253, Fifth Report and
Order, 9 FCC Rcd 5532, 5581-84 (1994).
---------------------------------------------------------------------------
20. The Commission has auctioned broadband PCS licenses in Blocks
A, B, and C. We do not have sufficient data to determine how many small
businesses under the Commission's definition bid successfully for
licenses in Blocks A and B. As of now, there are 90 non-defaulting
winning bidders that qualify as small entities in the Block C auction.
Based on this information, we conclude that the number of broadband PCS
licensees affected by the rule adopted in this Report and Order
includes the 90 non-defaulting winning bidders that qualify as small
entities in the Block C broadband PCS auction.
21. At present, no licenses have been awarded for Blocks D, E, and
F for spectrum. Therefore, there are no small businesses currently
providing these services. However, a total of 1,479 licenses will be
awarded in the D, E, and F Block broadband PCS auctions, which are
scheduled to begin on August 26, 1996. Eligibility for the 493 F Block
licensees is limited to ``entrepreneur'' with the average gross
revenues of less than $125 million. However, we cannot estimate how
many small businesses under the Commission's definition will win F
Block licensees, or D and E Block licensees. Given the facts that
nearly all radiotelephone companies have fewer than 1,000 employees and
that no reliable estimate of the number of prospective D, E, and F
Block licensees can be made, we assume, for purposes of our evaluations
and conclusions in this FRFA, that all of the licenses will be awarded
to small entities, as that term is defined by the SBA.
c. Estimates for SMR Licensees
22. Pursuant to 47 C.F.R. 90.814(b)(1), the Commission has defined
``small entity'' for geographic area 800 MHz and 900 MHz SMR licenses
as firms that had average gross revenues of less than $15 million in
the three previous calendar years. This regulation defining ``small
entity'' in the context of 800 MHz and 900 MHz SMR has been approved by
the SBA.8
---------------------------------------------------------------------------
\8\ See Amendment of Parts 2 and 90 of the Commission's Rules to
Provide for the Use of 200 Channels Outside the Designated Filing
Areas in the 896-901 MHz and the 935-940 MHz Bands Allotted to the
Specialized Mobile Radio Pool, PR Docket No. 89-583, Second Order on
Reconsideration and Seventh Report and Order, 11 FCC Rcd 2639, 2693-
702 (1995); Amendment of Part 90 of the Commission's Rules to
Facilitate Future Development of SMR Systems in the 800 MHz
Frequency Band, PR Docket No. 93-144, First Report and Order, Eighth
Report and Order, and Second Further Notice of Proposed Rulemaking,
11 FCC Rcd 1463 (1995).
---------------------------------------------------------------------------
23. The rule adopted in this Report and Order applies to SMR
providers in the 800 MHz and 900 MHz bands that either hold geographic
area licenses or have obtained extended implementation authorizations.
We do not know how many firms provide 800 MHz or 900 MHz geographic
area SMR service pursuant to extended implementation authorizations,
nor how many of these providers have annual revenues of less than $15
million. Since the Regulatory Flexibility Act amendments were not in
effect until the record in this proceeding was closed, the Commission
was unable to request information regarding the number of small
businesses in this category. We do know that one of these firms has
over $15 million in revenues. We assume, for purposes of our
evaluations and conclusions in this FRFA, that all of the remaining
existing extended implementation authorizations are held by small
entities, as that term is defined by the SBA.
24. The Commission recently held auctions for geographic area
licenses in the 900 MHz SMR band. There were 60 winning bidders who
qualified as small entities under the Commission's definition in the
900 MHz auction. Based on this information, we conclude that the number
of geographic area SMR licensees affected by the rule adopted in this
Report and Order includes these 60 small entities.
25. No auctions have been held for 800 MHz geographic area SMR
licenses.
[[Page 40351]]
Therefore, no small entities currently hold these licenses. A total of
525 licenses will be awarded for the upper 200 channels in the 800 MHz
geographic area SMR auction. However, the Commission has not yet
determined how many licenses will be awarded for the lower 230 channels
in the 800 MHz geographic area SMR auction. There is no basis to
estimate, moreover, how many small entities within the SBA's definition
will win these licenses. Given the facts that nearly all radiotelephone
companies have fewer than 1,000 employees and that no reliable estimate
of the number of prospective 800 MHz licensees can be made, we assume,
for purposes of our evaluations and conclusions in this FRFA, that all
of the licenses will be awarded to small entities, as that term is
defined by the SBA.
V. Steps Taken To Minimize the Burdens on Small Entities
26. The Commission in this proceeding has considered comments on
ways of achieving wider 911 availability and E911 compatibility with
wireless telephone services. In doing so, the Commission has adopted
alternatives which minimize burdens placed on small entities. First, it
has limited the regulations to mass market two-way voice services. In
doing so, it excluded small local specialized mobile services which
provide mainly dispatch services and do not provide the mass market
services which most users rely on to send 911 calls. It has also
excluded mobile satellite systems. Second, it provided for waivers for
small rural cellular carriers, and also provided that most services
would not be required unless specifically requested by the local
emergency service providers. Third, it has taken industry concerns into
account by basing the schedule for implementing E911 on that
recommended by the Consensus Agreement between the Cellular Telephone
Industry Association and public safety organizations, which does not
require caller location information until five years after the rules
adopted in the Order become effective. Finally, it has made the E911
requirements conditional on (1) a request by a local emergency service
provider that is capable of receiving and using the information; and
(2) a mechanism for the recovery of costs relating to the provision of
the service. Therefore, the burden on small entities will be offset by
the requirement that a cost recovery mechanism will be in place before
their E911 obligations need to be implemented.
VI. Significant Alternatives Considered and Rejected
27. The Commission rejected the alternative proposal that the rules
should be applicable to all providers of Commercial Mobile voice
services because not all CMRS services are mass market voice services
whose users expect to be able to use them to call 911. Specifically,
the Commission found that the costs of requiring local SMR services to
comply with the rules would outweigh the benefits and application of
the rules to them, and would give them an incentive to eliminate their
interconnection to the public network, which would not be in the public
interest. The Commission did not exempt rural cellular carriers from
these requirements, as requested by some of commenters, but instead
provided for waivers. The Consensus Agreement between the Cellular
Telephone Industry Association and public safety organizations
indicated that the signatories would work with rural cellular carriers
to resolve their problems in good faith, and that the issue of how such
carriers would be treated need not delay the final rule, which would be
required in the public interest. Instead, reviewing the need for
applying the rules to rural cellular carriers could be reviewed on an
individualized basis. Moreover, the Commission relied on the
representations that many emergency service providers do not use 911 in
rural areas, so that the requirement that the emergency service
providers would have to request and be capable of receiving and using
the E911 services would protect carriers from the obligation to provide
unneeded services. Further, the requirement that there be a cost
recovery mechanism would protect small carriers from having to absorb
excessive costs.
28. The Commission rejected proposals to delay the provision of the
upgrades necessary to expand the availability of 911 and the accuracy
of location technology because these upgrades will result in saving
lives and property and because the requirements of the rules were
included in the Consensus Agreement. We rejected the argument that
imposing 911 availability requirements on wireless carriers would
competitively disadvantage wireless carriers, since several wireless
carriers have been voluntarily transmitting 911 calls without a
validation requirement. Moreover, the Commission rejected proposals
that Federal grade of service and other standards should be developed
by the Commission, and instead determined that parties should be
allowed to develop standards with monitoring by the Commission, since
these issues require a level of expertise which can best be achieved by
intra-industry discussions.
VII. Report to Congress
29. The Commission shall send a copy of this Final Regulatory
Flexibility Analysis along with this Order in a report to Congress
pursuant of the Small Business Regulatory Enforcement Fairness Act of
1996, codified at 5 U.S.C. Section 801(a)(1)(A). A copy of this RFA
will also be published in the Federal Register.
Ordering Clauses
30. Accordingly, it is ordered that the rule amendments specified
below shall become effective October 1, 1996.
31. It is further ordered That the Petition of the Ad Hoc Alliance
for Public Access to 911 is granted in part, as set forth in the text
of the Order.
32. It is further ordered That the signatories to the Consensus
Agreement, the Personal Communications Industry Association, and the Ad
Hoc Alliance for Public Access to 911 file joint annual reports within
30 days after the end of each calendar year, as set forth in the text
of this Order.
33. It is further ordered That the signatories to the Consensus
Agreement, the Personal Communications Industry Association, and
Telecommunications for the Deaf, Inc. file a joint report within one
year of the effective date of the rules adopted herein, as set forth in
the text of the Order.
34. This action is taken pursuant to Sections 1, 4(i), 201, 208,
215, 303, and 309 of the Communications Act of 1934, as amended, 47
U.S.C. 151, 154(i), 201, 208, 215, 303, 309.
List of Subjects in 47 CFR Part 20
Communications common carriers, Federal Communications Commission.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Part 20 of Title 47 of the Code of Federal Regulations is amended
as follows:
PART 20--COMMERCIAL MOBILE RADIO SERVICES
1. The authority citation for Part 20 continues to read as follows:
Authority: Sections 4, 303 and 332, 48 Stat. 1066, 1082, as
amended; 47 U.S.C. 154, 303, and 332.
[[Page 40352]]
2. Section 20.03 is amended by adding the following definitions in
alphabetical order to read as follows:
Sec. 20.3 Definitions.
Automatic Number Identification. A system which permits the
identification of the caller's telephone number.
* * * * *
Code Identification. A Mobile Identification Number for calls
carried over the facilities of a cellular or Broadband PCS licensees,
or the functional equivalent of a Mobile Identification Number in the
case of calls carried over the facilities of a Specialized Mobile Radio
Services.
* * * * *
Mobile Identification Number. A 34-bit number that is a digital
representation of the 10-digit directory telephone number assigned to a
mobile station.
* * * * *
Pseudo Automatic Number Identification. A system which identifies
the location of the base station or cell site through which a mobile
call originates.
Public Safety Answering Point. A point that has been designated to
receive 911 calls and route them to emergency service personnel.
* * * * *
3. Section 20.18 is added to read as follows:
Sec. 20.18 911 Service.
(a) The following requirements are only applicable to Broadband
Personal Communications Services (part 24, subpart E of this chapter)
and Cellular Radio Telephone Service (part 22, subpart H of this
chapter), Geographic Area Specialized Mobile Radio Services in the 800
MHz and 900 MHz bands (included in part 90, subpart S of this chapter)
and offer real-time, two-way voice service that is interconnected with
the public switched network, and Incumbent Wide Area SMR Licensees.
(b) As of October 1, 1997, licensees subject to this section must
process all 911 calls which transmit a Code Identification and must
process all 911 wireless calls which do not transmit a Code
Identification where requested by the administrator of the designated
Public Safety Answering Point which is capable of receiving and
utilizing the data elements associated with 911 service.
(c) As of October 1, 1997, licensees subject to this section must
be capable of transmitting 911 calls from individuals with speech or
hearing disabilities through means other than mobile radio handsets,
e.g., through the use of Text Telephone Devices.
(d) As of April 1, 1998, licensees subject to this section must
relay the telephone number of the originator of a 911 call and the
location of the cell site or base station receiving a 911 call from any
mobile handset or text telephone device accessing their systems to the
designated Public Service Answering Point through the use of Pseudo
Automatic Number Identification and Automatic Number Identification.
(e) As of October 1, 2001, licensees subject to this section must
provide to the designated Public Service Answering Point the location
of a 911 call by longitude and latitude within a radius of 125 meters
using root mean square techniques.
(f) The requirements set forth in paragraphs (d) and (e) of this
section shall be applicable only if the administrator of the designated
Public Service Answering Point has requested the services required
under those paragraphs and is capable of receiving and utilizing the
data elements associated with the service, and a mechanism for
recovering the costs of the service is in place.
[FR Doc. 96-19662 Filed 8-1-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-19645 Food Labeling; Nutrient Content Claims and Health Claims; Restaurant Foods
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40320-40332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19645]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
21 CFR Part 101
[Docket No. 93N-0153]
RIN 0910-AA19
Food Labeling; Nutrient Content Claims and Health Claims;
Restaurant Foods
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
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SUMMARY: The Food and Drug Administration (FDA) is amending its food
labeling regulations to remove the provisions that exempt restaurant
menus from the requirements for how nutrient content claims and health
claims are to be made and from the requirements for the provision of
nutrition information with respect to the nutrients that are the basis
for the claim, when claims are made. Because a significant number of
meals are consumed outside of the home, the extension of these
requirements to menus will help to increase the awareness of the
American consumer to the relationships between diet and health. FDA is
issuing this final rule at this time in response to a decision by the
United States District Court for the District of Columbia.
DATES: This regulation is effective May 2, 1997. Written comments on
the information collection requirements should be submitted by October
1, 1996.
ADDRESSES: Submit written comments on the information collection
requirements to the Dockets Management Branch (HFA-305), Food and Drug
Administration, 12420 Parklawn Dr., rm. 1-23, Rockville, MD 20857. All
comments should be identified with the docket number found in brackets
in the heading of this document. Persons who believe it would be useful
for the agency to hold a public meeting on what is required by this
rule should also send their letters to the Dockets Management Branch.
FOR FURTHER INFORMATION CONTACT: Michelle A. Smith, Center for Food
Safety and Applied Nutrition (HFS-158), Food and Drug Administration,
200 C St. SW., Washington, DC 20204, 202-205-5099.
SUPPLEMENTARY INFORMATION:
I. Background
A. Requirements for Nutrition Labeling and Nutrient Content Claims and
Health Claims
The Nutrition Labeling and Education Act of 1990 (the 1990
amendments) and the final regulations that implement the 1990
amendments (58 FR 2066, January 6, 1993, as modified at 58 FR 44020,
August 18, 1993) provide for a number of fundamental changes in how
food is labeled, including mandatory nutrition labeling on most foods,
uniform definitions for terms that characterize the level of nutrients
in a food, and the use of claims about the relationship between
nutrients and diseases or health-related conditions. These changes
apply to virtually all foods in the food supply, including foods sold
in restaurants.
The provision on nutrition labeling that was added to the Federal
Food, Drug, and Cosmetic Act (the act) by the 1990 amendments, section
403(q) (21 U.S.C. 343(q)), includes an exemption for foods that are
served or sold in restaurants or other establishments in which food is
served for immediate human consumption (section 403(q)(5)(A)(i)). This
exemption, however, is contingent on there being no claims or other
nutrition information on the label or labeling, or in the advertising,
for the food. The use of nutrient content claims, health claims, or
other nutrition information on the label or labeling of a food sold in
a restaurant or other establishment in which food is served for
immediate consumption will subject that food to the nutrition labeling
provisions of the act (see sections 403 (q) and (r) of the act and
Sec. 101.9 (j)(2)(i) through (j)(2)(iii) (21 CFR 101.9 (j)(2)(i)
through (j)(2)(iii))). Consistent with these provisions, in this
discussion the term ``restaurant foods'' refers to foods served in
restaurants and in other establishments in which food that is ready for
human consumption is sold (e.g., institutional food service,
delicatessens, catering) or sold only in such establishments. Firms
selling such foods will be referred to as ``restaurants,'' and
responsible individuals in these firms will be referred to as
``restaurateurs.''
In the January 6, 1993, final rules on nutrient content claims and
health claims (entitled ``Food Labeling: Nutrient Content Claims,
General Principles, Petitions, Definitions of Terms; Definitions of
Nutrient Content Claims for the Fat, Fatty Acid, and Cholesterol
Content of Food'' (58 FR 2302); and ``Food Labeling; General
Requirements for Health Claims for Food'' (58 FR 2478), respectively
(hereinafter referred to as the ``nutrient content claims final rule''
and the ``health claims final rule,'' and collectively, as the ``claims
final rules'')), the agency concluded that if claims on restaurant
foods are to be useful to consumers, they must be valid. Thus, FDA
stated that the same standards will apply to restaurant foods as to
other foods with respect to basic definitions for nutrient content
claims. FDA also stated that when a restaurant makes explicit or
implied reference to a food or substance in food, and directly or
indirectly links that substance to an effect on a disease or health-
related condition (i.e., when both basic elements of a health claim are
present), the restaurant must comply with the health claims regime (58
FR 2478 at 2516). At the same time, FDA acknowledged that how a
restaurant demonstrates compliance with these requirements is a
difficult matter. FDA pointed out, in the claims final rules (58 FR
2302 at 2386 and 58 FR 2478 at 2515), that it is not obligated under
the act to regulate claims on restaurant foods in a manner identical to
that in which it regulates claims on packaged foods. In the nutrient
content claims final rule (58 FR 2302), the agency amended Sec. 101.10
Nutrition labeling of restaurant foods (21 CFR 101.10) to provide
flexibility for restaurants in determining compliance with FDA's
requirements for the claims regime and in providing nutrition labeling
for foods that bear a claim.
Consequently, although restaurant food must comply with the same
standards as other foods to bear a claim, the way in which a restaurant
determines the nutrient content of a food or meal, and the way in which
nutrition information is communicated to consumers, may be different
for restaurant foods than for foods from other sources. For example,
Sec. 101.10 provides that nutrient levels in restaurant foods may be
determined through the use of nutrient data bases, cookbooks, or other
reasonable bases that provide assurance that the food or meal meets the
nutrient requirements for the claim. For compliance purposes,
[[Page 40321]]
a restaurant is required to provide information on its reasonable basis
for making a claim. Further, restaurants making a claim are required to
provide consumers, upon request, with nutrition information on the
nutrient that is the subject of the claim. However, Sec. 101.10
provides that nutrition labeling may be presented in various forms,
including those provided in Sec. 101.45 (21 CFR 101.45) for raw fruit,
vegetables, and fish, or by other reasonable means.
Thus, although FDA encourages restaurants to provide full nutrition
information according to Sec. 101.9 whenever possible, the agency has
determined that information on the nutrient amounts that are the bases
for claims (e.g., if the claim is a ``low fat'' claim, the nutrition
information must only state that ``this meal provides less than 10
grams of fat'') may, in a restaurant setting, serve as the functional
equivalent of complete nutrition information as described in
Sec. 101.9. Further, this information may be provided by reasonable
means, e.g., in a flier, brochure, poster, notebook, or orally. FDA
concluded that these flexibilities (e.g., the ``reasonable basis''
criterion) would help to ensure that a restaurateur is provided with a
readily achievable way to make claims for his or her food, while the
consumer is provided with a reasonable assurance that the claim is
valid (58 FR 2302 at 2387 and 58 FR 2478 at 2516).
The claims final rule contained two additional provisions. First,
Sec. 101.13(q)(5) (21 CFR 101.13(q)(5)) exempts nutrient content claims
made on menus from the requirement that such claims comply with the
requirements and definitions governing nutrient content claims. There
is a similar provision with respect to health claims made on restaurant
menus in Secs. 101.10 and 101.14 with respect to nutrition labeling
requirements for a restaurant food that makes a nutrient content claim
or a health claim. The agency's decision to exempt restaurant menus
from the requirements for nutrient content claims and health claims was
based, in part, on the frequency with which menus change (sometimes
daily) (58 FR 2302 at 2388 and 58 FR 2478 at 2517).
Second, because of concerns about the demands that the new labeling
requirements would impose on small restaurants, FDA decided to use its
enforcement discretion to delay for 1 year the effective date of its
regulations governing the use of claims by these firms. The agency
defined ``small restaurants'' as ``restaurant firms consisting of 10 or
fewer establishments'' (58 FR 2302 at 2388 and 58 FR 2478 at 2517).
Consequently, FDA provided that its requirements for health claims and
nutrient content claims on restaurant labeling (except menus) would be
effective on May 8, 1993, and May 8, 1994, respectively, for other than
small restaurants (i.e., restaurant firms with more than 10
establishments), and on May 8, 1994, and May 8, 1995, for small
restaurants.
FDA concluded that these additional measures of flexibility would
help to ensure that restaurants, especially small restaurants, would
not be deterred by the 1990 amendments from providing useful nutrition-
related information to their customers. It is the latter two decisions
that FDA decided to reconsider.
B. Decision to Reconsider
Among the final rules that FDA issued in the Federal Register of
January 6, 1993, was one entitled ``Food Labeling Regulations
Implementing the Nutrition Labeling and Education Act of 1990;
Opportunity for Comments'' (58 FR 2066) (hereinafter referred to as the
``implementation final rule''). Among other things, the implementation
final rule provided 30 days for the submission of comments on technical
issues, such as inconsistencies or unintended consequences of specific
provisions not raised in earlier comments. Two comments received during
the technical comment period criticized the menu exemption and
questioned its legality under both the 1990 amendments and the
Administrative Procedure Act (the APA). One comment received during the
technical comment period maintained that the effort required for small
restaurants to comply with the new labeling requirements is no
different from that required by medium and large restaurants. Another
comment argued that delaying the effective dates for small restaurants
is not consistent with the 1990 amendments.
After careful consideration of the comments and further study of
the administrative record, the agency decided to reconsider these
provisions. Based on its reconsideration, in the Federal Register of
June 15, 1993 (58 FR 33055), FDA proposed to remove the exemption for
menus from the coverage of the claims provisions. In this proposed rule
(hereinafter referred to as the June 15, 1993, proposed rule), FDA
tentatively concluded that the menu exemption is not consistent with
the act or with the statutory charge provided by the 1990 amendments.
FDA stated that it was concerned that health claims and nutrient
content claims in menus will be of little utility if they fail to
comply with the standards in the claims regulations, which are designed
to ensure the validity of these claims. Further, FDA stated that the
menu exemption could create a situation in which confusion about the
valid information provided by authorized claims in non-menu labeling
would result from the use of unauthorized claims in menus. FDA
emphasized that (except for the deletion of the menu exemption) the
proposed amendments do not alter the substance or status of the current
regulations governing the use of nutrient content claims and health
claims in restaurants (58 FR 33055 at 33057). Finally, the agency noted
that it is virtually impossible to distinguish menus from other types
of restaurant labeling, such as signs, placards, and other point of
purchase information, that are covered by the claims final rules.
FDA also tentatively concluded that, in establishing dates of
applicability for its requirements, it had no reasonable basis for
differentiating among restaurants based on size. Consequently, the
agency proposed to remove the provisions that delayed by 1 year the
effective dates for compliance for small restaurants. However, because
the agency was unable to publish a final rule before the May 8, 1994,
and May 8, 1995, compliance dates for non-menu labeling, this aspect of
the proposal, i.e., to shorten the delay in effective dates for small
restaurant firms, is moot. Therefore, FDA is withdrawing that aspect of
its June 15, 1993, proposed rule.
In deciding whether to publish a final rule, several concerns were
raised for the agency's consideration. These concerns involved
evaluation of the extent to which the nutrient content claims and
health claims that were being made on restaurant menus failed to meet
FDA's definitions, and of whether consumers were experiencing confusion
or were concerned about variations between the labeling of restaurant
and packaged foods. Concerns were also raised about whether both
nutrient content claims and health claims needed to be covered, about
whether the regulations would cause restaurants to stop making claims
and/or the associated foods, and about what the effect of the
regulations would be on small restaurants.
Before the agency had fully resolved these issues, other events
intervened. As noted in the June 15, 1993, proposed rule, FDA had been
sued by two public interest groups and two individuals on the grounds
that the menu exemption violates the 1990 amendments and the
Administrative Procedure Act (Public
[[Page 40322]]
Citizen, Inc., et al. v. Shalala, Civil Action No. 93 0509 (D.D.C.)).
On June 28, 1996, the court declared that the parts of the regulations
that exempted restaurant menus from the nutrient content claim and
health claim provisions of the 1990 amendments are contrary to the
statute and ordered FDA to amend its regulations to include menus.
Therefore, FDA is issuing this final rule. However, as explained below,
in doing so, the agency remains committed to ensuring that the changes
made by this final rule do not adversely affect either small
restaurants or the flow of information from restaurant menus to
consumers.
II. Comments
The agency received 37 letters, each containing 1 or more comments
on its June 15, 1993, proposed rule, from consumers and consumer
groups, restaurateurs, trade associations, registered dieticians,
academia, and State officials. Some letters supported the proposal to
delete the exemption for restaurant menus, stating, for example, that
exempting restaurant menus that make claims from the new labeling
requirements would undermine the ability of consumers to make improved
dietary choices. Conversely, other letters opposed applying the new
labeling requirements to restaurant menus, stating that the
requirements are burdensome and not appropriate for a restaurant
situation. Many of these comments, however, expressed confusion as to
how the agency would implement its requirements with respect to
restaurant foods.
In response to the latter comments, FDA prepared a guidance
document on the labeling of restaurant foods. The agency announced in
the Federal Register of September 19, 1995 (60 FR 48516), the
availability of the guidance document. The agency also published, as an
appendix to that notice of availability, answers to some of the most
frequently asked questions. The guidance document, entitled ``Food
Labeling: Questions and Answers, Volume II; A Guide for Restaurants and
Other Retail Establishments,'' explains how FDA will implement its
requirements for restaurant labeling that bears a health claim or
characterizes the level of a nutrient in a food.
Several comments addressed issues that are outside the scope of
this rulemaking, such as modifying the criteria for nutrient content
and health claims set out in the claims final rules. These comments are
not responded to in this document. A summary of the comments that did
address the proposal, and the agency's responses, follow.
A. Menu Exemption
1. A number of comments supported the proposal, stating that FDA is
legally bound to include menus under the 1990 amendments. Comments
stated that restaurant menus are labeling under the act and appropriate
case law and, as such, are covered by the 1990 amendments. Comments
further stated that Congress neither provided for nor intended an
exemption for menus, and, therefore, FDA cannot grant one.
Other comments cited the importance of restaurant foods in the
American diet, stating that applying the requirements of the 1990
amendments to menus would play a critical role in the ability of
consumers to make healthy dietary choices. Comments maintained that
menus are the primary means by which a consumer discovers information
about the foods available in a restaurant. Thus, these comments argued,
the new labeling requirements should apply to all types of restaurant
labeling, including menus. As evidence of the need to apply the new
requirements to restaurant menus, several comments submitted menus
that, in their opinion, bear claims that do not comply with FDA's
requirements.
Conversely, a number of comments maintained that many restaurateurs
currently offer ``healthier'' menu items and promote the nutritional
quality of these foods to consumers in a variety of ways that are
truthful and not misleading. These comments maintained that applying
the requirements of the 1990 amendments to restaurant menus is
redundant and unnecessary because restaurant menus are already covered
by section 403(a) of the act. Several comments stated that menus are
also regulated by States and, because they are considered to be
advertising, by the Federal Trade Commission (FTC).
FDA agrees that many restaurants currently provide consumers with
useful information in a way that is not inconsistent with FDA's new
requirements. Nonetheless, FDA concludes, based at least in part on the
act, that it is necessary to make the proposed changes. Thus, the
agency disagrees with the comments that state that applying the
requirements of the 1990 amendments to restaurant menus is redundant
and unnecessary.
As stated in the nutrient content claims final rule (58 FR 2302 at
2388), before the 1990 amendments, when restaurants provided nutrition
information they were subject to Sec. 101.10, FDA's pre-1990 amendment
nutrition labeling regulation. FDA enforcement of that regulation was
virtually nonexistent, however. Further, while section 403(a) of the
act prohibits labeling that is ``false or misleading in any
particular,'' section 403(r) provides for requirements with respect to
claims that are in addition to those established in section 403(a) of
the act. FDA's statutory charge under the 1990 amendments is to ensure
that nutrient content claims and health claims made for food accurately
characterize the food and are scientifically valid. Finally, although
FTC has jurisdiction over national advertising, restaurant menus are
more akin to labeling than advertising in their use and function. Thus,
they are appropriately included within the regulatory scheme designed
for food labeling.
FDA notes that restaurant foods are an important part of the food
supply. As stated in the nutrient content claims final rule (58 FR 2302
at 2387), as much as 30 percent of the American diet is composed of
foods prepared in food service operations. The agency agrees with
comments that menus are a primary source of information for consumers
making purchase decisions in a restaurant or other establishment where
food is sold for immediate consumption.
In the claims final rules, the agency justified the menu exemption
on the grounds that it will help ensure that restaurants are not
deterred by the requirements of the 1990 amendments from providing
useful nutrition-related information. FDA also noted that fast food
chains and other restaurants frequently use non-menu media, such as
posters and placards, to convey nutrition information to consumers, and
stated that it would focus its efforts on these media. However, FDA
notes that menus are used to present information about the choices
available in a restaurant or other establishment in which food is
served for immediate consumption. Consequently, FDA concludes that
menus that bear a nutrient content claim, health claim, or other
nutrition information have a significant bearing on the ability of
consumers to select foods that are useful in maintaining healthy
dietary practices. Therefore, FDA finds that claims on restaurant menus
should be subject to the same standards as claims on other food labels
and in labeling.
FDA finds that, if it were to maintain the exemption for restaurant
menus, it would have no specific criteria for determining whether a
nutrient content claim made in a menu appropriately describes the food,
or for determining whether a health claim is scientifically valid.
Consequently, there would be no assurance that claims made in
[[Page 40323]]
restaurant menus are consistent with claims on other restaurant
labeling or on the labeling of other foods, or that such claims would
help consumers select foods that are useful in maintaining healthy
dietary practices.
On further review of the legislative history, FDA noted that
section 405 of the act (21 U.S.C. 345), which authorizes exemptions to
the act, was amended by the 1990 amendments to state: ``This section
does not apply to the labeling requirements of section 403(q) and
403(r).'' Because the menu exemption is an exemption from section
403(r) of the act, FDA tentatively concluded that it is barred by
section 405 of the act.
FDA also noted that section 403(r)(5)(B) of the act limits the
extent to which the nutrient content claims and health claims
provisions of the act apply to restaurants by, e.g., exempting
restaurant foods from certain disclosure statements that apply to
claims on packaged food labels. In its discussion of whether Congress
intended to apply the 1990 amendments to restaurant menus (58 FR 33055
at 33056), the agency cited a sponsors' report explaining this section.
That report stated that restaurants that use nutrient content claims in
connection with the sale of a food must comply with regulations issued
by the Secretary of Health and Human Services under section
403(r)(2)(A)(I). In that report, the sponsors specifically gave the
example of the use of the word ``light'' or ``low'' on a menu as the
type of labeling that must comply with FDA's requirements (136
Congressional Record H5841 (July 30, 1990)). This part of the bill was
passed by the Senate unchanged. Thus, FDA concludes that the menu
exemption is not consistent with the congressional intent in adopting
the 1990 amendments, and that there is no basis for exempting menus
from the coverage of section 403(r) of the act. (See also Public
Citizen v. Shalala, supra.)
2. A number of comments stated that consumers' need for useful
nutrition information outweighs any burden that the requirements might
place on restaurants making claims on their menus. One comment stated
that it did not believe that the new requirements would be burdensome
for restaurants because, according to the comment, a ``good''
restaurant ordinarily keeps track of ingredient quantities to evaluate
food preparation costs. Several comments stated that ample resources
exist to aid restaurants in developing menu items that comply with
FDA's requirements. They noted that applying the new requirements to
menus would not interfere with a restaurant's ability to provide
dietary guidance on a menu, e.g., to identify those foods with a
nutrient content such that the food could be helpful to consumers in
achieving a diet consistent with the dietary guidelines of a
professional health organization.
A number of comments stated that it is important that claims be
used in a consistent manner across the food industry. One comment
argued that exempting menus from the nutrient content claims and health
claims provisions would create an uneven playing field between
restaurateurs and food processors. Another comment maintained that the
need for a single rule for the use of claims is further evidenced by
FTC's decision to adopt FDA's definitions for nutrient content claims.
Conversely, a number of comments stated that the menu exemption
provides critical flexibility to the restaurant industry. Comments
cited numerous differences between restaurant foods and standardized,
processed foods, including: Ingredient supply sources, methods of
preparation, and marketing. One comment stated that many food service
operations find the new regulations to be burdensome and poorly suited
to the food service industry. Another comment argued that the nutrition
labeling regulations would impose a greater burden on restaurants than
on food manufacturers because restaurants may change their menus more
than once a day, for example, between lunch and dinner. Several
comments stated that revoking the menu exemption would create a barrier
to the dissemination of beneficial information to the consumer, would
increase the cost of creating and promoting nutritionally improved
foods, and would ultimately limit the number of nutritionally improved
foods in restaurants.
In response to comments that compliance with the requirements of
the 1990 amendments will be burdensome, FDA notes that these rules
place no affirmative requirements on restaurants that do not make
claims. In other words, a restaurant would be in complete compliance
with the new regulations if it simply refrained from making a nutrient
content claim or a health claim. However, FDA does not believe such a
situation would be the most desirable outcome.
As stated in the nutrient content claims final rule (58 FR 2302),
two of the goals of the 1990 amendments are to provide for information
that can assist consumers in maintaining healthy dietary practices and
to encourage product innovation through the development and marketing
of improved foods. FDA has concluded that, for information to be useful
to consumers, nutrient content and health claims must be valid. At the
same time, the agency has recognized that there are sources of
variation unique to restaurant foods (e.g., methods of preparation).
Consequently, to ensure that the new requirements do not place an
unreasonable burden on restaurants, FDA has included a number of
provisions to provide flexibility in how these requirements can be met
in a restaurant situation. For example, as stated above,
Secs. 101.13(q)(5)(ii) and 101.14(d)(2)(vii)(B) provide that a
restaurant may make a nutrient content claim or a health claim for a
food as long as it has a ``reasonable basis'' for believing that the
food contains the requisite level of the nutrient in question (58 FR
2302 at 2387 and 58 FR 2478 at 2516). The ``reasonable basis''
criterion provides that nutrient content levels may be determined by
use of nutrient data bases, cookbooks, analyses, or other sources that
provide reasonable assurance that the food meets the criteria for a
claim.
FDA also notes that restaurants may develop and market menu items
that help consumers to achieve certain dietary goals without subjecting
the food to the requirements of the 1990 amendments. For example,
restaurants may offer alternative selections whose value in a diet that
conforms to dietary guidelines may be recognized by consumers without
elaboration, e.g., raw vegetables, steamed vegetables, pasta with a
tomato based sauce instead of a cream sauce, a grain dish, or a fresh
fruit plate. Optional preparation or serving methods may be highlighted
on menus by statements such as ``may be prepared with half the oil on
request,'' ``smaller portions,'' or ``dressings and sauces available on
the side.''
Further, foods that meet the dietary guidelines of a recognized
dietary authority or health professional organization may be
highlighted without subjecting the food to the nutrient content claims
regime, provided the statement that a food meets dietary guidelines
does not go on to characterize the level of a nutrient in the food
(Sec. 101.13(q)(5)(iii)). For example, a restaurateur may signal to
consumers by the use of a term or symbol that a meal is formulated in
complete accordance with the Dietary Guidelines for Americans (e.g.,
moderate calories, less than 30 percent of calories from fat, less than
10 percent of calories from saturated fat, emphasis on vegetables,
fruits, and grain products,
[[Page 40324]]
and moderate use of sugars and sodium). Likewise, dietary guidance
that, within the context of the labeling, does not meet the definition
of a health claim, i.e., does not include both the food or substance
element and the disease-related element (e.g., ``eating five fruits and
vegetables a day is an important part of a healthy diet''), would be
considered dietary guidance and not a health claim subject to section
403(r) of the act (Sec. 101.14(a)(1)). FDA advises that foods bearing
statements outside the coverage of section 403(r) of the act are still
subject to section 403(a) of the act, which requires that the label be
truthful and not misleading, and to section 201(n) of the act which
describes the circumstances in which labeling is misleading.
The agency acknowledges that a significant effort will be required
on the part of some restaurants to examine their meals and menus to
ensure that they are in compliance with the new regulations. However,
many of the comments that argued that the requirements for nutrient
content claims and health claims would be burdensome for restaurants
consistently evidenced a significant misunderstanding of the relevant
provisions, such as the application of ``reference amounts customarily
consumed'' and the need for a ``reference food'' when making some types
of claims. For example, several comments seemed to believe that
restaurants would be forced to alter their portion sizes to be
identical to the established reference amounts. Another comment
expressed the belief that restaurants would be required to declare the
serving size of its food as the same as the reference amount, even if
the amount served differed from the reference amount. A number of
comments expressed concern that restaurateurs would be required to
develop recipes for, analyze, and market, a reference food for every
food that bears a claim. Several comments maintained that there is not
enough room on menus to provide the nutrition information that they
assumed FDA would require.
The agency advises that there is no basis for the concerns
expressed by these comments. In a January 6, 1993, final rule, entitled
``Food Labeling; Serving Sizes'' (58 FR 2229) (hereinafter referred to
as the ``serving size final rule''), FDA defined reference amounts, and
the serving sizes derived from them, on the basis of the amount of food
customarily consumed per eating occasion (reference amount customarily
consumed or ``reference amount'') in order to facilitate comparison of
the nutrient content of similar foods. FDA established reference
amounts for 139 food product categories (Sec. 101.12 (21 CFR 101.12)).
