Federal Crop Insurance Corporation, USDA.
Final rule.
The Federal Crop Insurance Corporation (FCIC) is revising the General Administrative Regulations, Subpart-L Reinsurance Agreement—Standards for Approval; Regulations for the 1997 and Subsequent Reinsurance Years. The intended effect of this rule is to clarify the time frame in which all requests for a final agency determination must be submitted.
This rule is effective January 25, 2000.
Heyward Baker, Director, Reinsurance Services Division, telephone (202) 720-4232.
This rule has been determined to be exempt for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB).
It has been determined by OMB that this rule is exempt from the information collection requirement contained under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.
The policies contained in this rule do not have any substantial direct effect on 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. Nor does this rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with the states is not required.
This regulation will not have a significant economic impact on a substantial number of small entities. The regulation does not require any more action on the part of the small entities than is required on the part of large entities. Therefore, this action is determined to be exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.
This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450.
This program is not subject to the provisions of Executive Order 12372 which require intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115, June 24, 1983.
This rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. The administrative appeal provisions must be exhausted before any action for judicial review of any determination made by FCIC may be brought.
This action is not expected to have a significant economic impact on the quality of the human environment, health, and safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.
On August 22, 1988, FCIC has implemented a process in cases when it suspects a violation of the provisions of the Standard Reinsurance Agreement where it provides the applicable reinsured company with a copy of initial findings, allowed the reinsured company to respond, and then issued a final determination. If the reinsured company disputed the final determination, the reinsured company was required to appeal within 45 days of receipt of the determination to the Deputy Manager of FCIC.
On May 1, 1995, FCIC revised this appeals process and now when a reinsured company disputed the final determination it was required to request a final agency determination from the Director of Compliance. The process also stated that the reinsured company “may” request the final agency determination within 45 days. A controversy has arisen with respect to whether the 45 day time frame is mandatory or permissive. Although FCIC has always treated the 45 day time frame as mandatory under both the old and new process, and the reinsured companies have routinely complied with this requirement, FCIC is revising the language to make it clear that the 45 day time frame is a mandatory requirement.
FCIC is also revising the section to have all requests for a final agency determination be submitted to the Deputy Administrator for Insurance Services or the Deputy Administrator for Compliance to be in conformance with the renaming of titles in the recent reorganization.
The changes in this rule do not change current requirements as understood by the reinsured companies and FCIC. This rule is merely interpretative and, therefore, exempt from the requirements for notice and comment and the 30 day delay in the effectiveness of this rule.
Administrative practice and procedures, Claims, Crop insurance, Penalties.
7 U.S.C. 1506(1), 1506(p).
(a) If the company believes that the Corporation has taken an action that is not in accordance with the provisions of the Standard Reinsurance Agreement or any reinsurance agreement with FCIC, except compliance issues, it may request the Deputy Administrator of Insurance Services to make a final administrative determination addressing the disputed action. The Deputy Administrator of Insurance Services will render the final administrative determination of the Corporation with respect to the applicable actions. All requests for a final administrative determination must be in writing and submitted within 45 days after receipt after the disputed action.
(b) With respect to compliance matters, the Compliance Field Office renders an initial finding, permits the company to respond, and then issues a final finding. If the company believes that the Compliance Field Office's final finding is not in accordance with the applicable laws, regulations, custom or practice of the insurance industry, or FCIC approved policy and procedure, it may request, the Deputy Administrator of Compliance to make a final administrative determination addressing the disputed final finding. The Deputy Administrator of Compliance will render the final administrative determination of the Corporation with respect to these issues. All requests for a final administrative determination must be in writing and submitted within 45 days after receipt of the final finding.
(c) A company may also request reconsideration by the Deputy Administrator of Insurance Services of a decision of the Corporation rendered under any Corporation bulletin or directive which bulletin or directive does not interpret, explain, or restrict the terms of the reinsurance agreement. The company, if it disputes the Corporation's determination, must request a reconsideration of that determination in writing, within 45 days of the receipt of the determination. The determinations of the Deputy Administrator will be final and binding on the company. Such determinations will not be appealable to the Board of Contract Appeals.
(d) Appealable final administrative determinations of the Corporation under paragraph (a) or (b) of this section may be appealed to the Board of Contract Appeals in accordance with the provisions of subtitle A, part 24 of title 7 of the Code of Federal Regulations.
Federal Crop Insurance Corporation, USDA.
Final rule.
The Federal Crop Insurance Corporation (FCIC) finalizes specific crop provisions for the insurance of forage production and forage seeding. The intended effect of this action is to provide policy changes to better meet the needs of the insured. The changes will be effective for the 2001 and subsequent crop years.
This rule is effective February 24, 2000.
Richard Brayton, Insurance Management Specialist, Product Development Division, Federal Crop Insurance Corporation, United States Department of Agriculture, 9435 Holmes Road, Kansas City, MO, 64131, telephone (816) 926-7730.
This rule has been determined to be exempt for the purpose of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB).
Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by the Office of Management and Budget (OMB) under control number 0563-0053 through April 30, 2001.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.
The policies contained in this rule do not have any substantial direct effect on 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. Nor does this rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with the states is not required.
This regulation will not have a significant economic impact on a substantial number of small entities. Additionally, the regulation does not require any action on the part of small entities than is required on the part of large entities. The amount of work required of the insurance companies will not increase because the information used to determine eligibility must already be collected under the present policy. No additional work is required as a result of this action on the part of either the insured or the insurance companies. Therefore, this action is determined to be exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.
This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450.
This program is not subject to the provisions of Executive Order 12372 which require intergovernmental consultation with State and local
This rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. The administrative appeal provisions published at 7 CFR part 11 must be exhausted before any action for judicial review of any determination made by FCIC may be brought.
This action is not expected to have a significant economic impact on the quality of the human environment, health, and safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.
This regulatory action is being taken as part of the National Performance Review Initiative to eliminate unnecessary or duplicate regulations and improve those that remain in force.
On Thursday, August 26, 1999, FCIC published a notice of proposed rulemaking in the
Following publication of the proposed rule on August 26, 1999, the public was afforded 30 days to submit written comments and opinions. A total of 8 comments were received from 2 reinsured companies, a Pennsylvania consulting firm, and the Pennsylvania State Secretary of Agriculture. The forage production comments received and FCIC's responses are as follows:
Forage seeding comments and FCIC's responses are as follows:
In addition to the changes described above, FCIC has made the following changes to the Forage Production Crop Provisions:
1. Section 1—Removed the definition of “crop year” from the final rule. The current regulation contains a more accurate definition of “crop year.”
2. Section 7(a)(4) and (5)—Removed these provisions from the final rule because section 7(a)(5) was duplicative with section 7(a)(1) and section 7(a)(4) was inconsistent with section 7(a)(2) which stated that the insurance attaches for Lassen, Modoc, Mono, Shasta and Siskiyou Counties on April 15.
Crop insurance, Forage production, Forage seeding, Reporting and recordkeeping requirements.
7 U.S.C. 1506(1), 1506(p).
The Forage Production Crop Insurance Provisions for the 2001 and succeeding crop years are as follows:
1. Definitions.
4.
In accordance with section 2 of the Basic Provisions, the cancellation and termination dates are:
In lieu of the provisions of section 6(a) of the Basic Provisions, a report of all insured acreage of forage production must be submitted on or before each forage production acreage reporting date specified in the Special Provisions.
6.
(a) In accordance with section 8 of the Basic Provisions, the crop insured will be all the forage in the county for which a premium rate is provided by the actuarial documents:
(1) In which you have a share; and
(2) That is grown during one or more years after the year of establishment.
7.
In lieu of the provisions of section 11 of the Basic Provisions:
(a) Insurance attaches on acreage with an adequate stand for the calendar year following the year of establishment for:
(1) All California counties accept Lassen, Modoc, Mono, Shasta and Siskiyou—December 1;
(2) Lassen, Modoc, Mono, Shasta and Siskiyou Counties California, Colorado, Idaho, Nebraska, Nevada, Oregon, Utah and Washington—April 15;
(3) Iowa, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, Wisconsin, Wyoming, and all other states—May 22;
(b) Insurance ends at the earliest of:
(6) The following dates of the crop year:
(i) California counties of Lassen, Modoc, Mono, Shasta and Siskiyou, and all other states—October 15;
(ii) The last day of the 12th month after the insured crop initially planted in all California counties except Lassen, Modoc, Mono, Shasta and Siskiyou.
8.
(b) In addition to the causes of loss specifically excluded in section 12 of the Basic Provisions, we will not insure against damage of loss of production that occurs after removal from the windrow.
9.
In addition to the requirements of section 14 of the Basic Provisions, the following will apply:
(a) You must notify us within 3 days of the date harvest should have started if the insured crop will not be harvested;
(b) You must notify us at least 15 days before any production from any unit will be sold by direct marketing unless you have records verifying that the forage was direct marketed. Failure to give timely notice that production will be sold by direct marketing will result in an appraised amount of production to count of not less than the production guarantee per acre if such failure results in our inability to make the required appraisal;
(c) If you intend to claim an indemnity on any unit, you must notify us at least 15 days prior to the beginning of harvest if you previously gave notice in accordance with section 14 of the Basic Provisions so that we may inspect the damaged production. You must not destroy the damaged crop until after we have given you written consent to do so. If you fail to meet the requirements of this section, and such failure results in our inability to inspect the damaged production, all such production will be considered undamaged and will be included as production to count; and
(d) You must notify us at least 5 days before grazing of insured forage begins so we can conduct an appraisal to determine production to count. Failure to give timely notice that the acreage will be grazed will result in an appraised amount of production to count of not less than the production guarantee per acre.
10.
(a) We will determine your loss on a unit basis. In the event you are unable to provide separate acceptable production records:
(1) For any optional units, we will combine all optional units for which such production records were not provided; or
(2) For any basic units, we will allocate any commingled production to such units in proportion to our liability on the harvested acreage for the units.
(b) * * *
(7) * * *
Assume you have a 100 percent share in 100 acres of type A forage in the unit, with a guarantee of 3.0 tons per acre and a price election of $65.00 per ton. Due to adverse weather you were only able to harvest 50.0 tons. Your indemnity would be calculated as follows:
1. 100 acres type A × 3 tons = 300 ton guarantee;
2 & 3. 300 tons × $65 price election = $19,500 total value guarantee;
4 & 5. 50 tons production to count × $65 price election = $3,250 total value of production to count;
6. $19,500 value guarantee—$3,250 = $16,250 loss; and
7. $16,250 × 100 percent share = $16,250 indemnity payment.
Assume you also have a 100 percent share in 100 acres of type B forage in the same unit, with a guarantee of 1.0 ton per acre and a price election of $50.00 per ton. Due to adverse weather you were only able to harvest 5.0 tons. Your total indemnity for forage production for both types A and B in the same unit would be calculated as follows:
1. 100 acres × 3 tons = 300 ton guarantee for type A; and 100 acres × 1 ton = 100 ton guarantee for type B;
2. 300 ton guarantee × $65 price election = $19,500 total value of the guarantee for type A; and 100 ton guarantee × $50 price election = $5,000 total value of the guarantee for type B;
3. $19,500 + $5,000 = $24,500 total value of the guarantee;
4. 50 tons × $65 price election = $3,250 total value of production to count for type A; and 5 tons × $50 price election = $250 total value of production to count for type B;
5. $3,250 + $250 = $ 3,500 total value of production to count for types A and B;
6. $24,500—$3,500 = $21,000 loss; and
7. $21,000 loss × 100 percent share = $21,000 indemnity payment.
3. Section 457.127 is removed and reserved.
4. Amend 457.151 as follows:
a. Revise the introductory text;
b. In the crop insurance provisions revise the definition in section 1 of “harvest';
c. In the crop insurance provisions redesignate sections 6 through 13 as 7 through 14;
d. In the crop insurance provisions revise section 5 and redesignated sections 7(b), 8, 11 introductory text, 11(a), 11(b), 13(a)(3);
e. In the crop insurance provisions add a new section 6 and an example to redesignated section 13(a)(3); all to read as follows:
The Forage Seeding Crop Insurance Provisions for the 2001 and succeeding crop years are as follows:
1.
5.
In accordance with section 2 of the Basic Provisions, the cancellation and termination dates are:
6.
In lieu of the provisions of section 6(a) of the Basic Provisions, a report of all insured acreage of forage seeding must be submitted on or before each forage seeding acreage report date specified in the Special Provisions.
7.
(b) That is planted during the current crop year, or replanted during the calendar year following planting, to establish a normal stand of forage;
8.
In addition to the provisions of section 9 of the Basic Provisions:
(a) In California counties Lassen, Modoc, Mono, Shasta, Siskiyou and all other states, any acreage of the insured crop damaged before the final planting date, to the extent that such acreage has less than 75 percent of a normal stand, must be replanted unless we agree that it is not practical to replant; and
(b) In California, unless otherwise specified in the Special Provisions, any acreage of the insured crop damaged anytime during the crop year to the extent that such acreage has less than 75 percent of a normal stand must be replanted unless it cannot be replanted and reach a normal stand within the insurance period.
11.
In lieu of the provisions contained in section 13 of the Basic Provisions:
(a) A replanting payment is allowed if:
(1) In California, unless specified otherwise in the Special Provisions, acreage planted to the insured crop is damaged by an insurable cause of loss occurring within the insurance period to the extent that less than 75 percent of a normal stand remains and the crop can reach maturity before the end of the insurance period;
(2) In Lassen, Modoc, Mono, Shasta, Siskiyou Counties, California, and all other states:
(i) A replanting payment is allowed only whenever the Special Provisions designate both fall and spring final planting dates;
(ii) The insured fall planted acreage is damaged by an insurable cause of loss to the extent that less than 75 percent of a normal stand remains;
(iii) It is practical to replant;
(iv) We give written consent to replant; and
(v) Such acreage is replanted the following spring by the spring planting date.
(b) The amount of the replanting payment will be equal to 50 percent of the amount of indemnity determined in accordance with section 13 unless otherwise specified in the Special Provisions.
13.
(a) * * *
(3) Multiplying the total acres with an established stand for the insured acreage of each type and practice in the unit by the amount of insurance for the applicable type and practice;
Assume you have 100 percent share in 30 acres of type A forage in the unit, with an amount of insurance of $100.00 per acre. At the time of loss, the following findings are established: 10 acres had a remaining stand of 75 percent or greater. You also have 20 acres of type B forage in the unit, with an amount of insurance of $90.00 per acre. 10 acres had with a remaining stand of 75 percent or greater. Your indemnity would be calculated as follows:
1. 30 acres × $100.00 = $3,000 amount of insurance for type A;
20 acres × $90.00 = $1,800 amount of insurance for type B;
2. $3,000 + $1,800 = $4,800 total amount of insurance;
3. 10 acres with 75% stand or greater × $100 = $1,000 production to count for type A;
10 acres with 75% stand or greater × $90 = $900 production to count for type B;
4. $1,000+$900 = $1,900 total production to count;
5. $4,800−$1,900 = $2,900 loss;
6. $2,900×100 percent share = $2,900 indemnity payment.
Signed in Washington, DC, on January 18, 2000.
Board of Governors of the Federal Reserve System.
Interim rule with request for public comments.
The Board of Governors of the Federal Reserve System is adopting on an interim basis effective March 11, 2000, and soliciting comment on a rule that establishes procedures for bank holding companies as well as foreign banks that operate a branch, agency, or commercial lending company in the United States to elect to become financial holding companies. The interim rule includes amended definitions of terms in existing Subpart A that are applicable to the new Subpart. The Board is promulgating this rule to implement provisions of the recently enacted Gramm-Leach-Bliley Act that enable bank holding companies and foreign banks that meet applicable statutory requirements to become financial holding companies and thereby engage in a broader range of financial and other activities than are permissible for bank holding companies.
The new Subpart sets forth the procedures by which bank holding companies and foreign banks may submit to the Board an election to become a financial holding company and describes the period in which the Board will act on financial holding company elections. This Subpart also enumerates the criteria that bank holding companies and foreign banks must meet in order to qualify as a financial holding company. In addition, the newly added sections set forth the limitations that the Board will apply to financial holding companies that fail to maintain compliance with applicable capital, management, and CRA criteria.
The Board has promulgated this Subpart on an interim basis, effective on March 11, 2000, in order to allow bank holding companies and foreign banks that meet applicable qualifications to become financial holding companies as soon as possible following the effective date of the relevant provisions of the Gramm-Leach-Bliley Act. The Board will allow bank holding companies and foreign banks to file elections in anticipation of the effective date of the Act and the interim rule and will review elections as promptly as possible after the effective date. The Board anticipates that as soon as March 13, 2000, the Board will begin notifying qualifying companies that elections filed in accordance with the interim rule are effective. This will enable companies that the Board determines qualify as financial holding companies to take advantage of the new powers granted by the Gramm-Leach-Bliley Act as early as March 13, 2000, which is the first business day following the effective date of the financial holding company provisions of the Act.
The Board solicits comments on all aspects of the interim rule and will amend the rule as appropriate in response to comments received.
This interim rule is effective on March 11, 2000. Comments must be received by March 27, 2000.
Comments should refer to docket number R-1057 and should be sent to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551. Comments addressed to Ms. Johnson also may be delivered to the Board's mail room between the hours of 8:45 a.m. and 5:15 p.m. and, outside of those hours, to the Board's security control room. Both the mail room and the security control room are accessible from the Eccles Building courtyard entrance, located on 20th Street between Constitution Avenue and C Street, N.W. Members of the public may inspect comments in Room MP-500 of the Martin Building between 9:00 a.m. and 5:00 on weekdays.
Thomas M. Corsi, Managing Senior Counsel (202/452-3275), Ann E. Misback, Managing Senior Counsel (202/452-3788), Christopher W. Clubb, Counsel (202/452-3904), or Adrianne G. Threatt, Attorney (202/452-3554), Legal Division; Betsy Cross, Assistant Director (202/452-2574) or Melissa W. Clark, Manager, Global/International Applications (202/452-2277), Division of Banking Supervision and Regulation; Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551.
Title I of the Gramm-Leach-Bliley Act (Pub. L. No. 106-102, 113 Stat. 1338 (1999)) repeals sections 20 and 32 of the Glass-Steagall Act (12 U.S.C. §§ 377 and 78, respectively) and is intended to facilitate affiliations among banks, securities firms, insurance firms, and other financial companies. To further this goal, the Gramm-Leach-Bliley Act amends section 4 of the Bank Holding Company Act (12 U.S.C. § 1843) (“BHC Act”) to authorize bank holding companies and foreign banks that qualify as “financial holding companies” to engage in securities, insurance and other activities that are financial in nature or incidental to a financial activity. The activities of bank holding companies and foreign banks that are not financial holding companies would continue to be limited to activities authorized currently under the BHC Act, such as activities that the Board previously has determined in regulations and orders issued under section 4(c)(8) of the BHC Act to be closely related to banking and permissible for bank holding companies.
The Gramm-Leach-Bliley Act defines a financial holding company as a bank holding company that meets certain eligibility requirements. In order for a bank holding company to become a financial holding company and be eligible to engage in the new activities authorized under the Gramm-Leach-Bliley Act, the Act requires that all depository institutions controlled by the bank holding company be well capitalized and well managed. With regard to a foreign bank that operates a branch or agency or owns or controls a commercial lending company in the United States, the Act requires the Board to apply comparable capital and management standards that give due regard to the principle of national treatment and equality of competitive opportunity.
To become a financial holding company, the Gramm-Leach-Bliley Act requires a bank holding company to submit to the Board a declaration that the company elects to be a financial holding company and a certification that all of the depository institutions controlled by the company are well capitalized and well managed. The Act also provides that a bank holding company's election to become a financial holding company will not be effective if the Board finds that, as of the date the company submits its election to the Board, not all of the insured depository institutions controlled by the company have achieved at least a “satisfactory” rating at the most recent examination of the institution under the Community Reinvestment Act (12 U.S.C. § 2903
The Gramm-Leach-Bliley Act grants the Board discretion to impose limitations on the conduct or activities of any financial holding company that controls a depository institution that does not remain both well capitalized and well managed following the company's election to be a financial holding company. The Act also requires the Board to prohibit a financial holding company from commencing additional activities under new subsection 4(k) or 4(n) of the BHC Act, or from acquiring control of companies engaged in such activities, if any insured depository institution controlled by the company fails to maintain at least a satisfactory CRA rating.
In order to implement the provisions of the Gramm-Leach-Bliley Act governing the creation and conduct of financial holding companies, the Board is amending its Regulation Y by adding a Subpart I that (a) defines the term “financial holding company” and establishes procedures by which a bank holding company may become a financial holding company; (b) enumerates the criteria a bank holding company must meet in order for the Board to determine that an election is effective and describes the period within which the Board will act on an election; (c) sets forth the consequences if any depository institution controlled by a financial holding company fails to remain well capitalized and well managed, or if any insured depository institution controlled by the financial holding company fails to maintain at least a satisfactory CRA rating; and (d) specifically addresses procedures and requirements applicable to foreign banking organizations that seek to be treated as financial holding companies.
The Board welcomes comment on all parts of the interim rule.
The Gramm-Leach-Bliley Act defines a financial holding company as a bank holding company that meets certain specific requirements. In accordance with the Act, section 225.81 provides that, in order to qualify as a financial holding company, all depository institutions controlled by the company at the time of the election must be and
Subsection (a) provides that a bank holding company wishing to become a financial holding company must file a written declaration with the Board stating that the bank holding company elects to be a financial holding company. The Board envisions that a company's election to become a financial holding company could be a short and simple document signed by an official or representative with authority to bind the company. Subsection (b) sets forth the information required as part of a declaration, which is limited to information about the location and capital position of each of the depository institutions controlled by the company, and a certification that each such institution is both well capitalized and well managed as of the date the election is filed.
The Gramm-Leach-Bliley Act provides that an election to be a financial holding company is ineffective if the Board finds, within a specified period, that any insured depository institution controlled by the bank holding company (other than a recently acquired institution) does not have at least a satisfactory CRA performance rating. Subsection (c) implements this provision. The interim rule also provides that an election is ineffective if the Board finds during this period that any depository institution controlled by the bank holding company is not well managed and well capitalized, as these terms are objectively defined, as of the date of the election.
The Board recognizes that there may be instances in which a bank holding company meets the statutory requirements to be a financial holding company but on a consolidated basis is not well capitalized and well managed or does not have adequate financial or managerial resources to conduct financial activities in a safe and sound manner. Under these circumstances, the Board may have significant supervisory concerns about the ability of the company to conduct additional activities or make additional acquisitions. Subsection (d) reserves the general supervisory authority of the Board to restrict or limit the commencement or conduct of activities or acquisitions of a financial holding company if the Board finds that the financial holding company lacks the financial or managerial strength to engage in new activities, make new acquisitions, or retain ownership of companies engaged in financial activities.
Subsection (e) describes circumstances under which the Gramm-Leach-Bliley Act allows the Board to exclude an insured depository institution when reviewing whether a bank holding company meets the applicable CRA requirement for financial holding companies. As provided in the Act, the Board will not consider institutions acquired by the company within the 12-month period preceding an election to be a financial holding company for purposes of the CRA criteria provided that (i) the bank holding company has submitted a plan to the appropriate Federal banking agency for the institution to take actions necessary to achieve at least a “satisfactory” rating at the next CRA examination, and (ii) the appropriate Federal banking agency has accepted that plan.
Subsection (f) provides that, as a general matter, an election by a bank holding company to become a financial holding company will be effective on the 31st day after the election was received by the appropriate Federal Reserve Bank, unless the Board has notified the bank holding company prior to that date that its election is ineffective because an institution controlled by the company fails to meet an applicable requirement. The interim rule provides that the Board or the appropriate Federal Reserve Bank may affirmatively notify a bank holding company that an election is effective at any time during that 30-day period.
As noted above, the Board proposes to adopt the proposed rule on an interim basis, effective March 11, 2000 (which is the effective date of the financial holding company provisions of the Gramm-Leach-Bliley Act). This will allow bank holding companies and foreign banks that meet the qualifications to be financial holding companies to take advantage of the new authority granted by the Gramm-Leach-Bliley Act as soon as possible following the effective date of the relevant provisions of the Act.
The Board also proposes to allow bank holding companies and foreign banks to file elections to become financial holding companies immediately in anticipation of the effective date of the Act and interim rule. These elections will be considered to be made as of March 11, 2000, and must certify compliance with all applicable capital and management criteria as of March 11, 2000. While the 30-day period for ineligibility decisions does not begin on any election until the effective date of the Act, the Board will endeavor on March 13, 2000, which is the first business day following the effective date of the financial holding company provisions of the Act, to act on elections filed prior to February 15, 2000. The Board will act on all other elections as soon as practicable. Prior to the date that its election to become a financial holding company becomes effective, a bank holding company may not engage in the newly authorized activities described in new sections 4(k), 4(n), and 4(o) of the BHC Act.
Companies that are not now bank holding companies and seek to acquire a depository institution must still apply to the Board to become a bank holding company under section 3 of the BHC Act. A company may file a bank holding company application and a declaration to be a financial holding company at the same time. In that case, it is expected that the System would act to make the financial holding company election effective at the time the System acts on the underlying bank holding company application. Consequently, the company could become a financial holding company without filing a separate election after the company becomes a bank holding company.
This section implements the provisions of the Gramm-Leach-Bliley Act that apply when a depository institution controlled by an existing financial holding company ceases to be both well capitalized and well managed. Subsection (a) states that the Board will notify a company in writing if the Board finds that not all depository institutions controlled by the company are well capitalized and well managed. In recognition of the fact that a company may know that one of its subsidiary depository institutions has ceased to be well capitalized or well managed before the Board will have access to such data, subsection (b) requires companies to notify the Board of the institutions involved and the areas of noncompliance promptly upon becoming aware of that the institution no longer meets applicable capital or management criteria.
Subsection (c) provides that, within 45 days (plus any additional time that the Board may grant) after receiving a
Until a company has corrected the conditions described in a notice provided by the Board under subsection (a), the Gramm-Leach-Bliley Act allows the Board to impose any limitations on the conduct or activities of the company or any of its affiliates as the Board deems to be appropriate and consistent with the purposes of the BHC Act. In particular, subsection (d) states that, until the Board determines that all deficiencies have been corrected, a company may not engage in any additional activity or acquire control or shares of any company under section 4(k) of the BHC Act without prior approval from the Board.
Subsection (e) provides that, if the conditions giving rise to a notice of noncompliance are not corrected within 180 days (or such longer period permitted by the Board), the Board may order the company to divest its subsidiary depository institutions. A company may comply with an order to divest by instead ceasing to engage in activities that are permissible only for financial holding companies. The Board's ability to require divestitures and impose limitations on financial holding companies that fail to meet the capital and management requirements is in addition to, not in lieu of, the Board's ability to take supervisory actions and enforce compliance with applicable provisions of law under section 8 of the BHC Act and section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818).
The Gramm-Leach-Bliley Act requires the Board to prohibit a financial holding company from commencing any additional activity under sections 4(k) or 4(n) of the BHC Act, or from acquiring control of a company engaged in activities under those sections, if any insured depository institution controlled by the company receives a rating of less than “satisfactory” under the CRA. Subsection (a) provides that a financial holding company is deemed to have received notice that these prohibitions are in effect at the time the appropriate Federal banking agency for any insured depository institution controlled by the company or the Board notifies the institution or company that the institution has received a rating of “needs to improve” or “substantial noncompliance” under the CRA. The prohibitions will continue to apply until such time as each insured depository institution controlled by the company has received at least a “satisfactory” rating at its most recent examinations under the CRA.
This prohibition does not prevent a financial holding company from making additional investments as part of merchant banking, investment banking, or insurance company investment activities pursuant to section 4(k)(4)(H) or 4(k)(4)(I) of the BHC Act, provided that the company was lawfully engaged in the merchant banking, investment banking, or insurance company investment activity prior to the time that one of its insured depository institutions received less than a “satisfactory” rating under the CRA and the Board has not prohibited or limited these activities.
Under the Gramm-Leach-Bliley Act, financial holding companies that do not comply with the CRA requirement are not prohibited from making acquisitions or engaging in activities that meet the more narrow “closely related to banking” standard pursuant to 4(c)(8). Financial holding companies that seek to engage in activities or make acquisitions pursuant to section 4(c)(8) of the BHC Act must, however, comply with the requirements of that section as well as the notice and approval requirements of section 4(j).
A foreign bank that is a bank holding company because it owns a subsidiary bank in the United States must comply with the same requirements as any other bank holding company that elects to be a financial holding company. Most foreign banks, however, do not own subsidiary banks in the United States; instead, they operate through branches that are part of the foreign bank itself.
Under the Gramm-Leach-Bliley Act, a company qualifies to be a financial holding company only if its insured bank and thrift subsidiaries are well capitalized and well managed. These standards are not by their terms applicable to the branches of a foreign bank. Consequently, the Act provides that “the Board shall apply comparable capital and management standards to a foreign bank that operates a branch * * * in the United States giving due regard to the principle of national treatment and equality of competitive opportunity.” The provision is necessary because it would be competitively harmful if a foreign bank that conducts a banking business in the United States in direct competition with U.S. banks could be treated as a financial holding company without meeting standards comparable to those applicable to U.S. banks. Without such a provision, a foreign bank could make securities and insurance acquisitions without meeting standards comparable to those applicable to U.S. banks, simply because the foreign bank conducts its U.S. banking business through a branch rather than through a subsidiary bank.
As described below, the Board is proposing to adopt standards and procedures that establish a flexible approach to carry out the statutory requirement for comparability of capital and management standards while, at the same time, assuring national treatment and equality of competitive opportunity for foreign banks operating in the United States.
Section 225.90 of the new Subpart sets forth the capital and management standards that foreign banks that maintain a branch, agency, or commercial lending company in the United States must meet in order to be considered to be “well capitalized” and “well managed” for purposes of being treated as financial holding companies. Under section 225.90, in order for a foreign bank or company to be treated as a financial holding company, the foreign bank must be well capitalized and well managed in accordance with standards comparable to those required of U.S. banks as determined by the Board, taking into account certain financial factors that may affect the analysis of capital and management.
Section 225.90 provides two methods under which a foreign bank may be considered well capitalized. The first method is applicable to foreign banks whose home country supervisors have adopted risk-based capital standards consistent with the Capital Accord of the Basel Committee on Banking Supervision (Basel Accord). Under this method, the foreign bank's total and Tier 1 risk-based capital ratios, as calculated under its home country standard, must be at least 6 percent for Tier 1 capital to total risk-based assets and 10 percent for total capital to risk-based assets.
In addition, section 225.90 requires that the foreign bank's ratio of Tier 1 capital to total assets must be at least 3 percent. The Board solicits comment on this requirement. The Board believes that the imposition of a leverage ratio requirement on a foreign bank maintaining a branch, agency, or commercial lending company in the United States and that elects to be treated as a financial holding company is appropriate in order to ensure that the capital standards applicable to foreign banking organizations are comparable to those for domestic depository institutions. In addition, the Board believes that imposing a 3 percent leverage ratio requirement, rather than the 5 percent required for domestic depository institutions, is appropriate in recognition of the fact that foreign banks hold both banking and nonbanking operations under the foreign bank. Domestic bank holding companies, which also hold banking and nonbanking operations, are subject under Regulation Y to a minimum leverage ratio of 4 percent, or 3 percent if they have implemented the market risk amendment to the risk-based capital guidelines or have a composite supervisory rating of “1.” Most internationally active foreign banks also follow the market risk guidelines.
The Board recognizes that many countries do not impose a leverage ratio or similar requirements. U.S. banks are, however, subject to a leverage ratio requirement and in order to assure comparability of capital standards, a leverage ratio requirement for foreign banks is being proposed.
The second method for a foreign banking organization to be considered well capitalized in section 225.90 applies to foreign banks whose home country supervisors have not adopted the Basel Accord standards and to any other foreign banking organizations that otherwise do not meet the standards set out under the first method. Any such institution may be considered “well capitalized” only by obtaining from the Board a prior determination that its capital is otherwise comparable to the capital that would be required of a U.S. bank.
In order to qualify as well managed under section 225.90, each U.S. branch, agency, and commercial lending company of a foreign banking organization must have received at least a satisfactory composite rating at the most recent assessment. In addition, the home country supervisor of the foreign bank must consider the overall operations of the foreign bank to be satisfactory.
In determining whether a foreign bank is well capitalized and well managed, the Board may take into account the foreign bank's composition of capital, accounting standards, long-term debt ratings, reliance on government support to meet capital standards, the extent to which the foreign bank is subject to comprehensive consolidated supervision, and other factors that may affect the analysis of capital and management. The Board will consult with the home country supervisor for the foreign bank as appropriate. The information gathered under these factors will assist the Board in determining whether the foreign bank operates under capital and managerial standards that are comparable to those applied to U.S. banks. The Board expects that most foreign banks that elect to be treated as financial holding companies will be subject to comprehensive consolidated supervision. An election by a foreign bank that is not subject to comprehensive consolidated supervision will receive a more detailed review.
The procedures applicable to a foreign bank, or company that owns or controls the foreign bank, electing to become a financial holding company are similar to the procedures discussed above for domestic bank holding companies. The foreign bank or company must file a written declaration with the appropriate Reserve Bank that it elects to be treated as a financial holding company. The declaration must be accompanied by the risk-based and leverage capital ratios of the foreign bank as of the close of the most recent quarter and as of the close of the most recent audited reporting period, a certification that the foreign bank is well capitalized as of the date the foreign bank or company files its election, and a certification that the foreign bank is well managed as of the date the foreign bank or company files its election.
An election filed by a foreign bank or company to become a financial holding company under section 225.91 will not become effective until the Board notifies the foreign bank or company that the foreign bank meets the standards set out above. The Board will notify the foreign bank or company of its finding within 30 days of the filing of the written declaration, unless the Board determines that it does not have sufficient information on which to base a determination. Before filing an election to be treated as a financial holding company, a foreign bank or company may file with the Board a request for review of its qualifications to be treated as a financial holding company. The Board will endeavor to make a determination on such requests within 30 days of receipt.
An election filed by a foreign bank or company under this section will be effective only if the Board finds that the foreign bank is well capitalized and well managed in accordance with capital and management standards comparable to those required of U.S. banks owned by financial holding companies, and, in the case of a foreign bank that operates a branch in the United States that is federally insured, the branch received a rating of at least “satisfactory” under the CRA at its most recent examination.
This section parallels section 225.83, with appropriate modifications. It sets forth the procedures to be followed in the event that a foreign bank that is treated as a financial holding company ceases to meet the applicable capital and management requirements. It provides for the execution of an agreement designed to bring the foreign bank back into compliance with the requirements of the regulation and permits the Board to impose certain limitations on the U.S. activities of such a foreign bank during any period of noncompliance. Finally, the section sets forth the consequences of a failure to correct the noncompliance within a period of 180 days. Such consequences could include termination of the foreign bank's U.S. branches and agencies and divestiture of its commercial lending company subsidiaries or ceasing to engage in the expanded activities permitted for financial holding companies.
This section provides that the provisions of section 225.84, with appropriate modifications, apply to a foreign bank that operates an insured branch, and its parent, and that is treated as a financial holding. For these purposes, the insured branch is treated as an “insured depository institution.”
The Board also is amending the definitions of “well capitalized” and “well managed” at sections 225.2(r)(2) and 225.2(s) to take account of the broader applicability of these definitions under the Gramm-Leach-Bliley Act. The definition of well capitalized has been amended to apply to all depository institutions, rather than insured depository institutions. The rule applies the same capital requirements to depository institutions that are not FDIC-insured for purposes of determining whether the institution is well capitalized as apply to insured depository institutions.
The definition of well managed has, in the case of depository institutions that have not received an examination rating, been amended in subparagraph (1)(ii) to allow the Board to determine that an institution is well managed after consulting with the appropriate Federal banking agency for the institution. In addition, the rule provides that a depository institution resulting from the merger of two or more institutions that are well managed would be considered to be well managed unless the Board determined otherwise after consulting with the appropriate Federal banking agency.
In accordance with section 3(a) of the Regulatory Flexibility Act (5 U.S.C. 603(a)), the Board must publish an initial regulatory flexibility analysis with this interim regulation. This rule implements provisions of Title I of the Gramm-Leach-Bliley Act that allow entities that qualify as financial holding companies to engage in a broad range of securities, insurance, and other financial activities by providing the Board with a simple, post-commencement notice. The interim rule will enable bank holding companies and foreign banks that qualify as financial holding companies to engage in an expanded range of activities using a streamlined notification procedure.
The financial holding company election procedure described in this rule is voluntary, and the criteria set forth in the rule for an effective election filing are those required by the Gramm-Leach-Bliley Act. The Board has established a simple, one-time procedure involving minimum paperwork to fulfill the statutory election requirement. In addition, the new powers described in the Act and implemented by this regulation should enhance the overall efficiency of bank holding companies and the other financial companies that seek to affiliate with them. The rule applies to all companies that attempt to qualify as financial holding companies, regardless of their size, and allows small organizations to take advantage of the broad new powers conferred by the Gramm-Leach-Bliley Act with minimal additional burden. Finally, the Board specifically seeks comment on the likely burden this interim rule will impose on entities that elect to become financial holding companies.
The Board will make this interim rule effective on March 11, 2000 without first reviewing public comments. Pursuant to 5 U.S.C. § 553, the Board finds that it is impracticable to review public comments prior to the effective date of the interim rule, and that there is good cause to make the interim rule effective on March 11, 2000, due to the fact that the rule sets forth procedures to implement statutory changes that will become effective on March 11, 2000. The Board is seeking public comment on the interim rule and will amend the rule as appropriate after reviewing the comments.
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 proposed rule under the authority delegated to the Board by the Office of Management and Budget in accordance with the emergency review procedures of the Paperwork Reduction Act of 1995.
The collection of information requirements in this proposed rulemaking are found in 12 CFR 225.82 (a) and (b). This information is required to evidence compliance with the requirements of Title I of the Gramm-Leach-Bliley Act (Pub. L. No. 106-103, 113 Stat. 1338 (1999)) which amends section 4 of the Bank Holding Company Act (12 U.S.C. 1843). The respondents are current and future bank holding companies and foreign banking organizations.
The notice cited in 12 CFR 225.82(b) provides that a bank holding company may elect to become a financial holding company by filing a simple written declaration with the Federal Reserve. The declaration must include information identifying the company's subsidiary depository institutions and their capital ratios, and a certification that each depository institution is well capitalized and well managed (for specific details, see 12 CFR 225.82(b)). There will be no reporting form for this information collection. The agency form number for this declaration will be the FR 4010. The Board estimates that approximately half of all bank holding companies will file this declaration during the first year and that it will take on average approximately 15 minutes to complete this information. This would result in estimated annual burden of 625 hours. Based on a rate of $20 per hour, the annual cost to the public for this information collection is estimated to be $12,500.
The OMB control number for this interim rule is 7100-0292. The Federal Reserve may not conduct or sponsor, and an organization is not required to respond to this information collection unless the Board has displayed a valid OMB control number.
A bank holding company may request confidentiality for the information contained in these information collections pursuant to section (b)(4) and (b)(6) of the Freedom of Information Act (5 U.S.C. 552(b)(4) and (b)(6)).
Comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility; (b) the accuracy of the Federal Reserve's estimate of the burden of the proposed information collection, including the cost of compliance; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collection of information should be sent to the Office of Management and Budget, Paperwork Reduction Project, Washington, DC 20503, with copies of such comments to be sent to Mary M. West, Federal Reserve Board Clearance Officer, Division of Research and Statistics, Mail Stop 97, Board of Governors of the Federal Reserve System, Washington, DC 20551.
Administrative practice and procedure, Banks, Banking, Federal Reserve System, Holding companies, Reporting and recordkeeping requirements, Securities.
12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831(i), 1831p-1, 1843(c)(8), 1844(b), 1972(l), 3106, 3108, 3310, 3331-3351, 3907, and 3909.
(r) * * *
(2)
(ii)
(s)
(i) At its most recent inspection or examination or subsequent review by the appropriate Federal banking agency for the company or institution, the company or institution received:
(A) At least a satisfactory composite rating; and
(B) At least a satisfactory rating for management and for compliance, if such a rating is given; or
(ii) In the case of a company or depository institution that has not received an examination rating, the Board has determined, after a review of managerial and other resources of the company or depository institution and after consulting the appropriate Federal banking agency for the institution, that the company or institution is well managed.
(2)
(3)
(a)
(b)
(1) All depository institutions controlled by the bank holding company must be and remain well capitalized;
(2) All depository institutions controlled by the bank holding company must be and remain well managed; and
(3) The bank holding company must have made an effective election to become a financial holding company.
(c)
(2)
(a)
(b)
(1) State that the bank holding company elects to be a financial holding company;
(2) Provide the name and head office address of the company and of each depository institution controlled by the company;
(3) Certify that all depository institutions controlled by the company are well capitalized as of the date the company files its election;
(4) Provide the capital ratios for all relevant capital measures (as defined in section 38 of the Federal Deposit Insurance Act) as of the close of the previous quarter for each depository institution controlled by the company on the date the company files its election; and
(5) Certify that all depository institutions controlled by the company are well managed as of the date the company files its election.
(c)
(1) Any insured depository institution controlled by the bank holding company (except an institution excluded under paragraph (e) of this section) has not achieved at least a rating of “satisfactory record of meeting community credit needs” under the Community Reinvestment Act at the institution's most recent examination; or
(2) Any depository institution controlled by the bank holding company is not both well capitalized and well managed.
(d)
(e)
(1) The bank holding company acquired the insured depository institution during the 12-month period preceding the filing of an election under paragraph (a) of this section;
(2) The bank holding company has submitted an affirmative plan to the appropriate Federal banking agency for the institution to take actions necessary for the institution to achieve at least a rating of “satisfactory record of meeting community credit needs” under the Community Reinvestment Act at the next examination of the institution; and
(3) The appropriate Federal banking agency for the institution has accepted that plan.
(f)
(2)
(a)
(b)
(c)
(2)
(3)
(i) Explain the specific actions that the company will take to correct all areas of noncompliance;
(ii) Provide a schedule within which each action will be taken;
(iii) Provide any other information that the Board may require; and
(iv) Be acceptable to the Board.
(d)
(1) The Board may impose any limitations or conditions on the conduct or activities of the company or any of its affiliates as the Board finds to be appropriate and consistent with the purposes of the Bank Holding Company Act; and
(2) The company and its affiliates may not engage in any additional activity or acquire control or shares of any company under section 4(k) of the Bank Holding Company Act without prior approval from the Board.
(e)
(2)
(f)
(a)
(i) Commence any additional activity under subsection 4(k) or 4(n) of the Bank Holding Company Act; or
(ii) Directly or indirectly acquire control of a company engaged in any activity under subsections 4(k) or 4(n) of the Bank Holding Company Act.
(2)
(b)
(i) The financial holding company lawfully was a financial holding company and commenced the investment activity under section 4(k)(4)(H) or the insurance company investment activities under section 4(k)(4)(I) prior to the time that an insured depository institution controlled by the financial holding company received a rating below “satisfactory record of meeting community credit needs” under the Community Reinvestment Act; and (ii) The Board has not, in the exercise of its supervisory authority, advised the financial holding company that these activities must be restricted.
(2)
(c)
(a)
(1) The foreign bank is and remains well capitalized and well managed; and (2) The foreign bank, or the company that owns the foreign bank, has made an effective election to be treated as a financial holding company under this subpart.
(b)
(1)(i) Its home country supervisor, as defined in § 211.21 of the Board's Regulation K (12 CFR 211.21), has adopted risk-based capital standards consistent with the Capital Accord of the Basel Committee on Banking Supervision (Basel Accord);
(ii) The foreign bank maintains a Tier 1 capital to total risk-based assets ratio of 6 percent and a total capital to total risk-based assets ratio of 10 percent, as calculated under its home country standard;
(iii) The foreign bank maintains a Tier 1 capital to total assets leverage ratio of at least 3 percent; and
(iv) The Board determines that the foreign bank's capital is comparable to the capital required for a U.S. bank owned by a financial holding company; or
(2) The foreign bank has obtained a determination from the Board under § 225.91(c) that the foreign bank's capital is otherwise comparable to the capital that would be required of a U.S. bank owned by a financial holding company.
(c)
(1) Each of the U.S. branches, agencies, and commercial lending subsidiaries of the foreign bank has received at least a satisfactory composite rating at its most recent assessment;
(2) The home country supervisor of the foreign bank considers the overall operations of the foreign bank to be satisfactory or better; and
(3) The Board determines that the management of the foreign bank meets standards comparable to those required of a U.S. bank owned by a financial holding company.
(a)
(b)
(1) State that the foreign bank or the company elects to be treated as a financial holding company;
(2) Provide the risk-based and leverage capital ratios of the foreign bank as of the close of the most recent quarter and as of the close of the most recent audited reporting period;
(3) Certify that the foreign bank meets the standards of well capitalized set out in § 225.90(b)(1)(i),(ii) and (iii) or § 225.90(b)(2) as of the date the foreign bank or company files its election; and
(4) Certify that the foreign bank is well managed as defined in § 225.90(c)(1) and (2) as of the date the foreign bank or company files its election.
(c)
(a)
(1) The foreign bank is well capitalized and well managed; and
(2) In the case of a foreign bank that operates a branch in the United States that is insured by the Federal Deposit Insurance Corporation, the branch has received at its most recent examination a rating of “satisfactory record of meeting community credit needs” or better under the Community Reinvestment Act.
(b)
(c)
(a)
(b)
(c)
(2)
(3)
(i) Explain the specific actions that the foreign bank or company will take to correct all areas of noncompliance;
(ii) Provide a schedule within which each action will be taken;
(iii) Provide any other information that the Board may require; and
(iv) Be acceptable to the Board.
(d)
(1) The Board may impose any limitations or conditions on the conduct or the U.S. activities of the foreign bank or company or any of its affiliates as the Board finds to be appropriate and consistent with the purposes of the Bank Holding Company Act; and
(2) The company and its affiliates may not engage in any new activity in the United States or acquire control or shares of any company under section 4(k) of the Bank Holding Company Act without prior approval from the Board.
(e)
(2)
(f)
(a)
(b)
By order of the Board of Governors of the Federal Reserve System, January 18, 2000.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to certain McDonnell Douglas Model DC-8 series airplanes, that requires detailed visual and eddy current inspections of the lower wing skin at the 3 outboard fasteners of the stringer 64 end fitting to detect cracks; and corrective actions, if necessary. This amendment is prompted by reports of fatigue cracks found in the lower wing skin initiating from the outboard fasteners of the stringer 64 end fitting. The actions specified by this AD are intended to prevent such fatigue cracking, which could reduce structural integrity and loss of fail-safe capability of the airplane.
Effective February 29, 2000.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of February 29, 2000.
The service information referenced in this AD may be obtained from Boeing Commercial Aircraft Group, Long Beach Division, 3855 Lakewood Boulevard, Long Beach, California 90846, Attention: Technical Publications Business Administration, Dept. C1-L51 (2-60). This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the FAA, Transport Airplane Directorate, Los Angeles Aircraft Certification Office,
Greg DiLibero, Aerospace Engineer, Airframe Branch, ANM-120L, FAA, Transport Airplane Directorate, Los Angeles Aircraft Certification Office, 3960 Paramount Boulevard, Lakewood, California 90712-4137; telephone (562) 627-5231; fax (562) 627-5210.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain McDonnell Douglas Model DC-8 series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the single comment received.
The commenter supports the proposed rule.
After careful review of the available data, including the comment noted above, the FAA has determined that air safety and the public interest require the adoption of the rule as proposed.
There are approximately 294 airplanes of the affected design in the worldwide fleet. The FAA estimates that 251 airplanes of U.S. registry will be affected by this AD, that it will take approximately 4 work hours per airplane to accomplish the required inspection, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the inspection required by this AD on U.S. operators is estimated to be $60,240, or $240 per airplane.
The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted.
The regulations adopted herein will not have a substantial direct effect 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, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (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) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each airplane 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 airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (b) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent fatigue cracking of the lower wing skin, which could reduce structural integrity and loss of fail-safe capability of the airplane, accomplish the following:
This AD will affect Principal Structural Elements (PSE) 57.08.037, 57.08.038, 57.08.021, and 57.08.022 of the DC-8 Supplemental Inspection Document (SID).
(a) Within 24 months after the effective date of this AD, perform detailed visual and eddy current inspections to detect cracks in the lower wing skin fastener holes in the area surrounding 3 outboard fasteners of the stringer 64 end fitting, in accordance with McDonnell Douglas Service Bulletin DC8-57-100, Revision 01, dated August 26, 1998.
For the purposes of this AD, a detailed inspection is defined as: “An intensive visual examination of a specific structural area, system, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at intensity deemed appropriate by the inspector. Inspection aids such as mirror, magnifying lenses, etc., may be used. Surface cleaning and elaborate access procedures may be required.”
(1) If any crack is detected in the skin fastener holes and it is less than 3.1 inches long, prior to further flight, repair in accordance with the service bulletin. Within 14,100 landings after accomplishment of the repair, inspect the lower wing skin to detect cracks, in accordance with a method approved by the Manager, Los Angeles Aircraft Certification Office (ACO), FAA, Transport Airplane Directorate.
(2) If any crack is detected in the skin fastener holes and it is greater than or equal to 3.1 inches long, prior to further flight, repair in accordance with a method approved by the Manager, Los Angeles ACO.
(3) If no crack is found, within 24 months after the effective date of this AD, accomplish the preventative modification (including stress or split sleeve coining the three fastener holes in the skin, and installing new pins), in accordance with the service bulletin. Accomplishment of this action constitutes terminating action for the requirements of this AD.
This AD does not terminate the inspection requirements for PSE's 57.08.037, 57.08.038, 57.08.021, and 57.08.022 of the DC-8 SID in accordance with AD 93-01-15, amendment 39-6330.
(b) 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, Los Angeles ACO. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, Los Angeles ACO.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the Los Angeles ACO.
(c) 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 airplane to a location where the requirements of this AD can be accomplished.
(d) Except as provided by paragraphs (a)(1) and (a)(2) of this AD, the actions shall be done in accordance with McDonnell Douglas Service Bulletin DC8-57-100, Revision 01, dated August 26, 1998. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Boeing Commercial Aircraft Group, Long Beach Division, 3855 Lakewood Boulevard, Long Beach, California 90846, Attention: Technical Publications Business Administration, Dept. C1-L51 (2-60). Copies may be inspected at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the FAA, Transport Airplane Directorate, Los Angeles Aircraft Certification Office, 3960 Paramount Boulevard, Lakewood, California; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(e) This amendment becomes effective on February 29, 2000.
Issued in Renton, Washington, on January 13, 2000.
Federal Aviation Administration, DOT.
Final rule; request for comments.
This amendment adopts a new airworthiness directive (AD) applicable to Eurocopter Deutschland GMBH (ECD) Model EC 135 P1 and EC 135 T1 helicopters. This action requires inspecting main rotor expansion bolt safety wires, bolt heads, and bolt nuts; replacing any unairworthy expansion bolt with a hexagon bolt; and, as necessary, replacing any bolt nut before further flight. This AD also requires replacing each expansion bolt, regardless of condition, no later than January 31, 2000. This amendment is prompted by reports of main rotor blade expansion bolt nuts becoming loose. This condition, if not corrected, could result in severe vibration during flight and subsequent loss of control of the helicopter.
Effective February 4, 2000.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of February 4, 2000.
Comments for inclusion in the Rules Docket must be received on or before March 27, 2000.
Submit comments in triplicate to the Federal Aviation Administration (FAA), Office of the Regional Counsel, Southwest Region, Attention: Rules Docket No. 99-SW-74-AD, 2601 Meacham Blvd., Room 663, Fort Worth, Texas.
The service information referenced in this AD may be obtained from American Eurocopter Corporation, 2701 Forum Drive, Grand Prairie, Texas 75053-4005, telephone (972) 641-3460, fax (972) 641-3527. This information may be examined at the FAA, Office of the Regional Counsel, Southwest Region, Room 663, Fort Worth, Texas.
Richard A. Monschke, Aerospace Engineer, FAA, Rotorcraft Directorate, Rotorcraft Standards Staff, Fort Worth, Texas 76193-0110, telephone (817) 222-5116, fax (817) 222-5961.
Luftfahrt-Bundesamt (LBA), the airworthiness authority for the Federal Republic of Germany, notified the FAA that an unsafe condition may exist on Model EC 135 P1 and EC 135 T1 helicopters. The LBA advises that severe vibrations occurred during a helicopter flight due to an expansion bolt nut becoming loose.
ECD has issued Alert Service Bulletin EC135-62A-005, Revision 1, dated November 16, 1999 (ASB). The ASB specifies inspecting the safety wire, bolt head, and bolt nut for the extent of thread protrusion of the expansion bolt through the end of the nut; replacing the expansion bolt by a hexagon bolt as necessary; and replacing the nut as necessary. In addition, all hexagon bolts must replace all expansion bolts no later than January 31, 2000. The LBA classified this ASB as mandatory and issued AD 1999-264, dated July 2, 1999, to ensure the continued airworthiness of these helicopters in the Federal Republic of Germany.
These helicopter models are manufactured in the Federal Republic of Germany and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the LBA has kept the FAA informed of the situation described above. The FAA has examined the findings of the LBA, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.
Since an unsafe condition has been identified that is likely to exist or develop on other ECD Model EC 135 P1 and EC 135 T1 helicopters of the same type designs registered in the United States, this AD is being issued to prevent a main rotor blade expansion bolt from becoming loose, severe vibration during flight, and subsequent loss of control of the helicopter. This AD requires, before further flight and at intervals not to exceed 15 hours time-in-service (TIS), inspecting the main rotor blade expansion bolt safety wire, bolt head, and bolt nut for the extent of thread protrusion of the expansion bolt through the end of the nut; replacing any unairworthy expansion bolt with a hexagon bolt; and replacing the nut as necessary. The AD also requires replacing all expansion bolts, part number (P/N) L621M1010 223, with hexagon bolts, P/N L621M1010 222, before further flight after January 31, 2000. The actions are required to be accomplished in accordance with the ASB described previously. The short compliance time involved is required because the previously described critical unsafe condition can adversely affect the structural integrity of the helicopter. Therefore, inspecting the main rotor blade expansion bolt safety wire, bolt head, and bolt nut; replacing any unairworthy expansion bolt with a hexagon bolt; and replacing the nut as necessary is required before further flight and this AD must be issued immediately.
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.
The FAA estimates that 14 helicopters will be affected by this AD, that it will take approximately 10 work hours to
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
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 rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. 99-SW-74-AD.” The postcard will be date stamped and returned to the commenter.
The regulations adopted herein will not have a substantial direct effect 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, it is determined that this proposal does not have federalism implications under Executive Order 13132.
The FAA has determined that this regulation is an emergency regulation that must be issued immediately to correct an unsafe condition in aircraft, and that it 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
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each helicopter identified in the preceding applicability provision, regardless of whether it has been otherwise modified, altered, or repaired in the area subject to the requirements of this AD. For helicopters that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (d) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent a main rotor blade expansion bolt nut becoming loose, causing severe vibration during flight, and subsequent loss of control of the helicopter, accomplish the following:
(a) Before further flight and thereafter at intervals not to exceed 15 hours time-in-service, visually inspect the main rotor blade expansion bolt safety wire, bolt head, and bolt nut in accordance with the Accomplishment Instructions, paragraph 3.A., steps (1), (2), (3), (4), and (6) of Eurocopter Deutschland GMBH (ECD) Alert Service Bulletin EC 135-62A-005, Revision 1, dated November 16, 1999 (ASB). If the safety wire is improperly fitted, the bolt head is worn, the expansion bolt thread does not protrude through the end of the nut, the bolt head has metallic abrasions, the nut is loose, or the nut has metallic abrasions, before further flight, replace the expansion bolt, part number (P/N) L621M1010 223, with a hexagon bolt, P/N L621M1010 222, and, as necessary, replace the nut in accordance with paragraph 3.B. of the ASB.
(b) Replace all expansion bolts, P/N L621M1010 223, with hexagon bolts, P/N L621M1010 222, and, as necessary, replace the nuts before flight after January 31, 2000.
(c) Replacing the expansion bolts with hexagon bolts and replacing the nuts, as necessary, constitutes terminating action for the requirements of this AD.
(d) 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, Regulations Group, Rotorcraft Directorate, FAA. Operators shall submit their requests through an FAA Principal Maintenance Inspector, who may concur or comment and then send it to the Manager, Regulations Group.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the Regulations Group.
(e) Special flight permits will not be issued.
(f) The inspection and replacement of the main rotor blade bolts shall be done in accordance with the Accomplishment Instructions, paragraph 3.A., Eurocopter Deutschland GMBH Alert Service Bulletin EC 135-62A-005, Revision 1, dated November 16, 1999. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from American Eurocopter Corporation, 2701 Forum Drive, Grand Prairie, Texas 75053-4005, telephone (972) 641-3460, fax (972) 641-3527. Copies may be inspected at the FAA, Office of the Regional Counsel, Southwest Region, Room 663, Fort Worth, Texas; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(g) This amendment becomes effective on February 4, 2000.
The subject of this AD is addressed in Luftfahrt-Bundesamt (the Federal Republic of Germany) AD 1999-264, dated July 2, 1999.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to all Short Brothers Model SD3-60 SHERPA and SD3-SHERPA series airplanes, and certain Model SD3-30 series airplanes, that requires replacement of existing oxygen system “O” rings with improved wear-resistant “O” rings. This amendment is prompted by issuance of mandatory continuing airworthiness information by a foreign civil airworthiness authority. The actions specified by this AD are intended to prevent the loss of oxygen from the aircraft oxygen system, which could result in an insufficient supply of oxygen being provided to the airplane flight crew and passengers in the event of an emergency.
Effective February 29, 2000.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of February 29, 2000.
The service information referenced in this AD may be obtained from Short Brothers, Airworthiness & Engineering Quality, P.O. Box 241, Airport Road, Belfast BT3 9DZ, Northern Ireland. This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Norman B. Martenson, Manager, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (425) 227-2110; fax (425) 227-1149.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to all Short Brothers Model SD3-60 SHERPA, SD3-SHERPA, and SD3-30 series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comment received.
One commenter requests that the applicability of the proposed AD be revised to include only those Model SD3-30 series airplanes on which an oxygen system is installed. The commenter states that only one variant of these airplanes was delivered in this configuration, and provides a list of the applicable serial numbers. The commenter notes that these serial numbers are also listed in Shorts Service Bulletin SD330-35-1, dated February 25, 1999, which is referenced as the appropriate source of service information in the proposed AD.
The FAA concurs that the requirements of the AD are applicable only to those airplanes on which an oxygen system is installed. The FAA has limited the applicability for Model SD3-30 series airplanes to those listed in Shorts Service Bulletin SD330-35-1, dated February 25, 1999, and has revised the Summary section of the AD to refer to “certain,” rather than “all,” Model SD3-30 series airplanes.
After careful review of the available data, including the comment noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the change described previously. The FAA has determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.
The FAA estimates that 62 airplanes of U.S. registry will be affected by this AD, that it will take approximately 50 work hours per airplane to accomplish the required actions, and that the average labor rate is $60 per work hour. Required parts will be provided by the manufacturer at no cost to operators. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $186,000, or $3,000 per airplane.
The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted.
The regulations adopted herein will not have a substantial direct effect 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, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (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) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each airplane 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 airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (c) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent the loss of oxygen from the aircraft oxygen system, accomplish the following:
(a) Within 24 months after the effective date of this AD, replace oxygen system “O” rings, part number (P/N) MS28778, with improved wear-resistant “O” rings, P/N MS9068, in accordance with Shorts Service Bulletins SD360 Sherpa-35-2, dated February 25, 1999 (for Model SD3-60 Sherpa series airplanes); SD3 Sherpa-35-3, Revision 1, dated May 5, 1999 (for Model SD3 Sherpa series airplanes); and SD330-35-1, dated February 25, 1999 (for Model SD3-30 series airplanes); as applicable.
(b) As of the effective date of this AD, no person shall install an oxygen system “O” ring, P/N MS28778, on any airplane.
(c) 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, International Branch, ANM-116, FAA, Transport Airplane Directorate. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, International Branch, ANM-116.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the International Branch, ANM-116.
(d) 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 airplane to a location where the requirements of this AD can be accomplished.
(e) The actions shall be done in accordance with Shorts Service Bulletin SD3-60 Sherpa-35-2, dated February 25, 1999; Shorts Service Bulletin SD3 Sherpa-35-3, Revision 1, dated May 5, 1999; or Shorts Service Bulletin SD330-35-1, dated February 25, 1999; as applicable. Shorts Service Bulletin SD3 Sherpa-35-3, Revision 1, dated May 5, 1999, contains the following list of effective pages:
The subject of this AD is addressed in British airworthiness directives 007-02-99 (for Model SD3-60 Sherpa series airplanes), 006-02-99 (for Model SD3 Sherpa series airplanes), and 008-02-99 (for Model SD3-30 series airplanes).
(f) This amendment becomes effective on February 29, 2000.
Federal Aviation Administration, DOT.
Final rule; request for comments.
This amendment adopts a new airworthiness directive (AD) that is applicable to certain Airbus Model A300 and all Model A300-600 and A310 series airplanes. This action requires performing a pitch trim system test to detect any continuity defect in the autotrim function, and follow-on corrective actions, if necessary. This amendment is prompted by issuance of mandatory continuing airworthiness information by a foreign civil airworthiness authority. The actions specified in this AD are intended to prevent a sudden change in pitch due to an out-of-trim condition combined with an autopilot disconnect, which could result in reduced controllability of the airplane.
Effective February 9, 2000.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of February 9, 2000.
Comments for inclusion in the Rules Docket must be received on or before February 24, 2000.
Submit comments in triplicate to the Federal Aviation Administration (FAA), Transport Airplane Directorate, ANM-114, Attention: Rules Docket No. 2000-NM-09-AD, 1601 Lind Avenue, SW., Renton, Washington 98055-4056.
The service information referenced in this AD may be obtained from Airbus Industrie, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France. This information may be examined at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Norman B. Martenson, Manager, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (425) 227-2110; fax (425) 227-1149.
The Direction Ge
After landing, the maintenance team performed a test with the autopilot engaged in vertical speed mode. When the team selected a vertical speed, the flight director pitch bars and control columns moved, but the pitch trim wheels did not move. An open circuit was found in the connection between flight control computer 1 (FCC 1) and flight augmentation computer 1 (FAC 1). That connection is necessary to generate the autotrim function.
With the autopilot engaged in command (CMD), the FCC command (COM) and monitor (MON) lanes send signals to the FAC in order to ensure the autotrim function. When the FAC does not receive the FCC COM signal or the FCC MON signal, the autotrim function is inhibited, which results in an out-of-trim condition. If an autopilot disconnect occurs when the airplane is in an out-of-trim condition, this condition, if not corrected, could result in a sudden change in pitch and consequent reduced controllability of the airplane.
Airbus has issued All Operators Telexes (AOT) A300-22A0115 (for Model A300 series airplanes), A300-600-22A6042 (for Model A300-600 series airplanes), and A310-22A2053 (for Model A310 series airplanes), all dated December 23, 1999, which describe procedures for a pitch trim system test to detect any continuity defect, and follow-on corrective actions, if necessary. Corrective actions include repairing any discrepant wiring found in the pitch trim system. (The AOT's reference Aircraft Schematic Manual 22-27-00 as an additional source of service information for accomplishment of the repair.) The DGAC has classified these AOT's as mandatory and issued French airworthiness directive T2000-007-301(B), dated January 4, 2000, in order to assure the continued airworthiness of these airplanes in France.
These airplane models are manufactured in France and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the DGAC has kept the FAA informed of the situation described above. The FAA has examined the findings of the DGAC, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.
Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of the same type design registered in the United States, this AD is being issued to prevent a sudden change in pitch due to an out-of-trim condition combined with an autopilot disconnect, which could result in reduced controllability of the airplane. This AD requires performing a pitch trim system test to detect any continuity defect in the autotrim function, and follow-on corrective actions, if necessary. The actions are required to be accomplished in accordance with the AOT's described previously.
This is considered to be interim action. The manufacturer has advised that it currently is developing additional actions that will positively address the unsafe condition addressed by this AD. Once these actions are developed, approved, and available, the FAA may consider additional rulemaking.
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.
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 shall identify the Rules Docket number and be submitted in triplicate to the address specified under the caption
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 rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2000-NM-09-AD.” The postcard will be date stamped and returned to the commenter.
The regulations adopted herein will not have a substantial direct effect 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, it is determined that this final rule does not have federalism implications under Executive Order 13132.
The FAA has determined that this regulation is an emergency regulation that must be issued immediately to correct an unsafe condition in aircraft, and that it 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
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each airplane 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 airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (c) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent a sudden change in pitch due to an out-of-trim condition combined with an autopilot disconnect, which could result in reduced controllability of the airplane, accomplish the following:
(a) Within 20 days after the effective date of this AD: Perform a pitch trim system test to detect any continuity defect in the autotrim function, in accordance with All Operators Telex (AOT) A300-22A0115 (for Model A300 series airplanes), A300-600-22A6042 (for Model A300-600 series airplanes), or A310-22A2053 (for Model A310 series airplanes), all dated December 23, 1999, as applicable.
(1) If no continuity defect is found, no further action is required by this paragraph.
(2) If any continuity defect is found, prior to further flight, accomplish the actions required by paragraphs (a)(2)(i) and (a)(2)(ii) of this AD, in accordance with the applicable AOT.
(i) Repair any discrepant wiring found in the pitch trim system.
(ii) Repeat the initial pitch trim system test required by paragraph (a) of this AD.
All Operators Telexes (AOT) A300-22A0115, A300-600-22A6042, and A310-22A2053, all dated December 23, 1999, reference Aircraft Schematic Manual (ASM) 22-27-00 as an additional source of service information to accomplish the repair.
(b) Within 10 days after accomplishing the pitch trim system test required by this AD, or within 10 days after the effective date of this AD, whichever occurs later: Submit a report of the inspection results (both positive and negative findings) to Airbus Customer Services, Engineering and Technical Support, Attention Mr. Vincent Frayssinet, AI/SE-E43; phone number 33 (0)5.62.11.04.96; Sita Code TLSBQ7X.
(c) 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, International Branch, ANM-116, FAA, Transport Airplane Directorate. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, International Branch, ANM-116.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the International Branch, ANM-116.
(d) 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 airplane to a location where the requirements of this AD can be accomplished.
(e) The actions shall be done in accordance with Airbus All Operators Telex A300-22A0115, dated December 23, 1999; Airbus All Operators Telex A300-600-22A6042, dated December 23, 1999; or Airbus All Operators Telex A310-22A2053, dated December 23, 1999; as applicable. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Airbus Industrie, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France. Copies may be inspected at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
The subject of this AD is addressed in French airworthiness directive T2000-007-301(B), dated January 4, 2000.
(f) This amendment becomes effective on February 9, 2000.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to certain Boeing Model 737-300, -400 and -500 series airplanes, that requires replacement, with new parts, of the existing actuators or the rod ends on the existing actuators at wing leading edge slat positions 1, 2, 5, and 6. This amendment is prompted by reports indicating that the rod ends on several leading edge slat actuators have fractured. The actions specified by this AD are intended to prevent fatigue cracking of the rod ends of the leading edge slat actuators, which could result in uncommanded deployment of the wing leading edge slat and consequent reduced controllability of the airplane.
Effective February 29, 2000.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of February 29, 2000.
The service information referenced in this AD may be obtained from Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington 98124-2207. This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Robert C. Jones, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Transport Airplane Directorate, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, Washington 98055-4056; telephone (425) 227-1118; fax (425) 227-1181.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to all Boeing Model 737-300, -400 and -500 series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received.
One commenter supports the proposed rule.
One commenter requests that the FAA revise the proposed rule to reference Boeing Alert Service Bulletin 737-27A1211, Revision 1, dated December 9, 1999, as an appropriate source of service information for accomplishment of the actions specified by the proposal. The proposed AD referenced the original issue of the alert service bulletin, dated November 19, 1998. The commenter states that referencing the revised alert service bulletin will minimize the amount of rework and parts necessary for airplanes that have received a certain other modification.
The FAA concurs with the commenter's request. The FAA has reviewed and approved Boeing Alert Service Bulletin 737-27A1211, Revision 1. The instructions contained in Revision 1 of the alert service bulletin are substantially similar to those in the original issue of the alert service bulletin, but Revision 1 adds references to new part numbers and kits that will provide new alternatives for compliance with this AD. In addition, as the commenter states, Revision 1 of the alert service bulletin provides alternative procedures for accomplishing the replacement on airplanes that have received a certain other modification. Therefore, paragraph (a) of this final rule has been revised to state that replacement of existing actuators or rod ends with new parts may be accomplished in accordance with either the original issue or Revision 1 of the alert service bulletin.
The
After careful review of the available data, including the comments noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the changes previously described. The FAA has determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.
There are approximately 1,897 Model 737-300, -400, and -500 series airplanes of the affected design in the worldwide fleet. The FAA estimates that 720 airplanes of U.S. registry will be affected by this AD.
Replacement of the leading edge slat actuator with an actuator that has a new rod end is one option for compliance with this AD. Replacement of the actuators on slat positions 1, 2, 5, and 6 will take approximately 3 hours per airplane to accomplish, at an average labor rate of $60 per work hour. Required parts will cost approximately $32,252 per airplane. Based on these figures, the cost impact of the installation of actuators with new rod ends, as provided as one option by this AD, on U.S. operators is estimated to be $32,432 per airplane.
In lieu of installation of an actuator with a new rod end, this AD provides an option for replacement of the rod ends on the existing actuators. This action will take approximately 4 work hours per airplane, at an average labor rate of $60 per work hour. Required parts will cost between approximately $5,928 and $21,544 per airplane. Based on these figures, the cost impact of the replacement of the rod ends, as provided as one option by this AD, on U.S. operators is estimated to be between $6,168 and $21,784 per airplane.
The cost impact figures discussed above are based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted.
The regulations adopted herein will not have a substantial direct effect 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, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (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) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
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:
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each airplane 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 airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (c) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent fatigue cracking of the rod ends on the leading edge slat actuators, which could result in uncommanded deployment of the wing leading edge slat and consequent reduced controllability of the airplane, accomplish the following:
(a) Within 24 months after the effective date of this AD: Replace the leading edge slat actuator with an actuator that has a new rod end, or replace the rod end on the existing slat actuator with a new rod end, at slat positions 1, 2, 5, and 6; in accordance with the Accomplishment Instructions in Boeing Alert Service Bulletin 737-27A1211, dated November 19, 1998, or Revision 1, dated December 9, 1999.
(b) As of the effective date of this AD, no person shall install any part having a part number identified in the “Existing Part Number” column of Section 2.E. of Boeing Alert Service Bulletin 737-27A1211, dated November 19, 1998, on any airplane.
(c) 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, Seattle Aircraft Certification Office (ACO), FAA, Transport Airplane Directorate. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, Seattle ACO.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the Seattle ACO.
(d) 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 airplane to a location where the requirements of this AD can be accomplished.
(e) The actions shall be done in accordance with Boeing Alert Service Bulletin 737-27A1211, dated November 19, 1998; or Boeing Alert Service Bulletin 737-27A1211, Revision 1, dated December 9, 1999. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington 98124-2207. Copies may be inspected at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(f) This amendment becomes effective on February 29, 2000.
Issued in Renton, Washington, on January 18, 2000.
U.S. Customs Service, Department of the Treasury.
Final rule.
This document adopts as a final rule, with some changes, proposed amendments to the Customs Regulations that implement section 622 of the Customs Modernization provisions of the North American Free Trade Agreement Implementation Act concerning penalties for false drawback claims. The document sets forth: procedures that apply when false drawback claims are filed and penalties are thereby incurred; mitigation guidelines that Customs would follow in arriving at a just and reasonable assessment and disposition of liabilities when false drawback claims are filed and penalties are incurred; and more specific grounds and procedures for removing a participant from the drawback compliance program.
February 24, 2000.
Wende Schuster, Penalties Branch, Office of Regulations and Rulings, 202-927-1537.
On December 8, 1993, the President signed into law the North American Free Trade Agreement Implementation Act (Public Law 103-182, 107 Stat. 2057). Title VI of that Act contained provisions pertaining to Customs Modernization and thus is commonly referred to as the Customs Modernization Act or “Mod Act.” Paragraph (a) of section 622 of the Mod Act amended the Tariff Act of 1930, as amended, by adding section 593A, which prohibits the filing of false (fraudulent or negligent) drawback claims and prescribes the actions that Customs may take, including the assessment of monetary penalties, if such claims are filed. New section 593A was codified as section 1593a of Title 19 of the United States Code (19 U.S.C. 1593a, hereinafter “the statute”).
As in the case of penalties under section 592 of the Tariff Act of 1930, as amended (19 U.S.C. 1592), specific procedures and other requirements are set forth in the statute for prepenalty notices and penalty claims, the former not being required by the statute if the penalty is $1,000 or less, and provision is made for limited penalty assessment if there is a prior disclosure. The statute further provides for the applicability of section 618 of the Tariff Act of 1930, as amended (19 U.S.C. 1618), which authorizes the administrative remission or mitigation of penalties. Written decisions, setting forth a final determination and findings of fact and conclusions of law upon which that determination was based, are also mandated by the statute.
The statute provides for the assessment of monetary penalties in amounts not to exceed a specific percentage of the actual or potential loss of revenue, with the applicable percentage depending on the level of culpability, whether there have been prior violations involving the same issue, and whether the violator is a participant in the Customs drawback compliance program. (The statute provides for the establishment of a drawback compliance program; regulatory provisions relating to the operation of that program were adopted as part of the amendments to the Customs Regulations regarding drawback published in the
On September 29, 1998, Customs published a Notice of Proposed Rulemaking in the
Seven commenters responded to the solicitation of comments contained in the Notice of Proposed Rulemaking. The comments submitted are summarized and responded to below.
On a related matter, Customs notes that the current § 162.74 prior disclosure provisions adopted in T.D. 98-49 (which was published in the
While the alleged violator is specifically required under the statute to respond to the warning letter (see 19 U.S.C. 1593a(f)(3)), there is no statutory provision for an additional appeal mechanism at this stage in the penalty process. Customs believes that it would create an unacceptable administrative burden to provide for a further appeal procedure to Headquarters as suggested by these commenters.
An example of a fraudulent violation for purposes of 19 U.S.C. 1593a is as follows: A person makes a false drawback claim asserting that certain drawback eligible merchandise was exported from the United States. In connection with this claim, the claimant submits fabricated bills of lading or other documents of exportation. In actuality, the claimant knows that the merchandise was never exported from the United States.
Accordingly, based on the comments received and the analysis of those comments as set forth above, and after further review of this matter, Customs believes that the proposed regulatory amendments should be adopted as a final rule with certain changes thereto as discussed above and as set forth below. In addition, a number of minor changes have been made in the regulatory texts to conform to statutory language and to reflect plain language principles.
For the reasons set forth above and because the amendments closely follow legislative direction, pursuant to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601,
Customs duties and inspection; Law enforcement; Penalties; Seizures and forfeitures.
Administrative practice and procedure; Customs duties and inspection; Law enforcement; Penalties; Seizures and forfeitures.
Administrative practice and procedure; Customs duties and inspection; Drawback.
5 U.S.C. 301; 19 U.S.C. 66, 1592, 1593a, 1624.
(a)
(b)
(1)
(2)
(c)
(a)
(1) For fraudulent violations, three times the loss of revenue; and
(2) For negligent violations,
(i) 20 percent of the loss of revenue for the first violation,
(ii) 50 percent of the loss of revenue for the first repetitive violation, or
(iii) One times the loss of revenue for the second and each subsequent repetitive violation.
(b)
(i) For fraudulent violations, three times the loss of revenue; and
(ii) For negligent violations,
(A) Issuance of a written notice of a violation (warning letter) for the first violation and for any other violation that is not repetitive or that is repetitive but does not occur within three years from the date of the violation of which it is repetitive,
(B) 20 percent of the loss of revenue for the first repetitive violation that occurs within three years from the date of the violation of which it is repetitive,
(C) 50 percent of the loss of revenue for the second repetitive violation that occurs within three years from the date of the first of two violations of which it is repetitive, or
(D) One times the loss of revenue for the third and each subsequent repetitive violation that occurs within three years from the date of the first of three or more violations of which it is repetitive.
(2)
(A) State that the person concerned has violated section 593A;
(B) Explain the nature of the violation; and
(C) Warn the person concerned that future violations of section 593A may result in the imposition of monetary penalties. The notice will also warn the person concerned that repetitive violations may result in removal of certification under the drawback compliance program provided for in part 191 of this chapter until the person takes corrective action that is satisfactory to Customs.
(ii) Within 30 days from the date of mailing of the notice issued under paragraph (b)(1)(ii)(A) of this section:
(A) The person concerned must notify Customs in writing of the steps that have been taken to prevent a recurrence of the violation; or
(B) If the person concerned believes that no violation took place, he may advise Customs in writing of the basis for that position. If Customs agrees on further review that no violation in fact took place, Customs will in writing advise the person concerned and rescind the notice of violation. If on further review Customs remains of the opinion that the violation took place as alleged in the notice of violation, Customs will issue a written affirmation of the notice of violation advising the person concerned that the notice requirement of paragraph (b)(2)(ii)(A) of this section remains applicable and must be complied with either within the remainder of the prescribed 30-day period or within 15 days after issuance of the written affirmation, whichever period is longer.
(c)
(1) For fraudulent violations, one times the loss of revenue; and
(2) For negligent violations, an amount equal to the interest accruing on the actual loss of revenue during the period from the date of overpayment of the claim to the date on which the person concerned tenders the amount of the overpayment based on the prevailing rate of interest under 26 U.S.C. 6621.
a. In paragraph (a)(1), the first sentence is amended by adding after “fees” the words “or actual loss of revenue”;
b. In paragraph (c), the heading and the first, second, eleventh, and twenlfth sentences are amended by adding after “and fees” the words “or actual loss of revenue”; and
c. Also in paragraph (c), the fourth, seventh, and ninth sentences are amended by removing the words “or fees” wherever they appear and adding, in their place, the words “and fees or actual loss of revenue”.
(a)
(b)
(i) Identify the drawback claim;
(ii) Set forth the details relating to the seeking, inducing, or affecting, or the attempted seeking, inducing, or affecting, or the aiding or procuring of, the drawback claim;
(iii) Specify all laws and regulations allegedly violated;
(iv) Disclose all the material facts which establish the alleged violation;
(v) State whether the alleged violation occurred as a result of fraud or negligence; and
(vi) State the estimated actual or potential loss of revenue due to the drawback claim and, taking into account all circumstances, the amount of the proposed monetary penalty.
(2)
(c)
(d)
Whether or not a monetary penalty is assessed under this subpart, the appropriate Customs field officer will require the deposit of any actual loss of duties, taxes and fees resulting from a violation of section 592, Tariff Act of 1930, as amended (19 U.S.C. 1592) or any actual loss of revenue resulting from a violation of section 593A, Tariff Act of 1930, as amended (19 U.S.C. 1593a), notwithstanding that the liquidation of the entry to which the loss is attributable has become final. If a person is liable for the payment of actual loss of duties, taxes and fees or actual loss of revenue in any case in which a monetary penalty is not assessed or a written notification of claim of monetary penalty is not issued, the port director will issue a written notice to the person of the liability for the actual loss of duties, taxes and fees or actual loss of revenue. The notice will identify the merchandise and entries involved, state the loss of duties, taxes and fees or loss of revenue and how it was calculated, and require the person to deposit or arrange for payment of the duties, taxes and fees or revenue within 30 days from the date of the notice. Any determination of actual loss of duties, taxes and fees or actual loss of revenue under this section is subject to review upon written application to the Commissioner of Customs.
19 U.S.C. 66, 1592, 1593a, 1618, 1624. * * *
If a petition for relief relates to a violation of section 592, 593A or 641, Tariff Act of 1930, as amended (19 U.S.C. 1592, 19 U.S.C. 1593a or 19 U.S.C. 1641), the petitioner will be provided with a written statement setting forth the decision on the matter and the findings of fact and conclusions of law upon which the decision is based.
A monetary penalty incurred under section 593A, Tariff Act of 1930, as amended (19 U.S.C. 1593a; hereinafter referred to as section 593A), may be remitted or mitigated under section 618, Tariff Act of 1930, as amended (19 U.S.C. 1618; hereinafter referred to as section 618), if it is determined that there exist such mitigating circumstances as to justify remission or mitigation. The guidelines below will be used by Customs in arriving at a just and reasonable assessment and disposition of liabilities arising under section 593A within the stated limitations. It is intended that these guidelines will be applied by Customs officers in prepenalty proceedings, in determining the monetary penalty assessed in the penalty notice, and in arriving at a final penalty disposition. The assessed or mitigated penalty amount set forth in Customs administrative disposition determined in accordance with these guidelines does not limit the penalty amount which the Government may seek in bringing a civil enforcement action pursuant to 19 U.S.C. 1593a(i).
A violation of section 593A occurs when a person, through fraud or negligence, seeks, induces, or affects, or attempts to seek, induce, or affect, the payment or credit to that person or others of any drawback claim by means of any document, written or oral statement, or electronically transmitted data or information, or act which is material and false, or any omission which is material, or aids or abets any other person in the foregoing violation. There is no violation if the falsity is due solely to clerical error or mistake of fact unless the error or mistake is part of a pattern of negligent conduct. Also, the mere nonintentional repetition by an electronic system of an initial clerical error will not constitute a pattern of negligent
There are two degrees of culpability under section 593A: negligence and fraud.
(1)
(2)
(1)
(2)
(1)
(2)
(a)
(b)
(3)
(a)
(i) In the case of fraud, an amount equal to the actual or potential revenue of which the United States is or may be deprived as a result of overpayment of the claim; or
(ii) If the violation resulted from negligence, an amount equal to the interest computed on the basis of the prevailing rate of interest applied under 26 U.S.C. 6621 on the amount of actual revenue of which the United States is or may be deprived during the period that begins on the date of overpayment of the claim and ends on the date on which the person concerned tenders the amount of the overpayment.
(b)
(c)
(d)
(e)
Notwithstanding section 514, Tariff Act of 1930, as amended (19 U.S.C. 1514), if the United States has been deprived of lawful duties and taxes resulting from a violation of section 593A, Customs will require that such duties and taxes be restored whether or not a monetary penalty is assessed.
(1)
(2)
(a)
(b)
(i)
(ii)
(c)
(3)
(a)
(b)
(4)
(a)
(b)
(c)
(d)
(e)
(f)
(5)
(a) Obstructing an investigation or audit.
(b) Withholding evidence.
(c) Providing misleading information concerning the violation.
(d) Prior substantive violations of section 593A for which a final administrative finding of culpability has been made.
(e) Failure to comply with a Customs summons or lawful demand for records.
(1)
(2)
(a)
(i) State that the person has violated section 593A;
(ii) Explain the nature of the violation; and
(iii) Warn the person that future violations of section 593A may result in the imposition of monetary penalties and that repetitive violations may result in removal of certification under the drawback compliance program until the person takes corrective action that is satisfactory to Customs.
(b)
(3)
(a)
(i) An amount not to exceed 20 percent of the loss of revenue for the first repetitive violation that occurs within three years from the date of the violation of which it is repetitive;
(ii) An amount not to exceed 50 percent of the loss of revenue for the second repetitive violation that occurs within three years from the date of the first of two violations of which it is repetitive ; and
(iii) An amount not to exceed 100 percent of the loss of revenue for the third and each subsequent repetitive violation that occurs within three years from the date of the first of three or more violations of which it is repetitive.
(b)
(4)
(a)
(b)
(c)
(d)
(e)
(5)
In compliance with the mandate of the Small Business Regulatory Enforcement Fairness Act of 1996, under appropriate circumstances, the issuance of a penalty under section 593A may be waived for businesses qualifying as small business entities. Procedures that were established for small business entities regarding violations of 19 U.S.C. 1592 in Treasury Decision 97-46 published in the
5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, Harmonized Tariff Schedule of the United States), 1313, 1624.
§§ 191.191-191.195 also issued under 19 U.S.C. 1593a.
(e)
(i) The certification privilege was obtained through fraud or mistake of fact;
(ii) The program participant is no longer in compliance with the Customs laws and regulations, including the requirements set forth in § 191.192;
(iii) The program participant repeatedly files false drawback claims or false or misleading documentation or other information relating to such claims; or
(iv) The program participant is convicted of any felony or has committed acts which would constitute a misdemeanor or felony involving theft, smuggling, or any theft-connected crime.
(2)
(3)
(f)
(2)
Internal Revenue Service (IRS), Treasury.
Final regulations.
This document contains final regulations providing guidance on the application of the rules governing qualified covered calls. The new rules address concerns that were created by the introduction of new financial instruments after the enactment of the qualified covered call rules. The final regulations will provide guidance to taxpayers writing qualified covered calls.
These regulations are effective January 25, 2000.
Pamela Lew of the Office of Assistant Chief Counsel (Financial Institutions and Products), (202) 622-3950 (not a toll-free number).
On June 25, 1998, the IRS published in the
Two written comments were received. These comments focused on whether equity options with flexible terms should be eligible for QCC treatment. After considering these comments, the IRS and Treasury have decided to
One of the comments also suggested a clarifying change to the text of the proposed regulations. After revising the regulation to take into account this comment, the proposed regulations are adopted by this Treasury decision.
Section 1092(c) defines a straddle as offsetting positions with respect to personal property. Under section 1092(d)(3), stock is personal property if the stock is part of a straddle that involves an option on that stock or substantially identical stock or securities. Under section 1092(c)(4), however, writing a QCC option and owning the optioned stock is not treated as a straddle for purposes of section 1092.
In order to be a QCC, a call option must, among other things, be exchange-traded and not be deep in the money. An option is deep in the money if the strike price of the option is lower than the lowest qualified bench mark for the stock. This bench mark is generally the highest available strike price for an option on the stock that is less than the applicable stock price.
At the time the QCC provisions were enacted, exchange-traded options were available only at standardized maturity dates and strike price intervals. This fixed-interval system was a basic assumption of the Congressional plan for QCCs and, more specifically, was the foundation for the definition of a deep-in-the-money option.
Certain options exchanges have begun to trade equity options with flexible terms. Unlike standardized exchange-traded options, these options could have strike prices at other than fixed intervals. For this reason, there is concern that the strike prices established for equity options with flexible terms could impact the bench-mark system for standardized exchange-traded options.
The proposed regulations provide that strike prices established by equity options with flexible terms are not taken into account in determining whether options that are not equity options with flexible terms are deep in the money. Thus, the existence of strike prices established by equity options with flexible terms does not affect the lowest qualified bench mark, as determined under section 1092(c)(4)(D), for an equity option with standardized terms.
One commentator was concerned that usage of the phrase “existence of strike prices established by equity options without standardized terms” might be interpreted as requiring actual trading at a particular strike price. The commentator suggested that the regulation be modified to discuss the availability of a strike price for equity options with flexible terms rather than the existence of a strike price established by equity options with flexible terms. This suggestion has been incorporated into the final regulation.
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations and, because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
The principal author of these regulations is Pamela Lew, Office of Assistant Chief Counsel (Financial Institutions and Products). However, other personnel from the IRS and Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
26 U.S.C. 7805 * * *. Section 1.1092(c)-1 also issued under 26 U.S.C. 1092(c)(4)(H). * * *
(a)
(b)
(c) [Reserved].
(d)
(1)
(i) That is described in any of the following Securities
Exchange Act Releases—
(A) Self-Regulatory Organizations; Order Approving Proposed Rule Changes and Notice of Filing and Order Granting Accelerated Approval of Amendments by the Chicago Board Options Exchange, Inc. and the Pacific Stock Exchange, Inc., Relating to the Listing of Flexible Equity Options on Specified Equity Securities, Securities Exchange Act Release No. 34-36841 (Feb. 21, 1996); or
(B) Self-Regulatory Organizations; Order Approving Proposed Rule Changes and Notice of Filing and Order Granting Accelerated Approval of Amendment Nos. 2 and 3 to the Proposed Rule Change by the American Stock Exchange, Inc., Relating to the Listing of Flexible Equity Options on Specified Equity Securities, Securities Exchange Act Release No. 34-37336 (June 27, 1996); or
(C) Self-Regulatory Organizations; Order Approving Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval of Amendment Nos. 2, 4 and 5 to the Proposed Rule Change by the Philadelphia Stock Exchange, Inc., Relating to the Listing of Flexible Exchange Traded Equity and Index Options, Securities Exchange Act Release No. 34-39549 (Jan. 23, 1998); or
(D) Any changes to the SEC releases described in paragraphs (d)(1)(i)(A) through (C) of this section that are approved by the Securities and Exchange Commission; or
(ii) That is traded on any national securities exchange which is registered with the Securities and Exchange Commission (other than those described in the SEC Releases set forth in paragraph (d)(1)(i) of this section) or
(A) Substantially identical to the equity options described in paragraph (d)(1)(i) of this section; and
(B) Approved by the Securities and Exchange Commission in a Securities Exchange Act Release.
(2)
(e)
Internal Revenue Service (IRS), Treasury.
Final and Temporary regulations.
This document amends the Income Tax Regulations by removing temporary regulations that provide guidance regarding the addition of a substantial new line of business by a possessions corporation that is an existing credit claimant and adding final regulations. These regulations are necessary to implement changes made by the Small Business Job Protection Act of 1996.
Daniel S. Karen, (202) 874-1490, or Jacob Feldman, (202) 622-3830 (not toll-free numbers).
Section 1601(a) of the Small Business Job Protection Act of 1996, Public Law 104-188, 110 Stat. 1755 (1996), amended the Internal Revenue Code by adding section 936(j). Section 936(j) generally repeals the Puerto Rico and possession tax credit for taxable years beginning after December 31, 1995. However, the section provides grandfather rules under which a corporation that is an existing credit claimant would be eligible to claim credits for a transition period. The Puerto Rico and possession tax credit and the Puerto Rico economic activity credit phase out for these existing credit claimants ending with the last taxable year beginning before January 1, 2006.
For taxable years beginning after December 31, 1995 and before January 1, 2006, the Puerto Rico and possession tax credit and the Puerto Rico economic activity credit apply only to a corporation that qualifies as an existing credit claimant (as defined in section 936(j)(9)(A)). The determination of whether a corporation is an existing credit claimant is made separately for each possession. A possessions corporation that adds a substantial new line of business (other than in a qualifying acquisition of all the assets of a trade or business of an existing credit claimant) after October 13, 1995, ceases to be an existing credit claimant as of the beginning of the taxable year during which such new line of business is added. Therefore, a possessions corporation that ceases to be an existing credit claimant either because it has added a substantial new line of business, or because a new line of business becomes substantial, during a taxable year may not claim the Puerto Rico and possession tax credit or the Puerto Rico economic activity credit for that taxable year or any subsequent taxable year.
On August 19, 1998, temporary regulations were published in the
Minor and conforming changes were made in these final regulations. Several changes were also made in the final regulations with regard to the three comments that were received on the Notice of Proposed Rulemaking.
The first comment received addressed the issue as to whether the leasing of some of the assets of an existing credit claimant would result in a new line of business under section 936(j)(9)(B) with respect to the leasing activity. In response to the comment, the final regulations provide that the leasing out of assets by an existing credit claimant (and the employees necessary to operate the leased assets) will not be treated as a new line of business provided that: (1) The existing credit claimant used the leased assets in an active trade or business for at least five years; (2) the existing credit claimant does not through its own officers or staff of employees perform management or operational functions (but not including operational functions performed through leased employees) with respect to the leased assets; and (3) the existing credit claimant does not perform marketing functions with respect to the leasing of the assets. The income from the leasing of assets will not be income from the active conduct of a trade or business, and therefore, the existing credit claimant may not receive a possession tax credit with respect to such income.
A second comment asked for clarification as to whether a taxpayer seeking to be treated as an existing credit claimant through the acquisition of the assets of an existing credit claimant pursuant to section 936(j)(9)(A)(ii) must acquire all the assets of the acquired corporation even in cases in which the existing credit claimant has more than one trade or business. The final regulations have been clarified to conform to the language of section 936(j)(9)(A)(ii) and provide that an acquiring corporation need only acquire all the assets of a single trade or business to be treated as an existing credit claimant.
The third comment asked for clarification as to when the assets of a trade or business are measured for purposes of satisfying the requirement that all the assets of a trade or business must be acquired from an existing credit claimant in order to satisfy section 936(j)(9)(A)(ii). Specifically, the comment expressed concern that assets
It has been determined that this final regulation is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to this regulation, and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the preceding notice of proposed rulemaking was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its effect on small business.
The principal author of this regulation is Daniel S. Karen of the Office of the Associate Chief Counsel (International), within the office of Chief Counsel, IRS. However, other personnel from the IRS and the Department of the Treasury participated in the development of this regulation.
Income taxes, Reporting and recordkeeping requirements.
26 U.S.C. 7805 * * *. Section 1.936-11 also issued under 26 U.S.C. 936(j). * * *
(a)
(b)
(2)
(i)
(A) The new activity provides products or services very similar to the products or services provided by the pre-existing business;
(B) The new activity markets products and services to the same class of customers;
(C) The new activity is of a type that is normally conducted in the same business location;
(D) The new activity requires the use of similar operating assets;
(E) The new activity's economic success depends on the success of the pre-existing business;
(F) The new activity is of a type that would normally be treated as a unit with the pre-existing business’ in the business accounting records; and
(G) The new activity and the pre-existing business are regulated or licensed by the same or similar governmental authority.
(ii)
(A) If the activity is within the same six-digit North American Industry Classification System (NAICS) code (or four-digit Standard Industrial Classification (SIC) code). The similarity of the NAICS or SIC codes may not be relied upon to determine whether the activity is closely related to a pre-existing business where the code indicates a miscellaneous category;
(B) If the new activity is within the same five-digit NAICS code (or three-digit SIC code) and the facts relating to the new activity also satisfy at least three of the factors listed in paragraphs (b)(2)(i)(A) through (G) of this section; or
(C) If the pre-existing business is making a component product or end-product form, as defined in § 1.936-5(a)(1),Q&A1, and the new business activity is making an integrated product, or an end-product form with fewer excluded components, that is not within the same six-digit NAICS code (or four-digit SIC code) as the pre-existing business solely because the component product and the integrated product (or two end-product forms) have different end-uses.
(3)
(A) The existing credit claimant was actively engaged in the activity within the possession on or before October 13, 1995; and
(B) The existing credit claimant had elected the benefits of the Puerto Rico and possession tax credit pursuant to an election which was in effect for the taxable year that included October 13, 1995.
(ii)
(B) Where all of the assets of one or more trades or businesses of a corporation of an existing credit claimant are acquired by a corporation that is not an existing credit claimant, the acquiring corporation may make a section 936(e) election for the taxable year in which the assets are acquired with the following effects—
(
(
(
(
(C) For purposes of this section the assets of a trade or business are determined at the time of acquisition provided that the transferee actively conducts the trade or business acquired.
(D) A mere change in the stock ownership of a possessions corporation will not affect its status as an existing credit claimant for purposes of this section.
(4)
(A) the existing credit claimant used the leased assets in an active trade or business for at least five years;
(B) the existing credit claimant does not through its own officers or staff of employees perform management or operational functions (but not including operational functions performed through leased employees) with respect to the leased assets; and
(C) the existing credit claimant does not perform marketing functions with respect to the leasing of the assets.
(ii) Any income from the leasing of assets not considered a new line of business pursuant to paragraph (b)(4)(i) of this section will not be income from the active conduct of a trade or business (and, therefore, the existing credit claimant may not receive a possession tax credit with respect to such income).
(5)
(c)
(i) The taxable year in which the possessions corporation derives more than 15 percent of its gross income from that new line of business (gross income test); or
(ii) The taxable year in which the possessions corporation directly uses in that new line of business more than 15 percent of its assets (assets test).
(2)
(3)
(ii)
(d)
(e)
(f)
(2)
Internal Revenue Service (IRS), Treasury.
Final regulations.
This document contains final regulations under section 1296 relating to the new mark-to-market election for stock of a passive foreign investment company (PFIC). The final regulations interpret changes made by the Taxpayer Relief Act of 1997. The final regulations affect persons holding PFIC stock that is regularly traded on certain U.S. or foreign exchanges or markets or holding stock in certain PFICs comparable to U.S. regulated investment companies (RICs).
Robert Laudeman, (202) 622-3840 (not a toll-free number).
On February 2, 1999, the IRS published in the
The preamble to the proposed regulations (64 FR 5014) provides a detailed discussion of the mark-to-market election for shareholders of PFIC stock and the proposed regulations.
The proposed regulations require that a foreign exchange or market be regulated or supervised by a governmental authority of the country in which the market is located. The proposed regulations also list additional characteristics that the foreign exchange or market must have for stock that is regularly traded on the exchange or market to be marketable stock for purposes of section 1296. Specifically, the proposed regulations require that the exchange have trading volume, listing, financial disclosure and other requirements designed to prevent fraud, perfect the mechanism of a free and open market, and protect investors.
The final regulations add a surveillance requirement and add the concept of perfecting a fair and orderly market to the requirements for exchanges. These changes are intended to clarify the characteristics that an exchange or other market must have in order to be a qualified exchange or market for purposes of section 1296 and to more closely represent common characteristics of foreign markets. See International Federation of Stock Exchanges (FIBV),
The proposed regulations provide that stock in certain PFICs is
Two commentators asserted that the statute and legislative history indicate that Congress was only concerned that PFICs redeem stock at net asset values and that such values represent sound and legitimate fair market values and, therefore, it is not necessary that the PFIC resemble a RIC. The commentators suggest that the regulations be modified to include PFICs that redeem their stock at its net asset value but do not otherwise resemble RICs. Because the plain language of the statute clearly requires that the stock in any foreign corporation be comparable to a RIC, the final regulations retain the approach of requiring PFICs to be comparable to RICs in order for their stock to be marketable stock for purposes of section 1296(e)(1)(B).
The proposed regulations provide that a foreign corporation must have one hundred or more unrelated shareholders. One commentator recommended that the number be reduced to ten unrelated shareholders, arguing that a corporation with ten unrelated shareholders as opposed to one hundred unrelated shareholders has the same susceptibility to legal liabilities if valuations are inaccurate. Requiring that a PFIC have one hundred or more unrelated shareholders is comparable to the requirement imposed on RICs by section 851(a). In addition, the IRS and the Treasury Department believe that there will be less likelihood of share price manipulation with corporations that have one hundred or more unrelated shareholders. Consequently, the above described rule in the proposed regulations is not changed except that “one hundred or more” is corrected to read “more than one hundred” unrelated shareholders.
The proposed regulations require that the class of shares of the foreign corporation be readily available for purchase by the general public at its net asset value by new investors in initial amounts not greater than $10,000 (U.S.). One commentator recommended that this condition not be included in the final regulations because an investment ceiling will not make the valuation easier or less likely to be manipulated.
The condition in the proposed regulations regarding initial investments is not an investment ceiling. Rather, the condition specifies that the foreign corporation not require a minimum initial investment of greater than $10,000 (U.S.) and that shares of the foreign corporation be readily available for purchase by the general public at net asset values. For example, a foreign corporation that requires new investors to purchase shares for a minimum initial investment of $5,000 (U.S.) satisfies the condition. However, a foreign corporation that requires new investors to purchase shares for a minimum initial investment of $20,000 (U.S.) does not satisfy the condition. There is not any limit, however, on the total amount that a shareholder can invest. The final regulations clarify that this condition is not an investment ceiling.
Two additional requirements in the proposed regulations are that shares be available for purchase by the general public and that, no less frequently than annually, financial statements prepared by independent auditors be available to the public. One commentator asserted that availability to the general public of the shares of the foreign corporation and of the financial statements is not necessary and should not be required because it will not necessarily ensure a legitimate and sound fair market value for the foreign corporation's stock.
Availability of shares for purchase by the general public is comparable to the requirement of availability of shares of RICs for purchase by the general public. In addition, availability of shares for purchase by the the general public for net asset value (in addition to current investors being able to redeem shares for the same net asset value), will ensure that the net asset values are legitimate and sound. However, shares will not be considered available for purchase by the general public if the shares are only available to individuals with high annual incomes or high net worth. For example, limiting investors to individuals with annual incomes in excess of $200,000 or net worth in excess of $1 million will not be considered available for purchase by the general public.
Similarly, availability to the general public of audited financial statements is comparable to conditions imposed on RICs and will help to ensure that the foreign corporation's financial information is readily available to potential and current investors, which, in turn, will help ensure that the net asset values are legitimate and sound. Availability of financial statements to the general public requires no more than that the statements be available upon request to potential and current investors.
The proposed regulations require that quotations for the shares of the foreign corporation be determined and published on a daily basis in a widely-available medium, such as a newspaper of general circulation. One commentator asserted that the condition is not necessary because the mark-to-market election is made on an annual basis at the close of the taxpayer's taxable year. The commentator recommended that the condition be changed to require that values be communicated to shareholders, on at least an annual basis, in written form that serves as support for such valuation.
The final regulations do not adopt the commentator's recommendation. The publication of quotations for the shares is not intended to serve solely as a means for a current shareholder of the PFIC to determine the value of the PFIC on the mark date. The publication of quotations for the shares is comparable to the practice of RICs and helps to ensure that asset valuations are legitimate and sound by allowing potential investors as well as current shareholders to have ready access to price information.
Because quotations for the shares of some PFICs may not be published on a daily basis, the daily publication requirement in the proposed regulations is changed to require that quotations for the shares of the foreign corporation be determined and published no less frequently than weekly. In addition, the publication requirement is changed to clarify that the quotations must be published in a permanent medium not controlled by the issuer of the shares, such as an independent trade publication. The requirement that the medium be permanent does not require the medium to be saved in a printed form; archived electronic data not susceptible to subsequent alteration are permanent. This change is intended to assist shareholders and the IRS in verifying valuations.
The proposed regulations require that the foreign corporation be supervised or regulated as an investment company by a foreign government or instrumentality thereof. One commentator suggested that the condition be clarified with respect to the meaning of governmental supervision. In particular, the commentator asks whether a foreign jurisdiction that requires a local corporation to file information upon incorporation with the local government
The condition in the proposed regulations is intended to require that the PFIC be supervised or regulated as an investment company in a manner comparable, but not identical, to RICs. Consequently, the final regulations clarify the type of supervision or regulation required. The final regulations provide that sufficient supervision or regulation requires that the government or agency have broad inspection and enforcement authority and effective oversight over investment companies to ensure that such companies provide complete and accurate disclosure of relevant financial information to shareholders and potential investors and to provide adequate sanctions for false or inadequate disclosure. The mere filing of information upon incorporation does not qualify as supervision or regulation.
Finally, the proposed regulations require that the foreign corporation have no senior securities authorized or outstanding, including any debt other than de minimis amounts. In addition, the proposed regulations require that the foreign corporation meet the PFIC income and asset tests in sections 1297(a)(1) and (2) with the requisite percentages increased from 75 percent to 90 percent and from 50 percent to 90 percent respectively. One commentator asserted that these conditions not be included in the final regulations because there is no basis for requiring a PFIC to have the same borrowing restrictions, asset composition, and characteristics of RICs in order for the PFIC's stock to be marketable stock under section 1296.
Conditions regarding debt and asset composition are essential characteristics of RICs. The IRS and the Treasury Department believe that Congress intended to provide mark-to-market treatment to shares of PFICs that are, in fact, comparable to RICs.
The proposed regulations provide that if shares in a PFIC are owned directly or indirectly by a RIC, that is offering for sale, or has outstanding any stock of which it is the issuer, and which is redeemable at net asset value, the PFIC shares shall be treated as marketable stock for purposes of section 1296. Section 1296(e)(2) further provides that except as provided in regulations, similar treatment as marketable stock shall apply in the case of any other RIC which publishes net asset valuations at least annually. The IRS and Treasury Department invited comments regarding situations where PFIC stock held by other RICs that publish asset valuations at least annually should not be treated as marketable stock for purposes of section 1296.
One commentator explained why PFIC stock held by any closed-end RIC that publishes net asset values at least annually should be treated as marketable stock. In particular, that commentator pointed out that closed-end RICs are subject to many of the same regulatory requirements as open-end RICs. In addition, that commentator explained that an industry practice has developed under which closed-end RICs typically determine and publish current share prices, together with net asset values, on a weekly basis in print and other media.
At this time, the IRS and Treasury Department know of no reason not to treat PFIC stock held by closed-end funds that publish net asset values at least annually as marketable stock. Consequently, as provided by section 1296(e)(2), PFIC stock held by any closed-end RIC that publishes net asset values at least annually shall be treated as marketable stock. The final regulations, however, continue to reserve this issue in the event that it is determined that situations exist where PFIC stock held by closed-end RICs that publish net asset valuations at least annually should not be treated as marketable stock for purposes of section 1296. If such a situation is found to exist, the reservation will be replaced at that time by a new regulatory exception.
It has been determined that these regulations are not significant regulatory actions as defined in EO 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and, because the regulations do not impose a requirement for the collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceeding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
The principal author of these regulations is Robert Laudeman of the Office of the Associate Chief Counsel (International). However, other personnel from the IRS and Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is amended as follows:
26 U.S.C. 7805 * * *. Section 1.1296(e)-1 also issued under 26 U.S.C. 1296(e). * * *
(a)
(1) Passive foreign investment company (PFIC) stock that is regularly traded, as defined in paragraph (b) of this section, on a qualified exchange or other market, as defined in paragraph (c) of this section;
(2) Stock in certain PFICs, as described in paragraph (d) of this section; and
(3) Options on stock that is described in paragraph (a)(1) or (2) of this section, to the extent provided in paragraph (e) of this section.
(b)
(2)
(c)
(i) A national securities exchange that is registered with the Securities and
(ii) A foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located and which has the following characteristics—
(A) The exchange has trading volume, listing, financial disclosure, surveillance, and other requirements designed to prevent fraudulent and manipulative acts and practices, to remove impediments to and perfect the mechanism of a free and open, fair and orderly, market, and to protect investors; and the laws of the country in which the exchange is located and the rules of the exchange ensure that such requirements are actually enforced; and
(B) The rules of the exchange effectively promote active trading of listed stocks.
(2)
(d)
(i) At all times during the calendar year, the foreign corporation has more than one hundred shareholders with respect to the class, other than shareholders who are related under section 267(b);
(ii) At all times during the calendar year, the class of shares of the foreign corporation is readily available for purchase by the general public at its net asset value and the foreign corporation does not require a minimum initial investment of greater than $10,000 (U.S.);
(iii) At all times during the calendar year, quotations for the class of shares of the foreign corporation are determined and published no less frequently than on a weekly basis in a widely-available permanent medium not controlled by the issuer of the shares, such as a newspaper of general circulation or a trade publication;
(iv) No less frequently than annually, independent auditors prepare financial statements of the foreign corporation that include balance sheets (statements of assets, liabilities, and net assets) and statements of income and expenses, and those statements are made available to the public;
(v) The foreign corporation is supervised or regulated as an investment company by a foreign government or an agency or instrumentality thereof that has broad inspection and enforcement authority and effective oversight over investment companies;
(vi) At all times during the calendar year, the foreign corporation has no senior securities authorized or outstanding, including any debt other than in de minimis amounts;
(vii) Ninety percent or more of the gross income of the foreign corporation for its taxable year is passive income, as defined in section 1297(a)(1) and the regulations thereunder; and
(viii) The average percentage of assets held by the foreign corporation during its taxable year which produce passive income or which are held for the production of passive income, as defined in section 1297(a)(2) and the regulations thereunder, is at least 90 percent.
(2)
(e) [Reserved]
(f)
(2) [Reserved]
(g)
Internal Revenue Service (IRS), Treasury.
Final regulations.
This document contains final regulations relating to the amortization of certain intangible property. The final regulations reflect changes to the law made by the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) and affect taxpayers who acquired intangible property after August 10, 1993, or made a retroactive election to apply OBRA '93 to intangibles acquired after July 25, 1991.
John Huffman at (202) 622-3110 (not a toll-free number).
The collection of information contained in these final regulations has been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget (OMB) under 44 U.S.C. 3507 and assigned control number 1545-1671.
The collection of information in this regulation is in § 1.197-2(h)(9). This information is required in order to provide guidance on the time and manner of making the election under section 197(f)(9)(B). Under this election, the seller of a section 197 intangible may pay a tax on the sale in order to avoid the application of the anti-churning rules of section 197(f)(9) to the purchaser. This information will be used to confirm the parties to the transaction, calculate any additional tax due, and notify the purchaser of the seller's election. The likely respondents are business or other for-profit institutions.
Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, OP:FS:FP, Washington, DC 20224. Comments on the collection of information should be received by March 27, 2000. Comments are specifically requested concerning:
Whether the collection of information is necessary for the proper performance of the functions of the Internal Revenue Service, including whether the information will have practical utility;
The accuracy of the estimated burden associated with the collection of information (see below);
How the quality, utility, and clarity of the information to be collected may be enhanced;
How the burden of complying with the collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and
Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
Estimated total annual reporting burden: 1500 hours.
Estimated average annual burden hours per respondent varies from 2 to 4 hours, depending on individual circumstances, with an estimated average of 3 hours.
Estimated number of respondents: 500 per year.
Estimated annual frequency of responses: 1.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.
Books or records relating to this collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
On January 16, 1997, the IRS published proposed regulations (REG-209709-94) in the
Certain intangibles are excepted from the application of section 197 if they are not acquired as part of a purchase of a trade or business. The proposed regulations provide that, for purposes of section 197, a group of assets constitutes a trade or business if their use would constitute a trade or business under section 1060 (that is, if goodwill or going concern value could, under any circumstances, attach to the assets).
In addition, the proposed regulations treat a group of assets as a trade or business if they include any customer-based intangibles or, with certain exceptions, any franchise, trademark, or trade name (the per se rules). The preamble of the proposed regulations state that the IRS intends to provide additional guidance on the circumstances in which a group of assets is treated as a trade or business in regulations under section 1060.
Although a number of comments requested that the final regulations under section 197 provide such additional guidance, the final regulations generally retain, without amplification, the rules in the proposed regulations. The IRS and Treasury Department will, however, continue to consider this issue during the development of final regulations under section 1060.
Commentators also requested modifications to the per se rules. In response to these comments, the final regulations limit the applicability of these rules to the cases specifically described in the legislative history of section 197 (that is, the acquisition of a franchise, trademark, or trade name). The final regulations retain the proposed exceptions under which certain franchises, trademarks, and trade names are disregarded in applying the per se rules. In addition, the regulations clarify that a license of a trademark or trade name is also disregarded in applying the per se rules.
The final regulations contain rules that supersede certain of the procedures set forth in Revenue Procedure 69-21 (1969-2 C.B. 303), which provides guidelines relating to costs incurred to develop, purchase, or lease computer software. Specifically, the final regulations provide that purchased computer software is amortizable over 15 years if section 197 applies and over 36 months if the software is not a section 197 intangible. In addition, the regulations clarify that section 197 (rather than § 1.162-11) applies to certain costs incurred with respect to leased software (that is, costs to acquire a section 197 intangible that is a limited interest in software). Computer software costs included, without being separately stated, in the cost of the computer hardware (bundled software) continue to be capitalized and depreciated as part of the computer hardware. In addition, the final regulations treat software costs as currently deductible (and not subject to section 197) if they are not chargeable to capital account under the rules applicable to licensing transactions (discussed below) and are otherwise currently deductible. The final regulations clarify that, for this purpose, an amount described in § 1.162-11 is not currently deductible if, without regard to § 1.162-11, such amount is properly chargeable to capital account. A proper and consistent practice of taking software costs into account under § 1.162-11 may, however, be continued if the costs are not subject to section 197.
A revenue procedure superseding Rev. Proc. 69-21 and providing procedures consistent with the rules in the final regulations will be issued in the near future. In the meantime, taxpayers may not rely on the
The proposed regulations treat mortgage servicing rights relating to a pool of mortgages as a single asset under section 167(f) (relating to mortgage servicing rights not acquired as part of a purchase of a trade or business). Thus, if some but not all mortgages in a pool prepay, no loss is recognized. Commentators assert that each right in the pool is a discrete asset, and thus, taxpayers should be able to recognize a loss upon the prepayment of an individual mortgage within the pool. The Service and the Treasury Department believe this is generally inappropriate in cases where depreciation is based on the average useful life of the assets. See § 1.167(a)-8. Thus, the regulations retain the rule that no loss is recognized if some but not all mortgages in a pool prepay or are sold or exchanged. The final regulations provide, however, that if a taxpayer establishes multiple accounts within a pool at the time of its acquisition, gain or loss is recognized on the sale or exchange of all mortgage servicing rights within any such account.
The proposed regulations provide that amortization begins the later of the first day of the month in which the property is acquired, or the first month in which the active conduct of a trade or business begins. Commentators suggest that the literal language of section 197(a) allows amortization beginning with the month the intangible is acquired. Under section 197(c)(1), however, a section 197 intangible is amortizable only if it is held in connection with the conduct of a trade or business or an activity described in section 212. Moreover, there is no suggestion in the legislative history that Congress intended to apply a rule differing from those applicable under section 167 and former section 1253(d).
Former section 1253(d)(2) provided, in language similar to that in section 197(a), that the amortization of certain amounts begins in the taxable year in which the amounts are paid. Although section 1253(d)(2) did not contain any reference to section 162 or to use in a trade or business, it was nevertheless well established at the time of the enactment of section 197 that the provision embodied a trade or business requirement and that amounts were not deductible thereunder unless the taxpayer was operating or conducting a trade or business after the amounts were paid.
Commentators suggest that it is significant that section 167 refers to “property used in the trade or business” while property can qualify for amortization under section 197 if it is “held in connection with the conduct of a trade or business.” Further, commentators assert that the language used in section 197 is closer to the “held in connection with his trade or business” language used in section 174, which does not require the current conduct of a trade or business, than to the language of section 167. The different language used in these provisions can be explained, however, without departing from previous practice under sections 167 and 1253(d) regarding the time at which amortization commences. Broader language under section 197 is necessary because it applies to assets, such as goodwill, that although held in connection with the conduct of a trade or business are not commonly viewed as being used in the trade or business. Further, modifying the language used in section 174 by adding the words “conduct of” indicates that Congress did not intend to change the longstanding trade or business requirement for purposes of determining when amortization commences.
Consequently, the final regulations retain the rule in the proposed regulations that amortization begins no earlier than the first day of the month in which the active trade or business or the activity described in section 212 begins.
The final regulations relating to partnership transactions have been changed from the proposed regulations in several respects to reflect the recommendations of commentators.
Certain commentators also requested that
The proposed regulations did not allow partners to deduct, for federal income tax purposes, curative or remedial amortization allocations from the partnership in situations where the asset was a section 197(f)(9) intangible (and thus nonamortizable) in the hands of the contributing partner. Commentators have suggested allowing curative and remedial allocations under section 704(c). The final regulations generally permit a partnership to make curative or remedial allocations to its noncontributing partners of amortization relating to an asset that was amortizable (or a zero-basis intangible that otherwise would have
Commentators requested that the final regulations provide additional guidance on how the special anti-churning rule of section 197(f)(9)(E) applies to increases in the basis of property under sections 732, 734, and 743. In accordance with these comments, the final regulations provide rules for determining the amount of a basis adjustment under sections 732(d) and 743 that will be subject to the anti-churning rules. The Treasury Department and the IRS also are issuing, at the same time as these final regulations, proposed regulations addressing how to determine the amount of a basis adjustment under sections 732(b) and 734(b) that will be subject to the anti-churning rules.
Finally, the final regulations provide that where, for purposes of the anti-churning rules, a partner is treated as holding its proportionate share of partnership property under section 197(f)(9)(E), the continued or subsequent use (by license or otherwise) of an intangible by a partner could cause the anti-churning rules to apply with respect to that partner's share of the intangible in situations where a basis step-up under section 732(d) or 743(b) otherwise would be amortizable. This rule is necessary in order to prevent the circumvention of section 197(f)(9)(A) through the use of a partnership. The proposed regulations being issued in conjunction with these final regulations expand the application of this rule to basis adjustments under sections 732(b) and 734(b).
The proposed regulations provide that a right to use a section 197 intangible pursuant to a license, contract, or other arrangement is, itself, a section 197 intangible. The proposed regulations further provide that amounts paid for such a right are chargeable to capital account, whether or not the payments would have been deductible (for example, as a royalty) if the right were not a section 197 intangible. Under the proposed regulations, the amount chargeable to capital account is generally determined without regard to sections 483 and 1274 (that is, no part of the amount paid is recharacterized as unstated interest or original issue discount). Finally, the proposed regulations treat the acquisition of a franchise, trademark, or trade name as the acquisition of a trade or business, thereby preventing other intangibles acquired in the same transaction or series of related transactions from qualifying for any of the exceptions applicable to separately acquired property.
Commentators suggested that these rules have negative consequences for common cross-border and affiliate licenses, which frequently include, in addition to rights that would not be subject to section 197 if not acquired as part of a purchase of a trade or business, rights to use a trademark or trade name. Under prior law, amounts paid for these licenses were generally currently deductible. The proposed regulations, however, require amortization over 15 years. In addition, cost recovery over the 15-year period is significantly backloaded because the licenses generally involve contingent payments that are not includible in basis until the year in which they are paid or incurred and, in addition, the proposed regulations provide that sections 483 and 1274 are generally inapplicable.
After further consideration of this issue in light of the concerns raised by the commentators, the IRS and Treasury Department have concluded that, particularly in the case of common licensing transactions involving technology and similar intangible property, a different approach is appropriate. The clearest indication of Congressional intent on this issue is the statement in the legislative history to the effect that, with certain exceptions, section 197 generally does not apply to amounts that were otherwise currently deductible before the enactment of section 197. Nevertheless, the IRS and Treasury Department are also mindful that Congress directed the issuance of such regulations as may be appropriate to prevent avoidance of the purposes of section 197.
The final regulations generally provide that royalty payments under a contract for the use of section 197 intangibles unconnected with the purchase of a trade or business are not required to be capitalized. Licensing transactions will, however, be closely scrutinized under the principles of section 1235 for purposes of determining whether the payments are, in fact, deductible royalties or, instead, represent purchase price that should be charged to capital account.
The final regulations also modify the rule that treats the acquisition of a franchise, trademark, or trade name as the acquisition of a trade or business. Under the final regulations, the acquisition of an interest in a trademark or trade name is disregarded in determining whether acquired property is a trade or business if, under the principles of section 1253, the grant of the interest is not a transfer of all substantial rights in the trademark or trade name. Thus, the acquisition of such an interest in a trademark or trade name will not subject other intangibles acquired in the same transaction or series of related transactions to the generally less favorable rules applicable to intangibles acquired as part of a purchase of a trade or business.
To prevent abuses, the final regulations provide that if the right to use a section 197 intangible is provided under a license entered into as part of a purchase of a trade or business, amounts paid for the right are, as under the proposed regulations, chargeable to capital account. An exception, not contained in the proposed regulations, is provided for licenses of technology,
Finally, any amount otherwise chargeable to capital account with respect to a section 197 intangible and payable after the acquisition of the intangible to which it relates is treated, in determining the tax treatment of the purchaser, as an amount payable under a debt instrument. Thus, the extent to which such amounts are treated as payments of principal and the time at which the amount treated as principal is included in basis is determined under generally applicable rules relating to imputed interest and original issue discount. If, under these rules, a basis increase occurs after the beginning of the 15-year amortization period, the increase is amortized over the remainder of the 15-year period (or, in the case of an increase occurring after the end of the amortization period, is immediately deductible).
The anti-churning rules of section 197 prevent taxpayers from converting goodwill, going concern value, and similar assets held or used at any time during the transition period into amortizable section 197 intangibles through transactions such as transfers to related parties. The proposed regulations provide guidance on a number of specific issues arising under the anti-churning rules. The final regulations retain this guidance with certain modifications and, in addition, set forth the purpose of the anti-churning rules (generally, to prevent the amortization of certain intangibles that are not acquired after the applicable effective date in a transaction giving rise to a significant change in ownership or use). The final regulations further provide that the anti-churning rules are to be applied in a manner that carries out their purpose. The final regulations include a rule providing that a transaction will be presumed to have a principal purpose of avoiding the anti-churning rules if it does not effect a significant change in ownership or use.