The agency provided that, in order to make certain nutrient content
claims or health claims, a food must meet the criteria for the claim
based on the amount of the particular nutrient present in the reference
amount of the food. For example, the reference amount for all soups is
245 grams (g) based on a serving size of 1 cup. However, restaurants
may offer soup in more than one portion size, e.g., by the cup and by
the bowl. In order to bear a ``low fat'' claim a cup of soup may
contain up to 3 g of fat per reference amount (245 g). If this same
soup is served to customers in a bowl that contains 367 g of soup (367
g serving/245 g per reference amount for all soups = 1.5), it may
contain up to 4.5 g of fat (3 g of fat per reference amount x 1.5 = 4.5
g of fat) and still be labeled ``low fat.''
Criteria for claims on meals and main dishes (as defined in
Sec. 101.13(l) and (m)) are generally based on the level of a nutrient
in 100 g of the food. For example, a ``low fat'' meal weighing 333 g
can contain up to 10 g of fat (333 g serving /100 g = 3.3; 3 g of fat
per 100 g of food x 3.3 = 10 g of fat). Again, a restaurant serving a
larger portion of a meal or main dish item is not at a disadvantage
compared to other food sources when making a ``low fat'' claim. FDA
advises, however, that some claims, e.g., ``free'' claims and
cholesterol claims, have additional criteria based on the labeled or
actual serving size. The criteria for specific nutrient content and
health claims are set out in part 101 (21 CFR part 101).
FDA advises that it is not necessary for restaurants to produce and
market a reference food in order to sell a food that bears a claim.
Reference foods are necessary only for comparative nutrient content
claims, i.e., claims about the level of a nutrient in one food compared
to another, such as ``reduced sodium'' or ``less fat.'' Provisions for
the use of data bases and other means to determine nutrient values for
an appropriate reference food are set out in Sec. 101.13(j)(1)(ii). FDA
also advises that, while restaurants are required to provide nutrition
information on request for foods that make a claim, FDA is providing
considerable flexibility in Sec. 101.10 as to the type of nutrition
information that must be provided and on how this information can be
provided. For example, in a restaurant situation, nutrition information
may be presented in various forms, including those provided in
Sec. 101.45 and by other reasonable means (e.g., using posters, fliers,
brochures, notebooks, or communicated orally by restaurant staff). In
sum, FDA notes that the types of misconceptions presented by these
comments have resulted in a perception of burdens that do not in fact
exist.
Given the flexible provisions, such as the ``reasonable basis''
criterion that the agency set out in the claims final rules, FDA
concludes that most restaurants that wish to make claims will be able
to do so. Further, as stated in several comments, many resources,
including Federal, State, and local governments; professional health
organizations; and dietary professionals, are available to aid
restaurants in their efforts to comply with FDA's requirements.
Moreover, as stated above, FDA has made available the labeling guidance
document to assist restaurants and other retail establishments in
developing or revising their labeling to comply with the new
requirements.
Although these resources will likely be sufficient to meet the
needs of restaurateurs for information, FDA is willing, if necessary,
to take other steps to help restaurants, particularly small
restaurants, to understand and respond to the requirements established
in this final rule. The agency requests that restaurateurs contact the
agency (see address above) if they believe that it would be useful to
have a national meeting or regional meetings to discuss what is
required for health or nutrient content claims made on menus to comply
with FDA's regulations. If the agency receives a sufficient expression
of interest, it will hold such a meeting or meetings. If it decides to
hold a meeting, FDA will provide ample notice of the time and place in
the Federal Register.
While FDA acknowledges that some restaurants may discontinue
offering improved food selections because menus have to comply with the
requirements for claims, the agency concludes that most restaurants
will continue to work to develop improved foods about which they can
make claims. Consumer interest in improved food choices provides a
continuing incentive for such efforts. The number of menus that
currently bear claims and other nutrition information evidences the
impact of consumer demand. FDA intends to work, as described above, to
help restaurants to minimize the number of claims that are removed and
to monitor the extent of this effect.
3. One comment argued that the First Amendment to the Constitution
protects menus through its guarantee of freedom of the press. Another
comment stated that FDA is not authorized to regulate restaurant foods
under the Tenth
[[Page 40325]]
Amendment, as this power is not one provided for in Article I, Section
8, of the Constitution.
The agency disagrees. FDA's authority to regulate the content of
the labels and labeling of food in interstate commerce has been broadly
upheld against First Amendment and other constitutional challenges. The
agency's authority to regulate food labeling, including the labeling of
restaurant foods, is discussed at length in the claims final rules (58
FR 2302 at 2392 and 58 FR 2478 at 2524), which are incorporated herein
by reference. The comments did not provide any information, or make any
arguments, that the agency has not previously considered and found to
be without merit.
4. Several comments maintained that FDA cannot legally justify
reversing its policy with respect to restaurant menus. These comments
maintained that FDA has received no new information or facts since the
claims final rules on which to base its reconsideration. They further
maintained that the proposal to delete the menu exemption without, in
the comments' opinion, adequately explaining the departure from the
past norm constitutes arbitrary and capricious rulemaking and is a
violation of the APA.
FDA disagrees with these comments. An agency may always change its
mind and alter its policies. Conference of State Bank Examiners v.
Office of Thrift Supervision, 792 F. Supp. 837, 845 (D.D.C. 1992).
While the burden is on the agency to justify the change from the status
quo, that justification need not consist of an affirmative
demonstration that the status quo is wrong. It may also consist of a
demonstration that there is no cause to believe that the status quo is
right, so that the existing rule has no rational basis to support it.
Center for Auto Safety v. Peck, 751 F.2d 1336, 1349 (D.C. Cir. 1985).
Concern about whether a rational basis existed for the agency's
rule is exactly what motivated FDA. In its June 15, 1993, proposed
rule, the agency pointed out that, in confronting the issue of what
defines a menu in the wake of the publication of the January 6, 1993,
final rules, it found that it was virtually impossible to distinguish
menus from other types of restaurant labeling, such as signs, placards,
and other types of point of purchase information that are covered under
the agency's rules (58 FR 33055 at 33056). Thus, the agency had ample
basis to be concerned about the distinction that it had drawn in the
final rules. This concern was underscored by technical comments that
the agency received on the menu exemption (id). The conclusion that the
agency has reached based on its consideration of the comments that it
received on the June 15, 1993, proposed rule is that there is, in fact,
no rational basis for distinguishing menus from other types of
restaurant labeling, and, therefore, FDA is revoking the provisions
that established that distinction.
5. One comment objected to what it perceived as the agency's
inability to define menus in the June 15, 1993, proposed rule. The
comment maintained that this problem was not a reasonable basis for
deleting the menu exemption. The comment argued that, at the least, FDA
should issue an advanced notice of proposed rulemaking on this issue.
FDA believes that the comment misinterpreted the agency's statement
in the June 15, 1993, proposed rule (58 FR 33055 at 33056), about
distinguishing between menus and other restaurant labeling. FDA did not
say that it could not define menus, but rather, that the agency found
that it is virtually impossible to distinguish menus from other types
of restaurant labeling, such as signs, placards, and other point of
purchase information, that the agency said in the claims final rules
would be covered.
The agency notes that if its problem were one of defining ``menu,''
it has numerous sources to which it could turn. Webster's II New
Riverside University Dictionary defines ``menu'' as ``A list of the
food and drink available or to be served for a meal.'' Comments
received during the 30-day technical comment period to the claims final
rules provided additional guidance, stating that a menu ``includes any
medium available to consumers in a restaurant that can be consulted in
making a purchasing decision in terms of food selection or price.'' One
comment stated that ``A broad range of formats are used to convey
selection and price information on which consumers rely. These formats
are all properly ``menus'.''
However, the problem that the agency stated that it was having in
June of 1993 was one of drawing a rational distinction that would
justify its treatment of menus on the one hand and of other types of
restaurant labeling on the other. Such a distinction is particularly
difficult to draw given that some of the same types of restaurant media
that FDA said were covered in the claims final rules, e.g., signs,
posters, and placards, are used, like menus, to convey purchase
information to consumers. Both menus and non-menu media may be used to
provide restaurant patrons with information about the foods available
in a restaurant.
Accordingly, for the foregoing reasons, FDA is amending its food
labeling regulations by removing the provisions of the regulations that
exempt nutrient content claims and health claims made on restaurant
menus from the coverage of these regulations. Specifically, FDA is
amending the regulations by removing: (1) From Sec. 101.10, pertaining
to nutrition labeling of restaurant foods, the language that reads ``*
* * (except on menus)''; (2) from Sec. 101.13(q)(5), pertaining to
nutrient content claims on restaurant foods, the language that reads
``* * * (except on menus)''; and (3) from Sec. 101.14(d)(2)(vii)(B),
pertaining to health claims on restaurant foods, the language that
reads ``* * * (except if the claim is made on a menu).'' Thus, the
requirements of FDA's food labeling regulations will be applied to all
forms of restaurant labeling, including menus, signs, posters, or
placards, that bear a nutrient content claim, health claim, or
otherwise characterize the level of a nutrient in a food.
6. One comment suggested that FDA specify that the term ``menu''
applies to all types of menus, including wallboards, take- out menus,
and menus delivered to the table.
FDA advises that, in the claims final rules, it differentiated
between menus and non-menu media by describing those media that it did
not consider to be menus, e.g., posters, signs, and placards. However,
as discussed in response to the preceding comment, the agency has
determined that it is virtually impossible to distinguish between menus
and other media that are used to convey purchase information to
consumers. Therefore, FDA is amending its food labeling regulations by
removing the provisions that exempt menus from the coverage of these
regulations. Because the requirements will be applied to all forms of
restaurant labeling that bear a claim, the issue of distinguishing
between menus and non-menu labeling is rendered moot.
B. Modification of Effective Date
The claims final rules provided that regulations governing the use
of health claims in restaurant labeling (other than menus) would become
effective on May 8, 1993, except for small restaurant firms consisting
of 10 or fewer establishments for which these provisions were to become
effective 1 year later, i.e., May 8, 1994. With respect to the use of
nutrient content claims and other nutrition information in restaurant
labeling (except for menus), FDA's requirements were to
[[Page 40326]]
become effective on May 8, 1994, for medium and large restaurant firms
and on May 8, 1995, for small firms.
In the claims final rules, FDA stated that it recognized that a
significant effort would be necessary on the part of restaurants to
show that they have a reasonable basis to believe that their food
complies with FDA's regulations for the use of nutrient content claims
and health claims. At that time, the agency believed that it would be
especially difficult for small restaurants to become familiar with
Federal requirements and to determine how to apply these requirements
to their individual food selection and preparation methods in a short
time. Consequently, FDA had decided that small restaurants should be
given the additional time (i.e., 1 year) to come into compliance.
During the technical comment period, FDA received information that
convinced the agency that it was appropriate to reconsider its decision
to delay the effective date of the claims requirements for small
restaurants. Thus, in its June 15, 1993, proposed rule (58 FR 33055 at
33057), FDA proposed to modify the delay in the effective dates for
small restaurant firms. However, based in part on numerous demands
associated with implementing the 1990 amendments and the agency's
limited resources, this speed-up did not happen. FDA's efforts to move
up those dates have effectively been rendered moot by the agency's
inability to issue a final rule. Consequently, the following comments
are now only relevant as they apply to restaurant menus.
1. Delay for Small Restaurants
7. One comment argued that compliance would be more difficult for
small firms compared to large restaurant chains because of limited
resources. The comment did not, however, provide any information that
the agency had not previously considered. Another comment maintained
that an extension for small restaurants is justified by the ``lack of
real harm'' to the public from such a delay.
Conversely, the majority of letters that addressed the proposed
modification in effective dates supported the agency's proposal to
establish uniform effective dates for all restaurants. These comments
maintained that there is no appropriate basis for differentiating among
restaurants based on size when establishing a date by which each must
comply with FDA's requirements. Thus, the comments stated, the agency
should enforce its labeling requirements for large and small
restaurants, at the same time. However, the comments contained numerous
and varied suggestions as to when the new effective dates should be.
Having considered the comments, FDA concludes that, although there
are some areas where small restaurants may be at a disadvantage
compared to large restaurants, e.g., the cost of a one-time menu change
relative to more limited resources, in most respects, the distinction
between small restaurants and larger restaurants is not as great as the
agency had believed when it issued the January 6, 1993, final rules.
For example, not all restaurant firms with greater than 10
establishments are familiar with the new requirements or have
established nutrition support personnel. Further, in establishing the
requirements for restaurant labeling in the claims final rules, the
agency worked with restaurant industry representatives to make its
requirements feasible for both large and small restaurants. FDA advises
that the flexibility built into these requirements, e.g., the
``reasonable basis'' criterion, provides a wide range of options for
how a restaurant may determine the nutrient content of its food, and
how it communicates this information to consumers. FDA finds that this
flexible approach will allow most restaurants, including small
restaurants, to choose options that fit their own needs and resources.
Thus, FDA finds nothing in the comments that would provide a basis for
differentiating among restaurants based on size when establishing a
date by which restaurants must comply with these requirements.
2. Establishment of Effective Date for Menus
FDA is removing the exemption for menus that it adopted
inappropriately. While, in light of overwhelming support from comments
and in the absence of any new information to the contrary, FDA has
concluded that the same date of applicability should apply to menus in
all restaurants, regardless of size, the agency wants to be sure that
the effect of its decision is not punitive for restaurants. FDA finds
that it has flexibility in setting the date by which menus must comply
with its requirements for claims. Thus, the agency is using that
discretion in setting the date by which menus must comply with the
rules on the use of claims. The issue that FDA has considered is what
effective date will provide all restaurants with a reasonable amount of
time to make any necessary changes in their menus while providing
consumers with useful information as quickly as possible.
8. A few comments stated that restaurant menus should comply with
FDA's requirements by the same date as labeling on foods from other
sources, i.e., May 8, 1994. These comments stated that to delay the
effective date for compliance by restaurant menus beyond May 8, 1994,
would create an uneven playing field between restaurants and food
processors. The comments further argued that any extension for
restaurants beyond May 8, 1994, would violate the mandatory effective
dates provided by the 1990 amendments. Another comment also tied the
effective date for restaurant labeling with the date of applicability
for other foods, except that it suggested that restaurants should have
an additional 4 months after the May 8, 1994, deadline (i.e., until
September 8, 1994) to bring their menus into compliance.
FDA does not agree that it must establish the same effective dates
for restaurant menus as for other food labeling. As stated above, FDA
must act in an equitable manner in removing the exemption for
restaurant menus. Although the agency continues to strive for
consistency within the framework of the 1990 amendments, this
rulemaking to amend certain provisions of the January 6, 1993, final
regulations cannot reasonably impose the same deadlines that the agency
imposed in the final regulations implementing the 1990 amendments that
it promulgated over 40 months ago. Further, the date of publication of
this final rule obviously makes an effective date of May 8, 1994, moot.
9. One comment suggested that compliance with FDA's requirements
begin 1 year from the date of the last menu printing. In support of its
suggestion, the comment stated that many restaurants change their menus
yearly, and that it would be costly for restaurants to change menus in
midyear to comply with the new regulations. The comment did not,
however, provide data on the number of restaurants that will need to
make changes in their menus or on the number of restaurants that do not
normally change their menus more than once a year.
FDA notes that restaurants vary widely in the frequency with which
they print new menus. Comments to the June 15, 1993, proposed rule,
stated that menus may be printed infrequently, annually, daily, or even
for each meal. Given the wide variance in practices within the
industry, the agency finds that establishing a compliance date that is
based on a date that is a given period of time from the last menu
printing would be impractical from an enforcement standpoint. It would
be extremely difficult to ensure compliance with an application date
that varies
[[Page 40327]]
from one establishment to another. In such a situation, compliance
checks would require not merely looking at the labeling but also
determining the date on which labels had last been revised.
Further, establishing an application date that, as it is phased in,
affects only some establishments, is inconsistent with the
establishment of a single effective date for labels on foods from other
sources. As stated in the August 18, 1993, technical amendments (58 FR
44033 at 44035), the nutrition labeling requirements apply to food
labeled after May 8, 1994. The agency stated that the term ``labeled''
means the date that the label is affixed to the food. FDA notes that
each time a menu is used in a restaurant to convey purchase information
about a food served in the restaurant, such use is analogous to
affixing a label to a packaged food. Thus, establishing a specific date
of applicability for restaurant menus, such that the date applies to
the date that any menu is used as labeling in any restaurant, would be
consistent with the treatment of labels on foods from other sources.
Finally, confusion could result from a situation in which, for
example, two neighboring restaurants use identical claims on identical
menus, one restaurant that makes claims would use terms in a manner
that complies with FDA's requirements, while the restaurant that
printed its menus less than a year earlier would not. Moreover, a
restaurant that has not changed its menu in some time because of
limited resources could be forced to change its menu sooner than a
larger restaurant that had recently printed new menus. Such an outcome
would make no sense.
FDA concludes that it is more appropriate to establish an effective
date for applying its requirements to menus based on a given amount of
time following the date on which this final rule publishes rather than
an arbitrary date, such as the date of the last menu change, that may
vary between restaurants. This approach will ensure that all
restaurants will have a specified amount of time to change menus to
comply with any applicable requirements, and that the amount of time
will be based on an accommodation of both consumer and industry needs,
rather than an arbitrary date that will vary between restaurants.
10. A number of comments agreed with FDA's proposal that the
modified effective dates for restaurant menu labeling should allow
restaurants to achieve compliance within an amount of time similar to
the time that other food producers have had, and that the effective
dates should be uniform for all restaurants, regardless of size. These
comments stated that all restaurants should be required to comply with
health claims regulations 4 months after publication of a final rule
and with nutrient content claims regulations 1 year after publication,
as proposed. One comment stated that the date of applicability for
requirements for menus bearing nutrient content claims should be based
on the same amount of time that packaged foods had, i.e., 16 months
after publication of the January 6, 1993, final rules.
Alternatively, several comments maintained that compliance with the
nutrient content claims regulations would be no more difficult than
compliance with the requirements for the use of health claims, and
that, consequently, restaurant menus should be required to comply with
both regulations at the same time. Comments were divided, however, as
to whether the single effective date for both nutrient content claims
and health claims should be 4 months or 12 months after the date of
publication of a final rule.
FDA has carefully considered how much time should be given for
restaurant menus to be brought into compliance with the nutrient
content claim and health claim labeling requirements. FDA's
consideration has been guided by section 10 of the 1990 amendments.
That provision made the nutrient content claim and health claim
provisions effective 6 months after enactment but gave FDA the
authority to delay application of the nutrient content claim
requirements for up to 1 year if it found that compliance with those
requirements would cause undue economic hardship (section 10(a)) of the
1990 amendments). FDA took advantage of the latter provision. FDA notes
that a number of the factors that influenced the agency's decision to
delay the application of the nutrient content claims requirements in
the January 6, 1993, final rule do not have equal application with
respect to this rulemaking.
One factor that influenced FDA's decision to delay the
applicability date was the amount of effort that would be necessary to
learn about how to come into compliance with the new rules (56 FR 60856
at 60862, November 27, 1991). The agency notes that, since publication
of the January 6, 1993, final rules, FDA and other organizations have
been active in disseminating information about the new food labeling
requirements. Because access to information about these requirements,
and the number of resources available to facilitate compliance with
these requirements, have grown, the effort required on the part of a
restaurateur who is not familiar with the requirements to obtain
information about them has been reduced compared to that which was
required for makers of other types of food. Moreover, the effort
required for compliance by restaurateurs is even further reduced by the
flexible provisions that FDA has established specifically for
restaurant situations, e.g., providing the ``reasonable basis''
criterion for nutrient content determinations.
A second factor that influenced FDA's decision was the amount of
time needed to come into compliance with the labeling requirements (56
FR 60856 at 60862). The type of labeling used in restaurants reduces
the amount of time, compared to other food sources, that is reasonably
necessary to achieve compliance. For example, for packaged foods that
bear nutrient content claims, manufacturers needed time to use up
preexisting labels to reduce the cost of complying with the new
requirements. Conversely, menu inventory is generally not affected by a
food purchase. Further, many restaurants use menus that may be revised,
printed, and copied in-house, thereby avoiding the queue at printers
that affected many food manufacturers. Therefore, providing time for
bringing menus into compliance will not have the same effects on the
costs of a restaurateur that it had on the costs of the manufacturer.
Consequently, FDA concludes that significant circumstances that
justified a1-year delay in the applicability of the nutrient content
claims provisions for packaged foods do not apply to restaurant foods.
Moreover, in the June 15, 1993, proposed rule (58 FR 33055 at
33058), FDA cited an informal survey by the National Restaurant
Association indicating that up to 89 percent of all printed menus
include at least one claim. Based on information in the survey, FDA had
assumed that more restaurants were making nutrient content claims than
health claims, and that, consequently, a larger effort would be
required on the part of restaurants to ensure compliance with
requirements for nutrient content claims compared to health claims. The
agency tentatively concluded that a date of applicability of 4 months
after the publication of a final rule would be sufficient to ensure
compliance with the requirements for health claims.
FDA continues to believe that few if any restaurant menus bear
express health claims, such as ``a diet low in sodium may contribute to
a reduced risk of high blood pressure, a disease associated with many
factors,'' on their
[[Page 40328]]
menus. However, a number of comments to the June 15, 1993, proposed
rule provided examples of menus that bear terms and symbols (e.g.,
heart symbols and terms such as ``heart healthy'') in a manner that
makes them implied health claims under the act. Based on this
information, and on information gleaned by FDA from informal inquiries
from the industry (Ref. 1), FDA concludes that the number of
restaurants making health claims is greater than it had previously
assumed.
Furthermore, because of the flexible provisions that FDA has
established for restaurant foods, it may be easier for a restaurant to
establish that a food qualifies to bear a nutrient content claim (e.g.,
that a ``low fat'' food contains no more than 3 g of fat per reference
amount) than that it qualifies to bear a health claim (i.e., that, in
addition to the criterion for the nutrient in the claim, the food
contains less than the disqualifying levels for fat, saturated fat,
sodium, and cholesterol, and 10 percent or more of the Reference Daily
Intake or Daily Reference Value for vitamin A, vitamin C, iron,
calcium, protein, or fiber per reference amount prior to nutrient
addition). The agency concludes that the effort required on the part of
restaurants that want to make health claims in their menus (e.g., to
obtain, read, and understand FDA's regulations; to develop a
``reasonable basis'' for making claims; to generate nutrition
information for consumers; and, in some cases, to modify a food or its
labeling) will be as great, if not greater, than that required of
restaurants making nutrient content claims.
The agency notes that, in establishing a specific effective date,
its goal is to ensure that consumers have access to useful nutrition-
related information as quickly as possible while providing
restaurateurs with sufficient time to make necessary changes. FDA does
not believe that all restaurant menus could be reasonably expected to
comply with the health claims requirements within the proposed 4-month
timeframe. While many restaurants have already begun actions to come
into compliance, especially larger restaurants that make claims on non-
menu labeling, some restaurants that use only menus to convey purchase
information may not be familiar with the requirements or know how to
obtain the necessary information to determine whether their menus are
in compliance. FDA further notes that an effective date for its
requirements for restaurant menus that bear nutrient content claims of
4 months after the publication of this final rule, as suggested by some
comments, would provide restaurant foods significantly less time than
had been afforded foods from other sources. Thus, a compliance period
of 4 months after publication would place restaurants offering improved
foods and promoting these foods on their menus at a disadvantage
compared to other food manufacturers.
Conversely, FDA concludes that it is not necessary for restaurant
menus to have the same amount of time that other food labeling
producers were given. Based in part on the amount of time that
information on the criteria that will be applied to menus has been
available (i.e., since January 6, 1993), and on the flexible rules it
has adopted for restaurants, FDA concludes that a compliance period of
12 or 16 months is longer than is necessary for menus, and that such a
time period would unduly delay consumer access to useful information.
After considering the foregoing, FDA has decided to establish a
single date of applicability for both the nutrient content claim and
health claim requirements for menus and to establish that date as May
2, 1997. This date will provide restaurateurs with 9 months to bring
their menus into compliance. FDA has decided to provide 9 months based
on the following three factors: First, 6 months is the amount of time
that Congress provided for compliance with these provisions in the
absence of undue economic hardship (section 10 of the 1990 amendments).
Second, FDA finds that, based on the economic impact analysis in this
rulemaking, unlike for non-restaurant foods, economic hardship does not
exist. Consequently, the agency has no basis for providing an
additional year for compliance by restaurant menus. Third, in Pub. L.
103-261, Congress provided non-restaurant food manufacturers with an
additional 3 months to achieve compliance with the new labeling rules.
Consequently, FDA finds that establishing May 2, 1997 as the effective
date for the amendments that it is making to Secs. 101.10,
101.13(q)(5), and 101.14(d)(2)(vii)(B) and (d)(3), and, thus, as the
date that menus must be in compliance, is consistent with the treatment
of non-restaurant foods. FDA believes that establishing a single date
will benefit both consumers and industry. FDA notes that the different
effective dates for nutrient content claims and for health claims in
non-menu labeling in small restaurants and in larger restaurants have
created a great deal of confusion about what requirements are effective
at a given time. The agency concludes that establishing different dates
for the use of health claims and of nutrient content claims in menus
would only further compound this confusion. FDA finds that, in light of
the confusion expressed by comments and in informal communications with
the agency (Ref. 1), establishing a uniform date for all types of
claims on menus makes the most sense. The agency further finds that a
single effective date for menus will prevent the consumer confusion
that could result from a restaurant using a menu that bears some types
of claims that are consistent with the new requirements and other
claims that are not. In addition, a single effective date for all menu
claims will aid compliance by giving restaurants a single date by which
to make necessary changes, regardless of the kind of statement (e.g.,
nutrient content claim, health claim, third party endorsement, or
dietary guidance) used to present nutrient information to consumers.
Thus, a single date will avoid the need to change menus twice within
the compliance period. The agency concludes that, for efficient
enforcement of the act, establishing a single effective date for both
nutrient content claims and health claims on menus is desirable and
appropriate.
Moreover, given the amount of time that FDA's labeling rules have
been in place, an effective date of May 2, 1997, will provide ample
time for restaurants to bring their menus into compliance without
unduly delaying consumer access to useful nutrition-related
information. An effective date of May 2, 1997, will also provide time
for FDA and other regulatory officials to work with restaurants,
consumers, dietitians, health professional organizations, and other
interested parties to ensure that the agency's regulations are
adequately implemented with respect to restaurant menus.
Thus, the deletion of the phrase ``(except for menus)'' that
exempted menus from nutrient content claim requirements in Secs. 101.10
and 101.13(q)(5) will be effective on May 2, 1997. Likewise, the
deletion of the phrase ``(except on menus)'' that exempted menus from
health claim requirements in Sec. 101.10 and the phrase ``(except if
the claim is made on a menu)'' in Sec. 101.14(d)(2)(vii)(B) will also
be effective on that date.
III. 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.
[[Page 40329]]
IV. 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. 601-612). Executive Order 12866 directs agencies to assess all
costs and benefits of available regulatory alternatives and, when
regulation is necessary, to select the regulatory approach that
maximizes net benefits (including potential economic, environmental,
public health and safety effects; 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 significant economic
impact of that rule on those small entities. FDA finds that this final
rule is 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 economic impact on a substantial number of small
entities.
A. Background
In the Federal Register of January 6, 1993 (58 FR 2927), FDA
published a final regulatory impact analysis (RIA) of the final rules
implementing the 1990 amendments (hereinafter referred to as the
January 6, 1993, RIA). In that document (58 FR 2927 at 2934), FDA
presented costs of compliance with the 1990 amendments for food service
establishments. Although the agency did not include menus in its
regulatory coverage of the nutrient content claims and health claims
final rules, it assumed that restaurants would alter their menus to
comply with the agency's definitions because of the possibility of
enforcement by the States. Consequently, FDA included the cost of
altering menus in its assessment.
In the June 15, 1993, proposed rule, FDA proposed to remove the
provisions that exempt restaurant menus from the requirements for how
nutrient content claims and health claims are to be made. Because the
agency originally assumed that restaurants would alter their menus in
order to comply with the regulations so as to avoid State enforcement,
FDA assumed that the proposed action to include menus in the agency's
regulatory coverage would not result in any significant increase in
costs to food service establishments beyond that estimated in the
January 6, 1993, RIA.
B. Costs of the Final Regulation
The following estimates are based on both quantitative and
anecdotal information provided in the comments. However, FDA has
previously stated that it lacks in-depth data on a number of issues
related to the food service industry (56 FR 60537 at 60554, November
27, 1991). Therefore, while these estimates represent the best
information available to the agency, FDA acknowledges that there is
uncertainty in these estimates.
In the January 6, 1993 (58 FR 2927 at 2934), RIA, FDA estimated
that 75 percent of restaurants, including all small restaurants, would
normally alter menus before the applicable compliance date for nutrient
content claims and health claims on non-menu labeling (based on a 16-
month compliance period). The agency also assumed that, in revising
their menus, most restaurants would make changes to comply with the
regulations so as to avoid enforcement by the States. Consequently, FDA
estimated that only 14,500 commercial establishments would incur costs
attributable to the nutrient content claims and health claims final
rules. In the June 15, 1993, proposed rule, FDA repeated the
assumptions stated in the January 6, 1993, RIA, i.e., that most
restaurants would alter their menus in order to comply with the
regulations.
FDA received very few comments regarding its economic analysis of
the June 15, 1993, proposed rule. However, a few comments indicated
that the agency's assumption that most restaurants would alter menus to
comply with the agency's requirements because of the possibility of
enforcement by the States was not correct. FDA has anecdotal
information indicating that at least some restaurants have not yet
altered menus to comply with the claims requirements and would,
therefore, bear some cost of the agency's action to remove the
exemption for menus. However, the comments did not provide information
regarding the proportion of the industry that has not yet altered its
menus.
FDA notes that the costs of revising menus to comply with the new
requirements are one-time costs only. However, costs of ensuring that
claims are made on a reasonable basis and are in conformance with FDA
rules, and costs of maintaining that information and presenting it to
consumers on demand, are on-going costs, changing with new claims only
in the former case. FDA does not have information with which to
estimate these costs. However, those firms that would normally redesign
their menus within the compliance period will not incur costs
attributable to FDA's regulations. In the analysis of the proposed
rule, FDA estimated that 75 percent of all menus would normally be
revised during the compliance period ending in May 1994.
FDA received comments regarding the frequency of menu changes.
Comments varied in their estimates of the frequency of menu redesign,
ranging from several times a day to once a year. FDA concludes that,
taken as a whole, these comments do not significantly alter its
original assumptions about the rates at which restaurants alter menus,
that is, that an average of 5 percent of all restaurants would normally
alter their menus in a month and, thus, 45 percent of all restaurants
would normally alter their menus during a 9-month compliance period.
In previous analyses, FDA noted that, because it is requiring only
a reasonable basis to support claims in restaurant labeling, no
analytical testing is necessary. FDA has described a number of methods
by which a restaurant may determine the nutrient content of a food that
are less costly than chemical analyses. For example, a claim may be
based on nutrient data published in FDA's regulations for the voluntary
nutrition labeling of fresh fruits, vegetables, and fish. A claim may
also be based on nutrient data provided in USDA's Handbook 8,
information in a cookbook, or an analysis using a reliable database.
However, the cost of determining whether or not a reasonable basis
exists to support a claim is not zero. Estimates of the cost of these
sources range from $10 to $175 per claim (Ref. 2).
FDA now assumes that approximately 50 percent of the industry has
already redesigned menus to comply with the nutrient content and health
claims regulations. This rulemaking provides 9 months for menus to come
FR Doc. 96-19645 Food Labeling; Nutrient Content Claims and Health Claims; Restaurant Foods
into compliance with the claims requirements. FDA assumes that
approximately 45 percent of restaurants will normally alter their menus
during this compliance period; those restaurants can incorporate the
requirements of this regulation into their normally scheduled menu
revisions and, thus, will incur no regulatory costs associated with
menu changes.
According to the National Restaurant Association, there are
approximately 262,000 commercial establishments and 36,000 institutions
with a combined total of approximately 460,000 printed menus. Based on
a review of menus entered in the National Restaurant Association's
annual menu contest, the association estimated that 89 percent of all
printed menus include at least one nutrient content or health claim.
Although FDA has not challenged this
[[Page 40330]]
number, it has no basis on which to determine whether this number
fairly represents the situation in restaurants. Nonetheless, FDA is
using the 89 percent survey result as an upper-bound estimate of the
likelihood of typical menus bearing claims. The association also
indicated that at least 18 percent of the printed menus that it
reviewed would require more complex changes, such as the revision of an
entire section or symbol program (e.g., programs using a heart logo).
Based on the association's estimates and on the agency's revised
estimate of the number of menus that have already been changed to
comply with the nutrient content and health claims requirements, FDA
estimates that approximately 90,000 individual menus
[460,000 x (.89-.18) x (1-.45) x (1-.50)] would require simple changes
valued at $500 per menu, or $45 million. In addition, approximately
23,000 menus [406,000 x .18 x (1-.45) x (1-.50)] would require more
complex changes valued at $1,700 per menu, or $39 million. The cost of
establishing a reasonable basis to support a claim ranges between $10
and $175 per claim for each of the 113,000 menus, or a total cost of
between $1 and $20 million. FDA estimates that the total cost of
compliance for food service establishments would be between $85 million
and $104 million if none of the restaurants currently making claims on
menus have a reasonable basis to support their claims. However, because
significant time has elapsed since publication of the nutrient content
and health claims final rules, it is likely that at least one-third of
restaurants have a reasonable basis for believing that their foods meet
the nutrient requirements for the claims that they are making.
Therefore, the total costs of compliance are estimated to be between
$57 million and $69 million. However, if as many as 90 percent of
restaurants have a reasonable basis to support claims currently being
made, the regulations will result in costs of between $8.5 million and
$10 million.
C. Benefits
Requiring that health claims and nutrient content claims on menus
be consistent with FDA's definitions and with these types of claims
made on packaged foods will provide consumers with consistent,
reasonably based signals from restaurant menus with regard to health
claims and nutrient content claims that they can use to achieve dietary
goals. It is possible that information that is now on menus that
complies with FDA's requirements and that would aid consumers in
meeting dietary goals may be removed if a restaurateur believes that
the burden of proof to support a claim is too costly. However, FDA
believes that in many circumstances this will not be the case, because
the minimum amount of effort that a restaurant would have to go through
to validate a claim is not overly burdensome.
D. Regulatory Flexibility
FDA has examined the economic implications of the final rule as
required by the Regulatory Flexibility Act
(5 U.S.C. 601-612).
In this final rule FDA defines small commercial food service
establishments consistent with the Small Business Administration's
(SBA's) definitions (13 CFR part 121) as firms with $5 million or less
in total annual revenue. In addition, small institutional food service
establishments defined as those with less than $15 million in sales.
FDA estimates that approximately 66 percent of all of the firms
affected by this rule are small by SBA's definitions. Using that
figure, FDA estimates that there are approximately 173,000 commercial
food establishments and 24,000 institutional food establishments that
may be defined as small under these definitions. Using the same
assumptions as in the previous analysis, i.e., that 89 percent of all
printed menus contain at least one nutrient content or health claim,
then there are approximately 175,000 small establishments with 270,000
menus that contain claims. Using the same assumptions as above ((1) 50
percent have already revised their menus, (2) 55 percent of the
remaining establishments would not normally revise their menus within
the compliance period for this rule, and (3) 18 percent of these latter
establishments will have to make complex changes), approximately 9,700
small establishments will potentially have one-time costs of $1,700 to
make complex changes to each menu. In addition, approximately 38,000
small establishments will potentially have one-time costs of $500 to
make simple revisions to each menu.
In addition, firms will have initial and recurring costs of
ensuring that health claims and nutrient content claims are supported
by a reasonable basis and are in conformance with FDA's definitions of
terms. For each claim, a firm must establish via books, databases, or
by some reasonable means that the claim falls within FDA's definition.
The supporting information must be kept as long as the claim appears on
the menu and must be presented to customers on demand. Thus, as menu
items and claims change, the cost of establishing a reasonable basis is
incurred.
FDA has no data on how often firms change claims or how often
restaurant customers will ask to see the nutrition information for
foods that bear these claims. However, as stated earlier, cost
estimates of establishing a reasonable basis for a claim run between
$10 and $175 per claim. Assuming one future claim change or addition
per menu per year and an average of 1.5 menus per firm, costs to
determine a reasonable basis per firm will be between $15 and $260 per
year. As stated earlier, for existing claims, many firms already have
or would be likely to have established a reasonable basis for such
claims, and this analysis will continue to presume that at least one
third to as much as 90 percent of all firms would do so. Thus, average
total cost per small firm may range from as high as $2,135 to as low as
$765 in the first year for those who have menus with claims and between
$15 and $260 per firm for each subsequent year. Firms that neither have
claims nor would be expected to have them on their menus in the future
will not incur cost.
It is important to note that this rule provides flexibility for
restaurateurs in how they determine the nutrient content of a food and
in how they communicate this information to consumers, as described
above in the preamble. That is, for enforcement purposes, restaurateurs
need only show that they have a reasonable basis for the claim and that
the method of preparation does not violate the basis for the claim.
Therefore, the costs of this regulation for small businesses have been
minimized. Accordingly, under the Regulatory Flexibility Act, 5 U.S.C.
605(b) the Secretary certifies that this final rule will not have a
significant economic impact on a substantial number of small entities.