The final regulations also provide additional guidance concerning the circumstances in which persons are treated as related for purposes of the anti-churning rules. Section 197 provides that a relationship is tested for purposes of the anti-churning rules both immediately before and immediately after the acquisition. The proposed regulations further provide that, in the case of intangibles acquired in a series of related transactions, testing begins immediately before the first acquisition and continues until immediately after the last acquisition. Comments suggested that momentary relationships created in the course of the acquisition should be disregarded for purposes of the anti-churning rules. Such relationships can arise, for example, in the course of a stock acquisition followed by a liquidation or when assets are contributed to a newly created subsidiary and, pursuant to a binding commitment, all stock of the subsidiary is sold to an unrelated person or persons immediately after the contribution.
To address these and similar situations, the final regulations provide that in the case of a series of related transactions (or a series of transactions that together comprise a qualified stock purchase within the meaning of section 338(d)(3)) a person is treated as related to another person if the relationship exists immediately before the earliest such transaction or immediately after the last such transaction. In addition, any relationship created as part of a series of related transactions in which a person acquires stock of a corporation followed by a liquidation of the acquired corporation under section 331 generally is disregarded. Further, as with all other provisions of the regulations relating to the anti-churning rules, these provisions are to be applied in a manner that carries out the purpose of the anti-churning rules.
The final regulations also provide guidance on the exemption from the anti-churning rules if the person from whom the taxpayer acquires an intangible elects to recognize gain and agrees to pay a specified amount of tax. In general, these rules are the same as those contained in the proposed regulations, except that the proposed regulations do not prescribe procedures for making the election. The final regulations provide guidance on the manner of making the election, including procedures that apply to persons not otherwise subject to Federal income tax.
The regulations under sections 167(f) and 197 were proposed to apply on the date on which the final regulations are published in the
The applicability date of the rules implementing section 197(e)(4)(D) is similarly clarified. Thus, the final regulations provide that these rules apply to property acquired after August 10, 1993 (or July 25, 1991, if a valid retroactive election has been made under § 1.197-1T). The regulations also provide consent for changes in method of accounting to comply with the rules and automatic procedures for making the change.
In addition, the final regulations permit taxpayers to apply the rules in the final regulations to property acquired before the applicability date of the final regulations (or to rely on the proposed regulations for such property) and provide similar consent and automatic change procedures for taxpayers that choose to apply the final regulations to pre-effective date acquisitions.
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It is hereby certified that these regulations do not have a significant impact on a substantial number of small entities. This certification is based on the fact that the time required to prepare and file the election statement and notify acquirers is minimal and will not have a significant impact on those few small entities that choose to make the election. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
The principal author of these regulations is John Huffman, Office of Assistant Chief Counsel (Passthroughs and Special Industries), IRS. However, other personnel from the IRS and Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Reporting and recordkeeping requirements.
26 U.S.C. 7805 * * *
Section 1.197-2 also issued under 26 U.S.C. 197(g). * * *
(a) * * * See § 1.197-2 for rules governing the amortization of costs to acquire limited interests in section 197 intangibles.
* * * See sections 197 and 167(f) and, to the extent applicable, §§ 1.197-2 and 1.167(a)-14 for amortization of goodwill and certain other intangibles acquired after August 10, 1993, or after July 25, 1991, if a valid retroactive election under § 1.197-1T has been made.
(a) * * * See § 1.167(a)-14(c)(4) for depreciation of a separately acquired interest in a patent or copyright described in section 167(f)(2) acquired after January 25, 2000. See § 1.197-2 for amortization of interests in patents and copyrights that constitute amortizable section 197 intangibles.
(a)
(b)
(2)
(3)
(c)
(i)
(ii)
(iii)
(2)
(i)
(ii)
(3)
(ii) The mere fact that a taxpayer will have the opportunity to renew a contract right or other right on the same terms as are available to others, in a competitive auction or similar process that is designed to reflect fair market value and in which the taxpayer is not contractually advantaged, will generally not be taken into account in determining the duration of such right provided that the bidding produces a fair market value price comparable to the price that would be obtained if the rights were purchased immediately after renewal from a person (other than the person granting the renewal) in an arm's-length transaction.
(iii) The cost of a renewal not included in the terms of the contract or governmental grant is treated as the acquisition of a separate intangible asset.
(4)
(5)
(d)
(2)
(ii)
(3)
(e)
(2)
This section lists the headings that appear in § 1.197-2.
(a)
(2)
(3)
(b)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(ii) Notwithstanding the definitions provided in paragraph (b)(10)(i) of this section, any amount that is paid or incurred on account of a transfer, sale, or other disposition of a franchise, trademark, or trade name and that is subject to section 1253(d)(1) is not included in the basis of a section 197 intangible. (See paragraph (g)(6) of this section.)
(11)
(12)
(c)
(1)
(2)
(3)
(4)
(A) Integrated programs acquired in a package from a single source are treated as a single computer program; and
(B) Any cost incurred to install the computer software on a system is not treated as a cost of the software. However, the costs for customization, such as tailoring to a user's specifications (other than embedded programming options) are costs of modifying the software.
(ii)
(iii)
(iv)
(5)
(6)
(7)
(8)
(ii)
(9)
(ii)
(10)
(11)
(12)
(13)
(A) Is acquired in the ordinary course of a trade or business (or an activity described in section 212) and not as part of a purchase of a trade or business;
(B) Is not described in section 197(d)(1)(A), (B), (E), or (F);
(C) Is not a customer-based intangible, a customer-related information base, or any other similar item; and
(D) Either—
(
(
(ii) See § 1.167(a)-14(c)(2) and (3) for applicable rules.
(d)
(2)
(ii)
(B)
(C)
(iii)
(B) The exception for self-created intangibles does not apply to any section 197 intangible created in connection with the purchase of a trade or business (as defined in paragraph (e) of this section).
(C) If a taxpayer disposes of a self-created intangible and subsequently reacquires the intangible in an acquisition described in paragraph (h)(5)(ii) of this section, the exception for self-created intangibles does not apply to the reacquired intangible.
(3)
(e)
(1)
(2)
(ii)
(A) A trademark or trade name is disregarded if it is included in computer software under paragraph (c)(4) of this section or in an interest in a film, sound recording, video tape, book, or other similar property under paragraph (c)(5) of this section;
(B) A franchise, trademark, or trade name is disregarded if its value is nominal or the taxpayer irrevocably disposes of it immediately after its acquisition; and
(C) The acquisition of a right or interest in a trademark or trade name is disregarded if the grant of the right or interest is not, under the principles of section 1253, a transfer of all substantial rights to such property or of an undivided interest in all substantial rights to such property.
(3)
(4)
(5)
(6)
(7)
(f)
(i) The basis of an amortizable section 197 intangible is amortized ratably over the 15-year period beginning on the later of—
(A) The first day of the month in which the property is acquired; or
(B) In the case of property held in connection with the conduct of a trade or business or in an activity described in section 212, the first day of the month in which the conduct of the trade or business or the activity begins.
(ii) Except as otherwise provided in this section, basis is determined under section 1011 and salvage value is disregarded.
(iii) Property is not eligible for amortization in the month of disposition.
(iv) The amortization deduction for a short taxable year is based on the number of months in the short taxable year.
(2)
(ii)
(iii)
(3)
(ii)
(B)
(
(
(iii)
(iv)
(B)
(
(
(
(
(
(g)
(
(
(B)
(C)
(ii)
(iii)
(iv)
(B)
(2)
(ii)
(
(
(B)
(C)
(
(
(iii)
(iv)
(B)
(C)
(3)
(4)
(ii)
(5)
(A) Any arrangement in which one insurance company (the reinsurer) becomes solely liable to policyholders on contracts transferred by another insurance company (the ceding company); and
(B) Any acquisition of an insurance contract that is treated as occurring by reason of an election under section 338.
(ii)
(
(
(B)
(C)
(6)
(7)
(8)
(h)
(ii)
(2)
(i) The taxpayer or a related person held or used the intangible or an interest therein at any time during the transition period;
(ii) The taxpayer acquired the intangible from a person that held the intangible at any time during the transition period and, as part of the transaction, the user of the intangible does not change; or
(iii) The taxpayer grants the right to use the intangible to a person that held or used the intangible at any time during the transition period (or to a person related to that person), but only if the transaction in which the taxpayer grants the right and the transaction in which the taxpayer acquired the intangible are part of a series of related transactions.
(3)
(4)
(5)
(i) The acquisition of a section 197(f)(9) intangible if the acquiring taxpayer's basis in the intangible is determined under section 1014(a); or
(ii) The acquisition of a section 197(f)(9) intangible that was an
(6)
(A) The person bears a relationship to that person that would be specified in section 267(b) (determined without regard to section 267(e)) and, by substitution, section 267(f)(1), if those sections were amended by substituting 20 percent for 50 percent; or
(B) The person bears a relationship to that person that would be specified in section 707(b)(1) if that section were amended by substituting 20 percent for 50 percent; or
(C) The persons are engaged in trades or businesses under common control (within the meaning of section 41(f)(1) (A) and (B)).
(ii)
(A) In the case of a single transaction, immediately before or immediately after the transaction in which the intangible is acquired; and
(B) In the case of a series of related transactions (or a series of transactions that together comprise a qualified stock purchase within the meaning of section 338(d)(3)), immediately before the earliest such transaction or immediately after the last such transaction.
(iii)
(iv)
(
(
(B)
(
(
(7)
(8)
(9)
(A) The taxpayer acquires the intangible from a person that would not be related to the taxpayer but for the substitution of 20 percent for 50 percent under paragraph (h)(6)(i)(A) of this section; and
(B) That person (whether or not otherwise subject to Federal income tax) elects to recognize gain on the disposition of the intangible and agrees, notwithstanding any other provision of law or treaty, to pay for the taxable year in which the disposition occurs an amount of tax on the gain that, when added to any other Federal income tax on such gain, equals the gain on the disposition multiplied by the highest marginal rate of tax for that taxable year.
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(A) The name and address of the electing taxpayer.
(B) Except in the case of a taxpayer that is not otherwise subject to Federal income tax, the taxpayer identification number (TIN) of the electing taxpayer.
(C) A statement that the taxpayer is making the election under section 197(f)(9)(B).
(D) Identification of the transaction and each person that is a party to the transaction or whose tax return is affected by the election (including, except in the case of persons not otherwise subject to Federal income tax, the TIN of each such person).
(E) The calculation of the gain realized, the applicable rate of tax, and the amount of the taxpayer's additional tax liability under this paragraph (h)(9).
(F) The signature of the taxpayer or an individual authorized to sign the taxpayer's Federal income tax return.
(ix)
(
(
(B)
(
(
(x)
(B)
(C)
(D)
(xi)
(10)
(11)
(12)
(ii)
(iii)
(iv)
(v)
(vi)
(B)
(
(
(
(
(
(
(
(C)
(vii)
(B)
(viii)
(i) [Reserved]
(j)
(k)
(i) Q manufactures and sells consumer products through a series of wholesalers and distributors. In order to increase sales of its products by encouraging consumer loyalty to its products and to enhance the value of the goodwill, trademarks, and trade names of the business, Q advertises its products to the consuming public. It regularly incurs costs to develop radio, television, and print advertisements. These costs generally consist
(ii) The advertising costs are not chargeable to capital account under paragraph (f)(3) of this section (relating to costs incurred for covenants not to compete, rights granted by governmental units, and contracts for the use of section 197 intangibles) and are currently deductible as ordinary and necessary expenses under section 162. Accordingly, under paragraph (a)(3) of this section, section 197 does not apply to these costs.
(i) X purchases all of the assets of an existing trade or business from Y. One of the assets acquired is all of Y's rights in certain computer software previously used by Y under the terms of a nonexclusive license from the software developer. The software was developed for use by manufacturers to maintain a comprehensive accounting system, including general and subsidiary ledgers, payroll, accounts receivable and payable, cash receipts and disbursements, fixed asset accounting, and inventory cost accounting and controls. The developer modified the software for use by Y at a cost of $1,000 and Y made additional modifications at a cost of $500. The developer does not maintain wholesale or retail outlets but markets the software directly to ultimate users. Y's license of the software is limited to an entity that is actively engaged in business as a manufacturer.
(ii) Notwithstanding these limitations, the software is considered to be readily available to the general public for purposes of paragraph (c)(4)(i) of this section. In addition, the software is not substantially modified because the cost of the modifications by the developer and Y to the version of the software that is readily available to the general public does not exceed $2,000. Accordingly, the software is not a section 197 intangible.
(i) B, the owner and operator of a worldwide package-delivery service, purchases from S all rights to software developed by S. The software will be used by B for the sole purpose of improving its package-tracking operations. B does not purchase any other assets in the transaction or any related transaction.
(ii) Because B acquired the software solely for internal use, it is disregarded in determining for purposes of paragraph (c)(4)(ii) of this section whether the assets acquired in the transaction or series of related transactions constitute a trade or business or substantial portion thereof. Since no other assets were acquired, the software is not acquired as part of a purchase of a trade or business and under paragraph (c)(4)(ii) of this section is not a section 197 intangible.
(i) City M operates a municipal water system. In order to induce X to locate a new manufacturing business in the city, M grants X the right to purchase water for 16 years at a specified price.
(ii) The right granted by M is a right to receive tangible property or services described in section 197(e)(4)(B) and paragraph (c)(6) of this section and, thus, is not a section 197 intangible. This exclusion applies even though the right does not qualify for exclusion as a right of fixed duration or amount under section 197(e)(4)(D) and paragraph (c)(13) of this section because the duration exceeds 15 years and the right is not fixed as to amount. It is also immaterial that the right would not qualify for exclusion as a self-created intangible under section 197(c)(2) and paragraph (d)(2) of this section because it is granted by a governmental unit.
(i) S is a franchiser of retail outlets for specialty coffees. G enters into a franchise agreement (within the meaning of section 1253(b)(1)) with S pursuant to which G is permitted to acquire and operate a store using the S trademark and trade name at the location specified in the agreement. G agrees to pay S $100,000 upon execution of the agreement and also agrees to pay, throughout the term of the franchise, additional amounts that are deductible under section 1253(d)(1). The agreement contains detailed specifications for the construction and operation of the business, but G is not required to purchase from S any of the materials necessary to construct the improvements at the location specified in the franchise agreement.
(ii) The franchise is a section 197 intangible within the meaning of paragraph (b)(10) of this section. The franchise does not qualify for the exclusion relating to self-created intangibles described in section 197(c)(2) and paragraph (d)(2) of this section because the franchise is described in section 197(d)(1)(F). In addition, because the acquisition of the franchise constitutes the acquisition of an interest in a trade or business or a substantial portion thereof, the franchise may not be excluded under section 197(e)(4). Thus, the franchise is an amortizable section 197 intangible, the basis of which must be recovered over a 15-year period. However, the amounts that are deductible under section 1253(d)(1) are not subject to the provisions of section 197 by reason of section 197(f)(4)(C) and paragraph (b)(10)(ii) of this section.
(i) As part of the acquisition of a trade or business from C, B and C enter into an agreement containing a covenant not to compete. Under this agreement, C agrees that it will not compete with the business acquired by B within a prescribed geographical territory for a period of three years after the date on which the business is sold to B. In exchange for this agreement, B agrees to pay C $90,000 per year for each year in the term of the agreement. The agreement further provides that, in the event of a breach by C of his obligations under the agreement, B may terminate the agreement, cease making any of the payments due thereafter, and pursue any other legal or equitable remedies available under applicable law. The amounts payable to C under the agreement are not contingent payments for purposes of § 1.1275-4. The present fair market value of B's rights under the agreement is $225,000. The aggregate consideration paid for all assets acquired in the transaction (including the covenant not to compete) exceeds the sum of the amount of Class I assets and the aggregate fair market value of all Class II, Class III, Class IV, Class V, and Class VI assets by $50,000. See § 1.338-6T(b) for rules for determining the assets in each class.
(ii) Because the covenant is acquired in an applicable asset acquisition (within the meaning of section 1060(c)), paragraph (f)(4)(ii) of this section applies and the basis of B in the covenant is determined pursuant to section 1060(a) and the regulations thereunder. Under §§ 1.1060-1T(c)(2) and 1.338-6T(c)(1), B's basis in the covenant cannot exceed its fair market value. Thus, B's basis in the covenant immediately after the acquisition is $225,000. This basis is amortized ratably over the 15-year period beginning on the first day of the month in which the agreement is entered into. Although the payments under the agreement ($270,000) exceed the amount allocated to the covenant by $45,000, all of the remaining consideration ($50,000) is allocated to Class VII assets (goodwill and going concern value). See §§ 1.1060-1T(c)(2) and 1.338-6T(b).
(i) X is a manufacturer of consumer goods that does business throughout the world through subsidiary corporations organized under the laws of each country in which business is conducted. X licenses to Y, its subsidiary organized and conducting business in Country K, all of the patents, formulas, designs, and know-how necessary for Y to manufacture the same products that X manufactures in the United States. Assume that the license is not considered a sale or exchange under the principles of section 1235. The license is for a term of 18 years, and there are no facts to indicate that the license does not have a fixed duration. Y agrees to pay X a royalty equal to a specified, fixed percentage of the revenues obtained from selling products manufactured using the licensed technology. Assume that the royalty is reasonable and is not subject to adjustment under section 482. The license is not entered into in connection with any other transaction. Y incurs capitalized costs in connection with entering into the license.
(ii) The license is a contract for the use of a section 197 intangible within the meaning of paragraph (b)(11) of this section. It does not qualify for the exception in section 197(e)(4)(D) and paragraph (c)(13) of this section (relating to rights of fixed duration or amecause it does not have a term of less than 15 years, and the other exceptions in section 197(e) and paragraph (c) of this section are also inapplicable. Accordingly, the license is a section 197 intangible.
(iii) The license is not acquired as part of a purchase of a trade or business. Thus, under paragraph (f)(3)(iii) of this section, the license will be closely scrutinized under the principles of section 1235 for purposes of determining whether the transfer is a sale or exchange and, accordingly, whether the payments under the license are chargeable to
(i) The facts are the same as in
(ii) As in
(iii) Because the technology license is not part of the purchase of a trade or business, it is treated in the manner described in
(i) The facts are the same as in
(ii) The purported license of technology is, in fact, an acquisition of an intangible described in section 197(d)(1)(C)(iii) and paragraph (b)(5) of this section (relating to know-how, etc.). As in
(i) X is a computer manufacturer that produces, in separate operating divisions, personal computers, servers, and peripheral equipment. In a transaction that is the purchase of a trade or business for purposes of section 197, Y (who is unrelated to X) purchases from X all assets of the operating division producing personal computers, except for certain patents that are also used in the division manufacturing servers and customer lists that are also used in the division manufacturing peripheral equipment. As part of the transaction, X transfers to Y the right to use the retained patents and customer lists solely in connection with the manufacture and sale of personal computers. The transfer agreement requires annual royalty payments contingent on the use of the patents and also requires a payment for each use of the customer list. In addition, Y incurs capitalized costs in connection with entering into the licenses.
(ii) The rights to use the retained patents and customer lists are contracts for the use of section 197 intangibles within the meaning of paragraph (b)(11) of this section. The rights do not qualify for the exception in 197(e)(4)(D) and paragraph (c)(13) of this section (relating to rights of fixed duration or amount) because they are transferred as part of a purchase of a trade or business and the other exceptions in section 197(e) and paragraph (c) of this section are also inapplicable. Accordingly, the licenses are section 197 intangibles.
(iii) Because the right to use the retained patents is described in paragraph (b)(11) of this section and the right is transferred as part of a purchase of a trade or business, the treatment of the royalty payments is determined under paragraph (f)(3)(ii) of this section. In addition, however, the retained patents are described in paragraph (b)(5) of this section. Thus, the annual royalty payments are chargeable to capital account under the general rule of paragraph (f)(3)(ii)(A) of this section unless Y establishes that the license is not a sale or exchange under the principles of section 1235 and the royalty payments are an arm's length consideration for the rights transferred. If these facts are established, the exception in paragraph (f)(3)(ii)(B) of this section applies and the royalty payments are not chargeable to capital account for purposes of section 197. The capitalized costs of entering into the license are treated in the same manner as in Example 7.
(iv) The right to use the retained customer list is also described in paragraph (b)(11) of this section and is transferred as part of a purchase of a trade or business. Thus, the treatment of the payments for use of the customer list is also determined under paragraph (f)(3)(ii) of this section. The customer list, although described in paragraph (b)(6) of this section, is a customer-related information base. Thus, the exception in paragraph (f)(3)(ii)(B) of this section does not apply. Accordingly, payments for use of the list are chargeable to capital account under the general rule of paragraph (f)(3)(ii)(A) of this section and are amortized under section 197. In addition, the capitalized costs of entering into the contract for use of the customer list are treated in the same manner as in
(i) Assume that X and Y are treated as a single taxpayer for purposes of paragraph (g)(1) of this section. In a single transaction, X and Y acquired from Z all of the assets used by Z in a trade or business. Z had operated this business at two locations, and X and Y each acquired the assets used by Z at one of the locations. Three years after the acquisition, X sold all of the assets it acquired, including amortizable section 197 intangibles, to an unrelated purchaser. The amortizable section intangibles are sold at a loss of $120,000.
(ii) Because X and Y are treated as a single taxpayer for purposes of the loss disallowance rules of section 197(f)(1) and paragraph (g)(1) of this section, X's loss on the sale of the amortizable section 197 intangibles is not recognized. Under paragraph (g)(1)(iv)(B) of this section, X's disallowed loss is allowed ratably, as a deduction under section 197, over the remainder of the 15-year period during which the intangibles would have been amortized, and Y may not increase the basis of the amortizable section 197 intangibles that it acquired from Z by the amount of X's disallowed loss.
(i) The facts are the same as in
(ii) Under paragraph (g)(1)(iv)(B) of this section, X may recognize, on the date of the sale by Y, any loss that has not been allowed as a deduction under section 197. Accordingly, X recognizes a loss of $50,000, the amount obtained by reducing the loss on the sale of the assets at the end of the third year ($120,000) by the amount allowed as a deduction under paragraph (g)(1)(iv)(B) of this section during the 7 years following the sale by X ($70,000).
(i) A, B, and C each contribute $1,500 for equal shares in general partnership P. On January 1, 1998, P acquires as its sole asset an amortizable section 197 intangible for $4,500. P still holds the intangible on January 1, 2003, at which time the intangible has an adjusted basis to P of $3,000, and A, B, and C each have an adjusted basis of $1,000 in their partnership interests. D (who is not related to A) acquires A's interest in P for $1,600. No section 754 election is in effect for 2003.
(ii) Because there is no change in the basis of the intangible under section 743(b), D merely steps into the shoes of A with respect to the intangible. D's proportionate share of P's adjusted basis in the intangible is $1,000, which continues to be amortized over the 10 years remaining in the original 15-year amortization period for the intangible.
(i) The facts are the same as in
(ii) Pursuant to paragraph (g)(3) of this section, for purposes of section 197, D is treated as if P owns two assets. D's proportionate share of P's adjusted basis in one asset is $1,000, which continues to be amortized over the 10 years remaining in the original 15-year amortization period. For the other asset, D's proportionate share of P's adjusted basis is $600 (the amount of the basis increase under section 743 as a result of the section 754 election), which is amortized over a new 15-year period beginning January 2003. With respect to B and C, P's remaining $2,000 adjusted basis in the intangible continues to be amortized over the 10 years remaining in the original 15-year amortization period.
(i) The facts are the same as in
(ii) Pursuant to paragraph (g)(3) of this section, because of the section 734 adjustment, P is treated as having two amortizable section 197 intangibles, one with a basis of $3,000 and a remaining amortization period of 10 years and the other with a basis of $600 and a new amortization period of 15 years.
(i) A and B are partners with equal shares in the capital and profits of general partnership P. P's only asset is an amortizable section 197 intangible, which P had acquired on January 1, 1995. On January 1, 2000, the asset had a fair market value of $100 and a basis to P of $50. On that date, A sells his entire partnership interest in P to C, who is unrelated to A, for $50. At the time of the sale, the basis of each of A and B in their respective partnership interests is $25.
(ii) The sale causes a termination of P under section 708(b)(1)(B). Under section 708, the transaction is treated as if P transfers its sole asset to a new partnership in exchange for the assumption of its liabilities and the receipt of all of the interests in the new partnership. Immediately thereafter, P is treated as if it is liquidated, with B and C each receiving their proportionate share of the interests in the new partnership. The contribution by P of its asset to the new partnership is governed by section 721, and the liquidating distributions by P of the interests in the new partnership are governed by section 731. C does not realize a basis adjustment under section 743 with respect to the amortizable section 197 intangible unless P had a section 754 election in effect for its taxable year in which the transfer of the partnership interest to C occurred or the taxable year in which the deemed liquidation of P occurred.
(iii) Under section 197, if P had a section 754 election in effect, C is treated as if the new partnership had acquired two assets from P immediately preceding its termination. Even though the adjusted basis of the new partnership in the two assets is determined solely under section 723, because the transfer of assets is a transaction described in section 721, the application of sections 743(b) and 754 to P immediately before its termination causes P to be treated as if it held two assets for purposes of section 197. See paragraph (g)(3) of this section. B's and C's proportionate share of the new partnership's adjusted basis is $25 each in one asset, which continues to be amortized over the 10 years remaining in the original 15-year amortization period. For the other asset, C's proportionate share of the new partnership's adjusted basis is $25 (the amount of the basis increase resulting from the application of section 743 to the sale or exchange by A of the interest in P), which is amortized over a new 15-year period beginning in January 2000.
(iv) If P did not have a section 754 election in effect for its taxable year in which the sale of the partnership interest by A to C occurred or the taxable year in which the deemed liquidation of P occurred, the adjusted basis of the new partnership in the amortizable section 197 intangible is determined solely under section 723, because the transfer is a transaction described in section 721, and P does not have a basis increase in the intangible. Under section 197(f)(2) and paragraph (g)(2)(ii) of this section, the new partnership continues to amortize the intangible over the 10 years remaining in the original 15-year amortization period. No additional amortization is allowable with respect to this asset.
(i) E and F are individuals who are unrelated to each other within the meaning of paragraph (h)(6) of this section. E has been engaged in the active conduct of a trade or business as a sole proprietor since 1990. E and F form EF Partnership. E transfers all of the assets of the business, having a fair market value of $100, to EF, and F transfers $40 of cash to EF. E receives a 60 percent interest in EF and the $40 of cash contributed by F, and F receives a 40 percent interest in EF, under circumstances in which the transfer by E is partially treated as a sale of property to EF under § 1.707-3(b).
(ii) Under § 1.707-3(a)(1), the transaction is treated as if E had sold to EF a 40 percent interest in each asset for $40 and contributed the remaining 60 percent interest in each asset to EF in exchange solely for an interest in EF. Because E and EF are related persons within the meaning of paragraph (h)(6) of this section, no portion of any transferred section 197(f)(9) intangible that E held during the transition period (as defined in paragraph (h)(4) of this section) is an amortizable section 197 intangible pursuant to paragraph (h)(2) of this section. Section 197(f)(9)(F) and paragraph (g)(3) of this section do not apply to any portion of the section 197 intangible in the hands of EF because the basis of EF in these assets was not increased under any of sections 732, 734, or 743.
(ii) P has a transferred basis in the intangible from A and B under section 723. The nonrecognition transfer rule under paragraph (g)(2)(ii) of this section applies to A's transfer of its one-half interest in the intangible to P, and consequently P steps into A's shoes with respect to A's nonamortizable transferred basis. The anti-churning rules of paragraph (h) of this section apply to B's transfer of its one-half interest in the intangible to P, because A, who is related to P under paragraph (h)(6) of this section immediately after the series of transactions in which the intangible was acquired by P, held B's one-half interest in the intangible during the transition period. Pursuant to paragraph (h)(10) of this section, these rules apply to B's transfer of its one-half interest to P even though the nonrecognition transfer rule under paragraph (g)(2)(ii) of this section would have permitted P to step into B's shoes with respect to B's otherwise amortizable basis. Therefore, P's entire basis in the intangible is nonamortizable. However, if A (not B) elects to recognize gain under paragraph (h)(9) of this section on the transfer of each of the one-half interests in the intangible to B and P, then the intangible would be amortizable by P to the extent provided in section 197(f)(9)(B) and paragraph (h)(9) of this section.
(ii) For the reasons set forth in
(ii) P has a transferred basis in the intangible from A and B under section 362. Pursuant to paragraph (h)(10) of this section, the application of the nonrecognition transfer rule under paragraph (g)(2)(ii) of this section and the anti-churning rules of paragraph (h) of this section to the facts of this
(ii) Pursuant to paragraph (h)(6)(iv)(B) of this section, the beneficial ownership interest of X in Z is 6.25 percent, determined by treating X as if it owned a proportionate (25 percent) interest in the stock of Z that is actually owned by Y. Thus, even though X is related to Y and Y is related to Z, X and Z are not considered to be related for purposes of the anti-churning rules of section 197.
(ii) If the gain recognition election had not been made, S would have taxable income of $30,000 for 2001 and a tax liability of $4,500. If the gain were not taken into account, S would have no tax liability for the taxable year. Thus, the amount of tax (other than the tax imposed under paragraph (h)(9) of this section) imposed on the gain is also $4,500. The gain on the disposition multiplied by the highest marginal tax rate is $17,500 ($50,000 × .35). Accordingly, S's tax liability for the year is $4,500 plus an additional tax under paragraph (h)(9) of this section of $13,000 ($17,500—$4,500).
(iii) Pursuant to paragraph (h)(9)(x)(A) of this section, S determines the amount of its net operating loss deduction in subsequent years without regard to the gain recognized on the sale of the section 197 intangible to B. Accordingly, the entire $20,000 net operating loss deduction that would have been available in 2001 but for the gain recognition election may be used in 2002, subject to the limitations of section 172.
(iv) B has a basis of $75,000 in the section 197(f)(9) intangibles acquired from S. As the result of the gain recognition election by S, B may amortize $50,000 of its basis under section 197. Under paragraph (h)(9)(ii) of this section, the remaining basis does not qualify for the gain-recognition exception and may not be amortized by B.
(ii) Pursuant to paragraph (h)(8) of this section, in the case of a qualified stock purchase that is treated as a deemed sale and purchase of assets pursuant to section 338, the corporation treated as purchasing assets as a result of an election thereunder (new target) is not considered the person that held or used the assets during any period in which the assets were held or used by the corporation treated as selling the assets (old target). Because there are no relationships described in paragraph (h)(6) of this section among the parties to the transaction, any nonamortizable section 197(f)(9) intangible held by old target is an amortizable section 197 intangible in the hands of new target.
(iii) Assume the same facts as set forth in paragraph (i) of this
(iv) Old target and new target (as these terms are defined in § 1.338-1(c)(13)) are members of a controlled group of corporations under section 267(b)(3), as modified by section 197(f)(9)(C)(i), and any nonamortizable section 197(f)(9) intangible held by old target is not an amortizable section 197 intangible in the hands of new target. However, a gain recognition election under paragraph (h)(9) of this section may be made with respect to this transaction.
(i) On January 1, 2001, Corporation X engages in a series of related transactions to discontinue its involvement in one line of business. X forms a new corporation, Y, with a nominal amount of cash. Shortly thereafter, X transfers all the stock of its subsidiary conducting the unwanted business (Target) to Y in exchange for 100 shares of Y common stock and a Y promissory note. Target owns a nonamortizable section 197(f)(9) intangible. Prior to January 1, 2001, X and an underwriter (U) had entered into a binding agreement pursuant to which U would purchase 85 shares of Y common stock from X and then sell those shares in a public offering. On January 6, 2001, the public offering closes. X and Y make a section 338(h)(10) election for Target.
(ii) Pursuant to paragraph (h)(8) of this section, in the case of a qualified stock purchase that is treated as a deemed sale and purchase of assets pursuant to section 338, the corporation treated as purchasing assets as a result of an election thereunder (new target) is not considered the person that held or used the assets during any period in which the assets were held or used by the corporation treated as selling the assets (old target). Further, for purposes of determining whether the nonamortizable section 197(f)(9) intangible is acquired by new target from a related person, because the transactions are a series of related transactions, the relationship between old target and new target must be tested immediately before the first transaction in the series (the formation of Y) and immediately after the last transaction in the series (the sale to U and the public offering). See paragraph (h)(6)(ii)(B) of this section. Because there was no relationship between old target and new target immediately before the formation of Y (because the section 338 election had not been made) and only a 15% relationship between old target and new target immediately after, old target is not related to new target for purposes of applying the anti-churning rules of paragraph (h) of this section. Accordingly, Target may amortize the section 197 intangible.
(i) In 2001, Corporation A transfers a section 197(f)(9) intangible that it held during the transition period to X, a newly formed corporation, in exchange for 15% of X's stock. As part of the same transaction, B transfers property to X in exchange for the remaining 85% of X stock.
(ii) Because the acquisition of the intangible by X is part of a qualifying section 351 exchange, under section 197(f)(2) and paragraph (g)(2)(ii) of this section, X is treated in the same manner as the transferor of the asset. Accordingly, X may not amortize the intangible. If, however, at the time of the exchange, B has a binding commitment to sell 25 percent of the X stock to C, an unrelated third party, the exchange, including A's transfer of the section 197(f)(9) intangible, would fail to qualify as a section 351 exchange. Because the formation of X, the transfers of property to X, and the sale of X stock by B are part of a series of related transactions, the relationship between A and X must be tested immediately before the first transaction in the series (the transfer of property to X) and immediately after the last transaction in the series (the sale of X stock to C). See paragraph (h)(6)(ii)(B) of this section. Because there was no relationship between A and X immediately before and only a 15% relationship immediately after, A is not related to X for purposes of applying the anti-churning rules of paragraph (h) of this section. Accordingly, X may amortize the section 197 intangible.
(i) In 2001, Partnership P purchases 100 percent of the stock of Corporation X. P and X were not related prior to the acquisition. Immediately after acquiring the X stock, and
(ii) Because the relationship between P and X was created pursuant to a series of related transactions where P acquires stock (meeting the requirements of section 1504(a)(2)) in a fully taxable transaction followed by a liquidation under section 331, the relationship immediately after the last transaction in the series (the liquidation) is disregarded. See paragraph (h)(6)(iii) of this section. Accordingly, P is entitled to amortize the section 197(f)(9) intangible.
(i) On January 1, 2001, A forms a partnership (PRS) with B in which A owns a 60-percent, and B owns a 40-percent, interest in profits and capital. A contributes a nonamortizable section 197(f)(9) intangible with a value of $80 and an adjusted basis of $0 to PRS in exchange for its PRS interest and B contributes $120 cash. At the time of the contribution, PRS licenses the section 197(f)(9) intangible to A. On February 1, 2001, A sells its entire interest in PRS to C, an unrelated person, for $80. PRS has a section 754 election in effect.
(ii) The section 197(f)(9) intangible contributed to PRS by A is not amortizable in the hands of PRS. Pursuant to section (g)(2)(ii) of this section, PRS steps into the shoes of A with respect to A's nonamortizable transferred basis in the intangible.
(iii) When A sells the PRS interest to C, C will have a basis adjustment in the PRS assets under section 743(b) equal to $80. The entire basis adjustment will be allocated to the intangible because the only other asset held by PRS is cash. Ordinarily, under paragraph (h)(12)(v) of this section, the anti-churning rules will not apply to an increase in the basis of partnership property under section 743(b) if the person acquiring the partnership interest is not related to the person transferring the partnership interest. However, A is an anti-churning partner under paragraph (h)(12)(vi)(B)(
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26 U.S.C. 7805.
(b) * * *
Internal Revenue Service (IRS), Treasury.
Final regulations.
This document contains final regulations that relate to the treatment of corporate subsidiaries of S corporations and interpret the rules added to the Internal Revenue Code by section 1308 of the Small Business Job Protection Act of 1996. These regulations provide the public with guidance needed to comply with applicable law and will affect S corporations and their shareholders.
Jeanne M. Sullivan (202) 622-3050 (not
The collections of information contained in these final regulations have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1590. Responses to these collections of information are required to determine the manner in which a corporate subsidiary of an S corporation will be treated under the Internal Revenue Code.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by the Office of Management and Budget.
The estimated annual burden per respondent/recordkeeper varies from 45 minutes to 1 hour, depending on individual circumstances, with an estimated average of 57 minutes.
Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be sent to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, OP:FS:FP, Washington, DC 20224, and to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503.
Books or records relating to this collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
On April 22, 1998, the IRS published in the
Written comments were received in response to the notice of proposed rulemaking, and a public hearing was held on October 14, 1998. After consideration of all the comments, the proposed regulations under sections 1361, 1362, and 1374 are adopted, as revised by this Treasury decision. The comments received and the revisions are discussed below. In addition, regulations under section 6109 are adopted to provide additional guidance consistent with the QSub provisions.
On January 13, 1997, the IRS published Notice 97-4, 1997-1 C.B. 351, to provide a temporary procedure for making a QSub (formerly QSSS) election. Taxpayers should continue to follow Notice 97-4 when making a QSub election until the QSub election form is published.
The proposed regulations provide that, when an S corporation makes a valid QSub election with respect to a subsidiary, the subsidiary is deemed to have liquidated into the parent S corporation immediately before the QSub election is effective. The tax treatment of this liquidation, alone or in the context of any larger transaction (for example, a transaction that also includes the acquisition of the subsidiary's stock), generally is determined under all relevant provisions of the Code and general principles of tax law, including the step transaction doctrine. However, the proposed regulations include a special transition rule that applies to certain elections effective prior to the date that is 60 days after publication of final regulations in the
Commentators expressed concern over the application of the step transaction doctrine to transactions that include the deemed liquidation that occurs as the result of a QSub election. These commentators argued that applying step transaction to the acquisition of stock that precedes a QSub election can cause the transaction to be recast as an asset acquisition under section 368 with results that may be inconsistent with the expectations of some taxpayers. Under step transaction principles, for example, if, pursuant to a plan, a shareholder contributes the stock of one wholly owned S corporation (S2) to another wholly owned S corporation (S1), and makes a QSub election for S2, the transaction generally would be a reorganization under section 368(a)(1)(D), with the possibility of gain recognition under section 357(c). See generally, Rev. Rul. 67-274 (1967-2 C.B. 141). In the opinion of these commentators, the legislative history of the QSub provisions indicates that the deemed liquidation that is incident to a QSub election should be respected as an independent, tax-free liquidation under section 332, rather than recast under the principles of the step transaction doctrine.
After consideration of all of the comments, Treasury and the IRS believe that the proposed regulations are consistent with the legislative history of the QSub provisions, conform the results of the deemed liquidation to the results that would obtain if an actual liquidation occurred, and follow the approach taken in other provisions of the tax law. (In regulations published on November 29, 1999 (64 FR 66580), rules for elective changes in the classification of an entity for Federal tax purposes also provide that the tax treatment of a change in the classification of an entity by election is determined under all relevant provisions of the Internal Revenue Code and general principles of tax law, including the step transaction doctrine.) Accordingly, the final regulations provide that general principles of tax law, including step transaction, apply to determine the tax consequences of the transactions that include a QSub election. The final regulations provide examples illustrating the results of applying step transaction in the context of a QSub election.
The final regulations also provide for an extended transition period during which step transaction will be suspended. During the extended transition period, it is anticipated that proposed regulations published in the
Section 1361(b)(3)(C) provides that, if a QSUB election terminates, the corporation is treated as a new corporation acquiring all of its assets (and assuming all of its liabilities) from the S corporation in exchange for stock of the new corporation immediately before the termination. The proposed regulations provide that the tax treatment of this transaction or of a larger transaction that includes this transaction will be determined under the Code and general principles of tax law, including the step transaction doctrine. The proposed regulations include examples illustrating the application of the step transaction doctrine in the context of the termination of a QSUB election.
Commentators recommended that step transaction not apply to the termination of a QSUB election. Those commentators argue that the application of the step transaction doctrine causes inappropriate tax results in some situations. One example cited is the sale of 21 percent of the stock of a QSUB, thereby terminating the QSUB election. Under step transaction principles, the deemed formation of a new corporation that occurs as a result of the QSub termination fails to qualify under section 351 because the S corporation parent is not in control of the new corporation as defined in section 368(c) after the disposition. As a result of the failure to qualify under section 351, gain would be recognized on all of the QSub's assets.
Treasury and the IRS believe that it is appropriate to apply the step transaction doctrine to the termination of a QSub election. Applying the step transaction principles to the control requirement of section 351 after the disposition of QSub stock is completed is consistent with the legislative history of the QSub termination provisions. S. Rep. No. 104-281, 104th Cong., 2d Sess. 52 n.59 (1996). Moreover, in many cases, application of the step transaction doctrine will provide a more taxpayer favorable result than giving separate effect to each step. This may occur, for example, if 100 percent of the stock of a QSub is sold. In that case, applying step transaction principles would result in a fair market value basis for the former QSub's assets, rather than a lower carryover basis that would result (absent a section 338 election) from treating the deemed formation of the new corporation as an independent step qualifying under section 351. In order to assist taxpayers to understand the effect of QSub terminations, the final regulations include two examples that illustrate the contrasting tax consequences of purchasing 21 percent of the stock of a QSub as opposed to the tax consequences of contributing property to the QSub in exchange for 21 percent of the former QSub's stock. The final regulations include additional examples illustrating the consequences of revoking the QSub election prior to sale of the QSub's stock and of merging a QSub into a disregarded entity prior to such sale.
As noted above, commentators generally oppose applying the step transaction doctrine to the acquisition of the stock of a corporation followed immediately by a QSub election. Some commentators, however, suggested that, for policy and other reasons, during the transition period, the formation of a new shell S corporation (Newco) by the shareholders of an existing S corporation, followed by the contribution of the stock of the existing S corporation to Newco, coupled with an immediate QSub election for the existing corporation, should be characterized as a reorganization under section 368(a)(1)(F) if all of the other requisites of that section are met. Treating the transaction as an “F” reorganization (as opposed to a stock acquisition followed by a section 332 liquidation) can be beneficial to taxpayers. For example, the existing S corporation's taxable year does not close if it undergoes an “F” reorganization.
In light of the underlying purpose of the transition rule as a relief provision for the benefit of taxpayers, during the extended transition period provided in the final regulations, the IRS will not challenge taxpayers who, through application of the step transaction doctrine to an acquisition of stock followed by a QSub election, obtain tax treatment similar to that applied in a valid reorganization under section 368(a)(1)(F) if, without regard to the transition rule, the transaction would properly qualify as such a reorganization.
Under section 332(a), no gain or loss shall be recognized on the receipt by a corporation of property distributed in complete liquidation of another corporation if the requirements of section 332(b) are satisfied. Those requirements include the adoption of a plan of liquidation at a time when the corporation receiving the distribution owns 80 percent or more of the stock of the liquidating corporation. A QSub election results in a constructive liquidation for Federal tax purposes. Formally adopting a plan of liquidation for the QSub, however, is potentially incompatible with the QSub provisions of the Code, which allow the state-law entity to continue to exist while liquidating only for Federal tax purposes. In order to provide tax treatment for the constructive liquidation incident to a QSub election that is compatible with the requirements of section 332, the proposed regulations include a provision that the making of a QSub election satisfies the requirement of adopting a plan of liquidation.
One commentator asked that the regulations provide a safe harbor with respect to the timing of the adoption of the plan of liquidation for purposes of section 332. The commentator argued that, where the acquisition of stock followed by the deemed liquidation does not constitute a reorganization (after appropriate application of step-transaction principles), the regulations should provide that, for purposes of applying section 332 to the liquidation incident to a QSub election, the S corporation will be deemed to adopt a plan of liquidation for its subsidiary as of the effective date of the election, which should not precede the acquisition by the S corporation of 100 percent of the stock of the subsidiary.
The timing of the adoption of the plan of liquidation is important in the
In general, section 332 does not apply to the liquidation of an insolvent corporation, because the parent corporation does not receive at least partial payment for the stock of its subsidiary. See, e.g., § 1.332-2(b) and Rev. Rul. 68-602 (1968-2 C.B. 135). One commentator recommended that a QSub election made for an insolvent subsidiary be eligible for tax-free treatment under section 332. The commentator argued that the legislative history of the QSub provisions makes it clear that a QSub election should qualify as a liquidation under section 332 unless regulations provide otherwise and that taxpayers may be unaware of the harsh results of making a QSub election for an insolvent corporation.
Treasury and the IRS do not agree that the legislative history indicates that section 332 applies to the liquidation of an insolvent corporation. In order to assist taxpayers, an example illustrates the effect of a QSub election for an insolvent corporation.
Commentators recommended that, for purposes of determining whether a subsidiary is wholly owned by the parent S corporation, arrangements that are not considered to be stock under the one-class-of-stock rules of § 1.1361-1(l) should be disregarded. The commentators noted that applying the principles of these regulations would provide certainty with respect to the subsidiary's eligibility to be a QSub and avoid difficult debt/equity determinations.
The final regulations adopt the position recommended by the commentators. The final regulations provide that, for purposes of determining whether the deemed liquidation of the subsidiary qualifies under section 332, the deemed exercise of an option under § 1.1504-4 and any instrument, obligation, or arrangement that would not be considered stock under the one-class-of-stock rules of § 1.1361-1(l) are disregarded in determining if the stock ownership requirements of section 332(b) are met. For example, an option that would not be treated as stock under § 1.1361-1, but that would be treated as exercised under § 1.1504-4, is disregarded. Similarly, if a QSub election terminates, in determining the applicability of section 351, the determination of whether stock ownership of the newly formed corporation satisfies the control requirement of section 368(c) is made without regard to instruments, obligations, or other arrangements that are not treated as stock for purposes of the 100 percent stock ownership requirement for the election.
The rule regarding options under § 1.1504-4 is included for purposes of applying section 332 because section 332 explicitly incorporates the affiliation rules of section 1504. See § 1.1504-4(a)(1) (the option rules apply to all provisions under the Code and the regulations to which affiliation within the meaning of section 1504(a) is relevant). The affiliation rules are not relevant for purposes of applying the rules regarding the 100 percent stock ownership requirement in section 1361(b)(3)(B)(i). Accordingly, the rule concerning the treatment of stock in applying the 100 percent stock ownership requirement does not refer to the option rules under § 1.1504-4.
Commentary on the proposed regulations identified certain discrepancies in the treatment of tiered groups of corporations when QSub elections are made for some or all of the members of the group and certain unintended implications of the sentence added to § 1.1374-8(b) in the proposed regulations.
Section 1374(d)(8) and § 1.1374-8(a) generally provide that, if an S corporation acquires assets in a transaction in which the S corporation's basis in the assets is determined (in whole or in part) by reference to a C corporation's basis in the assets (or any other property) (a section 1374(d)(8) transaction), section 1374 applies to the net recognized built-in gain attributable to the assets acquired in such a transaction. Section 1.1374-8(b) provides that, for purposes of the tax imposed under section 1374(d)(8), a separate determination of tax is made with respect to the assets the S corporation acquires in one section 1374(d)(8) transaction from the assets the S corporation acquires in another section 1374(d)(8) transaction and from the assets the corporation held when it became an S corporation.
A corporation's section 1374 attributes (loss carryforwards, credits, and credit carryforwards as provided in § 1.1374-1(c)) may be used only to reduce the section 1374 tax imposed on the disposition of assets held by the S corporation at the time it converted from C status. Likewise, section 1374 attributes acquired in one section 1374(d)(8) transaction may be used only to reduce tax on the disposition of assets acquired in that transaction. This results in separate section 1374 pools for purposes of calculating the tax imposed by section 1374.
One commentator noted that § 1.1374-8(b) of the proposed regulations implies that a QSub election for two or more corporations results in a section 1374(d)(8) transaction for each subsidiary and that this implication is contrary to the general timing rules of § 1.1361-4(b)(1). Those general timing rules provide that the deemed liquidation of a tiered group of C corporations that elect S and QSub status effective on the same day occurs at the close of the day before the effective date of the elections, while the parent is a C corporation. As a result of the operation of the general timing rules, there is a single section 1374 pool when the parent corporation's S election
Section 1.1502-19 of the Income Tax Regulations provides rules requiring, in certain instances, a member (X) of a consolidated group of corporations to include in income its excess loss account (ELA) in the stock of another member (Y) of the group. An ELA reflects X's negative adjustments with respect to Y's stock to the extent the negative adjustments exceed X's basis in the stock. An ELA must be included in X's income if X is treated as disposing of Y's stock. See § 1.1502-19(b)(1). A merger or liquidation of X into an S corporation or an S election by X is treated as a disposition that triggers income recognition with respect to an ELA in Y stock. In contrast, X's income or gain in certain cases is subject to any nonrecognition or deferral rules applicable, including section 332. As a result, if Y liquidates into X in a transaction subject to section 332, there is no income recognition with respect to an ELA in Y's stock. See § 1.1502-19(b)(2)(i).
Under the general timing rules of § 1.1361-4(b)(1), if the common parent elects S status, the deemed liquidations of the subsidiary members of the consolidated group for which QSub elections are made (effective on the same date as the S election) occur as of the close of the day before the QSub elections are effective, while the S electing parent corporation is still a C corporation. As a result, there is no triggering of income with respect to ELAs in the stock of the subsidiary corporations if the liquidations qualify under section 332. In contrast, if a consolidated group of corporations is acquired by an S corporation and the acquiring S corporation makes QSub elections for the parent and members of the consolidated group, a deemed liquidation of the parent prior to the deemed liquidation of other members of the consolidated group may be a disposition that triggers income recognition with respect to ELAs in the subsidiaries' stock.
The final regulations remove the proposed amendment to § 1.1374-8(b). Furthermore, an amendment to the general timing rules under § 1.1361-4(b)(1) for acquired S corporations clarifies that an acquired S corporation liquidates into an acquiring corporation as of the beginning of the day of acquisition, after the parent's S election, if any, is effective. There is no section 1374(d)(8) transaction when an S corporation acquires assets from another S corporation, if the acquired S corporation has no C corporation history. The modification to the timing rule also clarifies that there is no period during which an acquired S corporation is a C corporation if the QSub election is made effective as of the time of the acquisition.
As noted in the commentary, the order of the deemed liquidations for a tiered group of corporations for which QSub elections are made (effective on the same date) is significant for purposes of section 1374 and under § 1.1502-19. In many situations, it is preferable to have the deemed liquidations occur in order from the lowest tier subsidiary to the highest tier subsidiary, a bottom-up liquidation order. As a result of that ordering, the final liquidation of the highest tier subsidiary results in a single section 1374 pool for the group. In addition, in the case of a consolidated group of corporations, because the deemed liquidation of the common parent follows the deemed liquidation of its subsidiaries, there is no deconsolidation for purposes of § 1.1502-19 and no triggering of ELAs. In other circumstances, however, a top to bottom liquidation of a tiered group of subsidiaries may be preferable. Therefore, the final regulations allow the S corporation to specify the order of the deemed liquidations when QSub elections are made (effective on the same day) for a tiered group of subsidiaries. In default of an election, the deemed liquidations occur in succession on the effective date of the election, beginning with the lowest tier subsidiary.
One commentator noted a potential lack of coordination in the regulations that determine the timing of the termination of the S election of an acquired S corporation and the deemed liquidation incident to a QSub election for that S corporation. The commentator acknowledged that the intent of the proposed regulations is to provide that an acquired S corporation for which a QSub election is made effective immediately on acquisition should have no intervening C period.
Other timing issues can arise with respect to the termination of a QSub election. The regulations provide rules that govern the timing of the deemed liquidation incident to a QSub election and of the termination of a QSub election. The regulations also provide examples illustrating those rules. The regulations generally are intended to provide that a corporation may move between S and QSub status without an intervening C period, if the appropriate election is made effective as of the termination of the previous S or QSub election. The regulations are coordinated with provisions under section 338 and §§ 1.1362-2 and 1.1502-76 that have differing timing provisions.
One commentator requested that the regulations provide inadvertent invalid QSub election relief similar to the relief that is available under section 1362(f) for inadvertent invalid S elections and inadvertent S terminations. The proposed regulations include a provision indicating that inadvertent QSub termination relief may be available under standards established by the Commissioner for inadvertent termination of an S election under § 1.1362-4.
The QSub provisions include no section analogous to section 1362(f) that allows the IRS to determine that a corporation is a QSub during a period when the corporation does not satisfy the requirement of section 1361(b)(3)(B)(i). For example, if the parent corporation inadvertently transfers one share of QSub stock to another person, the QSub election terminates. The subsidiary is not eligible to have a QSub election in effect for the period during which the parent does not own 100 percent of its stock. If the QSub election terminates because of the inadvertent termination of the parent's S election, however, relief may be available under section 1362(f). A favorable determination under that section causes the subsidiary to continue to satisfy the requirements of section 1361(b)(3)(B)(ii) during the period when the parent is accorded
The final regulations do not include the provision relating to the inadvertent termination of a QSub election. The removal of that provision is not intended to suggest that relief under section 1362(f) is not available in appropriate circumstances (such as those discussed above), but is intended to avoid confusion with respect to the scope of the IRS's statutory authority under section 1362(f).
Commentators requested that the final regulations provide an ordering rule for the simultaneous termination of QSub elections as the result of the termination of an upper-tier subsidiary's QSub election. The final regulations provide that the terminations occur in succession, beginning with the upper-tier subsidiary, and include examples to illustrate the effect of simultaneous QSub terminations.
Consistent with the proposed regulations, the final regulations provide that any special rules applicable to banks under the Code continue to apply separately to banks as if the deemed liquidation incident to a QSub election had not occurred (the banking provisions). Commentators requested that the banking provisions be retroactive to the effective date of the Act, by election. As authorized by section 1601 of the 1997 Act, and as first announced in Notice 97-5 (1997-1 C.B. 352), the final regulations provide that the banking provisions apply to taxable years beginning after December 31, 1996. This rule applies to all taxpayers and is not subject to an election. The banking provisions also include a reference to other published guidance for section 265(b); see Rev. Rul. 90-44 (1990-1 C.B. 54, 57).
The regulations provide clarification regarding employer identification numbers (EINs) for QSubs. The regulations restate the general rules that: (1) When an entity's classification changes as a result of an election, it retains its EIN; and (2) unless regulations or published guidance provide otherwise, a disregarded entity (including a QSub) must use its owner's EIN for Federal tax purposes.
Notice 99-6 (1999-3 I.R.B. 12) provides guidance that, under limited circumstances, a disregarded entity may use its own EIN. If a QSub wishes to use its own EIN in accordance with Notice 99-6 but did not have an EIN prior to becoming a QSub, it must apply for a new EIN.
If a subsidiary's QSub election terminates, the new corporation formed as a result of that termination must use its own EIN for Federal tax purposes. If the new corporation had an EIN before the effective date of its QSub election or during its QSub status, it should use that EIN. Otherwise, the new corporation must apply for a new EIN.
The regulations generally apply to taxable years that begin on or after January 20, 2000; however, taxpayers may elect to apply the regulations in whole, but not in part (aside from those sections with special dates of applicability), for taxable years beginning on or after January 1, 2000, provided the corporation and all affected taxpayers apply the regulations in a consistent manner. To make the election, the corporation and all affected taxpayers must file a return or an amended return that is consistent with these rules for the taxable year for which the election is made. For purposes of this section, affected taxpayers means all taxpayers whose returns are affected by the election to apply the regulations. The rules relating to the treatment of banks apply to all taxable years beginning after December 31, 1996; see § 1.1361-4(a)(3)(iii). The provision relating to transitional relief from the step transaction applies to certain QSub elections effective on or before the end of calendar year 2000; see § 1.1361-4(a)(5)(i). Section 1.1361-5(c)(2), relating to automatic consent for an S or QSub election made for a corporation whose QSub election has terminated within the five-year period described in section 1361(b)(3)(D), applies to certain QSub elections effective after December 31, 1996. Section 301.6109-1(i), relating to EINs, applies on or after January 20, 2000.
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that the collection of information in these regulations will not have a significant impact on a substantial number of small businesses. This certification is based upon the fact that the economic burden imposed on taxpayers by the collection of information and recordkeeping requirements of these regulations is insignificant. For example, the estimated average annual burden per respondent is less than one hour. Furthermore, most taxpayers will only have to respond to the requests for information contained in §§ 1.1361-3 and 1.1361-5 one time in the life of the corporation. Therefore, a Regulatory Flexibility Analysis is not required under the Regulatory Flexibility Act (5 U.S.C. chapter 6). Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
The principal authors of these regulations are Jeanne M. Sullivan and David J. Sotos of the Office of the Assistant Chief Counsel (Passthroughs & Special Industries); and Michael N. Kaibni of the Office of the Assistant Chief Counsel (Corporate). However, other personnel from the IRS and Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.
Reporting and recordkeeping requirements.
26 U.S.C. 7805 * *
1. Revise the introductory text.
2. Remove the entry for § 1.1361-1(d)(3).
3. Add entries for §§ 1.1361-2, 1.1361-3, 1.1361-4, 1.1361-5, and 1.1361-6.
The revisions and additions read as follows:
This section lists captions contained in §§ 1.1361-1, 1.1361-2, 1.1361-3, 1.1361-4, 1.1361-5, and 1.1361-6.
(a) In general.
(b) Stock treated as held by S corporation.
(c) Straight debt safe harbor.
(d) Examples.
(a) Time and manner of making election.
(1) In general.
(2) Manner of making election.
(3) Time of making election.
(4) Effective date of election.
(5) Example.
(6) Extension of time for making a QSub election.
(b) Revocation of QSub election.
(1) Manner of revoking QSub election.
(2) Effective date of revocation.
(3) Revocation after termination.
(4) Revocation before QSub election effective.
(a) Separate existence ignored.
(1) In general.
(2) Liquidation of subsidiary.
(i) In general.
(ii) Examples
(iii) Adoption of plan of liquidation.
(iv) Example.
(v) Stock ownership requirements of section 332.
(3) Treatment of banks.
(i) In general.
(ii) Examples.
(iii)Effective date.
(4) Treatment of stock of QSub.
(5) Transitional relief.
(i) General rule.
(ii) Examples.
(b) Timing of the liquidation.
(1) In general.
(2) Application to elections in tiered situations.
(3) Acquisitions.
(i) In general.
(ii) Special rules for acquired S corporations.
(4) Coordination with section 338 election.
(c) Carryover of disallowed losses and deductions.
(d) Examples.
(a) In general.
(1) Effective date.
(2) Information to be provided upon termination of QSub election by failure to qualify as a QSub.
(3) QSub joins a consolidated group.
(4) Examples.
(b) Effect of termination of QSub election.
(1) Formation of new corporation.
(i) In general.
(ii) Termination for tiered QSubs.
(2) Carryover of disallowed losses and deductions.
(3) Examples.
(c) Election after QSub termination.
(1) In general.
(2) Exception.
(3) Examples.
1. Revise paragraph (b)(1)(i).
2. Remove paragraph (d)(1)(i).
3. Redesignate paragraphs (d)(1)(ii), (d)(1)(iii), (d)(1)(iv), and (d)(1)(v) as paragraphs (d)(1)(i), (d)(1)(ii), (d)(1)(iii), and (d)(1)(iv), respectively.
4. Revise newly designated paragraph (d)(1)(i).
5. Remove paragraph (d)(3).
6. Revise the first sentence of paragraph (e)(1).
The revisions read as follows:
(b) * * *
(1) * * *
(i) More than 75 shareholders (35 for taxable years beginning before January 1, 1997);
(d) * * *
(1) * * *
(i) For taxable years beginning on or after January 1, 1997, a financial institution that uses the reserve method of accounting for bad debts described in section 585 (for taxable years beginning prior to January 1, 1997, a financial institution to which section 585 applies (or would apply but for section 585(c)) or to which section 593 applies);
(e) * * *
(1)
(a)
(1) 100 percent of the stock of such corporation is held by an S corporation; and
(2) The S corporation properly elects to treat the subsidiary as a QSub under § 1.1361-3.
(b)
(1) Stock of a corporation is treated as held by an S corporation if the S corporation is the owner of that stock for Federal income tax purposes; and
(2) Any outstanding instruments, obligations, or arrangements of the corporation which would not be considered stock for purposes of section 1361(b)(1)(D) if the corporation were an S corporation are not treated as outstanding stock of the QSub.
(c)
(d)
(a)
(2)
(3)
(4)
(5)
(6)
(b)
(2)
(3)
(4)
(a)
(i) A corporation which is a QSub shall not be treated as a separate corporation; and
(ii) All assets, liabilities, and items of income, deduction, and credit of a QSub shall be treated as assets, liabilities, and items of income, deduction, and credit of the S corporation.