E. Summary
FDA has examined the impact of the final rule in accordance with
Executive Order 12866 and has determined that, while it is a
significant rule, it is not an economically significant rule. The rule
will result in total costs to restaurants of between $8.5 million and
$69 million, depending on the number of restaurants that can provide a
reasonable basis to support the claims currently in use.
FDA has also examined the impact of the final rule on small
entities in accordance with the Regulatory Flexibility Act and has
determined that it will not result in a significant burden on a
substantial number of small entities.
[[Page 40331]]
V. Paperwork Reduction Act
This final rule contains information collection requirements that
are subject to review by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The
title, description, and respondent description of the collection of
information are shown below with an estimate of the annual
recordkeeping burden. Included in the estimate is the time for
reviewing instructions, gathering necessary information, maintaining
records of that information, and making that information available upon
request.
Title: Food Labeling: Nutrient Content Claims and Health Claims;
Restaurant Foods.
Description: This regulation removes the provisions that exempt
restaurant menus from the requirements for how nutrient content claims
and health claims are to be made and from therequirements for the
provision of nutrition information with respect to the nutrients that
are the basis of the claim, when claims are made. Once it becomes
effective, Secs. 101.13(q)(5) and 101.14(d)(2)(vii)(B) will require
that nutrient content claims and health claims appearing on menus
comply with FDA's regulations for nutrient content claims in
Sec. 101.13 and subpart D of part 101 of this chapter and for health
claims in Sec. 101.14 and subpart E of part 101. Restaurants using
nutrient content claims or health claims on menus will be required by
Sec. 101.10 to provide nutrition information for the food that bears
the claim. Information on the nutrient that is the basis of the claim
may serve as the functional equivalent of complete nutrition
information as described in Sec. 101.9.
Because of the flexibility provided for restaurants in determining
the nutrient content of a food (they need only have a reasonable basis
that provides assurance that the food meets the requirements for the
claim) and in how this information may be communicated to consumers, a
wide range of options is available to restaurants in meeting the
information collection requirements imposed by this rule. For example,
a restaurant may choose to run a full nutrient profile analysis on a
group of items listed under a heading of ``low fat'' on its menu.
alternatively, it may chood to offer an item purchases from a
commercial manufacturer where the item is appropriately labeled by the
manufacturer as ``low fat.'' In such a case, the restaurant requirement
for the provision of nutrituin information with respect to the
nutrients that are the basis of the claim, when claims are made. Once
it becomes effective, Sec. Sec. 101.13(q)(5) and 101.14(d)(2)(vii)(B)
will require that nutrient content claims and health claims appearing
on menus comply with FDA's regulations for nutrient content claims in
Sec. 101.13 and subpart D of part 101 of this chapter and for health
claims in Sec. 101.14 and subpart E of part 101. Restaurants using
nutrient content claims or health claims on menus will be required by
Sec. 101.10 to provide nutrition information for the food that bears
the claim. Information on the nutrient that is the basis of the claim
may serve as the functional equivalent of complete nutrition
information as described in Sec. 101.9.
Because of the flexibility provided for restaurants in determining
the nutrient content of a food (they need only have a reasonable basis
that provides assurance that the food meets the requirements for the
claim) and in how this information may be communicated to consumers, a
wide range of options is available to restaurants in meeting the
information collection requirements imposed by this rule. For example,
a restaurant may choose to run a full nutrient profile analysis on a
group of items listed under a heading of ``low fat'' on its menu.
Alternatively, it may choose to offer an item purchased from a
commercial manufacturer where the item is appropriately labeled by the
manufacturer as ``low fat.'' In such a case, the restaurant would not
have to collect any additional information. All a restaurant must do to
satisfy the nutrition information requirement in Sec. 101.10 is provide
information to demonstrate that the food meets the requirements for any
nutrient content claim or health claim being made about the food. The
agency expects that restaurants will choose the least burdensome option
that complies with Sec. 101.10. Thus, FDA concludes that the
information collection requirements in this final rule will create a
minimal burden for restaurants.
Description of Respondents: Businesses or other for profit
organizations.
Estimated Annual Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
Annual Total
21 CFR No. of frequency of annual Hours per Total hours
recordkeepers recordkeeping records recordkeeping
----------------------------------------------------------------------------------------------------------------
Secs. 101.10, 101.13(q)(5), and 101.14
(d)(2)(vii)(B) and (d)(3)............... 265,000 1.5 397,500 1 397,500
----------------------------------------------------------------------------------------------------------------
Note: There are no operation and maintenance costs or capital costs associated with this information collection.
Although the June 15, 1993, proposed rule provided a 60-day comment
period, and this final rule incorporates the comments received, FDA is
providing an additional opportunity for public comment under the
Paperwork Reduction Act of 1995, which applies to this final rule but
which was enacted after the expiration of the comment period for the
June 15, 1993, proposal. FDA invites comments on: (1) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the agency, including whether the
information will have practical utility; (2) the accuracy of the
agency's estimate of the burden of the proposed collection of
information; (3) ways to enhance the quality, utility, and clarity of
the information to be collected; and (4) ways to minimize the burden of
the collection of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology, when appropriate. Individuals and organizations
may submit comments on the information collection requirements by
October 1, 1996. Comments should be directed to the Dockets Management
Branch (address above).
At the close of the 60-day comment period, FDA will review the
comments received, make revisions as necessary to the information
collection requirements, and submit the requirements to OMB for review
and approval. FDA will publish a notice in the Federal Register when
the information collection requirements are submitted to OMB, and an
opportunity for public comment to OMB will be provided at that time.
Additional time will be allotted for public comment to OMB. Prior to
the effective date of this final rule, FDA will publish a notice in the
Federal Register of OMB's decision to approve, modify, or
[[Page 40332]]
disapprove the information collection requirements. An agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number.
VI. 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, and may be seen by
interested persons between 9 a.m. and 4 p.m., Monday through Friday.
1. Smith, M.A., communications regarding labeling of restaurant
foods that bear a claim or other nutrition information, memorandum
to file, November 9, 1994.
2. Bush, L.M., communication regarding the cost of establishing
a reasonable basis for a claim, memorandum of telephone
conversation, September 14, 1994.
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 101.10 is revised to read as follows:
Sec. 101.10 Nutrition labeling of restaurant foods.
Nutrition labeling in accordance with Sec. 101.9 shall be provided
upon request for any restaurant food or meal for which a nutrient
content claim (as defined in Sec. 101.13 or in subpart D of this part)
or a health claim (as defined in Sec. 101.14 and permitted by a
regulation in subpart E of this part) is made, except that information
on the nutrient amounts that are the basis for the claim (e.g., ``low
fat, this meal provides less than 10 grams of fat'') may serve as the
functional equivalent of complete nutrition information as described in
Sec. 101.9. Nutrient levels may be determined by nutrient data bases,
cookbooks, or analyses or by other reasonable bases that provide
assurance that the food or meal meets the nutrient requirements for the
claim. Presentation of nutrition labeling may be in various forms,
including those provided in Sec. 101.45 and other reasonable means.
3. Section 101.13 is amended by revising the introductory text of
paragraph (q)(5) to read as follows:
Sec. 101.13 Nutrient content claims--general principles.
* * * * *
(q) * * *
(5) A nutrient content claim used on food that is served in
restaurants or other establishments in which food is served for
immediate human consumption or which is sold for sale or use in such
establishments shall comply with the requirements of this section and
the appropriate definition in subpart D of this part, except that:
* * * * *
4. Section 101.14 is amended by revising paragraphs (d)(2)(vii)(B)
and (d)(3), introductory text, and adding paragraph (d)(3)(i) to read
as follows:
Sec. 101.14 Health claims; general requirements.
* * * * *
(d) * * *
(2) * * *
(vii) * * *
(B) Where the food that bears the claim is sold in a restaurant or
in other establishments in which food that is ready for immediate human
consumption is sold, the food can meet the requirements of paragraphs
(d)(2)(vi) or (d)(2)(vii) of this section if the firm that sells the
food has a reasonable basis on which to believe that the food that
bears the claim meets the requirements of paragraphs (d)(2)(vi) or
(d)(2)(vii) of this section and provides that basis upon request.
* * * * *
(3) Nutrition labeling shall be provided in the label or labeling
of any food for which a health claim is made in accordance with
Sec. 101.9; for restaurant foods, in accordance with Sec. 101.10; or
for dietary supplements of vitamins or minerals, in accordance with
Sec. 101.36. The requirements of this paragraph are effective as of May
8, 1993, except:
(i) For menus, for which the requirements of paragraph (d)(3) of
this section will be effective May 2, 1997.
* * * * *
Dated: July 25, 1996.
David A. Kessler,
Commissioner of Food and Drugs.
Donna E. Shalala,
Secretary of Health and Human Services.
[FR Doc. 96-19645 Filed 7-30-96; 12:21 pm]
BILLING CODE 4160-01-U
Complete official Federal Register PDF
FR Doc. 96-19637 Florida Grapefruit, Florida Oranges and Tangelos, and, Florida Tangerines; Grade Standards
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40289-40290]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19637]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 61, No. 150 / Friday, August 2, 1996 / Rules
and Regulations
[[Page 40289]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 51
[Docket Number FV-96-301]
Florida Grapefruit, Florida Oranges and Tangelos, and, Florida
Tangerines; Grade Standards
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This rule will revise the United States Standards for Grades
of Florida Grapefruit, United States Standards for Grades of Florida
Oranges and Tangelos, and, United States Standards for Grades of
Florida Tangerines. This rule revises the ``Application of Tolerances''
sections, which establishes the limitations of defective fruit per
sample. It also sets a minimum sample size of twenty-five fruit.
EFFECTIVE DATE: August 5, 1996. Comments must be received by October 1,
1996.
ADDRESSES: Interested persons are invited to submit written comments
concerning this interim final rule. Comments must be sent to the
Standardization Section, Fresh Products Branch, Fruit and Vegetable
Division, Agricultural Marketing Service, U.S. Department of
Agriculture, P.O. Box 96456, Room 2065 South Building, Washington, DC
20090-6456. Comments should make reference to the date and page number
of this issue of the Federal Register and will be made available for
public inspection in the above office during regular business hours.
FOR FURTHER INFORMATION CONTACT: Frank O'Sullivan, at the above address
or call (202) 720-2185.
SUPPLEMENTARY INFORMATION: The U.S. Department of Agriculture (USDA) is
issuing this rule in conformance with Executive Order 12866.
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has
considered the economic impact of this action on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. The United States
standards issued pursuant to the Act, and 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 150 handlers of Florida citrus who are
subject to regulation under these standards and approximately 11,000
producers of citrus in Florida. Small agricultural service firms, which
includes handlers, have been defined by the Small Business
Administration (13 CFR 121.601) as those having annual receipts of less
than $5,000,000, and small agricultural producers are defined as those
having annual receipts of less than $500,000. A majority of handlers
and producers of Florida citrus may be classified as small entities.
These revisions will be a benefit to handlers and producers of
Florida citrus, regardless of the size, by minimizing the destruction
of packages and allowing more defective fruit in individual packages
while maintaining overall quality levels. Accordingly, AMS has
determined that the issuance of this interim final rule will not have a
significant economic impact on a substantial number of small entities.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This action is not intended to have retroactive effect.
This rule will not preempt any State or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
rule. There are no administrative procedures which must be exhausted
prior to any judicial challenge to the provisions of the rule.
The United States Standards for Grades of Florida Grapefruit,
United States Standards for Grades of Florida Oranges and Tangelos, and
United States Standards for Grades of Florida Tangerines were recently
revised following extensive discussions with the Florida citrus
industry and a 60 day comment period. The final rule to revise the
standards was published in the Federal Register on May 8, 1996, and
will become effective August 1, 1996. However, we received two requests
after the publication date concerning the revisions to the standards.
One was from the Florida Citrus Packers, Inc., which ``represents
nearly 90 percent of Florida's fresh commercial citrus industry,
growers and shippers'' and from the Commissioner of the Florida
Department of Agriculture and Consumer Services (FDACS). Both requested
revision of the ``Application of Tolerances'' sections of the standards
and they requested a minimum sample size of twenty-five fruit for each
of the U.S. standards for Florida citrus.
The ``Application of Tolerances'' sections in the standards
effective August 1, 1996, are based on the contents of individual
packages with no specified sample size. At that time, it was AMS'
understanding that a specified sample was no longer needed and that
defects were to be based on individual packages. After publication in
the Federal Register on May 8, 1996, the Florida citrus industry and
FDACS stated the following concerns to AMS.
The industry stated that without further revisions to the standards
it would be very costly to the Florida citrus industry. If the
standards are not revised an excessive amount of destruction to
consumer packages could occur, resulting in costly repacking of fruit
and replacing of these destroyed packages. Also, the tolerances are too
restrictive for these consumer packages ultimately resulting in failing
to market citrus account of one piece of defective fruit. They also
indicated that the minimum sample size should be a minimum of twenty-
five fruit.
The FDACS states that ``* * * inspections based on small containers
will require inspection procedures which are more time consuming and
less efficient than the present.'' The State also expresses their
concern in adopting and implementing the revisions to the ``Application
of Tolerances'' sections and the minimum sample size of twenty-five
fruit expeditiously, in order to train
[[Page 40290]]
inspectors for the 1996/1997 citrus season.
Therefore, this rule will change Sections 51.760, 51.1151, and
51.1820 ``Tolerances,'' to set a minimum sample size of twenty-five
fruit; which will read as follows: ``In order to allow for variations
incident to proper grading and handling in each of the foregoing
grades, the following tolerances, by count, based on a minimum 25 count
sample, are provided as specified:'' The Sections 51.761, 51.1152, and
51.1821 ``Application of Tolerances,'' will also change from individual
package limitations to limitations on individual samples and will read
as follows: ``Individual samples are subject to the following
limitations, unless otherwise specified in Secs. 51.760, 51.1151,
51.1820, respectively. Individual samples shall have not more than one
and one-half times a specified tolerance of 10 percent or more, and not
more than double a specified tolerance of less than 10 percent:
Provided, that at least one decayed or wormy fruit may be permitted in
any sample: And provided further, that the averages for the entire lot
are within the tolerances specified for the grade.''
Pursuant to 5 U.S.C. 553, it is 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 30 days after publication in the Federal Register because:
(1) The standards were published in the Federal Register on May 8,
1996, and will become effective August 1, 1996; (2) harvesting for the
1996/1997 Florida citrus season will begin in early Fall and USDA in
cooperation with the FDACS needs ample time to train inspectors and
inform the industry of these changes; and (3) this interim final rule
provides a 60 day comment period, and all comments timely received will
be considered prior to finalization of this rule.
List of Subjects in 7 CFR Part 51
Agricultural commodities, Food grades and standards, Fruits, Nuts,
Reporting and recordkeeping requirements, Trees, Vegetables.
For reasons set forth in the preamble, 7 CFR Part 51 is amended as
follows:
PART 51--[AMENDED]
1. The authority citation for Part 51 continues to read as follows:
Authority: 7 U.S.C. 1621-1627.
2. Section 51.760 is amended by revising the introductory text to
read as follows:
Sec. 51.760 Tolerances.
In order to allow for variations incident to proper grading and
handling in each of the foregoing grades, the following tolerances, by
count, based on a minimum 25 count sample, are provided as specified:
* * * * *
3. Section 51.761 is revised to read as follows:
Sec. 51.761 Application of Tolerances.
Individual samples are subject to the following limitations, unless
otherwise specified in Sec. 51.760. Individual samples shall have not
more than one and one-half times a specified tolerance of 10 percent or
more, and not more than double a specified tolerance of less than 10
percent: Provided, that at least one decayed or wormy fruit may be
permitted in any sample: And provided further, that the averages for
the entire lot are within the tolerances specified for the grade.
4. Section 51.1151 is amended by revising the introductory text to
read as follows:
Sec. 51.1151 Tolerances.
In order to allow for variations incident to proper grading and
handling in each of the foregoing grades, the following tolerances, by
count, based on a minimum 25 count sample, are provided as specified:
* * * * *
5. Section 51.1152 is revised to read as follows:
Sec. 51.1152 Application of Tolerances.
Individual samples are subject to the following limitations, unless
otherwise specified in Sec. 51.1151. Individual samples shall have not
more than one and one-half times a specified tolerance of 10 percent or
more, and not more than double a specified tolerance of less than 10
percent: Provided, that at least one decayed or wormy fruit may be
permitted in any sample: And provided further, that the averages for
the entire lot are within the tolerances specified for the grade.
6. Section 51.1820 is amended by revising the introductory text to
read as follows:
Sec. 51.1820 Tolerances.
In order to allow for variations incident to proper grading and
handling in each of the foregoing grades, the following tolerances, by
count, based on a minimum 25 count sample, are provided as specified:
* * * * *
7. Section 51.1821 is revised to read as follows:
Sec. 51.1821 Application of Tolerances.
Individual samples are subject to the following limitations, unless
otherwise specified in Sec. 51.1820. Individual samples shall have not
more than one and one-half times a specified tolerance of 10 percent or
more, and not more than double a specified tolerance of less than 10
percent: Provided, that at least one decayed or wormy fruit may be
permitted in any sample: And provided further, that the averages for
the entire lot are within the tolerances specified for the grade.
Dated: July 29, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-19637 Filed 8-01-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-19636 Avocados Grown in South Florida; Assessment Rate
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40290-40292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19636]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Part 915
[Docket No. FV96-915-1 FIR]
Avocados Grown in South Florida; Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Agriculture (Department) is adopting as a
final rule, without change, the provisions of an interim final rule
that established an assessment rate for the Avocado Administrative
Committee (Committee) under Marketing Order No. 915 for the 1996-97 and
subsequent fiscal periods. The Committee is responsible for local
administration of the marketing order which regulates the handling of
avocados grown in South Florida. Authorization to assess avocado
handlers enables the Committee to incur expenses that are reasonable
and necessary to administer the program.
EFFECTIVE DATE: Effective on April 1, 1996.
FOR FURTHER INFORMATION CONTACT: Caroline C. Thorpe, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.
Box 96456, room 2523-S, Washington, DC 20090-6456, telephone (202) 720-
5127, FAX (202) 720-5698, or Tershirra Yeager, Program 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. Small
[[Page 40291]]
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 No. 121 and Order No. 915, both as amended (7 CFR part 915),
regulating the handling of avocados grown in South Florida, hereinafter
referred to as the ``order.'' The marketing agreement and order are
effective under the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
The Department is issuing this rule in conformance with Executive
Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. Under the marketing order now in effect, South Florida
avocado handlers are subject to assessments. Funds to administer the
order are derived from such assessments. It is intended that the
assessment rate as issued herein will be applicable to all assessable
avocados beginning April 1, 1996, and continuing until amended 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 handler is afforded the opportunity for a hearing on
the petition. After the hearing the Secretary would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has his or
her principal place of business, has jurisdiction to review the
Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 65 producers of avocados in the production
area and approximately 95 handlers subject to regulation under the
marketing order. Small agricultural producers have been defined by the
Small Business Administration (13 CFR 121.601) as those having annual
receipts 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 avocado producers and handlers may be classified as
small entities.
The avocado marketing order provides authority for the Committee,
with the approval of the Department, to formulate an annual budget of
expenses and collect assessments from handlers to administer the
program. The members of the Committee are producers and handlers of
South Florida avocados. They are familiar with the costs for goods and
services in their local area and are thus in a position to formulate an
appropriate budget and assessment rate. The assessment rate is
formulated and discussed in a public meeting. Thus, all directly
affected persons have an opportunity to participate and provide input.
The Committee met on December 13, 1995, and unanimously recommended
1996-97 expenditures of $122,200 and an assessment rate of $0.16 per
bushel of avocados. In comparison, last year's budgeted expenditures
were $107,570. The assessment rate of $0.16 is the same as last year's
established rate. Major expenditures recommended by the Committee for
the 1996-97 year include $24,500 for local and national enforcement,
and $24,830 for research. In comparison, last year's budgeted
expenditures were $15,600 and $10,000, respectively.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of South Florida
avocados. Avocado shipments for the year are estimated at 750,000
bushels which should provide $120,000 in assessment income. Income
derived from handler assessments, along with interest income funds from
the Committee's authorized reserve, will be adequate to cover budgeted
expenses. Funds in the reserve will be kept within the maximum
permitted by the order.
An interim final rule regarding this action was published in the
May 2, 1996, issue of the Federal Register (61 FR 19512). That rule
provided for a 30-day comment period. No comments were received.
While this rule will impose some additional costs on handlers, the
costs are in the form of uniform assessments on all handlers. Some of
the additional costs may be passed on to producers. However, these
costs will be offset by the benefits derived by the operation of the
marketing order. Therefore, the AMS has determined that this rule will
not have a significant economic impact on a substantial number of small
entities.
The assessment rate established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and information submitted by the
Committee or other available information.
Although this assessment rate is effective for an indefinite
period, the Committee will continue to meet prior to or during each
fiscal period to recommend a budget of expenses and consider
recommendations for modification of the assessment rate. The dates and
times of Committee meetings are available from the Committee or the
Department. Committee meetings are open to the public and interested
persons may express their views at these meetings. The Department will
evaluate Committee recommendations and other available information to
determine whether modification of the assessment rate is needed. The
Committee's 1996-97 budget 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 Committee and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined that good
cause exists for not postponing the effective date of this rule until
30 days after publication in the Federal Register because: (1) The
Committee needs to have sufficient funds to pay its expenses which are
incurred on a continuous basis; (2) the 1996-97 fiscal period began on
April 1, 1996, and the marketing order requires that the rate of
assessment for each fiscal period apply to all assessable avocados
handled during such fiscal period; (3) handlers are aware of this
action which was
[[Page 40292]]
unanimously recommended by the Committee at a public meeting and is
similar to other assessment rate actions issued in past years; and (4)
an interim final rule was published on this action and provided for a
30-day comment period, no comments were received.
List of Subjects in 7 CFR Part 915
Avocados, Marketing agreements, Reporting and recordkeeping
requirements.
PART 915--AVOCADOS GROWN IN SOUTH FLORIDA
Accordingly, the interim final rule amending 7 CFR part 900 which
was published at 61 FR 19512 on May 2, 1996, is adopted as a final rule
without change.
Dated: July 29, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-19636 Filed 8-01-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-19635 Atlantic Tuna Fisheries; Closure
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Page 40352]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19635]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 285
[I.D. 072996C]
Atlantic Tuna Fisheries; Closure
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Fishery closure.
-----------------------------------------------------------------------
SUMMARY: NMFS closes the Angling category fishery for large school and
small medium Atlantic bluefin tuna (ABT). Closure of this fishery is
necessary because the annual quota of 100 metric tons (mt) of large
school and small medium ABT allocated to the Angling category is
projected to be attained by July 31, 1996. The intent of this action is
to prevent overharvest of the quota established for this fishery.
EFFECTIVE DATE: The closure is effective from 2330 hours local time
July 31 through December 31, 1996.
FOR FURTHER INFORMATION CONTACT: Bill Hogarth, 301-713-2347.
SUPPLEMENTARY INFORMATION: Regulations implemented under the authority
of the Atlantic Tunas Convention Act (16 U.S.C. 971 et seq.) governing
the harvest of ABT by persons and vessels subject to U.S. jurisdiction
are found at 50 CFR part 285.
Implementing regulations for the Atlantic tuna fisheries at 50 CFR
285.22 provide for a total annual quota of large school and small
medium ABT (measuring between 47 inches (119 cm) and 73 inches (185 cm)
total curved fork length) to be harvested from the regulatory area. The
Assistant Administrator for Fisheries, NOAA (AA), is authorized under
Sec. 285.20(b)(1) to monitor the catch and landing statistics and, on
the basis of those statistics, to project a date when the catch of ABT
will equal any quota under Sec. 285.22. The AA is further authorized
under Sec. 285.20(b)(1) to prohibit fishing for, or retention of, ABT
by those fishing in the category subject to the quota when the catch of
tuna equals the quota established under Sec. 285.22. The AA has
determined, based on the reported catch and estimated fishing effort,
that the annual quota of large school and small medium ABT will be
attained by July 31, 1996. Fishing for, catching, possessing, or
landing any large school or small medium ABT must cease by 2330 hours
local time on July 31, 1996.
However, anglers may continue to fish for ABT 47 inches (119 cm) or
greater under the NMFS tag and release program (50 CFR 285.27). The
Angling category fishery for school ABT (measuring between 27 inches
(69 cm) and 47 inches (119 cm)) in the waters off Delaware and south
was previously closed on July 25, 1996 (61 FR 38656, July 25, 1996).
The Angling category fishery for school ABT for waters off New Jersey
and states north (north of 38 deg.47' N. lat.) is not affected by this
closure, and continues to remain open.
Classification
This action is taken under 50 CFR 285.20(b) and 50 CFR 285.22 and
is exempt from review under E.O. 12866.
Authority: 16 U.S.C. 971 et seq.
Dated: July 29, 1996.
Richard W. Surdi,
Acting Director, Office of Fisheries Conservation and Management,
National Marine Fisheries Service.
[FR Doc. 96-19635 Filed 7-29-96; 5:02 pm]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-19560 Airworthiness Directives; Hamilton Standard Model 14RF-9 Propellers
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40313-40315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19560]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. 96-ANE-04; Amendment 39-9705, AD 96-08-01 R1]
Airworthiness Directives; Hamilton Standard Model 14RF-9
Propellers
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: This amendment revises airworthiness directive (AD) 96-08-01,
that is applicable to Hamilton Standard Model 14RF-9 propellers. The
current AD superseded priority letter AD 95-24-09, and requires an
ultrasonic shear wave inspection, adds a one-time visual and
fluorescent penetrant inspection, and repair of the propeller blade
shank. This revision will add a new shank eddy current inspection and
will allow repair of certain blade shanks removed from service under
the current AD. The actions specified by this AD are intended to
prevent propeller blade separation due to propeller blade shank
cracking that can result in loss of control of the aircraft.
DATES: Effective August 2, 1996.
The incorporation by reference of Hamilton Standard Service
Bulletins (SB) Nos. 14RF-9-61-86, Revision 4, dated November 9, 1995,
Alert Service Bulletin No. 14RF-9-61-A90, Original, dated November 9,
1995, and Alert Service Bulletin No. 14RF-9-61-A92, Revision 2, dated
March 6, 1996, and listed in the regulations was approved by the
Director of the Federal Register as of May 1, 1996 (61 FR 16618, 4/16/
96). The incorporation by reference of Hamilton Standard Service
Bulletin No. 14RF-9-61-105, Original, dated July 24, 1996, is approved
by the Director of the Federal Register as of August 2, 1996.
Comments for inclusion in the Rules Docket must be received on or
before September 16, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), New England Region, Office of the Assistant Chief
Counsel, Attention: Rules Docket No. 96-ANE-04, 12 New England
Executive Park, Burlington, MA 01803-5299. Comments may also be
submitted to the Rules Docket by using the following Internet
address:``[email protected]''. All comments must contain
the Docket No. in the subject line of the comment. Comments may be
inspected at this location between 8:00 a.m. and 4:30 p.m.
The service information referenced in this AD may be obtained from
Hamilton Standard, One Hamilton Road, Windsor Locks, CT 06096-1010;
telephone (203) 654-6876. This information may be examined at the FAA,
New England Region, Office of the Assistant Chief Counsel, 12 New
England Executive Park, Burlington, MA; or at the Office of the Federal
Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
FOR FURTHER INFORMATION CONTACT: Frank Walsh, Aerospace Engineer,
Boston Aircraft Certification Office, FAA, Engine and Propeller
Directorate, 12 New England Executive Park, Burlington, MA 01803-5299;
telephone (617) 238-7158, fax (617) 238-7199.
SUPPLEMENTARY INFORMATION: On April 1, 1996, the Federal Aviation
Administration (FAA) issued airworthiness directive (AD) 96-08-01,
applicable to Hamilton Standard Model 14RF-9 propellers, which
superseded priority letter AD 95-24-09, and requires an ultrasonic
shear wave inspection for cracks or surface indications, a one-time
visual and flourescent penetrant inspection for mechanical damage, and
repair of the propeller blade shank. That action was prompted by a
report of an inflight loss of a Hamilton Standard Model 14RF-9
propeller blade installed on an Embraer EMB-120 aircraft. The loss of
the propeller blade resulted in the subsequent loss of the propeller
and portions of the gearbox. The propeller blade separated due to a
crack approximately 9 inches from the butt end of the blade. The FAA
determined that the crack initiated on the outer
[[Page 40314]]
surface of the blade shank in an area of mechanical damage induced as a
result of a localized interference condition between the blade spar and
the foam mold which occurred during blade manufacture. That condition,
if not corrected, could result in propeller blade separation due to
propeller blade shank cracking, which could result in loss of control
of the aircraft.
Since the issuance of that AD, the manufacturer has developed new
inspection and repair procedures for mechanical damage (dents) greater
than .005 inches deep to a maximum of .010 inches in depth. The new
inspection and repair procedures will ensure that the structural
integrity of the blades is maintained. Also, the new inspection and
repair procedures will allow certain blades having dents greater than
.005 inches deep that were removed from service in accordance with AD
96-08-01 to be inspected and repaired in accordance with Hamilton
Standard Service Bulletin No. 14RF-9-61-105, dated July 24, 1996, and
returned to service.
The new inspection procedure can find damage in areas of the
propeller blade shank that might have been damaged by interference with
the propeller blade foam mold during manufacture. The damage will be
visible when the overlying fiberglass and adhesive layers are removed.
Prior to returning damaged propeller blades to service, blades must be
repaired in accordance with the applicable service or alert service
bulletin.
The FAA has reviewed and approved the technical contents of
Hamilton Standard Service Bulletin (SB) No. 14RF-9-61-86, Revision 4,
and Alert Service Bulletin (ASB) No. 14RF-9-61-A90, both dated November
9, 1995, that describe procedures for an ultrasonic shear wave
inspection of propeller blade shanks for cracks or surface indications;
and Hamilton Standard ASB No. 14RF-9-61-A92, Revision 2, dated March 6,
1996, that describes procedures for an inspection and repair for
mechanical damage. In addition, the FAA has reviewed and approved the
technical contents of Hamilton Standard SB No. 14RF-9-61-105, Original,
dated July 24, 1996, which describes eddy current inspection and repair
procedures for those propeller blades with dents that exceed .005
inches deep to a maximum of .010 inches in depth.
Since an unsafe condition has been identified that is likely to
exist or develop on other propellers of this same type design, this AD
revises AD 96-08-01, by adding a new paragraph (d) which allows
inspection and repair of propeller blades with mechanical damage
greater than .005 inches deep to a maximum of .010 inches in depth in
accordance with Hamilton Standard Service Bulletin No. 14RF-9-61-105,
dated July 24, 1996. This revision will also enable those propellers
that were removed from service in accordance with AD 96-08-01, and that
are determined repairable in accordance with SB 14RF-9-61-105, to be
returned to service.
Since a situation exists that requires the immediate adoption of
this regulation, it is found that notice and opportunity for prior
public comment hereon are impracticable, and that good cause exists for
making this amendment effective in less than 30 days.
Comments Invited
Although this action is in the form of a final rule that involves
requirements affecting flight safety and, thus, was not preceded by
notice and an opportunity for public comment, comments are invited on
this rule. Interested persons are invited to comment on this rule by
submitting such written data, views, or arguments as they may desire.
Communications should identify the Rules Docket number and be submitted
in triplicate to the address specified under the caption ADDRESSES. All
communications received on or before the closing date for comments will
be considered, and this rule may be amended in light of the comments
received. Factual information that supports the commenter's ideas and
suggestions is extremely helpful in evaluating the effectiveness of the
AD action and determining whether additional rulemaking action would be
needed.
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the rule that might
suggest a need to modify the rule. All comments submitted will be
available, both before and after the closing date for comments, in the
Rules Docket for examination by interested persons. A report that
summarizes each FAA-public contact concerned with the substance of this
AD will be filed in the Rules Docket.
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket Number 96-ANE-04.'' The postcard will be date stamped and
returned to the commenter.
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this final
rule does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
The FAA has determined that this regulation is an emergency
regulation that must be issued immediately to correct an unsafe
condition in aircraft, and is not a ``significant regulatory action''
under Executive Order 12866. It has been determined further that this
action involves an emergency regulation under DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979). If it is determined
that this emergency regulation otherwise would be significant under DOT
Regulatory Policies and Procedures, a final regulatory evaluation will
be prepared and placed in the Rules Docket. A copy of it, if filed, may
be obtained from the Rules Docket at the location provided under the
caption ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is revised to read as follows:
96-08-01R1 Hamilton Standard: Amendment 39-9707. Docket No. 96-ANE-
04, revises AD 96-08-01, Amendment No. 39-9567.
Applicability: Hamilton Standard Model 14RF-9 propellers,
installed on but not limited to Embraer EMB-120 series aircraft.
Note: This airworthiness directive (AD) applies to each
propeller identified in the preceding applicability provision,
regardless of whether it has been modified, altered, or repaired in
the area subject to the requirements of this AD. For propellers that
have been modified, altered, or repaired so that the performance of
the requirements of this AD is affected, the owner/operator must use
the authority provided in paragraph (e) to request approval from the
Federal Aviation Administration (FAA). This approval may
[[Page 40315]]
address either no action, if the current configuration eliminates
the unsafe condition, or different actions necessary to address the
unsafe condition described in this AD. Such a request should include
an assessment of the effect of the changed configuration on the
unsafe condition addressed by this AD. In no case does the presence
of any modification, alteration, or repair remove any propeller from
the applicability of this AD.
Compliance: Required as indicated, unless accomplished
previously.
To prevent propeller blade separation due to propeller blade
shank cracking, which could result in loss of control of the
aircraft, accomplish the following:
(a) Propeller blades that have been ultrasonically shear wave
inspected in accordance with the requirements of AD 95-24-09 or AD
96-08-01 need not undergo another ultrasonic shear wave inspection
in accordance with paragraph (b) of this AD. All affected propeller
blades with S/N's less than 885751, however, must be inspected for
mechanical damage in accordance with paragraph (c) of this AD by
August 31, 1996. Propeller blades with S/N's less than 885751 that
have not been ultrasonically shear wave inspected in accordance with
AD 95-24-09 or AD 96-08-01 must undergo ultrasonic shear wave
inspection in accordance with paragraph (b) of this AD prior to
further flight, and must be inspected for mechanical damage in
accordance with paragraph (c) of this AD by August 31, 1996; or must
be inspected for mechanical damage in accordance with paragraph (c)
of this AD prior to further flight.
(b) Prior to further flight, perform an ultrasonic shear wave
inspection for cracks or surface indications in accordance with the
applicable Hamilton Standard Service Bulletin (SB) or Alert Service
Bulletin (ASB) described in paragraphs (b)(1) and (b)(2) of this AD
unless accomplished previously in accordance with AD 95-24-09 or AD
96-08-01. Prior to further flight, remove from service propeller
blades with ultrasonic shear wave readings that exceed the
acceptable limits described in the applicable SB or ASB, and replace
with serviceable propeller blades:
(1) Inspect, and if necessary, remove and replace with a
serviceable propeller blade, in accordance with the Accomplishment
Instructions of Hamilton Standard SB No. 14RF-9-61-86, Revision 4,
dated November 9, 1995, propeller blade shanks with propeller blade
spars, Part Number (P/N) 792231-1. These propeller blades may be
identified by, but not limited to, Serial Numbers (S/N's) 853445 and
higher except for the S/N's listed in Table 1 of this SB. Propeller
blades inspected in accordance with the Original, Revision 1,
Revision 2, or Revision 3 of Hamilton Standard SB No. 14RF-9-61-86,
and which passed inspection, need not be ultrasonically shear wave
inspected again.
(2) Remove propeller blade for off-wing inspection, inspect, and
if necessary, replace with a serviceable propeller blade, in
accordance with the Accomplishment Instructions of Hamilton Standard
ASB No. 14RF-9-61-A90, dated November 9, 1995, propeller blade
shanks with propeller blade spars, P/N 782683-1. These propeller
blades may be identified by, but not limited to, S/N's less than
853445, and propeller blades with S/N's greater than 853445 that are
listed in Table 1 of this ASB.
(c) Perform a one-time visual and fluorescent penetrant
inspection of the propeller blade shank for mechanical damage by
August 31, 1996, in accordance with the Accomplishment Instructions
of Hamilton Standard ASB No. 14RF-9-61-A92, Revision 2, dated March
6, 1996, on all propeller blade shanks with S/N's before 885751.
Propeller blades inspected in accordance with the original or
Revision 1 of Hamilton Standard ASB No. 14RF-9-61-A92, and which
passed inspection or were repaired, need not be inspected again.
(1) Prior to further flight, remove from service propeller
blades with mechanical damage that exceed repair limits specified in
ASB No. 14RF-9-61-A92, Revision 2, dated March 6, 1996, and replace
with serviceable parts.
(2) Prior to further flight, repair propeller blades with
repairable damage in accordance with the procedures described in ASB
No. 14RF-9-61-A92, Revision 2, dated March 6, 1996.
(d) Propeller blades removed from service in accordance with
paragraph (c) of this AD, may be returned to service provided the
blades are inspected for cracks and repaired in accordance with the
procedures described in Hamilton Standard SB No. 14RF-9-61-105,
dated July 24, 1996. Blades with damage that exceed repair limits
specified in Hamilton Standard SB 14RF-9-61-105, dated July 24,
1996, cannot be returned to service.
(e) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Boston Aircraft Certification
Office. The request should be forwarded through an appropriate FAA
Principal Maintenance Inspector, who may add comments and then send
it to the Manager, Boston Aircraft Certification Office.
Note: Information concerning the existence of approved
alternative methods of compliance with this airworthiness directive,
if any, may be obtained from the Boston Aircraft Certification
Office.
(f) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the aircraft to a location where
the requirements of this AD can be accomplished.
(g) The actions required by this AD shall be performed in
accordance with Hamilton Standard Service Bulletin (SB) No. 14RF-9-
61-86, Pages 1-34, Revision 4, dated November 9, 1995, Hamilton
Standard Alert SB No. 14RF-9-61-A90, Pages 1- 39, Original, dated
November 9, 1995; Hamilton Standard Alert SB No. 14RF-9-61-A92,
Pages 1-44, Revision 2, dated March 6, 1996, and Hamilton Standard
SB No. 14RF-9-61-105, Pages 1-23, Original, dated July 24, 1996. The
incorporation of Hamilton Standard ASB Nos. 14RF-9-61- 86, 14RF-9-
61-A90, and 14RF-9-61-A92, was approved previously in accordance
with 5 U.S.C. 552(a) and 1 CFR part 51 as of May 1, 1996 (61 FR
16618, 4/16/96). The incorporation by reference of Hamilton Standard
Service Bulletin No. 14RF-9-61-105, Pages 1-23, Original dated July
24, 1996, was approved by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51 as of August 2,
1996. Copies may be obtained from Hamilton Standard, One Hamilton
Road, Windsor Locks, CT 06096-1010; telephone (203) 654-6876. Copies
may be inspected at the FAA, New England Region, Office of the
Assistant Chief Counsel, 12 New England Executive Park, Burlington,
MA; or at the Office of the Federal Register, 800 North Capitol
Street, NW., suite 700, Washington, DC.
(h) This amendment revises AD 96-08-01, issued April 1, 1996.
(i) This amendment becomes effective on August 2, 1996.
Issued in Burlington, Massachusetts, on July 27, 1996.
Jay J. Pardee,
Manager, Engine and Propeller Directorate, Aircraft Certification
Service.
[FR Doc. 96-19560 Filed 7-31-96; 10:38 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-19558 Medicare Program: Special Enrollment Periods and Waiting Period
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40343-40347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19558]
=======================================================================
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 406, 407, 408, and 416
[BPD-752-FC]
RIN 0938-AH33
Medicare Program: Special Enrollment Periods and Waiting Period
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rules with comment period.
-----------------------------------------------------------------------
SUMMARY: These rules provide an additional way for certain disabled
individuals under age 65 to qualify for special enrollment periods
(SEPs); extend from 1991 through 1998 the period during which certain
disabled individuals under age 65 who are covered under large group
health plans (LGHPs) may qualify for SEPs; and make clear that a second
24-month waiting period is not required for disability-based
reentitlement if the current impairment is the same as, or directly
related to, the impairment on which the previous period of entitlement
was based.
The changes made by these rules conform the HCFA regulations to
certain provisions of the Omnibus Budget Reconciliation Acts of 1987,
1989, 1990, and 1993 (commonly referred to as OBRA '87, OBRA '89, OBRA
'90, and OBRA '93, respectively), and the Social Security Act (SSA)
Amendments of 1994 (Pub. L. 103-432).
In OBRA '93, Congress amended section 1862(b) of the Social
Security Act (the Act), to extend through September 30, 1998 the
Medicare Secondary Payer (MSP) provisions for disabled beneficiaries.
Congress did not make a conforming amendment to section 1837(i) of the
Act, which authorizes SEPs for disabled beneficiaries who stop working.
However, the SSA Amendments of 1994 made the conforming change to
section 1837(i), retroactive to the OBRA '93 effective date.
The purpose of the special enrollment period amendments is to
ensure that a disabled individual under age 65 who meets the conditions
for enrollment in Medicare Part B will be able to enroll as soon as his
or her group health plan coverage based on current employment ends; and
to extend until September 30, 1998 the protection afforded by the
special enrollment periods to disabled individuals covered under LGHPs.
DATES: Effective date: These rules are effective on September 3, 1996.
Comment date: We will consider comments received by October 1,
1996.
ADDRESSES: Please mail original and 3 copies of your comments to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: BPD-752-FC, P.O. Box 26688,
Baltimore, Maryland 21207.
If you prefer, you may deliver original and 3 copies of your
comments to either of the following addresses:
Room 309-G, 200 Independence Avenue, S.W., Washington, DC 20201,
Room C5-09-26, 7500 Security Boulevard, Baltimore, Maryland 21244-1850.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code BPD-752-FC. Comments received timely will be available for
public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 309-G of
the Department's offices at 200 Independence Avenue, SW., Washington,
DC on Monday through Friday of each week from 8:30 a.m. to 5 p.m.
(Phone: (202) 690-7890).
Although we cannot respond to individual comments, if we revise
these rules as a result of comments, we will discuss all timely
comments in the preamble to the revised rules.
FOR FURTHER INFORMATION CONTACT: Margaret Jefferson, (410) 786-4482.
SUPPLEMENTARY INFORMATION:
I. Background
A. Amendments to the Statute: Special Enrollment Periods and Waiting
Period
1. Section 4033 of OBRA '87 (Pub. L. 100-203) amended section
226(f) of the Act to provide that, effective as of March 1988, a second
24-month waiting period is not required for disability-based
reentitlement if the current impairment is the same as, or directly
related to, the impairment on which the
[[Page 40344]]
previous period of entitlement was based.
2. Section 6202(c) of OBRA '89 (Pub. L. 101-239) amended section
1837(i) of the Act to provide, effective July 1, 1990, an additional
way for certain disabled individuals under age 65 to qualify for a SEP.
Before enactment of this amendment, a disabled ``active individual''
could qualify for a SEP only if he or she was covered (directly or as
part of the family of another covered individual) under a large group
health plan (LGHP). (The statute defined ``active individual'' as ``an
employee (as may be defined in regulations), the employer, self-
employed individual (such as the employer) an individual associated
with the employer in a business relationship, or a member of the family
of any such person''). An LGHP is a plan of an employer of 100 or more
employees or of a group of employers at least one of which has 100 or
more employees. Under the amendment, a disabled individual can also
qualify for a SEP under the rules that previously applied only to an
individual age 65 or over, that is, by having been covered under a
group health plan (GHP) on the basis of his or her own employment or
that of a spouse. This rule applies regardless of the number of
employees an employer has. However, since the SEP qualification
provisions for individuals age 65 or over refer specifically to the
plan of the individual or the individual's spouse, this additional way
of qualifying for a SEP is not available to a child or other family
member who is disabled. Those individuals qualify for SEPs only if
covered under an LGHP.
3. Section 4203(b) of OBRA '90 (Public Law 101-508) and section
13561(b) of OBRA '93 (Public Law 103-66) amended section
1862(b)(1)(B)(iii) of the Act to change, first from December 31, 1991
to September 30, 1995, and then to September 30, 1998, the termination
date of the MSP provisions for the disabled. Moreover, sections
13561(e)(1)(E) and (e)(1)(F) of OBRA '93 amended section
1862(b)(1)(B)(i) of the Act to eliminate the ``active individual''
language. Before this amendment, ``active individual'' identified the
beneficiaries to whom the MSP provisions applied. Because of this
change to the ``current employment'' criterion, Medicare is secondary
payer for a disabled beneficiary who is under age 65 and who is covered
under an LGHP--
Through August 9, 1993, as a disabled ``active
individual''; and
From August 10, 1993 through September 1998, ``by virtue
of the individual's current employment status with an employer''.
Section 1862(b)(1)(B) of the Act establishes October 1, 1998 as the
sunset date of the MSP provisions for disabled individuals. As noted
above, section 1837(i) of the Act, which pertains to SEPs, was amended
by the SSA Amendments of 1994 to conform to section 1862(b(1)(B) of the
Act. Since the availability of SEPs to disabled individuals depends
upon the existence of section 1862(b)(1)(B) of the Act, we have
interpreted that the October 1, 1998 sunset date in that section
applies also to those SEP provisions. (The MSP provisions for the aged,
set forth at section 1862(b)(1)(A) of the Act have no sunset date.)
4. Section 147(f) of the Social Security Amendments of 1994 (Pub.
L. 103-432).
Amended section 1837(i)(3) of the Act so that a SEP may
begin earlier and last longer; and
Amended section 1838(e) of the Act to provide options for
the beginning of Medicare coverage that is based on enrollment during
specified months of a SEP.
Under the section 1837 amendment--
Instead of beginning on the first day of the first month
during which the individual is no longer enrolled in a GHP or LGHP on
the basis of current employment status, the SEP may include each month
during any part of which the individual is so enrolled; and
Instead of ending ``seven months later'', the SEP ends on
the last day of the eighth consecutive month in which the individual is
no longer so enrolled.
Under the section 1838 amendment, with respect to the beginning of
coverage--
For one who enrolls in Medicare in a month during any part
of which he or she is enrolled in a GHP or LGHP on the basis of current
employment status, or the first full month when not so enrolled,
Medicare coverage begins on the first day of the month of enrollment
or, at the option of the individual, on the first day of any of the
following three months.
For one who enrolls in any other month of the SEP, there
is no change: Medicare coverage begins on the first day of the month
following the month of enrollment.
B. Conforming Changes in the Regulations: Special Enrollment Periods
and Waiting Period
1. To reflect the statutory changes discussed above, we have made
the following changes:
Added a new paragraph (b)(3) to Sec. 406.12, to specify
that a second 24-month waiting period is not required for reentitlement
to hospital insurance benefits if the previous period of entitlement
ended on or after March 1, 1988 and the current impairment is the same
as, or directly related to, the impairment on which the previous period
of entitlement was based.
Revised Sec. 407.20(d) to set forth the new rule under
which a disabled individual may qualify for a SEP if he or she had GHP
coverage on the basis of the current employment of the individual or
the individual's spouse, and to restate the rule for those who must
qualify on the basis of LGHP coverage.
Revised Sec. 407.20(f) to specify the beginning date of a
SEP for a disabled individual who had GHP coverage on the basis of
current employment.
Revised Sec. 408.24(a)(8)(i) to change ``January 1992'' to
``October 1998'' and add a new paragraph (a)(9) to specify the months
excluded in computing Medicare Part B premium increases (for late
enrollment or reenrollment) for disabled individuals who had GHP
coverage on the basis of current employment. The revisions to
Sec. 408.24(a)(8)(i) reflect the extension of the MSP provisions for
the disabled. The new paragraph 408.24 (a)(9) is needed because the
OBRA '89 amendment that extended the SEP provisions to disabled
beneficiaries covered under a GHP (as distinguished from an LGHP) was
effective July 1990.
C. Technical and Clarifying Changes
1. In Sec. 406.6, we have amended paragraph (b) to clarify that an
individual who is under age 65 and has been entitled, for more than 24
months, to monthly social security or railroad retirement benefits
based on disability is also (in addition to those currently identified
in the paragraph) automatically entitled to Medicare Part A without
filing an application. This provision is part of section 226(b) of the
Act and, through an oversight, this provision had not been reflected in
our regulations.
2. Paragraph (e) of Sec. 406.21, revised to reflect the statutory
changes that affect SEPs, is redesignated as a new Sec. 406.24.
3. In Sec. 407.20(a), we have made the following changes:
Removed the definitions and replaced them with reference
to the definitions in Part 411 of the HCFA rules.
Used the initials ``GHP'' and ``LGHP'' wherever
appropriate.
Explained, under paragraph (a)(1) why the ``former
employee'' language of the Sec. 411.101 definitions of GHP and LGHP
does not apply with respect to SEPs.
[[Page 40345]]
4. In Sec. 407.25, we have revised paragraph (c) to remove the
current outdated content on beginning of entitlement and referenced new
Sec. 406.24. This new section incorporates the statutory changes that
pertain to SEPs and apply to Medicare Part B as well as Medicare Part
A.
5. In Sec. 408.24(a), we have--
Corrected the cross-reference to Sec. 405.340, which has
been redesignated as Sec. 411.170.
Used the initials ``GHP'' and ``LGHP'' wherever
appropriate.
Referenced the definitions in Secs. 411.101, 411.104, and
411.201 of the HCFA regulations, which incorporate the Internal Revenue
Code language.
Removed references to Public Laws because reference to the
implementing rules provides more precise guidance and is sufficient.
6. We have also taken advantage of this opportunity to make minor
technical and editorial changes that we overlooked when Sec. 416.35,
which pertains to ambulatory surgical centers, was amended.
II. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment. The Notice describes the
terms and substance of the proposed rules and references the legal
authority under which they are proposed. However, this procedure may be
waived if the agency finds that notice and public comment rulemaking is
impracticable, unnecessary, or contrary to the public interest.
These rules conform HCFA regulations to statutory amendments that
are already in effect. Publication of these conforming amendments will
ensure better understanding of beneficiary rights, but will have no
fiscal or program impact. The technical and clarifying amendments make
no substantive changes in the rules. For these reasons, we find that
notice and opportunity for comment are unnecessary and that there is
good cause to waive notice of proposed rulemaking procedures.
However, as indicated above under DATES, we will consider timely
comments from anyone who believes that the conforming changes go beyond
what the statute requires or permits, or that any of the technical
amendments affect the substance of the rules.
III. Regulatory Impact Statement
Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612), we prepare a regulatory flexibility analysis for each
rule unless the Secretary certifies that it will not have a significant
economic impact on a substantial number of small entities. States and
individuals are not included in the definition of small entities.
In addition, section 1102(b) of the Act requires the Secretary to
prepare a regulatory impact analysis if a rule may have a significant
impact on the operations of a substantial number of small rural
hospitals. This analysis must conform to the provisions of section 604
of the RFA. For purposes of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is located outside of a
Metropolitan Statistical Area and has fewer than 50 beds.
These rules conform the HCFA regulations to certain provisions of
OBRA '87, OBRA '89, OBRA '90, OBRA '93, and the Social Security Act
Amendments of 1994. The statutory effective dates of these provisions
have already passed and the changes are already in effect.
These amendments to the regulations will have no fiscal or program
impact. We are not preparing analyses for either the RFA or section
1102(b) of the Act because we have determined, and the Secretary
certifies, that these rules will not have a significant economic impact
on a substantial number of small entities or a significant impact on
the operation of a substantial number of small rural hospitals.
We have reviewed these rules and determined that, under the
provisions of Public Law 104-121, they are not major rules.
In accordance with the provisions of Executive Order 12866, these
final rules with comment period were not reviewed by the Office of
Management and Budget.
IV. Paperwork Reduction Act
These rules contain no information collection requirements subject
to review by the Office of Management and Budget under the Paperwork
Reduction Act.
List of Subjects
42 CFR Part 406
Health Facilities, Kidney diseases, Medicare.
42 CFR Part 407
Medicare.
42 CFR Part 408
Medicare.
42 CFR Part 416
Health facilities, Kidney diseases, Medicare, Reporting and
recordkeeping requirements.
42 CFR Chapter IV is amended as follows:
A. Part 406 is amended as set forth below:
PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT
1. The authority citation for Part 406 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh), unless otherwise noted.
2. Section 406.6 is amended to revise paragraph (b) to read as
follows:
Sec. 406.6 Application or enrollment for hospital insurance.
* * * * *
(b) Individuals who need not file an application for hospital
insurance. An individual who meets any of the following conditions need
not file an application for hospital insurance:
(1) Is under age 65 and has been entitled, for more than 24 months,
to monthly social security or railroad retirement benefits based on
disability.
(2) At the time of attainment of age 65, is entitled to monthly
social security or railroad retirement benefits.
(3) Establishes entitlement to monthly social security or railroad
retirement benefits at any time after attaining age 65.
3. Section 406.12(b) is amended to remove footnote ``1'', revise
the introductory text, remove the semicolon and the word ``or'' from
the end of paragraph (b)(1) and insert a period in its place, and add a
new paragraph (b)(3), to read as follows:
Sec. 406.12 Individual under age 65 who is entitled to social security
or railroad retirement disability benefits.
* * * * *
(b) Previous periods of disability benefits entitlement. Months of
a previous period of entitlement or deemed entitlement to disability
benefits count toward the 25-month requirement if any of the following
conditions is met:
* * * * *
(3) The previous period ended on or after March 1, 1988 and the
current impairment is the same as, or directly related to, the
impairment on which the previous period of entitlement was based.
* * * * *
4. In Sec. 406.21, paragraph (e) is removed and reserved.
5. A new Sec. 406.24 is added, to read as follows:
[[Page 40346]]
Sec. 406.24 Special enrollment period.1
---------------------------------------------------------------------------
\1\ Before August 1986, SEPs were available only for enrollment
in supplementary medical insurance, not for enrollment in premium
hospital insurance.
---------------------------------------------------------------------------
(a) Terminology. As used in this subpart, the following terms have
the indicated meanings.
(1) Current employment status has the meaning given this term in
Sec. 411.104 of this chapter.
(2) Family member has the meaning given this term in Sec. 411.201
of this chapter.
(3) Group health plan (GHP) and large group health plan (LGHP) have
the meanings given those terms in Sec. 411.101 of this chapter, except
that the ``former employee'' language of those definitions does not
apply with respect to SEPs because--
(i) Section 1837(i)(1)(A) of the Act explicitly requires that GHP
coverage of an individual age 65 or older, be by reason of the
individual's (or the individual's spouse's) current employment status;
and
(ii) The sentence following section 1837(i)(1)(B), of the Act
refers to ``large group health plan''. Under section 1862(b)(1)(B)(i),
as amended by OBRA '93, LGHP coverage of a disabled individual must be
``by virtue of the individual's or a family member's current employment
status with an employer''.
(4) Special enrollment period (SEP) is a period provided by statute
to enable certain individuals to enroll in Medicare without having to
wait for the general enrollment period.
(b) Duration of SEP.2 (1) The SEP includes any month during
any part of which--
---------------------------------------------------------------------------
\2\ Before March 1995, SEPs began on the first day of the first
month the individual was no longer covered under a GHP or LGHP by
reason of current employment status.
---------------------------------------------------------------------------
(i) An individual over age 65 is enrolled in a GHP by reason of the
current employment status of the individual or the individual's spouse;
or
(ii) An individual under age 65 and disabled--
(A) Is enrolled in a GHP by reason of the current employment status
of the individual or the individual's spouse; or
(B) Is enrolled in an LGHP by reason of the current employment
status of the individual or a member of the individual's family.
(2) The SEP ends on the last day of the eighth consecutive month
during which the individual is at no time enrolled in a GHP or an LGHP
by reason of current employment status.
(c) Conditions for use of a SEP.3 In order to use a SEP, the
individual must meet the following conditions:
---------------------------------------------------------------------------
\3\ Before August 10, 1993, an individual under age 65 could
qualify for a SEP only if he or she had LGHP coverage as an ``active
individual'', which the statute defined as ``an employee, employer,
self-employed individual (such as the employer), individual
associated with the employer in a business relationship, or as a
member of the family of any of those persons''.
---------------------------------------------------------------------------
(1) When first eligible to enroll for premium hospital insurance
under Sec. 406.20(b) or (c), the individual was--
(i) Age 65 or over and covered under a GHP by reason of the current
employment status of the individual or the individual's spouse;
(ii) Under age 65 and covered under an LGHP by reason of the
current employment status of the individual or a member of the
individual's family ; or
(iii) Under age 65 and covered under a GHP by reason of the current
employment status of the individual or the individual's spouse.
(2) For all the months thereafter, the individual has maintained
coverage either under hospital insurance or a GHP or LGHP.
(d) Special rule: Additional SEPs. (1) Generally, if an individual
fails to enroll during any available SEP, he or she is not entitled to
any additional SEPs.
(2) However, if an individual fails to enroll during a SEP, because
coverage under the same or a different GHP or LGHP was restored before
the end of that particular SEP, that failure to enroll does not
preclude additional SEPs.
(e) Effective date of coverage. (1) If the individual enrolls in a
month during any part of which he or she is covered under a GHP or LGHP
on the basis of current employment status, or in the first full month
when no longer so covered, coverage begins on the first day of the
month of enrollment or, at the individual's option, on the first day of
any of the three following months.
(2) If the individual enrolls in any month of the SEP other than
the months specified in paragraph (e)(1) of this section, coverage
begins on the first day of the month following the month of enrollment.
B. Part 407 is amended as set forth below.
PART 407--SUPPLEMENTARY MEDICAL INSURANCE (SMI) ENROLLMENT AND
ENTITLEMENT
1. The authority citation for part 407 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. Section 407.20 is revised to read as follows:
Sec. 407.20 Special enrollment period related to coverage under group
health plans.
(a) Terminology--(1) Group health plan (GHP) and large group health
plan (LGHP). These terms have the meanings given them in Sec. 411.101
of this chapter except that the ``former employee'' language of those
definitions does not apply with respect to SEPs for the reasons
specified in Sec. 406.24(a)(3) of this chapter.
(2) Special enrollment period (SEP). This term has the meaning set
forth in Sec. 406.24(a)(4) of this chapter. In order to use a SEP, an
individual must meet the conditions of paragraph (b) and of paragraph
(c) or (d) of this section, as appropriate.
(b) General rule. All individuals must meet the following
conditions:
(1) They are eligible to enroll for SMI on the basis of age or
disability, but not on the basis of end-stage renal disease.
(2) When first eligible for SMI coverage (4th month of their
initial enrollment period), they were covered under a GHP or LGHP on
the basis of current employment status or, if not so covered, they
enrolled in SMI during their initial enrollment period; and
(3) For all months thereafter, they maintained coverage under
either SMI or a GHP or LGHP. (Generally, if an individual fails to
enroll in SMI during any available SEP, he or she is not entitled to
any additional SEPs. However, if an individual fails to enroll during a
SEP because coverage under the same or a different GHP or LGHP was
restored before the end of that particular SEP, that failure to enroll
does not preclude additional SEPs.)
(c) Special rule: Individual age 65 or over. For an individual who
is or was covered under a GHP, coverage must be by reason of the
current employment status of the individual or the individual's spouse.
(d) Special rules: Disabled individual.4 Individuals entitled
on the basis of disability (but not on the basis of end-stage renal
disease) must meet conditions that vary depending on whether they were
covered under a GHP or an LGHP.
---------------------------------------------------------------------------
\4\ Under the current statute, the SEP provision applicable to
disabled individuals covered under an LGHP expires on September
1998. Unless Congress changes that date, the last SEP available
under those provisions will begin with June 1998.
---------------------------------------------------------------------------
(1) For a disabled individual who is or was covered under a GHP,
coverage must be on the basis of the current employment status of the
individual or the individual's spouse.
(2) For a disabled individual who is or was covered under an LGHP,
coverage must be as follows:
(i) Before August 10, 1993, as an ``active individual'', that is,
as an employee, employer, self-employed individual (such as the
employer), individual associated with the employer
[[Page 40347]]
in a business relationship, or as a member of the family of any of
those persons.
(ii) On or after August 10, 1993, by reason of current employment
status of the individual or a member of the individual's family.
(e) Effective date of coverage. The rule set forth in
Sec. 406.24(d) for Medicare Part A applies equally to Medicare Part B.
3. In Sec. 407.25, paragraph (c) is revised to read as follows:
Sec. 407.25 Beginning of entitlement: Individual enrollment.
* * * * *
(c) Enrollment or reenrollment during a SEP. The rules set forth in
Sec. 406.24(d) of this chapter apply.
C. Part 408 is amended as set forth below:
PART 408--SUPPLEMENTARY MEDICAL INSURANCE PREMIUMS
1. The authority citation for Part 408 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. Section 408.24 is amended to republish the introductory text of
paragraph (a), to revise paragraphs (a)(6), (a)(7), and (a)(8), to add
a new paragraph (a)(9), and to revise paragraph (b)(2)(i), to read as
follows:
Sec. 408.24 Individuals who enrolled or reenrolled before April 1,
1981 or after September 30, 1981.
(a) Enrollment. For an individual who first enrolled before April
1, 1981 or after September 30, 1981, the period includes the number of
months elapsed between the close of the individual's initial enrollment
period and the close of the enrollment period in which he or she first
enrolled, and excludes the following:
* * * * *
(6) For premiums due for months beginning with September 1984 and
ending with May 1986, the following:
(i) Any months after December 1982 during which the individual
was--
(A) Age 65 to 69;
(B) Entitled to hospital insurance (Medicare Part A); and
(C) Covered under a group health plan (GHP) by reason of current
employment status.
(ii) Any months of SMI coverage for which the individual enrolled
during a special enrollment period as provided in Sec. 407.20 of this
chapter.
(7) For premiums due for months beginning with June 1986, the
following:
(i) Any months after December 1982 during which the individual was:
(A) Age 65 or over; and
(B) Covered under a GHP by reason of current employment status.
(ii) Any months of SMI coverage for which the individual enrolled
during a special enrollment period as provided in Sec. 407.20 of this
chapter.
(8) For premiums due for months beginning with January 1987, the
following:
(i) Any months after December 1986 and before October 1998 during
which the individual was:
(A) A disabled Medicare beneficiary under age 65;
(B) Not eligible for Medicare on the basis of end stage renal
disease, under Sec. 406.13 of this chapter; and
(C) Covered under an LGHP as described in Sec. 407.20 of this
chapter.
(ii) Any months of SMI coverage for which the individual enrolled
during a special enrollment period as provided in Sec. 407.20 of this
chapter.
(9) For premiums due for months beginning with July 1990, the
following:
(i) Any months after December 1986 during which the individual met
the conditions of paragraphs (a)(8)(i)(A) and (a)(8)(i)(B) of this
section, and was covered under a GHP by reason of the current
employment status of the individual or the individual's spouse.
(ii) Any months of SMI coverage for which the individual enrolled
during a special enrollment period as provided in Sec. 407.20 of this
chapter.
(b) * * *
(2) * * *
(i) The periods specified in paragraphs (a)(1) through (a)(9) of
this section; and
* * * * *
D. Part 416 is amended as set forth below.
PART 416--AMBULATORY SURGICAL SERVICES
1. The authority citation for part 416 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Sec. 416.35 [Amended]
2. In Sec. 416.35, the following changes are made:
a. In paragraph (b)(1)(i), ``Sec. 416.39'' is revised to read
``Sec. 416.26''.
b. In the introductory text of paragraph (d), ``shall be given'' is
revised to read ``is given''.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance and No. 93.774, Medicare--Supplementary
Medical Insurance)
Dated: July 26, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 96-19558 Filed 8-1-96; 8:45 am]
BILLING CODE 4120-01-P
Complete official Federal Register PDF
FR Doc. 96-19525 Modification of Definition of Deposits in Banks or Trust Companies
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40311-40313]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19525]
=======================================================================
-----------------------------------------------------------------------
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 931
[No. 96-48]
Modification of Definition of Deposits in Banks or Trust
Companies
AGENCY: Federal Housing Finance Board.
ACTION: Final rule.
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SUMMARY: The Board of Directors of the Federal Housing Finance Board
(Finance Board) has adopted a final rule to modify the definition of
``deposits in banks or trust companies'' in the Finance Board's
regulations. The final rule will: Make clear that the term ``banks''
includes savings associations; and expressly include federal funds
transactions as eligible to fulfill the liquidity requirement imposed
on the Federal Home Loan Banks (FHLBanks) by section 11(g) of the
Federal Home Loan Bank Act (Bank Act).
EFFECTIVE DATE: September 3, 1996.
FOR FURTHER INFORMATION CONTACT: Janice A. Kaye, Attorney-Advisor,
Office of General Counsel, (202) 408-2505, Federal Housing Finance
Board, 1777 F Street, NW., Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
Under section 11(e)(1) of the Bank Act, the FHLBanks have the power
to accept deposits from their members, other FHLBanks, or
instrumentalities of the United States. See 12 U.S.C. 1431(e)(1). To
ensure that each FHLBank has sufficient liquid assets to meet deposit
withdrawal demands, section 11(g) of the Bank Act imposes a liquidity
requirement. See id. section 1431(g). The liquidity requirement
provides that each FHLBank must invest, upon such terms and conditions
as the Board of Directors of the Finance Board may prescribe, an amount
equal to the current deposits the FHLBank holds in specified types of
assets. Id. Among the specified assets are ``deposits in banks or trust
companies.'' Id. section 1431(g)(2).
The phrase ``deposits in banks or trust companies'' appeared in,
and has not been changed since enactment of, the Bank Act in 1932. See
ch. 522, sec. 11, 47 Stat. 733 (July 22, 1932). The legislative history
of section 11(g) of the Bank Act does not discuss use of the phrase,
but suggests only that the purpose of the liquidity requirement is to
ensure that the FHLBanks have sufficient liquid assets to meet their
advance and deposit withdrawal demands. See Bank Act: Hearings on S.
2959 Before a Subcomm. of the Senate Comm. on Banking and Currency, 72d
Cong., 1st Sess. 36 (Jan. 14, 1932) (statement of John O'Brien,
Assistant Legislative Counsel). Although the legislative history of
section 11(g) is limited, a legal opinion issued several years after
enactment of the Bank Act by the General Counsel of the Federal Home
Loan Bank Board (Bank Board), the Finance Board's predecessor agency,
stated that ``Congress, in using the phrase `deposits in banks or trust
companies' * * * intended to refer to those financial institutions
which accept deposits in their regular course of business.'' \1\ The
Bank Board General Counsel based his determination on the plain meaning
of the term ``banks'' at that time. Id. at 2-3. To decide if a
financial institution is a ``bank'' for purposes of section 11(g)(2),
``the principal test or criterion * * * is whether the financial
institution accepts deposits as one of the primary purposes for which
it was created.'' Id. at 2. Since savings associations did not accept
deposits at that time,\2\ the Bank Board General Counsel concluded that
``savings associations did not fall within the strict meaning of
`banks.' '' Bank Board General Counsel opinion at 3.
---------------------------------------------------------------------------
\1\ See Bank Board General Counsel opinion 015 (Dec. 7, 1936) at
1-2. The Bank Board General Counsel concluded that ``Congress * * *
intended to limit the trust companies authorized to receive
[FHLBank] deposits to those which actually receive deposits as part
of their regular course of business.'' Id. at 4.
\2\ See e.g., Home Owners' Loan Act of 1933 (HOLA), ch. 64, sec.
5(b), 48 Stat. 132 (June 13, 1993) (savings and loan associations
``shall raise their capital only in the form of payments on such
shares as are authorized in their charger * * * no deposits shall be
accepted''); Horace Russell, Savings and Loan Associations 166-67,
n.21 (1956) (``savings and loan associations * * * issue savings
accounts, sometimes called share accounts and sometimes share
savings accounts * * * by federal law, the use of the word `deposit'
by savings and loan associations is prohibited''); Indep Bankers
Ass'n of Am. v. Clarke, 917 F.2d 1126, 1128 (8th Cir. 1990)
(``traditionally, of course, and originally, savings and loan
associations * * * did not accept demand deposits'').
---------------------------------------------------------------------------
In 1978, the Bank Board defined by regulation the phrase ``deposits
in banks or trust companies'' to include a deposit in another FHLBank,
a demand account with a Federal Reserve Bank, or a deposit in a
depository designated by a FHLBank's board of directors that is a
member of the Federal Reserve System (FRS) or the Federal Deposit
Insurance Corporation (FDIC). See 43 FR 46835, 46836 (Oct. 11, 1978),
codified at 12 CFR 521.5 (superseded). When the Bank Board adopted this
definition, deposits in federal and some state savings associations
were insured by the former Federal Savings and Loan Insurance
Corporation (FSLIC), and deposits in banks (and some savings banks)
were insured by the FDIC. The Bank Board's regulation provided that
only deposits in FDIC-insured institutions were eligible investments
for purposes of the ``deposits in banks or trust companies'' provision
of section 11(g) of the Bank Act. Since, generally speaking, only banks
were members of (or, more precisely, insured by) the FDIC, deposits in
FSLIC-insured savings associations could not be counted toward the
liquidity requirement under the regulation. When Congress abolished the
Bank Board and FSLIC in 1989, see Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, sec.
401, 103 Stat. 183 (Aug. 9, 1989), the Finance Board transferred the
definition of ``deposits in banks or trust companies,'' without any
change in substantive or technical matters, to Sec. 931.5 of its
regulations. See 54 FR 36757 (Aug. 28, 1989), codified at 12 CFR 931.5.
On September 22, 1993, the Board of Directors of the Finance Board
approved for publication a proposed rule to modify the definition of
``deposits in banks or trust companies'' in Sec. 931.5 of its
regulations. The notice of proposed rulemaking (Notice) was published
in the Federal Register on September 29, 1993, with a 60-day public
comment period that closed on November 29, 1993. See 58 FR 50867 (Sept.
29, 1993). The Notice proposed to make two changes to the definition of
``deposits in banks or trust companies.'' First, it
[[Page 40312]]
proposed to replace the reference to depositories that are FRS or FDIC
members with a reference to banks, as defined in section 3 of the
Federal Deposit Insurance Act (FDI Act), see 12 U.S.C. 1813(a), and
trust companies that are members of the FRS or insured by the FDIC. The
intent of this modification was to make clear that deposits in savings
associations would continue to be ineligible investments for purposes
of section 11(g) of the Bank Act. Second, the Notice proposed to expand
the definition to specifically include as deposits the sale of federal
funds.
II. Analysis of the Final Rule
A. Meaning of the Term ``Banks''
In the Notice, the Board of Directors of the Finance Board proposed
to limit the meaning of ``banks'' to those institutions included in the
technical definition of the term ``banks'' under the FDI Act. Under
that definition, the term ``banks'' does not include savings
associations. See id. section 1813 (a), (b). As a result of reviewing
the comments received by the Finance Board, one from a FHLBank and the
other from an industry trade association, and the factors discussed
below, the Board of Directors of the Finance Board has determined that
deposits in savings associations should be eligible investments for
purposes of the liquidity requirement in section 11(g) of the Bank Act.
The Board of Directors of the Finance Board has modified the proposed
rule to make clear that the term ``banks'' will include savings
associations for purposes of section 11(g)(2) of the Bank Act. The
public comments support this interpretation.
Neither the legislative history of the Bank Act nor the Bank Board
in adopting its regulatory definition, articulated any policy reasons
to support the exclusion of deposits in FSLIC-insured savings
associations. See supra section I. One commenter suggested that the
rationale for the exclusion of savings associations might have been to
avoid any conflict of interest that might arise as a result of placing
deposits in FHLBank member institutions. If this was the concern when
Congress enacted the Bank Act in 1932, or when the Bank Board
promulgated its regulatory definition in 1978, it was obviated in 1989,
when banks for the first time became eligible as FHLBank members. See
FIRREA, sec. 704(a), codified at 12 U.S.C. 1424(a)(1). The commenter
urged the Finance Board to treat bank and savings association FHLBank
members equally.
The other commenter offered that the reason for disparate treatment
of banks and savings associations might have been to ensure that
FHLBank liquidity deposits be transacted only with ``low-risk''
counterparties, implying that FDIC-insured deposits were less risky
than FSLIC-insured savings accounts. Because Congress dissolved FSLIC
in 1989 and transferred responsibility for administering the insurance
funds for both savings associations and banks to the FDIC, see FIRREA,
sections 401(a)(1), 205, the commenter argued that, if there ever were
such differences, there are now no material differences in overall
credit risk between deposits in FDIC-insured banks and deposits in
FDIC-insured savings associations. The commenter pointed out also that
sound financial management and the dictates of the Finance Board's
Financial Management Policy, see Board of Directors Res. 93-133 (Dec.
15, 1993), Board of Directors Dec. Mem. 94-DM-48 (Nov. 10, 1994),
require the FHLBanks to select only the most creditworthy
counterparties.
-Permitting the FHLBanks to count deposits in savings associations
towards the statutory liquidity requirement also is sound as a matter
of statutory construction. Congress enacted the Bank Act a year before
it created the FDIC. See ch. 89, sec. 8, 48 Stat. 168 (June 16, 1933).
Thus, the technical definition of the term ``bank'' provided for
purposes of deposit insurance coverage could not have been the
contemplated meaning of the word as used in section 11(g)(2) of the
Bank Act. See supra section I. It appears that Congress' intent in
using the phrase ``deposits in banks or trust companies'' was to permit
the FHLBanks to make deposits only in financial institutions that
accepted deposits in the ordinary course of their business. Id.
Clearly, the plain meaning of the term ``bank'' at the time Congress
enacted the Bank Act was a financial institution that accepts deposits.
Id. This also is the ordinary dictionary definition of the term
``bank'' today.\3\
---------------------------------------------------------------------------
\3\ ``A bank is an institution * * * whose business it is to
receive money on deposit * * *.'' 131 Black's Law Dictionary (5th
ed. 1979). The word ``bank'' means ``an institution for receiving,
lending, exchanging, and safeguarding money.'' 106 The Random House
College Dictionary (rev. ed. 1980) (emphasis added).