(2)
(ii)
Corporation X acquires all of the outstanding stock of solvent corporation Y from an unrelated individual for cash and short-term notes. Thereafter, as part of the same plan, X immediately makes an S election and a QSub election for Y. Because X acquired all of the stock of Y in a qualified stock purchase within the meaning of section 338(d)(3), the liquidation described in paragraph (a)(2) of this section is respected as an independent step separate from the stock acquisition, and the tax consequences of the liquidation are determined under sections 332 and 337.
Corporation X, pursuant to a plan, acquires all of the outstanding stock of corporation Y from the shareholders of Y solely in exchange for 10 percent of the voting stock of X. Prior to the transaction, Y and its shareholders are unrelated to X. Thereafter, as part of the same plan, X immediately makes an S election and a QSub election for Y. The transaction is a reorganization described in section 368(a)(1)(C), assuming the other conditions for reorganization treatment (e.g., continuity of business enterprise) are satisfied.
After the expiration of the transition period provided in paragraph (a)(5)(i) of this section, individual A, pursuant to a plan, contributes all of the outstanding stock of Y to his wholly owned S corporation, X, and immediately causes X to make a QSub election for Y. The transaction is a reorganization under section 368(a)(1)(D), assuming the other conditions for reorganization treatment (e.g., continuity of business enterprise) are satisfied. If the sum of the amount of liabilities of Y treated as assumed by X exceeds the total of the
(iii)
(iv)
Corporation X owns 75 percent of a solvent corporation Y, and individual A owns the remaining 25 percent of Y. As part of a plan to make a QSub election for Y, X causes Y to redeem A's 25 percent interest on June 1 for cash and makes a QSub election for Y effective on June 3. The making of the QSub election is considered to be the adoption of a plan of liquidation immediately before the deemed liquidation. The deemed liquidation satisfies the requirements of section 332.
(v)
(3)
(ii)
X, an S corporation, is a bank as defined in section 581. X owns 100 percent of Y and Z, corporations for which valid QSub elections are in effect. Y is a bank as defined in section 581, and Z is not a financial institution. Pursuant to paragraph (a)(3)(i) of this section, any special rules applicable to banks under the Internal Revenue Code continue to apply separately to X and Y and do not apply to Z. Thus, for example, section 265(b), which provides special rules for interest expense deductions of banks, applies separately to X and Y. That is, X and Y each must make a separate determination under section 265(b) of interest expense allocable to tax-exempt interest, and no deduction is allowed for that interest expense. Section 265(b) does not apply to Z except as published guidance may provide otherwise.
X, an S corporation, is a bank holding company and thus is not a bank as defined in section 581. X owns 100 percent of Y, a corporation for which a valid QSub election is in effect. Y is a bank as defined in section 581. Pursuant to paragraph (a)(3)(i) of this section, any special rules applicable to banks under the Internal Revenue Code continue to apply to Y and do not apply to X. However, all of Y's assets, liabilities, and items of income, deduction, and credit, as determined in accordance with the special bank rules, are treated as those of X. Thus, for example, section 582(c), which provides special rules for sales and exchanges of debt by banks, applies only to sales and exchanges by Y. However, any gain or loss on such a transaction by Y that is considered ordinary income or ordinary loss pursuant to section 582(c) is treated as ordinary income or ordinary loss of X.
(iii)
(4)
(5)
(ii)
Individual A owns 100 percent of the stock of X, an S corporation. X owns 79 percent of the stock of Y, a solvent corporation, and A owns the remaining 21 percent. On May 4, 1998, A contributes its Y stock to X in exchange for X stock. X makes a QSub election with respect to Y effective immediately following the transfer. The liquidation described in paragraph (a)(2) of this section is respected as an independent step separate from the stock acquisition, and the tax consequences of the liquidation are determined under sections 332 and 337. The contribution by A of the Y stock qualifies under section 351, and no gain or loss is recognized by A, X, or Y.
(b)
(2)
(3)
(ii)
(4)
(c)
(d)
X, an S corporation, owns 100 percent of the stock of Y, a C corporation. On June 2, 2002, X makes a valid QSub election for Y, effective June 2, 2002. Assume that, under general principles of tax law, including the step transaction doctrine, X's acquisition of the Y stock and the subsequent QSub election would not be treated as related. The liquidation described in paragraph (a)(2) of this section occurs at the close of the day on June 1, 2002, the day before the QSub election is effective, and the plan of liquidation is considered adopted on that date. Y's taxable year and separate existence for Federal tax purposes end at the close of June 1, 2002.
X, a C corporation, owns 100 percent of the stock of Y, another C corporation. On December 31, 2002, X makes an election under section 1362 to be treated as an S corporation and a valid QSub election for Y, both effective January 1, 2003. Assume that, under general principles of tax law, including the step transaction doctrine, X's acquisition of the Y stock and the subsequent QSub election would not be treated as related. The liquidation described in paragraph (a)(2) of this section occurs at the close of December 31, 2002, the day before the QSub election is effective. The QSub election for Y is effective on the same day that X's S election is effective, and the deemed liquidation is treated as occurring before the S election is effective, when X is still a C corporation. Y's taxable year ends at the close of December 31, 2002. See § 1.381(b)-1.
On June 1, 2002, X, an S corporation, acquires 100 percent of the stock of Y, an existing S corporation, for cash in a transaction meeting the requirements of a qualified stock purchase (QSP) under section 338. X immediately makes a QSub election for Y effective June 2, 2002, and also makes a joint election under section 338(h)(10) with the shareholder of Y. Under section 338(a) and § 1.338(h)(10)-1T(d)(3), Y is treated as having sold all of its assets at the close of the acquisition date, June 1, 2002. Y is treated as a new corporation which purchased all of those assets as of the beginning of June 2, 2000, the day after the acquisition date. Section 338(a)(2). The QSub election is effective on June 2, 2002, and the liquidation under paragraph (a)(2) of this section occurs immediately after the deemed asset purchase by the new corporation.
X, an S corporation, owns 100 percent of Y, a corporation for which a QSub election is in effect. On May 12, 2002, a date on which the QSub election is in effect, X issues Y a $10,000 note under state law that matures in ten years with a market rate of interest. Y is not treated as a separate corporation, and X's issuance of the note to Y on May 12, 2002, is disregarded for Federal tax purposes.
X, an S corporation, owns 100 percent of the stock of Y, a C corporation. At a time when Y is indebted to X in an amount that exceeds the fair market value of Y's assets, X makes a QSub election effective on the date it is filed with respect to Y. The liquidation described in paragraph (a)(2) of this section does not qualify under sections 332 and 337 and, thus, Y recognizes gain or loss on the assets distributed, subject to the limitations of section 267.
(a) In
(i) On the effective date contained in the revocation statement if a QSub election is revoked under § 1.1361-3(b);
(ii) At the close of the last day of the parent's last taxable year as an S corporation if the parent's S election terminates under § 1.1362-2; or
(iii) At the close of the day on which an event (other than an event described in paragraph (a)(1)(ii) of this section) occurs that renders the subsidiary ineligible for QSub status under section 1361(b)(3)(B).
(2)
(3)
(4)
X, an S corporation, owns 100 percent of Y. A QSub election is in effect with respect to Y for 2001. Effective on January 1, 2002, X revokes its S election. Because X is no longer an S corporation, Y
X, an S corporation, owns 100 percent of Y. A QSub election is in effect with respect to Y. On December 10, 2002, X sells one share of Y stock to A, an individual. Because X no longer owns 100 percent of the stock of Y, Y no longer qualifies as a QSub. Accordingly, the QSub election made with respect to Y terminates at the close of December 10, 2002.
X, an S corporation, owns 100 percent of the stock of Y, and Y owns 100 percent of the stock of Z. QSub elections are in effect with respect to both Y and Z. Y transfers all of its Z stock to X. Because X is treated as owning the stock of Z both before and after the transfer of stock solely for purposes of determining whether the requirements of section 1361(b)(3)(B)(i) and § 1.1361-2(a)(1) have been satisfied, the transfer of Z stock does not terminate Z's QSub election. Because the stock of Z is disregarded for all other Federal tax purposes, no gain is recognized under section 311.
X, an S corporation, owns 100 percent of Y, a corporation for which a QSub election is in effect. Z, the common parent of a consolidated group of corporations, acquires 80 percent of the stock of X on June 1, 2002. Z does not make an election under section 338(g) with respect to the purchase of X stock. X's S election terminates as of the close of the preceding day, May 31, 2002. Y's QSub election also terminates at the close of May 31, 2002. Under § 1.1502-76(b)(1)(ii)(A)(2) and paragraph (a)(3) of this section, X and Y become members of Z's consolidated group of corporations as of the beginning of the day June 1, 2002.
The facts are the same as in Example 4, except that Z acquires 80 percent of the stock of Y (instead of X) on June 1, 2002. In this case, Y's QSub election terminates as of the close of June 1, 2002, and, under § 1.1502-76(b)(1)(ii)(A)(1), Y becomes a member of the consolidated group at that time.
(b)
(ii)
(2)
(3)
X sells 21 percent of the Y stock to Z, an unrelated corporation, for cash, thereby terminating the QSub election. Y is treated as a new corporation acquiring all of its assets (and assuming all of its liabilities) in exchange for Y stock immediately before the termination from the S corporation. The deemed exchange by X of assets for Y stock does not qualify under section 351 because X is not in control of Y within the meaning of section 368(c) immediately after the transfer as a result of the sale of stock to Z. Therefore, X must recognize gain, if any, on the assets transferred to Y in exchange for its stock. X's losses, if any, on the assets transferred are subject to the limitations of section 267.
(ii) The merger of Y into T causes a termination of Y's QSub election. The new corporation (Newco) that is formed as a result of the termination is immediately merged into T, an entity that is disregarded for Federal tax purposes. Because, at the end of the series of transactions, the assets continue to be held by X for Federal tax purposes, under step transaction principles, the formation of Newco and the transfer of assets pursuant to the merger of Newco into T are disregarded. The sale of 21 percent of T is treated as a sale of a 21 percent undivided interest in each of T's assets. Immediately thereafter, X and Z are treated as contributing their respective interests in those assets to a partnership in exchange for ownership interests in the partnership.
(iii) Under section 1001, X recognizes gain or loss from the deemed sale of the 21 percent interest in each asset of the limited liability company to Z. Under section 721(a), no gain or loss is recognized by X and Z as a result of the deemed contribution of their respective interests in the assets to the partnership in exchange for ownership interests in the partnership.
(ii) Immediately before the QSub elections terminate, Y is treated as a
(ii) Immediately before the QSub elections terminate, Y is treated as a new corporation acquiring all of its assets (and assuming all of its liabilities) directly from X in exchange for the stock of Y. Z is also treated as a new corporation acquiring all of its assets (and assuming all of its liabilities) directly from X in exchange for the stock of Z.
(c)
(2)
(i) Immediately following the termination, the corporation (or its successor corporation) is otherwise eligible to make an S election or have a QSub election made for it; and
(ii) The relevant election is made effective immediately following the termination of the QSub election.
(3)
Except as provided in §§ 1.1361-4(a)(3)(iii), 1.1361-4(a)(5)(i), and 1.1361-5(c)(2), the provisions of §§ 1.1361-2 through 1.1361-5 apply to taxable years beginning on or after January 20, 2000; however, taxpayers may elect to apply the regulations in whole, but not in part (aside from those sections with special dates of applicability), for taxable years beginning on or after January 1, 2000, provided all affected taxpayers apply the regulations in a consistent manner. To make this election, the corporation and all affected taxpayers must file a return or an amended return that is consistent with these rules for the taxable year for which the election is made. For purposes of this section, affected taxpayers means all taxpayers whose returns are affected by the election to apply the regulations.
(a) In general.
(b) Determination of active or passive earnings and profits.
(1) In general.
(2) Lower tier subsidiaries.
(3) De minimis exception.
(4) Special rules for earnings and profits accumulated by a C corporation prior to 80 percent acquisition.
(5) Gross receipts safe harbor.
(c) Allocating distributions to active or passive earnings and profits.
(1) Distributions from current earnings and profits.
(2) Distributions from accumulated earnings and profits.
(3) Adjustments to active earnings and profits.
(4) Special rules for consolidated groups.
(d) Examples.
(e) Effective date.
(c) * * *
(5) * * *
(ii) * * *
(C) * * * See § 1.1362-8 for special rules regarding the treatment of dividends received by an S corporation from a C corporation in which the S corporation holds stock meeting the requirements of section 1504(a)(2).
(a)
(b)
(2)
(3)
(4)
(5)
(c)
(2)
(3)
(4)
(i) The current earnings and profits, accumulated earnings and profits, and active earnings and profits of the common parent shall be determined under the principles of § 1.1502-33 (relating to earnings and profits of any member of a consolidated group owning stock of another member); and
(ii) The gross receipts of the common parent shall be the sum of the gross receipts of each member of the consolidated group (including the common parent), adjusted to eliminate gross receipts from intercompany transactions (as defined in § 1.1502-13(b)(1)(i)).
(d)
(i) X, an S corporation, owns 85 percent of the one class of stock of Y. On December 31, 2002, Y declares a dividend of $100 ($85 to X), which is equal to Y's current earnings and profits. In 2002, Y has total gross receipts of $1,000, $200 of which would be passive investment income if Y were an S corporation.
(ii) One-fifth ($200/$1,000) of Y's gross receipts for 2002 is attributable to activities that would produce passive investment income. Accordingly, one-fifth of the $100 of earnings and profits is passive, and $17 (
(i) The facts are the same as in
(ii) Four-fifths ($12,000/15,000) of the dividend from Z to Y are attributable to passive earnings and profits. Accordingly, $720 (
(e)
Amend § 1.1368-0 in the entry for § 1.1368-2(d)(2) by revising “Reorganizations” to read “Liquidations and reorganizations”.
(b)
26 U.S.C. 7805 * * *
1. Paragraph (i) is redesignated as paragraph (j) and the first sentence of newly designated paragraph (j)(1) is amended by removing the language “paragraph (i)” and adding “paragraph (j)” in its place.
2. A new paragraph (i) is added.
The addition reads as follows:
(i)
(2)
(3)
(4)
26 U.S.C. 7805.
(b) * * *
Minerals Management Service (MMS), Interior.
Technical amendments.
This document makes technical changes to regulations that were published in various
January 25, 2000.
Greg Gould, (703) 787-1600.
These technical amendments affect all offshore operators, lessees, and permittees. On May 13, 1999 (64 FR 26240), MMS published final regulations, effective the same date, governing the appeal of orders and decisions from MMS's Royalty Management and Offshore Minerals Management Programs in 30 CFR parts 208, 241, 242, 243, 250, and 290. The final regulations neglected to amend several other sections of our Offshore Minerals Management regulations in parts 251, 254, and 282 to make them consistent with the MMS Appeals rule. This was an inadvertent oversight that we are now correcting.
As published, the final regulations contain inconsistencies with the intent of the appeals final rulemaking, which may prove to be misleading, and are in need of clarification.
Continental shelf, Freedom of information, Oil and gas exploration, Public lands—mineral resources, Public lands—rights-of-way, Report and recordkeeping requirements, Research.
Continental shelf, Environmental protection, Oil and gas development and production, Oil and gas exploration, Pipelines, Public lands—mineral resources, Public lands—rights-of-way, Report and recordkeeping requirements.
Continental shelf, Prospecting, Public lands—mineral resources, Public lands—rights-of-way, Report and recordkeeping requirements, Research.
43 U.S.C. 1331
(c)
33 U.S.C. 1321.
See 30 CFR part 290 for instructions on how to appeal any order or decision that we issue under this part.
43 U.S.C. 1331
See 30 CFR part 290 for instructions on how to appeal any order or decision that we issue under this part.
Postal Service.
Final rule.
This final rule amends the Postal Service regulations that govern the disclosure of information contained in PS Form 1093, Application for Post Office Box or Caller Service, and PS Form 1583, Application for Delivery of Mail Through Agent. The recorded business name, address, and telephone number of a post office box used for doing or soliciting business with the public will no longer be provided to the general public upon request. Disclosure to the public of information contained in Form 1583 will continue to be prohibited. In addition, information from both Forms 1093 and 1583 will no longer be made available in response to an oral request from a law enforcement agency engaged in a criminal investigation. Disclosure of information from either form also will be prohibited, except pursuant to the order of a court of competent jurisdiction, when the individual customer has presented the Postal Service with an appropriate court order of protection.
February 24, 2000.
Lawrence Maxwell, (202) 268-5015.
This final rule adopts the change to the regulation governing disclosure of names and addresses of post office boxholders that was published as a proposed rule on August 26, 1999 (64 FR 46630). This change repeals the provision that authorized disclosure to the general public, upon request, of the name, address, and telephone number of the holder of a post office box being used for the purpose of doing or soliciting business with the public. The purpose of the change is to provide a greater degree of privacy and security to the growing number of small-business owners who operate out of the home. The background for this rulemaking was provided in the August 26 notice and will not be repeated here.
After consideration of the comments made on the August 26 proposal, which are discussed below, the Postal Service has decided to adopt as part of this final rule two additional changes to the regulations governing disclosure of information about post office boxholders and the customers of commercial mail receiving agencies (CMRAs). In response to concerns for the safety of battered individuals and their children, stalking victims, and other persons who consider themselves at risk of harm if their physical location is not kept private, the Postal Service will further restrict disclosure of the names and addresses of post office boxholders and CMRA customers in the following ways.
First, the existing provision that authorizes disclosure in response to oral requests of law enforcement agencies for criminal investigations, when made through the Inspection Service, is made inapplicable to information concerning post office boxholders and CMRA customers.
Second, when the individual boxholder has presented to the Postal Service a protective court order, information from neither Form 1093 nor Form 1583 will be made available under the existing provision that authorizes disclosure to federal, state, or local government agencies upon written request. In such a case, the government agency seeking the information must furnish to the Postal Service an order of a court of competent jurisdiction that requires disclosure to the agency. The Postal Service has already reserved the right to withhold information about a particular individual's address, including a boxholder's address, for sufficient reasons of personal safety, and has provided for the submission of protective court orders to block access of the general public in such situations. The present rule change respecting post office boxholders and CMRA customers will block access not just of the public but also of government agencies, including law enforcement agencies, when there is a protective order on file, unless the agency obtains a countervailing court order that requires the Postal Service to release the information.
As revised by this rule, the regulations that govern the disclosure of information contained in Form 1093 and 1583 may be summarized as follows. Information provided by a post office boxholder on Form 1093 will not generally be available to the public. It will be disclosed only to a government agency upon written certification of official need; to an appropriate person when needed for the service of process; and in compliance with a subpoena, when appropriate, or a court order. When the boxholder is an individual, as opposed to a business or organization, a subpoena will not be honored—a court order signed by a judge will be required. In addition, copies of the 1093 will not be disclosed except when requested by a government agency upon written certification of official need or in compliance with a subpoena or court order. When the boxholder has submitted a court order of protection, the Postal Service will not disclose the boxholder's name, address, or telephone number pursuant to any of the foregoing provisions, nor make available a copy of the form, unless the requester has obtained an order of a court of competent jurisdiction that requires the disclosure notwithstanding the existence of the boxholder's protective order.
Information provided by a CMRA customer on Form 1583 will not be available to the public. It will be disclosed only to a government agency upon written certification of official need or pursuant to a subpoena (only if the CMRA customer is not an individual) or to a court order. When the customer has submitted a court order of protection, however, the Postal Service will not disclose the customer's name or address pursuant to these provisions, unless the requester obtains a court order as provided in the foregoing paragraph.
A total of 318 written comments were received in response to the August 26 proposed rule. Nineteen of these were from state agencies, four were from members of Congress, two were from public-interest organizations, and the bulk of the remainder were from CMRA customers and operators. Only one commenter objected to the proposal to
Twenty-five commenters stated their unqualified approval of the proposal. Nineteen others limited their comments to approval of the existing regulations as they authorize disclosure to government agencies. These latter comments were provided by the Attorneys General for 18 states and one state agency for workforce development. The comments of the states' Attorneys General stressed the need of state law enforcement agencies (and those state agencies that work with them) for the information in connection with the investigation and prosecution of fraud, including consumer and charities fraud. They stated that it is “critical” that these investigatory agencies have access to the 1583s.
Twenty-four comments were limited to objections to the underlying CMRA regulations and so are not within the scope of the present rulemaking. While most of the remaining 80 percent of the commenters stated approval of the repeal of the provision allowing disclosure of information about post office boxholders doing business with the public, none discussed that provision; instead, they focused their attention on objections to various provisions relating to CMRA customers. Overall, these latter comments revealed widespread misinformation about the existing regulations and the limited nature of the current proposal. Only a few of those providing negative comments appeared to understand that no new disclosure was proposed in the August 26 notice. A number of comments revealed a fundamental misunderstanding of this rulemaking by complaining that the new rule would allow the release of private boxholder information when the box is being used to conduct business with the public. The Postal Service withdrew its proposal to make such a provision applicable to CMRA customers in the August 26 notice, and, in the same notice, proposed to eliminate the existing parallel provision respecting post office boxholders.
A national nonprofit organization interested in the prevention of domestic violence objected to the release of information from the Form 1583 to government agencies, including law enforcement agencies, without a warrant. The organization stated that it is “imperative” that no one obtain the address of a battered women's shelter without a warrant. The commenter expressed concern that disclosure to law enforcement would increase the possibility of unwitting release to the public, to a person impersonating a law enforcement officer, or to a law enforcement officer engaging in misconduct. Several other individual commenters objected to release of information in response to oral law enforcement requests made through the Inspection Service, because they thought that this would produce no “paper trail” and thus encourage abuse.
The national organization also objected to disclosure to government agencies in general as an expansion of the categories of persons having access to the information. This latter comment suggests a misunderstanding of what the current regulation permits. Postal regulations have authorized the disclosure of information from Form 1583 to government agencies, including law enforcement, in appropriate circumstances for as long as the Postal Service has used the form. This is not something newly proposed in one of the recent notices of proposed rules. While the Postal Service is unaware of any instance in which disclosure of this information to a government agency or law enforcement officer has resulted in harm to a boxholder or other individual, it is nonetheless sympathetic to the concern expressed in these comments. Because of the potential for abuse, it has decided to eliminate the longstanding rule that authorizes disclosure in response to oral requests of law enforcement agencies when conducting criminal investigations. The Postal Service is not, however, persuaded of the necessity to require government agencies to obtain a warrant as a precondition to access in all cases. This would place an undue burden on an agency's performance of legitimate law enforcement or other governmental functions. In the absence of any history of abuse of the provision, the Postal Service believes that the requirement that the requester certify in writing on agency letterhead that the information is required for the performance of official duties provides a reasonable amount of protection against unwarranted invasions of the privacy of most boxholders. For those boxholders who are in particular risk of danger if located, the Postal Service believes that it is not an unreasonable burden for them to obtain an appropriate protective order to be placed on file with the 1093 or the 1583, thus requiring the requesting agency to first obtain a court order.
This commenter also urged the need for security measures to govern the maintenance of Forms 1583 at the local post office and the need for a method by which a victim of abuse could confirm with local postal officials whether the information had been released. The Postal Service already has procedures in place, mandated by the Privacy Act of 1974, that address these last two concerns.
One private corporation claiming to comment “on behalf of the several million American citizens that choose to receive their mail at private and P.O. boxes” stated that the underlying CMRA revisions made final on March 25, 1999, “are in fact the only issue.” Those revisions are not at issue, however, in the present rulemaking. Principal among its comments regarding the present rule is an objection to the “changes” in the August 26 notice that would allow release of information about private or post office boxholders to anyone without a warrant, subpoena, or court order. These “changes,” the commenter states, are in conflict with the safeguards of the Privacy Act and violate the Fourth Amendment, which protects against warrantless searches and seizures. The commenter's references to “changes,” supposedly made by the August 26 notice, indicate a basic misunderstanding of the Postal Service's regulations in this area. The regulations have long authorized disclosure to government agencies upon written certification and to law enforcement when oral requests are made through the Inspection Service. These objections, therefore, are to regulations that have been in effect for a long time, and not to any recently proposed changes. The Postal Service, moreover, is not persuaded that its regulations are in conflict with the Privacy Act or violate the Fourth Amendment. The Postal Service's routine uses provide sufficient authorization for disclosure of information on Form 1583 to government agencies, consistent with the requirements of the Privacy Act. The safeguards required by the Act have long since been implemented by the Postal Service with respect to the information contained in the 1583. Further, the Postal Service is not aware that any court has extended the protection of the Fourth Amendment to an individual's name or address. The commenter also states that the Privacy Act statement on Form 1583 is “defective” because it does not inform the customer how the information will be used or released. The Postal Service intends to amend the statement to bring
Almost all of the remaining commenters, primarily CMRA customers, echoed nearly verbatim the objections discussed in the preceding paragraph. A number of these commenters also took the opportunity to voice their objections to the underlying CMRA regulations, which will not be addressed here.
A nonprofit organization that is interested in rights and responsibilities in the “electronic world” objected to the creation of a national database of information from Form 1583, because the existence of such a database would be a “boon to identity thieves.” Several other individual commenters stated their concern that the Postal Service will use Forms 1583 to create a national database. In the August 26 notice, the Postal Service addressed this concern by stating that the forms are maintained locally and that it has no intention of creating a national database with the information contained in them. The nonprofit organization stated that although the Postal Service may not intend to create such a database, this will necessarily be the result of storage of the forms in a Federal Records Center and from the maintenance of the forms at each CMRA and local post office. The Postal Service disagrees with this analysis. There is a great deal of difference in terms of risk to personal privacy between a collection of paper records locally maintained in secure conditions, or stored in boxes in a federal records depository, and information collected and maintained in a national electronic database. The secure storage of paper records simply does not pose the same kind of risk of improper data sharing as is posed by maintenance in an electronic database. Moreover, the maintenance of these paper forms over many years has not resulted in any incidents of identity theft so far as the Postal Service is aware. This commenter also complained that the proposal ignores the Fair Information Practices of the Federal Trade Commission. These guidelines, developed specifically in connection with the FTC's work regarding online privacy, are already embedded in the procedures required by the Privacy Act of 1974 and so are addressed elsewhere in the Postal Service's regulations that implement the Act. The regulation at hand is not the appropriate place for their inclusion. See the Postal Service's Privacy Act regulations, 39 CFR Part 266, and the system notice for the system of records titled USPS 010.050, Collection and Delivery Records—Delivery of Mail Through Agents, last published in full at 54 FR 43660 (October 26, 1989), with amendments appearing at 59 FR 22874 (May 3, 1994) and 64 FR 8878 (February 23, 1999). Finally, this commenter claimed that the Postal Service is violating two provisions of the Privacy Act: subsection (e)(1) through the “over-collection of information,” namely, the ages of any children who will receive mail at the CMRA address, and subsection (e)(2) by “coercing” the CMRA to collect the information rather than collecting the information itself. The Postal Service sees no merit in either contention. Subsection (e)(1) limits an agency's maintenance of information about an individual to that which is “relevant and necessary to accomplish a [legally required] purpose of the agency.” The provision permitting the boxholder to list the names and addresses of his or her minor children is an exception to the general requirement that all individuals receiving mail through a private box submit a Form 1583. Ages are necessary to determine when the child no longer qualifies for this exception. Subsection (e)(2) provides for collection of information “to the greatest extent practicable directly from the subject individual.” Since the CMRA customer is asked to fill out the Form 1583, the Postal Service believes that it is in compliance with this provision.
Finally, a number of commenters stated that the Postal Service has no authority to collect information about CMRA customers. Others stated that the Postal Service is expressly forbidden to collect the information. No reference to an authority for either proposition was given, and the Postal Service knows of none. The Postal Service believes it has ample authority to require agents for the receipt of mail to prove the bona fides of their agency agreements with postal customers. This cannot be done without submitting the names and addresses of the principals to such agreements.
Administrative practice and procedure, Courts, Freedom of Information, Government employees, Release of information.
5 U.S.C. 552; 5 U.S.C. App. 3; 39 U.S.C. 401, 403, 410, 1001, 2601.
(d) * * *
(3)
(i) Except as provided in paragraph (d)(3)(iii) of this section, information from PS Form 1093 will be provided only in those circumstances stated at paragraphs (d)(4)(i) through (d)(4)(iii) of this section.
(ii) Except as provided in paragraph (d)(3)(iii) of this section, copies of PS Form 1093 will be furnished only in those circumstances stated at paragraphs (d)(4)(i) and (d)(4)(iii) of this section.
(iii) When the boxholder files with the postmaster a copy of a protective court order, information from PS Form 1093 will not be disclosed except pursuant to the order of a court of competent jurisdiction.
(8)
(i) Except as provided in paragraph (d)(8)(iii) of this section, information from PS Form 1583 will be provided only in those circumstances stated at paragraphs (d)(4)(i) and (d)(4)(iii) of this section.
(ii) To the public only for the purpose of identifying a particular address as an address of an agent to whom mail is delivered on behalf of other persons. No other information, including, but not limited to, the identities of persons on whose behalf agents receive mail, may be disclosed to the public from PS Form 1583.
(iii) Information concerning an individual who has filed a protective court order with the postmaster will not be disclosed except pursuant to the order of a court of competent jurisdiction.
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes time-limited tolerances for residues of bifenthrin (2-methyl [1,1'-biphenyl]-3-yl)methyl-3-(2-chloro-3,3,3,-trifluoro-1-propenyl)-2,2-dimethylcyclopropanecarboxylate) in or on grapes and peanut nutmeats. This action is in response to EPA's granting of emergency exemptions under section 18 of the Federal Insecticide, Fungicide, and Rodenticide Act authorizing use of the pesticide on grapes and peanuts. This regulation establishes maximum permissible levels for residues of bifenthrin in these food commodities. The tolerances will expire and is revoked on December 31, 2001.
This regulation is effective January 25, 2000. Objections and requests for hearings, identified by docket control number OPP-300963, must be received by EPA on or before March 27, 2000.
Written objections and hearing requests may be submitted by mail, in person, or by courier. Please follow the detailed instructions for each method as provided in Unit VII. of the “SUPPLEMENTARY INFORMATION.” To ensure proper receipt by EPA, your objections and hearing requests must identify docket control number OPP-300963 in the subject line on the first page of your response.
By mail: Andrea Beard, Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, Ariel Rios Building, 1200 Pennsylvania Avenue, NW., Washington, DC 20460; telephone number: (703) 308-9356; and e-mail address: beard.andrea@epa.gov.
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected categories and entities may include, but are not limited to:
This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in the table could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether or not this action might apply to certain entities. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under
1.
2.
EPA, on its own initiative, in accordance with sections 408(l)(6) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, is establishing tolerances for residues of the insecticide bifenthrin (2-methyl [1,1'-biphenyl]-3-yl)methyl-3-(2-chloro-3,3,3,-trifluoro-2-chloro-3,3,3,-trifluoro-1-propenyl)-2,2-dimethylcyclopropanecarboxylate), in or on grapes at 0.2 part per million (ppm), and in/on peanut nutmeats at 0.05 ppm. These tolerances will expire and are revoked on December 31, 2001. EPA will publish a document in the
Section 408(l)(6) of the FFDCA requires EPA to establish a time-limited tolerance or exemption from the requirement for a tolerance for pesticide chemical residues in food that will result from the use of a pesticide under an emergency exemption granted by EPA under section 18 of FIFRA. Such tolerances can be established without providing notice or period for public comment. EPA does not intend for its actions on section 18 related tolerances to set binding precedents for the application of section 408 and the new safety standard to other tolerances and exemptions.
Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”
Section 18 of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) authorizes EPA to exempt any Federal or State agency from any provision of FIFRA, if EPA determines that “emergency conditions exist which require such exemption.” This provision was not amended by the Food Quality Protection Act (FQPA). EPA has
1.
2.
As part of its assessment of this emergency exemption, EPA assessed the potential risks presented by residues of bifenthrin in or on grapes and peanut nutmeats. In doing so, EPA considered the safety standard in FFDCA section 408(b)(2), and EPA decided that the necessary tolerances under FFDCA section 408(l)(6) would be consistent with the safety standard and with FIFRA section 18. Consistent with the need to move quickly on the emergency exemptions in order to address urgent non-routine situations and to ensure that the resulting food is safe and lawful, EPA is issuing these tolerances without notice and opportunity for public comment as provided in section 408(l)(6). Although these tolerances will expire and are revoked on December 31, 2001, under FFDCA section 408(l)(5), residues of the pesticide not in excess of the amounts specified in the tolerances remaining in or on grapes and peanut nutmeats after that date will not be unlawful, provided the pesticide is applied in a manner that was lawful under FIFRA, and the residues do not exceed levels that were authorized by these tolerances at the time of that application. EPA will take action to revoke these tolerances earlier if any experience with, scientific data on, or other relevant information on this pesticide indicate that the residues are not safe.
Because these tolerances are being approved under emergency conditions, EPA has not made any decisions about whether bifenthrin meets EPA's registration requirements for use on grapes and peanuts or whether permanent tolerances for these uses would be appropriate. Under these circumstances, EPA does not believe that these tolerances serve as a basis for registration of bifenthrin by a State for special local needs under FIFRA section 24(c). Nor do these tolerances serve as the basis for any State other than Washington or Oklahoma to use this pesticide on these crops under section 18 of FIFRA without following all provisions of EPA's regulations implementing section 18 as identified in 40 CFR part 166. For additional information regarding the emergency exemptions for bifenthrin, contact the Agency's Registration Division at the address provided under
EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997) (FRL-5754-7).
Consistent with section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of bifenthrin and to make a determination on aggregate exposure, consistent with section 408(b)(2), for time-limited tolerances for residues of bifenthrin (2-methyl [1,1'-biphenyl]-3-yl)methyl-3-(2-chloro-3,3,3,-trifluoro-2-chloro-3,3,3,-trifluoro-1-propenyl)-2,2-dimethylcyclopropanecarboxylate) on grapes at 0.2 ppm, and on peanut nutmeats at 0.05 ppm. EPA's assessment of the dietary exposures and risks associated with establishing the tolerances follows.
EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by bifenthrin are discussed in Unit II.A. of the Final Rule on Bifenthrin Pesticide Tolerances published in the
The toxicological endpoints for bifenthrin are discussed in Unit II.B. of the Final Rule on Bifenthrin Pesticide Tolerances published in the
1.
The acute dietary (food only) risk assessment was conducted by Novigen Science, Inc. In this acute analysis, Monte Carlo analysis (Tier 3) was used. For those foods identified by EPA as
This analysis evaluates individual food consumption as reported by respondents in the USDA Continuing Surveys of Food Intake by Individuals (CSFII) conducted in 1989 through 1992. The model accumulates exposure to the chemical for each commodity and expresses risk as a function of exposure to residues in food. This is a highly refined assessment since percent of crop treated (PCT) was used (except as indicated above) and anticipated residues for all crops.
In conducting this Dietary Exposure Evaluation Model (DEEM) analysis for chronic food risk assessment, Novigen used anticipated residue values which were determined from field trial data conducted at maximum label conditions of maximum application rates and minimum preharvest intervals. Mean anticipated residue values were calculated, substituting one-half of the LOD for those samples for which residues were reported below the LOD. It was assumed that 100% crop treated for all crops except hops at 43%, cottonseed-oil and cottonseed-meal at 4%. Secondary residues for meat and milk were derived from the total dietary burden and tissue-to-feed ratio, using the average ratio for meat and milk. The analysis evaluates individual food consumption as reported by respondents in the USDA CSFII conducted in 1989 through 1992.
i.
ii.
Section 408(b)(2)(E) authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide chemicals that have been measured in food. If EPA relies on such information, EPA must require that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. Following the initial data submission, EPA is authorized to require similar data on a time frame it deems appropriate. As required by section 408(b)(2)(E), EPA will issue a data call-in for information relating to anticipated residues to be submitted no later than 5 years from the date of issuance of this tolerance.
Section 408(b)(2)(F) states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if the Agency can make the following findings: Condition 1, that the data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain such pesticide residue; Condition 2, that the exposure estimate does not underestimate exposure for any significant subpopulation group; and Condition 3, if data are available on pesticide use and food consumption in a particular area, the exposure estimate does not understate exposure for the population in such area. In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of percent crop treated (PCT) as required by section 408(b)(2)(F), EPA may require registrants to submit data on PCT.
The Agency used PCT information as follows. It was assumed that 100% crop was treated for all crops except hops at 43%, and cottonseed-oil and cottonseed-meal at 4%.
The Agency believes that the three conditions listed above have been met. With respect to Condition 1, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. EPA uses a weighted average PCT for chronic dietary exposure estimates. This weighted average PCT figure is derived by averaging State-level data for a period of up to 10 years, and weighting for the more robust and recent data. A weighted average of the PCT reasonably represents a person's dietary exposure over a lifetime, and is unlikely to underestimate exposure to an individual because of the fact that pesticide use patterns (both regionally and nationally) tend to change continuously over time, such that an individual is unlikely to be exposed to more than the average PCT over a lifetime. For acute dietary exposure estimates, EPA uses an estimated maximum PCT. The exposure estimates resulting from this approach reasonably represent the highest levels to which an individual could be exposed, and are unlikely to underestimate an individual's acute dietary exposure. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimated. As to Conditions 2 and 3, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available information on the regional consumption of food to which bifenthrin may be applied in a particular area.
2.
i.
ii.
iii.
3.
i.
ii.
4.
EPA does not have, at this time, available data to determine whether bifenthrin has a common mechanism of toxicity with other substances or how to include this pesticide in a cumulative risk assessment. Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, bifenthrin does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that bifenthrin has a common mechanism of toxicity with other substances. For more information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the final rule for Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997).
1.
2.
3.
In the case of bifenthrin, the registered residential use sites include outdoor lawn/gardens, inside households and termiticide. These uses constitute a short- and intermediate-term exposure scenario. The short- and intermediate-term aggregate risk assessment for bifenthrin includes inhalation, dermal, oral non-dietary, chronic food, and water exposure routes. The acceptable MOEs for short- and intermediate-term exposures are all at 100. For adults, the routes of exposure from these registered, residential uses include dermal and inhalation, and for infants and children, the routes of exposure include dermal, inhalation, and oral (non-dietary). The MOEs for food (excluding water) and residential exposures is 1,100 for adults, 420 for children 1 to 6 years, and 500 for infants < 1 year. These MOEs are all above the acceptable short-term aggregate MOE of 100.
Since residue values in drinking water are not available, the DWLOCs have to be back-calculated. The short- and intermediate-term DWLOCs are 290 μg/L for adult males, 250 μg/L for adult females, 77 μg/L for children 1 to 6 years, and 77 μg/L for infants (< 1 year old). The estimated maximum concentration of bifenthrin in surface and ground water for chronic exposure 0.032 μg/L is very small compared to the DWLOCs.
4.
5.
1.
FFDCA section 408 provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base unless EPA determines that a different margin of safety will be safe for infants and children. Margins of safety are incorporated into EPA risk assessments either directly through use of a margin of exposure (MOE) analysis or through using uncertainty (safety) factors in calculating a dose level that poses no appreciable risk to humans. EPA believes that reliable data support using the standard MOE and uncertainty factor (usually 100 for combined interspecies and intraspecies variability) and not the additional tenfold MOE/uncertainty factor when EPA has a complete data base under existing guidelines and when the severity of the effect in infants or children or the potency or unusual toxic properties of a compound do not raise concerns regarding the adequacy of the standard MOE/safety factor.
ii.
iii.
iv.
b.
v.
2.
3.
4.
5.
The metabolism of bifenthrin in plants and animals is adequately understood. Studies conducted to delineate the metabolism of radio-labeled bifenthrin in various crops and animals show similar results. The residue of concern is the parent compound only.
Adequate enforcement methods are available for determination of the regulated bifenthrin residue in plants and animals. Residues of bifenthrin are recoverable under Protocols D and E of the FDA Multiresidue Methods.
Residues of bifenthrin are not expected to exceed 0.2 ppm in/on grapes, and 0.05 ppm in/on peanut nutmeats, as a result of these uses. Since the use on peanuts prohibits the feeding of peanut hay to livestock, the existing tolerances for livestock commodities are considered to be adequate.
There are no Codex Maximum Residue Levels (MRLs) for these commodities.
Crops with established U.S. tolerances may be rotated at any time. Leafy vegetable and root crops may be rotated 30 days following the final application. All other crops may be rotated 7 months following the final application.
Therefore, the tolerances are established for residues of bifenthrin (2-methyl [1,1'-biphenyl]-3-yl)methyl-3-(2-chloro-3,3,3,-trifluoro-2-chloro-3,3,3,-trifluoro-1-propenyl)-2,2-dimethylcyclopropanecarboxylate) in grapes at 0.2 ppm, and in peanut, nutmeats, at 0.05 ppm.
Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA of 1996, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d), as was provided in the old FFDCA sections 408 and 409. However, the period for filing objections is now 60 days, rather than 30 days.
You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket control number OPP-300963 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before March 27, 2000.
1.
Mail your written request to: Office of the Hearing Clerk (1900), Environmental Protection Agency, 401 M St., SW., Washington, DC 20460. You may also deliver your request to the Office of the Hearing Clerk in Rm. M3708, Waterside Mall, 401 M St., SW., Washington, DC 20460. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (202) 260-4865.
2.
EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, 401 M St., SW., Washington, DC 20460.
If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 401 M St., SW., Washington, DC 20460.
3.
A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a 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 issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).
This final rule establishes time limited tolerances under FFDCA section 408. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled
The Congressional Review Act, 5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346(a) and 371.
(b) * * *
* * * * *
Fish and Wildlife Service, Interior.
Final rule.
We, the U.S. Fish and Wildlife Service, have determined endangered status pursuant to the Endangered Species Act of 1973 (Act), as amended, for the plant
February 24, 2000.
The complete file for this rule is available for inspection, by appointment, during normal business hours at the U.S. Fish and Wildlife Service, Oregon State Office, 2600 S.E. 98th Ave., Suite 100, Portland, Oregon 97266.
Andrew Robinson, Botanist, at the above address, or by telephone at 503/231-6179.
A member of the borage family (Boraginaceae),
The species was collected only four times between 1887 and 1961, all at sites within Douglas County, Oregon (Gamon and Kagan 1985). The taxon was considered possibly extinct (Meinke 1982) until it was rediscovered in 1983 as a result of intensive field surveys (Jimmy Kagan, Oregon Natural Heritage Program, pers. comm. 1997). The location of the first specimen, collected by Thomas Howell, was given only as the Umpqua Valley (Greene 1888). The sites of collections from 1932 and 1939 were from 16 kilometers (km) (10 miles (mi)) east of Sutherlin and 3 km (2 mi) north of Yoncalla, respectively (Siddall and Chambers 1978). Both of these sites were surveyed in 1983, but no plants were found (Gamon and Kagan 1985). At the time, the sites were heavily grazed by sheep, which led the botanists to speculate that grazing was the probable cause of extirpation of the species (Gamon and Kagan 1985). In 1961, a collection was made adjacent to Interstate 5 south of Yoncalla, a site which remains in existence today (J. Kagan, pers. comm. 1997).
Despite the few pre-1961 collections,
All existing populations are at risk of extirpation due to a variety of threats (Almasi and Borgias 1996; J. Kagan, pers. comm. 1997; Robert Meinke, Oregon State University, pers. comm. 1997). In addition to the ongoing threat of direct loss of habitat from conversion to urban and agricultural uses, hydrological alterations, and fire suppression, other threats to the species include spring and summer livestock grazing, roadside mowing, spraying, competition with non-native vegetation, and landscaping (Gamon and Kagan 1985; J. Kagan, pers. comm. 1995).
Fifteen of the 17 occupied habitat patches occur on private or commercial land. Three of these parcels are owned and managed by The Nature Conservancy. The other 12 habitat patches have no protective management for the species and are at risk of extirpation from development,
Federal action on
We published an updated notice of review for plants on December 15, 1980 (50 FR 82480), including
Section 4(b)(3)(B) of the Act requires the Secretary to make findings on pending petitions within 12 months of their receipt. Section 2(b)(1) of the 1982 amendments further requires that all petitions pending on October 13, 1982, be treated as having been newly submitted on that date. This provision applied to
The processing of this final rule conforms with our Listing Priority Guidance published in the
In the November 20, 1997, proposed rule (62 FR 61953) and associated notifications, we requested interested parties to submit factual reports or information that might contribute to the development of a final listing decision. We sent announcements of the proposed rule and notice of a public hearing to appropriate State and Federal agencies, county governments, city governments, scientific organizations, private land owners, industrial land owners and other interested parties and requested comments. We also published announcements of the proposed rule in the
We received six written comments during the comment period following the publication of the proposed rule. One individual who submitted a set of written comments also testified at the public hearing. Three commenters opposed and three favored the listing of
Moreover, a substantial amount of interstate commerce arises from the efforts of conservation organizations to protect rare species. The Nature Conservancy, a national organization that engages in substantial interstate commerce through fund-raising and sale of its publications, has sought to protect
In accordance with our policy published on July 1, 1994 (59 FR 34270), we solicited the expert opinions of appropriate and independent specialists regarding pertinent scientific or commercial data relating to the biological and ecological information for
After a thorough review and consideration of all information available, we determine that
A.
Five habitat patches were recently known to occur on private land within the urban boundary of the town of Sutherlin, but only two populations continue to exist, and they make up about 4.5 percent of the remaining occupied habitat. Since 1997, 34 percent of
Two sites were, at one time, a single large habitat patch of about 5 ha (13 ac) with about 300 to 500 plants growing in openings when discovered in 1983 (J. Kagan, pers. obs. 1983). By 1985, this site had fill dirt dumped in the wetlands, and a series of drainage ditches installed (John Gamon, Washington Natural Heritage Program and J. Kagan, pers. obs. 1985). As a result, the population was divided into two, with the second population occurring a few hundred feet from the first population, just south of a trailer park in a commercially viable vacant lot. In 1997, biologists estimated the total amount of habitat occupied by the 2 populations as 1 ha (2.5 ac). Additionally, in 1997 biologists observed survey markers at the sites, and both sites are frequently mown. A local resident indicated that the property was for sale and that unspecified development plans were being formulated (Kelly Amsberry, Oregon State University and R. Meinke, pers. obs. 1997). In 1998, one population was eliminated by grading and dumping with fill. The other population continues to exist, though only a few plants are left (K. Amsberry, pers. comm. 1998). It is likely that the drainage ditches are contributing to the loss of habitat by changing the hydrology of the sites.
The other existing urban population was found in 1983 with 60 to 100 plants. This undeveloped site is located adjacent to two highways in an area that is considered to be very valuable for commercial development. The population was estimated to have about 40 to 50 plants in 1997 (K. Amsberry and R. Meinke, pers. obs. 1997). The current owner plans to develop the site
A fourth population located in 1986 in a horse pasture with 30 to 40
A fifth urban population was also known to exist until recently. In 1983, J. Gamon and J. Kagan discovered the site which consisted of 100 to 500 plants in 1985. The presence of sewer and storm drains above ground level at that time suggested there were plans to fill the site by about 1.5 m (3 ft). Construction workers plowed or graded the site and, by 1997, only one plant remained (K. Amsberry and R. Meinke, pers. obs. 1997). In 1998, the remaining plant was lost due to development (K. Amsberry, pers. comm. 1998).
Ten occupied habitat patches are known from private land just south of the town of Sutherlin to just north of Wilbur. Three of these 10 populations (or 56 percent of the remaining occupied habitat) of
Four of the 10
The remaining 3 out of the 10 habitat patches south of Sutherlin account for approximately 3 percent of occupied habitat. Biologists have documented a decline over time at 1 site from 50 to 60 plants, to 10 to 20 plants. The other two sites tend to fluctuate in numbers. These three sites, as well as the TNC sites, are threatened by competition from invasion of non-native weedy vegetation and succession, which is causing a closure of the forest canopy (see Factor E).
Three other sites are known to occur outside of the town of Sutherlin. Two known habitat patches are located east of Sutherlin on private land. One site, about 2 ha (5.5 ac) in size, is by a road in an agricultural field and is estimated to be about 12.5 percent of the total remaining occupied habitat. The location of the site is in a wet depression in a hayfield. The hayfield was plowed and planted in grass hay, and biologists observed tractor tracks in the depression in which
The third site is located west of Sutherlin, also in a roadside ditch, similar to the second population. This site contains a couple hundred plants, and site totals approximately 10 m
The last two habitat patches, which contain about 3 percent of the occupied habitat, occur in a marshy area on public and private land about 22 km (14 mi) north of Sutherlin, near the town of Yoncalla. In 1983, the Oregon Department of Agriculture rediscovered the collection made in 1961 at this site (see “Background” section). About 200 plants were present in 1988 in 2 separate habitat patches. The northern patch is completely managed by ODOT. The southern patch is partially managed by ODOT, but a portion also occurs on private land. Overall, the population has continued to increase under management by ODOT. Although the population on public land appears vigorous, a portion of the population on the adjacent private land appears to have vanished (J. Kagan, pers. comm. 1997). The northern habitat patch contains 500 plants in a 2 by 20 m (6 by 65 ft) area (Amsberry and Meinke 1997b). The northern population appears stable; however, its small size and precarious location make predictions of its future stability risky (Amsberry and Meinke 1997b). Counts in 1997 estimated the number of plants in the southern patch to be 3,000 (Amsberry and Meinke 1997b).
Alterations in site hydrology pose the primary threat to the plants (R. Meinke, pers. comm. 1997). Right-of-way management also poses a threat to these two populations. For example, in early July of 1995, damage to the marked study plots of transplanted
B.
Vandalism seems to be a potential threat for some populations. For example, after
Vandalism also occurred at a site near Sutherlin a few years ago. The Nature Conservancy informed a landowner of
C.
Livestock graze in pastures containing four of the known habitat patches (Amsberry and Meinke 1997b). Currently, the grazing pressure is heavy at three of those sites, as evidenced by
However, where fires and flooding no longer occur, grazing may benefit the species. This species prefers open canopies and does not compete well with woody and non-native vegetation (Amsberry and Meinke 1997b). Fall grazing, in particular, may benefit the plant because it is dormant at this time and grazing can keep the habitat open by reducing the growth of weedy species (Gamon and Kagan 1985).
Herbivory due to small rodents has been observed on overwintering
D.
Section 404 of the Clean Water Act could provide some protection for
Section 404 is not, however, adequate to ensure protection of the wetland habitat upon which
E.
With the exception of the
Encroachment by native and non-native plant species increases when natural processes like fire or flooding are altered (J. Kagan, pers. comm. 1997; R. Meinke, pers. comm. 1997). Invasion of vernal pools and wet areas by exotic grasses and herbs, as well as encroachment by native ash that increase shading, has caused the decline of this species in at least two populations. This taxon prefers full exposure to sun, and succession in some locations has increased shading by Oregon ash, willow (
After a 1985 fire at one of the sites in Sutherlin, the plants responded the following year with vigorous growth (J. Kagan, pers. comm. 1997). As with late season grazing or mowing, late season fire is likely to be of benefit to the species by reducing encroaching vegetation. Fire occurring prior to seed set may have negative effects on
Because of the small, isolated nature of the occurrences and the few individuals present in most of them,
We have carefully assessed the best scientific and commercial information available concerning the past, present, and future threats faced by this species in developing this final rule.
Critical habitat is defined in section 3 of the Act as: (i) the specific areas within the geographical area occupied by a species, at the time it is listed in accordance with the Act, on which are found those physical or biological features (I) essential to the conservation of the species and (II) that may require special management considerations or protection; and (ii) specific areas outside the geographical area occupied by a species at the time it is listed, upon a determination that such areas are essential for the conservation of the species. “Conservation” means the use of all methods and procedures needed to bring the species to the point at which listing under the Act is no longer necessary.
Section 4(a)(3) of the Act, as amended, and implementing regulations (50 CFR 424.12) require that, to the maximum extent prudent and determinable, we designate critical habitat at the time the species is determined to be endangered or threatened. Our regulations (50 CFR 424.12(a)(1)) state that designation of critical habitat is not prudent when one or both of the following situations exist—(i) the species is threatened by taking or other activity and the identification of critical habitat can be expected to increase the degree of threat to the species or (ii) such designation of critical habitat would not be beneficial to the species. We find that designation of critical habitat is prudent for the for the
In the proposed rule, we indicated that designation of critical habitat was not prudent for
In the last few years, a series of court decisions have overturned Service determinations regarding a variety of species that designation of critical habitat would not be prudent (e.g.,
Due to the small number of populations,
In the absence of a finding that designation of critical habitat would increase threats to a species, if there are any benefits to critical habitat designation, then a prudent finding is warranted. In the case of this species, there may be some benefits to designation of critical habitat. The primary regulatory effect of critical habitat designation is the section 7 requirement that Federal agencies refrain from taking any action that destroys or adversely modifies critical habitat. While a critical habitat designation for habitat currently occupied by this species would not be likely to change the section 7 consultation outcome because an action that destroys or adversely modifies such critical habitat would also be likely to result in jeopardy to the species, there may be instances where section 7 consultation would be triggered only if critical habitat is designated. Examples could include unoccupied habitat or occupied habitat that may become unoccupied in the future. There may also be some educational or informational benefits to designating critical habitat. Therefore, we find that designation of critical habitat is prudent for
The Final Listing Priority Guidance for FY 2000 (64 FR 57114) states, “The processing of critical habitat determinations (prudency and determinability decisions) and proposed or final designations of critical habitat will no longer be subject to prioritization under the Listing Priority Guidance. Critical habitat determinations, which were previously included in final listing rules published in the
We plan to employ a priority system for deciding which outstanding critical habitat designations should be addressed first. We will focus our efforts on those designations that will provide the most conservation benefit, taking into consideration the efficacy of critical habitat designation in addressing the threats to the species, and the magnitude and immediacy of those threats. We will develop a proposal to designate critical habitat for the
Conservation measures provided to species listed as endangered or threatened under the Act include recognition, recovery actions, requirements for Federal protection, and prohibitions against certain practices. Recognition through listing can encourage and result in public awareness and conservation actions by Federal, State, and local agencies, private organizations, and individuals. The Act provides for possible land acquisition and cooperation with the States and requires that recovery actions be carried out for all listed species. The protection required by Federal agencies and the prohibitions against certain activities involving listed plants are discussed, in part, below.
Section 7(a) of the Act, as amended, requires Federal agencies to evaluate their actions with respect to any species that is proposed or listed as endangered or threatened and with respect to its critical habitat, if designated. Regulations implementing this interagency cooperation provision of the Act are codified at 50 CFR part 402. Section 7(a)(4) of the Act requires Federal agencies to confer with us on any action that is likely to jeopardize the continued existence of a species proposed for listing or result in destruction or adverse modification of proposed critical habitat. If a species is subsequently listed, section 7(a)(2) requires Federal agencies to ensure that activities they authorize, fund, or carry out are not likely to jeopardize the continued existence of the species or destroy or adversely modify its critical habitat. If a Federal action may affect a listed species or its critical habitat, the responsible Federal agency must enter into consultation with us.
None of the known naturally occurring populations of
Other Federal agencies' actions that may require consultation include the National Resource Conservation Service projects and Department of Housing and Urban Development and Veterans' Administration mortgage programs (Federal Home Administration loans). The Federal Highway Administration will become involved with
Listing of this plant will provide for development of a recovery plan for the plant. Such a plan will bring together both State and Federal efforts for conservation of the plant. The plan will establish a framework for agencies to coordinate activities and cooperate with each other in conservation efforts. The plan will set recovery priorities, assign responsibilities, and estimate costs of various tasks necessary to accomplish them. It will also describe site-specific management actions necessary to achieve conservation and survival of the plant. Additionally, pursuant to section 6 of the Act, we will be able to grant funds to affected States for management actions promoting the protection and recovery of this species.
Five of the 17 habitat patches currently receive some protective management. Two patches are owned and managed by ODOT and are conserved under State law. The ODOT physically delineated the sites with plastic markers and signs designating them as Special Management Areas (Amsberry and Meinke 1997b). Mowing is restricted to late in the fall when
During the spring of 1998, we assisted the BLM with experimental introductions using 1,000 greenhouse-grown plants that were planted at 2 different sites on BLM lands in suitable wetland habitats. We established the plants on an upland soil type with which
The Act and its implementing regulations set forth a series of general prohibitions and exceptions that apply to all endangered plants. All prohibitions of section 9(a)(2) of the Act, implemented by 50 CFR 17.61, apply. These prohibitions, in part, make it illegal for any person subject to the jurisdiction of the United States to import or export, transport in interstate or foreign commerce in the course of a commercial activity, sell or offer for sale in interstate or foreign commerce, or remove and reduce the species to possession from areas under Federal jurisdiction. In addition, for plants listed as endangered, the Act prohibits the malicious damage or destruction on areas under Federal jurisdiction and the removal, cutting, digging up, or damaging or destroying of such plants in knowing violation of any State law or regulation, including State criminal trespass law. Certain exceptions to the prohibitions apply to our agents and State conservation agencies.
As published on July 1, 1994 (59 FR 34272), our policy is to identify, to the maximum extent practicable, those activities that would or would not constitute a violation of section 9 of the Act at the time of listing. The intent of this policy is to increase public awareness of the effect of the listing on proposed and ongoing activities within a species' range. Collection, damage, or destruction of this species on Federal land is prohibited, although in appropriate cases, we may issue a Federal endangered species permit for scientific or recovery purposes. We believe that, based upon the best available information, you can take the following actions without resulting in a violation of section 9, only if these activities are carried out in accordance with existing regulations and permit requirements:
(1) Activities authorized, funded, or carried out by Federal agencies (
(2) Normal agricultural and silvicultural practices, including pesticide and herbicide use, that are carried out in accordance with any existing regulations, permit and label requirements, and best management practices.
(3) Normal landscape activities around your own personal residence.
We believe that the following might potentially result in a violation of section 9; however, possible violations are not limited to these actions alone:
(1) Removal, cutting, digging up, damaging, or destroying endangered plants on non-Federal land if conducted in knowing violation of Oregon State law or regulations or in violation of State criminal trespass law.
(2) Interstate or foreign commerce and import/export without previously obtaining an appropriate permit.
Questions regarding whether specific activities will constitute a violation of section 9 should be addressed to the State Supervisor of the Oregon State Office (see
The Act and 50 CFR 17.62 and 17.63 also provide for the issuance of permits to carry out otherwise prohibited activities involving endangered plants under certain circumstances. Such permits are available for scientific purposes and to enhance the propagation or survival of the species. Requests for copies of the regulations concerning listed plants and animals and general inquiries regarding prohibitions and permits may be addressed to the U.S. Fish and Wildlife Service, Ecological Services, Endangered Species Permits, 911 N.E. 11th Avenue, Portland, Oregon 97232-4181 (telephone 503/231-2063; facsimile 503/231-6243).
We have determined that Environmental Assessments and Environmental Impact Statements, as defined under the authority of the National Environmental Policy Act of 1969, need not be prepared in connection with regulations adopted pursuant to section 4(a) of the Act. We published a notice outlining our reasons for this determination in the
This rule does not contain any new collections of information other than those already approved under the Paperwork Reduction Act, 44 U.S.C. 3501
A complete list of all references cited herein is available upon request from the Oregon State Fish and Wildlife Office (see
The primary author of this final rule is Dr. Andrew F. Robinson, Jr., U.S. Fish and Wildlife Service, Oregon State Office (see
Endangered and threatened species, Exports, Imports, Reporting and recordkeeping requirements, Transportation.
Accordingly, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as follows:
16 U.S.C. 1361-1407; 16 U.S.C. 1531-1544; 16 U.S.C. 4201-4245; Pub. L. 99-625, 100 Stat. 3500; unless otherwise noted.
Fish and Wildlife Service, Interior.
Final rule.
The U.S. Fish and Wildlife Service (“Service” or “we”) determines endangered status pursuant to the Endangered Species Act (Act) of 1973, as amended, for a plant and a butterfly,
February 24, 2000.
You may inspect the complete file for this rule, by appointment, during normal business hours at the U.S. Fish and Wildlife Service, Oregon State Office, 2600 SE 98th Ave, Suite 100, Portland, Oregon 97266.