---------------------------------------------------------------------------
-Although there continue to be differences between banks and
savings associations, even the courts have acknowledged that ``the
clear, bright-line distinctions between commercial banks and savings
and loans have, over the years, gradually become blurred.'' Indep.
Bankers, 917 F.2d at 1128. Indeed, for purposes of other statutes, the
term ``banks'' has been defined to include savings associations, and
vice versa. For example, under HOLA, the Office of Thrift Supervision
considers certain types of banks to be savings associations for
purposes of the qualified thrift lender test. See 12 U.S.C.
1467a(1)(A), (l); 12 CFR 583.21. Further, under the Internal Revenue
Code, the meaning of the term ``bank'' includes savings associations
for purposes of assessing taxes on certain situations common to both
types of financial institutions. See 26 U.S.C. 581; Horace Russell,
Savings and Loan Associations 307 (2d ed. 1960) (`` `black,' therefore,
is `white' ''). And, for purposes of the McFadden Act, 12 U.S.C. 36,
which authorizes national banks to establish branches only to the
extent that state banks within the same state may branch under state
law, the Comptroller of the Currency has determined that savings
associations are state banks. Several courts have upheld as reasonable
the Comptroller of the Currency's determination.
-For all of the above reasons, including the fact that savings
associations now have statutory authority to accept deposits,\4\ it is
reasonable for the Board of Directors of the Finance Board to conclude
that deposits in savings associations should be eligible investments
for purposes of section 11(g) of the Bank Act.
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\4\ In 1968, Congress amended section 5(b) of HOLA. See Pub. L.
90-448, Title XVII, sec. 1716(a), 82 Stat. 608 (Aug. 1, 1968); supra
n.2. The amendment eliminated provisions that permitted savings
associations to raise their capital only in the form of payments on
shares and prohibited acceptance of deposits, and inserted
provisions permitting savings associations to raise capital in the
form of savings deposits, shares, or other accounts. Id., codified
at 12 U.S.C. 1464.
---------------------------------------------------------------------------
B. Federal Funds Transactions
The Board of Directors of the Finance Board has adopted the
provisions of the Notice that concern federal funds transactions as
proposed. The Board of Directors of the Finance Board has decided that
federal funds transactions, which are highly liquid investments
essentially equivalent to deposits, constitute investments that are
``deposits'' within the meaning of section 11(g)(2) of the Bank Act.
Therefore, the final rule amends Sec. 931.5 to include expressly the
sale of federal funds to banks and trust companies as a deposit the
FHLBanks may use to fulfill the liquidity requirement in section 11(g)
of the Bank Act. Since the Board of Directors of the Finance Board has
concluded that the term ``banks'' includes savings associations,
savings associations, as well as banks and trust companies, are
eligible counterparties
[[Page 40313]]
for federal funds transactions. The public comments received by the
Finance Board support this interpretation.
For purposes of the final rule, a sale of federal funds means
either a conventional federal funds transaction or a correspondent-
respondent federal funds transaction. A conventional sale of federal
funds involves the unsecured sale of funds held by a FHLBank in an
account maintained at its district Federal Reserve Bank to a bank in
need of additional funds to meet its statutory reserve requirement.\5\
A correspondent-respondent federal funds sale involves the sale of
unsecured funds directly from a FHLBank (the respondent) to a
correspondent bank in need of funds to meet its statutory reserve
requirement.
---------------------------------------------------------------------------
\5\ Section 19(b)(2)(A) of the Federal Reserve Act requires each
depository institution to maintain reserves against its transaction
accounts, as the FRS Board of Governors may prescribe, for the
purpose of implementing monetary policy. See 12 U.S.C. 461(b)(2)(A).
These reserves are commonly referred to as ``federal funds.'' A
depository institution meets the reserve requirement by maintaining
accounts at its direct Federal Reserve Bank or by holding cash in
its vaults. A depository institution may sell excess reserves to
another depository institution in need of additional funds to meet
its reserve requirement.
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III. Regulatory Flexibility Act
Under the Regulatory Flexibility Act (RFA), 5 U.S.C. 601, et seq.,
the FHLBanks are not ``small entities.'' Id. section 601(6). Since this
final rule applies only to the FHLBanks, it does not impose any
additional regulatory requirements on small entities. Thus, in
accordance with section 605(b) of the RFA, Id. section 605(b), the
Board of Directors of the Finance Board hereby certifies that this
final rule will not have a significant economic impact on a substantial
number of small entities.
List of Subjects in 12 CFR Part 931
Banks, banking, Federal home loan banks.
Accordingly, the Board of Directors of the Federal Housing Finance
Board hereby amends chapter IX, title 12, part 931, Code of Federal
Regulations, as follows:
PART 931--DEFINITIONS
1. The authority citation for part 931 is revised to read as
follows:
Authority: 12 U.S.C. 1422a, 1422b, 1427, and 1431(g).
2. Section 931.5 is revised to read as follows:
Sec. 931.5 Deposits in banks or trust companies.
Include:
(a) A deposit in another Bank;
(b) A demand account in a Federal Reserve Bank; and
(c) A deposit in, or a sale of federal funds to:
(1) An insured depository institution, as defined in section
2(12)(A) of the Act (12 U.S.C. 1422(12)(A)), that is designated by the
Bank's board of directors; or
(2) A trust company that is a member of the Federal Reserve System
or insured by the Federal Deposit Insurance Corporation, and is
designated by the Bank's board of directors.
Dated: July 3, 1996.
By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairperson.
[FR Doc. 96-19525 Filed 8-1-96; 8:45 am]
BILLING CODE 6725-01-U
Complete official Federal Register PDF
FR Doc. 96-19400 Management Official Interlocks
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40293-40311]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19400]
=======================================================================
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 26
[Docket No. 96-15]
RIN 1557-AB39
FEDERAL RESERVE BOARD
12 CFR Part 212
[Docket No. R-0907]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 348
RIN 3064-AB71
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 563f
[Docket No. 96-62]
RIN 1150-AA95
Management Official Interlocks
AGENCIES: Office of the Comptroller of the Currency, Treasury; Board of
Governors of the Federal Reserve System; Federal Deposit Insurance
Corporation; Office of Thrift Supervision, Treasury.
ACTION: Joint final rule.
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SUMMARY: The Office of the Comptroller of the Currency (OCC), Board of
Governors of the Federal Reserve System (Board), Federal Deposit
Insurance Corporation (FDIC), and Office of Thrift Supervision (OTS)
(collectively, the agencies) are revising their rules regarding
management interlocks. This final rule conforms the interlocks rules to
recent statutory changes, modernizes and clarifies the rules, and
reduces unnecessary regulatory burdens where feasible, consistent with
statutory requirements. In so doing, it reflects comments received on
the proposed rule and the agencies' further internal considerations.
EFFECTIVE DATE: This joint rule is effective October 1, 1996.
FOR FURTHER INFORMATION, CONTACT: OCC: Sue E. Auerbach, Senior
Attorney, Bank Activities and Structure Division (202) 874-5300; Emily
R. McNaughton, National Bank Examiner, Credit & Management Policy (202)
874-5170; Jackie Durham, Senior Licensing Policy Analyst (202) 874-
5060; or Mark J. Tenhundfeld, Senior Attorney, Legislative and
Regulatory Activities (202) 874-5090, 250 E Street, SW., Washington, DC
20219.
Board: Thomas M. Corsi, Senior Attorney (202/452-3275), or Tina
Woo, Attorney (202/452-3890), Legal Division, Board of Governors of the
Federal Reserve System. For the hearing impaired only,
Telecommunication Device for Deaf (TDD), Dorothea Thompson (202/452-
3544), Board of Governors of the Federal Reserve System, 20th and C
Streets, NW., Washington DC 20551.
FDIC: Curtis Vaughn, Examination Specialist, Division of
Supervision, (202) 898-6759; or Mark Mellon, Counsel, Regulation and
Legislation Section, Legal Division, (202) 898-3854, Federal Deposit
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
OTS: David Bristol, Senior Attorney, Business Transactions
Division, (202) 906-6461; or Donna Deale, Program Manager, Supervision
Policy, (202) 906-7488.
SUPPLEMENTARY INFORMATION:
Background
Section 303 of the Riegle Community Development and Regulatory
Improvement Act of 1994 (CDRI Act)
Section 303(a) of the CDRI Act (12 U.S.C. 4803(a)) requires the
agencies to review their regulations in order to streamline and modify
the regulations to improve efficiency, reduce unnecessary costs, and
eliminate unwarranted constraints on credit availability. Section
303(a) also requires the agencies to work jointly to make uniform all
regulations and guidelines implementing common statutory or supervisory
policies. The agencies have reviewed their respective management
interlocks regulations with these purposes in mind and are amending the
regulations in ways designed to meet the goals of section 303(a).
The agencies have made the following changes to their respective
management interlocks rules in order to comply with the mandate of
section 303(a):
The final rules revise the definition of ``senior
management official'' to eliminate uncertainty as to when an employee
of a depository institution will be considered to be a senior
management official for purposes of the Depository Institution
Management Interlocks Act (12 U.S.C. 3201-3208) (Interlocks Act).
Moreover, the final rules conform this definition to definitions of
similar terms used elsewhere in the agencies' regulations.
The final rules revise the definition of ``representative
or nominee'' to clarify
[[Page 40294]]
that the agencies will determine that a person is acting as a
representative or nominee on behalf of another person only when there
is an agreement, express or implied, obligating the first person to act
on the second person's behalf with respect to management
responsibilities.
The final rules reflect a reinterpretation of the
Interlocks Act by the agencies that permits management interlocks
within a relevant metropolitan statistical area (MSA) when either of
the depository institutions in the MSA has assets of less than $20
million (the agencies previously interpreted the Interlocks Act to
permit interlocks between unaffiliated institutions in MSA only if both
depository institutions have assets of less than $20 million). This
expands the pool of available managerial talent for small depository
institutions.
In implementing the Interlocks Act's ``regulatory standards''
exemption (Regulatory Standards exemption) and the exemption under a
``management official consignment program'' (Management Consignment
exemption), the final rules contain certain presumptions and define key
terms so as to eliminate unnecessary burdens.
The final rules remove the provision concerning statutorily
grandfathered management interlocks, given that it is unnecessary in
light of the changes made to the Interlocks Act by the CDRI Act.
The agencies believe that these changes will streamline and modify
their respective management interlocks regulations, thus furthering the
goals of section 303 of the CDRI Act. These changes are explained more
fully in the discussion of the final rule and comments received.
Summary of Statutory Changes
The CDRI Act amended the Interlocks Act by removing the agencies'
broad authority to exempt otherwise impermissible interlocks and
replacing it with the authority to exempt interlocks under more narrow
circumstances. The CDRI Act also required a depository organization
with a ``grandfathered'' interlock to apply for an extension of the
grandfather period if the organization wanted to keep the interlock in
place.1
---------------------------------------------------------------------------
\1\ The agencies completed their review of requests for
extensions by March 23, 1995, as directed by the statute. Therefore,
the provision regarding extending the grandfather period is moot for
purposes of this regulation.
---------------------------------------------------------------------------
Pursuant to the changes made by the CDRI Act, a depository
institution seeking an exemption from the Interlocks Act's restrictions
must qualify either for a Regulatory Standards exemption or a
Management Consignment exemption. An applicant seeking a Regulatory
Standards exemption must submit a board resolution certifying that no
other candidate from the relevant community has the necessary expertise
to serve as a management official, is willing to serve, and is not
otherwise prohibited by the Interlocks Act from serving. Before
granting the exemption request, the appropriate agency must find that
the individual is critical to the institution's safe and sound
operations, that the interlock will not produce an anticompetitive
effect, and that the management official meets any additional
requirements imposed by the agency. Under the Management Consignment
exemption, the appropriate agency may permit an interlock that
otherwise would be prohibited by the Interlocks Act if the agency
determines that the interlock would: (1) improve the provision of
credit to low- and moderate-income areas; (2) increase the competitive
position of a minority- or women-owned institution; or (3) strengthen
the management of a newly chartered institution or an institution that
is in an unsafe or unsound condition (see text following ``Management
Consignment exemption'' in this preamble for a discussion regarding
interlocks involving a newly chartered institution or an institution
that is in an unsafe or unsound condition).
The Proposal
On December 29, 1995, the agencies published a joint notice of
proposed rulemaking (proposal) (60 FR 67424) to implement these
statutory changes. In addition, the proposal permitted interlocks
involving two institutions located in the same relevant metropolitan
statistical area (RMSA) if the institutions were not also located in
the same community and if at least one of the institutions had total
assets of less than $20 million. Finally, the proposal streamlined and
clarified the agencies' interlocks rules in various respects.
The Final Rule and Comments Received
The agencies received a total of 26 comments,2 some of which
were sent to more than one agency. Commenters overwhelmingly supported
the proposal. A few commenters, while supporting the proposal,
suggested that the agencies make additional changes as discussed later
in this preamble. Most of the provisions in the proposal received
either no comments or uniformly favorable comments. Accordingly, except
where noted in the text that follows, the agencies have adopted without
revision the changes to their respective interlocks rules that were set
forth in the proposal.
---------------------------------------------------------------------------
\2\ The Board received 10 comments from the public, while the
OCC, FDIC, and OTS received 6, 6, and 4, respectively.
---------------------------------------------------------------------------
The following discussion summarizes the amendments to the agencies'
management interlock rules and the comments received.
Authority, Purpose, and Scope
This section in the agencies' final rules identifies the Interlocks
Act as the statutory authority for the management interlocks
regulation. It also states that the purpose of the rules governing
management interlocks is to foster competition between unaffiliated
institutions. Finally, this section identifies the types of
institutions to which each agency's regulation applies. The OCC rule
uses the term ``District bank'' to describe banks operating under the
Code of Laws of the District of Columbia. (See definition of ``District
bank'' at Sec. 26.2(k).)
Definitions
Anticompetitive effect
The final rules define the term ``anticompetitive effect'' to mean
``a monopoly or substantial lessening of competition,'' a definition
derived from the Bank Merger Act (12 U.S.C. 1828(c)). The term
``anticompetitive effect'' is used in the Regulatory Standards
exemption. Under the Regulatory Standards exemption, the appropriate
agency may approve a request for an exemption to the Interlocks Act if,
among other things, the agency finds that continuation of service by
the management official does not produce an anticompetitive effect with
respect to the affected institution.
The statute does not define the term ``anticompetitive effect,''
nor does the legislative history to the CDRI Act point to a particular
definition. The context of the Regulatory Standards exemption suggests,
however, that the agencies should apply the term ``anticompetitive
effect'' in a manner that permits interlocks that present no
substantial lessening of competition. By prohibiting an interlock that
would result in a monopoly or substantial lessening of competition, the
definition preserves the free flow of credit and other banking services
that the Interlocks Act is designed to protect. Moreover, use of a
definition familiar to the banking industry enables the agencies to
accomplish the legislative purpose of
[[Page 40295]]
the Interlocks Act without imposing unnecessary regulatory burdens.
Area Median Income
The final rules define ``area median income'' as the median family
income for the MSA in which an institution is located or the statewide
nonmetropolitan median family income if an institution is located
outside an MSA. The term ``area median income'' is used in the
definition of ``low- and moderate-income areas,'' which in turn is used
in the implementation of the Management Consignment exemption.
Critical
The final rules define ``critical'' as ``important to restoring or
maintaining a depository organization's safe and sound operations.''
The term ``critical'' is used in the Regulatory Standards exemption.
Under that exemption, the appropriate agency must find that a proposed
management official is critical to the safe and sound operations of the
affected institution. 12 U.S.C. 3207(b)(2)(A).
Neither the statute nor its legislative history defines
``critical.'' The agencies are concerned that a narrow interpretation
of this term would nullify the Regulatory Standards exemption. If
someone were ``critical'' to the safe and sound operations of an
institution only if the institution would fail but for the service of
the person in question, the exemption would have little relevance,
because the standard would be impossible to meet. Given that Congress
clearly intended for the Regulatory Standards exemption to permit
interlocks under some circumstances, the question thus becomes how to
define those circumstances.
The agencies believe that the definition adopted in these final
rules is consistent with the legislative intent by insuring that only
persons of demonstrated expertise and importance to the institution's
safe and sound operations may serve pursuant to a Regulatory Standards
exemption.
Depository Institution
The final rules make no substantive change to the definition of
``depository institution.'' Two commenters noted that several of the
agencies interpret ``depository institution'' to include only those
institutions that accept deposits (see, e.g., Board Staff Opinion of
March 29, 1983, I F.R.R.S. 3-838; OCC No-Objection Letter No. 93-01,
October, 1993; FDIC Interpretive Letter No. 85-27), and requested that
the agencies clarify that these interpretations will not be affected by
the final rules. The OCC, Board, and FDIC note that the final rules
change neither the definition of ``depository institution'' nor the
application of that definition, and that the interpretations cited
remain accurate statements of the positions of these agencies.
Low- and Moderate-income Areas
The final rules define this term as a census tract (or, if an area
is not in a census tract, a block numbering area delineated by the
United States Bureau of the Census) in which the median family income
is less than 100 percent of the area median income. This term is used
in the Management Consignment exemption that permits an otherwise
impermissible interlock if the interlock would improve the provision of
credit to a low- and moderate-income area. The final rules clarify that
the agencies will evaluate whether an area is low- or moderate-income
by comparing the median family income for the census tract to be helped
(or, if there is no census tract, the block numbering area delineated
by the United States Bureau of the Census) with the area median income.
Income data will be derived from the most recent decennial census.
One commenter requested that the agencies use a cutoff of 120
percent of the area median income for determining whether an area is
``low- or moderate-income.'' This commenter suggested that this higher
cutoff would be consistent with the flexibility vested in the agencies
to implement the Management Consignment exemption in a way designed to
make it easier for institutions to serve economically disadvantaged
areas.
The agencies agree that a cutoff above 80 percent of the area
median income is appropriate, given that ``low-income'' is defined in
Title I, Subtitle A of the CDRI Act (titled ``Community Development
Banking and Financial Institutions'') to mean not more than 80 percent
of the area median income. 12 U.S.C. 4702(17). The agencies believe
that Congress, by using the term ``moderate-income'' in addition to
``low-income'' in section 338(b) of the CDRI Act (which created the
Management Consignment exemption), intended for that term to apply to
an area where the median family income exceeds the cutoff for low
income established elsewhere in the CDRI Act.
The agencies disagree, however, that a cutoff above 100 percent of
area median income is appropriate. The agencies continue to believe
that the 100 percent cutoff proposed best effectuates the Congressional
purpose of facilitating the flow of credit to economically
disadvantaged areas. Moreover, the threshold adopted is a commonly used
definition for ``moderate-income'' in other statutory provisions.3
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\3\ See, e.g., 12 U.S.C. 4502(10) (defining ``moderate-income''
in the context of the statute addressing government sponsored
enterprises).
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Management Official
The final rules define ``management official'' to include a senior
executive officer, a director, a branch manager, a trustee of an
organization under the control of trustees, or any person who has a
representative or nominee serving in such capacity. The definition
excludes (1) A person whose management functions relate either
exclusively to the business of retail merchandising or manufacturing or
principally to business outside the United States of a foreign
commercial bank and (2) a person excluded by section 202(4) of the
Interlocks Act (12 U.S.C. 3201(4)).
The final rules remove the phrase ``an employee or officer with
management functions,'' which appeared in the former rule. In its
place, the agencies have used the term ``senior executive officer'' as
defined by each agency in its regulation pertaining to the prior notice
of changes in senior executive officers, which implement section 32 of
the Federal Deposit Insurance Act (FDI Act) (12 U.S.C. 1831i) as added
by section 914 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA) (Pub. L. No. 101-73, 103 Stat. 183).
The agencies have made this change to eliminate the uncertainty and
attendant compliance burden created by the ambiguous term ``management
functions.'' The final rules incorporate specific illustrative examples
of positions at depository organizations that will be treated as senior
executive officers. See 12 CFR 5.51(c)(3) (OCC); 12 CFR 225.71(a)
(Board); 12 CFR 303.14(a)(3) (FDIC); and 12 CFR 574.9(a)(2) (OTS). The
agencies believe that these definitions will allow depository
organizations to identify impermissible interlocks with greater
certainty and thus will enhance compliance.
One commenter requested that the agencies amend the rules to expand
the exemption that exists for individuals whose management functions
relate to the business of retail merchandising or manufacturing. In
response to this request, the agencies carefully reviewed their
respective rules and concluded that the rules as drafted are
sufficiently broad to address the concerns expressed by the commenter.
This commenter also requested that the agencies clarify the procedures
by which someone may confirm that an organization complies
[[Page 40296]]
with the regulation. The agencies note that an organization may request
from the appropriate regulator at any time confirmation that a given
interlock complies with applicable law. The agencies have elected not
to impose any procedural requirements in the regulation on this type of
request.
Relevant Metropolitan Statistical Area (RMSA)
The final rules, like the former rules, define ``relevant
metropolitan statistical area (RMSA)'' as an MSA, a primary MSA, or a
consolidated MSA that is not comprised of designated primary MSAs.
However, unlike the former rules, the final rules clarify that this
definition will be used to the extent that the Office of Management and
Budget (OMB) defines and applies the terms MSA, primary MSA, and
consolidated MSA. This change reflects the fact that OMB defines
``consolidated MSA'' to include two or more primary MSAs. Given that a
consolidated MSA, by OMB's definition, is comprised of primary MSAs,
the reference to a consolidated MSA in the Interlocks Act and the
agencies' regulations is inappropriate. The final rules enable the
agencies to implement the statute in a way that complies with both the
spirit and the letter of the Interlocks Act.
Representative or Nominee
The final rules define ``representative or nominee'' as someone who
serves as a management official and has an obligation to act on behalf
of someone else. The final rules remove the rest of the definition that
appeared in the former rule, however, and insert in lieu thereof a
statement that the appropriate agency will find that someone has an
obligation to act on behalf of someone else only if there is an
agreement (express or implied) to act on behalf of another. This change
clarifies that the determination of whether someone serves a
representative or nominee will depend on whether there is a basis to
conclude that an agreement exists to act on someone's behalf.
Prohibitions
The former rules prohibited interlocks in the following three
instances. First, no two unaffiliated depository organizations may have
an interlock if they (or their depository institution affiliates) have
depository institution offices in the same community. Second, a
depository organization may not have an interlock with any unaffiliated
depository organization if either depository organization has assets of
$20 million or more and the depository organizations (or depository
institution affiliates of either) have depository institution offices
in the same RMSA.4 Third, if a depository organization has total
assets exceeding $1 billion, it (and its affiliates) may not have an
interlock with any depository organization with total assets exceeding
$500 million (or affiliate thereof), regardless of location.
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\4\ A community as that term is defined in the rules is smaller
than an RMSA. There may be several communities in one RMSA.
---------------------------------------------------------------------------
The final rules amend the restriction applicable to institutions
with assets equal to or exceeding $20 million to better conform to the
purposes of the Interlocks Act. Whereas the former rules prohibited
interlocks in an RMSA if one of the organizations has total assets of
$20 million or more, the final rules apply the RMSA-wide prohibition
only if both organizations have total assets of $20 million or more.
Interlocks within a community involving unaffiliated depository
organizations will continue to be prohibited, regardless of the size of
the organizations.
The agencies believe that this change is consistent with both the
language and the intent of the Interlocks Act. While the statute uses
the plural ``depository institutions'' in section 203(1) of the
Interlocks Act (12 U.S.C. 3202(1)), in context, the wording is
ambiguous and neither the statute nor its legislative history compels
the conclusion that the interlock must involve two institutions with
less than $20 million in assets before the less restrictive prohibition
applies.
The Interlocks Act seeks to prohibit interlocks that could enable
two institutions to engage in anticompetitive behavior. However, an
institution with total assets of less than $20 million is likely to
derive most of its business from the community in which it is located
and is unlikely to compete with institutions that do not have offices
in that community. Therefore, an interlock involving one institution
with assets under $20 million and another institution with assets of at
least $20 million not in the same community is not likely to lead to
the anticompetitive conduct that the Interlocks Act is designed to
prohibit.
The agencies believe, moreover, that the change will promote rather
than inhibit competition. Expanding the pool of managerial talent for
institutions with assets under $20 million could enhance the ability of
smaller institutions to compete by improving the management of these
institutions.
Every comment on this change either supported the change without
qualification or supported the change and asked the agencies go even
farther. A few commenters suggested that the agencies should raise the
asset thresholds discussed earlier and/or provide blanket exceptions
for institutions with total assets below certain levels. The agencies
note that the Interlocks Act, which establishes the thresholds at which
the various prohibitions apply, does not vest the agencies with
authority to change these levels or to exempt classes of organizations
from the statute's prohibitions. Accordingly, the agencies have not
adopted the changes proposed by these commenters.
Interlocking Relationships Expressly Permitted by Statute
The final rules state the exemptions found in 12 U.S.C. 3204 (1)-
(8).5 The final rules reorder the exemptions set forth in the
current regulations in order to conform the list of exemptions to the
list set forth in the Interlocks Act.
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\5\ The Interlocks Act contains an additional exemption for
savings associations and savings and loan holding companies that
have issued stock in connection with a qualified stock issuance
pursuant to section 10(q) of the Home Owners' Loan Act (12 U.S.C.
1467a(q)). See 12 U.S.C. 3204(9). The OTS therefore will continue to
list an additional exemption in its interlocks regulation that the
other agencies do not list. Another exemption provides for
interlocks as a result of an emergency acquisition of a savings
association authorized in accordance with section 13(k) of the
Federal Deposit Insurance Act (12 U.S.C. 1823(k)) if the FDIC has
given its approval to the interlock. The FDIC will continue to list
an additional exemption in its management interlocks regulation that
the other agencies do not list.
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Regulatory Standards Exemption
The final rules set forth the requirements that a depository
organization must satisfy in order to obtain a Regulatory Standards
exemption. The rules implement the requirement regarding certification
by allowing a depository organization's board of directors (or the
organizers of a depository organization that is being formed) to
certify to the appropriate agency that no other qualified candidate has
been found after undertaking reasonable efforts to locate qualified
candidates who are not prohibited from service under the Interlocks
Act. If read narrowly, the Interlocks Act could require a depository
organization to evaluate every person in a given locale that might be
qualified and interested. This would create a requirement that, in
practice, would be impossible to satisfy. Given that Congress would not
have included an exemption that would have no practical application,
the agencies believe that the ``reasonable efforts'' standard is
consistent with the legislative intent.
[[Page 40297]]
The final rules also set forth presumptions that the agencies will
apply when reviewing an application for a Regulatory Standards
exemption. First, each agency will presume that an interlock will not
have an anticompetitive effect if it involves institutions that, if
merged, would not trigger a challenge from the agencies on competitive
grounds. This presumption is unavailable, however, for interlocks
subject to the Major Assets prohibition.
Generally, the agencies will not object to a merger on competitive
grounds if the post-merger Herfindahl-Hirschman Index (HHI) for the
market is less than 1800 and the merger increases the HHI by 200 points
or less. This presumption will enable applicants to avoid the
unnecessary burden of submitting a competitive analysis in several
instances. The agencies have found this HHI benchmark to be a useful
guide to evaluating anticompetitive effects of interlocks.6
However, the agencies may decide that this presumption should not be
conclusive in appropriate circumstances, such as when approval of an
interlock request would lead to several institutions being linked by
overlapping management.
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\6\ See, e.g., the OCC's Bank Merger Competitive Analysis Screen
(OCC Advisory Letter 95-4, July 18, 1995); Department of Justice
Merger Guidelines (49 FR 26823, June 29, 1984) (applied by the
Board); FDIC Statement of Policy: Bank Merger Transactions (54 FR
39045, Sept. 22, 1989).
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Second, the agencies will presume that a person is critical to an
institution's safe and sound operations if the agencies also approved
that individual under section 914 of FIRREA and the institution in
question either was a newly chartered institution, failed to meet
minimum capital requirements, or otherwise was in a ``troubled
condition'' as defined in the reviewing agency's section 914 regulation
at the time the section 914 filing was approved.7
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\7\ This presumption also applies to individuals whose service
as a senior executive officer is approved by the OCC pursuant to the
standard conditions imposed on newly chartered national banks and to
individuals whose service as a management official is approved by
the FDIC as a condition of a grant of deposit insurance prior to the
opening of the depository institution.
---------------------------------------------------------------------------
The final rules also address the duration of an interlock permitted
under the Regulatory Standards exemption. The statute does not require
that these interlocks terminate. In light of this open-ended grant of
authority, the agencies have not adopted a specific term for a
permitted exemption. Instead, an agency may require an institution to
terminate the interlock if the agency determines that the management
official in question either no longer is critical to the safe and sound
operations of the affected organization or that continued service will
produce an anticompetitive effect. The agencies will provide affected
organizations an opportunity to submit information before they make a
final determination to require termination of an interlock.
One commenter suggested that the agencies clarify that the 15-month
grace period that applies when an interlock must be terminated due to a
change in circumstances also applies in the case of a Regulatory
Standards exemption that must be terminated. The agencies agree with
the commenter that it is appropriate in most cases to grant a grace
period following the termination of a Regulatory Standards exemption in
order to minimize the disruption of the affected institution that
otherwise might be caused by the loss of a management official.
There may be circumstances, however, where immediate termination of
a regulatory standards exemption would be appropriate. For instance, if
an organization obtains an exemption on the basis of misleading
information, the organization's primary regulator will require the
organization to take appropriate steps to immediately remedy the
situation. The final rules thus provide for the possibility of a grace
period, with the caveat that the agencies may, under appropriate
circumstances, order the immediate termination of a Regulatory
Standards exemption.
Another commenter suggested that the agencies limit the term of a
Regulatory Standards exemption when the exemption is granted. This
commenter opined that depository organizations would benefit from the
greater certainty by avoiding questions concerning whether a director
must vacate his or her position on a board. The agencies believe that
the procedures in the final rules for terminating a Regulatory
Standards exemption will provide an affected organization with ample
certainty concerning the permissibility of continued service.
Grandfathered Interlocking Relationships--Removed
Section 338(a) of the CDRI Act authorizes the agencies to extend a
grandfathered interlock for an additional five years if the management
official in question satisfies the statutory criteria for obtaining an
extension.
The final rules remove the sections addressing the grandfather
exemption because they are unnecessary and redundant in light of the
statute. Individuals who wished to extend their exemption already have
applied for and received an exemption if they met the statutory
criteria.
Management Consignment Exemption
The final rules implement the Management Consignment exemption, set
forth in section 209(c) of the Interlocks Act (12 U.S.C. 3207(c)), by
restating the statutory criteria with three clarifications. First, the
final rules state that the agencies consider a ``newly chartered
institution'' to be an institution that has been chartered for less
than two years at the time it files an application for exemption. This
standard is consistent with certain other banking agency thresholds for
determining when an institution is considered newly chartered (see,
e.g., 12 CFR 5.51(d), 225.72(a)(1); 303.14(b)).
Second, the final rules clarify that the exemption available for
``minority- and women-owned institutions'' is available for an
institution that is owned either by minorities or women. In analyzing
the exemptions to the Interlocks Act that the Federal banking agencies
have approved, the House Conference Report to the CDRI Act (H.R. Conf.
Rep. No. 652, 103d Cong., 2d Sess. 181 (1994)) (Conference Report)
states that the types of institutions that have received exemptions
include those that are ``owned by women or minorities.'' These
exemptions ultimately were codified in the Interlocks Act. Accordingly,
the agencies have concluded that Congress intended the Management
Consignment exemption to assist institutions owned by women and/or by
minorities, but did not intend to require the institution to be owned
by both.
Third, the final rules permit an interlock if the interlock would
strengthen the management of either a newly chartered institution or an
institution that is in an unsafe or unsound condition. Section
209(c)(1)(C) of the Interlocks Act (12 U.S.C. 3207(c)(1)(C)) permits an
exemption if the interlock would ``strengthen the management of newly
chartered institutions that are in an unsafe or unsound condition.''
However, this provision contains what appears on its face to be an
error, given that an exemption limited to situations involving newly
chartered institutions that also are in an unsafe and unsound condition
would have no practical utility. The chartering agencies do not approve
an application for a bank or thrift charter unless the applicant
seeking a charter can demonstrate that the proposed new financial
institution will operate in a safe and sound manner for the foreseeable
future. While there may be an extraordinary instance where
[[Page 40298]]
a newly chartered institution immediately experiences unforeseen
problems so severe that they threaten the safety and soundness of that
institution, there is nothing in the legislative history to suggest
that Congress intended to limit the Management Consignment exemption to
such rare instances.
Moreover, the legislative history of the CDRI Act suggests that the
agencies are to apply the Management Consignment exemption in cases
involving either newly chartered institutions or institutions that are
in an unsafe or unsound condition. The Conference Report notes that the
agencies have used their exemptive authority to grant exemptions in
limited cases where institutions ``are particularly in need of
management guidance and expertise to operate in a safe and sound
manner.'' Id. The Conference Report goes on to state that ``Examples of
exceptions permissible under an agency management official consignment
program include improving the provision of credit to low- and moderate-
income areas, increasing the competitive position of minority- and
women-owned institutions, and strengthening the [sic] management of
newly chartered institutions or institutions that are in an unsafe or
unsound condition.'' Id. at 182 (emphasis added).
Finally, Congress used the exemptions in the agencies' current
rules as the model for the Management Consignment exemption. See id. at
181-182. These exemptions distinguish newly chartered institutions from
institutions that are in an unsafe or unsound condition. The reference
in the CDRI Act's legislative history to the current regulatory
exemptions suggests that Congress intended to codify these exemptions.
For these reasons, the agencies will permit Management Consignment
exemptions if the management official will strengthen either a newly
chartered institution or an institution that is in an unsafe or unsound
condition.
The final rules set forth two presumptions that the agencies will
apply in connection with an application for an exemption under the
Management Consignment exemption. First, the agencies will presume that
an individual is capable of strengthening the management of an
institution that has been chartered for less than two years if the
reviewing agency approved the individual to serve as a management
official of that institution pursuant to section 914 of FIRREA.8
Second, the agencies will presume that an individual is capable of
strengthening the management of an institution that is in an unsafe or
unsound condition if the reviewing agency approved the individual to
serve under section 914 as a management official of that institution at
a time when the institution was not in compliance with minimum capital
requirements or otherwise was in a ``troubled condition.''
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\8\ This presumption also applies to an individual whose
service as a senior executive officer of a national bank is approved
pursuant to the standard conditions imposed by the OCC on newly
chartered national banks and to an individual whose service as a
management official is approved by the FDIC as a condition of a
grant of deposit insurance prior to the opening of the depository
institution.
---------------------------------------------------------------------------
The agencies believe that presumptions of suitability are less
valid when applied to the other Management Consignment exemptions
because there is no reason to conclude that a management official
approved under section 914 necessarily will improve the flow of credit
to low- and moderate-income areas or increase the competitive position
of minority- or women-owned institutions. Moreover, the final rules do
not contain a presumption regarding effects on competition, given that
this is not a factor to be considered by the agencies when reviewing an
application for a Management Consignment exemption.
The final rules set forth the limits on the duration of a
Management Consignment exemption. The Interlocks Act limits a
Management Consignment exemption to two years, with a possible
extension for up to an additional two years if the applicant satisfies
at least one of the criteria for obtaining a Management Consignment
exemption. The final rules implement this limitation by requiring
interested parties to submit an application for an extension at least
30 days before the expiration of the initial term of the exemption and
by clarifying that the presumptions that apply to initial applications
also apply to extension applications.
One commenter suggested that the agencies should be consistent in
how they address the duration of a Management Consignment exemption
with how the agencies address the duration of a Regulatory Standards
exemption, and permit a Management Consignment exemption to last until
the appropriate agency orders the interlock terminated. The statute is
clear, however, that a Management Consignment exemption may not last
more than one initial two-year term and one extension of up to an
additional two years in appropriate circumstances. Accordingly, the
agencies have not adopted the approach suggested by the commenter.
Change in Circumstances
The final rules provide a 15-month grace period for
nongrandfathered interlocks that become impermissible due to a change
in circumstances. This period may be shortened by the agencies under
appropriate circumstances.
Paperwork Reduction Act
OCC: The collection of information requirements contained in this
final rule have been reviewed and approved by the Office of Management
and Budget in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)) under control number 1557-0196. Comments on the
collections of information should be sent to the Office of Management
and Budget, Paperwork Reduction Project (1557-0196), Washington, DC
20503, with copies to the Legislative and Regulatory Activities
Division (1557-0196), Office of the Comptroller of the Currency, 250 E
Street, SW, Washington, DC 20219.
The collection of information requirements in this final rule are
found in 12 CFR 26.4(h)(1)(i), 26.5(a)(1), 26.5(a)(2), 26.6(a), and
26.6(c). This information is required by the Interlocks Act, and will
be used by the OCC to evaluate compliance with the requirements of the
Interlocks Act by national banks and District banks. The collections of
information are required to obtain a benefit.
Respondents are not required to respond to the foregoing collection
of information unless it displays a currently valid OMB control number.
The likely respondents are national banks and District banks.
Estimated average annual burden hours per respondent: 3 hours.
Estimated number of respondents: 100.
Start-up costs to respondents: None.
Board: In accordance with section 3506 of the Paperwork Reduction
Act of 1995 (44 U.S.C. Ch. 35; 5 CFR 1320 Appendix A.1), the Board
reviewed the final rule under the authority delegated to the Board by
the Office of Management and Budget. Comments on the collections of
information should be sent to the Office of Management and Budget,
Paperwork Reduction Project (7100-0046, 7100-0134, 7100-0171, 7100-
0266), Washington, DC 20503, with copies of such comments to be sent to
Mary M. McLaughlin, Federal Reserve Board Clearance Officer, Division
of Research and Statistics, Mail Stop 97, Board of Governors of the
[[Page 40299]]
Federal Reserve System, Washington, DC 20551.
The collection of information requirements in this final rule are
found in 12 CFR 212.4(h)(1)(i), 212.5(a)(1), 212.5(a)(2), 212.6(a), and
212.6(c). This information is required to evidence compliance with the
requirements of the Interlocks Act as amended by section 338 of the
CDRI Act. The respondents are state member banks and subsidiary
depository institutions of bank holding companies.
Currently, information on management official interlocks is
gathered as a part of the following applications: membership in the
Federal Reserve System (OMB No. 7100-0046); state member bank mergers
(OMB No. 7100-0266); changes in bank control (OMB No. 7100-0134); and
bank holding company acquisitions of depository institutions (OMB No.
7100-0171). The estimated portion of burden for each application that
is attributable to management interlocks averages 4 hours, and the
burden ranges from as much as 6 hours to as little as 0.5 hours. It is
estimated that 822 applications are filed annually, with an estimate of
3,288 hours of annual burden. Based on an hourly cost of $20, the
annual cost to the public is estimated to be $65,760. The Federal
Reserve believes that the final rule will have a minimal effect on
respondent burden.
The Federal Reserve may not conduct or sponsor, and an organization
is not required to respond to, these information collections unless
they display currently valid OMB control numbers.
No issues of confidentiality under the provisions of the Freedom
of Information Act normally arise for the applications.
FDIC: The collections of information contained in this final rule
have been reviewed and approved by the Office of Management and Budget
under control number 3064-0118 in accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collections
of information should be sent to the Office of Management and Budget,
Paperwork Reduction Project (3604-0118), Washington, DC 20503, with
copies of such comments to be sent to Steven F. Hanft, Office of the
Executive Secretary, Room F-453, Federal Deposit Insurance Corporation,
550 17th Street, NW., Washington, DC 20429.
The collection of information requirements in this final rule are
found in 12 CFR 348.4(i)(1)(i), 348.5(a)(1), 348.5(a)(2), 348.6(a), and
348.6(c). This information is required by the Interlocks Act as amended
by section 338 of the CDRI Act, and will be used by the FDIC to
evaluate compliance with the requirements of the Interlocks Act by
insured nonmember banks. The likely respondents are insured nonmember
banks.
Estimated number of respondents: 6 applicants per year.
Estimated average annual burden per respondent: 4 hours.
Estimated annual frequency of recordkeeping: Not applicable (one-
time application).
Estimated total annual recordkeeping burden: 24 hours.
OTS: The collection of information requirements contained in this
rule have been reviewed and approved by the Office of Management and
Budget for review in accordance with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)). Comments on the collection of information
should be sent to the Office of Management and Budget, Paperwork
Reduction Project (1550-0051), Washington, DC 20503, with copies to the
Business Transactions Division (1550-0051), Office of Thrift
Supervision, 1700 G Street, NW., Washington, DC.
The collection of information requirements in this final rule are
found in 12 CFR 563f.4(h)(1)(i), 563f.5(a)(1), 563f.5(a)(2), 563f.6(a),
and 563f.6(c). This information is required by the Interlocks Act, and
will be used by the OTS to evaluate compliance with the requirements of
the Interlocks Act by savings associations. The collections of
information are required to obtain a benefit.
Respondents are not required to respond to the foregoing collection
of information unless it displays a currently valid OMB control number.
The likely respondents are savings associations.
Estimated average annual burden hours per respondent: 4 hours.
Estimated number of respondents: 8.
Start-up costs to respondents: None.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA)
(5 U.S.C. 605(b)), the regulatory flexibility analysis otherwise
required under section 603 of the RFA (5 U.S.C. 603) is not required if
the head of the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities
and the agency publishes such certification and a succinct statement
explaining the reasons for such certification in the Federal Register
along with its final rule.
Pursuant to section 605(b) of the RFA, the agencies hereby certify
that this rule will not have a significant economic impact on a
substantial number of small entities. The agencies expect that this
rule will not (1) have significant secondary or incidental effects on a
substantial number of small entities or (2) create any additional
burden on small entities. The changes to the exemptions are required by
the Interlocks Act. The agencies have added presumptions that will
streamline and simplify the application procedures for obtaining an
exemption from the Interlocks Act prohibitions, and have defined key
terms used in the provisions implementing these exemptions in a way
that is intended to eliminate any unnecessary burden. As noted in the
preamble discussion of the changes made by the final rule, the agencies
have made substantive changes that will permit more flexibility to
institutions with total assets of less than $20 million, clarified the
circumstances under which someone will be deemed to be a
``representative or nominee,'' and amended the definition of ``senior
management official'' so as to provide greater clarity and to conform
this definition with definitions of similar terms used in other
regulations.
The impact of these changes will be to minimize, to the extent
possible, the costs of complying with this final rule.
Executive Order 12866
OCC and OTS: The OCC and OTS have determined that this rule is not
a significant regulatory action under Executive Order 12866.
Unfunded Mandates Act of 1995
OCC and OTS: Section 202 of the Unfunded Mandates Act of 1995
(Unfunded Mandates Act) requires that an agency prepare a budgetary
impact statement before promulgating a rule likely to result in a
Federal mandate that may result in the annual expenditure of $100
million or more in any one year by State, local, and tribal
governments, in the aggregate, or by the private sector. If a budgetary
impact statement is required, section 205 of the Unfunded Mandates Act
requires an agency to identify and consider a reasonable number of
alternatives before promulgating the rule.
The OCC and OTS have determined that this final rule will not
result in expenditures by State, local, and tribal governments, or by
the private sector, of more than $100 million in any one year.
Accordingly, neither the OCC nor the OTS has prepared a budgetary
impact statement or specifically addressed the regulatory alternatives
considered.
[[Page 40300]]
List of Subjects
12 CFR Part 26
Antitrust, Banks, banking, Holding companies, Management official
interlocks, National banks.
12 CFR Part 212
Antitrust, Banks, banking, Holding companies, Management official
interlocks.
12 CFR Part 348
Antitrust, Banks, banking, Holding companies.
12 CFR Part 563f
Antitrust, Holding companies, Management official interlocks,
Savings associations.
Office of the Comptroller of the Currency
12 CFR Chapter I
Authority and Issuance
For the reasons set out in the joint preamble, the OCC revises part
26 of chapter I of title 12 of the Code of Federal Regulations to read
as follows:
PART 26--MANAGEMENT OFFICIAL INTERLOCKS
Sec.
26.1 Authority, purpose, and scope.
26.2 Definitions.
26.3 Prohibitions.
26.4 Interlocking relationships permitted by statute.
26.5 Regulatory Standards exemption.
26.6 Management Consignment exemption.
26.7 Change in circumstances.
26.8 Enforcement.
Authority: 12 U.S.C. 93a and 3201-3208.
Sec. 26.1 Authority, purpose, and scope.
(a) Authority. This part is issued under the provisions of the
Depository Institution Management Interlocks Act (Interlocks Act) (12
U.S.C. 3201 et seq.), as amended, and the OCC's general rulemaking
authority in 12 U.S.C. 93a.
(b) Purpose. The purpose of the Interlocks Act and this part is to
foster competition by generally prohibiting a management official from
serving two nonaffiliated depository organizations in situations where
the management interlock likely would have an anticompetitive effect.
(c) Scope. This part applies to management officials of national
banks, District banks, and affiliates of either.
Sec. 26.2 Definitions.
For purposes of this part, the following definitions apply:
(a) Affiliate. (1) The term affiliate has the meaning given in
section 202 of the Interlocks Act (12 U.S.C. 3201). For purposes of
that section 202, shares held by an individual include shares held by
members of his or her immediate family. ``Immediate family'' means
spouse, mother, father, child, grandchild, sister, brother, or any of
their spouses, whether or not any of their shares are held in trust.
(2) For purposes of section 202(3)(B) of the Interlocks Act (12
U.S.C. 3201(3)(B)), an affiliate relationship involving a national bank
based on common ownership does not exist if the OCC determines, after
giving the affected persons the opportunity to respond, that the
asserted affiliation was established in order to avoid the prohibitions
of the Interlocks Act and does not represent a true commonality of
interest between the depository organizations. In making this
determination, the OCC considers, among other things, whether a person,
including members of his or her immediate family, whose shares are
necessary to constitute the group owns a nominal percentage of the
shares of one of the organizations and the percentage is substantially
disproportionate to that person's ownership of shares in the other
organization.
(b) Anticompetitive effect means a monopoly or substantial
lessening of competition.
(c) Area median income means:
(1) The median family income for the metropolitan statistical area
(MSA), if a depository organization is located in an MSA; or
(2) The statewide nonmetropolitan median family income, if a
depository organization is located outside an MSA.
(d) Community means a city, town, or village, and contiguous or
adjacent cities, towns, or villages.
(e) Contiguous or adjacent cities, towns, or villages means cities,
towns, or villages whose borders touch each other or whose borders are
within 10 road miles of each other at their closest points. The
property line of an office located in an unincorporated city, town, or
village is the boundary line of that city, town, or village for the
purpose of this definition.
(f) Critical means important to restoring or maintaining a
depository organization's safe and sound operations.
(g) Depository holding company means a bank holding company or a
savings and loan holding company (as more fully defined in section 202
of the Interlocks Act (12 U.S.C. 3201)) having its principal office
located in the United States.
(h) Depository institution means a commercial bank (including a
private bank), a savings bank, a trust company, a savings and loan
association, a building and loan association, a homestead association,
a cooperative bank, an industrial bank, or a credit union, chartered
under the laws of the United States and having a principal office
located in the United States. Additionally, a United States office,
including a branch or agency, of a foreign commercial bank is a
depository institution.
(i) Depository institution affiliate means a depository institution
that is an affiliate of a depository organization.
(j) Depository organization means a depository institution or a
depository holding company.
(k) District bank means any State bank operating under the Code of
Law of the District of Columbia.
(l) Low- and moderate-income areas means census tracts (or, if an
area is not in a census tract, block numbering areas delineated by the
United States Bureau of the Census) where the median family income is
less than 100 percent of the area median income.
(m) Management official. (1) The term management official means:
(i) A director;
(ii) An advisory or honorary director of a depository institution
with total assets of $100 million or more;
(iii) A senior executive officer as that term is defined in 12 CFR
5.51(c)(3);
(iv) A branch manager;
(v) A trustee of a depository organization under the control of
trustees; and
(vi) Any person who has a representative or nominee serving in any
of the capacities in this paragaph (m)(1).
(2) The term management official does not include:
(i) A person whose management functions relate exclusively to the
business of retail merchandising or manufacturing;
(ii) A person whose management functions relate principally to the
business outside the United States of a foreign commercial bank; or
(iii) A person described in the provisos of section 202(4) of the
Interlocks Act (12 U.S.C. 3201(4)) (referring to an officer of a State-
chartered savings bank, cooperative bank, or trust company that neither
makes real estate mortgage loans nor accepts savings).
(n) Office means a principal or branch office of a depository
institution located in the United States. Office does not include a
representative office of a foreign commercial bank, an electronic
terminal, or a loan production office.
(o) Person means a natural person, corporation, or other business
entity.
[[Page 40301]]
(p) Relevant metropolitan statistical area (RMSA) means an MSA, a
primary MSA, or a consolidated MSA that is not comprised of designated
primary MSAs to the extent that these terms are defined and applied by
the Office of Management and Budget.
(q) Representative or nominee means a natural person who serves as
a management official and has an obligation to act on behalf of another
person with respect to management responsibilities. The OCC will find
that a person has an obligation to act on behalf of another person only
if the first person has an agreement, express or implied, to act on
behalf of the second person with respect to management
responsibilities. The OCC will determine, after giving the affected
persons an opportunity to respond, whether a person is a representative
or nominee.
(r) Total assets. (1) The term total assets means assets measured
on a consolidated basis and reported in the most recent fiscal year-end
Consolidated Report of Condition and Income.
(2) The term total assets does not include:
(i) Assets of a diversified savings and loan holding company as
defined by section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(F)) other than the assets of its depository institution
affiliate;
(ii) Assets of a bank holding company that is exempt from the
prohibitions of section 4 of the Bank Holding Company Act of 1956
pursuant to an order issued under section 4(d) of that Act (12 U.S.C.
1843(d)) other than the assets of its depository institution affiliate;
or
(iii) Assets of offices of a foreign commercial bank other than the
assets of its United States branch or agency.
(s) United States means the United States of America, any State or
territory of the United States of America, the District of Columbia,
Puerto Rico, Guam, American Samoa, and the Virgin Islands.
Sec. 26.3 Prohibitions.
(a) Community. A management official of a depository organization
may not serve at the same time as a management official of an
unaffiliated depository organization if the depository organizations in
question (or a depository institution affiliate thereof) have offices
in the same community.
(b) RMSA. A management official of a depository organization may
not serve at the same time as a management official of an unaffiliated
depository organization if the depository organizations in question (or
a depository institution affiliate thereof) have offices in the same
RMSA and each depository organization has total assets of $20 million
or more.
(c) Major assets. A management official of a depository
organization with total assets exceeding $1 billion (or any affiliate
thereof) may not serve at the same time as a management official of an
unaffiliated depository organization with total assets exceeding $500
million (or any affiliate thereof), regardless of the location of the
two depository organizations.
Sec. 26.4 Interlocking relationships permitted by statute.
The prohibitions of Sec. 26.3 do not apply in the case of any one
or more of the following organizations or to a subsidiary thereof:
(a) A depository organization that has been placed formally in
liquidation, or which is in the hands of a receiver, conservator, or
other official exercising a similar function;
(b) A corporation operating under section 25 or section 25A of the
Federal Reserve Act (12 U.S.C. 601 et seq. and 12 U.S.C. 611 et seq.,
respectively) (Edge Corporations and Agreement Corporations);
(c) A credit union being served by a management official of another
credit union;
(d) A depository organization that does not do business within the
United States except as an incident to its activities outside the
United States;
(e) A State-chartered savings and loan guaranty corporation;
(f) A Federal Home Loan Bank or any other bank organized solely to
serve depository institutions (a bankers' bank) or solely for the
purpose of providing securities clearing services and services related
thereto for depository institutions and securities companies;
(g) A depository organization that is closed or is in danger of
closing as determined by the appropriate Federal depository
institutions regulatory agency and is acquired by another depository
organization. This exemption lasts for five years, beginning on the
date the depository organization is acquired; and
(h)(1) A diversified savings and loan holding company (as defined
in section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(F)) with respect to the service of a director of such
company who also is a director of an unaffiliated depository
organization if:
(i) Both the diversified savings and loan holding company and the
unaffiliated depository organization notify their appropriate Federal
depository institutions regulatory agency at least 60 days before the
dual service is proposed to begin; and
(ii) The appropriate regulatory agency does not disapprove the dual
service before the end of the 60-day period.
(2) The OCC may disapprove a notice of proposed service if it finds
that:
(i) The service cannot be structured or limited so as to preclude
an anticompetitive effect in financial services in any part of the
United States;
(ii) The service would lead to substantial conflicts of interest or
unsafe or unsound practices; or
(iii) The notificant failed to furnish all the information required
by the OCC.
(3) The OCC may require that any interlock permitted under this
paragraph (h) be terminated if a change in circumstances occurs with
respect to one of the interlocked depository organizations that would
have provided a basis for disapproval of the interlock during the
notice period.
Sec. 26.5 Regulatory Standards exemption.
(a) Criteria. The OCC may permit an interlock that otherwise would
be prohibited by the Interlocks Act and Sec. 26.3 if:
(1) The board of directors of the depository organization (or the
organizers of a depository organization being formed) that seeks the
exemption provides a resolution to the OCC certifying that the
organization, after the exercise of reasonable efforts, is unable to
locate any other candidate from the community or RMSA, as appropriate,
who:
(i) Possesses the level of expertise required by the depository
organization and who is not prohibited from service by the Interlocks
Act; and
(ii) Is willing to serve as a management official; and
(2) The OCC, after reviewing an application submitted by the
depository organization seeking the exemption, determines that:
(i) The management official is critical to the safe and sound
operations of the affected depository organization; and
(ii) Service by the management official will not produce an
anticompetitive effect with respect to the depository organization.
(b) Presumptions. The OCC applies the following presumptions when
reviewing any application for a Regulatory Standards exemption:
(1) An interlock will not have an anticompetitive effect if it
involves depository organizations that, if merged, would not cause the
post-merger Herfindahl-Hirschman Index (HHI) to exceed 1800 and would
not cause the HHI to increase by more than 200 points. This presumption
does not
[[Page 40302]]
apply to depository organizations subject to the Major Assets
prohibition of Sec. 26.3(c).
(2) A proposed management official is critical to the safe and
sound operations of a depository institution if:
(i) That official is approved by the OCC to serve as a director or
senior executive officer of that institution pursuant to 12 CFR 5.51 or
pursuant to conditions imposed on a newly chartered national bank; and
(ii) The institution had operated for less than two years, was not
in compliance with minimum capital requirements, or otherwise was in a
``troubled condition'' as defined in 12 CFR 5.51 at the time the
service under that section was approved.
(c) Duration of interlock. An interlock permitted under this
section may continue until the OCC notifies the affected depository
organizations otherwise. The OCC may require a national bank to
terminate any interlock permitted under this section if the OCC
concludes, after giving the affected persons the opportunity to
respond, that the determinations under paragraph (a)(2) of this section
no longer may be made. A management official may continue serving the
depository organization involved in the interlock for a period of 15
months following the date of the order to terminate the interlock. The
OCC may shorten this period under appropriate circumstances.
Sec. 26.6 Management Consignment exemption.
(a) Criteria. The OCC may permit an interlock that otherwise would
be prohibited by the Interlocks Act and Sec. 26.3 if the OCC, after
reviewing an application submitted by the depository organization
seeking an exemption, determines that the interlock would:
(1) Improve the provision of credit to low- and moderate-income
areas;
(2) Increase the competitive position of a minority- or women-owned
depository organization;
(3) Strengthen the management of a depository institution that has
been chartered for less than two years at the time an application is
filed under this part; or
(4) Strengthen the management of a depository institution that is
in an unsafe or unsound condition as determined by the OCC on a case-
by-case basis.
(b) Presumptions. The OCC applies the following presumptions when
reviewing any application for a Management Consignment exemption:
(1) A proposed management official is capable of strengthening the
management of a depository institution described in paragraph (a)(3) of
this section if that official is approved by the OCC to serve as a
director or senior executive officer of that institution pursuant to 12
CFR 5.51 or pursuant to conditions imposed on a newly chartered
national bank and the institution had operated for less than two years
at the time the service under 12 CFR 5.51 was approved; and
(2) A proposed management official is capable of strengthening the
management of a depository institution described in paragraph (a)(4) of
this section if that official is approved by the OCC to serve as a
director or senior executive officer of that institution pursuant to 12
CFR 5.51 and the institution was not in compliance with minimum capital
requirements or otherwise was in a ``troubled condition'' as defined
under 12 CFR 5.51 at the time service under that section was approved.
(c) Duration of interlock. An interlock granted under this section
may continue for a period of two years from the date of approval. The
OCC may extend this period for one additional two-year period if the
depository organization applies for an extension at least 30 days
before the current exemption expires and satisfies one of the criteria
specified in paragraph (a) of this section. The provisions set forth in
paragraph (b) of this section also apply to applications for
extensions.
Sec. 26.7 Change in circumstances.
(a) Termination. A management official shall terminate his or her
service or apply for an exemption to the Interlocks Act if a change in
circumstances causes the service to become prohibited under that Act. A
change in circumstances may include, but is not limited to, an increase
in asset size of an organization, a change in the delineation of the
RMSA or community, the establishment of an office, an acquisition, a
merger, a consolidation, or any reorganization of the ownership
structure of a depository organization that causes a previously
permissible interlock to become prohibited.
(b) Transition period. A management official described in paragraph
(a) of this section may continue to serve the depository organization
involved in the interlock for 15 months following the date of the
change in circumstances. The OCC may shorten this period under
appropriate circumstances.
Sec. 26.8 Enforcement.
Except as provided in this section, the OCC administers and
enforces the Interlocks Act with respect to national banks, District
banks, and affiliates of either, and may refer any case of a prohibited
interlocking relationship involving these entities to the Attorney
General of the United States to enforce compliance with the Interlocks
Act and this part. If an affiliate of a national bank or a District
bank is subject to the primary regulation of another Federal depository
organization supervisory agency, then the OCC does not administer and
enforce the Interlocks Act with respect to that affiliate.
Dated: July 22, 1996.
Eugene A. Ludwig,
Comptroller of the Currency.
Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the joint preamble, the Board revises
part 212 of chapter II of title 12 of the Code of Federal Regulations
to read as follows:
PART 212--MANAGEMENT OFFICIAL INTERLOCKS
Sec.
212.1 Authority, purpose, and scope.
212.2 Definitions.
212.3 Prohibitions.
212.4 Interlocking relationships permitted by statute.
212.5 Regulatory Standards exemption.
212.6 Management Consignment exemption.
212.7 Change in circumstances.
212.8 Enforcement.
212.9 Effect of Interlocks Act on Clayton Act.
Authority: 12 U.S.C. 3201-3208; 15 U.S.C. 19.
Sec. 212.1 Authority, purpose, and scope.
(a) Authority. This part is issued under the provisions of the
Depository Institution Management Interlocks Act (Interlocks Act) (12
U.S.C. 3201 et seq.), as amended.
(b) Purpose. The purpose of the Interlocks Act and this part is to
foster competition by generally prohibiting a management official from
serving two nonaffiliated depository organizations in situations where
the management interlock likely would have an anticompetitive effect.
(c) Scope. This part applies to management officials of state
member banks, bank holding companies, and their affiliates.
Sec. 212.2 Definitions.
For purposes of this part, the following definitions apply:
(a) Affiliate. (1) The term affiliate has the meaning given in
section 202 of the Interlocks Act (12 U.S.C. 3201). For purposes of
that section 202, shares held
[[Page 40303]]
by an individual include shares held by members of his or her immediate
family. ``Immediate family'' means spouse, mother, father, child,
grandchild, sister, brother, or any of their spouses, whether or not
any of their shares are held in trust.
(2) For purposes of section 202(3)(B) of the Interlocks Act (12
U.S.C. 3201(3)(B)), an affiliate relationship based on common ownership
does not exist if the Board determines, after giving the affected
persons the opportunity to respond, that the asserted affiliation was
established in order to avoid the prohibitions of the Interlocks Act
and does not represent a true commonality of interest between the
depository organizations. In making this determination, the Board
considers, among other things, whether a person, including members of
his or her immediate family, whose shares are necessary to constitute
the group owns a nominal percentage of the shares of one of the
organizations and the percentage is substantially disproportionate to
that person's ownership of shares in the other organization.
(b) Anticompetitive effect means a monopoly or substantial
lessening of competition.
(c) Area median income means:
(1) The median family income for the metropolitan statistical area
(MSA), if a depository organization is located in an MSA; or
(2) The statewide nonmetropolitan median family income, if a
depository organization is located outside an MSA.
(d) Community means a city, town, or village, and contiguous and
adjacent cities, towns, or villages.
(e) Contiguous or adjacent cities, towns, or villages means cities,
towns, or villages whose borders touch each other or whose borders are
within 10 road miles of each other at their closest points. The
property line of an office located in an unincorporated city, town, or
village is the boundary line of that city, town, or village for the
purpose of this definition.
(f) Critical, as used in Sec. 212.5, means important to restoring
or maintaining a depository organization's safe and sound operations.
(g) Depository holding company means a bank holding company or a
savings and loan holding company (as more fully defined in section 202
of the Interlocks Act (12 U.S.C. 3201)) having its principal office
located in the United States.
(h) Depository institution means a commercial bank (including a
private bank), a savings bank, a trust company, a savings and loan
association, a building and loan association, a homestead association,
a cooperative bank, an industrial bank, or a credit union, chartered
under the laws of the United States and having a principal office
located in the United States. Additionally, a United States office,
including a branch or agency, of a foreign commercial bank is a
depository institution.
(i) Depository institution affiliate means a depository institution
that is an affiliate of a depository organization.
(j) Depository organization means a depository institution or a
depository holding company.
(k) Low- and moderate-income areas means census tracts (or, if an
area is not in a census tract, block numbering ar
FR Doc. 96-19400 Management Official Interlocks
eas delineated by the
United States Bureau of the Census) where the median family income is
less than 100 percent of the area median income.
(l) Management official. (1) The term management official means:
(i) A director;
(ii) An advisory or honorary director of a depository institution
with total assets of $100 million or more;
(iii) A senior executive officer as that term is defined in 12 CFR
225.71(a);
(iv) A branch manager;
(v) A trustee of a depository organization under the control of
trustees; and
(vi) Any person who has a representative or nominee, as defined in
paragraph (p) of this section, serving in any of the capacities in this
paragraph (l)(1).
(2) The term management official does not include:
(i) A person whose management functions relate exclusively to the
business of retail merchandising or manufacturing;
(ii) A person whose management functions relate principally to a
foreign commercial bank's business outside the United States; or
(iii) A person described in the provisos of section 202(4) of the
Interlocks Act (referring to an officer of a State-chartered savings
bank, cooperative bank, or trust company that neither makes real estate
mortgage loans nor accepts savings).
(m) Office means a principal or branch office of a depository
institution located in the United States. Office does not include a
representative office of a foreign commercial bank, an electronic
terminal, a loan production office, or any office of a depository
holding company.
(n) Person means a natural person, corporation, or other business
entity.
(o) Relevant metropolitan statistical area (RMSA) means an MSA, a
primary MSA, or a consolidated MSA that is not comprised of designated
Primary MSAs to the extent that these terms are defined and applied by
the Office of Management and Budget.
(p) Representative or nominee means a natural person who serves as
a management official and has an obligation to act on behalf of another
person with respect to management responsibilities. The Board will find
that a person has an obligation to act on behalf of another person only
if the first person has an agreement, express or implied, to act on
behalf of the second person with respect to management
responsibilities. The Board will determine, after giving the affected
persons an opportunity to respond, whether a person is a representative
or nominee.
(q) Total assets. (1) The term total assets means assets measured
on a consolidated basis and reported in the most recent fiscal year-end
Consolidated Report of Condition and Income.
(2) The term total assets does not include:
(i) Assets of a diversified savings and loan holding company as
defined by section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(F)) other than the assets of its depository institution
affiliate;
(ii) Assets of a bank holding company that is exempt from the
prohibitions of section 4 of the Bank Holding Company Act of 1956
pursuant to an order issued under section 4(d) of that Act (12 U.S.C.
1843(d)) other than the assets of its depository institution affiliate;
or
(iii) Assets of offices of a foreign commercial bank other than the
assets of its United States branch or agency.
(r) United States means the United States of America, any State or
territory of the United States of America, the District of Columbia,
Puerto Rico, Guam, American Samoa, and the Virgin Islands.
Sec. 212.3 Prohibitions.
(a) Community. A management official of a depository organization
may not serve at the same time as a management official of an
unaffiliated depository organization if the depository organizations in
question (or a depository institution affiliate thereof) have offices
in the same community.
(b) RMSA. A management official of a depository organization may
not serve at the same time as a management official of an unaffiliated
depository organization if the depository organizations in question (or
a depository institution affiliate thereof) have offices in the same
RMSA and each
[[Page 40304]]
depository organization has total assets of $20 million or more.
(c) Major assets. A management official of a depository
organization with total assets exceeding $1 billion (or any affiliate
thereof) may not serve at the same time as a management official of an
unaffiliated depository organization with total assets exceeding $500
million (or any affiliate thereof), regardless of the location of the
two depository organizations.
Sec. 212.4 Interlocking relationships permitted by statute.
The prohibitions of Sec. 212.3 do not apply in the case of any one
or more of the following organizations or to a subsidiary thereof:
(a) A depository organization that has been placed formally in
liquidation, or which is in the hands of a receiver, conservator, or
other official exercising a similar function;
(b) A corporation operating under section 25 or section 25A of the
Federal Reserve Act (12 U.S.C. 601 et seq. and 12 U.S.C. 611 et seq.,
respectively) (Edge Corporations and Agreement Corporations);
(c) A credit union being served by a management official of another
credit union;
(d) A depository organization that does not do business within the
United States except as an incident to its activities outside the
United States;
(e) A State-chartered savings and loan guaranty corporation;
(f) A Federal Home Loan Bank or any other bank organized solely to
serve depository institutions (a bankers' bank) or solely for the
purpose of providing securities clearing services and services related
thereto for depository institutions and securities companies;
(g) A depository organization that is closed or is in danger of
closing as determined by the appropriate Federal depository
institution's regulatory agency and is acquired by another depository
organization. This exemption lasts for five years, beginning on the
date the depository organization is acquired; and
(h)(1) A diversified savings and loan holding company (as defined
in section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(F)) with respect to the service of a director of such
company who also is a director of an unaffiliated depository
organization if:
(i) Both the diversified savings and loan holding company and the
unaffiliated depository organization notify their appropriate Federal
depository institutions regulatory agency at least 60 days before the
dual service is proposed to begin; and
(ii) The appropriate regulatory agency does not disapprove the dual
service before the end of the 60-day period.
(2) The Board may disapprove a notice of proposed service if it
finds that:
(i) The service cannot be structured or limited so as to preclude
an anticompetitive effect in financial services in any part of the
United States;
(ii) The service would lead to substantial conflicts of interest or
unsafe or unsound practices; or
(iii) The notificant failed to furnish all the information required
by the Board.
(3) The Board may require that any interlock permitted under this
paragraph (h) be terminated if a change in circumstances occurs with
respect to one of the interlocked depository organizations that would
have provided a basis for disapproval of the interlock during the
notice period.
Sec. 212.5 Regulatory Standards exemption.
(a) Criteria. The Board may permit an interlock that otherwise
would be prohibited by the Interlocks Act and Sec. 212.3 if:
(1) The board of directors of the depository organization (or the
organizers of a depository organization being formed) that seeks the
exemption provides a resolution to the Board certifying that the
organization, after the exercise of reasonable efforts, is unable to
locate any other candidate from the community or RMSA, as appropriate,
who:
(i) Possesses the level of expertise required by the depository
organization and who is not prohibited from service by the Interlocks
Act; and
(ii) Is willing to serve as a management official; and
(2) The Board, after reviewing an application submitted by the
depository organization seeking the exemption, determines that:
(i) The management official is critical to the safe and sound
operations of the affected depository organization; and
(ii) Service by the management official will not produce an
anticompetitive effect with respect to the depository organization.
(b) Presumptions. The Board applies the following presumptions when
reviewing any application for a Regulatory Standards exemption:
(1) An interlock will not have an anticompetitive effect if it
involves depository organizations that, if merged, would not cause the
post-merger Herfindahl-Hirschman Index (HHI) to exceed 1800 and would
not cause the HHI to increase by more than 200 points. This presumption
does not apply to depository organizations subject to the Major Assets
prohibition of Sec. 212.3(c).
(2) A proposed management official is critical to the safe and
sound operations of a depository institution if:
(i) That official is approved by the Board to serve as a director
or senior executive officer of that institution pursuant to 12 CFR
225.71; and
(ii) The institution had operated for less than two years, was not
in compliance with minimum capital requirements, or otherwise was in a
``troubled condition'' as defined in 12 CFR 225.71 at the time the
service under that section was approved.
(c) Duration of interlock. An interlock permitted under this
section may continue until the Board notifies the affected depository
organizations otherwise. The Board may require termination of any
interlock permitted under this section if the Board concludes, after
giving the affected persons the opportunity to respond, that the
determinations under paragraph (a)(2) of this section no longer may be
made. A management official may continue serving the depository
organization involved in the interlock for a period of 15 months
following the date of the order to terminate the interlock. The Board
may shorten this period under appropriate circumstances.
Sec. 212.6 Management Consignment exemption.
(a) Criteria. The Board may permit an interlock that otherwise
would be prohibited by the Interlocks Act and Sec. 212.3 if the Board,
after reviewing an application submitted by the depository organization
seeking an exemption, determines that the interlock would:
(1) Improve the provision of credit to low- and moderate-income
areas;
(2) Increase the competitive position of a minority- or women-owned
depository organization;
(3) Strengthen the management of a depository institution that has
been chartered for less than two years at the time an application is
filed under this part; or
(4) Strengthen the management of a depository institution that is
in an unsafe or unsound condition as determined by the Board on a case-
by-case basis.
(b) Presumptions. The Board applies the following presumptions in
reviewing any application for a Management Consignment exemption:
(1) A proposed management official is capable of strengthening the
management of a depository institution
[[Page 40305]]
described in paragraph (a)(3) of this section if that official is
approved by the Board to serve as a director or senior executive
officer of that institution pursuant to 12 CFR 225.71 and the
institution had operated for less than two years at the time the
service was approved; and
(2) A proposed management official is capable of strengthening the
management of a depository institution described in paragraph (a)(4) of
this section if the official is approved by the Board to serve as a
director or senior executive officer of the institution pursuant to 12
CFR 225.71 and the institution was not in compliance with minimum
capital requirements or otherwise was in a ``troubled condition'' as
defined under 12 CFR 225.71 at the time service was approved.
(c) Duration of interlock. An interlock granted under this section
may continue for a period of two years from the date of approval. The
Board may extend this period for one additional two-year period if the
depository organization applies for an extension at least 30 days
before the current exemption expires and satisfies one of the criteria
specified in paragraph (a) of this section. The provisions set forth in
paragraph (b) of this section also apply to applications for
extensions.
Sec. 212.7 Change in circumstances.
(a) Termination. A management official shall terminate his or her
service or apply for an exemption to the Interlocks Act if a change in
circumstances causes the service to become prohibited under that Act. A
change in circumstances may include, but is not limited to, an increase
in asset size of an organization, a change in the delineation of the
RMSA or community, the establishment of an office, an acquisition, a
merger, a consolidation, or any reorganization of the ownership
structure of a depository organization that causes a previously
permissible interlock to become prohibited.
(b) Transition period. A management official described in paragraph
(a) of this section may continue to serve the state member bank or bank
holding company involved in the interlock for 15 months following the
date of the change in circumstances. The Board may shorten this period
under appropriate circumstances.
Sec. 212.8 Enforcement.
Except as provided in this section, the Board administers and
enforces the Interlocks Act with respect to state member banks, bank
holding companies, and affiliates of either, and may refer any case of
a prohibited interlocking relationship involving these entities to the
Attorney General of the United States to enforce compliance with the
Interlocks Act and this part. If an affiliate of a state member bank or
a bank holding company is subject to the primary regulation of another
Federal depository organization supervisory agency, then the Board does
not administer and enforce the Interlocks Act with respect to that
affiliate.
Sec. 212.9 Effect of Interlocks Act on Clayton Act.
The Board regards the provisions of the first three paragraphs of
section 8 of the Clayton Act (15 U.S.C. 19) to have been supplanted by
the revised and more comprehensive prohibitions on management official
interlocks between depository organizations in the Interlocks Act.
Dated: July 10, 1996.
William W. Wiles,
Secretary of the Board.
Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the joint preamble, pursuant to its
authority under section 209 of the Depository Institution Management
Interlocks Act (12 U.S.C. 3207), the Board of Directors of the FDIC
revises part 348 of chapter III of title 12 of the Code of Federal
Regulations to read as follows:
PART 348--MANAGEMENT OFFICIAL INTERLOCKS
Sec.
348.1 Authority, purpose, and scope.
348.2 Definitions.
348.3 Prohibitions.
348.4 Interlocking relationships permitted by statute.
348.5 Regulatory Standards exemption.
348.6 Management Consignment exemption.
348.7 Change in circumstances.
348.8 Enforcement.
Authority: 12 U.S.C. 3207, 12 U.S.C. 1823(k).
Sec. 348.1 Authority, purpose, and scope.
(a) Authority. This part is issued under the provisions of the
Depository Institution Management Interlocks Act (Interlocks Act) (12
U.S.C. 3201 et seq.), as amended.
(b) Purpose. The purpose of the Interlocks Act and this part is to
foster competition by generally prohibiting a management official from
serving two nonaffiliated depository organizations in situations where
the management interlock likely would have an anticompetitive effect.
(c) Scope. This part applies to management officials of insured
nonmember banks and their affiliates.
Sec. 348.2 Definitions.
For purposes of this part, the following definitions apply:
(a) Affiliate. (1) The term affiliate has the meaning given in
section 202 of the Interlocks Act (12 U.S.C. 3201). For purposes of
section 202, shares held by an individual include shares held by
members of his or her immediate family. ``Immediate family'' means
spouse, mother, father, child, grandchild, sister, brother or any of
their spouses, whether or not any of their shares are held in trust.