Dr. Andrew F. Robinson, Jr., Botanist; or Diana Hwang, Fish and Wildlife Biologist, U.S. Fish and Wildlife Service (see
Fender's blue butterfly (
The alluvial soils of the Willamette Valley and southern Washington host a mosaic of grassland, woodland, and forest communities. Fender's blue butterfly,
Two native prairie types occur in the Willamette Valley, wet prairie and upland prairie. Fender's blue butterfly and
The primary habitat for
The impact of humans on the botanical communities of the Willamette Valley dates back several centuries to the Kalapooya Indians, who cleared and burned lands used for hunting and food gathering. Early accounts by David Douglas in 1826 indicate extensive burning of the valley floor, from its northern end at the falls of the Willamette River to its southern extremities near Eugene. Burned areas were documented by Douglas as being so complete as to limit the forage available for his horse and to reduce game availability (Douglas 1972). Accounts by other early explorers support Douglas' observations and suggest a pattern of annual burning by the Kalapooya resulted in the maintenance of extensive wet and dry prairie grasslands (Johannessen
The Willamette basin covers approximately 2,600,000 hectares (ha) (6,400,000 acres (ac)), which Lang (1885) estimated to consist of one-sixth prairie and five-sixths forest. We can analyze the extent of the prairie component through historical information from land survey records. Natural grasslands described by Federal land surveyors in the 1850s were broken down into three distinct types—oak savannah, upland prairie, and wet prairie (Habeck 1961). Of the estimated 409,000 ha (1,010,000 ac) of historic native grasslands extant prior to 1850, approximately 277,000 ha (685,000 ac) appears to have consisted of upland prairie and 132,000 ha (325,000 ac) of wet prairie (E. Alverson, The Nature Conservancy, Eugene, pers. comm., 1994).
This extensive resource was rapidly depleted through the conversion of native prairie to agricultural use during European settlement. Within 30 years of passage of the Donation Land Act of 1850, European-American settlers, who quickly subdivided their original land grants to accommodate the rapid increase in population, occupied most prairie lands (Lang 1885). Settlers first plowed the level, open tracts of prairie (Lang 1885) and only boggy, flood-prone areas prevented complete conversion of the native grassland community to cropped monocultures. After 1936, the U.S. Army Corps of Engineers (Corps) overcame limitations on development that had been imposed by seasonal flooding and a high water table by initiating water projects to provide flood control and security for expanded agricultural activity.
Fender's blue butterfly,
Although large prairie expanses dominated by native species had been lost by the early 1900's, many remnant grasslands with a large native species component have been recently identified. These remnants, often dominated by nonnative species, also support the only remaining occurrences of native prairie species in the Willamette Valley. Current estimates of the remaining native upland prairie in the Willamette Valley are less than 400 ha (988 ac) (Alverson, pers. comm. 1994). This estimate represents only one-tenth of one percent of the original upland prairie once available to Fender's blue butterfly and
Fender's blue butterfly is one of about a dozen subspecies of Boisduval's blue butterfly (
Fender's blue butterfly is small with a wingspan of approximately 2.5 centimeters (cm) (1 inch (in)). The upper wings of the males are brilliant blue in color, and the borders and basal areas are black. The upper wings of the females are completely brown colored. The undersides of the wings of both sexes are creamish tan, with black spots surrounded with a fine white border or halo. The dark spots on the underwings of male Fender's blue butterflies are small. In contrast, the dark spots on the underwings of the pembina blue butterfly (
We do not know the precise historic distribution of Fender's blue butterfly due to the limited information collected on this subspecies prior to its description in 1931 (Macy 1931). Although Ralph W. Macy collected the type specimens for this butterfly in 1929, only a limited number of collections were made between the time of the subspecies' discovery and Macy's last observation on May 23, 1937, in Benton County, Oregon (Hammond and Wilson 1992a). A lack of information on the identity of the butterfly's host plant caused researchers to focus their survey efforts on common lupine species known to occur in the vicinity of Macy's collections. As a result, no Fender's blue butterflies were observed during 20 years of widespread investigation. Finally, Dr. Paul Hammond rediscovered Fender's blue butterfly in 1989 at McDonald Forest, Benton County, Oregon, on an uncommon species of lupine,
Although researchers have made only limited observations of the early life stages of Fender's blue butterfly, the life cycle of the species likely is similar to other subspecies of
The larvae of many species of lycaenid butterflies, including
Of the 32 sites where Fender's blue butterfly occurs,
At this time we have no information to suggest that
In 1924, C.P. Smith first described
Thomas Nuttall (1840) based his description of
According to Strother and Ferlatte (1988),
Clark
As with many species in the family Asteraceae,
Fender's blue butterfly was initially assigned to category 3A taxa in the NOR published on January 6, 1989 (54 FR 572). The best available information at that time indicated that this butterfly was likely extinct because the subspecies had last been observed in 1937. Category 3A taxa were taxa for which we had pervasive evidence of extinction, however, if rediscovered, such taxa might be reconsidered for listing. The rediscovery of this butterfly in May 1989 prompted us to change the status of the subspecies to a category 2 candidate in the NOR published on November 21, 1991 (56 FR 58830). In the NOR published on February 28, 1996 (61 FR 7596), we retained Fender's blue butterfly as a candidate for listing. On January 27, 1998, we published a proposed rule (63 FR 3863) to list the Fender's blue butterfly (
The processing of this final rule conforms with our Listing Priority Guidance published in the
In the January 27, 1998, proposed rule (63 FR 3863) and associated notifications, all interested parties were requested to submit factual reports or information that might contribute to the development of a final listing decision. Appropriate State agencies, county governments, city governments, Federal agencies, scientific organizations, private landowners, industrial landowners and other interested parties were contacted and requested to comment. Newspaper notices inviting public comments were published in the
Five commenters opposed, and 24 favored the listing of
In our letter to the landowner, we sought clarification on the status of the population that is/was apparently on the commenter's land. Upon receipt of the letter, the landowner called us and informed us that he did not know the status of the population in question but could check later that summer.
On November 24, 1998, we contacted the landowner. The landowner informed us that a fence in the area where
Recovery planning for the species may include recommendations for land acquisition or easements involving private landowners. Some of these areas may be unoccupied prairie habitat. These efforts would be undertaken only with the voluntary cooperation of the landowner. In the majority of cases, private landowners are not prevented from using their land in the manner originally intended. Within the Willamette Valley wetland prairies, there are 26 sites across 116 ha (286 ac) where
Landowners will be able to use occupied Fender's blue butterfly habitat (165 ha (407 ac)) as long as the use does not involve the take of the butterfly. The Act and its implementing regulations set forth a series of prohibitions and exceptions that apply to endangered wildlife, including prohibition of take (16 U.S.C. 1538). Take includes harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect; or to attempt any of these (16 U.S.C. 1532). Permits may be issued to carry out otherwise prohibited activities involving endangered wildlife under certain circumstances. If certain requirements are met, these permits are available for incidental take in connection with otherwise lawful activities.
Executive Order 12630, Government Actions and Interference with Constitutionally Protected Property Rights, require that a Taking Implication Assessment (TIA) be conducted “as a part of the final rulemaking to evaluate the risk of and strategies for avoidance of the taking of private property.” However, the Attorney General's guidelines state that TIAs used to analyze the potential for Fifth Amendment “taking claims” are to be prepared after, rather than before, an agency makes a restricted discretionary decision. In enacting the Act, Congress required the Department to list a species based solely upon scientific and commercial data indicating whether or not the species is in danger of extinction. We may not withhold a listing based upon economic concerns. Therefore, even though a TIA may be required, a TIA for a listing action is finalized only after the final determination is made regarding whether to list the species.
In accordance with interagency policy published on July 1, 1994 (59 FR 34270), we solicited the expert opinions of appropriate and independent specialists regarding pertinent scientific or commercial biological and ecological data for
Comments provided by Cathy L. Maxwell, Dr. Robert Michael Pyle, Cheryl B. Schultz, and Dr. Mark Wilson, Associate Professor of Botany and Plant Pathology at Oregon State University were incorporated into the final rule. Cathy L. Maxwell; Dr. Robert Michael Pyle; Cheryl B. Schultz; Dr. Mark Wilson; David Brittell, Assistant Director, Wildlife Management Program, Washington Department of Fish and Wildlife; and Diane S. Doss, Conservation Chair, Washington Native Plant Society, supported our position that
Section 4 of the Endangered Species Act and regulations (50 CFR Part 424) issued to implement the listing provisions of the Act set forth the procedures for adding species to the Federal lists. A species may be determined to be an endangered or threatened species due to one or more of the five factors described in section 4(a)(1). These factors and their application to Fender's blue butterfly (
A.
Within the 88 remnants of native prairie occupied by these species in the Willamette Valley, the Fender's blue butterfly occurs at 32 sites (Hammond and Wilson 1993, Schultz 1996),
The immediacy of the threat of habitat loss in the last remaining 88 remnants of native prairie occupied by these species has been well documented. Habitat at 80 percent of the sites (68 sites) is rapidly disappearing due to agriculture practices, development activities, forestry practices, grazing, roadside maintenance, and commercial Christmas tree farming.
Agricultural activities likely impact at least 12 prairie remnants. Five of these remnants are wetland prairies occupied by
Urban development has caused additional loss of prairie habitat (Clark
Examples of this type of threat are the Dallas-Oakdale Avenue sites 1 and 2 covering about 2 ha (5 ac) occupied by Fender's blue butterfly and
Silvicultural activities for timber production have threatened 6 percent (5 sites) of the remaining 88 prairie occurrences. The Coburg Ridge area-2 site in Lane County is the largest site occupied by Fender's blue butterfly and is among the best examples of remnant upland native prairie in the Willamette Valley (Hammond 1994). Native species were severely damaged, however, by the application of grass-specific herbicide that eliminated grasses and severely damaged other herbaceous species prior to tree planting activities. Approximately 4 ha (10 ac) were sprayed with herbicide. The saddle section of Coburg Ridge (area-2) that received aerial application of the herbicide is used by Fender's blue butterfly due to the presence of
Herbicide spraying associated with reforestation, after logging, has also altered habitat and caused a decline of a
Grazing currently impacts 13 of the occupied habitat patches, with 5 of these being wetlands occupied by
Another common threat to these species is roadside maintenance activities. At least 34 sites occur along roadsides and are impacted by maintenance activities. Five of these are wetland areas supporting
With frequent weed control efforts ongoing, as well as highway and driveway construction, small roadside occurrences of Fender's blue butterfly,
Between 1994 and 1996, Fender's blue butterfly populations disappeared from (or were considered no longer viable) at least seven small roadside sites (Liberty Road, Monmouth Falls City Road, Fern Corner, Grant Creek, and McTimmonds Valley in Polk County, and two sites at Wren), and populations at many of the remaining roadside sites continue to decline. Between 1990 and 1992, three sites occupied by both Fender's blue butterfly and
In summary, habitat loss from a wide variety of causes (e.g., urbanization, agriculture, silvicultural practices, and roadside maintenance) is a severe problem faced by Fender's blue butterfly,
B.
The 1989 rediscovery of this insect generated a great deal of publicity and interest, which in turn increased demand by collectors. Therefore, remaining populations of Fender's blue butterfly face strong pressure from some members of the collecting community. Collectors who highly prize rare butterflies often take all wild specimens obtainable for use in trade (U.S. Department of Justice,
No current evidence exists of horticultural collection or other overutilization for scientific purposes for either
C.
Evidence of insect herbivory on
D.
In 1987, Oregon Senate Bill 533 was passed to augment the legislative actions available for the protection of the State's threatened and endangered species, both plant and animal. This bill, known as the Oregon Endangered Species Act, mandates responsibility for threatened and endangered species in Oregon to two State agencies—the Oregon Department of Agriculture (ODA) for plant species (ORS 564.105) and the Oregon Department of Fish and Wildlife (ODFW) for “wildlife” species (ORS 496.172). As re-authorized in 1995 (HB 2120), the Oregon Endangered Species Act does not include invertebrate animals in the definition of “wildlife.” Therefore, Fender's blue butterfly receives no protection under the Oregon Endangered Species Act. The Oregon Natural Heritage Program is the only State agency “which tracks locations of and works to protect the rare, threatened and endangered invertebrates of Oregon” (Oregon Natural Heritage Program 1993). The Heritage program has created a Sensitive Species invertebrate list, which includes Fender's blue butterfly as a “priority 1 species.” Priority 1 species are “taxa that are threatened or endangered throughout their range” (Oregon Natural Heritage Program 1993). The program can assist planning agencies in managing lands for the benefit of rare invertebrate taxa, but it has no regulatory authority over rare
The Oregon Endangered Species Act directs the ODA to maintain a strong program to conserve and protect native plant species classified by the State as threatened or endangered.
ODOT owns and manages roadside habitat where
The BLM and the Forest Service (FS) manage lands occupied by
On Corps lands, discretion for the protection and management of State-listed and Federal candidate species lies at the local level. Funds may be available in some years to proactively manage these species.
Populations of
Individual Corps permits are required for discharge of material that would fill or adversely modify greater than 1.2 ha (3 ac) of wetlands. The review process for individual permits is more rigorous than for nationwide permits. Unlike nationwide permits, a cumulative analysis of wetland impacts is required for individual permit applications. Resulting permits may include special conditions that require potential avoidance or mitigation for environmental impacts. On nationwide permits, the Corps has discretionary authority to require an individual permit if the Corps believes that resources are sufficiently important, regardless of the wetland's size. In practice, however, the Corps generally does not require an individual permit when a project qualifies for a nationwide permit unless a threatened or endangered species or other significant resources would be adversely affected by the proposed activity. When a listed species may be affected, consultation requirements of section 7 of the Act do pertain to the Corps' regulatory process.
Disking and some other farming, ranching, and silvicultural practices can degrade or destroy wetland habitat without a permit from the Corps because these activities are exempt from regulation under the CWA (33 CFR 323.4(a)). The discontinuous configuration of the existing wet prairies further obscures these wetland losses. Occurrences of
The primary inadequacies in existing regulatory mechanisms pertain to populations of Fender's blue butterflies,
E.
Although few large sites (greater than 10 ha (25 ac)) are secure from habitat loss, large sites currently support relatively stable populations of Fender's blue butterflies,
The sites with small acreage where these three taxa occur, such as roadside and fence line/boundaries, face an immediate threat of destruction from a variety of disturbances. These disturbances include development, agriculture, silvicultural practices, roadside maintenance, and herbicide application. Of the 54 sites occupied by
Given the impact of such habitat losses on these small habitat patches, the extirpation of most of the small Fender's blue butterfly populations is anticipated within the next 5 years.
The importance of these small populations, particularly for the Fender's blue butterfly, lies in their potential to serve as stepping stones between larger neighboring populations. The loss of these populations and the accompanying potential habitat would severely compromise the ability of
A less visible threat to the smaller populations is a decrease in vigor and viability. For the Fender's blue butterfly, small numbers and localized populations increase the risk of loss through random genetic or demographic factors. (Gilpin and Soule
This pattern of extinction and re-colonization of connected colonies of butterflies has been disrupted by the extensive fragmentation of remaining habitat and the disruption of the disturbance regimes that have maintained them. The remnant populations, now small in numbers, are either unconnected or exchange individuals to a very limited degree. With their limited dispersal abilities, low numbers, and dwindling habitat, a majority of the remaining populations of Fender's blue butterfly likely face permanent extirpation.
The effects of random environmental events are magnified in small populations. For instance, one small population of
A serious long-term threat to all Fender's blue butterfly,
At prairie remnant roadside sites, the degree of the threat of succession varies, depending on the vegetation control employed by each county. Many Fender's blue butterfly populations are close to local extinction at small
Non-roadside prairie remnant sites in general face the greatest threat from succession/weed expansion and invasion due to a lack of disturbance that disrupts successional progress. For instance, otherwise secure habitat on one Corps site has been heavily invaded by the nonnative plant
Compounding the threat of nonnative plant species is the control of weedy nonnative species by herbicides. Twenty-three
Natural and human-caused factors threaten the remaining populations of Fender's blue butterflies,
We have carefully assessed the best scientific and commercial information available regarding the past, present, and future threats faced by these species in developing this final rule. Threats to Fender's blue butterfly are more imminent than threats to
Critical habitat is defined in section 3(5)(A) of the Act as (i) the specific areas within the geographical area occupied by a species, at the time it is listed in accordance with the Act, on which are found those physical or biological features (I) essential to the conservation of the species and (II) that may require special management considerations or protection; and (ii) specific areas outside the geographical area occupied by a species at the time it is listed, upon a determination that such areas are essential for the conservation of the species. The term “conservation” means the use of all methods and procedures needed to bring the species to the point at which listing under the Act is no longer necessary (16 U.S.C. 1532(3)(5)(A)).
Our regulations (50 CFR 424.12(a)(1)) state that designation of critical habitat is not prudent when one or both of the following situations exist—(1) The species is threatened by taking or other human activity and identification of critical habitat can be expected to increase the degree of threat to the species, or (2) such designation of critical habitat would not be beneficial to the species.
In the proposed rule, we indicated that designation of critical habitat was not prudent for Fender's blue butterfly (
In the last few years, a series of court decisions have overturned our determinations regarding a variety of species that designation of critical habitat would not be prudent (e.g.,
Due to the small number of populations, Fender's blue butterfly (
In the absence of a finding that critical habitat would increase threats to a species, if there are any benefits to critical habitat designation, then a prudent finding is warranted. In the case of these species, there may be some benefits to designation of critical habitat. The primary regulatory effect of critical habitat is the section 7 requirement that Federal agencies refrain from taking any action that destroys or adversely modifies critical habitat. While a critical habitat designation for habitat currently occupied by these species would not be likely to change the section 7 consultation outcome because an action that destroys or adversely modifies such critical habitat would also be likely to result in jeopardy to the species, there may be instances where section 7 consultation would be triggered only if critical habitat is designated. Examples could include unoccupied habitat or occupied habitat that may become unoccupied in the future. There may also be some educational or informational benefits to designating critical habitat. Therefore, we find that critical habitat designation is prudent for Fender's blue butterfly (
The Final Listing Priority Guidance for FY 2000 (64 FR 57114) states that the processing of critical habitat determinations (prudency and determinability decisions) and proposed or final designations of critical habitat will no longer be subject to prioritization under the Listing Priority Guidance. Critical habitat determinations, which were previously included in final listing rules published in the
We plan to employ a priority system for deciding which outstanding critical habitat designations should be addressed first. We will focus our efforts on those designations that will provide the most conservation benefit, taking into consideration the efficacy of critical habitat designation in addressing the threats to the species, and the magnitude and immediacy of those threats. We will develop a proposal to designate critical habitat for the Fender's blue butterfly (
Conservation measures provided to species listed as endangered or threatened under the Act include recognition, recovery actions, requirements for Federal protection, and prohibitions against certain activities. Recognition through listing encourages and results in conservation actions by Federal, State, and private agencies, groups, and individuals. The Act provides for possible land acquisition and cooperation with the States and requires that recovery actions be carried out for all listed species. The protection required of Federal agencies and the prohibitions against taking and harm of animals and certain activities involving listed plants are discussed, in part, below.
Section 7(a)(2) of the Act, as amended, requires Federal agencies to evaluate their actions with respect to any species that is proposed or listed as endangered or threatened and with respect to its critical habitat, if any is being designated. Regulations implementing this interagency cooperation provision of the Act are codified at 50 CFR Part 402. If a species is listed, section 7(a)(2) requires Federal agencies to ensure that activities they authorize, fund, or carry out, are not likely to jeopardize the continued existence of such a species or to destroy or adversely modify its critical habitat. If a Federal action is likely to adversely affect a listed species or its critical habitat, the responsible Federal agency must enter into formal consultation with us.
The Federal Highway Administration provides partial funding for State highway maintenance. Therefore, any roadside habitat supporting
Active management of native prairie remnants is being carried out by the Portland District Corps, our Western Oregon National Wildlife Refuge complex, Eugene District BLM, and the Washington and Oregon field offices of TNC. In 1997, the Corps initiated an attempt to create two new
We have conducted research at Baskett Slough National Wildlife Refuge on the effects of prescribed fire, fire suppression, mowing, and herbicide on native and nonnative prairie species including
Management of the six prairie remnants in the west Eugene wetlands of Lane County on BLM lands includes control of nonnative invasive species, primarily blackberry, tansy ragwort, meadow knapweed, and Scotch broom. BLM will use methods such as tractor mowing, hand pulling or cutting, and will remove native hardwoods and/or conifers needed to maintain these prairie remnants. As part of the West Eugene Wetlands Acquisition Program, BLM will acquire additional habitat supporting sensitive Willamette Valley prairie species as opportunities occur.
At the Boistfort Cemetery, extensive Canada thistle patches at the base of the south side of the hill near
On the TNC Willow Creek Natural Area, seedlings of
The Act and its implementing regulations set forth a series of general prohibitions and exceptions that apply to all endangered and threatened plants. The prohibitions of section 9(a)(2) of the Act, implemented by 50 CFR 17.61 for endangered plants and 50 CFR 17.71 for threatened plants, apply. These prohibitions, in part, make it illegal for any person subject to the jurisdiction of the United States to import or export, transport in interstate or foreign commerce in the course of a commercial activity, sell or offer for sale in interstate or foreign commerce, or remove and reduce the species to possession from areas under Federal jurisdiction. In addition, for plants listed as endangered, the Act prohibits the malicious damage or destruction of the plants on areas under Federal jurisdiction and the removal, cutting, digging up, or damaging or destroying of such plants in knowing violation of any State law or regulation, or in the course of a violation of State criminal trespass law (see 16 U.S.C. 1538 (a)(2)(B)). Section 4(d) of the Act allows for the provision of such protection to threatened species through regulation. This protection may apply to
The Act and 50 CFR 17.62, 17.63, and 17.72 also provide for the issuance of permits to carry out otherwise prohibited activities involving endangered and threatened plants under certain circumstances. Such permits are available for scientific purposes and to enhance the propagation or survival of the species. For threatened plants, permits also are available for botanical or horticultural exhibition, educational purposes, or special purposes consistent with the purposes of the Act. It is anticipated that few trade permits would ever be sought or issued because
The Act and implementing regulations also set forth a series of general prohibitions and exceptions that apply to all endangered wildlife. These prohibitions, in part, make it illegal for any person subject to the jurisdiction of the United States to take (includes harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, collect; or to attempt any of these), import or export, ship in interstate commerce in the course of commercial activity, or sell or offer for sale in interstate or foreign commerce any listed species. It also is illegal to possess, sell, deliver, carry, transport, or ship any such wildlife that has been taken illegally. Certain exceptions apply to agents of the Service and State conservation agencies.
Permits may be issued to carry out otherwise prohibited activities involving endangered wildlife under certain circumstances. Regulations governing permits are codified at 50 CFR 17.22 and 17.23. Such permits are available for scientific purposes, to enhance the propagation or survival of the species, and/or for incidental take in connection with otherwise lawful activities.
Our policy, as published in the
With issuance of this final rule, Fender's blue butterfly receives more extensive protection under the Act than described for
(1) Possession, delivery, or movement, including interstate transport involving no commercial activity, dead specimens of Fender's blue butterfly that were collected prior to the date of publication in the
(2) Actions that may affect Fender's blue butterfly and are authorized, funded, or carried out by a Federal agency when the action is conducted in accordance with incidental take statements included in biological opinions issued under section 7 of the Act;
(3) Land actions or management carried out under a habitat conservation plan approved by us pursuant to section 10(a)(1)(B) of the Act; and
(4) Scientific research carried out under a permit issued by us pursuant to section 10(a)(1)(A) of the Act.
Potential activities involving Fender's blue butterfly that would likely be considered a violation of section 9 include, but are not limited to, the following:
(1) Take of Fender's blue butterfly without a permit pursuant to section 10(a)(1)A) or an incidental take permit pursuant to section 10(a)(1)(B) of the Act (this includes harassing, harming, pursuing, hunting, shooting, wounding, killing, trapping, capturing, or collecting, or attempting any of these actions);
(2) Possessing, selling, delivering, carrying, transporting, or shipping illegally taken specimens of Fender's blue butterfly;
(3) Release of chemical or biological control agents that attack, damage, or kill any stage of this taxon, if not approved through section 7 consultation;
(4) In areas where Fender's blue butterfly occurs, the removal or destruction of the food plants being utilized by Fender's blue butterfly, defined as
(5) Destruction or alteration of Fender's blue butterfly habitat by grading, leveling, plowing, mowing, burning, herbicide or pesticide spraying, intensively grazing, or otherwise disturbing grasslands that result in the death or injury of adult Fender's blue butterflies and/or their larvae or eggs, through significant impairment of the species' essential breeding, foraging, sheltering, or other essential life functions.
You may direct questions regarding whether specific activities risk a violation of section 9 to the State Supervisor of our Oregon State Office (see
We have determined that Environmental Assessments and Environmental Impact Statements, as defined under the authority of the National Environmental Policy Act of 1969, need not be prepared in connection with regulations adopted pursuant to section 4(a) of the Endangered Species Act of 1973, as amended. A notice outlining our reasons for this determination was published in the
This rule does not contain any new collections of information other than those already approved under the Paperwork Reduction Act, 44 U.S.C. 3501
This rule has not been reviewed by the Office of Management and Budget under Executive Order 12866.
You may request a complete list of all references cited herein, as well as others, from the Oregon State Office (see
The primary author of this final rule is Dr. Andrew F. Robinson, Jr., Fish and Wildlife Biologist (see
Endangered and threatened species, Exports, Imports, Reporting and recordkeeping requirements, Transportation.
For the reasons outlined in the preamble, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below:
16 U.S.C. 1361-1407; 16 U.S.C. 1531-1544; 16 U.S.C. 4201-4245; Pub. L. 99-625, 100 Stat. 3500, unless otherwise noted.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final harvest guidelines.
NMFS announces the annual harvest guidelines for Pacific sardine and Pacific mackerel in the exclusive economic zone (EEZ) off the Pacific coast. The Coastal Pelagic Species Fishery Management Plan (FMP) and its implementing regulations require NMFS to establish annual harvest guidelines for Pacific sardine and Pacific mackerel based on a formulas appearing in the FMP. The intended effect of this action is to establish allowable harvest levels for coastal pelagic species off the Pacific coast.
Effective January 1, 2000. Comments are invited until February 24, 2000.
Submit comments on the annual specifications to Rodney R. McInnis, Acting Regional Administrator, Southwest Region, (Regional Administrator), NMFS, 501 West Ocean Blvd., Suite 4200, Long Beach, CA 90802-4213. The reports
James J. Morgan, Southwest Region, NMFS, (562) 980-4030.
The FMP, which was partially approved by the Secretary of Commerce on June 10, 1999, and implemented by publication of a final rule in the
At a public meeting each year, the biomass for each actively managed species is presented by the Council's Coastal Pelagic Species Management Team (Team) to the Council's Coastal Pelagic Species Advisory Subpanel (Subpanel). At that time, the biomass,
The FMP allows the Administrator, Southwest Region, NMFS to announce harvest guidelines before review by the Council if there is insufficient time for review. At its meeting in September 1999, the Council decided to use this procedure during the first year of managing Pacific sardine and Pacific mackerel because the sardine assessment would not be completed by its November 1999 Meeting. The Council plans to complete its review at its March 2000 meeting, when the stock assessment and fishery evaluation report for Pacific sardine will be presented. At the November meeting, the Team presented the Council with the Pacific mackerel assessment to establish a harvest guideline for the season that began on July 1, 1999. The Council adopted the Team's recommendations, including the necessary procedure to subtract the estimated harvest of Pacific mackerel from July 1, 1999, to December 31, 1999, to establish a harvest guideline beginning January 1, 2000, consistent with the beginning of the fishing season.
On December 9, 1999, consistent with the procedures of the FMP, the biomass report and attendant harvest guidelines for Pacific sardine and Pacific mackerel were reviewed at a public meeting of the Team at the NMFS Southwest Fisheries Science Center in La Jolla, California. A public meeting between the Team and the Subpanel was held on December 14, 1999, at the Southwest Region, NMFS, in Long Beach, California. No significant comments regarding the harvest guidelines were received.
The sardine population was estimated using a modified version of the integrated stock assessment model called Catch at Age Analysis of Sardine-Two Area Model (CANSAR-TAM). CANSAR is a forward-casting, age-structured analysis using fishery dependent and fishery independent data to obtain annual estimates of sardine abundance, year-class strength, and age-specific fishing mortality for 1983 through 1999. The modification of CANSAR was developed to account for the expansion of the Pacific sardine stock northward to include waters off the northwest Pacific coast. Documentation of the 1999 estimate is described in the Council report
The formula in the FMP uses the following factors to determine the harvest guideline for Pacific sardine:
1.
2.
3.
4.
Based on the estimated biomass of 1,581,346 mt and the formula in the FMP, a harvest guideline of 186,791 mt was calculated for the fishery beginning on January 1, 2000. The harvest guideline is allocated one third for Subarea A, which is north of 35° 40' N. lat. to the Canadian border, and two thirds for Subarea B, which is south of 35° 40' N. lat. to the Mexican border. Any unused resource in either area will be reallocated between areas to help ensure that optimum yield will be achieved. The northern allocation is 62,264 mt; the southern allocation is 124,527 mt.
The size of the Pacific mackerel population was estimated using a modified virtual population analysis stock assessment model, which employs both fishery dependent and fishery independent data to estimate abundance. The model was used to calculate biomass estimates through the end of 1998 and then project an estimate of biomass for July 1, 1999, based on the number of Pacific mackerel estimated to comprise each year class at the beginning of 1999, estimates of fishing mortality during 1998, assumptions of natural and fishing mortality through the first half of 1999, and estimates of age-specific growth. Documentation of the 1999 estimate is described in the Council report
The formula in the FMP uses the following factors to determine the harvest guideline for Pacific mackerel:
1.
2.
3.
4.
Based on the estimated biomass of 239,286 mt and the formula in the FMP, a harvest guideline of 46,428 was calculated for the fishery beginning on July 1, 1999. To determine a harvest guideline for the period beginning January 1, 2000, the estimated harvest of Pacific mackerel between July 1, 1999, through December 31, 1999, was subtracted from the harvest guideline. The amount harvested is 3,609 mt; therefore, the harvest guideline available to the fishery beginning on January 1, 2000, is 42,819 mt.
This action is authorized by 50 CFR 660.509 and is exempt from review under Executive Order 12866.
The Assistant Administrator for Fisheries, NOAA (AA) finds for good cause under 5 U.S.C. § 553(b)(B) that providing prior notice and an opportunity for public comment on this action is unnecessary because establishing the harvest guidelines is a ministerial act, determined by applying formulas in the FMP. Accordingly, providing prior notice and an opportunity for public comment would serve no useful purpose.
Because this rule merely announces the result of harvest guideline calculations and does not require any participants in the fishery to take action or to come into compliance, the AA finds for good cause under 5 U.S.C. § 553(d)(3) that delaying the effective
Because prior notice and opportunity for public comment are not required for this action by 5 U.S.C. 553, or any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Emergency interim rule; revision to 2000 interim harvest specifications; request for comments.
NMFS issues an emergency interim rule implementing reasonable and prudent alternatives (RPAs) to avoid the likelihood that the pollock fisheries off Alaska will jeopardize the continued existence of the western population of Steller sea lions or adversely modify its critical habitat. This emergency rule implements three types of management measures for the pollock fisheries of the Bering Sea and Aleutian Islands Management Area (BSAI) and Gulf of Alaska (GOA): Measures to temporally disperse fishing effort; measures to spatially disperse fishing effort; and measures to provide sufficient protection from fisheries competition for prey in waters adjacent to rookeries and important haulouts. These emergency measures are necessary to avoid jeopardy and adverse modification.
Effective January 20, 2000, through July 19, 2000. Comments must be received by February 24, 2000.
Comments may be sent to Sue Salveson, Assistant Regional Administrator, Sustainable Fisheries Division, Alaska Region, NMFS, P.O. Box 21668, Juneau, AK, 99802, Attn: Lori Gravel, or delivered to the Federal Building, 709 West 9th Street, Juneau, AK. Copies of the Biological Opinion (BiOp) on the pollock fisheries of the BSAI and GOA and the Atka mackerel fishery of the Aleutian Islands subarea, the Revised Final Reasonable and Prudent Alternatives (RFRPAs), and the Environmental Assessment/Regulatory Impact Review (EA/RIR) prepared for the emergency interim rule may be obtained from the same address. The BiOp and the RFRPAs are also available on the Alaska Region home page at
Shane Capron, 907-586-7228 or shane.capron@noaa.gov
NMFS manages the groundfish fisheries in the exclusive economic zone off Alaska under the Fishery Management Plan for the Groundfish Fishery of the Bering Sea and Aleutian Islands Area and the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMPs). The North Pacific Fishery Management Council (Council) prepared the FMPs under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801
In 1990, NMFS designated the Steller sea lion as a threatened species under the Endangered Species Act of 1973 (ESA). The designation followed severe declines throughout much of the GOA and Aleutian Islands region. In 1993, NMFS defined critical habitat for the species to include (among other areas), the marine areas within 20 nautical miles (nm) of major rookeries and haulouts of the species west of 144° W long. In 1997, NMFS recognized two separate populations, and reclassified the western population (west of 144° W long.) as endangered.
NMFS first began collecting information on the abundance of Steller sea lions during the 1950s and 1960s. However, the first counts based on reliable data were not available until the late 1970s; these counts reported approximately 109,800 animals. During the 1980s, a precipitous decline of Steller sea lions was observed. By 1996, counts declined to only 22,000 animals, a decline of 80 percent from the late 1970s. Counts of adult and juvenile Steller sea lions have continued to decline over the last few years, but at a lower rate. Due to the small population size, these recent reductions may be a serious obstacle to the recovery of the western population of Steller sea lions.
Multiple factors have contributed to the decline, but considerable evidence indicates that lack of available prey is a serious problem. Foraging studies confirm that Steller sea lions depend on pollock as a major prey source, and that they may be particularly sensitive to any reduced availability of prey during the winter. The significance of pollock in the diet of sea lions may have increased since the 1970s due to shifts in the Bering Sea ecosystem related to atmospheric and oceanographic changes. Pollock are also the target of the largest commercial fisheries in Alaska, fisheries that have grown increasingly concentrated in time and area. This concentration of effort occurs largely in areas designated as Steller sea lion critical habitat and may reduce prey availability during critical times in the life history of sea lions. Additional information on Steller sea lions and the pollock fisheries of the BSAI and GOA is contained in the BiOp and in the EA/RIR prepared for this action (see
In accordance with the requirements of the ESA, the NMFS Office of Protected Resources issued a BiOp dated December 3, 1998, revised December 16, 1998, on the pollock fisheries of the BSAI and GOA and the Atka mackerel fishery of the Aleutian Islands subarea. The BiOp concluded that the BSAI and GOA pollock trawl fisheries, as projected for 1999 through 2002, were likely to jeopardize the endangered western population of Steller sea lions and destroy or adversely modify critical habitat designated for this population. “To jeopardize” means “to engage in an action that reasonably would be expected, directly or indirectly, to reduce appreciably the likelihood of both the survival and recovery of a listed species in the wild by reducing the reproduction, numbers, or distribution of that species” (50 CFR 402.02). The clause “adversely modify its critical habitat” means “a direct or indirect alteration that appreciably diminishes the value of critical habitat for both the survival and recovery of a listed species. Such alterations include, but are not limited to, alterations adversely modifying any of those physical or biological features that were the basis for determining the habitat to
The BiOp did not prescribe a single set of RPAs for the BSAI and GOA pollock fisheries but rather established a framework to avoid the likelihood of jeopardizing the continued existence of the western population of Steller sea lions or adversely modifying its critical habitat. The framework consisted of three principles: (1) Temporal dispersion of fishing effort, (2) spatial dispersion of fishing effort, and (3) protection from fisheries competition for Steller sea lion prey in waters adjacent to rookeries and important haulouts. For each of these principles, the BiOp provided guidance on the development of management measures to meet the objectives and, ultimately, to avoid jeopardy and adverse modification. The BiOp stated that certain conservation measures could be phased in over a 2-year period.
In December 1998, NMFS staff briefed the Council on the BiOp. The Council then prepared recommendations for alternative management measures based on the RPA guidelines to avoid jeopardy and adverse modification. The Council's recommendation did not contain Bering Sea subarea (BS) B and C season specifications. However, the Council planned to recommend B and C season measures prior to the second half of 1999. The Council also recommended closing all but nine of the haulout zones specified by the BiOp in the BSAI and GOA. NMFS determined these recommendations to be acceptable as part of a 2-year phase-in strategy, in which equivalent or better protections would be extended for those areas for 2000 and beyond.
On December 16, 1998, NMFS adopted the measures recommended by the Council (with modifications) into the BiOp as part of an RPA for the fisheries. NMFS published an emergency interim rule implementing RPAs in the
The Council met again in February, April, and June 1999, to consider recommendations for extending the emergency rule for the second half of 1999, and, at its June meeting, voted to extend the emergency rule. Using the Council's recommendation, NMFS extended the emergency rule through December 31, 1999 (64 FR 39087, July 21, 1999; technical amendment 64 FR 43297, August 10, 1999), with revisions to include specifications for the B and C seasons in the BS.
In June 1999, the Council also deliberated on various management measures to implement permanently the RPA guidelines as described in the BiOp for 2000 and beyond. After significant debate and public comment, the Council voted to recommend a series of conservation measures to protect Steller sea lions.
Greenpeace, the American Oceans Campaign, and the Sierra Club challenged the BiOp in the U.S. District Court for the Western District of Washington. In an Order issued on July 9, 1999 (and amended on July 13, 1999), the Court upheld NMFS’ no-jeopardy conclusion for the Atka mackerel fishery and the jeopardy conclusion for the pollock fisheries. However, the Court also found that “the Reasonable and Prudent Alternatives * * * were arbitrary and capricious * * * because they were not justified under the prevailing legal standards and because the record does not support a finding that they were reasonably likely to avoid jeopardy.” On August 6, 1999, the Court remanded the BiOp back to NMFS for further analysis and explanation.
To comply with the Court's Order, NMFS conducted additional analyses and developed revised final RPAs (RFRPAs, October 15, 1999). The RFRPAs describe management measures that will avoid the likelihood that the pollock fisheries authorized by NMFS' regulations will jeopardize the continued existence of the endangered western population of Steller sea lions or adversely modify its critical habitat.
NMFS has determined that the Council's recommended measures, with certain modifications to season dates, haulout protections, and spatial dispersion in the Bering Sea, achieve the principles identified in the BiOp and the RFRPAs. The Council's recommendation, modified as necessary to avoid jeopardy and adverse modification, therefore forms the basis for the management measures contained in this emergency interim rule.
Under this emergency interim rule, directed fishing for pollock is prohibited within either 10 or 20 nm of rookeries and haulouts in the BS and GOA. The location, size, and period of each exclusion zone are set out in Tables 12, 13, and 20 of 50 CFR part 679. Table 20 for the Aleutian Islands subarea (AI), is reprinted to be consistent in format with Tables 12 and 13, however, no substantive changes were made (see the following discussion).
NMFS approved these exclusion zones on the basis of 10 Steller sea lion counts conducted since 1979, during the reproductive season (summer) and non-reproductive season (winter). NMFS used the following criteria to identify sites that require exclusion zones and to determine the period of the closure and the radius of the zone:
1.
2.
3.
4.
The size of the exclusion zones in each area reflects the relative widths of the continental shelf. In the BS, the shelf is relatively wide and exclusion zones have radii of 20 nm. In the GOA, the shelf is narrower and exclusion zones have radii of 10 nm.
The BiOp allowed for a 2-year phase-in schedule for certain RFRPA measures including rookeries and haulout trawl exclusion zones. In the BSAI, under the emergency rule provisions for 1999, all exclusion zones had a 20-nm radius except for the Cape Sarichef zone, which had only a 10-nm raduis. For 2000 and beyond, the Council has recommended that the Cape Sarichef zone have a 20-nm radius, consistent with the BiOp. Therefore, under the emergency interim rule, all 25 exclusion zone sites in the BS are closed to trawling for pollock for a radius of 20 nm.
In the GOA, 53 sites qualified for closure to 10 nm, under criteria in the BiOp. However, in recommending management measures for 2000 and
Sites around Point Elrington and The Needles meet the criteria for pollock trawl exclusion zones but are not established as exclusion zones under this emergency interim rule. The sites lie entirely within Alaska State waters. Pollock fisheries in these areas are not managed under Federal regulations implementing FMPs. The State of Alaska has indicated its intent to develop equivalent protection measures for these haulouts in 2000. However, if the State fails to develop adequate protection measures for these two sites, NMFS will implement additional protection measures in these areas in 2001 under the authority of the ESA.
This emergency interim rule closes Sea Lion Rocks for a radius of 10 nm to all vessels greater than 60 ft (18.3 m) length overall (LOA). Due to safety concerns for small boats in the region and the relatively lower levels of harvests by these vessels, the area is not closed to vessels less than or equal to 60 ft (18.3 m) LOA. Historically, from 1994 through 1998, vessels longer than 60 ft (18.3 m) LOA have accounted for 72 percent of total harvests in this area. The RFRPAs concluded that excluding vessels greater than 60 ft (18.3 m) LOA from fishing within 10 nm of Sea Lion Rocks, and the subsequent harvest reductions under this closure, would provide sufficient protection against localized depletions of pollock.
Cape Barnabas, Gull Point, Rugged Island, Cape Ikolik, Spitz Island, and Mitrofania Island were proposed by the Council to be included as pollock trawl exclusion zones for 2000 and beyond with a variety of exemptions. However, this emergency rule closes these areas because they have been determined to be critical to the recovery of the western population of Steller sea lions.
In the Bering Sea, the Walrus Island rookery also meets the requirements under the RPA guidelines for closure to 20 nm. However, because this site falls entirely within the Pribilof Island Area Habitat Conservation Zone (see § 679.22(a)(6)), which is closed to trawling year-round, a 20-nm closure of this area would be redundant and is not necessary.
The RFRPA guidelines require that the AI be closed to directed fishing for pollock to protect the waters surrounding rookeries and major haulouts of Steller sea lions. This closure was implemented in 1999, by a reduction in TAC allocated to this subarea that provided for incidental catch only, and then by emergency interim rule. The closure of the AI is continued by this emergency interim rule.
The SCA consists of the area of the BS between 170°00′ W long. and 163°00′ W long., south of straight lines connecting the following points in the order listed: 55°00′ N lat. 170°00′ W long.; 55°00′ N lat. 168°00′ W long.; 55°30′ N lat. 168°00′ W long.; 55°30′ N lat. 166°00′ W long.; 56°00′ N lat. 166°00′ W long.; 56°00′ N lat. 163°00′ W long.
This emergency interim rule restricts pollock harvests within the SCA to a percentage of each sector's seasonal directed fishing allowance (DFA) according to the percentages set forth in Table 2 of the preamble. In the Bering Sea, the DFA is the amount of pollock available for harvest by each industry sector after subtracting the incidental catch allowance (ICA).
NMFS will monitor catch by each industry sector and close the SCA to directed fishing for pollock by sector when NMFS determines that the specified SCA limit has been reached. In accordance with the Council's intent, inshore catcher vessels less than or equal to 99 ft (30.2 m) LOA are exempt from SCA closures during the fall and winter months unless the cap for the inshore sector has been reached. Under the authority of the American Fisheries Act (AFA), NMFS will separate the inshore fishery into cooperative and non-cooperative sector allocations. For each sector, NMFS will announce the closure of the SCA to catcher vessels over 99 ft (30.2 m) LOA before the inshore sector SCA limit is reached. NMFS will implement the closure in a manner intended to leave remaining quota within the SCA that is sufficient to support directed fishing for pollock by vessels less than or equal to 99 ft (30.2 m) LOA for the duration of the inshore sector opening. This measure will be implemented during the fall and winter seasons only because of vessel safety concerns during these time periods of severe weather.
The Council recommended a complex suite of seasons, stand-downs, and SCA limits. Under the RFRPAs, NMFS determined that stand-downs between the A/B and C/D seasons were unnecessary outside the SCA. However, NMFS also determined that the SCA was of special concern and that lengthening the seasons to attain spatial and temporal dispersion was a priority in this area. Therefore, the season dates as proposed by the Council have been altered to reflect these requirements. All sectors now have the same fishing season dates as described in the following Table 1.
For example, if the inshore sector received an annual DFA allocation of 100,000 mt, 40 percent (40,000 mt) would be apportioned to the combined A/B season for the inshore sector. Of this amount, 42 percent (16,800 mt) could be taken within the SCA during the A season, and 14 percent could be taken within the SCA during the B season (5,600 mt).
Overages and underages of SCA amounts may be “rolled over” from the A season SCA limit to the B season SCA limit so that no single season exceeds 15 percent of the annual TAC, and that the combined A/B limit inside the SCA of 20 percent is not exceeded.
This emergency interim rule adds a definition for “directed fishing for pollock CDQ” that is necessary to enforce directed fishing closures that apply to both the CDQ and non-CDQ pollock fisheries. The CDQ groups are prohibited from exceeding any of their groundfish CDQ allocations and are required to manage the catch of vessels fishing on their behalf within these CDQ allocations. Therefore, NMFS does not use maximum retainable amounts, prohibited species catch status, and announcements of directed fishing closures to manage the CDQ fisheries, as is done to manage the non-CDQ fisheries. The definition of directed fishing for pollock CDQ implemented in this emergency interim rule is based on the percent pollock in each CDQ haul using the 60-percent threshold recommended by the Council at its June 1999 meeting. NMFS is preparing proposed rulemaking that would permanently implement a definition of directed fishing for pollock CDQ. However, that regulatory amendment will not be in place in time for the start of the trawl fisheries in January 2000. Under the definition added by this emergency interim rule, vessels fishing for the CDQ groups in any areas closed to directed fishing for pollock CDQ are prohibited from bringing onboard their vessel any trawl hauls in which pollock is equal to or greater than 60 percent of the total groundfish in the haul. Species composition collected by the observer onboard the vessel will be used to determine the percent pollock in each CDQ trawl haul.
2.
In the GOA, overall pollock fishery harvest rates have varied from about 5 percent of the total biomass to about 10 percent since 1990. Since 1994, the estimated harvest rate in Shelikof Strait has been on the order of 1 percent to 3 percent of the total biomass, well below the overall harvest rate for the GOA. This discrepancy suggests that the biomass of pollock in Shelikof Strait is under-utilized relative to the biomass of pollock outside the Strait and, relative to the overall harvest rate, pollock biomass outside the Strait must be over-utilized. This relative over-utilization of pollock outside Shelikof Strait may have a detrimental effect on the availability of pollock to Steller sea lions in those outer regions.
The Shelikof Strait conservation area is defined as the area bounded by straight lines and shoreline connecting the following coordinates in the following order:
58°51′ N lat. 153°15′ W long.;
58°51′ N lat. 152°00′ W long.; and, the intersection of 152°00′ W long. with Afognak Island; aligned counterclockwise around the shoreline of Afognak, Kodiak, and Raspberry Islands to 57°00′ N lat. 154°00′ W long.; 56°30′ N lat. 154°00′ W long.; 56°30′ N lat. 155°00′ W long.; 56°00′ N lat. 155°00′ W long.; 56°00′ N lat. 157°00′ W long.; and the intersection of 157°00′ W long. with the Alaska Peninsula.
The Shelikof Strait conservation area TAC apportionment will be determined annually for the A and B seasons during the specification process. A separate TAC will be determined for this area based on winter hydroacoustic survey data. The GOA TAC for areas 610, and areas 620 and 630 outside of the Shelikof Strait conservation area, will be reduced proportionally by this amount. When NMFS determines that the A or B season pollock TAC from within the Shelikof Strait conservation area has been reached, NMFS will prohibit directed fishing for pollock within Shelikof Strait.
In addition, to prevent the large scale use of tender vessels to avoid the trip limit restriction, this emergency interim rule also prohibits vessels from operating as tenders in the GOA east of 157°00′ W long. Vessels operating as tenders in the GOA west of 157°00′ W long. are prohibited from retaining on board more that 600,000 lb (272 mt) (the equivalent of two fishing trips) of unprocessed pollock that was harvested in the GOA. The Council recommended that tendering west of 157°00′ W long. is necessary because smaller vessels delivering to Sand Point and King Cove may be more dependent on tenders than the larger vessels that operate east of 157°00′ W long. and deliver primarily to Kodiak.
The Council recommended that catcher vessels be prohibited from participating in directed fishing for pollock in both the BS and GOA in concurrent seasons, except for catcher vessels less than 125 ft (38.1 m) LOA in area 620 east of 157°00′ W long. and area 630. For example, if a catcher vessel chose to participate in the combined BS A/B season, it would not be eligible to participate in the W/C GOA until the start of the GOA C season. Similarly, if a catcher vessel chose to participate in the GOA A season, it would not be eligible to participate in the BS until the start of the next BS season, which would be the C/D season. The existing 3-day stand-down requirement at § 679.23(h) is revised to remove directed fishing for pollock from stand-down requirements, which would be redundant. However, a 3-day stand-down will remain in effect for vessels directed fishing for Pacific cod.
The regulatory changes in this emergency interim rule require revision of the 2000 interim harvest specifications for pollock in the BS and GOA. Existing regulations at 50 CFR 679.20(c)(2) do not require that interim harvest specifications for pollock in the BS and GOA be temporally or spatially dispersed. However, the BiOp concluded that the current program for managing the BS and GOA pollock fisheries could jeopardize Steller sea lions or their critical habitat. Therefore, to allow the Bering Sea and GOA pollock fisheries to commence on January 20, 2000, this emergency interim rule also adjusts the 2000 interim harvest specifications for pollock to comport with the RFRPA management measures outlined above.
The specifications for Bering Sea Subarea pollock in Table 1 of the BSAI 2000 interim harvest specifications (65 FR 60; January 3, 2000) are replaced by the following Table 4 in the preamble. This rule changes the interim specifications for pollock for two reasons: (1) To comport with the temporal and spatial dispersions required by the BiOp; and (2) to incorporate the Council's final 2000 TAC recommendations for pollock, which are increased from the 2000 proposed specifications.
The first seasonal allowances for W/C GOA pollock in Table 1 of the GOA 2000 interim harvest specifications (65 FR 65; January 3, 2000) are replaced by the following Table 5.
This emergency interim rule also makes technical changes to the existing no-trawl zones set out in Table 5 of 50 CFR part 679 by suspending it and by adding Table 20 to 50 CFR part 679. This is due to the availability of new information on the location of haulout sites as determined by NMFS during recent surveys.
The Assistant Administrator for Fisheries, NOAA (AA), has determined that this emergency interim rule is necessary to respond to an emergency situation and that it is consistent with the Magnuson-Stevens Act and other applicable laws.
Pursuant to the National Environmental Policy Act an EA/RIR was developed for this action. It was determined that this action would not have a significant impact on the human environment. The EA/RIR may be obtained in hard copy from the Alaska Regional Office (see
This emergency action has been determined to be significant for purposes of E.O. 12866. This rule contains no reporting, recordkeeping, or compliance requirements, and no relevant Federal rules exist which may duplicate, overlap, or conflict with this rule.
Failure to have the measures contained in this rule in place by January 20, 2000, would force delay of the start of the pollock fisheries of the BS and GOA, with significant costs to industry. As such, NMFS finds that the immediate need to effect the provisions of this emergency interim rule by January 20, 2000, in order to avoid unecessary closures that would cause extensive economic disruption to the pollock fisheries, constitutes good cause to waive the requirement to provide prior notice and an opportunity for public comment pursuant to authority set forth at 5 U.S.C. 553(b)(B), as such procedures would be impracticable and contrary to the public interest. The need for these measures to be in place by January 20, 2000, also constitutes good cause under authority set forth at 5 U.S.C. 553(d)(3) not to delay the effective date of this emergency interim rule for 30 days.
Because prior notice and opportunity for public comment are not required for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601
The President has directed Federal agencies to use plain language in their communications with the public, including regulations. These regulations have been drafted to comply with that directive. We seek public comment on any ambiguity or unnecessary complexity arising from the language used in this emergency interim rule.
Alaska, Fisheries, Recordkeeping and reporting requirements.
16 U.S.C. 773
(j)
(2)
(3)
(ii) Operate as a tender vessel west of 157°00′ W long. while retaining on board at any time more than 600,000 lb (272 mt) of unprocessed pollock.
4. In § 679.20, paragraphs (a)(5)(i)(A) and (a)(5)(ii)(B) are suspended, and new paragraphs (a)(5)(i)(C) and (a)(5)(ii)(C) are added to read as follows:
(a) * * *
(5) * * *
(i) * * *
(C)
(
(ii) * * *
(C)
(a) * * *
(8) * * *
(iv)
(11)
(ii)
(iii)
(iv)
(B)
(C)
(
(
(
(
(D)
(
(b) * * *
(3)
(ii)
(iii)
(B)
(C)
(d) * * *
(3)
(i)
(ii)
(iii)
(iv)
(e) * * *
(5)
(A)
(B)
(ii) [Reserved]
(i)
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking and notice of public hearing.
This document contains proposed regulations relating to the amortization of certain intangible property to partnership transactions involving sections 732(b) and 734(b). The proposed regulations interpret the provisions of section 197(f)(9), reflecting changes to the law made by the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) and affect taxpayers who acquired intangible property after August 10, 1993, or made a retroactive election to apply OBRA '93 to intangibles acquired after July 25, 1991. This document also provides a notice of public hearing on these proposed regulations.
Written comments must be received by April 24, 2000. Outlines of topics to be discussed at the public hearing scheduled for May 24, 2000, at 10 a.m. must be received by May 3, 2000.
Send submissions to: CC:DOM:CORP:R (REG-100163-00), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-100163-00), Courier's desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers may submit comments electronically via the Internet by selecting the “Tax Regs” option on the IRS Home Page, or by submitting comments directly to the IRS Internet site at http://www.irs.ustreas.gov/prod/tax
Concerning the proposed regulations, Robert G. Honigman, (202) 622-3050; concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Guy Traynor, (202) 622-7180 (not toll-free numbers).
This document proposes to amend section 197 of the Income Tax Regulations (26 CFR Part 1) to provide additional rules regarding the application of section 197(f)(9) to partnership transactions under sections 732(b) and 734(b).
On January 16, 1997, the IRS published proposed regulations (REG-209709-94) in the
Section 197(f)(9)(E) provides that, in applying the anti-churning rules for basis adjustments under sections 732, 734, and 743, determinations are made at the partner level, and each partner is treated as having owned and used such partner's proportionate share of the partnership's assets. With respect to basis adjustments under sections 732(b) and 734(b), this rule requires taxpayers and the IRS to analyze transactions that actually involve a distribution of property from the partnership to a partner as deemed transactions involving transfers of property directly among the partners.
The proposed regulations embody a two-step analysis in determining whether the anti-churning rules apply to the deemed transfer of intangibles in transactions giving rise to basis adjustments under sections 732(b) and 734(b). First, it is necessary to determine whether the portion of an intangible that a partner is deemed to transfer is treated, immediately prior to the deemed transfer, as being subject to the anti-churning rules for purposes of applying these provisions. Second, if the partner's share of the intangible is treated, immediately prior to the deemed transfer, as being subject to the anti-churning rules for purposes of applying these provisions, it is necessary to determine whether the deemed transferor and transferee are related so that the anti-churning rules will continue to apply to the intangible after the deemed transfer.
For purposes of applying the first prong of the analysis, when a partner acquires an interest in a partnership, the proposed regulations treat the partner as acquiring an undivided interest in all section 197(f)(9) intangibles held by a partnership at the time that the partner acquires an interest in the partnership. If a partner acquires an interest in a partnership from an unrelated person after August 10, 1993 (or, in certain cases, after July 25, 1991), the partner's share of any intangible held by the partnership as of August 10, 1993 (or, in certain cases, after July 25, 1991) is treated as no longer subject to the anti-churning rules for purposes of analyzing subsequent deemed transfers of intangibles in transactions that give rise to the basis adjustments under sections 732(b) and 734(b). With respect to intangibles acquired by the partnership after August 10, 1993, that are subject to the anti-churning rules in the hands of the partnership, a partner's share of the intangible is treated as not subject to the anti-churning rules for purposes of analyzing these basis adjustments if the partner acquired the interest in the partnership from an unrelated person after the partnership acquired the tainted intangible. Once a partner's
For purposes of applying the anti-churning rules to basis adjustments under section 732(b), the distributee partner is deemed to acquire the distributed intangible directly from the continuing partners of the distributing partnership. The proposed regulations contain a favorable stacking rule that treats the distributee partner as acquiring the intangible first from the continuing partners for whom transfers would not be subject to the anti-churning rules (either because the continuing partner's share of the intangible is treated, for purposes of this rule, as not being subject to the anti-churning rules or the distributee partner is not related to the continuing partner) to the extent of such partners' share of appreciation in the intangible.
The proposed regulations contain a special rule to ensure that, in analyzing subsequent transfers, a partner cannot treat the entire intangible as no longer subject to the anti-churning rules simply because the full basis of the intangible (which may be significantly less than the intangible's fair market value) becomes amortizable as a result of the favorable stacking rule that applies to section 732(b) basis adjustments.
For purposes of applying the anti-churning rules to basis adjustments under section 734(b), the continuing partners are deemed to acquire interests in the intangible that remains in the partnership from the partner who received a distribution (giving rise to the section 734(b) basis adjustment) of property other than the intangible. To the extent that the distributee partner could transfer the intangible directly to a continuing partner (who may be the distributee partner) and the transfer would not be subject to the anti-churning rules (either because the distributee partner's share of the intangible is treated (for purposes of this rule) as not being subject to the anti-churning rules or the continuing partner is not related to the distributee (except in certain circumstances)), the basis adjustment will be amortizable with respect to the continuing partner.
The proposed regulations contain a special rule which provides that if a distribution that gives rise to an increase in the basis under section 734(b) of a section 197(f)(9) intangible held by the partnership is undertaken as part of a series of related transactions that include a contribution of the intangible to the partnership by a continuing partner, the continuing partner is treated as related to the distributee partner to the extent that the continuing partner's partnership interest was received in exchange for the intangible.
In addition to issues relating to determining the amount of a basis adjustment that is subject to the anti-churning rules, the Treasury Department and the IRS also recognize that certain problems may arise in maintaining capital accounts where a portion of a section 734(b) adjustment is allocated to an intangible that is subject to the anti-churning rules with respect to one or more partners. In some situations, the failure to allocate deductions for amortization to any partner whose allocable share of a section 734(b) adjustment is subject to the anti-churning rules will distort the partners' economic agreement. For example, where partners agree to share depreciation and amortization deductions equally, if one partner's share of a section 734(b) adjustment allocable to an intangible asset is subject to the anti-churning rules, the capital accounts of the partners will not reflect an equivalent sharing of the economic amortization from the asset absent special adjustments to account for the disparity between the allocation of tax amortization and the intended allocation of economic amortization. Furthermore, divergence of book and tax accounts with respect to an intangible that may result from such special adjustments can cause problems in allocating the correct amount of taxable gain or loss to the appropriate parties upon disposition of the intangible. Similar problems may arise as a result of allowing remedial allocations for intangibles that otherwise are subject to the anti-churning rules and are addressed in § 1.197-2(h)(12)(vii)(B). These regulations are not intended to create such distortions. Nevertheless, a general rule that resolves these distortions in all situations (including different allocations of gain and depreciation or amortization) would be extremely complicated and, perhaps, unduly narrow.
Therefore, the proposed regulations provide that taxpayers may use any reasonable method to determine amortization for book purposes in these situations, provided that the method used does not contravene the purposes of the anti-churning rules under section 197 (i.e., the effect of the book adjustments will not be such that a partner who is subject to the anti-churning rules will receive, directly or indirectly, deductions for amortization, for Federal income tax purposes, attributable to the section 734(b) adjustment). The Treasury Department and IRS may consider providing guidance with respect to this issue in the future and request comments relating thereto.
These regulations are proposed to apply to distributions occurring on or after the date final regulations are published in the
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in EO 12866. It also has been determined that section 533(b) of the Administrative Procedures Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) that are submitted timely to the IRS. All comments will be available for public inspection and copying. The Treasury Department and IRS specifically request comments on the clarity of the proposed regulations and how they may be made easier to understand.
A public hearing has been scheduled for May 24, 2000, at 10 a.m. in Room 2615, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. Due to building security procedures, visitors must enter at the 10th Street entrance, located between Constitution and Pennsylvania Avenues, NW. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 15 minutes before the hearing starts. For
The rules of 26 CFR 601.601(a)(3) apply to the hearing.
Persons that wish to present oral comments at the hearing must submit written comments and an outline of the topics to be discussed and the time devoted to each topic (signed original and eight (8) copies) by April 24, 2000.
A period of 10 minutes will be allotted to each person for making comments.
An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.
The principal author of these proposed regulations is Robert G. Honigman, Office of the Assistant Chief Counsel (Passthroughs & Special Industries). However, other personnel from the Treasury Department and IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
26 U.S.C. 7805 * * *
1. Revising paragraphs (h)(12)(ii), (h)(12)(iv), and (h)(12)(vi).
2. Adding
3. Adding a sentence at the end of paragraph (l)(1).
The additions and revisions read as follows:
(h) * * *
(12) * * *
(ii)
(
(
(
(
(
(
(
(B)
(C)
(
(
(
(
(D)
(E)
(iv)
(B)
(
(
(
(
(
(
(
(C)
(D)
(
(
(
(
(E)
(
(F)
(vi)
(k) * * *
(i) In 1990, A, B, and C each contribute $150 cash to form general partnership ABC for the purpose of engaging in a consulting business and a software manufacturing business. The partners agree to share partnership profits and losses equally. In 2000, the partnership distributes the consulting business to A in liquidation of A's entire interest in ABC. The only asset of the consulting business is a nonamortizable intangible, which has a fair market value of $180 and a basis of $0. At the time of the distribution, the adjusted basis of A's interest in ABC is $150. A is not related to B or C.
(ii) Under section 732(b), A's adjusted basis in the intangible distributed by ABC is $150, a $150 increase over the basis of the intangible in ABC's hands. In determining whether the anti-churning rules apply to any portion of the basis increase, A is treated as having owned and used A's proportionate share of partnership property. Thus, A is treated as holding an interest in the intangible during the transition period. Because the intangible was not amortizable prior to the enactment of section 197, the section 732(b) increase in the basis of the intangible may be subject to the anti-churning provisions. Paragraph (h)(12)(ii) of this section provides that the anti-churning provisions apply to the extent that the section 732(b) adjustment exceeds the total unrealized appreciation from the intangible allocable to partners other than A or persons related to A, as well as certain other partners whose purchase of their interests meet certain criteria. Because B and C are not related to A, and A's acquisition of its partnership interest does not satisfy the necessary criteria, the section 732(b) basis increase is subject to the anti-churning provisions to the extent that it exceeds B and C's proportionate share of the unrealized appreciation from the intangible. B and C's proportionate shares of the unrealized appreciation from the intangible is $120 (2/3 of $180). This is the amount of gain that would be allocated to B and C if the partnership sold the intangible immediately before the distribution for its fair market value of $180. Therefore, $120 of the section 732(b) basis increase is not subject to the anti-churning rules. The remaining $30 of the section 732(b) basis increase is subject to the anti-churning rules. Accordingly, A is
(iii) In applying the anti-churning rules to future transfers of the distributed intangible, under paragraph (h)(12)(ii)(C) of this section, one-third of the intangible will continue to be subject to the anti-churning rules, determined as follows: The sum of the amount of the distributed intangible's basis that is nonamortizable under paragraph (g)(2)(ii)(B) of this section ($0) and the total unrealized appreciation inherent in the intangible reduced by the amount of the increase in the adjusted basis of the distributed intangible under section 732(b) to which the anti-churning rules do not apply ($180 −$120 = $60), over the fair market value of the distributed intangible ($180).
(i) The facts are the same as in example 28, except that B and C form ABC in 1990. A does not acquire an interest in ABC until 1995. In 1995, A contributes $150 to ABC in exchange for a one-third interest in ABC. At the time of the distribution, the adjusted basis of A's interest in ABC is $150.
(ii) As in
(iii) In applying the anti-churning rules to future transfers of the distributed intangible, under paragraph (h)(12)(ii)(C) of this section, one-sixth of the intangible will continue to be subject to the anti-churning rules, determined as follows: The sum of the amount of the distributed intangible's basis that is nonamortizable under paragraph (g)(2)(ii)(B) of this section ($0) and the total unrealized appreciation inherent in the intangible reduced by the amount of the increase in the adjusted basis of the distributed intangible under section 732(b) to which the anti-churning rules do not apply ($180 −$150 = $30), over the fair market value of the distributed intangible ($180).
(ii) As in
(iii) In applying the anti-churning rules to future transfers of the distributed intangible, under paragraph (h)(12)(ii)(C) of this section, one-half of the intangible will continue to be subject to the anti-churning rules, determined as follows: The sum of the amount of the distributed intangible's basis that is nonamortizable under paragraph (g)(2)(ii)(B) of this section ($60) and the total unrealized appreciation inherent in the intangible reduced by the amount of the increase in the adjusted basis of the distributed intangible under section 732(b) to which the anti-churning rules do not apply ($120 − $90 = $30), over the fair market value of the distributed intangible ($180).
(l) * * *
(1)
Environmental Protection Agency (EPA).
Proposed rule amendments and notice of public hearing.
Under the Clean Air Act (Act), EPA issued a final rule (63 FR 18504, April 15, 1998) to reduce hazardous air pollutant (HAP) emissions from the pulp and paper production source category. That rule (known as the Pulp and Paper national emission standard for hazardous air pollutants (NESHAP) or pulp and paper NESHAP) is the air component of the integrated air and water rules for the pulp and paper industry (known as the Pulp and Paper Cluster Rules). In this action, we are proposing to amend certain passages
Mr. Stephen Shedd, Emission Standards Division (MD-13), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711; telephone (919) 541-5397, and e-mail at “shedd.steve@epa.gov”. For questions on compliance and applicability determinations, contact Mr. Seth Heminway, Office of Enforcement and Compliance Assessment (2223A), U.S. Environmental Protection Agency, 401 M Street SW, Washington, DC 20460; telephone (202) 564-7017 and e-mail at “heminway.seth@epa.gov'.
This list is not intended to be exhaustive. It provides a guide regarding the types of entities that we expect to regulate by this proposed action. To determine whether your facility would be regulated by this action, you must carefully examine the applicability criteria in part 63, subparts A and S of title 40 of the Code of Federal Regulations.
In accordance with section 307(d)(5) of the Act, EPA will hold a public hearing, if requested, to discuss the proposed amendments. If a public hearing is held, the EPA may ask clarifying questions during the oral presentations but will not respond to the presentations or comments. To provide an opportunity for all who may wish to speak, oral presentations will be limited to 15 minutes each. Any member of the public may file a written statement (see
2. May a mill use site-specific monitoring parameters for open biological treatment systems instead of the parameters specified in the final rule (§ 63.453(j))?
The Pulp and Paper NESHAP was promulgated on April 15, 1998 (63 FR 18504) and was codified as 40 CFR part 63, subpart S. Since promulgation, the rule has been amended by four
Following promulgation, we received comments from the industry regarding the pulping process vent and condensate standards. The comments focused on performance testing requirements for combustion devices used to control HAP vent gas streams, and the monitoring and test methods used for demonstrating initial and continuous compliance using biological treatment systems.
We have evaluated the comments and decided to propose amendments to the final rule to address the issues raised by the commenters. For the pulping process vent standards for kraft, soda, and semi-chemical mills, we are proposing to remove the requirement, in some cases, to conduct an initial performance test or continuous temperature monitoring of the control device.
For biological treatment systems, we are proposing several changes. Under the proposed amendments, you would be allowed to use an optional format of the emission limit, expressed as a minimum HAP mass removal, and to use four specific HAPs as a surrogate for total HAPs. We are also proposing to allow you to determine site-specific monitoring parameters for open biological treatment systems as an alternative to using the parameters specified in the final rule. Additionally, we are proposing new test procedures, including special monitoring procedures, for nonthoroughly mixed biological treatment systems.
The rationale for the proposed amendments is presented in the following sections. The rationale for each change is presented in a question and answer format.
We are proposing to remove the requirement for conducting an initial performance test in some cases. The pulping process vent requirement being proposed today (§ 63.443(d)(4)) eliminates the initial performance test and continuous temperature monitoring if HAP vent gases are introduced with the combustion air into a boiler or recovery furnace with a heat input capacity greater than or equal to 44 megawatts (MW)(150 million British thermal units per hour, Btu/hr).
In the final rule, one option for controlling HAP emission streams from kraft, soda, and semi-chemical pulping systems is to route the streams to a boiler, lime kiln, or recovery furnace (§ 63.443(d)(4)). The final rule does not require you to conduct an initial performance test or continuously monitor the operating temperature of the combustion unit if the HAP emission stream enters the unit with the primary fuel or enters directly into the flame zone.
Following promulgation, we received comments indicating that pulping vent gases are typically controlled in boilers and recovery furnaces by mixing the vent gases with the combustion air (not introduced directly into the flame zone). The commenters stated that conducting an initial performance test on these combustion devices to demonstrate compliance with the standard would not be reasonable due to the large volume of air flow through these devices. The commenters requested that the initial performance test requirement for these boilers be removed from the final rule.
We have reviewed the performance of combustion devices used to control HAP emissions and found that many standards allow boilers with heat input capacities greater than or equal to 44 MW (150 million Btu/hr) to control HAP emission streams without conducting an initial performance test. The supporting information (“Reactor Processes in the Synthetic Organic Chemical Manufacturing Industry—Background Information for Promulgated Standards,” EPA-450/3-90-016b, March 1993) shows that “large” boilers with heat input capacities greater than or equal to 44 MW (150 million Btu/hr) are typically operated at temperatures and residence times exceeding the levels needed to achieve at least 98 percent reduction of HAPs (as required in the final rule (§ 63.443(d)(1))) when the HAP gases are introduced with the combustion air. In contrast, boilers with heat input capacities less than 44 MW are generally not operated at levels that would ensure at least 98 percent HAP reduction unless the HAP emission stream is introduced with the primary fuel or into the flame zone. Using this same rationale, the National Emission Standard for Organic HAP from Process Vents, Storage Vessels, Transfer Operations, and Wastewater (subpart G of part 63), the NESHAP for Petroleum Refineries (subpart CC of part 63), and several other NESHAP allow these large boilers to be used to control HAP emission streams without conducting an initial performance test and without monitoring operating temperature if the HAP emission streams are introduced with the combustion air, with the primary fuel, or into the flame zone.
Consequently, we are proposing to amend the vent control requirements for kraft, soda, and semi-chemical pulping mills to eliminate the initial performance test and continuous monitoring requirements if you
Although an initial performance test and continuous monitoring are not required for these large boilers, you must design and operate the closed-vent system according to the requirements specified in the final rule (§ 63.450) and conduct the periodic visual inspections and leak detection tests (§ 63.453) of the closed-vent system components. You must record the results of these inspections and tests and comply with the reporting requirements (§ 63.455) of the final rule. Also, you must keep records of the boiler or recovery furnace downtime (§ 63.10(c)(8)) to demonstrate compliance with the excess emission allowance standards (§ 63.443(e)).
One of the options for complying with the pulping condensate standards in the final rule is to discharge the applicable condensates below the liquid surface of a biological treatment system that achieves 92 percent reduction of total HAPs. Following promulgation, commenters raised several compliance issues associated with using biological treatment systems to comply with the condensate standards. The commenters were concerned that they would have difficulty demonstrating a 92 percent reduction of total HAPs in biological treatment systems. Therefore, they requested the flexibility to use the mass removal option, which is allowed for other treatment devices. The commenters also stated that their analytical labs were having difficulty using Method 305 to evaluate condensate samples for total HAP compounds. The commenters stated their belief that the number of measurable HAPs in the regulated condensate streams is very limited, and that testing for a specific list of HAPs would reduce the complexity and cost compliance testing. The commenters recommended a specific list of HAPs to measure in biological treatment systems. Additionally, in meetings with industry representatives after promulgation, it was identified that some biological treatment systems used in the industry were not thoroughly mixed. Therefore, the performance tests procedures in the final rule, which were established for thoroughly mixed systems, are not appropriate in all cases for nonthoroughly mixed systems.
Since promulgation, several meetings between the EPA and industry representatives were held to discuss these issues. We have reviewed the comments and information obtained during these meetings and decided to propose amendments to the final rule to address these concerns.
We have found that the regulated condensate streams contain a finite number of measurable HAPs. Today's proposed action amends the test methods and procedures section (§ 63.457(l)) to specify that only four HAP compounds (acetaldehyde, methanol, methyl ethyl ketone, and propionaldehyde) are to be measured to determine compliance with all biological treatment standards, instead of measuring for all 188 HAP compounds.
The final rule (§ 63.457(g)) requires measurement of the total HAPs for mills that comply with the condensate standards using a biological treatment system. At promulgation of the final rule, we had limited data on the speciation profile of total HAPs in regulated condensate streams. We needed additional data to establish a specific list of the 188 HAPs for compliance testing.
To support the development of a specific list of HAPs, the National Council of the Paper Industry for Air and Stream Improvement, Inc. (NCASI), submitted to EPA a study (Hazardous Air Pollutants Present in Kraft Mill Condensates and Their Significance for the Hard-piping Option Under Maximum Achievable Control Technology (MACT), December 1998) (Docket No. A-92-40) of the condensate streams contained in steam stripper feed tanks at eight mills. They sampled condensates in steam stripper feed tanks since these are the same condensates that the final rule regulates. We gave NCASI a list of 108 volatile HAPs to be evaluated in the study. This list specifies the HAPs that volatilize most readily from biological treatment systems. The NCASI used a test method with a nominal detection limit between 0.5 and 1 part per million by weight (ppmw) to analyze the steam stripper feed tank contents. This detection limit was selected because the final rule (§ 63.457(j)(4)) specifies those HAP compounds with concentrations at the point of determination that are either below 1 ppmw or below the detection limit are not required to be included in the total HAP compliance demonstrations.
The NCASI data report that the HAP compounds with concentrations greater than 1 ppmw in regulated condensate streams are methanol, methyl ethyl ketone, acetaldehyde, and propionaldehyde. Methanol accounts for approximately 98.5 percent of the total HAP mass with acetaldehyde, methyl ethyl ketone, and propionaldehyde accounting for the remaining 1.5 percent.
We have reviewed the test methods and sampling procedures used in the NCASI study and concur that the methods and procedures were appropriate. We have also reviewed the criteria used by NCASI for selecting the condensate streams to be analyzed, and we agree that the condensate streams sampled are representative of the range of condensate streams found at kraft mills. Therefore, we agree that acetaldehyde, methanol, methyl ethyl ketone, and propionaldehyde account for the total of HAP compounds in the regulated condensate streams. Identifying a specific list of HAPs will achieve the EPA's and industry's goal of reducing the performance testing and monitoring burden without reducing the emission reductions achieved by the final rule. Today's proposal amends the test methods and procedures section (§ 63.457(l)) of the final rule to specify that the HAPs in the regulated condensate streams are determined by measuring acetaldehyde, methanol, methyl ethyl ketone, and propionaldehyde.
In today's action, we are proposing to amend the test methods and procedures section of the final rule to add a mass standard and two alternative compliance procedures for biological treatment systems. The two alternative procedures require sending additional condensates to the biological treatment
Since promulgation, we held several meetings with industry representatives to discuss ways to simplify the testing and monitoring procedures for demonstrating compliance of biological treatment systems, considering the condensate speciation data submitted after promulgation (see section I.C.2 of this preamble). Industry representatives suggested that mills be allowed to conduct the initial performance and subsequent compliance monitoring tests only for the major HAP constituent of the regulated condensates, methanol. Industry representatives also requested that they be allowed to comply with the mass removal standard, kilograms of total HAPs per megagram of oven-dried pulp, which is allowed for steam strippers.
We have considered the data and industry comments and decided to propose a mass standard and two alternative compliance procedures in today's action. We believe a mass removal standard is appropriate (as an alternative to the current percent reduction standard) for biological systems since we established one for steam strippers and it provides equivalent environmental protection. To establish the level of the mass standard for biological treatment units to be equivalent to steam strippers, adjustments needed to be made to the proposed mass and current percent reduction standards for biological treatment units. We believe that the mass standard should be set at the current level of the standard and the test procedures should be adjusted to address the proposed list of HAPs (only four HAPs instead of all 188 HAP compounds). In meetings following promulgation, the industry representatives recommended only testing for methanol which is the major HAP constituent in the regulated condensates. During those meetings, we reiterated that steam strippers operating at a 92 percent efficiency to remove methanol, also removed nearly all of the other volatile HAP compounds (see the preamble to the final rule, 63 FR 18524). However, in biological treatment units, the amount of biodegradation of those nonmethanol HAP compounds is less than for methanol. To balance this difference, we are proposing two alternative procedures that require additional condensate to be sent to the biological treatment system. These two procedures require you to measure the four HAPs and comply with the current percent reduction or proposed mass standard on either an individual HAP or methanol basis, as discussed in the following sections.
A.
For the mass standard, we calculated the required mass removal that is equivalent to those percent reduction levels. To set the mass standard for each compound, we used the required mass removal of methanol (10.2 and 6.6 pounds of methanol per oven-dried ton of pulp (lb/ODTP)) and the average composition of the four HAP compounds found in the NCASI testing discussed earlier in section I.C.2 of this preamble. For mills that perform bleaching, the mass standard is 10.2 lb/ODTP for methanol, 0.104 lb/ODTP for acetaldehyde, 0.052 lb/ODTP for methyl ethyl ketone, and 0.010 lb/ODTP for propionaldehyde. For mills that do not perform bleaching, the mass standard is 6.6 lb/ODTP for methanol, 0.067 lb/ODTP for acetaldehyde, 0.034 lb/ODTP for methyl ethyl ketone, and 0.0067 lb/ODTP for propionaldehyde.
B.
For example, assume that a hypothetical bleached kraft mill determines that the regulated condensates contain 90 percent methanol. If the mill sends 12 lb/ODTP of methanol to a steam stripper, then the mill is also sending 1.3 lb/ODTP of nonmethanol HAPs. If the steam stripper achieves 92 percent reduction of methanol and 100 percent removal of nonmethanol HAPs, then the steam stripper would be achieving a total HAP removal of 12.3 lb/ODTP. If you make the conservative assumption that biological treatment systems do not achieve any degradation of nonmethanol HAP compounds, then the mill using a biological treatment system would need to remove 12.3 lb/ODTP of methanol. Under this concept, we would require a mill using a steam stripper to remove 10.2 lb/ODTP of methanol to comply with the standard, while we would require a mill using a biological treatment system to remove 11.4 lb/ODTP of methanol to comply with the standard.
We agree with the industry representatives that this approach provides an alternative to the individual HAP approach discussed earlier (section I.C.3.A of this preamble). Under this second alternative procedure in today's proposed action, you measure the mass of the four HAPs in the regulated condensates entering the biological treatment system and determine the ratio of nonmethanol HAP mass to methanol mass. Compliance with the percent reduction or proposed mass removal standard is then determined using that ratio and the appropriate procedures in appendix C of part 63, using methanol measurements instead of measurements for all four HAPs in the condensate streams.
In today's action, we are proposing to amend the kraft pulping process condensate standards (§ 63.446(e)(2)) to specify that biological treatment systems may be used to comply with the proposed mass removal and percent reduction requirements, using either the individual HAP or methanol procedure. Additionally, we are proposing to revise the test methods and procedures section (§ 63.457(g) and (l)) of the final rule to include the alternative procedures for
You must use the procedure proposed in today's action to determine the minimum measurement level (MML) of a specific HAP for the liquid stream test method that you select to demonstrate compliance. Also, you must use this MML value in all compliance calculations if the test method does not detect a value at or below the MML. Today's proposed action amends the test methods and procedures section (§ 63.457(c)) of the final rule to add two alternative procedures to determine the MML.
The final rule and the amendments proposed in today's action require kraft mills to determine the HAP or methanol concentration in liquid streams (
We have evaluated the comments and decided to propose in today's action two alternative procedures to determine the MML that you must use in compliance calculations. Also, a quality assurance procedure is being proposed in today's action that must be followed for either alternative, in addition to the quality assurance procedures required in § 63.7(c) of the NESHAP general provisions. These procedures were developed by EPA's testing group and industry representatives to provide you with flexibility in determining the appropriate MML. The two alternative procedures are: (1) a procedure for each analytical laboratory to follow to determine the MML for each test method setup, and (2) a procedure to follow if a group chooses to collect sufficient data to determine the MML for a given test method.
In the first procedure for determining the MML of a particular HAP using one of the test methods specified in the § 63.457(c)(3) of the final rule, you must perform the following procedures each time that the analytical equipment for the test method is set up: (1) assume a concentration that you believe represents the MML; (2) measure the concentration in a minimum of three replicate samples that contain the target HAP at the MML concentration, using the selected test method; and (3) calculate the relative standard deviation (RSD) and the upper confidence limit at the 95 percent confidence level of the resulting concentration values, using the assumed MML as the mean.
In the first step of this procedure, you must assume a concentration value for the particular HAP in question (
In the second step of this procedure, you must measure the concentration of the target HAP in a minimum of three replicate condensate samples, using the selected test method. All replicate condensate samples must be run through the entire analytical procedure. Spiking of the liquid samples with a known concentration of the target HAP may be necessary to ensure that the HAP concentration in the three samples is at the MML.
In the final step of this procedure, you must calculate the RSD and the upper confidence limit at the 95 percent confidence level, using the measured HAP concentrations determined in step 2 of the procedure. If the upper confidence limit of the RSD is less than 30 percent, then the selected MML is acceptable, and this MML value would be established for the laboratory's analytical equipment setup and procedure used in this analysis. If the upper confidence limit of the RSD is greater than or equal to 30 percent, then the selected MML is too low and a higher MML must be selected.
In the second procedure proposed in today's action, a group (
Once the MML has been determined using one of the alternative procedures, the analytical laboratory that you choose to conduct the initial performance test analysis must also follow the quality assurance procedure proposed in today's action to demonstrate that they are performing the test method correctly. The proposed quality assurance procedure specifies that the analytical laboratory must measure the concentration of the target HAP in a minimum of three replicate condensate samples using the selected test method. The upper confidence limit of the RSD at the 95 percent confidence level determined using the measured HAP concentrations must be less than 30 percent. If the upper confidence limit of the RSD is greater than or equal to 30 percent, then the test method is not being performed correctly. If you have not met the quality assurance procedure, then the analytical equipment must be corrected, and you must repeat the quality assurance procedure until met.
Today's action proposes to amend the test methods and procedures section (§ 63.457(c)) of the final rule to (1) specify that the MML must be used in compliance demonstrations if the selected test method indicates nondetect for a specific HAP, and (2) to include the procedures for determining the MML. In today's proposed action, we are also amending the delegation of authority section (§ 63.458) of the final rule to specify that the procedure for obtaining EPA approval of the demonstrated MML is not delegated to the States.
At promulgation, the only treatment option available for biological treatment systems was the percent reduction option. Today's proposed amendments allow mills to use biological treatment systems to comply with the condensate standard mass removal requirements and to use four specific HAPS as a surrogate for total HAPS. Consequently, these proposed amendments alter the procedures for conducting performance tests of biological treatment systems.
To conduct a performance test of an open or closed biological treatment system, you would first measure the mass of the four specific HAPs entering the biological treatment system. The
For biological treatment systems, table 1 presents a summary of the proposed performance test requirements including those in today's action. Briefly, to conduct a performance test of a biological treatment system, you would measure the mass of the four HAPs in the regulated condensates entering the biological treatment system. Then you determine the fraction of compounds that are biodegraded (f
After promulgation of the final rule, a few mills said that they intended to use closed biological treatment systems (both aerobic and anaerobic systems) to comply with the kraft pulping process condensate standards. The mill representatives have mentioned multiple types of systems, however, we have not received any specific information detailing system designs or how they would conduct the performance demonstration for a closed biological treatment system. Consequently, we cannot amend the final rule to specifically address closed biological treatment systems, and we believe that setting one procedure for a few systems with varying designs would be impractical. Typically, closed biological treatment systems would need to test all inlets and outlets and demonstrate compliance with the applicable emission standard and demonstrate appropriate continuous compliance monitoring procedures. Appendix C of part 63 contains test procedures that can be used for most known designs of closed systems. If the design of the systems mentioned by industry representatives meets the calculation procedures of appendix C, then you could use appendix C procedures. For other designs, you must present for EPA approval the design of the system and a test and monitoring plan. The above information is provided for discussion purposes only, and we are not requesting or taking comment or planning to propose test procedures for all designs of closed biological treatment systems in this proposal or comment period.
We plan to propose in the near future a new procedure for calculating the site-specific fraction of organic compounds biodegraded in nonthoroughly mixed open biological treatment systems (or units) under a separate action. This new procedure, called the Multiple Mixing Zone Concentration Measurements Procedure, will be proposed as an addition to appendix C of part 63.
The performance test and monitoring procedures in the final rule for open biological treatment systems were developed under the presumption that all biological treatment systems at kraft mills would be thoroughly mixed systems, and that the Inlet and Outlet Concentration Measurement Procedure in appendix C of part 63 would be the most appropriate procedure for you to use to determine the performance of the open biological treatment system at pulp mills. However, the Inlet and Outlet Concentration Measurement Procedure is not appropriate for evaluating the performance of nonthoroughly mixed biological treatment systems. In meetings with industry representatives following promulgation, it was identified that the biological treatment systems at most mills do not meet the criteria (uniform biomass distribution and organic compound concentrations) for thoroughly mixed systems. Consequently, another procedure is needed because appendix C of part 63 does not contain a concentration measurement procedure for modeling nonthoroughly mixed systems.
The soon-to-be proposed amendments to appendix C of part 63 will include a concentration measurement procedure for determining f
Additionally, there are two documents (“Technical Support Document for Evaluation of Thoroughly Mixed Biological Treatment Units” and the “Technical Support Document for the Evaluation of Aerobic Biological Treatment Units with Multiple Mixing Zones”) that provide technical information on how to determine if a biological treatment system is thoroughly mixed and how to evaluate the performance of a nonthoroughly mixed biological treatment system using multiple mixing zones. The first document is available from the public
The monitoring requirements (§ 63.453(j)) in the final rule require mills using an open biological treatment system to conduct daily parameter monitoring and quarterly performance tests. The parameter values must be established during a performance test. Whenever a parameter excursion occurs, you can conduct a performance test of the open biological treatment system to demonstrate that the system is in compliance with the applicable emission limit even though a parameter exceedance occurred. Quarterly performance tests must be conducted for total HAPs in the first quarter, however the tests may be conducted for methanol in the remaining quarters.
After promulgation, several issues were identified regarding the monitoring requirements for open biological treatment systems. In today's action, we are proposing the following changes to address the issues:
• Allowing you to determine site-specific monitoring parameters for biological treatment systems;
• Providing an alternative procedure for estimating the fraction of organic compounds degraded in a nonthoroughly mixed biological treatment system during unsafe sampling conditions;
• Clarifying the monitoring requirements for open versus closed biological treatment systems;
• Removing the requirement to test for total HAPs in the first quarter performance test; and
• Specifying the period for notifying the Administrator if you intend to use data collected during a performance test to expand the allowable range of a monitoring parameter.
Today's action proposes to amend the final rule to specify that mills may establish site-specific monitoring parameters for open biological treatment systems. The mill must conduct a performance test to demonstrate that the monitoring parameters are appropriate to determine continuous compliance with the applicable emission standard. The monitoring parameters and the operating ranges that demonstrate continuous compliance must be approved by the permit authority.
The final rule (§ 63.453(j)) requires daily monitoring of outlet soluble biochemical oxygen demand (BOD
After promulgation, commenters indicated that the monitoring parameters in the final rule might not be appropriate for all open biological treatment systems, especially for nonthoroughly mixed systems. The commenters requested that the final rule be revised to give mills the flexibility to monitor different parameters for open biological treatment systems on a case-by-case basis.
We agree that in some circumstances operating parameters other than those specified in the final rule may provide assurance that continuous compliance with the emission limits is being achieved for nonthoroughly mixed systems. The monitoring requirements in the final rule were established under the presumption that all biological treatment systems in the pulp and paper industry were thoroughly mixed and would, therefore, use the inlet and outlet procedure in appendix C of part 63 to determine the performance of the system. However, for nonthoroughly mixed biological treatment systems, the treatment unit must be divided into mixing zones, and concentration monitoring must be conducted within each zone.
In today's action, we are proposing to add a new paragraph to the open biological treatment system monitoring requirements (§ 63.453(j)(2)) that would allow mills the option to determine site-specific monitoring parameters. The site-specific monitoring parameters must be developed based on a performance test and must be approved by the Administrator using the procedures specified in the final rule (§ 63.453(n)). In § 63.453(n), the final rule specifies that you must conduct a performance test to determine the appropriate parameters to be monitored continuously and corresponding parameter values. The rationale and supporting documentation for the parameter selection must also be provided for the Administrator's approval. The Administrator in this case is the delegated implementation and enforcement State authority.
No. Today's proposed amendments contain a modeling procedure that can be used until such time as the unsafe conditions pass and in-zone sampling and a full performance test can be conducted. The alternative modeling procedure is proposed as appendix E of part 63—Test Procedure for Nonthoroughly Mixed Biological Treatment Units at Kraft Pulp Mills Under Unsafe Sampling Conditions. In addition, today's action proposes conforming amendments to the monitoring requirements section (§ 63.453(p)(1)). An amendment to the recordkeeping requirements (§ 63.454(e)) section of the final rule is also being proposed to require you to maintain descriptions of the unsafe conditions that would warrant the use of the modeling procedure.
The kraft pulping process condensate standards of the final rule require periodic performance testing of open biological treatment systems that are used as control devices. During discussions following promulgation, industry representatives noted that there are times when sampling and monitoring of multizone biological treatment systems would expose workers to unsafe conditions. Examples of unsafe conditions provided by industry representatives include: weather conditions (e.g., high wind, fog, lightning, heavy rain, hail storm, sleet, and snow); lack of outdoor lighting; availability of boats; personnel availability; heavy foam layer; and high hydrogen sulfide concentration.
Industry representatives requested that when unsafe conditions occur they be able to use a modeling approach (proposed as appendix E of part 63) developed by NCASI that approximates the total HAP or methanol concentrations within the mixing zones of a biological treatment system. The approach consists of three components: (1) Confirmation that the open biological treatment system can be represented by Monod kinetics, (2) data collection to characterize the
Under the first component of the modeling approach, the value of the saturation coefficient, Ks, must be determined. The determination that the value of Ks is a constant is used to demonstrate that the mill's open biological treatment system being tested can be represented by Monod kinetics. Under the second component of the modeling approach, you would determine the number and characteristics of each mixing zone in the open biological treatment system, and the recycle ratio of the internal recirculation between the mixing zones. Technical information on how to evaluate open biological treatment systems with multiple mixing zones can be found in the “Technical Support Document for the Evaluation of Aerobic Biological Treatment Units with Multiple Mixing Zones” (discussed in section I.D.3 of this preamble). Under the third component, inlet and outlet concentration data are collected during conditions when conducting in-zone sampling is determined to be unsafe. These data are used with the characterization data developed under the first component to estimate the HAP concentrations in each of the mixing zones. The industry representatives noted that collection of inlet and outlet samples would not be affected by unsafe conditions.
We analyzed the above industry concerns, and we agree that in rare circumstances there may be conditions when sampling in each zone of an open biological treatment system could expose workers to dangerous, hazardous, or otherwise unsafe conditions. During these conditions, we believe that the above modeling procedure proposed in appendix E of part 63 is a reasonable procedure to follow until the full in-zone sampling and performance test can be conducted to determine the system's compliance with the applicable emission limit. If the mass removal or percent reduction calculations using the value of f
Further, we believe the conditions that warrant the use of the proposed calculations will be limited to those conditions that are beyond the mill's control, such as extreme weather conditions and presence of high and heavy foam or high concentrations of hydrogen sulfide. The mill operator should use remote and automated sampling systems wherever possible to decrease the number and frequency of possible unsafe conditions. We believe that unsafe conditions do not include conditions that are within the control of the mill, such as unavailability of outdoor lighting, boats, or mill personnel. If these later types of conditions cannot be addressed by the mill and made safe for mill personnel, then this will severely limit the ability of the mill and control agency to determine compliance and allow use of an open biological treatment system as a control device. We believe that those conditions are within the control of the operator and that unless they are addressed and fixed by the operator, the other NESHAP control options (recycling, steam stripping, or closed biological systems) must be used to meet the kraft pulping process condensate standards.
The proposed amendments (§ 63.453(p)) specify that if performing the sampling and test procedures for nonthoroughly mixed systems would expose a worker to dangerous, hazardous, or otherwise unsafe conditions, the proposed appendix E of part 63 calculation can be used to estimate compliance of biological treatment systems instead of the full multiple mixing zone performance test procedures specified in the test methods and procedures section (§ 63.457(l)) of the final rule. The proposed amendments to § 63.457(l) also specify that the value of the biorate constant must be determined during the initial performance test (§ 63.457(l)(4)).
The proposed amendments also specify that as soon as practical (but within 24 hours) after the dangerous, hazardous, or otherwise unsafe conditions have passed, you must conduct the full multiple mixing zone performance test procedures (§ 63.457(l)). The performance test is required, regardless of whether or not the monitoring parameter values are within the approved range, following the period of unsafe conditions. The purpose of the test is to confirm that the dangerous, hazardous, or otherwise unsafe conditions did not alter the performance of the system and to confirm that the treatment system operation is achieving the required removal through biodegradation and not through volatilization.
Amendments to the recordkeeping requirements section (§ 63.454) of the final rule are being proposed that would require you to maintain onsite a written record identifying the specific conditions under which sampling of the open biological treatment system would expose a worker to dangerous, hazardous, or otherwise unsafe conditions. The proposed amendments specify that this written record must include a written explanation of why the in-zone sampling cannot be performed under those conditions. The proposed amendments also specify that whenever dangerous, hazardous, or otherwise unsafe conditions prevent you from conducting the sampling and test requirements for nonthoroughly mixed open biological treatment systems, you must notify the Administrator (the delegated permit authority) as soon as practicable of the onset of the dangerous, hazardous, or otherwise unsafe conditions. The notification must include the reason why the specified sampling and test requirements could not be performed.
The biological treatment system monitoring and test procedures specified in the final rule are applicable only to open biological treatment systems. Following promulgation, commenters questioned if closed aerobic and anaerobic biological treatment systems would be required to comply with the monitoring procedures specified in § 63.453(j) and (p). Today's action proposes to add the word “open” to citations in the monitoring requirements section of the final rule where the term “biological treatment system” is used.
In the final rule, we intended that the reference to “biological treatment system” in the monitoring requirements section meant open biological treatment systems. Although the test methods and procedures specified in § 63.457(l) refer to open biological treatment systems, we inadvertently omitted the word “open” in the § 63.453(j) and (p) of the final rule. Today's action proposes amendments to the sections mentioned above to clarify that these requirements are applicable only to open biological treatment systems.
If you choose to comply using a closed biological treatment system, you must determine appropriate monitoring parameters and establish the parameter values or ranges during the performance test using the procedures specified in § 63.453(m) and (n). Both the monitoring parameters and the parameter values or ranges must be approved by the Administrator (see section I.D.2 of this preamble for additional discussion).
The flow diagram shown in figure 1 summarizes the daily monitoring requirements for open biological treatment systems. In figure 1, today's proposed changes are depicted by dashed lines and rounded boxes.
Mills must monitor on a daily basis either the parameters specified in the final rule (§ 63.453(j)(1)) or site-specific parameters that have been approved (proposed § 63.453(j)(2), see section I.E.2 of this preamble). If the monitoring parameters are within the values or ranges established during the initial performance test, compliance with the applicable emission standard is demonstrated for that day. If the monitoring parameters are outside the established values or ranges, you must conduct a performance test to confirm compliance of the open biological treatment system. The performance test must be performed using the same procedures (
During periods of monitoring parameter excursions, you must take steps to repair or adjust the process operation to end the parameter excursion, and you must take steps to minimize the total HAP emissions to the atmosphere (§ 63.453(p)(4)). However, the samples for the optional performance test to confirm compliance with the applicable emission limit must be collected before these repair steps are implemented (§ 63.453(p)(2)) since the steps taken to end the parameter excursion or minimize total HAP emissions would influence the results of the performance test.
The final rule (§ 63.453(p)(3)) provides a special procedure to model the fraction of compounds that are biodegraded in nonthoroughly mixed systems. This modeling procedure applies whenever unsafe conditions would prevent mill personnel from conducting in-zone sampling. After the unsafe conditions have passed, you must confirm compliance of the nonthoroughly mixed biological treatment system by conducting a full performance test using the initial performance test procedures.
Yes. The requirement for quarterly performance tests of open biological treatment systems is retained in the final rule. However, in today's action, we are proposing to allow you to initially demonstrate compliance with the condensate standards by testing for four specific HAPs. Additionally, in today's action we are proposing amendments to the condensate standards that allow you to comply with a percent reduction or mass removal standard using the individual HAPs or using methanol under certain conditions. Consequently, we are proposing to amend the quarterly performance test requirements in the final rule to incorporate these proposed changes.
The final rule (§ 63.453(j)(2)(ii)) requires you to conduct quarterly performance tests to confirm the performance of open biological treatment systems. The first quarter test is performed for total HAPs while the remaining quarterly tests may be performed for methanol or total HAPs. Also, in the final rule, mills that use a biological treatment system to comply with the condensate standards were limited to the percent reduction standard (§ 63.446(e)(2)).
As discussed in section I.C.2 of this preamble, we are proposing to allow you to measure total HAPs as acetaldehyde, methanol, methyl ethyl ketone, and propionaldehyde since these four compounds represent the majority of the HAPs present in the regulated condensate streams. No changes were necessary to the monitoring section (§ 63.453(j)) text in the final rule to address limiting the analysis to four HAP compounds. The rule text references the test methods and procedures section (§ 63.457(g)) that has already been corrected for this change. Also, in section I.C.3 of this preamble, we are proposing to add a mass removal standard for biological treatment systems. Because the monitoring section of the final rule, as written, does not mention a mass removal standard, we are proposing in today's action to amend the monitoring rule text to include this proposed treatment option.
In today's proposed action, we are specifically requesting comment on the requirement to test for the four HAPs in the first quarter of each year. Industry representatives suggested that testing for the four HAPs in the first quarter of each year was unnecessary because the majority of HAPs in the regulated condensates is one compound (methanol). Also, because the contribution from the other nonmethanol HAPs is small, variations in the composition of these nonmethanol HAPs would be insignificant. The industry representatives suggested that testing for the four HAPs is only necessary if new or modified pulping process condensates are generated, or when changes occur in the annual bleached and unbleached oven-dried ton of pulp production rates used to prorate the mass removal standards. At this time, we do not have data that address the variability of the HAP composition of the regulated condensates. Therefore, in today's action, we are proposing to retain the requirement for annual testing of the four HAPs in the first quarter. However, if data are submitted with public comments on this proposal, we will consider removing the requirement and allowing you to conduct the quarterly performance tests after the initial first quarter test for methanol only.
Yes. You may use monitoring parameter values recorded during a compliance test to expand the established parameter operating range, after approval from your permit authority. Under the general provisions to the final rule, you must notify the permit authority 60 days prior to conducting the initial and subsequent performance tests. However, for the reasons set forth below, we are proposing to change the timing of the notification for certain compliance monitoring performance tests from 60 days to 15 days with a 24-hour confirmation notification.
The final rule (§ 63.457(n)) specifies that you must establish the value or range of values parameter required to be monitored. After promulgation, commenters stated that some open biological treatment system operating parameters (
We agree with the commenters that they should be allowed to change their allowable monitoring parameter ranges
Because these subsequent compliance tests are triggered by monitoring parameter excursions or by conditions that cannot be manipulated by the owner or operator, the performance tests are not scheduled months in advance. Therefore, the 60-day period for notifying the permit authority is not appropriate in all cases. However, a short-term notification (24 hours or the same day) as suggested by the industry representatives would not provide permitting agencies with sufficient time to have an observer present during the subsequent performance test.
We believe that the 15-day notification is the minimum period that is appropriate to allow permit authorities time to plan and attend the subsequent compliance test and given that the exact time of the compliance test may not be known at the time of the 15-day notification, the 24-hour confirmation notification is reasonable. We also agree that all biological treatment system operating conditions cannot be anticipated due to rare circumstances that are outside the control of the mill operator. In these limited cases, shorter notification periods may be necessary and are appropriate with prior approval by the permit authority and properly recorded.
In today's action, we are proposing an amendment to the reporting requirements section (§ 63.455(e)) of the final rule that requires a 15-day notification of intent to conduct a subsequent performance test followed by a 24-hour confirmation notification. The purpose of the 15-day notification is to give permitting agencies an early indication of a possible subsequent performance testing, and the 24-hour confirmation notification would establish the exact date and time for conducting the subsequent performance test.
Minor drafting errors were identified in the final rule after promulgation. Today's action makes the following corrections:
• Corrects the citations for the condensate segregation requirements in § 63.446(i) of the final rule from (c)(2) to (c)(2) and (3).
• Adds the word “mills” between the words “unbleached” and “specified” in the condensate standards (§ 63.446(i)) of the final rule.
• Removes the comma after the word “reestablish” in § 63.453(n) of the final rule.
• Replaces the word “shall” with the word “may” in the biological treatment system monitoring requirements (§ 63.453(p)) of the final rule.
• Corrects the liquid sampling procedures reference in § 63.457(c)(1) of the final rule from “specified in Method 305 of part 60, appendix A” to “of the test method selected to determine liquid stream total HAP or methanol concentrations.”
• Corrects the citation in the condensate segregation procedures (§ 63.457(m)(1) and (m)(1)(iii)) of the final rule from § 63.446(c)(1) to § 63.446(c)(2).
• Corrects the citation in the condensate segregation procedures (§ 63.457(m)(2) and (m)(2)(ii)) of the final rule from § 63.446(c)(2) to § 63.446(c)(3).
• Removes the spaces between the “degree” symbol (°) and the abbreviations for Celsius (C) and Fahrenheit (F) in § 63.457(n) of the final rule.
The EPA submitted the information requirements of the previously promulgated NESHAP for approval to the Office of Management and Budget (OMB) on April 27, 1998 under the Paperwork Reduction Act, 44 U.S.C. 3501
Today's proposed amendments to the NESHAP will have no impact on the information collection burden estimates made previously. Consequently, EPA has not revised the ICR.
Under Executive Order 12866 (58 FR 51375, October 4, 1993), EPA must determine whether the proposed regulatory action is “significant” and, therefore, subject to OMB review and the requirements of the Executive Order. The order defines “significant” regulatory action as one that is likely to lead to a rule that may:
(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, public health or safety, or State, local, or tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
The NESHAP published on April 15, 1998 was considered significant under Executive Order 12866. Accordingly, EPA prepared a regulatory impact analysis (RIA). The amendments proposed today make technical revisions and correct inadvertent omissions. The OMB evaluated this action and determined it to be nonsignificant; thus, it did not require OMB review.
Under Executive Order 13084, EPA may not issue a regulation that is not required by statute, that significantly or uniquely affects the communities of Indian tribal governments, and that imposes substantial direct compliance costs on those communities unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments or if EPA consults with those governments. If EPA complies by consulting, Executive Order 13084 requires EPA to provide to OMB, in a separately identified section of the preamble to the rule, a description of the extent of EPA's prior consultation with representatives of affected tribal governments, a summary of the nature of their concerns, and a statement supporting the need to issue the regulation. In addition, Executive Order
Today's proposed action does not significantly or uniquely affect the communities of Indian tribal governments. The final rule published on April 15, 1998 (1998 NESHAP) does not create mandates upon tribal governments. Today's proposed action does not create a mandate on tribal governments. Accordingly, the requirements of section 3(b) of Executive Order 13084 do not apply to this action.
The Regulatory Flexibility Act (RFA) of 1980 (5 U.S.C. 601
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any 1 year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.
The EPA has determined that today's action does not contain a Federal mandate that may result in expenditures of $100 million or more to either State, local, or tribal governments in the aggregate or to the private sector in any 1 year. The amendments proposed in today's action provide additional flexibility to the final rule and reduce compliance costs. Therefore, today's proposed rule amendments are not subject to the requirements of sections 202 and 205 of the UMRA.
Executive Order 13045 applies to any rule that EPA determines (1) is economically significant as defined under Executive Order 12866, and (2) the environmental health or safety risk addressed by the rule has a disproportionate effect on children. If the proposed regulatory action meets both criteria, EPA must evaluate the environmental health or safety effects of the proposed rule on children and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, so that the analysis required under section 5-501 of the order has the potential to influence the regulation. This proposed rule falls into that category only in part: the minimum rule stringency is set according to a congressionally mandated, technology-based lower limit called the “floor,” while a decision to increase the stringency beyond this floor can be partly based on risk considerations.
No children's risk analysis was performed for the 1998 NESHAP rulemaking because no alternative technologies exist that would provide greater stringency at a reasonable cost, and therefore the results of any such analysis would have no impact on the stringency decision. Today's proposed action is not subject to Executive Order 13045 because it does not involve decisions on environmental health risks or safety risks that may disproportionately affect children.
Section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) directs all Federal agencies to use voluntary consensus standards instead of government-unique standards in their regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, business practices) that are developed or adopted by one or more voluntary consensus standards bodies. Examples of organizations generally regarded as voluntary consensus standards bodies include the American Society for Testing and Materials (ASTM), the National Fire Protection Association (NFPA), and the Society of Automotive Engineers (SAE). The NTTAA requires Federal agencies like EPA to provide Congress, through the OMB, with explanations when an agency decides not to use available and applicable voluntary consensus standards.
Today's proposed action does not establish new or modify existing technical standards. Therefore, consideration of voluntary consensus standards is not relevant to this action.
Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and
If EPA complies by consulting, Executive Order 13132 requires EPA to provide to the Office of Management and Budget (OMB), in a separately identified section of the preamble to the rule, a federalism summary impact statement (FSIS). The FSIS must include a description of the extent of EPA's prior consultation with State and local officials, a summary of the nature of their concerns and the agency's position supporting the need to issue the regulation, and a statement of the extent to which the concerns of State and local officials have been met. Also, when EPA transmits a draft final rule with federalism implications to OMB for review pursuant to Executive Order 12866, EPA must include a certification from the agency's Federalism Official stating that EPA has met the requirements of Executive Order 13132 in a meaningful and timely manner.
These proposed amendments to a final rule 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, as specified in Executive Order 13132. While the final rule published on April 15, 1998 (1998 NESHAP) does not create mandates upon State, local, or tribal governments EPA involved State and local governments in its development. Thus, the requirements of section 6 of the Executive Order do not apply to this rule. Today's proposed action does not create a mandate upon State, local, or tribal governments, and they have been briefed on the proposed amendments.
Environmental protection, Administrative practice and procedure, Air pollution control, Intergovernmental relations.
For the reasons set out in the preamble, title 40, chapter I of the Code of Federal Regulations is proposed to be amended as follows:
1. The authority citation for part 63 continues to read as follows:
42 U.S.C. 7401
2. Amend § 63.443 by revising paragraph (d)(4) to read as follows:
(d) * * *
(4) Reduce total HAP emissions using one of the following:
(i) A boiler, lime kiln, or recovery furnace by introducing the HAP emission stream with the primary fuel or into the flame zone; or
(ii) A boiler or recovery furnace with a heat input capacity greater than or equal to 44 megawatts (150 million British thermal units per hour) by introducing the HAP emission stream with the combustion air.
3. Amend § 63.446 by revising paragraphs (e)(2) and (i) to read as follows:
(e) * * *
(2) Discharge the pulping process condensate below the liquid surface of a biological treatment system and treat the pulping process condensates to meet the requirements specified in paragraph (e)(2)(i) or (ii) of this section.
(i) On an individual HAP basis, using the procedures specified in § 63.457(l)(1) or (2), either:
(A) Reduce methanol by 92 percent or more by weight and reduce acetaldehyde, methyl ethyl ketone, and propionaldehyde each by 99 percent or more by weight; or
(B) At mills that do not perform bleaching, remove 3.3 kilograms or more of methanol per megagram (6.6 pounds per ton) of ODP, remove 0.034 kilograms or more of acetaldehyde per megagram (0.067 pounds per ton) of ODP, remove 0.017 kilograms or more of methyl ethyl ketone per megagram (0.034 pounds per ton) of ODP, and remove 0.003 kilograms or more of propionaldehyde per megagram (0.0067 pounds per ton) of ODP; or
(C) At mills that perform bleaching, remove 5.1 kilograms or more of methanol per megagram (10.2 pounds per ton) of ODP, remove 0.052 kilograms or more of acetaldehyde per megagram (0.104 pounds per ton) of ODP, remove 0.026 kilograms or more of methyl ethyl ketone per megagram (0.052 pounds per ton) of ODP, and remove 0.005 kilograms or more of propionaldehyde per megagram (0.010 pounds per ton) of ODP.
(ii) On a methanol basis, using the test procedures in § 63.457(l)(3) or (4) to determine the additional condensates to be treated, either:
(A) Reduce methanol by 92 percent or more by weight; or
(B) At mills that do not perform bleaching, remove 3.3 kilograms or more of methanol per megagram (6.6 pounds per ton) of ODP; or
(C) At mills that perform bleaching, remove 5.1 kilograms or more of methanol per megagram (10.2 pounds per ton) of ODP.
(i) For the purposes of meeting the requirements in paragraph (c)(2), (c)(3), (e)(4), or (e)(5) of this section at mills producing both bleached and unbleached pulp products, owners and operators may meet a prorated mass standard that is calculated by prorating the applicable mass standards (kilograms of total HAP per megagram of ODP) for bleached and unbleached mills specified in paragraph (c)(2), (c)(3), (e)(4), or (e)(5) of this section by the ratio of annual megagrams of bleached and unbleached ODP.
4. Amend § 63.453 by revising paragraphs (j), (n), and (p) to read as follows:
(j) Each owner or operator using an open biological treatment system to comply with § 63.446(e)(2) shall perform the daily monitoring procedures specified in either paragraph (j)(1) or (j)(2) of this section and shall conduct a performance test each quarter using the procedures specified in paragraph (j)(3) of this section.
(1) Comply with the monitoring and sampling requirements specified in paragraphs (j)(1)(i) and (j)(1)(ii) of this section.
(i) On a daily basis, monitor the following parameters for each open biological treatment unit:
(A) Composite daily sample of outlet soluble BOD
(B) Mixed liquor volatile suspended solids;
(C) Horsepower of aerator unit(s);
(D) Inlet liquid flow; and
(E) Liquid temperature.
(ii) If the Inlet and Outlet Concentration Measurement Procedure (Procedure 3) in appendix C of part 63 is used to determine the fraction of HAP compounds degraded in the biological treatment system as specified in § 63.457(l), conduct the sampling and archival requirements specified in paragraphs (j)(1)(ii)(A) and (j)(1)(ii)(B) of this section.
(A) Obtain daily inlet and outlet liquid grab samples from each biological treatment unit to have HAP data available to perform quarterly compliance tests specified in paragraph (j)(3) of this section and the compliance tests specified in paragraph (p) of this section.
(B) Store the samples as specified in § 63.457(n) until after the results of the soluble BOD
(2) As an alternative to the monitoring requirements of paragraph (j)(1) of this section, conduct daily monitoring of the site-specific parameters established according to the procedures specified in paragraph (n) of this section.
(3) Conduct a performance test as specified in § 63.457(l) within 45 days after the beginning of each quarter and meet the applicable emission limit in § 63.446(e)(2) (i) or (ii).
(i) The performance test conducted in the first quarter (annually) shall be performed for total HAP and the percent reduction or mass removal obtained from the test shall be at least as great as the total HAP percent reduction or mass removal specified in § 63.446(e)(2) (i) or (ii).
(ii) The remaining quarterly performance tests shall be performed for either methanol or total HAP and the percent reduction or mass removal obtained from the test shall be at least as great as the methanol or total HAP percent reduction or mass removal determined in the previous first-quarter test specified in paragraph (j)(3)(i) of this section.
(n) To establish or reestablish the value for each operating parameter required to be monitored under paragraphs (b) through (j), (l), and (m) of this section or to establish appropriate parameters for paragraphs (f), (i), (j)(2), and (m) of this section, each owner or operator shall use the following procedures:
(p) Each owner or operator of an open biological treatment system complying with paragraph (j) of this section may perform the procedures specified in this paragraph and record the results as soon as practicable whenever the monitoring parameters specified in paragraphs (j)(1)(i) (A) through (C) of this section or any of the monitoring parameters specified in paragraph (j)(2) are below minimum operating parameter values or above maximum operating parameter values established in paragraph (n) of this section.
(1) Determine compliance with § 63.446(e)(2) using the test procedures specified in § 63.457(l) and the monitoring data specified in paragraph (j)(1) or (j)(2) of this section that coincide with the time period of the parameter excursion except as provided in paragraph (p)(3) of this section.
(2) A parameter excursion is not a violation of the applicable emission standard if the results of the compliance test conducted under paragraph (p)(1) of this section demonstrate compliance with § 63.446(e)(2), and no maintenance or changes have been made to the process or control device after the beginning of a parameter excursion that would influence the results of the determination.
(3) If an owner or operator determines that performing the required procedures under paragraph (p)(1) of this section for a nonthoroughly mixed open biological system would expose a worker to dangerous, hazardous, or otherwise unsafe conditions, all of the following procedures shall be performed:
(i) Calculate the mass removal or percent reduction value using the procedures specified in § 63.457(l) except the value for f
(ii) Repeat the procedures in paragraph (p)(3)(i) of this section for every day until the unsafe conditions have passed.
(iii) If the percent reduction or mass removal determined in paragraph (p)(3)(i) of this section is less than the percent reduction or mass removal values specified in § 63.446(e)(2), as appropriate, then this is a violation of the applicable standard.
(iv) The determination that there is a condition that exposes a worker to dangerous, hazardous, or otherwise unsafe conditions shall be documented according to requirements in § 63.454(e) and reporting in § 63.455(f).
(v) The requirements of paragraphs (p) (1) and (2) of this section shall be performed and met as soon as practical but no later than 24 hours after the conditions have passed that exposed a worker to dangerous, hazardous, or otherwise unsafe conditions.
(4) During periods of monitoring parameter excursions, the following requirements shall be met:
(i) Steps shall be taken to repair or adjust the operation of the process to end the parameter excursion period;
(ii) Steps shall be taken to minimize total HAP emissions to the atmosphere during the parameter excursion period.
5. Amend § 63.454 by revising paragraph (a) and adding paragraph (e) to read as follows:
(a) The owner or operator of each affected source subject to the requirements of this subpart shall comply with the recordkeeping requirements of § 63.10, as shown in table 1 of this subpart, and the requirements specified in paragraphs (b) through (e) of this section for the monitoring parameters specified in § 63.453.
(e) The owner or operator of an open nonthoroughly mixed biological treatment system complying with § 63.453(p)(3) instead of § 63.453(p)(1) shall prepare a written record identifying the specific conditions that would expose a worker to dangerous, hazardous, or otherwise unsafe conditions. The record must include a written explanation of the specific reason(s) why a worker would not be able to perform the sampling and test procedures specified in § 63.457(l).
6. Amend § 63.455 by adding paragraphs (e) and (f) to read as follows:
(e) If the owner or operator uses the results of the compliance test required in § 63.453(p)(1) to revise the approved values or ranges of the monitoring parameters specified in § 63.453(j)(1) or (2), the owner or operator shall submit an initial notification of the subsequent compliance test to the Administrator as soon as practicable, but no later than 15
(f) To comply with the open biological treatment system monitoring provisions of § 63.453(p)(3), the owner or operator shall notify the Administrator as soon as practicable of the onset of the dangerous, hazardous, or otherwise unsafe conditions that did not allow a compliance determination to be conducted using the sampling and test procedures in § 63.457(l). The notification shall occur no later than 24 hours after the onset of the dangerous, hazardous, or otherwise unsafe conditions and shall include the specific reason(s) that the sampling and test procedures in § 63.457(l) could not be performed.
7. Amend § 63.457 by revising paragraphs (c)(1) introductory text and (c)(4) introductory text, (g), (l), (m)(1) introductory text, (m)(1)(iii), (m)(2) introductory text, (m)(2)(ii), and (n), and add paragraphs (c)(5) and (6) to read as follows:
(c) * * *
(1) Samples shall be collected using the sampling procedures of the test method listed in paragraph (c)(3) of this section selected to determine liquid stream HAP concentrations;
(4) To determine soluble BOD
(5) If the test method used to determine HAP concentration indicates that a specific HAP is not detectable, the value determined as the minimum measurement level (MML) of the selected test method for the specific HAP shall be used in the compliance demonstration calculations. To determine the MML for a specific HAP using one of the test methods specified in paragraph (c)(3) of this section, one of the procedures specified in paragraphs (c)(5)(i) and (ii) of this section shall be performed.
(i) To determine the MML for a specific HAP, the following procedures shall be performed each time the method is used.
(A) Select a concentration value for the specific HAP in question to represent the MML. The selected value of the MML selected shall not be below the calibration standard of the selected test method.
(B) Measure the concentration of the specific HAP in a minimum of three replicate samples using the selected test method. All replicate samples shall be run through the entire analytical procedure. The samples must contain the specific HAP at the selected MML concentration and should be representative of the liquid streams to be analyzed in the compliance demonstration. Spiking of the liquid samples with a known concentration of the target HAP may be necessary to ensure that the HAP concentration in the three replicate samples is at the selected MML.
(C) Calculate the relative standard deviation (RSD) and the upper confidence limit at the 95 percent confidence level using the measured HAP concentrations determined in paragraph (c)(5)(i)(B) of this section. If the upper confidence limit of the RSD is less than 30 percent, then the selected MML is acceptable. If the upper confidence limit of the RSD is greater than or equal to 30 percent, then the selected MML is too low and the procedures specified in paragraphs (c)(5)(i)(A) through (C) of this section must be repeated.
(ii) Provide for the Administrator's approval the selected value of the MML for a specific HAP and the rationale for selecting the MML including all data and calculations used to determine the MML. The approved MML must be used in all applicable compliance demonstration calculations.
(6) When using the MML determined using the procedures in paragraph (c)(5)(i) or (ii) of this section, the analytical laboratory conducting the analysis must perform and meet the following quality assurance procedures.
(i) Measure the concentration of the specific HAP in a minimum of three replicate samples using the selected test method.
(ii) Calculate the RSD and the upper confidence limit at the 95 percent confidence level using the measured HAP concentrations determined in paragraph (c)(6)(i) of this section. If the upper confidence limit of the RSD is less than 30 percent, then the test method is being performed correctly. The upper confidence limit of the RSD must be less than or equal to 30 percent.
(g)
(1)
(1)
(2)
(3)
(4)
(5) The owner or operator of a nonthoroughly mixed open biological treatment system using the monitoring requirements specified in § 63.453(p)(3) shall follow the procedures specified in appendix E of this part during the initial and any subsequent performance tests.
(m) * * *
(1) To demonstrate compliance with the percent mass requirements specified in § 63.446(c)(2), the procedures specified in paragraphs (m)(1)(i) through (iii) of this section shall be performed.
(iii) Compliance with the segregation requirements specified in § 63.446(c)(2) is demonstrated if the condensate stream or streams from each equipment system listed in § 63.446(b)(1) through (3) being treated as specified in § 63.446(e) contain at least as much total HAP mass as the target total HAP mass determined in paragraph (m)(1)(ii) of this section.
(2) To demonstrate compliance with the percent mass requirements specified in § 63.446(c)(3), the procedures specified in paragraphs (m)(2)(i) through (ii) of this section shall be performed.
(ii) Compliance with the segregation requirements specified in § 63.446(c)(3) is demonstrated if the total HAP mass determined in paragraph (m)(2)(i) of this section is equal to or greater than the appropriate mass requirements specified in § 63.446(c)(3).
(n)
8. Amend § 63.458 by adding paragraph (b)(5) to read as follows:
(b) * * *
(5) Section 63.457(c)(5)(ii)—Determination of the minimum measurement level in liquid streams for a specific HAP using the selected test method.
9. Add appendix E to part 63 to read as follows:
This procedure is required to be performed in subpart S of this part, entitled National Emission Standards for Hazardous Air Pollutants from the Pulp and Paper Industry. Subpart S requires this procedure in § 63.453(p)(3) to be followed during unsafe sampling conditions when it is not practicable to obtain representative samples of hazardous air pollutant (HAP) concentrations from an open biological treatment unit. It is assumed that inlet and outlet HAP concentrations from the open biological treatment unit may be obtained during the unsafe sampling conditions. The purpose of this procedure is to estimate the concentration of HAPs within the open biological treatment unit based on information obtained at inlet and outlet sampling locations in units that are not thoroughly mixed and therefore have different concentrations of HAPs at different locations within the unit.