(2) For purposes of section 202(3)(B) of the Interlocks Act (12
U.S.C. 3201(3)(B)), an affiliate relationship involving an insured
nonmember bank based on common ownership does not exist if the FDIC
determines, after giving the affected persons the opportunity to
respond, that the asserted affiliation was established in order to
avoid the prohibitions of the Interlocks Act and does not represent a
true commonality of interest between the depository organizations. In
making this determination, the FDIC considers, among other things,
whether a person, including members of his or her immediate family
whose shares are necessary to constitute the group, owns a nominal
percentage of the shares of one of the organizations and the percentage
is substantially disproportionate to that person's ownership of shares
in the other organization.
(b) Anticompetitive effect means a monopoly or substantial
lessening of competition.
(c) Area median income means:
(1) The median family income for the metropolitan statistical area
(MSA), if a depository organization is located in an MSA; or
(2) The statewide nonmetropolitan median family income, if a
depository organization is located outside an MSA.
(d) Community means a city, town, or village, and contiguous or
adjacent cities, towns, or villages.
(e) Contiguous or adjacent cities, towns, or villages means cities,
towns, or villages whose borders touch each other or whose borders are
within 10 road miles of each other at their closest points. The
property line of an office located in an unincorporated city, town, or
village is the boundary line of that city, town, or village for the
purpose of this definition.
(f) Critical means important to restoring or maintaining a
depository
[[Page 40306]]
organization's safe and sound operations.
(g) Depository holding company means a bank holding company or a
savings and loan holding company (as more fully defined in section 202
of the Interlocks Act (12 U.S.C. 3201)) having its principal office
located in the United States.
(h) Depository institution means a commercial bank (including a
private bank), a savings bank, a trust company, a savings and loan
association, a building and loan association, a homestead association,
a cooperative bank, an industrial bank, or a credit union, chartered
under the laws of the United States and having a principal office
located in the United States. Additionally, a United States office,
including a branch or agency, of a foreign commercial bank is a
depository institution.
(i) Depository institution affiliate means a depository institution
that is an affiliate of a depository organization.
(j) Depository organization means a depository institution or a
depository holding company.
(k) Low- and moderate-income areas means census tracts (or, if an
area is not in a census tract, block numbering areas delineated by the
United States Bureau of the Census) where the median family income is
less than 100 percent of the area median income.
(l) Management official. (1) The term management official means:
(i) A director;
(ii) An advisory or honorary director of a depository institution
with total assets of $100 million or more;
(iii) A senior executive officer as that term is defined in 12 CFR
303.14(a)(3);
(iv) A branch manager;
(v) A trustee of a depository organization under the control of
trustees; and
(vi) Any person who has a representative or nominee serving in any
of the capacities in this paragraph (l)(1).
(2) The term management official does not include:
(i) A person whose management functions relate exclusively to the
business of retail merchandising or manufacturing;
(ii) A person whose management functions relate principally to the
business outside the United States of a foreign commercial bank; or
(iii) A person described in the provisos of section 202(4) of the
Interlocks Act (12 U.S.C. 3201(4)) (referring to an officer of a State-
chartered savings bank, cooperative bank, or trust company that neither
makes real estate mortgage loans nor accepts savings).
(m) Office means a principal or branch office of a depository
institution located in the United States. Office does not include a
representative office of a foreign commercial bank, an electronic
terminal, or a loan production office.
(n) Person means a natural person, corporation, or other business
entity.
(o) Relevant metropolitan statistical area (RMSA) means an MSA, a
primary MSA, or a consolidated MSA that is not comprised of designated
Primary MSAs to the extent that these terms are defined and applied by
the Office of Management and Budget.
(p) Representative or nominee means a natural person who serves as
a management official and has an obligation to act on behalf of another
person with respect to management responsibilities. The FDIC will find
that a person has an obligation to act on behalf of another person only
if the first person has an agreement, express or implied, to act on
behalf of the second person with respect to management
responsibilities. The FDIC will determine, after giving the affected
persons an opportunity to respond, whether a person is a representative
or nominee.
(q) Total assets. (1) The term total assets includes assets
measured on a consolidated basis and reported in the most recent fiscal
year-end Consolidated Report of Condition and Income.
(2) The term total assets does not include:
(i) Assets of a diversified savings and loan holding company as
defined by section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(F)) other than the assets of its depository institution
affiliate;
(ii) Assets of a bank holding company that are exempt from the
prohibitions of section 4 of the Bank Holding Company Act of 1956
pursuant to an order issued under section 4(d) of that Act (12 U.S.C.
1843(d)) other than the assets of its depository institution affiliate;
or
(iii) Assets of offices of a foreign commercial bank other than the
assets of its United States branch or agency.
(r) United States means the United States of America, any State or
territory of the United States of America, the District of Columbia,
Puerto Rico, Guam, American Samoa, and the Virgin Islands.
Sec. 348.3 Prohibitions.
(a) Community. A management official of a depository organization
may not serve at the same time as a management official of an
unaffiliated depository organization if the depository organizations in
question (or a depository institution affiliate thereof) have offices
in the same community.
(b) RMSA. A management official of a depository organization may
not serve at the same time as a management official of an unaffiliated
depository organization if the depository organizations in question (or
a depository institution affiliate thereof) have offices in the same
RMSA and each depository organization has total assets of $20 million
or more.
(c) Major assets. A management official of a depository
organization with total assets exceeding $1 billion (or any affiliate
thereof) may not serve at the same time as a management official of an
unaffiliated depository organization with total assets exceeding $500
million (or any affiliate thereof), regardless of the location of the
two depository organizations.
Sec. 348.4 Interlocking relationships permitted by statute.
The prohibitions of Sec. 348.3 do not apply in the case of any one
or more of the following organizations or to a subsidiary thereof:
(a) A depository organization that has been placed formally in
liquidation, or which is in the hands of a receiver, conservator, or
other official exercising a similar function;
(b) A corporation operating under section 25 or section 25A of the
Federal Reserve Act (12 U.S.C. 601 et seq. and 12 U.S.C. 611 et seq.,
respectively) (Edge Corporations and Agreement Corporations);
(c) A credit union being served by a management official of another
credit union;
(d) A depository organization that does not do business within the
United States except as an incident to its activities outside the
United States;
(e) A State-chartered savings and loan guaranty corporation;
(f) A Federal Home Loan bank or any other bank organized solely to
serve depository institutions (a bankers' bank) or solely for the
purpose of providing securities clearing services and services related
thereto for depository institutions and securities companies;
(g) A depository organization that is closed or is in danger of
closing as determined by the appropriate Federal depository
institutions regulatory agency and is acquired by another depository
organization. This exemption lasts for five years, beginning on the
date the depository organization is acquired;
(h) A savings association whose acquisition has been authorized on
an emergency basis in accordance with section 13(k) of the Federal
Deposit
[[Page 40307]]
Insurance Act (12 U.S.C. 1823(k)) with resulting dual service by a
management official that would otherwise be prohibited under the
Interlocks Act which may continue for up to 10 years from the date of
the acquisition provided that the FDIC has given its approval for the
continuation of such service; and
(i)(1) A diversified savings and loan holding company (as defined
in section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(F)) with respect to the service of a director of such
company who is also a director of an unaffiliated depository
organization if:
(i) Both the diversified savings and loan holding company and the
unaffiliated depository organization notify their appropriate Federal
depository institutions regulatory agency at least 60 days before the
dual service is proposed to begin; and
(ii) The appropriate regulatory agency does not disapprove the dual
service before the end of the 60-day period.
(2) The FDIC may disapprove a notice of proposed service if it
finds that:
(i) The service cannot be structured or limited so as to preclude
an anticompetitive effect in financial services in any part of the
United States;
(ii) The service would lead to substantial conflicts of interest or
unsafe or unsound practices; or
(iii) The notificant failed to furnish all the information required
by the FDIC.
(3) The FDIC may require that any interlock permitted under this
paragraph (h) be terminated if a change in circumstances occurs with
respect to one of the interlocked depository organizations that would
have provided a basis for disapproval of the interlock during the
notice period.
Sec. 348.5 Regulatory Standards exemption.
(a) Criteria. The FDIC may permit an interlock that otherwise would
be prohibited by the Interlocks Act and Sec. 348.3 if:
(1) The board of directors of the depository organization (or the
organizers of a depository organization being formed) that seeks the
exemption provides a resolution to the FDIC certifying that the
organization, after the exercise of reasonable efforts, is unable to
locate any other candidate from the community or RMSA, as appropriate,
who:
(i) Possesses the level of expertise required by the depository
organization and who is not prohibited from service by the Interlocks
Act; and
(ii) Is willing to serve as a management official; and
(2) The FDIC, after reviewing an application submitted by the
depository organization seeking the exemption, determines that:
(i) The management official is critical to the safe and sound
operations of the affected depository organization; and
(ii) Service by the management official will not produce an
anticompetitive effect with respect to the depository organization.
(b) Presumptions. The FDIC applies the following presumptions when
reviewing any application for a Regulatory Standards exemption:
(1) An interlock will not have an anticompetitive effect if it
involves depository organizations that, if merged, would not cause the
post-merger Herfindahl-Hirschman Index (HHI) to exceed 1800 and would
not cause the HHI to increase by more than 200 points. This presumption
shall not apply to depository organizations subject to the Major Assets
prohibition of Sec. 348.3(c).
(2) A proposed management official is critical to the safe and
sound operations of a depository institution if:
(i) That official is approved by the FDIC to serve as a director or
a senior executive officer of that institution pursuant to 12 CFR
303.14; and
(ii) The institution had operated for less than two years, was not
in compliance with minimum capital requirements, or otherwise was in a
``troubled condition'' as defined by 12 CFR 303.14(a)(4) at the time
the service under that section was approved.
(c) Duration of interlock. An interlock permitted under this
section may continue until the FDIC notifies the affected depository
organizations otherwise. The FDIC may require termination of any
interlock permitted under this section if the FDIC concludes, after
giving the affected persons the opportunity to respond, that the
determinations under paragraph (a)(2) of this section no longer may be
made. A management official may continue serving the depository
organization involved in the interlock for a period of 15 months
following the date of the order to terminate the interlock. The FDIC
may shorten this period under appropriate circumstances.
Sec. 348.6 Management Consignment exemption.
(a) Criteria. The FDIC may permit an interlock that otherwise would
be prohibited by the Interlocks Act and Sec. 348.3 if the FDIC, after
reviewing an application submitted by the depository organization
seeking an exemption, determines that the interlock would:
(1) Improve the provision of credit to low- and moderate-income
areas;
(2) Increase the competitive position of a minority- or women-owned
depository organization;
(3) Strengthen the management of a depository institution that has
been chartered for less than two years at the time an application is
filed under this part; or
(4) Strengthen the management of a depository institution that is
in an unsafe or unsound condition as determined by the FDIC on a case-
by-case basis.
(b) Presumptions. The FDIC applies the following presumptions when
reviewing any application for a Management Consignment exemption:
(1) A proposed management official is capable of strengthening the
management of a depository institution described in paragraph (a)(3) of
this section if that official is approved by the FDIC to serve as a
director or a senior executive officer of that institution pursuant to
12 CFR 303.14 and the institution had operated for less than two years
at the time the service under 12 CFR 303.14 was approved; and
(2) A proposed management official is capable of strengthening the
management of a depository institution described in paragraph (a)(4) of
this section if that official is approved by the FDIC to serve as a
director or a senior executive officer of that institution pursuant to
12 CFR 303.14 and the institution was not in compliance with minimum
capital requirements or otherwise was in a ``troubled condition'' as
defined under 12 CFR 303.14 at the time service under that section was
approved.
(c) Duration of interlock. An interlock granted under this section
may continue for a period of two years from the date of approval. The
FDIC may extend this period for one additional two-year period if the
depository organization applies for an extension at least 30 days
before the current exemption expires and satisfies one of the criteria
specified in paragraph (a) of this section. The provisions set forth in
paragraph (b) of this section also apply to applications for
extensions.
Sec. 348.7 Change in circumstances.
(a) Termination. A management official shall terminate his or her
service or apply for an exemption to the Interlocks Act if a change in
circumstances causes the service to become prohibited under that Act. A
change in circumstances may include, but is not limited to, an increase
in asset size of an organization, a change in the delineation of the
RMSA or community, the establishment of an office, an acquisition, a
merger, a consolidation,
[[Page 40308]]
or any reorganization of the ownership structure of a depository
organization that causes a previously permissible interlock to become
prohibited.
(b) Transition period. A management official described in paragraph
(a) of this section may continue to serve the insured nonmember bank
involved in the interlock for 15 months following the date of the
change in circumstances. The FDIC may shorten this period under
appropriate circumstances.
Sec. 348.8 Enforcement.
Except as provided in this section, the FDIC administers and
enforces the Interlocks Act with respect to insured nonmember banks and
their affiliates and may refer any case of a prohibited interlocking
relationship involving these entities to the Attorney General of the
United States to enforce compliance with the Interlocks Act and this
part. If an affiliate of an insured nonmember bank is subject to the
primary regulation of another federal depository organization
supervisory agency, then the FDIC does not administer and enforce the
Interlocks Act with respect to that affiliate.
Dated at Washington, DC, this 16th day of July, 1996.
By order of the Board of Directors.
Federal Deposit Insurance Corporation
Robert E. Feldman,
Deputy Executive Secretary.
Office of Thrift Supervision
12 CFR Chapter V
Authority and Issuance
For the reasons set out in the joint preamble, the OTS revises part
563f of chapter V of title 12 of the Code of Federal Regulations to
read as follows:
PART 563f--MANAGEMENT OFFICIAL INTERLOCKS
Sec.
563f.1 Authority, purpose, and scope.
563f.2 Definitions.
563f.3 Prohibitions.
563f.4 Interlocking relationships permitted by statute.
563f.5 Regulatory Standards exemption.
563f.6 Management Consignment exemption.
563f.7 Change in circumstances.
563f.8 Enforcement.
563f.9 Interlocking relationships permitted pursuant to Federal
Deposit Insurance Act.
Authority: 12 U.S.C. 3201-3208.
Sec. 563f.1 Authority, purpose, and scope.
(a) Authority. This part is issued under the provisions of the
Depository Institution Management Interlocks Act (Interlocks Act) (12
U.S.C. 3201 et seq.), as amended.
(b) Purpose. The purpose of the Interlocks Act and this part is to
foster competition by generally prohibiting a management official from
serving two nonaffiliated depository organizations in situations where
the management interlock likely would have an anticompetitive effect.
(c) Scope. This part applies to management officials of savings
associations, savings and loan holding companies, and affiliates of
either.
Sec. 563f.2 Definitions.
For purposes of this part, the following definitions apply:
(a) Affiliate. (1) The term affiliate has the meaning given in
section 202 of the Interlocks Act (12 U.S.C. 3201). For purposes of
that section 202, shares held by an individual include shares held by
members of his or her immediate family. ``Immediate family'' means
spouse, mother, father, child, grandchild, sister, brother, or any of
their spouses, whether or not any of their shares are held in trust.
(2) For purposes of section 202(3)(B) of the Interlocks Act (12
U.S.C. 3201(3)(B)), an affiliate relationship involving a savings
association or savings and loan holding company based on common
ownership does not exist if the OTS determines, after giving the
affected persons the opportunity to respond, that the asserted
affiliation was established in order to avoid the prohibitions of the
Interlocks Act and does not represent a true commonality of interest
between the depository organizations. In making this determination, the
OTS considers, among other things, whether a person, including members
of his or her immediate family, whose shares are necessary to
constitute the group owns a nominal percentage of the shares of one of
the organizations and the percentage is substantially disproportionate
to that person's ownership of shares in the other organization.
(b) Anticompetitive effect means a monopoly or substantial
lessening of competition.
(c) Area median income means:
(1) The median family income for the metropolitan statistical area
(MSA), if a depository organization is located in an MSA; or
(2) The statewide nonmetropolitan median family income, if a
depository organization is located outside an MSA.
(d) Community means a city, town, or village, and contiguous or
adjacent cities, towns, or villages.
(e) Contiguous or adjacent cities, towns, or villages means cities,
towns, or villages whose borders touch each other or whose borders are
within 10 road miles of each other at their closest points. The
property line of an office located in an unincorporated city, town, or
village is the boundary line of that city, town, or village for the
purpose of this definition.
(f) Critical means important to restoring or maintaining a
depository organization's safe and sound operations.
(g) Depository holding company means a bank holding company or a
savings and loan holding company (as more fully defined in section 202
of the Interlocks Act (12 U.S.C. 3201)) having its principal office
located in the United States.
(h) Depository institution means a commercial bank (including a
private bank), a savings bank, a trust company, a savings and loan
association, a building and loan association, a homestead association,
a cooperative bank, an industrial bank, or a credit union, chartered
under the laws of the United States and having a principal office
located in the United States. Additionally, a United States office,
including a branch or agency, of a foreign commercial bank is a
depository institution.
(i) Depository institution affiliate means a depository institution
that is an affiliate of a depository organization.
(j) Depository organization means a depository institution or a
depository holding company.
(k) Low- and moderate-income areas means census tracts (or, if an
area is not in a census tract, block numbering areas delineated by the
United States Bureau of the Census) where the median family income is
less than 100 percent of the area median income.
(l) Management official. (1) The term management official means:
(i) A director;
(ii) An advisory or honorary director of a depository institution
with total assets of $100 million or more;
(iii) A senior executive officer as that term is defined in 12 CFR
574.9(a)(2);
(iv) A branch manager;
(v) A trustee of a depository organization under the control of
trustees; and
(vi) Any person who has a representative or nominee serving in any
of the capacities in this paragraph (l)(1).
(2) The term management official does not include:
(i) A person whose management functions relate exclusively to the
business of retail merchandising or manufacturing;
(ii) A person whose management functions relate principally to the
[[Page 40309]]
business outside the United States of a foreign commercial bank; or
(iii) A person described in the provisos of section 202(4) of the
Interlocks Act (12 U.S.C. 3201(4)) (referring to an officer of a State-
chartered savings bank, cooperative bank, or trust company that neither
makes real estate mortgage loans nor accepts savings).
(m) Office means a principal or branch office of a depository
institution located in the United States. Office does not include a
representative office of a foreign commercial bank, an electronic
terminal, or a loan production office.
(n) Person means a natural person, corporation, or other business
entity.
(o) Relevant metropolitan statistical area (RMSA) means an MSA, a
primary MSA, or a consolidated MSA that is not comprised of designated
Primary MSAs to the extent that these terms are defined and applied by
the Office of Management and Budget.
(p) Representative or nominee means a natural person who serves as
a management official and has an obligation to act on behalf of another
person with respect to management responsibilities. The OTS will find
that a person has an obligation to act on behalf of another person only
if the first person has an agreement, express or implied, to act on
behalf of the second person with respect to management
responsibilities. The OTS will determine, after giving the affected
persons an opportunity to respond, whether a person is a representative
or nominee.
(q) Savings association means:
(1) Any Federal savings association (as defined in section 3(b)(2)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(2));
(2) Any state savings association (as defined in section 3(b)(3) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3)) the deposits
of which are insured by the Federal Deposit Insurance Corporation; and
(3) Any corporation (other than a bank as defined in section
3(a)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(a)(1)) the
deposits of which are insured by the Federal Deposit Insurance
Corporation, that the Board of Directors of the Federal Deposit
Insurance Corporation and the Director of the Office of Thrift
Supervision jointly determine to be operating in substantially the same
manner as a savings association.
(r) Total assets. (1) The term total assets means assets measured
on a consolidated basis and reported in the most recent fiscal year-end
Consolidated Report of Condition and Income.
(2) The term total assets does not include:
(i) Assets of a diversified savings and loan holding company as
defined by section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(F)) other than the assets of its depository institution
affiliate;
(ii) Assets of a bank holding company that is exempt from the
prohibitions of section 4 of the Bank Holding Company Act of 1956
pursuant to an order issued under section 4(d) of that Act (12 U.S.C.
1843(d)) other than the assets of its depository institution affiliate;
or
(iii) Assets of offices of a foreign commercial bank other than the
assets of its United States branch or agency.
(s) United States means the United States of America, any State or
territory of the United States of America, the District of Columbia,
Puerto Rico, Guam, American Samoa, and the Virgin Islands.
Sec. 563f.3 Prohibitions.
(a) Community. A management official of a depository organization
may not serve at the same time as a management official of an
unaffiliated depository organization if the depository organizations in
question (or a depository institution affiliate thereof) have offices
in the same community.
(b) RMSA. A management official of a depository organization may
not serve at the same time as a management official of an unaffiliated
depository organization if the depository organizations in question (or
a depository institution affiliate thereof) have offices in the same
RMSA and each depository organization has total assets of $20 million
or more.
(c) Major assets. A management official of a depository
organization with total assets exceeding $1 billion (or any affiliate
thereof) may not serve at the same time as a management official of an
unaffiliated depository organization with total assets exceeding $500
million (or any affiliate thereof), regardless of the location of the
two depository organizations.
Sec. 563f.4 Interlocking relationships permitted by statute.
The prohibitions of Sec. 563f.3 do not apply in the case of any one
or more of the following organizations or to a subsidiary thereof:
(a) A depository organization that has been placed formally in
liquidation, or which is in the hands of a receiver, conservator, or
other official exercising a similar function;
(b) A corporation operating under section 25 or section 25A of the
Federal Reserve Act (12 U.S.C. 601 et seq. and 12 U.S.C. 611 et seq.,
respectively) (Edge Corporations and Agreement Corporations);
(c) A credit union being served by a management official of another
credit union;
(d) A depository organization that does not do business within the
United States except as an incident to its activities outside the
United States;
(e) A State-chartered savings and loan guaranty corporation;
(f) A Federal Home Loan Bank or any other bank organized solely to
serve depository institutions (a bankers' bank) or solely for the
purpose of providing securities clearing services and services related
thereto for depository institutions and securities companies;
(g) A depository organization that is closed or is in danger of
closing as determined by the appropriate Federal depository
institutions regulatory agency and is acquired by another depository
organization. This exemption lasts for five years, beginning on the
date the depository organization is acquired;
(h)(1) A diversified savings and loan holding company (as defined
in section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(F)) with respect to the service of a director of such
company who also is a director of an unaffiliated depository
organization if:
(i) Both the diversified savings and loan holding company and the
unaffiliated depository organization notify their appropriate Federal
depository institutions regulatory agency at least 60 days before the
dual service is proposed to begin; and
(ii) The appropriate regulatory agency does not disapprove the dual
service before the end of the 60-day period.
(2) The OTS may disapprove a notice of proposed service if it finds
that:
(i) The service cannot be structured or limited so as to preclude
an anticompetitive effect in financial services in any part of the
United States;
(ii) The service would lead to substantial conflicts of interest or
unsafe or unsound practices; or
(iii) The notificant failed to furnish all the information required
by the OTS.
(3) The OTS may require that any interlock permitted under this
paragraph (h) be terminated if a change in circumstances occurs with
respect to one of the interlocked depository organizations that would
have provided a basis for disapproval of the interlock during the
notice period; and
(i) Any savings association or any savings and loan holding company
(as defined in section 10(a)(1)(D) of the Home Owners' Loan Act) which
has
[[Page 40310]]
issued stock in connection with a qualified stock issuance pursuant to
section 10(q) of such Act, except that this paragraph (i) shall apply
only with regard to service by a single management official of such
savings association or holding company, or any subsidiary of such
savings association or holding company, by a single management official
of the savings and loan holding company which purchased the stock
issued in connection with such qualified stock issuance, and shall
apply only when the OTS has determined that such service is consistent
with the purposes of the Interlocks Act and the Home Owners' Loan Act.
Sec. 563f.5 Regulatory Standards exemption.
(a) Criteria. The OTS may permit an interlock that otherwise would
be prohibited by the Interlocks Act and Sec. 563f.3 if:
(1) The board of directors of the depository organization (or the
organizers of a depository organization being formed) that seeks the
exemption provides a resolution to the OTS certifying that the
organization, after the exercise of reasonable efforts, is unable to
locate any other candidate from the community or RMSA, as appropriate,
who:
(i) Possesses the level of expertise required by the depository
organization and who is not prohibited from service by the Interlocks
Act; and
(ii) Is willing to serve as a management official; and
(2) The OTS, after reviewing an application submitted by the
depository organization seeking the exemption, determines that:
(i) The management official is critical to the safe and sound
operations of the affected depository organization; and
(ii) Service by the management official will not produce an
anticompetitive effect with respect to the depository organization.
(b) Presumptions. The OTS applies the following presumptions when
reviewing any application for a Regulatory Standards exemption:
(1) An interlock will not have an anticompetitive effect if it
involves depository organizations that, if merged, would not cause the
post-merger Herfindahl-Hirschman Index (HHI) to exceed 1800 and would
not cause the HHI to increase by more than 200 points. This presumption
shall not apply to depository organizations subject to the Major Assets
prohibition of Sec. 563f.3(c).
(2) A proposed management official is critical to the safe and
sound operations of a depository institution if:
(i) That official is approved by the OTS to serve as a director or
senior executive officer of that institution pursuant to 12 CFR 574.9;
and
(ii) The institution had operated for less than two years, was not
in compliance with minimum capital requirements, or otherwise was in a
``troubled condition'' as defined in 12 CFR 574.9 at the time the
service under that section was approved.
(c) Duration of interlock. An interlock permitted under this
section may continue until the OTS notifies the affected depository
organizations otherwise. The OTS may require termination of any
interlock permitted under this section if the OTS concludes, after
giving the affected persons the opportunity to respond, that the
determinations under paragraph (a)(2) of this section no longer may be
made. A management official may continue serving the depository
organization involved in the interlock for a period of 15 months
following the date of the order to terminate the interlock, unless the
order terminating the interlock provides otherwise.
Sec. 563f.6 Management Consignment exemption.
(a) Criteria. The OTS may permit an interlock that otherwise would
be prohibited by the Interlocks Act and Sec. 563f.3 if the OTS, after
reviewing an application submitted by the depository organization
seeking an exemption, determines that the interlock would:
(1) Improve the provision of credit to low- and moderate-income
areas;
(2) Increase the competitive position of a minority- or women-owned
depository organization;
(3) Strengthen the management of a depository institution that has
been chartered for less than three years at the time an application is
filed under this part; or
(4) Strengthen the management of a depository institution that is
in an unsafe or unsound condition as determined by the OTS on a case-
by-case basis.
(b) Presumptions. The OTS applies the following presumptions when
reviewing any application for a Management Consignment exemption:
(1) A proposed management official is capable of strengthening the
management of a depository institution described in paragraph (a)(3) of
this section if that official is approved by the OTS to serve as a
director or senior executive officer of that institution pursuant to 12
CFR 574.9 and the institution had operated for less than two years at
the time the service under 12 CFR 574.9 was approved; and
(2) A proposed management official is capable of strengthening the
management of a depository institution described in paragraph (a)(4) of
this section if that official is approved by the OTS to serve as a
director or senior executive officer of that institution pursuant to 12
CFR 574.9 and the institution was not in compliance with minimum
capital requirements or otherwise was in a ``troubled condition'' as
defined under 12 CFR 574.9 at the time service under that section was
approved.
(c) Duration of interlock. An interlock granted under this section
may continue for a period of two years from the date of approval. The
OTS may extend this period for one additional two-year period if the
depository organization applies for an extension at least 30 days
before the current exemption expires and satisfies one of the criteria
specified in paragraph (a) of this section. The provisions set forth in
paragraph (b) of this section also apply to applications for
extensions.
Sec. 563f.7 Change in circumstances.
(a) Termination. A management official shall terminate his or her
service or apply for an exemption to the Interlocks Act if a change in
circumstances causes the service to become prohibited under that Act. A
change in circumstances may include, but is not limited to, an increase
in asset size of an organization, a change in the delineation of the
RMSA or community, the establishment of an office, an acquisition, a
merger, a consolidation, or any reorganization of the ownership
structure of a depository organization that causes a previously
permissible interlock to become prohibited.
(b) Transition period. A management official described in paragraph
(a) of this section may continue to serve the depository organization
involved in the interlock for 15 months following the date of the
change in circumstances. The OTS may shorten this period under
appropriate circumstances.
Sec. 563f.8 Enforcement.
Except as provided in this section, the OTS administers and
enforces the Interlocks Act with respect to savings associations,
savings and loan holding companies, and affiliates of either, and may
refer any case of a prohibited interlocking relationship involving
these entities to the Attorney General of the United States to enforce
compliance with the Interlocks Act and this part. If an affiliate of a
savings association or savings and loan holding company is subject to
the primary regulation of another Federal depository organization
[[Page 40311]]
supervisory agency, then the OTS does not administer and enforce the
Interlocks Act with respect to that affiliate.
Sec. 563f.9 Interlocking relationships permitted pursuant to Federal
Deposit Insurance Act.
A management official or prospective management official of a
depository organization may enter into an otherwise prohibited
interlocking relationship with another depository organization for a
period of up to 10 years if such relationship is approved by the
Federal Deposit Insurance Corporation pursuant to section
13(k)(1)(A)(v) of the Federal Deposit Insurance Act, as amended (12
U.S.C. 1823(k)(1)(A)(v)).
Dated: July 1, 1996.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 96-19400 Filed 8-1-96; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P
Complete official Federal Register PDF
FR Doc. 96-19392 Department Hearings and Appeals Procedures
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40347-40348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19392]
=======================================================================
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DEPARTMENT OF THE INTERIOR
Office of the Secretary
43 CFR Part 4
Department Hearings and Appeals Procedures
AGENCY: Office of Hearings and Appeals, Office of the Secretary,
Interior.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document updates addresses for the Office of the
Solicitor.
EFFECTIVE DATE: August 2, 1996.
FOR FURTHER INFORMATION CONTACT:
Will A. Irwin, Administrative Judge, Interior Board of Land Appeals,
Office of Hearings and Appeals, U.S. Department of the Interior, 4015
Wilson Blvd., Arlington, VA 22203. Telephone: 703-235-3750.
SUPPLEMENTARY INFORMATION: Because this action reflects agency
management in announcing a change of address, the Department has
determined that the provisions of the Administrative Procedure Act, 5
U.S.C. 553 (b) and (d), allowing for public notice and comment and a
30-day delay in the effective date of a rule, are unnecessary and
impracticable.
List of Subjects in 43 CFR Part 4
Administrative practice and procedure, Mines, Public lands, Surface
mining.
Therefore, part 4 of title 43 of the Code of Federal Regulations,
is amended as follows:
PART 4--[AMENDED]
Subpart E--Special Procedures Applicable to Public Land Hearings
and Appeals
1. The authority citation for subpart E of part 4 continues to read
as follows:
Authority: Sections 4.470 to 4.478 also issued under authority
of sec. 2, 48 Stat. 1270; 43 U.S.C. 315a.
2. Section 4.413 is amended by revising the address in paragraph
(c)(2)(iv) to read as follows:
Sec. 4.413 Service of notice of appeal and of other documents.
* * * * *
(c) * * *
[[Page 40348]]
(2) * * *
(iv) * * *
Regional Solicitor, Rocky Mountain Region, U.S. Department of the
Interior, 755 Parfet Street, Suite 151, Lakewood, CO 80215;
* * * * *
Subpart L--Special Rules Applicable to Surface Coal Mining Hearings
and Appeals
3. The authority citation for subpart L of part 4 continues to read
as follows:
Authority: 30 U.S.C. 1256, 1260, 1261, 1264, 1268, 1271, 1272,
1275, 1293; 5 U.S.C. 301.
Sec. 4.1109 [Amended]
4. In Sec. 4.1109(a)(2), the seven undesignated paragraphs are
designated as (i) through (vii).
5. In Sec. 4.1109, newly designated paragraphs (a)(2) (iii), (v),
and (vii) are revised to read as follows:
Sec. 4.1109 Service.
(a) * * *
(2) * * *
(iii) For mining operations in Colorado, Montana, North Dakota,
South Dakota, and Wyoming, including mining operations located on
Indian lands within those States: Regional Solicitor, Rocky Mountain
Region, U.S. Department of the Interior, 755 Parfet Street, Suite 151,
Lakewood, CO 80215; Telephone: (303) 231-5350; FAX: (303) 231-5360.
* * * * *
(v) For the challenge of permitting decisions affecting mining
operations located on Indian lands within Arizona, California, and New
Mexico: Regional Solicitor, Rocky Mountain Region, U.S. Department of
the Interior, 755 Parfet Street, Suite 151, Lakewood, CO 80215;
Telephone: (303) 231-5350; FAX: (303) 231-5360.
* * * * *
(vii) For the challenge of permitting decisions affecting mining
operations in Washington: Regional Solicitor, Rocky Mountain Region,
U.S. Department of the Interior, 755 Parfet Street, Suite 151,
Lakewood, CO 80215; Telephone: (303) 231-5350; FAX: (303) 231-5360.
* * * * *
Dated: June 12, 1996.
Brooks B. Yeager,
Acting Assistant Secretary--Policy, Management and Budget.
[FR Doc. 96-19392 Filed 8-1-96; 8:45 am]
BILLING CODE 4310-79-M
Complete official Federal Register PDF
FR Doc. 96-19305 Direct Food Substances Affirmed as Generally Recognized as Safe; Listing of Color Additives Exempt From Certification; Ferrous Lactate
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40317-40320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19305]
=======================================================================
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 73 and 184
[Docket No. 93G-0017]
Direct Food Substances Affirmed as Generally Recognized as Safe;
Listing of Color Additives Exempt From Certification; Ferrous Lactate
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending its
regulations to affirm that ferrous lactate is generally recognized as
safe (GRAS) as a color fixative on ripe olives. The agency is adding
this use of ferrous lactate as a color fixative on ripe olives to the
other uses for ferrous lactate. The agency is also amending this
regulation to permit additional methods of synthesis for ferrous
lactate. This action is in response to a petition filed by Purac
America, Inc. The agency, on its own initiative, is also amending its
color additive regulations to provide for the safe use of ferrous
lactate for the coloring of ripe olives.
DATES: The amendments to Sec. 184.1311 (21 CFR 184.1311) will be
effective on August 2, 1996. New Sec. 73.165 will be effective on
September 4, 1996, except as to any provisions that may be stayed by
the filing of proper objections; written objections by September 3,
1996. The Director of the Office of the Federal Register approves the
incorporations by reference in accordance with 5 U.S.C. 552(a) and 1
CFR part 51 of certain publications listed in Sec. 184.1311(b),
effective August 2, 1996; and in new Sec. 73.165(b) effective September
4, 1996.
ADDRESSES: Submit written objections to new Sec. 73.165 to the Dockets
Management Branch (HFA-305), Food and Drug Administration, 12420
Parklawn Dr., rm. 1-23, Rockville, MD 20857.
FOR FURTHER INFORMATION CONTACT: Robert L. Martin, Center for Food
Safety and Applied Nutrition (HFS-217), Food and Drug Administration,
200 C St. SW., Washington, DC 20204, 202-418-3074.
SUPPLEMENTARY INFORMATION:
I. Background
In accordance with the procedures described in 21 CFR 170.35, Purac
America, Inc., c/o 700 13th St. NW., suite 1200, Washington, DC 20005,
submitted a petition (GRASP 3G0396) requesting that the regulations in
Sec. 184.1311 be amended to affirm that ferrous lactate is GRAS as a
color fixative in black olives.
FDA published a notice of filing of this petition in the Federal
Register of December 27, 1993 (58 FR 68437), and gave interested
parties an opportunity to submit comments to the Dockets Management
Branch (HFA-305), Food and Drug Administration, 12420 Parklawn Dr., rm.
1-23, Rockville, MD 20857. Also, in this notice, FDA announced that, on
its own initiative, the agency would amend the color additive
regulations to provide for the safe use of ferrous lactate as a color
additive for the coloring of ripe olives. No comments were received in
response to this notice of filing.
Since the filing of this petition, the agency has come to recognize
that ferrous lactate is being used as a color fixative in ripe, rather
than black, olives. The Agricultural Marketing Service of the U. S.
Department of Agriculture defines ``ripe type'' olives as ``* * * those
which have been treated and oxidized in processing to produce a typical
dark brown to black color'' (7 CFR 52.3752(a)). Also, in 21 CFR 73.160,
the use of ferrous gluconate is approved for the coloring of ripe
olives. Ferrous lactate is a potential substitute for ferrous
gluconate. Therefore, to maintain consistency, the agency will refer to
ripe olives instead of black olives.
II. Standards for GRAS Affirmation
Under Sec. 170.30 (21 CFR 170.30), general recognition of safety
may be based only on the views of experts qualified by scientific
training and experience to evaluate the safety of substances added to
food. The basis of such views may be either: (1) Scientific procedures,
or (2) in the case of a substance used in food prior to January 1,
1958, experience based on common use in food (Sec. 170.30(a)). General
recognition of safety based upon scientific procedures requires the
same quantity and quality of scientific evidence as is required to
obtain approval of a food additive regulation and ordinarily is to be
based upon published studies, which may be corroborated by unpublished
studies and other data and information (Sec. 170.30(b)). General
recognition of safety through experience based on common use in food
prior to January 1, 1958, may be determined without the quantity or
quality of scientific procedures required for approval of a food
additive regulation but ordinarily is to be based upon generally
available data and information concerning the pre-1958 history of use
of the food ingredient (Sec. 170.30(c)). In its petition, Purac
America, Inc., relied on the scientific procedures that have been used
to support the regulated uses of ferrous lactate in Sec. 184.1311, and
on additional submitted published and unpublished data, to establish
that ferrous lactate is GRAS for use as a color fixative on ripe
olives.