Biological treatment unit = wastewater treatment unit designed and operated to promote the growth of bacteria to destroy organic materials in wastewater.
This test procedure is used under unsafe sampling conditions that do not permit practicable sampling of open biological treatment units within the unit itself, but rather relies on sampling at the inlet and outlet locations of the unit. This procedure may be used only under unsafe sampling conditions to estimate f
The steps in the estimation procedure include data collection, the estimation of concentrations within the unit, and the use of Form 1 to estimate f
This method is based upon: modeling the nonthoroughly mixed open biological treatment unit as a series of well-mixed zones with internal recycling between the units; and assuming that two Monod biological kinetic parameters can be used to characterize the biological removal rates in each unit. The data collection procedure consists of two separate components. The first data collection component is part of the initial performance test, and the second data collection component is used during unsafe sampling conditions.
1. Initial Performance Test
The objective of the first data collection component is to demonstrate that the open biological treatment unit can be represented by Monod kinetics and to characterize the performance of the open biological treatment unit. An appropriate value of the biorate constant, Ks, is determined using actual sampling data from the open biological treatment unit. This is done during the initial performance test when the open biological treatment unit is operating under normal conditions. This specific Ks value obtained during the initial performance test is used in the calculation procedure to characterize the open biological treatment unit during unsafe sampling conditions. The following open biological treatment unit characterization information is obtained from the first component of the data collection procedure:
(1) The value of the biorate constant, Ks;
(2) The number and characteristics of each zone in the open biological treatment unit (depth, area, characterization parameters for surface aeration, submerged aeration rates, biomass concentration, concentrations of organic compounds, dissolved oxygen (DO), dissolved solids, temperature, and other relevant variables); and
(3) The recycle ratio of internal recirculation between the zones.
The number of zones and the above characterization of the zones are also used to determine the performance of the unit under the unsafe sampling conditions of concern.
In the second data collection component, obtained under unsafe sampling conditions, the measured inlet and outlet HAP concentrations and the biomass concentration are obtained for the open biological treatment unit. After the site specific data collection is completed on the day a parameter excursion occurs, the inlet and outlet concentrations are used with the prior open biological treatment unit characterization to estimate the concentrations of HAPs in each zone. The following information on the open biological treatment unit must be available in the second data collection component:
(1) Basic unit variables such as inlet and recycle wastewater flow rates, type of agitation, and operating conditions;
(2) The value of the inlet and outlet HAP concentrations; and
(3) The biomass concentration in the open biological treatment unit.
A single value of Ks is calculated using Form 3 for each data set that is collected during the initial performance test. A single composite value of Ks, deemed to be representative of the biological unit, is subsequently selected so that the f
(1) Determine the median of the Ks values calculated for each data set;
(2) Estimate f
(3) Calculate f
(4) Compare the f
i. Confirmation that the unit can be represented by Monod kinetics is made by identifying the following two items:
(1) The zone methanol concentrations measured during the initial performance test; and
(2) The zone methanol concentrations estimated by the Multiple Zone Concentrations Calculations Procedure based on inlet and outlet concentrations (Column A of Form 2). For each zone, the concentration in item 1 is compared to the concentration in item 2.
ii. For each zone, the estimated value of item 2 must be:
(1) Within 25 percent of item 1 when item 1 exceeds 8 mg/L; or
(2) Within 2 mg/L of item 1 when item 1 is 8 mg/L or less.
iii. Successful demonstration that the calculated zone concentrations meet these criteria must be achieved for 80 percent of the performance test data sets.
iv. If negative values are obtained for the values of K1 and Ks, then these negative kinetic constants may not be used with the Monod model, even if the criteria are met. If negative values are obtained, this test procedure cannot be used for evaluating the performance of the open biological treatment unit.
i. A site-specific liquid-phase mass transfer coefficient (KL) must be obtained for each zone during the unsafe sampling conditions. Do not use a default value for KL. The KL value for each zone must be based on the site-specific parameters of the specific unit. The first step in using this procedure is to calculate KL for each zone in the unit using Form 4. Form 4 outlines the procedure to follow for using mass transfer equations to determine KL. Form 4 identifies the appropriate form to use for providing the detailed calculations to support the estimate of the value of KL. Forms 5 and 6 are used to provide individual compound estimates of KL for quiescent and aerated impoundments, respectively. A computer model may be used to perform the calculations. If the WATER8 model or the most recent update to this model is used, then report the computer model input parameters that you used as an attachment to Form 4. In addition, the Bay Area Sewage Toxics Emission (BASTE) model version 3.0 or equivalent upgrade and the TOXCHEM (Environment Canada's Wastewater Technology Centre and Environmega, Ltd.) model version 1.10 or equivalent upgrade may also be used to determine KL for the open biological treatment unit with the following stipulations:
(1) The programs must be altered to output a KL value that is based on the site-specific parameters of the unit modeled; and
(2) The Henry's law value listed in Form 4 must be substituted for the existing Henry's law values in the models.
ii. The Henry's law value listed in Form 4 may be obtained from the following sources:
(1) Values listed by EPA with temperature adjustment if needed;
(2) Measured values for the system of concern with temperature adjustment; or
(3) Literature values of Henry's law values for methanol, adjusted for temperature if needed.
iii. Input values used in the model and corresponding output values shall become part of the documentation of the f
iv. Report the input parameters that you used in the computer model on Forms 5 and 6 as an attachment to Form 4. If you have submerged air flow in your unit, you must correct the value of KL estimated on Form 4 with the correction factor determined using Form 7 before using the value of KL with Form 2.
Form 2 is used to estimate the zone concentrations of HAPs based on the inlet and outlet data. The value of Ks entered on the form is that single composite value of Ks discussed in section III.C of this appendix. This value of Ks is calculated during the Initial Performance Test (and subsequently updated, if necessary). A unique value of the biorate K1 is entered on line 4 of Form 4, and the inlet concentration is estimated in Column A of Form 4. The inlet concentration is located in the row of Form 2 corresponding to zone 0. If there are three zones in the system, n-3 equals 0 for the inlet concentration row. These estimated zone concentrations are then used in Form 1 to estimate f
A QA/QC plan outlining the procedures used to determine the measured inlet and outlet concentrations during unsafe conditions and how the zone characterization data were obtained during the initial performance test shall be prepared and submitted with the initial performance test report. The plan should include, but may not be limited to:
(1) A description of each of the sampling methods that were used (method, procedures, time, method to avoid losses during sampling and holding, and sampling procedures) including simplified schematic drawings;
(2) A description of how that biomass was sampled from the activated sludge unit, including methods, locations, and times;
(3) A description of what conditions (DO, temperature, etc.) are important, what the target values are in the zones, how the factors were controlled, and how they were monitored. These conditions are primarily used to establish that the conditions of the initial performance test correspond to the conditions of the day in question;
(4) A description of how each analytical measurement was conducted, including preparation of solutions, dilution procedures, sampling procedures, monitoring of conditions, etc;
(5) A description of the analytical instrumentation used, how the instruments were calibrated, and a summary of the accuracy and precision for each instrument;
(6) A description of the test methods used to determine HAP concentrations and other measurements. Section 63.457 (c)(3) specifies the test methods that must be used to determine HAP concentrations;
(7) A description of how data are captured, recorded, and stored; and
(8) A description of the equations used and their solutions for sampling and analysis, including a reference to any software used for calculations and/or curve-fitting.
Use Form 1 with your zone concentration information to estimate the value of f
Pursuant to the Federal Advisory Committee Act, notice is hereby given of a meeting of the USAID Malaria Vaccine Development Program (MVDP) Federal Advisory Committee. The meeting will be held from 9 a.m. to 5 p.m. on February 2, 2000 and from 9 a.m. to noon on February 3, 2000 at the Conference Room of the Environmental Health Project located in Suite 300, 1611 North Kent Street in Arlington, VA 22209-2111.
The agenda will concentrate on the activities of the MVDP over the past six months and on future plans. The meeting will be open to the public on 2 February unless it is necessary to discuss procurement sensitive information; should this be the case, it will be announced and the meeting closed at the appropriate time. Such issues will be discussed on 3 February on which date the meeting will be closed. Any interested person may attend the meeting, may file written statements with the committee before or after the meeting, or present any oral statements in accordance with procedures established by the committee, to the extent that time available for the meeting permits.
Those wishing to attend the meeting or to obtain additional information about the USAID MVDP should contact Carter Diggs, the designated Federal Officer for the USAID MVDP Federal Advisory Committee at the Office of Health and Nutrition, USAID/G/PHN/HN/EH, Room 3.07-013, 3rd floor, RRB, Washington, DC 20523-3700, telephone (202) 712-5728, Fax (202) 216-3702, cdiggs@usaid.gov.
Foreign Agricultural Service, USDA.
Notice.
The Foreign Agricultural Service (FAS) invites proposals for using technical assistance to promote the export of, and improve the market access for, U.S. agricultural products to emerging markets in fiscal year (FY) 2000 under the Emerging Markets Program (the Program).
All proposals must be received by 5:00 p.m. Eastern Standard Time, March 13, 2000.
Requests for program guidelines and additional information may be obtained from, and proposals submitted to: Emerging Markets Office, Foreign Agricultural Service, Room 6506 South Building, U.S. Department of Agriculture, Washington, D.C. 20250-1032, Fax: (202) 690-4369, E-mail:
The FAS issued a
The Program is authorized by section 1542(d)(1)(D) of the Food, Agriculture, Conservation, and Trade Act of 1990. Up to $10 million is available to fund the Program each fiscal year. The purpose of the Program is to assist U.S. organizations, public and private, to improve market access and to develop and promote U.S. agricultural products or processes in low- to-middle-income countries that offer promise of emerging market opportunities in the near- to medium-term. This is to be accomplished by providing U.S. technical assistance through projects and activities in those emerging markets.
The Act defines an emerging market as any country that the Secretary of Agriculture determines:
(1) Is taking steps toward a market-oriented economy through the food, agriculture, or rural business sectors of the economy of the country; and
(2) Has the potential to provide a viable and significant market for United States agricultural commodities or products of United States agricultural commodities.
Because funds are limited and the range of potential emerging market countries is worldwide, proposals will be considered which focus on those countries which meet the above definition and have (1) a per capita income less than $9,360 (the ceiling on upper middle income economies as determined by the World Bank [World Development Indicators 1999]; and (2) a population greater than 1 million. These categories may encompass suitable regional groupings,
The underlying premise of the Program is that there are distinctive characteristics of emerging agricultural markets that necessitate or benefit significantly from technical assistance through the public sector before the private sector moves to develop these markets through normal corporate or
Any United States agricultural or agribusiness organization, university, or state department of agriculture, is eligible to participate in the Program. Proposals from research and consulting organizations will be considered if they provide evidence of substantial participation by U.S. industry.
In general, priority consideration will be given to those proposals that identify and seek to address specific problems or constraints in rural business systems or food and agribusiness systems in emerging markets through technical assistance to expand or maintain U.S. agricultural exports.
The following marketing criteria will be used to determine the suitability of projects for funding by the Program:
1. Low U.S. market share and significant market potential.
• Is there a significant lag in U.S. market share of a specific commodity in a given country or countries?
• Is there an identifiable obstacle or competitive disadvantage facing U.S. exporters (
• What is the potential of a project to generate a significant increase in U.S. agricultural exports in the near- to medium-term? (Estimates or projections of trade benefits to commodity exports, and the basis for evaluating such, must be included in proposals submitted to the Program.)
2. Recent change in a market.
• Is there, for example, a change in a sanitary or phytosanitary trade barrier; a change in an import regime or the lifting of a trade embargo; a shift in the political or financial situation in a country?
CCC will also review the following information, which should be included in the proposal, in considering the suitability of projects. (1) Cost-sharing: Information indicating the willingness of private agribusiness to commit its own funds along with those of the Program to seek export business in an emerging market. The Program is intended to complement, not supplant, the efforts of the U.S. private sector. The percentage of private funding proposed for a project will therefore be a critical factor in determining which proposals are funded under the Program. While no minimum or maximum is specified, the absolute amount of private sector funding proposed may also affect the decision to fund a proposal. Cost-sharing provided by private industry may be professional time of staff assigned to the project or actual cash invested in the proposed project. However, proposals in which private industry is willing to commit actual funds, rather than contributing such in-kind items as staff resources, will be given priority consideration. (2) Market Analysis and Statement of Specific Benefit(s) to U.S. Exports: A brief underlying analysis of the target market which supports the objectives of the proposed project and the benefits that can be expected to accrue to U.S. commodity exports as a result of successful completion of the project. (3) Justification for Federal Funding: A clearly stated argument supporting the need for Program funding.
For additional details that should be included in each application, see “Submissions” below.
The following subject areas for technical assistance activities to promote markets for U.S. agricultural product exports will be given priority consideration for funding under the Program:
Retail Training: U.S. organizations which may be interested in applying for funding assistance to support retail training are urged to review a data base of FAS-supported activities on this topic so to avoid possible duplication and/or overlap of training in similar markets or on similar commodities. The data base will be available on the FAS Internet web site by mid-January 2000.
Projects which promote markets for any agricultural products, except tobacco, are eligible for consideration. Projects which include multiple commodities are also eligible.
Ineligible activities include in-store promotions; restaurant promotions; branded product promotions (including labeling and supplementing normal company sales activities intended to increase awareness and stimulate sales of branded products); advertising; administrative and operational expenses for trade shows; and for the preparation and printing of brochures, flyers, posters, etc. except in connection with specific technical assistance activities such as training seminars.
Funding for technical assistance projects is made on the basis of proposals to the Emerging Markets Office (EMO). In general, each proposal submitted in response to this announcement will compete against all such proposals received under the same announcement. Proposals will be judged not only on their ability to provide benefits to the organization receiving Program funds, but which also represent the broader interests of the industry which that organization represents.
The limited funds of the Program and the range of emerging markets worldwide in which the funds may be used preclude EMO from approving large budgets for single projects. The Program is intended to provide appropriate USDA assistance to projects which also have a significant amount of financial contributions from other sources, especially U.S. private industry. There is no minimum or maximum amount set for EMO-funded projects; however, most are funded at the level of less than $500,000 and for a duration of 1 year or less. Funding is normally made available on a cost-reimbursable basis.
These may be considered in the context of a strategic plan and detailed plan of implementation. Funding in such cases is normally provided 1 year at a time, with commitments beyond the first year subject to interim evaluations.
Funding may be considered for technical assistance projects that have already begun with the support and financial assistance of a private entity, and for which government funding for continuation of the project is requested. Such proposals must meet the criteria of the Program, including cost-sharing for the portion of the project for which government funding is requested. Note: While this announcement solicits proposals from private U.S. agricultural organizations for consideration and funding on a competitive basis, the EMO may also consider proposals on an accelerated basis depending upon the technical and time requirements of the proposal. If approved, such proposals would be covered through the Technical Issues Resolution Fund or the Quick Response Market Fund. For details concerning these specialty funds, see the program guidelines.
Results of all projects supported financially by the Program must be reported in a performance report to EMO. Because public funds are used to support the project, these reports will be made available to the public by the EMO.
To assist FAS in making determinations under the Program, FAS recommends that all proposals contain complete information about the proposed project and that the proposals not be longer than 10 pages. The recommended information includes: name of person/organization submitting proposal; date of proposal; organization affiliation and address; telephone and fax numbers; full title of proposal; precis of the proposal, including objectives, proposed activities, benefits to U.S. agricultural exports, target country/countries for proposed activities, projected starting date for project, and funding amount requested; summary and detailed description of proposed project; statement of problem (specific trade constraint) to be addressed through the proposed project; benefits to U.S. agricultural exports as a result of the proposed project, including specific performance measures; supporting market analysis of the target market(s)—brief economic analysis for each commodity and country, including current market conditions and relevant trade data—and existing percentage of U.S. export market share, and the basis or source(s) for this data; information on whether similar activities are or have previously been funded in target country/countries (
Proposals must be submitted in both printed form and on computer diskette, using WordPerfect or Word or compatible format.
Forest Service, USDA.
Notice—Availability of appealable decisions; legal notice of availability for comment of decisions that may be appealable under 36 CFR part 215.
Responsible Officials in the Southwestern Region will publish notices of availability for comment and notices of decisions that may be subject to administrative appeal under 36 CFR part 215. These notices will be published in the legal notice section of the newspapers listed in the Supplementary Information section of this notice. As provided in 36 CFR 215.5 and 215.9, such notice shall constitute legal evidence that the agency has given timely and constructive notice for comment and notice of decisions that may be subject to administrative appeal. Newspaper publication of notices of decisions is in addition to direct notice to those who have requested notice in writing and to those known to be interested in or affected by a specific decision.
Use of these newspapers for the purpose of publishing legal notices for comment and decisions that may be subject to appeal under 36 CFR part 215 shall begin January 25, 2000, and continue until further notice.
Southwestern Region, ATTN: Regional Appeals Coordinator, 517 Gold Avenue SW, Room 5432, Albuquerque, NM 87102.
Christina Gonzalez, 505-842-3219.
Responsible Officials in the Southwestern Region will give legal notice of decisions that may be subject to appeal under 36 CFR part 215 in the following newspapers which are listed by Forest Service administrative unit. Where more than one newspaper is
Notice by Regional Forester of Availability for Comment and Decisions affecting New Mexico Forests: “Albuquerque Journal”, published daily in Albuquerque, Bernalillo County, New Mexico, for comment and decisions affecting National Forest System Lands in the State of New Mexico and for any decisions of Region-wide impact.
Notice by Regional Forester of Availability for Comment and Decisions affecting Arizona Forests: “The Arizona Republic” published daily in Phoenix, Maricopa County, Arizona, for comment and decisions affecting National Forest System lands in the State of Arizona and for any decisions of Region-wide impact.
Notice by Regional Forester of Availability for Comment and Decisions affecting National Grasslands in New Mexico, Oklahoma, and Texas; Kiowa National Grassland in Colfax, Harding, Mora and Union Counties, New Mexico: “Union County Leader”, published weekly on Wednesday in Clayton, Union County, New Mexico. Rita Blanca National Grassland in Cimarron County, Oklahoma: “Boise City News”, published weekly on Wednesday in Boise City, Cimarron County, Oklahoma. Rita Blanca National Grassland in Dallam County, Texas: “The Dalhart Texan”, published on Tuesday and Saturday in Dalhart, Dallam County, Texas. Black Kettle National Grassland in Roger Mills County, Oklahoma: “Cheyenne Star”, published weekly on Thursday in Cheyenne, Roger Mills County, Oklahoma. Black Kettle National Grassland in Hemphill County, Texas: “The Canadian Record”, published weekly on Thursday in Canadian, Hemphill County, Texas. McClellan Creek National Grassland in Gray County, Texas: “The Pampa News”, published on Friday and Sunday in Pampa, Gray County, Texas.
Notice by Forest Supervisor of Availability for Comment and Decisions: “The White Mountain Independent”, published Tuesday and Friday in Show Low and Navajo County, Arizona.
Notice by District Ranger of Availability for Comment and Decisions: Alpine District: “The White Mountain Independent”, published Tuesday and Friday in Show Low and Navajo County, Arizona. Chevelon District: “The White Mountain Independent'', published Tuesday and Friday in Show Low and Navajo County, Arizona. Clifton District: “Copper Era”, published weekly on Wednesday in Clifton, Greenlee County, Arizona. Heber District: “The White Mountain Independent‘, published Tuesday and Friday in Show Low and Navajo County, Arizona. Lakeside District: “The White Mountain Independent”, published Tuesday and Friday in Show Low and Navjo County, Arizona. Springerville District: “The White Mountain Independent”, published Tuesday and Friday in Show Low and Navajo County, Arizona.
Notice by Forest Supervisor of Availability for Comment and Decisions: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona.
Notice by District Ranger of Availability for Comment and Decisions: Beaver Creek District: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona. Blue Ridge District: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona. Peaks District: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona. Long Valley District: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona. Mormon Lake District: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona. Sedona District: “Red Rock News”, published Wednesday and Friday in Sedona, Coconino County, Arizona.
Notice by Forest Supervisor of Availability for Comment and Decisions: “The Arizona Daily Star”, published daily, in Tucson, Pima County, Arizona.
Notice by District Ranger of Availability for Comment and Decisions: Douglas District: “Daily Dispatch”, published Tuesday-Friday, and Sunday in Douglas, Cochise County, Arizona. Nogales District: “Nogales International”, published on Tuesday and Friday in Nogales, Santa Cruz County, Arizona. Sierra Vista District: “Sierra Vista Herald”, published Sunday-Friday, in Sierra Vista, Cochise County, Arizona. Safford District: “Eastern Arizona Courier”, published weekly on Wednesday, in Safford, Graham County, Arizona. Santa Catalina District: “The Arizona Daily Star”, published daily, in Tucson, Pima County, Arizona.
Notice by Forest Supervisor of Availability for Comment and Decisions: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona.
Notice by District Ranger of Availability for Comment and Decisions: North Kaibab District: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona. Tusayan District: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona. Williams District: “Arizona Daily Sun”, published daily, in Flagstaff, Coconino County, Arizona.
Notice by Forest Supervisor of Availability for Comment and Decisions: “Prescott Courier”, published daily in Prescott, Yavapai County, Arizona.
Notice by District Ranger of Availability for Comment and Decisions: Bradshaw District: “Prescott Courier”, published daily in Prescott, Yavapai County, Arizona. Chino Valley District: “Prescott Courier”, published daily in Prescott, Yavapai County, Arizona. Verde District: “Prescott Courier”, published daily in Prescott, Yavapai County, Arizona.
Notice by Forest Supervisor of Availability for Comment and Decisions: “Mesa Tribune”, published daily in Mesa, Maricopa County, Arizona.
Notice by District Ranger of Availability for Comment and Decisions: Cave Creek District: “Foothills Sentinel”, published weekly on Wednesday in Cave Creek, Maricopa County, Arizona. Globe District: “Arizona Silver Belt”, published weekly on Thursday in Globe, Gila County, Arizona. Mesa District: “Mesa Tribune”, published daily in Mesa, Maricopa County, Arizona. Payson District: “Payson Roundup”, published weekly on Friday in Payson, Gila County, Arizona. Pleasant Valley District: “Payson Roundup”, published weekly on Friday in Payson, Gila County, Arizona. Tonto Basin District: “Payson Roundup”, published weekly on Friday in Payson, Gila County, Arizona.
Notice by Forest Supervisor of Availability for Comment and Decisions: “The Taos News”, published weekly on Thursday in Taos, Taos County, New Mexico.
Notice by District Ranger of Availability for Comment and Decisions: Canjilon District: “Rio Grande Sun”, published Wednesday in Espanola, Rio Arriba County, New Mexico. El Rito District: “Rio Grande Sun”, published Wednesday in Espanola, Rio Arriba County, New Mexico. Jicarilla District: “Farmington Daily Times”, published daily in Farmington, San Juan County, New Mexico. Camino Real District: “The Taos News”, published weekly on Thursday in Taos, Taos County, New Mexico. Tres Piedras District: “The Taos News”, published weekly on Thursday in Taos, Taos County, New Mexico. Questa District: “The Taos News”, published weekly on Thursday in Taos, Taos County, New Mexico.
Notice by Forest Supervisor of Availability for Comment and Decisions affecting lands in New Mexico, except the National Grasslands: “Albuquerque Journal”, published daily in Albuquerque, Bernalillo County, New Mexico.
Notice by Forest Supervisor of Availability for Comment and Decisions affecting National Grasslands in New Mexico, Texas and Oklahoma: Kiowa National Grassland in Colfax, Harding, Mora and Union Counties, New Mexico: “Union County Leader”, published weekly on Wednesday in Clayton, Union County, New Mexico. Rita Blanca National Grassland in Cimarron County, Oklahoma: “Boise City News”, published weekly on Wednesday in Boise City, Cimarron County, Oklahoma. Rita Blanca National Grassland in Dallam County, Texas: “Dalhart Texan”, published on Tuesday and Saturday in Dalhart, Dallam County, Texas. Black Kettle National Grassland, Roger Mills County, Oklahoma: “Cheyenne Star”, published weekly on Thursday in Cheyenne, Roger Mills County, Oklahoma. Black Kettle National Grassland, Hemphill County, Texas: “The Canadian Record”, published weekly on Thursday in Canadian, Hemphill County, Texas. McClellan Creek National Grassland, Gray County, Texas: “The Pampa News”, published on Friday and Sunday in Pampa, Gray County, Texas.
Notice by District Ranger of Availability for Comment and Decisions: Mt. Taylor District: “Cibola County Beacon”, published on Wednesday and Friday in Grants, Cibola County, New Mexico. Magdalena District: “Defensor-Chieftain”, published Wednesday and Saturday in Socorro, Socorro County, New Mexico. Mountainair District: “Estancia Valley Citizen”, published weekly on Friday in Estancia, Torrance County, New Mexico. Sandia District: “Albuquerque Journal”, published daily in Albuquerque, Bernalillo County, New Mexico. Kiowa National Grassland: “Union County Leader”, published weekly on Wednesday in Clayton, Union County, New Mexico. Rita Blanca National Grassland: “Boise City News”, published weekly on Wednesday in Boise City, Cimarron County, Oklahoma. Black Kettle National Grassland: “Cheyenne Star”, published weekly on Thursday in Cheyenne, Roger Mills County, Oklahoma. Black Kettle National Grassland: “The Canadian Record”, published weekly on Thursday in Canadian, Hemphill County, Texas. McClellan Creek National Grassland: “The Pampa News”, published on Friday and Sunday in Pampa, Gray County, Texas.
Notice by Forest Supervisor of Availability for Comment and Decisions: “Silver City Daily Press”, published Monday-Saturday in Silver City, Grant County, New Mexico.
Notice by District Ranger of Availability for Comment and Decision: Black Range District: “The Herald”, published on Tuesday, in Truth or Consequences, Sierra County, New Mexico. Quemado District: “Silver City Daily Press”, published Monday-Saturday in Silver City, Grant County, New Mexico. Reserve District: “Silver City Daily Press”, published Monday-Saturday in Silver City, Grant County, New Mexico. Glenwood District: “Silver City Daily Press”, published Monday-Saturday in Silver City, Grant County, New Mexico. Silver City District: “Silver City Daily Press”, published Monday-Saturday in Silver City, Grant County, New Mexico. Wilderness District: “Silver City Daily Press‘, published Monday-Saturday in Silver City, Grant County, New Mexico.
Notice by Forest Supervisor of Availability for Comment and Decisions: “Alamagordo Daily News”, published daily in Alamogordo, Otero County, New Mexico.
Notice by District Ranger of Availability for Comment and Decisions: Sacramento District: “Alamogordo Daily News”, published daily in Alamogordo, Otero County, New Mexico. Guadalupe District: “Carlsbad Current Argus”, published daily except Saturday, in Carlsbad, Eddy County, New Mexico. Smokey Bear District: “Ruidoso News”, published Monday and Thursday in Ruidoso, Lincoln County, New Mexico.
Notice by Forest Supervisor of Availability for Comment and Decisions: “Albuquerque Journal”, published daily in Alburquerque, Bernalillo County, New Mexico.
Notice by District Ranger of Availability for Comment and Decisions: Coyote District: “Albuquerque Journal”, published daily in Albuquerque, Bernalillo County, New Mexico, Cuba District: “Albuquerque Journal”, published daily in Albuquerque, Bernalillo County, New Mexico. Espanola District: “Albuquerque Journal”, published daily in Albuquerque, Bernalillo County, New Mexico. Jemez District: “Albuquerque Journal”, published daily in Albuquerque, Bernalillo County, New Mexico. Pecos-Las Vegas District: “Albuquerque Journal”, published daily in Albuquerque, Bernalillo County, New Mexico.
International Trade Administration, Department of Commerce.
Notice.
The Department of Commerce invites U.S. companies to participate in the following overseas trade missions to be held between February and August 2000. For a more complete description of the trade mission, obtain a copy of the mission statement from the Project Officer indicated below. The recruitment and selection of private sector participants for these missions will be conducted according to the Statement of Policy Governing Department of Commerce Overseas Trade Missions announced by Secretary Daley on March 3, 1997.
Hotel and Recreation Equipment Trade Mission, Santo Domingo and Puerto Plata, Dominican Republic, February 8-11, 2000. Recruitment closes January 31, 2000.
For further information contact: Sheila de Andujar, Trade Event Manager, C.S. Santo Domingo, American Embassy, Unit 5515, APO AA 34041, Tel: 809-221-2171 ext. 408, Fax: 809-688-4838 E-mail: sheila.andujar@mail.doc.gov.
Information Technology Dealmaker, Toronto, Canada, February 9-10, 2000. Recruitment closes January 31, 2000.
For further information contact: Viktoria Palfi, Project Manager, U.S. Commercial Service, Toronto, 480 University Avenue, Suite 602, Toronto, ON M5G 1V2, Tel: 416-595-5412, ext. 229, Fax: 416-595-5419, E-mail: viktoria.palfi@mail.doc.gov.
Corporate Executive Office Program at Meditech Asia Show, Bangkok, Thailand, March 1-4, 2000. Recruitment closes February 15, 2000.
For further information contact: Kellie Holloway, Phoenix EAC, 901 N. Central Avenue, Suite 970, Phoenix, AR 85012, Tel: 602-640-2513, ext. 16, Fax: 602-640-2518. E-mail: Kelly.Holloway@mail.doc.gov.
Manufacturing Matchmaker India, New Delhi, Chennai, Mumbai, and Pune, India, April 3-11, 2000. Recruitment closes April 11, 2000.
For further information contact: Sam Dhir, U.S. Department of Commerce, Tel: 202-482-4756, Fax: 202-482-0178, E-mail: Sam.Dhir@mail.doc.gov.
Telecommunications Matchmaker Trade Delegation, Madrid, Spain and Rome, Italy, April 10-15, 2000. Recruitment closes February 28, 2000.
For further information contact: Molly Costa, U.S. Department of Commerce, Tel: 202-482-0693, Fax: 202-482-0178, E-mail: Molly.Costa@mail.doc.gov.
Women In Trade Business Development Mission, France and the Netherlands, May 7-12, 2000. Recruitment closes March 22, 2000.
For further information contact: Loretta Allison, U.S. Department of Commerce, Tel: 202-482-5479, Fax; 202-482-1999, E-mail: Loretta_Allison@ita.doc.gov.
U.S. Information Technology Trade Mission to Far East Asia, Taipei, Taiwan, Seoul and Pusan, South Korea, June 11-17, 2000. Recruitment closes April 15, 2000.
For further information contact: Tu-Trang Phan, U.S. Department of Commerce, Tel: 202-482-0480, Fax: 202-482-3002, E-mail Tu-Trang_Phan@ita.doc.gov.
Telecommunication Trade Mission to Chile and Argentina, June 18-23, 2000. Recruitment closes May 31, 2000.
For further information contact: Richard Paddock, U.S. Department of Commerce, Tel: 202-482-5235, Fax: 202-482-5834, E-mail Richard_Paddock@ita.doc.gov.
Medical Devices and Biotechnology Trade Mission to Australia, Melbourne, Sydney, and Brisbane, June 25-30, 2000. Recruitment closes May 5, 2000.
For further information contact: Bart Meroney, U.S. Department of Commerce, Tel: 202-482-5014, Fax: 202-482-0975, E-mail: Bart_Meroney@ita.doc.gov.
Medical Device Trade Mission, Taiwan, Malaysia, and Singapore, August 19-31, 2000. Recruitment closes June 30, 2000.
For further information contact: Steven R. Harper. U.S. Department of Commerce, Tel: 202-482-2991, Fax: 202-482-0975, E-mail: Steven_Harper@ita.doc.gov.
For further information contact: Reginald Beckham, U.S. Department of Commerce. Tel: 202-482-5478, Fax: 202-482-1999.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The Mid-Atlantic Fishery Management Council (Council) and the Atlantic States Marine Fisheries Commission's Summer Flounder, Scup and Black Sea Bass Board (Board) will hold a public meeting.
The meeting will be held Thursday, February 10, 2000, from 1:00-5:00 p.m.
This meeting will be held at the Radisson Hotel, 901 N. Fairfax Street, Alexandria, VA; telephone 703-683-6000.
Daniel T. Furlong, Executive Director, Mid-Atlantic Fishery Management Council; telephone: 302-674-2331, ext. 19.
The Council and Board will consider the following items: Discuss the development of a conservation equivalency amendment for summer flounder; discuss the development of an amendment to review allocation of annual total allowable catch and discards and revise summer period state by state quotas for scup; possible review and comment on 2000 specifications for summer flounder, scup, and black sea bass; discussion of disapproved portions of Sustainable Fisheries Act amendment for summer flounder, scup, and black sea bass; and discussion of other measures that would be included in amendments to summer flounder, scup, and black sea bass.
Although non-emergency issues not contained in this agenda may come before the Council and Commission for discussion, these issues may not be the subject of formal Council action during this meeting. Council action will be restricted to those issues specifically listed in this document and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Joanna Davis, 302-674-2331, at least 5 days prior to the meeting date.
Department of Defense (DoD).
Notice of test program.
The Department of Defense is amending its Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans to implement Section 817 of the National Defense Authorization Act for Fiscal Year 2000. Section 817 provides for a five year extension of the DoD Test Program for negotiation of comprehensive small business subcontracting plans from September 30, 2000 to September 30, 2005.
January 24, 2000.
Mr. Ivory Fisher, Office of Small and Disadvantaged Business Utilization, OUSD (A&T) SADBU, 1777 North Kent Street, Suite 9100, Arlington, VA 22209, telephone (703) 588-8616, telefax (703) 588-7561.
In accordance with Section 834 of Public Law 101-189, as amended, the Department of Defense (DoD) established a Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (the Program) to determine whether the use of comprehensive subcontracting plans on a corporate, division, or plant-wide basis would increase subcontracting opportunities for small business concerns. DoD amended the Program to implement the requirements of Section 822 of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85). The amendments: (1) Provide for subcontracts that are awarded by participating contractors performing as subcontractors, under DoD contracts, to be included in comprehensive small business subcontracting plans, and (2) to cover the HUBZone Act of 1997 implementation in the Federal Acquisition Regulation (FAR), which results in the addition of HUBZone small businesses to the categories of small business concerns that must be addressed by comprehensive small business subcontracting plans.
The revised test plan is as follows:
This document implements Section 834 of Public Law 101-189, the National Defense Authorization Act for Fiscal Years 1990 and 1991, as amended. The primary purpose of the Comprehensive Small Business Subcontracting Plan Test Program (the Program) is to determine whether the negotiation and administration of comprehensive small business subcontracting plans will reduce administrative burdens on contractors while enhancing subcontracting opportunities for small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals under Department of Defense (DoD) contracts.
The Program is established pursuant to Section 834 of the National Defense Authorization Act for Fiscal Years 1990 and 1991, as amended.
A. The Program shall be conducted from October 1, 1990, through September 30, 2005.
B. The selection of contractors for participation in the Program shall be in accordance with Section 811(b)(3) of the National Defense Authorization Act For Fiscal Year 1996, Public Law 104-106. Eligible contractors are large business concerns at the major (total) corporate level that, during the preceding fiscal year:
1. Were performing under at least three DoD prime contracts; furnished supplies or services (including professional services) to DoD, engaged in research and development for DoD, or performed construction for DoD; and were paid $5,000,000 or more for such contract activities; and
2. Achieved a small disadvantaged business (SDB) subcontracting participation rate of 5 percent or more during the preceding fiscal year. However, this requirement does not apply to the eight original contractors accepted into the Program. Additionally, a large business with an SDB subcontracting participation rate of less than 5 percent during the preceding fiscal year may request, through the designated contracting activity, to participate in the Program if the firm submits a detailed plan with milestones leading to attainment of at least a 5 percent SDB subcontracting participation rate by September 30, 2000,
C. Contractors selected for participation shall:
1. Be eligible in accordance with paragraph III(B);
2. Establish their comprehensive subcontracting plans on the same corporate, division or plant-wide basis under which they submitted the Standard Form (SF) 295 during the preceding fiscal year, except that a division or plant that historically reported through a higher-level division, but would meet the criteria of paragraph III(B)(2), shall be permitted to participate in the Program if the lower-level division, plant or profit center can demonstrate a 5 percent or greater subcontract performance level with SDB concerns;
3. Have reported to DoD on the SF 295 for the previous fiscal year, except as provided in paragraph III(C)(2);
4. Accept an SDB goal for each fiscal year of not less than 5 percent, or an SDB goal that is in accordance with the milestone established under paragraph III(B)(2);
5. Comply with the requirements of Defense Federal Acquisition Regulation Supplement (DFARS) Section 215.605 for source selection purposes;
6. Offer a broad range of subcontracting opportunities;
7. Voluntarily agree to participate; and
8. Have at least one active contract that requires a subcontracting plan at the designated DoD buying activity responsible for negotiating the Comprehensive Subcontracting Plan.
A. The comprehensive small business subcontracting plan shall address each of the 11 elements set forth in paragraph (d) of the clause at FAR 52.219-9, “Small Business Subcontracting Plan.”
1. The subcontracting plan, percentage and corresponding dollar goals for awards to small business, HUBZone small business, small disadvantaged business and women-owned small business concerns shall be developed by the contractor for its entire business operation in support of all DoD contracts and subcontracts under DoD contracts regardless of dollar value.
2. Participating contractors shall include separate specific goals and timetables for the awarding of subcontracts in two industry categories which have not historically been made available to small business and small disadvantaged business concerns. These industry categories will be recommended by the contractor and approved by the contracting officer. Subcontract awards made in support of the specific industry categories shall also count towards attainment of the overall small business and small disadvantaged business goals.
3. The subcontracting plan shall set forth the prime contractor's actions to publicize prospective subcontract opportunities for small business, HUBZone small business, small disadvantaged business and women-owned small business concerns.
B. Subcontracting plans to be established under the Program shall be submitted each year by participating contractors to the designated contracting officer 45 days prior to the end of the Government's fiscal year (September 30). However, new contractors requesting participation under the Program shall submit subcontracting plans to the contracting officer as far in advance as possible to the beginning of the fiscal year in which the contractor proposes to participate.
A. The Service Acquisition Executive within each military department and defense agency having contractors that meet the requirements of paragraphs III(B) and (C) shall designate at least three but nor more than five contracting activities to participate in the Program. In selecting the contracting activities to participate in the Program, the Services Acquisition Executive shall ensure that the designated activities cover a broad range of supplies and services.
B. The designated contracting activity will accomplish the following:
1. With the coordination of the Director, Office of Small and Disadvantaged Business
2. Establish a “Comprehensive Small Business Subcontracting Plan” negotiating team(s) composed as follows:
a. A contracting officer(s) who will be responsible for negotiation and approval of the comprehensive subcontracting plan(s) as well as the responsibilities at FAR 19.705.
b. The contracting activity's Small and Disadvantaged Business Utilization Specialist.
c. The Small and Disadvantaged Business Utilization Specialist of the cognizant contract administration activity that administers the preponderance of the selected prime contractor's contracts and/or the appropriate individual who will administer contractor performance under the test in accordance with FAR 19.706 and the provisions herein.
d. Production specialist, price analyst and other functional specialists as appropriate.
C. The designated contracting officer shall:
1. Encourage prime contractors interested in participating in the program to enter the program on a plant or facility basis.
2. Solicit proposed comprehensive subcontracting plans from selected contractor(s) as soon as possible and by July 1, annually thereafter.
3. By October 1, and annually thereafter, review, negotiate and approve on behalf of DoD a comprehensive subcontracting plan for each selected contractor.
4. Distribute copies of the approved subcontracting plan in accordance with paragraph VI(A).
5. Upon negotiation and acceptance of the comprehensive subcontracting plan, obtain from the contractor:
a. A listing of all active DoD contracts that contain individual subcontracting plans required by Section 211 of Public Law 95-507.
b. The listing shall include the following:
i. Contract number.
ii. Name and address of the contracting activity.
iii. Contracting officer's name and phone number.
6. Upon receipt of the information provided by the participating contractor under paragraph V(C)(4), direct the designated administrative contracting officer to issue a comprehensive change order, which modifies all of the contractor's active DoD contracts that include subcontracting plans. The modification will substitute the contractor's approved comprehensive subcontracting plan for the individual plans, will substitute the clause at DFARS 252.219-7004 for the clause at FAR 52.219-9, and will delete the clauses at FAR 52.219-10 and 52.219-16 and DFARS 252.219-7003 and 252.219-7005, as appropriate.
7. Review annually, with the contract administration activity, the contractor's performance under the plan. Document the review findings and distribute, in accordance with paragraph VI(A), within 45 days of the end of the fiscal year.
8. By November 15 of the year after acceptance, and annually thereafter, determine whether the contractor has met its comprehensive subcontracting goals. If the goals have not been met, determine whether there is any indication that the contractor failed to make a good faith effort and take appropriate action.
9. By December 15, 2005, prepare and submit a report on each participating contractor's performance which details the results of the Program. The report must compare the contractor's performance under the Program with its performance for the three fiscal years prior to acceptance into the Program. The report distribution will be in accordance with paragraph VI(A).
D. Participating contractors:
1. Shall establish their comprehensive subcontracting plans on the same corporate, division or plant-wide basis under which they submitted the SF 295 during the preceding fiscal year, except that those contractors that historically reported through a higher headquarters can elect to participate as a separate (lower-level) reporting profit center, plant or division if the contractor achieved an SDB subcontracting performance rate of 5 percent or greater in the preceding fiscal year.
2. Upon negotiation of an acceptable comprehensive subcontracting plan, shall be exempt from individual contract-by-contract reporting requirements for DoD contracts and subcontracts under DoD contracts unless otherwise required in accordance with paragraph III(C)(5).
3. Shall continue individual contract reporting on non-DoD contracts.
4. Shall comply with the flow-down provisions of Section 211 of Public Law 95-507 for large business subcontractors which are not participating in the Program. Consequently, large business concerns which are not participating in the Program receiving a DoD subcontract in excess of $500,000 ($1,000,000 for construction) are required to adopt a plan similar to that mandated by the clause at FAR 52.219-9. Participating contractors are prohibited from flowing down the “Comprehensive” subcontracting deviation provisions of DFARS 252.219-7004. Accordingly, large business subcontractors to the participating contractors who themselves are not participating in the Program shall be required to establish individual subcontracting plans with specific goals for awards to small business, small disadvantaged business and women-owned small business concerns.
5. Upon expulsion from the Program or Program termination on September 10, 2005, shall negotiate and establish individual subcontracting plan son all future DoD contracts that otherwise meet the requirements of Section 211 of Public Law 95-507.
A. Upon negotiation and acceptance of comprehansive subcontracting plans and goals, the designated activity shall immediately forward one copy of the plan to each of the following:
1. Director, Office of Small and Disadvantaged Business Utilization, Office of the Deputy Under Secretary of Defense (Acquisition and Technology), 1777 North Kent Street, Suite 9100, Arlington, VA 22209
2. Director, Small and Disadvantaged Business Utilization, for the military department or defense agency of the activity that negotiated and accepted the comprehensive subcontracting plan.
3. The cognizant contract administration office.
B. Each participating contractor shall complete the SF 295 “Summary Subcontract Report” in accordance with the instructions on the back of the form on a semi-annual basis, except as noted below:
1. One copy of the SF 295 and attachments shall be submitted to Director, Office of Small and Disadvantaged Business Utilization, Office of the Deputy Under Secretary of Defense (Acquisition and Technology), 1777 North Kent Street, Suite 9100, Arlington, VA 22209.
2. Participating contractors shall enter in Item 14 Remarks block the annual corporate, division or plant-wide small business, small disadvantaged business and women-owned small business percentage and corresponding dollar goals.
3. Participating contractors shall also enter separately in Item 14 the percentage and corresponding dollar goals for each of the two selected industry categories (see paragraph IV(A) (2)).
4. Participating contractors shall also enter separately in Item 14 on a semi-annual cumulative basis the percentage and corresponding dollar amount of subcontract awards made in each of the two selected industry categories.
5. Participating contractors shall be exempt from the completion of SF 294 “Subcontract Report For Individual Contracts'' for DoD contracts during their participation in the Program.
Department of Education.
Notice of Proposed Information Collection Requests.
The Leader, Information Management Group, Office of the Chief Information Officer, invites comments on the proposed information collection requests as required by the Paperwork Reduction Act of 1995.
An emergency review has been requested in accordance with the Act (44 U.S.C. Chapter 3507(j)), since public harm is reasonably likely to result if normal clearance procedures are followed. Approval by the Office of
Written comments regarding the emergency review should be addressed to the Office of Information and Regulatory Affairs, Attention: Danny Werfel, Desk Officer: Department of Education, Office of Management and Budget; 725 17th Street, NW., Room 10235, New Executive Office Building, Washington, DC 20503 or should be electronically mailed to the internet address DWERFEL@OMB.EOP.GOV.
Section 3506 of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) requires that the Director of OMB provide interested Federal agencies and the public an early opportunity to comment on information collection requests. The Office of Management and Budget (OMB) may amend or waive the requirement for public consultation to the extent that public participation in the approval process would defeat the purpose of the information collection, violate State or Federal law, or substantially interfere with any agency's ability to perform its statutory obligations. The Leader, Information Management Group, Office of the Chief Information Officer, publishes this notice containing proposed information collection requests at the beginning of the Departmental review of the information collection. Each proposed information collection, grouped by office, contains the following: (1) Type of review requested,
Failure to receive the reports in a timely manner would delay ED from issuing the continuation awards in accordance with Departmental directives. Also, the reported information is needed for ED to document program and administrative performance on essential indicators described in ED's strategic plan as required by the Government Performance and Results Act.
We are requesting an Emergency Clearance by OMB for the Grant Performance Report (524-B). When the emergency clearance has been granted the Department will submit the same document to OMB for a three year clearance.
Requests for copies of the proposed information collection request should be addressed to Vivian Reese, Department of Education, 400 Maryland Avenue, S.W., Room 5624, Regional Office Building 3, Washington, D.C. 20202-4651, or should be electronically mailed to the internet address OCIO_IMG_Issues@ed.gov, or should be faxed to 202-708-9346.
Written comments or questions regarding burden and/or the collection activity requirements, contact Terry O'Malley at (202) 395-6466. Individuals who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
Department of Education.
The Leader, Information Management Group, Office of the Chief Information Officer invites comments on the submission for OMB review as required by the Paperwork Reduction Act of 1995.
Interested persons are invited to submit comments on or before February 24, 2000.
Written comments should be addressed to the Office of Information and Regulatory Affairs, Attention: Danny Werfel, Desk Officer, Department of Education, Office of Management and Budget, 725 17th Street, NW, Room 10235, New Executive Office Building, Washington, DC 20503 or should be electronically mailed to the internet address DWERFEL@OMB.EOP.GOV.
Section 3506 of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) requires that the Office of Management and Budget (OMB) provide interested Federal agencies and the public an early opportunity to comment on information collection requests. OMB may amend or waive the requirement for public consultation to the extent that public participation in the approval process would defeat the purpose of the information collection, violate State or Federal law, or substantially interfere with any agency's ability to perform its statutory obligations. The Leader, Information Management Group, Office of the Chief Information Officer, publishes that notice containing proposed information collection requests prior to submission of these requests to OMB. Each proposed information collection, grouped by office, contains the following: (1) Type of review requested,
Responses: 57.
Burden Hours: 14.
Requests for copies of the proposed information collection request may be accessed from
Questions regarding burden and/or the collection activity requirements should be directed to Kathy Axt at (703) 426-9692 or via her internet address Kathy_Axt@ed.gov. Individuals who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
Department of Education.
The Leader, Information Management Group, Office of the Chief Information Officer invites comments on the submission for OMB review as required by the Paperwork Reduction Act of 1995.
Interested persons are invited to submit comments on or before February 24, 2000.
Written comments should be addressed to the Office of Information and Regulatory Affairs, Attention: Danny Werfel, Desk Officer, Department of Education, Office of Management and Budget, 725 17th Street, NW, Room 10235, New Executive Office Building, Washington, DC 20503 or should be electronically mailed to the internet address DWERFEL@OMB.EOP.GOV.
Section 3506 of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) requires that the Office of Management and Budget (OMB) provide interested Federal agencies and the public an early opportunity to comment on information collection requests. OMB may amend or waive the requirement for public consultation to the extent that public participation in the approval process would defeat the purpose of the information collection, violate State or Federal law, or substantially interfere with any agency's ability to perform its statutory obligations. The Leader, Information Management Group, Office of the Chief Information Officer, publishes that notice containing proposed information collection requests prior to submission of these requests to OMB. Each proposed information collection, grouped by office, contains the following: (1) Type of review requested,
This information collection is being submitted under the Streamlined Clearance Process for Discretionary Grant Information Collections (1890-0001). Therefore, the 30-day public comment period notice will be the only public comment notice published for this information collection.
Requests for copies of the proposed information collection request may be accessed from
Questions regarding burden and/or the collection activity requirements should be directed to AXT at (703) 426-9692. Individuals who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
Department of Education.
Notice inviting applications for new awards for fiscal year (FY) 2000.
1. If an institution is the recipient of a grant under the programs authorized under Part A or B of Title III of the Higher Education Act of 1965, as amended(HEA), the institution may not receive a grant under the HSI Program if any part of the grant period for the HSI Program grant would overlap with the grant awarded under Part A or B of Title III. Thus, such an institution may not apply for a grant under the HSI Program in this competition. Further, an institution that is a recipient of a grant under Part A or B may not relinquish that grant in order to apply for a grant under the HSI Program. The programs authorized under Part A of Title III of the HEA include the Strengthening Institutions Program, American Indian Tribally Controlled Colleges and Universities Program, Alaska Native-Serving Institutions Program, and Native Hawaiian-Serving Institutions Program. The programs authorized under Part B of Title III of the HEA include the Strengthening Historically Black Colleges and Universities Program and the Strengthening Historically Black Graduate Institutions Program.
2. An institution that does not fall within the limitation described in paragraph 1 may apply for a grant under both the programs authorized under Title III Part A of the HEA and the HSI Program. However, the institution may receive only one grant under any of those programs. Accordingly, if an institution applies for a grant under more than one program, it should indicate that fact in each application, and should further indicate which grant it wishes to receive if it is selected to receive a grant under more than one program.
3. We have changed the way we collect information for determining the value of endowment funds and total expenditures for library materials. As a result of that change, we do not now have base year data beyond 1996-1997 data. Consequently, in order to award FY 2000 grants in a timely manner, we will use 1996-1997 base year data.
Under both formats we have established mandatory page limits. Reviewers will be instructed not to read applications beyond the stated page limits. If, to meet the page limit, you use a larger page or you use a print size, spacing, or margins smaller than the standards in this notice, we will reject your application. For this purpose, an application narrative includes the institutional narrative, the comprehensive development plan, activity narratives, and the project management narrative.
• The narrative of a development grant application may not exceed 60 pages. Additionally, essential appendices may be attached but may not exceed 5 pages each.
• The narrative of a cooperative arrangement grant application may not exceed 120 pages. Additionally, essential appendices may be attached but may not exceed 10 pages each.
• The narrative of a planning grant application may not exceed 20 pages. Additionally, essential appendices may be attached but may not exceed 5 pages each.
The cover page (ED Form 424 and the tiebreaker information page on the back of ED Form 424) and all certificates and assurances must accompany the original application and are not included within the page limits.
1. A ‘page’ is 8.5” x 11”, on one side only, with 1” margins top, bottom, right and left.
2. You must double-space all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions. However, you may single space charts, forms, tables, figures or graphs.
Some of the procedures in these instructions for transmitting applications differ from those in 34 CFR 75.102. Under 5 U.S.C. 553, the Department generally offers interested parties the opportunity to comment on proposed regulations. However, these amendments make procedural changes only and do not establish new substantive policy. Therefore, under 5 U.S.C. 553(b)(A), the Secretary has determined that proposed rulemaking is not required.
Development Grants: $350,000-$400,000 per year.
Planning Grants: $30,000—$35,000 for one year.
Development Grant: $375,000 per year.
Planning Grant: $32,500 for one year.
Development Awards: 65.
Planning Grant Awards: 10.
60 months for development grants.
12 months for planning grants.
The Department is not bound by any estimates in this notice.
Under Section 511(d) of the HEA, we give priority to applications that contain satisfactory evidence that the Hispanic Serving institution has entered into or will enter into a collaborative arrangement with at least one local educational agency or community-based organization to provide that agency or organization with assistance (from funds other than funds provided under Title V of the HEA) in reducing dropout rates for Hispanic students, improving rates of academic achievement for Hispanic students, and increasing the rates at which Hispanic secondary school graduates enroll in higher education. We anticipate that we will fund under this competition only applications that meet this priority.
As described under Section 514(b) of the HEA, we give priority to grants for cooperative arrangements that are geographically and economically sound or will benefit the applicant Hispanic Serving Institution. We anticipate that we will fund only those applications that meet this priority under this competition.
In tie-breaking situations described in 34 CFR 606.23 of the HSI Program regulations, we award one additional point to an application from an
For the purpose of these funding considerations, an applicant must be able to demonstrate that the market value of its endowment fund per FTE student, or expenditures for library per FTE student, were less than the following approximated national averages for year 1996-97.
If a tie still remains after applying the additional points, we determine that an institution will receive an award according to a combined ranking of two-year and four-year institutions. This ranking is established by combining library expenditures and endowment values per FTE student. The institutions with the lowest combined library expenditures per FTE student and endowment values per FTE student are ranked higher in strict numerical order.
(a) The Department of Education General Administrative Regulations (EDGAR) in 34 CFR Parts 74, 75, 77, 79, 82, 85, 86, 97, 98, and 99; and (b) the regulations for the HSI Program in 34 CFR Part 606. The HSI final regulations, 34 CFR part 606, were published in the
Individuals who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an alternate format (e.g., Braille, large print, audiotape, or computer diskette) on request to the contact person specified in the preceding paragraph. Individuals with disabilities may obtain a copy of the application package in an alternate format, also, by contacting that person. However, the Department is not able to reproduce in an alternate format the standard forms included in the application package.
You may view this document, as well as all other Department of Education documents published in the
The official version of a document is the document Published in the
20 USC 1059c.
Department of Education
Notice of proposed priority and selection criteria for fiscal year 2000 and subsequent years.
The Secretary announces a proposed priority, eligible applicants, and selection criteria for fiscal year (FY) 2000 and, at the discretion of the Secretary, for subsequent years under the Safe and Drug-Free Schools and Communities (SDFSC) National Programs—Federal Activities Grants Program. The Secretary takes this action to focus Federal financial assistance on an identified national need—the development and dissemination of a newsletter with information about effective practices to prevent drug use and violent behavior among youth.
Comments must be received by the Department on or before February 24, 2000.
All comments concerning these proposed priorities should be addressed to Gail Beaumont, Safe and Drug-Free Schools Program, U.S. Department of Education, 400 Maryland Avenue, SW, Room 3E310, Washington, DC 20202-6123. Comments may be sent through the Internet:
Gail Beaumont, Safe and Drug-Free Schools Programs, U.S. Department of Education, 400 Maryland Avenue, SW, Room 3E310, Washington, DC 20202-6123, (202) 260-3954. Fax: (202) 260-7767. Internet: http//www.ed.gov/offices/OESE/SDFS.
Individuals who use a telecommunication device for the deaf (TDD) may call the Federal Information Relay Service at 1-800-877-8339. Individuals with disabilities may obtain this document in an alternate format (e.g., Braille, large print, audio tape, or computer diskette) on request to the contact person listed above.
This notice of proposed priorities does not solicit applications. A notice inviting applications under this competition will be published in the
This notice contains one proposed priority for fiscal year 2000, and related selection criteria. Under the absolute priority, the Secretary intends to award one cooperative agreement for up to 36 months; this cooperative agreement will support a means of communicating with the field on current and future program directions, research-based activities, and other information related to effective drug and violence prevention practices through
Applicants must demonstrate extensive knowledge of elements of effective drug and violence prevention programs and current research in the area of drug and violence prevention programs and current research in the area of drug and violence prevention. Funds under the Safe and Drug-Free Schools Program reach 97 percent of the nation's school districts. While most school districts have implemented drug and violence prevention activities in some form, too often these activities are narrow in scope and are not based on science. Many school districts lack data on the effects of their drug and violence prevention programs on student behavior. They need information about programs that have proven to be effective or promising that they can adopt for their students. Although research exists on drug and violence prevention strategies that have positive results, too often this research is not known to school personnel, and does not get translated into practice.
With regard to content, the following information describes examples of topics and types of articles that have been featured in past issues of
• Information about principles of effective drug and violence prevention programs.
• Key elements or characteristics of successful drug and violence prevention programs.
• Research studies and data related to drug and violence prevention.
• Articles by recognized experts in fields related to safe and drug-free schools.
• Articles describing model programs.
• Information that describes discretionary grant activities funded under the Safe and Drug-Free Schools Program, National Programs, including resources and products resulting from the activities.
• Timely information on special topics such as emerging trends in use of specific drugs, or early warning signs of violent behavior.
• Resources and helplines for obtaining information and materials on drug and violence prevention.
Frequency of past publication of
The applicant funded under the absolute priority in this notice will have the responsibility to design, develop, publish, disseminate, and manage all aspects of
(1) Design, develop, publish, and disseminate
(2) Manage all aspects of
(3) Create, maintain, and expand a subscriber data base for ED.
(4) Evaluate on an ongoing basis the impact of
(5) Develop, create, and maintain a Web site to post each issue and receive reader comments and suggestions.
(6) Agree to have content of the newsletter reviewed and approved by the Department of Education prior to publication.
The following selection criteria will be used to evaluate applications for one cooperative agreement under this competition. The maximum score for all these criteria is 100 points. The
In determining the significance of the proposed project, the following factor is considered: The potential contribution of the proposed project to increased knowledge or understanding of educational problems, issues, or effective strategies.
In determining the quality of the design of the proposed project, the following factors are considered:
(a) The extent to which the goals, objectives, and outcomes to be achieved by the proposed project are clearly specified and measurable. (10)
(b) The extent to which the design of the proposed project is appropriate to, and will successfully address, the needs of the target population or other identified needs. (5)
(c) The extent to which the proposed project represents an exceptional approach to the priority or priorities established for the competition. (15)
In determining the adequacy of resources for the proposed project, the following factor is considered: The extent to which the costs are reasonable in relation to the objectives, design, and potential significance of the proposed project.
In determining the quality of the management plan for the proposed project, the following factors are considered.
(a) The adequacy of the management plan to achieve the objectives of the proposed project on time and within budget, including clearly defined responsibilities, timelines, and milestones for accomplishing project tasks. (5)
(b) The adequacy of mechanisms for ensuring high-quality products and services from the proposed project, including qualifications and experience of key personnel in writing and editing newsletters for education, prevention and related fields. (10)
(c) The extent to which the time commitments of the project director and principal investigator and other key project personnel are appropriate and adequate to meet the objectives of the proposed project. (5)
(d) How the applicant will ensure that a diversity of perspectives are brought to bear in the operation of the proposed project, including those of students, faculty, parents, the business community, a variety of disciplinary and professional fields, recipients or beneficiaries of services, or others, as appropriate. (5)
In determining the quality of the evaluation, the following factors are considered:
(a) The extent to which the evaluation plan provides for an ongoing evaluation of the effectiveness of
(b) The extent to which the evaluation results will be used for continuous improvement of
(c) The extent to which the methods of evaluation are appropriate to the context within which the project operates. (5)
(d) The extent to which the methods of evaluation will provide performance feedback and permit periodic assignment of progress toward achieving intended outcomes. (5)
This program is subject to the requirements of Executive Order 12372 and the regulations in 34 CFR part 79. The objective of the executive order is to foster an intergovernmental partnership and a strengthened federalism by relying on processes developed by State and local government for coordination and review of proposed Federal financial assistance.
In accordance with this order, this document is intended to provide early notification of the Department's specific plans and actions for this program.
You may view this document, as well as all other Department of Education documents published in the
The official version of this document is the document published in the
20 U.S.C. 7131.
Department of Education.
Notice of availability of the Federal Perkins Loan and National Direct Student Loan Programs Directory of Designated Low-Income Schools for Teacher Cancellation Benefits for the 1999-2000 School Year.