III. Use, Estimated Exposure Levels, and Synthesis of Ferrous
Lactate
Ferrous lactate is currently affirmed as GRAS for use as a nutrient
supplement under Sec. 184.1311. Because ferrous lactate is used
interchangeably with several other iron salts that also may be used as
nutrient supplements, FDA considered the exposure to ferrous lactate
resulting from its use on ripe olives in relation to total exposure
from iron.
Based on information supplied in the petition, FDA has estimated
that the exposure to iron from the consumption of ferrous lactate-
treated olives would be no greater than 0.14 milligrams per person per
day (mg/person/day) (Ref. 1).
[[Page 40318]]
This represents a small contribution to the reference daily intake
(RDI) of 18 mg/day for iron (21 CFR 104.20(d)(3)). As ferrous lactate
can replace ferrous gluconate for coloring or fixing color in ripe
olives, no actual increase in exposure to iron is expected.
Lactic acid is GRAS (21 CFR 184.1061) and is a ubiquitous component
of the human body. FDA has estimated that exposure to lactate from the
petitioned use would not contribute significantly to the overall
dietary exposure to lactate (Ref. 1).
Section 184.1311(a) describes ferrous lactate as a greenish-white
powder prepared by reacting calcium lactate or sodium lactate with
ferrous sulfate or by direct reaction of lactic acid with iron filings.
The petitioner described two additional methods for preparing ferrous
lactate: (1) Reaction of ferrous chloride with sodium lactate and (2)
reaction of ferrous sulfate with ammonium lactate.
The petitioner also submitted a draft copy of specifications for
ferrous lactate that has been incorporated into the 4th edition of the
Food Chemicals Codex recently published by the National Academy of
Sciences. The agency has reviewed these additional methods of synthesis
and specifications for ferrous lactate and has concluded that they are
acceptable (Ref. 1).
IV. Safety
FDA discussed the safety of ferrous lactate in a proposal that
published in the Federal Register on April 21, 1987 (52 FR 13086). As
noted above, ferrous lactate is affirmed as GRAS for use as a nutrient
in food under Sec. 184.1311. Ferrous lactate is also recognized as a
coloring adjunct and nutrient by the Food and Agriculture Organization/
World Health Organization and the Joint Expert Committee on Food
Additives. Ferrous lactate is listed as a color retention agent in the
Registry of Food Additives of the European Communities. Ferrous lactate
is also listed by the Spanish Ministry of Health for color fixation of
black olives. The petitioner has relied primarily on the above data to
support its proposed use of ferrous lactate as a color fixative for
ripe olives.
FDA has considered the information in the petition, along with
other available information, concerning ferrous lactate and other iron
salts and has concluded that ferrous lactate is safe for use as a color
fixative for ripe olives (Ref. 2). This determination is based on the
fact that lactate is a normal constituent of food and a normal
intermediary metabolite in humans. Ferrous salts are present in many
foods, particularly meats and poultry and are used as nutrients in food
processing. The exposure to iron from the consumption of ferrous
lactate-treated olives represents only a small contribution to the RDI
of 18 mg/day for iron.
V. Conclusions on Use of Ferrous Lactate as a Color Fixative on
Ripe Olives
FDA has evaluated all of the available information on ferrous
lactate. Based on its review, the agency concludes that the data are
adequate to demonstrate the safety of ferrous lactate for the
petitioned use. Therefore, the agency concludes, based upon scientific
procedures, that ferrous lactate is GRAS for use as a color fixative on
ripe olives at levels consistent with current good manufacturing
practice. The agency is therefore amending Sec. 184.1311 to provide for
this use.
The agency is also amending Sec. 184.1311 to provide for the
additional methods of synthesis for ferrous lactate that were discussed
above. Additionally, the agency is amending Sec. 184.1311 to require
that the ingredient meets the specifications listed in the Food
Chemicals Codex. In the existing GRAS regulation for food use of
ferrous lactate (Sec. 184.1311), the agency indicated that it was
developing specifications for ferrous lactate in cooperation with the
National Academy of Sciences. The agency, as noted above, has reviewed
the specifications for ferrous lactate that published in the 4th
edition of the Food Chemicals Codex and has found them acceptable.
Therefore, the agency is amending Sec. 184.1311 to require that ferrous
lactate meet the specifications in the Food Chemicals Codex, 4th
edition, pages 154 and 155.
VI. Use of Ferrous Lactate as a Color Additive
In the document announcing the filing of Purac America, Inc.'s,
GRAS affirmation petition for ferrous lactate, FDA proposed, on its own
initiative, to amend the color additive regulations in part 73 (21 CFR
part 73) to provide for the safe use of ferrous lactate as a color
additive for the coloring of ripe olives. The agency undertook this
action because of questions as to whether ferrous lactate, when used
for the petitioned purpose, is functioning as a color fixative or as a
color additive. Section 721(b)(4) of the Federal Food, Drug, and
Cosmetic Act (the act) (21 U.S.C. 379e(b)(4), provides that ``* * * a
color additive shall be deemed to be suitable and safe for the purpose
of listing under this subsection for use generally in or on food, while
there is in effect a published finding of the Secretary declaring such
substance exempt from the term `food additive' because of its being
generally recognized by qualified experts as safe for its intended use,
as provided in section 201(s).'' Therefore, to eliminate any questions
with respect to the use of ferrous lactate on ripe olives, the agency
proposed to amend part 73 to provide for the safe use of ferrous
lactate for the coloring of ripe olives.
Having concluded that ferrous lactate is GRAS for use as a color
fixative on ripe olives, the agency is amending part 73 to provide for
the use of ferrous lactate as a color additive for the coloring of ripe
olives.
The agency has also determined that the Food Chemicals Codex
specifications for ferrous lactate are acceptable for the color
additive use of ferrous lactate in coloring ripe olives, and in the
regulation, the agency is requiring that the substance conform to these
specifications. Section 721(c) of the act provides that GRAS substances
when listed as color additives are exempt from certification.
Therefore, ferrous lactate, when used as a color additive for coloring
ripe olives, is exempt from certification.
In accordance with Sec. 71.15 (21 CFR 71.15), the petition and the
documents that FDA considered and relied upon in reaching its decision
to approve the petition are available for inspection at the Center for
Food Safety and Applied Nutrition by appointment with the information
contact person listed above. As provided in Sec. 71.15, the agency will
delete from the documents any materials that are not available for
public disclosure before making the documents available for inspection.
VII. Environmental Effect
The agency has carefully considered the potential environmental
effects of this action. FDA has concluded that the action will not have
a significant impact on the human environment, and that an
environmental impact statement is not required. The agency's finding of
no significant impact and the evidence supporting that finding,
contained in an environmental assessment, may be seen in the Dockets
Management Branch (address above) between 9 a.m. and 4 p.m., Monday
through Friday.
VIII. Economic Effects of GRAS Affirmation
FDA has examined the economic implications of this final rule
affirming that the use of ferrous lactate is GRAS as a color fixative
on ripe olives and of amending Sec. 184.1311 to permit
[[Page 40319]]
additional methods of synthesis for ferrous lactate under Executive
Order 12866 and the Regulatory Flexibility Act (Pub. L. 96-354).
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, when regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health, and safety effects;
distributive impacts; and equity). The Regulatory Flexibility Act
requires analyzing options for regulatory relief for small businesses.
FDA finds that this final rule is not a significant regulatory
action as defined by Executive Order 12866. The compliance costs to
firms are zero because no current activity is prohibited by affirming
the GRAS status of ferrous lactate as a color fixative for ripe olives,
or by amending the regulations to permit additional methods of
synthesis for ferrous lactate. Because this final rule will not
increase the health risks faced by consumers, total health costs are
also zero. Potential benefits include the ability to use additional
methods to synthesize ferrous lactate and any resources saved by
eliminating the need to prepare further petitions to affirm the GRAS
status of this substance.
Affirming that ferrous lactate is GRAS as a color fixative for ripe
olives under conditions of current good manufacturing practice and
permitting additional methods of synthesis for ferrous lactate will
expand the formulation possibilities for food manufacturers, including
small businesses. Therefore, in accordance with the Regulatory
Flexibility Act, FDA has also determined that this rule will have a
positive impact on small businesses.
IX. References
The following references have been placed on display in the Dockets
Management Branch (address above) and may be seen by interested persons
between 9 a.m. and 4 p.m., Monday through Friday.
1. Memoranda from Chemistry Review Branch, HFS-247, to Direct
Additives Branch, HFS-217, dated December 19, 1994, July 28, 1995,
and November 21, 1995.
2. Memorandum from Additives Evaluation Branch no. 1, HFS-226,
to Direct Additives Branch, HFS-217, dated September 9, 1993.
X. Objections to Sec. 73.165
Any person who will be adversely affected by new Sec. 73.165 may at
any time on or before September 3, 1996, file with the Dockets
Management Branch (address above) written objections thereto. Each
objection shall be separately numbered, and each numbered objection
shall specify with particularity the provisions of the regulation to
which objection is made and the grounds for the objection. Each
numbered objection on which a hearing is requested shall specifically
so state. Failure to request a hearing for any particular objection
shall constitute a waiver of the right to a hearing on that objection.
Each numbered objection for which a hearing is requested shall include
a detailed description and analysis of the specific factual information
intended to be presented in support of the objection in the event that
a hearing is held. Failure to include such a description and analysis
for any particular objection shall constitute a waiver of the right to
a hearing on the objection. Three copies of all documents shall be
submitted and shall be identified with the docket number found in
brackets in the heading of this document. Any objections received in
response to the regulation may be seen in the Dockets Management Branch
between 9 a.m. and 4 p.m., Monday through Friday. FDA will publish
notice of the objections that the agency has received or lack thereof
in the Federal Register.
List of Subjects
21 CFR Part 73
Color additives, Cosmetics, Drugs, Medical devices.
21 CFR Part 184
Food ingredients.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drug and
redelegated to the Director, Center for Food Safety and Applied
Nutrition, 21 CFR parts 73 and 184 are amended as follows:
PART 73--LISTING OF COLOR ADDITIVES EXEMPT FROM CERTIFICATION
1. The authority citation for 21 CFR part 73 continues to read as
follows:
Authority: Secs. 201, 401, 402, 403, 409, 501, 502, 505, 601,
602, 701, 721 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
321, 341, 342, 343, 348, 351, 352, 355, 361, 362, 371, 379e).
2. New Sec. 73.165 is added to subpart A to read as follows:
Sec. 73.165 Ferrous lactate.
(a) Identity. The color additive ferrous lactate is the ferrous
lactate defined in Sec. 184.1311 of this chapter.
(b) Specifications. Ferrous lactate shall meet the specifications
given in the Food Chemicals Codex, 4th ed. (1996), pp. 154 to 155,
which is incorporated by reference in accordance with 5 U.S.C. 552(a)
and 1 CFR part 51. Copies are available from the National Academy
Press, 2101 Constitution Ave. NW., Washington, DC 20418, or may be
examined at the Center for Food Safety and Applied Nutrition's Library,
200 C St. SW., rm. 3321, Washington, DC, or at the Office of the
Federal Register, 800 North Capitol St. NW., suite 700, Washington, DC.
(c) Uses and restrictions. Ferrous lactate may be safely used in
amounts consistent with good manufacturing practice for the coloring of
ripe olives.
(d) Labeling. The label of the color additive shall conform to the
requirements of Sec. 70.25 of this chapter.
(e) Exemption from certification. Certification of this color
additive is not necessary for the protection of the public health, and
therefore batches thereof are exempt from the certification
requirements of section 721(c) of the Federal Food, Drug, and Cosmetic
Act (the act).
PART 184--DIRECT FOOD SUBSTANCES AFFIRMED AS GENERALLY RECOGNIZED
AS SAFE
Authority: Secs. 201, 402, 409, 701 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 321, 342, 348, 371).
3. Section 184.1311 is amended by revising paragraphs (a), (b), and
(c) to read as follows:
Sec. 184.1311 Ferrous lactate.
(a) Ferrous lactate (iron (II) lactate, C6H10FeO6,
CAS Reg. No. 5905-52-2) in the trihydrate form is a greenish-white
powder or crystalline mass. It is prepared by reacting calcium lactate
or sodium lactate with ferrous sulfate, direct reaction of lactic acid
with iron filings, reaction of ferrous chloride with sodium lactate, or
reaction of ferrous sulfate with ammonium lactate.
(b) The ingredient meets the specifications of the Food Chemicals
Codex, 4th ed. (1996), pp. 154 to 155, which is incorporated by
reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies
are available from the National Academy Press, 2101 Constitution Ave.
NW., Washington, DC 20418, or may be examined at the Center for Food
Safety and Applied Nutrition's library, 200 C St. SW., rm. 3321,
Washington, DC, or at the Office of the Federal Register, 800 North
Capitol St. NW., suite 700, Washington, DC.
(c) In accordance with Sec. 184.1(b)(1), the ingredient is used in
food as a nutrient supplement as defined in
[[Page 40320]]
Sec. 170.3(o)(20) of this chapter and as a color fixative for ripe
olives, with no other limitation other than current good manufacturing
practice. The ingredient may also be used in infant formula in
accordance with section 412(g) of the Federal Food, Drug, and Cosmetic
Act (the act) (21 U.S.C. 350a(g)) or with regulations promulgated under
section 412(a)(2) of the act (21 U.S.C. 350a(a)(2)).
* * * * *
Dated: July 19, 1996.
Janice F. Oliver,
Deputy Director for Systems and Support, Center for Food Safety and
Applied Nutrition.
[FR Doc. 96-19305 Filed 8-1-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-18884 Freedom of Information Policy and Procedures
[Federal Register Volume 61, Number 150 (Friday, August 2, 1996)]
[Rules and Regulations]
[Pages 40332-40336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18884]
=======================================================================
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ARMS CONTROL AND DISARMAMENT AGENCY
22 CFR Part 602
Freedom of Information Policy and Procedures
Agency: Arms Control and Disarmament Agency.
Action: Final rule.
-----------------------------------------------------------------------
Summary: The United States Arms Control and Disarmament Agency (ACDA)
is revising and restating in their entirety its rules that govern the
availability and release of information. Clarifying these rules will
help the public to interact better with ACDA and is part of ACDA's
effort to update and streamline its regulations.
Effective Date: August 2, 1996.
For Further Information Contact: Frederick Smith, Jr., United States
Arms Control and Disarmament Agency, Room 5635, 320 21st Street, N.W.,
Washington, DC 20451, telephone (202) 647-3596.
Supplementary Information: On May 30, 1996, ACDA published a notice of
proposed rulemaking (61 FR 27031-27036) with a 39-day comment period.
No comments were received during the comment period. Accordingly, the
rules are adopted as proposed.
List of Subjects in 22 CFR Part 602
Freedom of Information Act.
Chapter VI of Title 22 of the Code of Federal Regulations is
amended by revising part 602 to read as follows:
PART 602--FREEDOM OF INFORMATION POLICY AND PROCEDURES
Authority: 5 U.S.C. 552; 22 U.S.C. 2581; and 31 U.S.C. 9701.
Subpart A--Basic Policy
Sec.
602.1 Scope of part.
602.2 Definitions.
602.3 General policy.
Subpart B--Procedure for Requesting Records
602.10 Requests for records.
602.11 Requests in person.
602.12 Availability of records at the ACDA Office of Public
Affairs.
602.13 Copies of records.
602.14 Records of other agencies, governments and international
organizations.
602.15 Overseas requests.
602.16 Responses and time limits on requests.
602.17 Time extensions.
602.18 Inability to comply with requests.
602.19 Predisclosure notification for confidential commercial
information.
[[Page 40333]]
Subpart C--Fees
602.20 Fees for records search, review, copying, certification, and
related services.
602.21 Waiver or reduction of fees.
602.22 [Reserved]
602.23 GPO and free publications.
602.24 Method of payment.
Subpart D--Denials of Records
602.30 Denials.
602.31 Exemptions.
Subpart E--Review of Denials of Records
602.40 Procedure for appealing initial determinations to withhold
records.
602.41 Decision on appeal.
Subpart F--Annual Report to the Congress
602.50 Requirements for annual report.
Authority: U.S.C. 552; 22 U.S.C. 2581; and 31 U.S.C. 9701.
Subpart A--Basic Policy
Sec. 602.1 Scope of part.
This part 602 establishes the policies, responsibilities and
procedures for release to members of the public of records which are
under the jurisdiction of the U.S. Arms Control and Disarmament Agency.
Sec. 602.2 Definitions.
As used throughout this part, the following terms have the meanings
set forth in this section:
(a) The term Agency and the acronym ACDA stand for the U.S. Arms
Control and Disarmament Agency.
(b) The term records includes all books, papers, maps, photographs,
or other documentary materials, regardless of physical form or
characteristics, made or received by the Agency in pursuance of Federal
law or in connection with the transaction of public business and
preserved or appropriate for preservation by the Agency or its
legitimate successor as evidence of the organization, functions,
policies, decisions, procedures, operations, or other activities of the
Government or because of the informational value of data contained
therein. Library or museum material made or acquired solely for
reference or exhibition purposes is not included within the definition
of the term ``records.''
(c) Deputy Director means the Deputy Director of the Agency.
(d) The acronym FOIA stands for the Freedom of Information Act, as
amended (5 U.S.C. 552).
Sec. 602.3 General policy.
(a) In accordance with section 2 of the Arms Control and
Disarmament Act, as amended (22 U.S.C. 2551), it is the policy of ACDA
to carry out as one of its primary functions the dissemination and
coordination of public information concerning arms control,
nonproliferation, and disarmament.
(b) In compliance with the FOIA, ACDA will make available upon
request by members of the public to the fullest extent practicable all
Agency records under its jurisdiction, as described in the FOIA, except
to the extent that they may be exempt from disclosure under the FOIA
and Sec. 602.31
.Subpart B--Procedure for Requesting Records
.Sec. 602.10 Requests for records.
.(a) A written request for records should be addressed to: FOIA
Officer, U.S. Arms Control and Disarmament Agency, 320 21st Street,
NW., Washington, DC 20451. To facilitate processing, the letter of
request and envelope should be conspicuously marked ``FOIA request.''
.(b) The request should identify the desired record or reasonably
describe it. The identification should be as specific as possible so
that a record can be found readily. Blanket requests or requests for
``the entire file of'' or ``all matters relating to'' a specified
subject will not be accepted. The Agency will make any reasonable
effort to assist the requester in sharpening the request to eliminate
extraneous and unwanted materials and to keep search and copying fees
to a minimum.
.(c) If a fee is chargeable under subpart C of this part for search
or duplication costs incurred in connection with a request for an
Agency record, the request should include the anticipated fee or should
ask for a determination of such fee. Any chargeable fee must be paid in
full prior to issuance of requested materials. The method of payment is
described in Sec. 602.24.
.Sec. 602.11 Requests in person.
.A member of the public may request an Agency record by making an
appointment to apply in person between the hours of 8:30 a.m. and 4
p.m. at the ACDA Office of Public Affairs, 320 21st Street, NW.,
Washington, DC 20451. Form ACDA-21, Public Information Service Request,
is available at the ACDA Office of Public Affairs for the convenience
of members of the public in requesting Agency records.
.Sec. 602.12 Availability of records at the ACDA Office of Public
Affairs.
.(a) A current index identifying all available records is kept on
file at the ACDA Office of Public Affairs. Copies of this index may be
obtained free upon request.
.(b) In addition, the ACDA Office of Public Affairs will maintain
or have available, unless authorized to be withheld, certain types of
unclassified records, including but not necessarily limited to the
following:
(1) A copy of the ACDA Manual and other Agency regulations,
including a copy of title 22 of the Code of Federal Regulations (CFR)
and any other title of the CFR in which Agency regulations have been
published;
(2) Copies of arms control and disarmament treaties or agreements
in force;
(3) Research contracts between the Agency and universities or other
non-Government organizations; and
(4) Reimbursable agreements with other Government agencies.
(c) Copies of records available to the public may be inspected by a
requester in the ACDA Office of Public Affairs during the business
hours stated in Sec. 602.11. Copies of records made available for
inspection may not be removed by any requester from the ACDA Office of
Public Affairs.
Sec. 602.13 Copies of records.
(a) The Agency will provide copies of requested records of the same
type and quality that it would provide to personnel of another U.S.
Government agency in the course of official business. It will not
accept requests for special types of copying processes or for special
standards of quality of reproduction.
(b) Copies of records requested will be reproduced as promptly as
possible and mailed to the requester. Chargeable fees will be
determined according to the schedule set forth in subpart C of this
part. The FOIA Officer is authorized to limit copies of each requested
record to ten or fewer when there exists an extraordinary demand for
the number of available copies or when requirements place excessive
demands on the Agency's copying facilities.
Sec. 602.14 Records of other agencies, governments and international
organizations.
(a) Requests for records that were originated by or are primarily
the concern of another U.S. Government department or agency shall be
forwarded to the particular department or agency involved, and the
requester notified in writing.
(b) Requests for records that have been furnished to the Agency by
foreign governments or by international organizations will not normally
be released unless the organization or government concerned has
indicated that the particular information should or may be made public.
Where international organizations or foreign governments concerned have
not made such a determination, the requester will be so advised, and if
possible, furnished
[[Page 40334]]
the address to which the request may be sent.
Sec. 602.15 Overseas requests.
Pursuant to the general policy outlined in Sec. 602.3, ACDA has
made arrangements to provide the United States Information Agency
(USIA) with material for dissemination abroad, such as information on
official U.S. positions on arms control and disarmament policy.
Requests originating in an area served by a USIA office which are
received at Agency headquarters, will be referred to USIA when
appropriate for direct response to the requester.
Sec. 602.16 Responses and time limits on requests.
(a) The FOIA requires an initial determination on a request for an
Agency record to be made within ten working days after receipt of the
request.
(b) If it is determined that the requested record (or portions
thereof) will be made available, the requested material will be
forwarded promptly after the initial determination, provided any
applicable fee has been paid in full.
(c) If prior to making an initial determination it is anticipated
that the costs chargeable for a request will amount to more than $25.00
or more than the amount of the payment accompanying the request,
whichever is larger, the requester shall be promptly notified of the
total amount of the anticipated fee or such portion thereof as can
readily be estimated. In these instances, an advance deposit in the
estimated amount of the search, review, and copying costs may be
required. The request for an advance deposit shall extend an offer to
the requester to consult with Agency personnel in order to reformulate
the request in a manner that will reduce the fee, yet still meet the
needs of the requester.
(d) In instances where the Agency has requested an advance deposit,
the date of receipt of the deposit will be considered as the request
date which begins the period of response by the Agency.
(e) Receipt of a request for Agency records will be determined by
the time and date the request is received.
(f) Where an obvious delay in receipt of a request has occurred,
such as in cases where the requester has failed to address the request
properly, or where a delay has been caused in the mails, the Agency
will dispatch to the requester an acknowledgment of the receipt of the
request.
Sec. 602.17 Time extensions.
(a) In unusual circumstances, the time limit for an initial or
final determination may be extended, but not to exceed a total of ten
working days in the aggregate in the processing of any specific request
for an Agency record.
(b) ``Unusual circumstances'' means, but only to the extent
reasonably necessary to the proper processing of the particular case:
(1) The need to search for and collect the requested records from
other establishments that are physically separate from ACDA
headquarters;
(2) The need to search for, collect, and appropriately examine a
voluminous amount of separate and distinct records which are demanded
in a single request; or
(3) The need for consultation, which shall be conducted with all
practicable speed, with another agency having a substantial interest in
the determination of the request.
Sec. 602.18 Inability to comply with requests.
(a) When a request cannot be fulfilled, the requester will be so
informed with reasons, and any fees returned after deduction of
applicable search costs. Such reasons may include, but are not limited
to the following:
(1) Insufficient or vague identifying information which makes
identification or location of the record impossible;
(2) No such record in existence;
(3) Record available for purchase from the Government Printing
Office or elsewhere; or
(4) Records destroyed pursuant to the Records Disposal Act.
(b) Inability to comply with requests shall be processed the same
as denials of records, i.e., notification to the requester shall be in
writing, shall set forth the reasons therefor, shall be signed by the
name and title of the FOIA Officer, and shall include an explanation of
the requester's right to appeal, including the address to which an
appeal may be directed.
Sec. 602.19 Predisclosure notification for confidential commercial
information
(a) When notification is required. If a request under the FOIA
seeks a record that contains information submitted by a person or
entity outside the Federal government that arguably is exempt from
disclosure under exemption 4 of the FOIA because disclosure could
reasonably be expected to cause substantial competitive harm, the
Agency shall notify the submitter that such a request has been made
whenever:
(1) The submitter has made a good faith designation of information,
less than ten years old, as confidential commercial or financial
information, or
(2) The Agency has reason to believe that disclosure of the
information could reasonably be expected to cause substantial
competitive harm.
(b) Notification to submitter. The notice to the submitter shall
either describe the exact nature of the business information requested
or provide copies of the records or portions of records containing the
information. The notice shall afford the submitter a reasonable period
of time, based on the amount and/or complexity of the information,
within which to object to disclosure.
(c) Objection by submitter. Any objection by a submitter to
disclosure must be made in writing and sent to: FOIA Officer, U.S. Arms
Control and Disarmament Agency, 320 21st Street, NW., Washington, DC
20451. It should identify the portion(s) of the information to which
disclosure is objected, and should include a detailed statement of all
claimed grounds for withholding any of the information under the FOIA
and, in the case of exemption 4, an explanation of why the information
constitutes a trade secret or commercial or financial information that
is privileged and confidential, including a specification of any claim
of competitive or other business harm that would result from
disclosure.
(d) Notification to requester. The Agency shall notify the
requester in writing when any notification to a submitter is made
pursuant to paragraph (a) of this section.
(e) When notification is not required. Notification to a submitter
is not required if:
(1) The Agency determines that the information requested should not
be disclosed;
(2) Disclosure is required by statute (other than FOIA) or by
regulation; or
(3) The information has previously been lawfully published or
officially made available to the public.
(f) Notice of intent to disclose. If the Agency determines that
despite the objection of the submitter the requested information should
be disclosed, in whole or in part, it shall notify both the requester
and the submitter of the decision and shall provide to the submitter in
writing:
(1) A brief explanation of why the submitter's objections were not
sustained;
(2) A description of the information to be disclosed; and
(3) A specified disclosure date that provides a reasonable period
of time between receipt of the notice and the disclosure date.
(g) Notice of lawsuit. (1) Whenever a requester brings legal action
to compel disclosure of information covered by paragraph (a) of this
section, the Agency
[[Page 40335]]
shall promptly notify the submitter in writing.
(2) Whenever a submitter brings legal action to prevent disclosure
of information covered by paragraph (a) of this section, the Agency
shall promptly notify the requester in writing.
Subpart C--Fees
Sec. 620.20 Fees for records search, review, copying, certification,
and related services.
The fees for search, review, and copying services for Agency
records under the FOIA or the Privacy Act are as follows:
(a) When documents are requested for commercial use, requesters
will be assessed the full direct costs for searching for, reviewing for
release, and copying the records sought. A ``commercial use'' request
refers to a request from or on behalf of one who seeks information for
a use or purpose that furthers the commercial, trade, or profit
interests of the requester or the person on whose behalf the request is
made.
(b) Requesters from educational and noncommercial scientific
institutions will be assessed only copying costs.
(c) Requesters who are representatives of the news media (persons
actively gathering news for an entity that is organized and operated to
publish or broadcast news to the public) will be assessed only copying
costs.
(d) All other requesters will be assessed fees which recover the
full and reasonable direct cost of searching for, reviewing for
release, and copying records that are responsive to the request.
(e) Requesters from educational and noncommercial scientific
institutions, representatives of the news media, and all other
noncommercial users, will not be assessed for the first 100 pages of
copying or the first two hours of search time. Commercial use
requesters will not be entitled to these free services.
(f) The search and review hourly fees will be based upon employee
grade levels in order to recoup the full, allowable direct costs
attributable to their performance of these functions.
(g) The fee for paper copy reproduction will be $.20 per page.
(h) The fee for duplication of computer tape or printout
reproduction or other reproduction (e.g., microfiche) will be the
actual, cost, including operator time.
(i) If the cost of collecting any fee would be equal to or greater
than the fee itself, it will not be assessed.
(j) A fee may be charged for searches that are not productive and
for searches for records or parts of records that subsequently are
determined to be exempt from disclosure.
(k) Interest charges may be assessed on any unpaid bill starting on
the 31st day following the day on which the billing was sent, at the
rate prescribed in 31 U.S.C. 3717 and will accrue from the date of
billing. The Debt Collection Act, including disclosure to consumer
reporting agencies and the use of collection agencies, will be utilized
to encourage payment where appropriate.
(l) If search charges are likely to exceed $25.00, the requester
will be notified of the estimated fees unless the requester's
willingness to pay whatever fee is assessed has been provided in
advance.
(m) An advance payment (before work is commenced or continued on a
request) may be required if the charges are likely to exceed $250.00.
Requesters who have previously failed to pay a fee in a timely fashion
(i.e., within 30 days of the date of billing) may be required to pay
this amount plus any applicable interest (or demonstrate that the fee
has been paid) and them make an advance payment of the full amount of
the estimated fee before the new or pending request is processed.
Sec. 602.21 Waiver or reduction of fees.
Documents shall be furnished without any charge or at a charge
reduced below the fees set forth in Sec. 602.20 if disclosure of the
information is in the public interest because it is likely to
contribute significantly to public understanding of the operations or
activities of the government and is not primarily in the commercial
interest of the requester. The following six factors will be employed
in determining when such fees shall be waived or reduced:
(a) The subject of the request: Whether the subject of the
requested records concerns ``the operations or activities of the
government;''
(b) The informative value of the information to be disclosed:
Whether the disclosure is ``likely to contribute'' to an understanding
of government operations or activities;
(c) The contribution to an understanding of the subject by the
general public likely to result from disclosure: Whether disclosure of
the information will contribute to the ``public understanding;''
(d) The significance of the contribution to public understanding:
Whether the disclosure is likely to contribute ``significantly'' to
public understanding of government operations or activities;
(e) The existence and magnitude of a commercial interest: Whether
the requester has a commercial interest that would be furthered by the
requested disclosure; and, if so
(f) The primary interest in disclosure: Whether the magnitude of
the identified commercial interest of the requester is sufficiently
large, in comparison with the public interest in disclosure, that
disclosure is ``primarily in the commercial interest of the
requester.''
Sec. 602.22 [Reserved]
Sec. 602.23 GPO and free publications.
(a) The index of records available in the Agency's Office of Public
Affairs will list the sales offices of records published by the
Government Printing Office (GPO). The Agency will refer each requester
to the appropriate sales office and refund any fee payments
accompanying the request. Published records out of print at the GPO may
be copied by the Agency for the requester at the requester's expense in
accordance with the fee schedule established for copying service. In
some instances the Agency may have extra copies of out of print GPO
records. These extra copies will be provided to requesters at the
printed GPO price.
(b) The Agency makes some publications or records available to the
public without charge. These regulations neither change that practice
nor require payment of a fee by a requester unless the original stock
has been exhausted any copying services are necessary to satisfy a
request.
Sec. 602.24 Method of payment.
(a) Payment may be in the form of cash, a personal check or bank
draft drawn on a bank in the United States, or a postal money order.
Remittances shall be made payable to the Treasury of the United States
and mailed or delivered to the FOIA Officer, U.S. Arms Control and
Disarmament Agency, 320 21st Street, NW., Washington, DC 20451. Cash
should not be sent by mail.
(b) A receipt for fees paid will be given upon request.
Subpart D--Denials of Records
Sec. 602.30 Denials.
(a) Requests for inspection or copies of records may be denied
where the information or record is exempt from disclosure for reasons
stated in Sec. 602.31.
(b) Denials shall be in writing, shall set forth the reasons
therefor, shall be signed by the FOIA Officer and shall include an
explanation of the requester's right to appeal, including the address
to which an appeal may be directed.
[[Page 40336]]
Sec. 602.31 Exemptions.
The requirements of this part to make Agency records available do
not apply to matters that are:
(a) Specifically authorized under criteria established by an
Executive Order to be kept secret in the interest of national defense
or foreign policy and are in fact properly classified pursuant to such
Executive Order;
(b) Related solely to the internal personnel rules and practices of
the Agency;
(c) Specifically exempted from disclosure by statute;
(d) Trade secrets and commercial or financial information obtained
from a person and privileged or confidential;
(e) Inter-agency or intra-agency memoranda or letters that would
not be available by law to a private party in litigation with the
Agency;
(f) Personnel and medical files and similar files the disclosure of
which would constitute a clearly unwarranted invasion of personal
privacy;
(g) Records or information compiled for law enforcement purposes,
but only to the extent that the production of such law enforcement
records or information.
(1) Could reasonably be expected to interfere with enforcement
proceedings;
(2) Would deprive a person of a right to a fair trial or impartial
adjudication;
(3) Could reasonably be expected to constitute an unwarranted
invasion of personal privacy;
(4) Could reasonably be expected to disclose the identity of a
confidential source, including a State, local or foreign agency or
authority or any private institution that furnished information on a
confidential basis, and, in the case of a record or information
compiled by a criminal law enforcement authority in the course of a
criminal investigation, or by an agency conducting a lawful national
security intelligence investigation, information furnished by a
confidential source;
(5) Would disclose techniques and procedures for law enforcement
investigations or prosecutions, or would disclose guidelines for law
enforcement investigations or prosecutions if such disclosure could
reasonably be expected to risk circumvention of the law; or
(6) Could reasonably be expected to endanger the life or physical
safety of any individual.
(h) Contained in or related to examination, operating or condition
reports prepared by, on behalf of, or for the use of an agency
responsible for the regulation or supervision of financial
institutions; or
(i) Geological and geophysical information and data, including
maps, concerning wells.
Subpart E--Review of Denials of Records
Sec. 602.40 Procedure for appealing initial determinations to withhold
records.
(a) A member of the public who has requested an Agency record in
accordance with subpart B of this part and who has received an initial
determination that does comply fully with the request, may appeal such
a determination.
(b) The appeal shall:
(1) Be in writing;
(2) Be initiated within 30 working days of the initial
determination denying the request;
(3) Include a copy of the initial written request, a copy of the
letter of denial, and the requester's reasons for appealing the denial;
and
(4) Be addressed to the Deputy Director, U.S. Arms Control and
Disarmament Agency, 320 21st Street, NW., Washington, DC 20451.
(c) The 30-day period for appealing a denial begins on he date of
the denial letter. The 30-day limitation may be waived by the Agency
for good cause shown. The Agency will consider any request closed if,
within 30 working days after a complete or partial denial, the
requester fails to appeal the denial.
Sec. 602.41 Decision on appeal.
(a) Review and final determination on an appeal shall be made by
the Deputy Director.
(b) [Reserved]
(c) Review of an appeal shall be made on the submitted record. No
personal appearance, oral argument, or hearing shall be permitted.
(d) The final determination on an appeal from a denial shall be
made by the Deputy Director within 20 working days of receipt of the
appeal by the Agency.
(e) If the final determination is to release the withheld material,
the requester will be notified immediately and the material will be
forwarded promptly in accordance with the procedure described in
Sec. 602.16 for notifications of initial determinations.
(f) If the final determination is to continue to withhold material
in whole or in part, the requester will be notified immediately of the
determination, the reasons therefore, and the right to judicial review.
(g) All decisions will be indexed and available for inspection and
copying in the same manner as other Agency final orders and opinions,
if any, under 5 U.S.C. 552(a)(2).
Subpart F--Annual report to the Congress
Sec. 602.50 Requirements for annual report.
(a) On or before March 1 of each calendar year, ACDA shall submit a
report covering the preceding calendar year to the Speaker of the House
of Representatives and the President of the Senate for referral to the
appropriate committees of the Congress. The report shall include the
following information:
(1) The number of determinations made by ACDA not to comply with
requests for records made to the Agency under this part and the reasons
for each such determination;
(2) The number of appeals made by persons under subpart E of this
part, the result of such appeals, and the reason for the action upon
each appeal that results in a denial of information;
(3) The names and titles or positions of each person responsible
for the denial of records requested under this part, and the number of
instances of participation for each;
(4) The results of each proceeding conducted pursuant to 5 U.S.C.
552(a)(4)(F), including a report of the disciplinary action taken
against the officer or employee who was primarily responsible for
improperly withholding records or an explanation of why disciplinary
action was not taken;
(5) A copy of this part 602 and any other rule or regulation made
by ACDA regarding 5 U.S.C. 552;
(6) A copy of the fee schedule and the total amount of fees
collected by ACDA for making records available under this part; and
(7) such other information as indicates efforts to administer fully
this part.
(b) The FOIA Officer will be responsible for preparing the report
for review and submission to the Congress.
Dated: July 15, 1996.
Mary Elizabeth Hoinkes,
General Counsel.
[FR Doc. 96-18884 Filed 8-1-96; 8:45 am]
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