We are announcing that the 1999-2000 Federal Perkins Loan and National Direct Student Loan Programs Directory of Designated Low-Income Schools (The Directory) is now available on the Department of Education's (the Department's) Web site. Under the Federal Perkins Loan and National Direct Student Loan programs, a borrower may have repayment of his or her loan deferred and a portion of his or her loan canceled if the borrower teaches full-time for a complete academic year in a designated elementary or secondary school having a high concentration of students from low-income families. In the 1999-2000 Directory, we list, on a State-by-State and Territory-by-Territory basis, the schools in which a borrower may teach during the 1999-2000 school year to qualify for deferment and cancellation benefits.
The Directory is currently available at the Department's Web site.
You may obtain information concerning specific schools listed in the Directory from Chrissa Allen, Systems Administration Branch, Campus-Based Programs Systems Division, Office of Student Financial Assistance, U.S. Department of Education, 400 Maryland Avenue, S.W., (Portals Building, Room 6200), Washington, D.C. 20202-5447, Telephone (202) 708-7738. You may
Directories are also available in an electronic format at (1) each institution of higher education participating in the Federal Perkins Loan Program, (2) each of the fifty-seven (57) State and Territory Departments of Education, (3) each of the major Federal Perkins Loan billing services, and (4) the U.S. Department of Education, including its regional offices. Individuals with disabilities may obtain this notice in an alternate format (
We select schools that qualify a borrower for deferment and cancellation benefits under the procedures contained in the Federal Perkins Loan Program regulations in 34 CFR 674.53, 674.54 and 674.55.
We have determined that, for the 1999-2000 academic year, full-time teaching in the schools set forth in the 1999-2000 Directory qualifies a borrower for deferment and cancellation benefits.
We are providing the Directory to each institution participating in the Federal Perkins Loan Program in an electronic format only. Borrowers and other interested parties may check the Web site or their lending institution, the appropriate State or Territory Department of Education, a regional office of the Department of Education, or contact us directly at the Office of Student Financial Assistance concerning the identity of qualifying schools for the 1999-2000 academic year. We retain, on a permanent basis, copies of past Directories.
You may view this document, as well as all other Department of Education documents published in the
The official version of this document is published in the
20 U.S.C. 1087aa-1087ii and 20 U.S.C. 421-429, unless otherwise noted.
U.S. Department of Energy.
Notice of Solicitation for Participation in Competition to Create Low-Cost Inverters.
The U.S. Department of Energy (DOE), in partnership with the National Association of State Energy Officials (NASEO), the Institute of Electrical and Electronics Engineers (IEEE), and other sponsors announces an opportunity for qualified colleges and university engineering programs to submit proposals to compete for a cash prize for funds to build prototype, low-cost inverters, in a contest titled the 2001 Future Energy Challenge. This competition is open to schools with ABET-accredited engineering programs or the equivalent.
Additional information on this competition and application requirements will be mailed beginning February 1, 2000, with a due date for receipt of application requirements of April 3, 2000. Schools selected to compete in the 2001 Future Energy Challenge will be notified by May 1, 2000. The competition will be scheduled for late May or early June 2001.
If your school is interested in receiving an application requirements package for the 2001 Future Energy Challenge, complete the attached form and fax or mail it to the address on the form. You can also e-mail your response to:
The 2001 Future Energy Challenge seeks to dramatically improve the design and reduce the cost of DC-AC inverters and interface systems for use in distributed generation systems. DOE is joining with NASEO, and possibly others, to sponsor this competition with the goal of making these interface systems practical and cost effective. The objectives are to design elegant, manufacturable systems that would reduce the costs of commercial interface systems by at least 50% and, thereby, accelerate the deployment of distributed generation systems in homes and buildings. Schools with the capability to undertake the challenging task of designing complete systems or modifying commercial inverters to achieve design and manufacturability improvements that lead to cost reductions of 50% or better are invited to submit proposals to DOE to compete. Schools may elect to compete in one of three classes: an engineering design study class that involves a thorough design, analysis, cost, and simulation study; a scale prototype class in which hardware is built and demonstrated at a fraction of the target power level; and a full prototype class that leads to a comprehensive hardware system. Schools should plan to form multi-disciplinary teams to address the energy source characteristics (selected from fuel cells, solar panels, or other direct energy conversion devices), design the power electronics, design packaging and thermal management systems, develop filtering and other interface sub-systems, analyze process costs and manufacturability, and perform economic and life-cycle cost analyses.
The hardware prototypes judged as best will be tested by fuel cell manufacturers, at DOE energy technology centers, or at national laboratory facilities as interfaces for a fuel cell source. The school with the most cost-effective, fully functional design that can meet the aggressive cost target will win a prize of at least
Take notice that on January 13, 2000, Kern River Gas Transmission Company (Kern River) tendered for filing as part of its FERC Gas Tariff, First Revised Volume No. 1, the following tariff sheets to be effective January 13, 2000.
Kern River states that the purpose of this filing is to establish procedures in its tariff to allow shippers to net and/or trade shipper imbalances.
Kern River states that is has served a copy of this filing upon its customers and interested state regulatory commissions.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street N.E., Washington, D.C. 20426, in accordance with Sections 385.214 or 385.211 of the Commission's Rules and Regulations. All such motions or protests must be filed in accordance with Section 154.210 of the Commission's Regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. Copies of this filing are on file with the Commission and are available for public inspection in the Public Reference Room. This filing may be viewed on the web at http://www.ferc.fed.us/online/rims.htm (call 202-208-2222 for assistance).
January 19, 2000.
Take notice that a Settlement Conference will be convened to discuss compensation for deferred maintenance costs in Docket No. ER99-4392-000. The Settlement Conference is scheduled for Monday, January 24, 2000, at 10:00 a.m. The Settlement Conference will be held at the Offices of the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, D.C. 20426, for the purpose of exploring settlement of the captioned proceeding.
Any party as defined by 18 CFR 385.102(c), or any participant as defined in 18 CFR 385.102(b), is invited to attend. Persons wishing to become a party must move to intervene and receive intervenor status pursuant to the Commission's regulations (18 CFR 385.214).
For additional information contact Moira Notargiacomo at (202) 208-1079.
Take notice that the following filings have been made with the Commission:
Take notice that on January 13, 2000, Louisiana Generating LLC (Generating) tendered for filing an application under section 203 of the Federal Power Act for approval of the transfer of certain transmission facilities associated with generating facilities being sold to Louisiana Generating LLC by Cajun Electric Power Cooperative, Inc. (Cajun). Generating also requested approval of the assignment of four power sales agreements from Cajun to Generating.
Take notice that on January 13, 2000, Ameren Services Company (Ameren) tendered for filing a Service Agreement for Market Based Rate Power Sales between Ameren and the City of Sikeston, Board of Municipal Utilities. Ameren asserts that the purpose of the Agreement is to replace the unexecuted Agreement in Docket No. ER98-4440-000 with an executed Agreement.
Ameren requests that the Service Agreement become effective August 3, 1998.
Take notice that on January 13, 2000, Ameren Services Company (Ameren) tendered for filing a Service Agreement for Market Based Rate Power Sales between Ameren and Duke Energy Trading & Marketing, L.L.C. Ameren asserts that the purpose of the Agreement is to replace the unexecuted Agreement in Docket No. 98-3886-000 with an executed Agreement.
Ameren requests that the Service Agreement become effective August 3, 1998.
Take notice that on January 13, 2000, the California Independent System Operator Corporation (ISO) tendered for filing Amendment No. 2 to the Meter Service Agreement between the ISO and PG&E Energy Services Corporation, for acceptance by the Commission. The ISO states that Amendment No. 2 modifies Schedule 1 of the Meter Service Agreement to reflect changes in meter information concerning meter resources and their locations.
The ISO states that this filing has been served on all parties listed on the official service list in the above-referenced docket.
Take notice that on January 13, 2000, the California Independent System Operator Corporation (ISO) tendered for filing Amendment No. 1 to the Meter
The ISO states that this filing has been served on all parties listed on the official service list in the above-referenced docket.
Take notice that on January 13, 2000, Northeast Utilities Service Company (NUSCO) tendered for filing, a First Amendment to its Service Agreement No. 55 under FERC Electric Tariff Original Volume No. 9, under which New Hampshire Electric Cooperative (NHEC) takes Network Integration Transmission Service under the NU System Companies' Open Access Transmission Service Tariff.
NUSCO states that the amendment changes the delivery points identified in Service Agreement No.55 and is being filed to correspond to a settlement reached between the NU System Companies and NHEC and filed with the Commission in Docket Nos. EL96-53-000 and EL95-37-000.
NUSCO requests waiver of the Commission's regulations to allow the amendment to become effective as of January 1, 2000, the effective date requested for the Settlement.
Take notice that on January 13, 2000, PECO Energy Company (PECO) filed an amendment to its Electric Tariff Original Volume No. 1 accepted by the Commission in Docket No. ER95-770, as subsequently amended and accepted by the Commission in Docket No. ER97-316. The amendment requests Commission authorization to make market based sales of specified ancillary services.
PECO requests a waiver of the Commission's regulations to permit the revised tariff sheets to become effective January 14, 2000.
Take notice that on January 13, 2000, Wisconsin Public Service Corporation (WPSC) tendered for filing a quarterly report for the quarter ending December 31, 1999.
Take notice that on January 13, 2000, Entergy Services, Inc. (Entergy), on behalf of Entergy Gulf States, Inc. (Entergy Gulf States), tendered for filing an Interconnection and Operating Agreement between Entergy Gulf States and SRW Cogeneration Limited Partnership (SRW).
Take notice that on January 13, 2000, Illinova Power Marketing, Inc. (IPMI) tendered for filing Electric Power Transaction Service Agreements under which Cargill Alliant, LLC and Springfield City Water Light & Power will take service pursuant to IPMI's power sales tariff, Rate Schedule FERC No. 1.
IPMI has requested an effective date of December 14, 1999, for each service agreement.
Take notice that on January 12, 2000, Cadillac Renewable Energy LLC filed their quarterly report for the quarter ending December 31, 1999.
Take notice that on January 10, 2000, Cleco Utility Group, Inc., Transmission Services (CLECO) filed their service agreements for non-firm and short term firm point-to-point transmission services by CLECO to Cargill and Alliant, LLC.
CLECO requests an effective date of December 22, 1999.
Copies of this filing have been served to: Ms. Arlene Jorgensen Hillestad, Contract Administrator, Cargill-Alliant, LLC, P. O. Box 5653, Minneapolis, MN 55440-5653.
Take notice that on January 11, 2000, ACN Power, Inc. tendered for filing a letter from the Executive Committee of the Western Systems Power Pool (WSPP) indicating that ACN Power, Inc. had completed all the steps for pool membership. ACN Power, Inc. requests that the Commission amend the WSPP Agreement to include it as a member.
ACN Power, Inc. requests an effective date of January 6, 2000 for the proposed amendment.
Copies of the filing were served upon the WSPP Executive Committee.
Take notice that on January 6, 2000, Indianapolis Power & Light Company (Indianapolis) submitted standards of conduct under Order No. 889
Indianapolis states that it served copies of the filing on the service list, to the Indiana Utility Regulatory Commission, Cinergy Corp., and Hoosier Energy Rural Electric Cooperative, Inc.
Any person desiring to be heard or to protest such filing should file a motion to intervene or protest with the Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). All such motions or protests should be filed on or before the comment date. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding.
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
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All documents (original and eight copies) should be filed with: David P. Boergers, Secretary, Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426.
The Commission's Rules of Practice and Procedure require all intervenors filing documents with the Commission to serve a copy of that document on each person whose name appears on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
k.
l.
The Marquette Development No. 3 includes (8) Tourist Park Reservoir with a surface area of 100 acres and a storage volume of 875 acre-feet, impounded by (9) a dam composed of (a) a 37-foot-long left spillway dike with a crest elevation of 642.84 feet NGVD, (b) an 80-foot long, 21-foot high, uncontrolled concrete ogee-shaped overflow spillway, with a crest elevation of 638.84 feet NGVD, (c) a gated spillway with two electric-hoist-operated, 10-foot-high by 10-foot-wide Taintor gates with a crest elevation of 629.84 feet NGVD, (d) a 758-foot-long right dike, with a reinforced concrete core wall with a crest elevation of 642.84 feet NGVD, and (e) a reinforced concrete intake structure with inclined trash racks, located 123 feet from the right end of the right dike, and having a single 20-foot-wide by 17-foot high bay. This bay controls water flowing into (10) an 8-foot-diameter, 150-foot long steel penstock, supported on nine reinforced-concrete pedestals spaced 16 feet apart, which carries water to (11) Powerhouse No. 3, which is a 28-foot by 40-foot reinforced concrete and brick structure containing (12) one two-phase, 60-cycle vertical turbine-generator set with a generating capacity of 700 kW, which transmits power to the 12,500kV power distribution system.
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n. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
Protests or Motions to Intervene—Anyone may submit a protest or a motion to intervene in accordance with the requirements of Rules of Practice and Procedure, 18 CFR 385.210, 385.211, and 385.214. In determining the appropriate action to take, the Commission will consider all protests filed, but only those who file a motion to intervene in accordance with the Commission's Rules may become a party to the proceeding. Any protests or motions to intervene must be received on or before the specified deadline date for the particular application.
Filing and Service of Responsive Documents—The application is not ready for environmental analysis at this time; therefore, the Commission is not now requesting comments, recommendations, terms and conditions, or prescriptions.
When the application is ready for environmental analysis, the Commission will issue a public notice requesting comments, recommendations, terms and conditions, or prescriptions.
All filings must (1) bear in all capital letters the title “PROTEST” or “MOTION TO INTERVENE;” (2) set forth in the heading the name of the applicant and the project number of the application to which the filing responds; (3) furnish the name, address, and telephone number of the person protesting or intervening; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. Agencies may obtain copies of the application directly from the applicant. Any of these documents must be filed by providing the original and the number of copies required by the Commission's regulations to: The Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Washington DC 20426. An additional copy must be sent to Director, Division of Project Review, Office of Hydropower Licensing, Federal Energy Regulatory Commission, at the above address. A copy of any protest or motion to intervene must be served upon each
The following notice of meeting is published pursuant to section 3(a) of the Government in the Sunshine Act (Pub. L. No. 94-409), 5 U.S.C 552B:
This is a list of matters to be considered by the commission. It does not include a listing of all papers relevant to the items on the agenda; however, all public documents may be examined in the reference and information center.
Environmental Protection Agency (EPA).
Notice.
In compliance with the Paperwork Reduction Act (44 U.S.C. 3501
Comments must be submitted on or before February 24, 2000.
For a copy of the ICR contact Sandy Farmer at EPA by phone at (202) 260-2740, by E-Mail at Farmer.Sandy@epamail.epa.gov or download off the Internet at
These standards of performance for this category of major sources and area sources of hazardous air pollutants are required by section 112 of the Clean Air Act. Facilities may meet the standards by materials substitution, by installing control devices, or by a combination of both. The information that is required to be submitted to the Agency or kept at the facility is needed to insure compliance with the regulation. These include initial one time notifications, performance tests plans and reports and records of maintenance and shutdown, startup, and malfunctions. The required notifications are used to inform the Agency or delegated authority when a source becomes subject to the standard. The reviewing authority may then inspect the source to check if the pollution control devices are properly installed and operated, leaks are being detected and repaired and the standard is being met. Performance test reports are needed as these are the Agency's record of a source's initial capability to comply with the emission standard, and serve as a record of the operating conditions under which compliance was achieved. For facilities that install CMS there are performance test, and maintenance reports. Excess emissions reports are submitted semiannually. Responses to the collection of information are mandatory.
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.The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15. The
Send comments on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques to the following addresses. Please refer to EPA ICR No. 1739.03 and OMB Control No. 2060-0335 in any correspondence.
Environmental Protection Agency (EPA).
Notice.
In compliance with the Paperwork Reduction Act (44 U.S.C. 3501
Comments must be submitted on or before February 24, 2000.
For a copy of the ICR contact Sandy Farmer at EPA by phone at (202) 260-2740, by E-Mail at Farmer.Sandy@epamail.epa.gov or download off the Internet at
The information collection includes initial and periodic reporting necessary for the EPA to ensure compliance with the promulgated federal rule for automobile refinish coatings. The rule will be enforced through random sampling of coatings to determine VOC content. All manufacturers and importers of coatings and coating components subject to this rule must submit an initial report. The initial report must include the name and mailing address of the manufacturer or importer. The rule requires that containers of all subject automobile refinish coatings and coating components display the date of manufacture or a code indicating the date of manufacture. All manufacturers and importers of subject coatings and coating components must submit an explanation of all date codes used on automobile refinish coating and coating component containers. Date code explanations can be submitted with the initial report. Thereafter, respondents must submit explanations of any new date codes within 30 days of their first use. The EPA is required under section 183(e) of the Clean Air Act (Act) to regulate VOC emissions from the use of consumer and commercial products. Pursuant to section 183(e)(3), the EPA published a list of consumer and commercial products and a schedule for their regulation (60 FR 15264). Automobile refinish coatings were included in Group 1 of the list, and the standards for such coatings were promulgated on September 11, 1998 (63 FR 48806).The reports required under the rule enable the EPA to identify all coating and coating component manufacturers and importers in the United States, and to determine which coatings and coating components are subject to the rule based on dates of manufacture. Agency enforcement personnel will use the information collected to identify manufacturers and importers subject to the rule and to determine which coatings and coating components are subject to the rule by dates of manufacture.
All information submitted to the EPA for which a claim of confidentiality is made will be safeguarded according to the Agency policies set forth in 40 CFR part 2, subpart B—Confidentiality of Business Information.
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. The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15. The
Send comments on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques to the following addresses. Please refer to EPA ICR No. 1765.02 and OMB Control No. 2060-0353 in any correspondence. Ms. Sandy Farmer, U.S. Environmental Protection Agency, Office of Environmental Information, Collection Strategies Division (2822), 1200 Pennsylvania, NW, Washington, DC 20460; and Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for EPA, 725 17th Street, NW, Washington, DC 20503.
Environmental Protection Agency (EPA).
Notice of meeting.
Pursuant to the Federal Advisory Committee Act, Public Law 92-463, as amended (5 U.S.C., App. 2) notification is hereby given that the Environmental Protection Agency, Office of Research and Development (ORD), Board of Scientific Counselors (BOSC), will hold an Executive Committee Meeting.
The meeting will be held on February 9-10, 2000. On Wednesday, February 9, the meeting will begin at 9 a.m., and will recess at 4:30 p.m. On Thursday, February 10, the meeting will reconvene at 8:45 a.m. and adjourn at approximately 1 p.m. All times noted are Eastern Time.
The meeting will be held at the Washington Monarch Hotel, 2401 M Street, NW., Washington, DC.
Shirley R. Hamilton, Designated Federal Officer, U.S. Environmental Protection Agency, Office of Research and Development, NCERQA (MC 8701R), 401 M Street, SW., Washington, DC 20460, (202) 564-6853.
Agenda items will include, but not limited to: Discussion on ORD's Particulate Matter
Environmental Protection Agency (EPA).
Notice.
On November 19, 1999, the Cherokee Nation submitted an application for EPA approval to administer and enforce training and certification requirements, training program accreditation requirements, and work practice standards for lead-based paint activities in target housing and child-occupied facilities under section 402 of the Toxic Substances Control Act (TSCA). This notice announces the receipt of the Cherokee Nation's application, and provides a 45-day public comment period and an opportunity to request a public hearing on the application.
Comments, identified by docket control number PB-402404-CN, must be received on or before March 10, 2000. In addition, a public hearing request may be submitted on or before March 10, 2000.
Comments and the public hearing request may be submitted by mail, electronically, or in person. Please follow the detailed instructions for each method as provided in Unit I. of the
Jeffrey Robinson, Regional Lead Coordinator, Environmental Protection Agency, Region VI, 6PD-T, 1445 Ross Avenue, Suite 1200, Dallas, TX 75202-2733. Telephone: 214-665-7577, e-mail address: robinson.jeffrey@epamail.epa.gov.
This action is directed to the public in general. This action may, however, be of interest to firms and individuals engaged in lead-based paint activities in the Cherokee Nation. Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under
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You may submit comments and hearing requests through the mail, in person, or electronically. To ensure proper receipt by EPA, it is imperative that you identify docket control number PB-402404-CN in the subject line on the first page of your response.
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Do not submit any information electronically that you consider to be CBI. You may claim information that you submit to EPA in response to this document as CBI by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public version of the official record. Information not marked confidential will be included in the public version of the official record without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified under
The Cherokee Nation has submitted an application to EPA Region VI, under section 404 of TSCA and has requested approval of their lead-based paint training and certification program. This application will be reviewed by EPA within 180 days of receipt of a complete application. If EPA subsequently finds that the program does not meet all the requirements for approval of a Tribal program, EPA will work with the Tribe to correct any deficiencies in order to approve the program. If the deficiencies are not corrected, a notice of disapproval will be issued in the
Pursuant to section 404(b) of TSCA (15 U.S.C. 2684(b)), EPA provides notice and an opportunity for a public hearing on a State or Tribal program application before approving the application. Therefore, by this notice EPA is soliciting public comment on whether the Cherokee Nation's application meets the requirements for EPA approval. This notice also provides an opportunity to request a public hearing on the application. If a hearing is requested and granted, EPA will issue a
On October 28, 1992, the Housing and Community Development Act of 1992, Public Law 102-550, became law. Title X of that statute was the Residential Lead-Based Paint Hazard Reduction Act of 1992. That Act amended TSCA (15 U.S.C. 2601
Section 402 of TSCA authorizes and directs EPA to promulgate final regulations governing lead-based paint activities in target housing, public and commercial buildings, bridges, and other structures. Those regulations are to ensure that individuals engaged in such activities are properly trained, that training programs are accredited, and that individuals engaged in these activities are certified and follow documented work practice standards. Under section 404 of TSCA, a State may seek authorization from EPA to administer and enforce its own lead-based paint activities program.
On August 29, 1996 (61 FR 45777) (FRL-5389-9), EPA promulgated final TSCA section 402/404 regulations governing lead-based paint activities in target housing and child-occupied facilities (a subset of public buildings). Those regulations are codified at 40 CFR part 745, and allow both States and Indian Tribes to apply for program authorization. Pursuant to section 404(h) of TSCA, EPA is to establish the Federal program in any State or Tribal Nation without its own authorized program in place by August 31, 1998.
States and Tribes that choose to apply for program authorization must submit a complete application to the appropriate Regional EPA Office for review. Those applications will be reviewed by EPA within 180 days of receipt of the complete application. To receive EPA approval, a State or Tribe must demonstrate that its program is at least as protective of human health and the environment as the Federal program, and provides for adequate enforcement (section 404(b) of TSCA, 15 U.S.C. 2684(b)). EPA's regulations (40 CFR part 745, subpart Q) provide the detailed requirements a State or Tribal program must meet in order to obtain EPA approval.
A State may choose to certify that its lead-based paint activities program meets the requirements for EPA approval, by submitting a letter signed by the Governor or Attorney General stating that the program meets the requirements of section 404(b) of TSCA. Upon submission of such certification letter, the program is deemed authorized. This authorization becomes ineffective, however, if EPA disapproves the application or withdraws the program authorization.
The following summary of the Cherokee Nation's proposed program has been provided by the applicant:
On November 19, 1999, the Cherokee Nation applied to EPA for authorization to administer and enforce a Tribal Lead-Based Paint Program. The Cherokee Nation originally enacted on January 26, 1998, the Cherokee Nation Lead-Based Paint Management Act. L-98, 63 CNCA. Article 12, 1201, Section 601
In addition to authority under the Cherokee Nation Environmental Code, the Act provides Cherokee Nation Environmental Protection with the power and duty to enforce the Act, rules, certification and accreditations. The Act authorizes the Cherokee Nation Department of Environmental Protection to issue, refuse to issue, renew, reactivate, reinstate, modify, suspend, or revoke certifications and accreditations.
The Cherokee Nation Lead-Based Paint Management Rules were promulgated on August 30, 1998. In general, 40 CFR part 745, subpart L and Oklahoma Administrative Code 252:110 were incorporated by reference when possible. The items not incorporated by reference are those that are otherwise mandated by the Act. Items pertaining to dates and deadlines were not incorporated by reference since the legislation provides those.
The scope of the Cherokee Nation Rules applies to all individuals and firms engaged in lead-based paint services in target housing and child-occupied facilities. It contains procedures and requirements for the accreditation of lead-based paint services training programs, procedures and requirements for the certification of individual and firms engaged in Lead-Based Paint services, and work practice standards for performing such services.
Accreditation is only available to educational institutions and government agencies offering ongoing and continuous lead-based paint training programs. Accreditation is available for both initial and refresher courses for inspector, risk assessor, supervisor, project designer and abatement worker. It is not available to training programs offering courses on a one time-only basis or for a period of less than 12 months. As an effort to maintain quality training, accreditation is not available for refresher courses only. If a training program wishes to receive accreditation for a refresher course, it must receive accreditation for the initial training course as well. The Cherokee Nation Lead Rules outline the accreditation timelines and the fees for initial and renewal accreditation. Renewal must be done on an annual basis.
Certification is required for all individuals and firms who perform or offer to perform Lead-Based Paint services in target housing and child-occupied facilities in the Cherokee Nation. Certification is available for inspector, risk assessor, supervisor, project designer, abatement worker, and firm. Only the Oklahoma Department of Environmental Quality (ODEQ)
The Cherokee Nation Lead Rules incorporate by reference the work practice standards from 40 CFR 745.227. These work practice standards must be followed when performing all lead-based paint activities. Work practice standards are outlined for inspection, lead hazard screen, risk assessment, abatement, collection and laboratory analysis of samples, composite dust sampling, and recordkeeping.
As required by 40 CFR 745.327, the Cherokee Nation will establish a Memorandum of Agreement with the Region VI, Regional Administrator. The Memorandum of Agreement will include provisions for the timely and appropriate referral to the Region VI, Regional Administrator for those criminal enforcement matters where the Cherokee Nation does not have the authority. The Agreement will also identify any enforcement agreements that may exist between the Cherokee Nation and any State.
Section 404(b) of TSCA makes it unlawful for any person to violate, or fail or refuse to comply with, any requirement of an approved State or Tribal program. Therefore, EPA reserves the right to exercise its enforcement authority under TSCA against a violation of, or a failure or refusal to comply with, any requirement of an authorized State or Tribal program.
The Congressional Review Act, 5 U.S.C. 801
Environmental protection, Hazardous substances, Lead, Reporting and recordkeeping requirements.
Farm Credit Administration.
Pursuant to the Government in the Sunshine Act (5 U.S.C. 552b(e)(3)), the Farm Credit Administration gave notice on January 10, 2000 (65 FR 1389) of the regular meeting of the Farm Credit Administration Board (Board) scheduled for January 13, 2000. We then gave notice on January 12, 2000 (65 FR 1892) of the regular meeting cancellation and scheduling of a special meeting on January 27, 2000. This notice is to amend the original agenda for the upcoming special meeting.
The special meeting of the Board will be held at the offices of the Farm Credit Administration in McLean, Virginia, on January 27, 2000, from 9:00 a.m. until such time as the Board concludes its business.
Vivian L. Portis, Secretary to the Farm Credit Administration Board, (703) 883-4025, TDD (703) 883-4444.
Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090.
This meeting of the Board is open to the public (limited space available). In order to increase the accessibility to Board meetings, persons requiring assistance should make arrangements in advance. The agenda for January 27, 2000, is amended to read as follows:
Thursday, January 27, 2000 at 10:00 a.m.
999 E Street, NW., Washington, DC (Ninth Floor)
This meeting will be open to the public. The following item has been added to the agenda. Express Advocacy Rule (11 CFR 100.22).
Ron Harris, Press Officer, Telephone (202) 694-1220.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than February 7, 2000.
Board of Governors of the Federal Reserve System, January 19, 2000.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than February 17, 2000.
In connection with this proposal, BB&T Corporation requests permission to exercise an option to acquire up to 19.9 percent of the voting securities of Hardwick Holding Company under certain circumstances.
Board of Governors of the Federal Reserve System, January 19, 2000.
The companies listed in this notice have given notice under section 4 of the Bank Holding Company Act (12 U.S.C. 1843) (BHC Act) and Regulation Y, (12 CFR Part 225) to engage de novo, or to acquire or control voting securities or assets of a company, including the companies listed below, that engages either directly or through a subsidiary or other company, in a nonbanking activity that is listed in § 225.28 of Regulation Y (12 CFR 225.28) or that the Board has determined by Order to be closely related to banking and permissible for bank holding companies. Unless otherwise noted, these activities will be conducted throughout the United States.
Each notice is available for inspection at the Federal Reserve Bank indicated. The notice also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the question whether the proposal complies with the standards of section 4 of the BHC Act.
Unless otherwise noted, comments regarding the applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than February 7, 2000.
A. Federal Reserve Bank of Atlanta (Lois Berthaume, Vice President) 104 Marietta Street, N.W., Atlanta, Georgia 30303-2713:
1. Birthright, Incorporated, Montgomery, Alabama; to engage de novo through its subsidiary, Jackson, Shanklin, & Sonia Securities, LLC, New Orleans, Louisiana, in securities brokerage activities, pursuant to § 225.28(b)(7)(i) of Regulation Y.
B. Federal Reserve Bank of San Francisco (Maria Villanueva, Consumer Regulation Group) 101 Market Street, San Francisco, California 94105-1579:
1. Wells Fargo & Company, San Francisco, California; to acquire Ragen MacKenzie Group Incorporated, Seattle, Washington, and thereby engage in providing financial and investment advisory services, pursuant to § 225.28(b)(6) of Regulation Y; providing securities brokerage, riskless principal, private placement, and other agency transactional services, pursuant to § 225.28(b)(7) of Regulation Y; underwriting and dealing in government obligations and money market instruments in which state member banks may underwrite and deal under 12 U.S.C. 335 and 24; and investing and trading activities other than in bank ineligible securities, pursuant to § 225.28(b)(8) of Regulation Y; and in underwriting and dealing in all types of debt and equity securities, other than interests in open-end investment companies, see J.P. Morgan & Co., Inc., et al., 75 Fed. Res. Bull. 192 (1989).
NCANDS has two components. The Summary Data Component (SDC) survey collects aggregate data on key child protective services statistics. The Detailed Case Data Component (DCDC) collects case-level data on each child reported as an alleged victim of child maltreatment. The Children's Bureau is currently preparing the 9th annual report based on the NCANDS data.
In 1996, the Child Abuse Prevention and Treatment Act was amended by Public Law 104-235 to require that any State receiving the Basic State Grant work with the Secretary of the Department of Health and Human Services (DHHS) to provide specific data on child maltreatment to the extent practicable. The legislation specified the following data elements.
(1) The number of children who were reported to the State during the year as abused or neglected.
(2) Of the number of children described in paragraph (1), the number with respect to whom such reports were—
(A) substantiated;
(B) unsubstantiated; or
(C) determined to be false.
(3) Of the number of children described in paragraph (2)—
(A) the number that did not receive services during the year under the State program funded under this section or an equivalent State program;
(B) the number that received services during the year under the State program funded under this section or an equivalent State program; and
(C) the number that were removed from their families during the year by disposition of the case.
(4) The number of families that received preventive services from the State during the year.
(5) The number of deaths in the State during the year resulting from child abuse or neglect.
(6) Of the number of children described in paragraph (5), the number of such children who were in foster care.
(7) The number of child protective services workers responsible for the intake and screening of reports filed in the previous year.
(8) The agency response time with respect to each such report with respect to initial investigation of reports of child abuse or neglect.
(9) The response time with respect to the provision of services to families and children where an allegation of abuse or neglect has been made.
(10) The number of child protective services workers responsible for intake, assessment, and investigation of child abuse and neglect reports relative to the number of reports investigated in the previous year.
(11) The number of children reunited with their families or receiving family preservation services that, within five years, result in subsequent substantiated reports of child abuse and neglect, including the death of the child.
(12) The number of children for whom individuals were appointed by the court to represent the best interests of such children and the average number of out-of-court contacts between such individuals and children.
The reporting requirements specified in CAPTA, as amended, have been met through recent revisions to the SDC. After discussions with the States and pilot testing with a small number of States, the reporting requirements are being integrated into the current DCDC. With this modification to the NCANDS, States will be able to annually report on child maltreatment using either the SDC or the DCDC. States that participate in the DCDC will no longer need to additionally respond to the SDC Survey in order to meet the annual reporting requirements.
The information collected by NCANDS will be used to understand better the experiences of children and families served by CPS and to guide policy and program development at the national and local levels. An annual report, entitled Child Maltreatment, will continue to be published. Data collected through the NCANDS will also be used to support the Department in responding to the requirements of the Government Performance and Results Act; publishing State data in the annual report to Congress on child welfare outcomes; and monitoring States through the Child and Family Services Review process.
Respondents: State, Local or Tribal Govt.
Estimated Total Annual Burden Hours: 4780.
In compliance with the requirements of Section 3506(c)(2)(A) the Paperwork Reduction Act of 1995, the Administration for Children and Families is soliciting public comment on the specific aspects of the information collection described above.
Copies of the proposed collection of information can be obtained and comments may be forwarded by writing to the Administration for Children and Families, Office of Information Services, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447, Attn: ACF Reports Clearance Officer. All requests should be identified by the title of the information collection.
The Department specifically requests comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted within 60 days of this publication.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Notice is hereby given of a change in the meeting of the Neurological Sciences and Disorders A, February 17, 2000, 7:30 p.m. to February 19, 2000, 5:00 p.m., Ramada Inn Rockville, 1775 Rockville Pike, Rockville, MD 20852 which was published in the
The meeting will be held February 17, 2000, 8:00 a.m. to February 18, 2000, 5:00 p.m. The meeting will is closed to the public.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Notice is hereby given of the Washington D.C. area meeting of the National Reading Panel. The meeting will be held on Monday, January 31, 2000, from 8:00 AM to 6:00 PM. The meeting location is the National Institutes of Health, Building 31, C Wing-Conference Room 6, 9000 Rockville Pike, Bethesda, Maryland, 20816. The entire meeting will be open to the public.
The National Reading Panel was requested by Congress and created by the Director of the National Institute of Child Health and Human Development in consultation with the Secretary of Education. The Panel is studying the effectiveness of various approaches to teaching children how to read and report on the best ways to apply these findings in classrooms and at home. Its members include prominent reading researchers, teachers, child development experts, leaders in elementary and higher education, and parents. The Chair of the Panel is Dr. Donald N. Langenberg, Chancellor of the University System of Maryland.
The Panel is building on the findings presented by the National Research Council's Committee on the Prevention of Reading Difficulties in Young Children. Based on these findings and the National Reading Panel's own review of the literature, the Panel will: determine the readiness for application in the classroom of the results of these research studies; identify appropriate means to rapidly disseminate this information to facilitate effective reading instruction in the schools; and identify gaps in the knowledge base for reading instruction and the best ways to close these gaps.
The agenda for this meeting will include discussion and final acceptance of the reports by The National Reading Panel. A period of time will be set aside at approximately 3:00 PM on Monday, January 31 for members of the public to address the Panel and express their views regarding the Panel's mission.
For further information contact Mr. Patrick Riccards at 202-667-0901. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should contact Mr. Patrick Riccards by January 27, 2000.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
National Institutes of Health (NIH), HHS.
Notification of altered system of records.
In accordance with the requirements of the Privacy Act, the National Institutes of Health is publishing a notice of a proposal to alter the system of records 09-25-0165, “National Institutes of Health Loan Repayment Program HHS/NIH/OD.” The main purposes of the major alteration include: (1) Addition of new programs, (2) change of the system name to 09-25-0165, “National Institutes of Health Office of Loan Repayment and Scholarship (OLRS) Records System, HHS/NIH/OD,” (3) the addition of applicants, participants and individuals interested in scholarship or loan repayment programs of the NIH to “Categories of Individuals Covered by the System;” and (4) two new and two modified routine uses to reflect the added programs.
The NIH invites interested parties to submit comments on the proposed uses on or before February 24, 2000. The NIH has sent a Report of the Altered System to the Congress and to the Office of Management and Budget (OMB) on January 19, 2000. The alteration of this system of records will be effective 40 days from the date submitted to the OMB, unless NIH receives comments which would result in a contrary determination.
Please address comments to: NIH Privacy Act Officer, 6011 Executive Boulevard, Room 601, MSC 7669, Rockville, MD 20852, (301) 496-2832. (This is not a toll-free number). Comments received will be available for inspection at this same address from 9 a.m. to 3 p.m., Monday through Friday.
Marc S. Horowitz, J.D., Director, Office of Loan Repayment and Scholarship, National Institutes of Health, 7550 Wisconsin Avenue, Room 604, Bethesda, MD 20814-9121, (800) 528-7689 (toll-free number).
Sections 487A-C, and E of the Public Health Service (PHS) Act (42 U.S.C. 288-1, 2, 3, and 5), as amended, authorizes the Secretary to implement and establish programs of entering into agreements with appropriately qualified health professionals under which such health professionals agree to conduct research, as employees of the NIH or to conduct research with respect to contraception or infertility as employees or affiliates of the National Institute of Child Health and Human Development (NICHD) Intramural Laboratories and NICHD Extramural sites, in consideration of the Federal Government agreeing to repay, for each year of service, not more than $35,000 of the principal and interest of the educational loans of such health professionals. These programs include the following: (1) The NIH AIDS Research Loan Repayment Program, (2) the NIH General Research Loan Repayment Program, (3) the NIH Clinical Research Loan Repayment Program for Individuals from Disadvantaged Backgrounds, and (4) the Contraceptive and Infertility Research Loan Repayment Program.
Section 487D of the PHS Act (42 U.S.C 288-4) authorizes a scholarship program for individuals who agree to pursue, as undergraduates, academic programs appropriate for careers in professions needed by the NIH and who agree to serve as NIH employees in exchange for receipt of the scholarship. This program is known as the NIH Undergraduate Scholarship Program (UGSP) for Individuals from Disadvantaged Backgrounds.
The NIH is recommending this proposed major alteration to expand system coverage for three new programs: (1) The General Research Loan Repayment Program, (2) the Contraceptive and Infertility Research Loan Repayment Program, and (3) the Undergraduate Scholarship Program. The proposed name change for this system of records to “National Institutes of Health (NIH) Office of Loan Repayment and Scholarship (OLRS) Records System, HHS/NIH/OD,” is recommended to reflect the addition of records authorized by Sections 487B-D of the Public Health Service Act (42 U.S.C. 288-2, 288-3, and 288-4), as added June 10, 1993, by Pub. L. 103-43. NIH is proposing to change the “Categories of Individuals Covered by the System” to include applicants, participants and individuals interested in scholarship or loan repayment programs of the NIH. The proposed “Categories of Records in the System” adds (a) program application and associated forms; (b) academic and research progress reports (which include related data, correspondence, and professional performance information consisting of continuing education, performance awards, and adverse or disciplinary actions); (c) financial data, including loan balances, deferment, forbearance, and repayment/delinquent/default status information; (d) commercial credit reports; and (e) educational data including tuition and other expenses, and academic programs and class standing.
In addition, two new routine uses and two modified routine uses are proposed: (a) New Routine Use No. 16—the disclosure of identifying information to: Designated coordinators at schools participating in the scholarship program for the purpose of determining educational expenses and resulting levels of scholarship support, and guiding and informing these recipients about the nature of their professional service obligation to the NIH; and to medical and graduate schools, attended by UGSP scholars who have elected to defer their service obligation, for the purpose of determining their academic status and verifying the validity of the NIH UGSP service deferment; (b) New Routine Use No. 17—the disclosure of records to Department contractors and subcontractors for the purpose of recruiting, screening, and matching health professionals for NIH
Only authorized users will have access to the records contained in the system. Authorized users include the following: system managers and their staffs, OLRS staff, financial, fiscal and records management personnel, legal personnel, computer personnel, and NIH contractors and subcontractors, all of whom are responsible for administering or monitoring the LRSPs. Access is limited to those individuals trained in accordance with Privacy Act procedures. Contractors will be required to maintain, and will also be required to ensure that subcontractors maintain confidentiality safeguards with respect to the records covered by this system.
The 09-25-0165 system notice was last published in the
The following notice is written in the present tense, rather than the future tense, in order to avoid the unnecessary expenditure of public funds to republish the notice after the system has become effective.
“National Institutes of Health (NIH) Office of Loan Repayment and Scholarship (OLRS) Records System, HHS/NIH/OD.”
None.
Office of Loan Repayment and Scholarship (OLRS), National Institutes of Health, 7550 Wisconsin Avenue, Rooms 604 & B1-16, Bethesda, Maryland 20814-9121.
See Appendix I for a listing of NIH offices responsible for administration of the NIH LRSPs. Write to the System Manager at the address below for the address of any Federal Records Center where records from this system may be stored.
Individuals who have applied for, who have been approved to receive, who are receiving, or who have received funds under the NIH LRSPs; and individuals who are interested in participation in the NIH LRSPs.
Name, address, Social Security number (SSN), program application and associated forms, service pay-back obligations, employment data, professional performance and credentialing history of licensed health professionals; personal, professional, and demographic background information; academic and research progress reports (which include related data, correspondence, and professional performance information consisting of continuing education, performance awards, and adverse or disciplinary actions); standard school budgets; financial data including loan balances, deferment, forbearance, and repayment/delinquent/default status information; commercial credit reports; educational data including tuition and other related educational expenses; educational data including academic program and status; employment status verification (which includes certifications and verifications of continuing participation in qualified research); Federal, State and local tax related information, including copies of tax returns.
Sections 487A-E (42 U.S.C. 288-1, 288-2, 288-3, 288-4, 288-5) of the PHS Act, as amended, authorize the NIH to establish and implement (a) multiple programs of educational loan repayment for qualified health professionals who agree to conduct research, subject to each program's specific statutory requirements; and (b) a scholarship program for undergraduates who agree to pursue academic programs appropriate for careers in professions needed by the NIH and who agree to serve as NIH employees. The provisions of subpart III of part D of title III of the PHS Act (42 U.S.C. 254l
These records are used to: (1) Identify and select applicants for the NIH LRSPs; (2) monitor loan repayment and scholarship activities, such as payment tracking, academic status and performance, research and related services, deferment of service obligation, and default; and (3) assist NIH officials in the collection of overdue debts owed under the NIH LRSPs. Records may be transferred to System No. 09-15-0045, “Health Resources and Services Administration Loan Repayment/Debt Management Records System, HHS/HRSA/OA,” for debt collection purposes when NIH officials are unable to collect overdue debts owed under the NIH LRSPs.
1. Disclosure may be made to a Member of Congress or to a Congressional staff member in response to an inquiry of the Congressional office made at the written request of the constituent about whom the record is maintained.
2. The Department of Health and Human Services (HHS) may disclose information from this system of records to the Department of Justice, or to a court or other tribunal when: (a) HHS or any component thereof; or (b) any HHS employee in his or her official capacity; or (c) any HHS employee in his or her individual capacity where the Department of Justice (or HHS, where it is authorized to do so) has agreed to represent the employee; or (d) the
3. When a record on its face, or in conjunction with other records, indicates a violation or potential violation of law, whether civil, criminal or regulatory in nature, and whether arising by general statute or particular program statute, or by regulation, rule, or order issued pursuant thereto, disclosure may be made to the appropriate agency, whether Federal, foreign, State, local, or tribal, or other public authority responsible for enforcing, investigating or prosecuting such violation or charged with enforcing or implementing the statute, or rule, regulation, or order issued pursuant thereto, if the information disclosed is relevant to any enforcement, regulatory, investigative or prosecutive responsibility of the receiving entity.
4. The NIH may disclose records to HHS contractors and subcontractors for the purpose of collecting, compiling, aggregating, analyzing, or refining records in the system. Contractors maintain, and are also required to ensure that subcontractors maintain, Privacy Act safeguards with respect to such records.
5. The NIH may disclose information from this system of records to private parties such as present and former employers, references listed on applications and associated forms, other references and educational institutions. The purpose of such disclosures is to evaluate an individual's professional and or academic accomplishments and plans, performance, credentials, and educational background, and to determine if an applicant is suitable for participation in the NIH LRSPs.
6. The NIH will disclose information from this system of records to a consumer reporting agency (credit bureau) to obtain an applicant or participant's commercial credit report for the following purposes: (1) To establish his/her creditworthiness; (2) To assess and verify his/her ability to repay debts owed to the Federal Government; and (3) To determine and verify the eligibility of loans submitted for repayment. Disclosures are limited to the individual's name, address, Social Security number and other information necessary to identify him/her; the funding being sought or amount and status of the debt; and the program under which the applicant or claim is being processed.
7. The NIH may disclose from this system of records a delinquent debtor's or a defaulting participant's name, address, Social Security number, and other information necessary to identify him/her; the amount, status, and history of the claim, and the agency or program under which the claim arose, as follows:
a. To another Federal agency so that agency can effect a salary offset for debts owed by Federal employees; if the claim arose under the Social Security Act, the employee must have agreed in writing to the salary offset.
b. To another Federal agency so that agency can effect an authorized administrative offset; i.e., withhold money, other than Federal salaries, payable to or held on behalf of the individual.
c. To the Treasury Department, Internal Revenue Service (IRS), to request an individual's current mailing address to locate him/her for purposes of either collecting or compromising a debt, or to have a commercial credit report prepared.
8. The NIH may disclose information from this system of records to another agency that has asked the HHS to effect a salary or administrative offset to help collect a debt owed to the United States. Disclosure is limited to the individual's name, address, Social Security number, and other information necessary to identify the individual, information about the money payable to or held for the individual, and other information concerning the offset.
9. The NIH may disclose to the IRS information about an individual applying for any NIH loan repayment or scholarship program authorized by the Public Health Service Act to find out whether the applicant has a delinquent tax account. This disclosure is for the sole purpose of determining the applicant's creditworthiness and is limited to the individual's name, address, Social Security number, other information necessary to identify him/her, and the program for which the information is being obtained.
10. The NIH may report to the IRS, as taxable income, the written-off amount of a debt owed by an individual to the Federal Government when a debt becomes partly or wholly uncollectible, either because the time period for collection under statute or regulations has expired, or because the Government agrees with the individual to forgive or compromise the debt.
11. The NIH may disclose to debt collection agents, other Federal agencies, and other third parties who are authorized to collect a Federal debt, information necessary to identify a delinquent debtor or a defaulting participant. Disclosure will be limited to the individual's name, address, Social Security number, and other information necessary to identify him/her; the amount, status, and history of the claim, and the agency or program under which the claim arose.
12. The NIH may disclose information from this system of records to any third party that may have information about a delinquent debtor's or a defaulting participant's current address, such as a U.S. post office, a State motor vehicle administration, a professional organization, an alumni association, etc., for the purpose of obtaining the individual's current address. This disclosure will be strictly limited to information necessary to identify the individual, without any reference to the reason for the agency's need for obtaining the current address.
13. The NIH may disclose information from this system of records to other Federal agencies that also provide loan repayment or scholarship at the request of these Federal agencies in conjunction with a matching program conducted by these Federal agencies to detect or curtail fraud and abuse in Federal loan repayment or scholarship programs, and to collect delinquent loans or benefit payments owed to the Federal Government.
14. The NIH will disclose from this system of records to the Department of Treasury, IRS: (1) A delinquent debtor's or a defaulting participant's name, address, Social Security number, and other information necessary to identify the individual; (2) the amount of the debt; and (3) the program under which the debt arose, so that the IRS can offset against the debt any income tax refunds which may be due to the individual.
15. The NIH may disclose information provided by a lender or educational institution to other Federal agencies, debt collection agents, and other third parties who are authorized to collect a Federal debt. The purpose of this disclosure is to identify an individual who is delinquent in loan or benefit payments owed to the Federal Government and the nature of the debt.
16. The NIH will disclose records consisting of names, disciplines, current mailing addresses, and dates of scholarship support and dates of graduation of scholarship recipients to: (a) Designated coordinators at each school participating in the scholarship program for the purpose of determining educational expenses and resulting levels of scholarship support, and for the purpose of guiding and informing these recipients about the nature of their
17. The NIH may disclose records to HHS contractors and subcontractors for the purpose of recruiting, screening, and matching health professionals for NIH employment in qualified research positions under the NIH LRSPs. In addition, HHS contractors and subcontractors: (1) may disclose biographic data and information supplied by potential applicants (a) to references listed on application and associated forms for the purpose of evaluating the applicant's professional qualifications, experience, and suitability, and (b) to a State or local government medical licensing board and/or to the Federation of State Medical Boards or a similar nongovernment entity for the purpose of verifying that all claimed background and employment data are valid and all claimed credentials are current and in good standing; (2) may disclose biographic data and information supplied by references listed on application and associated forms to other references for the purpose of inquiring into the applicant's professional qualifications and suitability; and (3) may disclose professional suitability evaluation information to NIH officials for the purpose of appraising the applicant's professional qualifications and suitability for participation in the NIH LRSPs. Contractors maintain, and are also required to ensure that subcontractors maintain, Privacy Act safeguards with respect to such records.
Disclosures pursuant to 5 U.S.C. 552a(b)(12): Disclosures may be made from this system to “consumer reporting agencies” as defined in the Federal Claims Collection Act of 1966, as amended (31 U.S.C. 3701(a)(3)). The purposes of these disclosures are: (1) To provide an incentive for debtors to repay delinquent debts to the Federal Government by making these debts part of their credit records, and (2) to enable NIH to improve the quality of loan repayment and scholarship decisions by taking into account the financial reliability of applicants, including obtaining a commercial credit report to assess and verify the ability of an individual to repay debts owed to the Federal Government. Disclosure of records will be limited to the individual's name, Social Security number, and other information necessary to establish the identity of the individual, the amount, status, and history of the claim, and the agency or program under which the claim arose.
Records are maintained in file folders, file cards, microfiche and electronic media, including computer tape, discs, servers connected to local area networks, and Internet servers.
Records are retrieved by name, NIH Institutes and Centers, Social Security number, or other identifying numbers or characteristics.
1. Authorized Users: Access to information is limited to authorized personnel in the performance of their duties. Authorized personnel include system managers and their staffs, NIH OLRS officials and staff, financial, fiscal and records management personnel, legal personnel, computer personnel, and NIH contractors and subcontractors—all of whom are responsible for administering the NIH LRSPs.
2. Physical Safeguards: Rooms where records are stored are locked when not in use. During regular business hours rooms are unlocked but are controlled by on-site personnel. Security guards perform random checks on the physical security of the storage locations after duty hours, including weekends and holidays.
3. Procedural and Technical Safeguards: A password is required to access the terminal and a data set name controls the release of data to only authorized users. All users of personal information in connection with the performance of their jobs (see Authorized Users, above) protect information from public view and from unauthorized personnel entering an unsupervised office. Data on local area network computer files is accessed by keyword known only to authorized personnel. Codes by which automated files may be accessed are changed periodically. This procedure also includes deletion of access codes when employees or contractors leave. New employees and contractors are briefed and the security department is notified of all staff members and contractors authorized to be in secured areas during working and nonworking hours. This list is revised as necessary. Individuals remotely accessing the secured areas of the OLRS Internet sites have separate accounts and passwords. Passwords are assigned by project staff and may include both alphabetic and non-alphabetic characters. These practices are in compliance with the standards of Chapter 45-13 of the HHS General Administration Manual, “Safeguarding Records Contained in Systems of Records,” supplementary Chapter PHS hf: 45-13, and the Department's Automated Information System Security Handbook.
Records are retained and disposed of under the authority of the NIH Records Control Schedule contained in NIH Manual Chapter 1743, Appendix 1—“Keeping and Destroying Records” (HHS Records Management Manual, Appendix B-361), item 2300-537-1. Participant case files are transferred to a Federal Records Center one year after closeout and destroyed five years later. Closeout is the process by which it is determined that all applicable administrative actions and disbursements of benefits have been completed by the OLRS and service obligations have been completed by the participant. Applicant case files are destroyed three years after disapproval or withdrawal of their application. Appeal and litigation case files are destroyed six years after the calendar year in which the case is closed. Other copies of these files are destroyed two years after the calendar year in which the case is closed.
Director, Office of Loan Repayment and Scholarship, National Institutes of Health, 7550 Wisconsin Avenue, Room 604, Bethesda, Maryland 20814-9121.
To determine if a record exists, write to the System Manager listed above. A written request must contain the name and address of the requester, Social Security number, and his/her signature which is either notarized to verify his/her identity or includes a written certification that the requester is the person he/she claims to be and that he/she understands that the knowing and willful request or acquisition of records pertaining to an individual under false pretenses is a criminal offense subject to a $5,000 fine. In addition, the following information is needed: dates of enrollment in the NIH LRSPs and current enrollment status, such as pending application approval or approved for participation.
An individual who appears in person at a specific location seeking access to or disclosure of records relating to him/her shall provide his/her name, current address, Social Security number, dates of enrollment in an NIH loan repayment or scholarship program, and at least one piece of tangible identification, such as driver's license, passport, or voter registration card. Identification papers with current photographs are preferred but not required. If an individual has no identification papers but is personally known to an agency employee, such employees shall make a written record verifying the individual's identity. Where the individual has no identification papers, the responsible agency official shall require that the individual certify in writing that he/she is the individual who he/she claims to be and that he/she understands that the knowing and willful request or acquisition of a record concerning an individual under false pretenses is a criminal offense subject to a $5,000 fine. Since positive identification of the caller or sender cannot be established, telephone and electronic mail requests are not honored.
Write to the System Manager specified above to attain access to records and provide the same information as is required under the Notification Procedures. Requesters should also reasonably specify the record contents being sought. Individuals may also request an accounting of disclosures of their records, if any.
Contact the System Manager specified above and reasonably identify the record, specify the information to be contested, the corrective action sought, and your reasons for requesting the correction, along with supporting information to show how the record is inaccurate, incomplete, untimely or irrelevant. The right to contest records is limited to information which is incomplete, irrelevant, incorrect, or untimely (obsolete).
Subject individual; participating lending and loan servicing institutions; educational institutions; other Federal agencies; consumer reporting agencies/credit bureaus; and third parties that provide references concerning the subject individual.
None.
Office of the Assistant Secretary—Water and Science, Department of the Interior.
Notice of intent to prepare an Environmental Assessment for the Diamond Fork Proposed Action Modifications.
Pursuant to the National Environmental Policy Act of 1969, the Central Utah Water Conservancy District (CUWCD), Utah Reclamation Mitigation and Conservation Commission (Mitigation Commission), and the Department of the Interior (Interior) announces their intent to prepare an Environmental Assessment (EA) on the Diamond Fork Proposed Action Modifications.
This EA will address modifications to the Proposed Action as a result of value engineering studies on the Proposed Action of the Diamond Fork System 1999 Final Supplement to the Final Environmental Impact Statement (FSFEIS) that was filed with the Environmental Protection Agency July 1, 1999. A Record of Decision (1999 ROD) documenting the selection of the Proposed Action Alternative as presented in the FSFEIS was signed by the Assistant Secretary—Water and Science on September 29, 1999. The 1999 ROD allowed for value engineering studies, pursuant to public law 104-
Information relating to the EA will be announced in local newspapers and/or mailed to interested parties. Upon completion of a draft EA a notice of availability will be published in the
Harold Sersland, Environmental Program Manger, Central Utah Water Conservancy District, 355 West University Parkway, Orem, Utah 84058-7303, (801) 226-7110.
The purpose of this Notice of Intent is to inform the public, local, State, and Federal government agencies that an EA will be prepared. Information, data, opinions, and comments obtained on the draft EA may be used in the preparation of the final EA.
Fish and Wildlife Service, Interior.
Notice; reopening of comment period.
We (the U.S. Fish and Wildlife Service) reopen the comment period on our notice of intent to develop policy or guidance and/or to revise regulations, if necessary, to clarify the role of habitat in endangered species conservation. We are reopening the comment period to allow us to receive comments in conjunction with two critical habitat workshops to be held with major stakeholders. We will analyze additional comments received during this comment period from workshop participants, others who wish to comment on issues raised at the workshop, and any additional comments, as well as those we received during the two previous comment periods, and will consider these comments when preparing new proposed guidance, policy, or regulations, as appropriate.
We will accept comments on this guidance until February 24, 2000. The first workshop will be held in Reston, Virginia, on February 8, 2000, and the second in Tempe, Arizona, on February 11, 2000. Members of the public who wish to attend as an observer are requested to contact the U.S. Institute for Environmental Conflict Resolution (see
Submit your comments to the Chief, Division of Endangered Species, U.S. Fish and Wildlife Service, 1849 C Street, NW, Mailstop ARLSQ-420, Washington, D.C. 20240. If you are interested in attending a workshop as an observer, contact Tina Urbina, Executive Assistant, U.S. Institute for Environmental Conflict Resolution, 110 South Church Avenue, Suite 3350, Tempe, Arizona 85701, telephone 520/670-5299, facsimile 520/670-5530.
Nancy Gloman, Chief, Division of Endangered Species, U.S. Fish and Wildlife Service, 703-358-2171 (see
On June 14, 1999 (64 FR 31871), we published a notice of our intent to develop policy or guidance and/or to revise regulations, if necessary, to clarify the role of habitat in endangered species conservation. In that notice, we sought comments on the benefits of the designation of critical habitat, beyond the benefits that result from the act of listing species as endangered or threatened, and what considerations should be included in determining whether a designation of critical habitat is prudent. We also requested comments and suggestions on how we can effectively streamline the process of designating critical habitat and specifically whether and how our existing regulations might or should be changed to accomplish this goal. Additionally, we requested comments and suggestions on possible legislative actions that might improve the effectiveness and efficiency of the critical habitat process. We reopened the comment period on August 30, 1999 (64 FR 47195), in order to provide additional time for interested parties to comment on this important issue.
Based on our preliminary review of the comments, a wide range of opinions exists on the role of habitat in endangered species conservation. We felt it would be beneficial to have a focus group provide their individual views on these issues. We have contracted with the U.S. Institute for Environmental Conflict Resolution to hold two workshops with major stakeholders to discuss critical habitat issues, such as the regulatory effect of designating critical habitat, linking critical habitat designation to recovery planning, and the relationship between critical habitat and habitat conservation planning under section 10 of the Act. These participants will not act as a committee and there will be no attempt to seek a group recommendation on any issue. The workshops are scheduled to be held in Reston, Virginia, on February 8, 2000, and Tempe, Arizona, on February 11, 2000. In order to facilitate a meaningful discussion, we have invited a small number of participants representing Federal, State, and local governments, Congress, resource user groups, environmental organizations, and academia. Additional seats will be available for members of the public to attend as observers, who will be given a limited time on the agenda to provide comments. If you would like to attend as an observer, please contact the U.S. Institute for Environmental Conflict Resolution (see
We will take into consideration any comments and additional information received. We will make available for your review and comment any proposed guidance, policy, or regulatory changes that are developed.
The authority for this notice is the Endangered Species Act of 1973, as amended, 16 U.S.C. 1531
Fish and Wildlife Service, Interior.
Notice of document availability.
The Fish and Wildlife Service announces the availability of the Morro Bay kangaroo rat (
Comments on the draft revised recovery plan received by March 27, 2000 will be considered by the Fish and Wildlife Service.
Copies of the draft revised recovery plan are available for inspection, by appointment, during normal business hours at the following location: U.S. Fish and Wildlife Service, 2493 Portola Road, Suite B, Ventura, California 93003 (phone: 805/644-1766). The draft revised recovery plan will also be available at the San Luis Obispo County Public Library. Requests for copies of the draft revised recovery plan and written comments and materials regarding this plan should be addressed to the Field Supervisor, at the above Ventura address.
Catherine Mc Calvin, at the above Ventura address.
Restoring endangered or threatened animals and plants to the point where they are again secure, self-sustaining members of their ecosystems is a primary goal of the Service's endangered species program. To help guide the recovery effort, the Service is working to prepare recovery plans for most of the listed species native to the United States. Recovery plans describe actions considered necessary for the conservation of the species, establish criteria for downlisting or delisting them, and estimate time and cost for implementing recovery measures.
The Endangered Species Act, as amended (16 U.S.C. 1531
The Morro Bay kangaroo rat is listed as endangered (35 FR 16047). This species is restricted to less than 200 acres. It is currently known from one site. The Morro Bay kangaroo rat is threatened by habitat loss from development. In addition, the very low numbers of individuals and populations of this species puts it at great risk of extinction due to random naturally-occurring (stochastic) events.
The objective of this revised plan is to provide a framework for the recovery of the Morro Bay kangaroo rat so that protection by the Endangered Species Act is no longer necessary. Actions necessary to accomplish this objective include protecting species habitat through acquisition, conservation easements, and Habitat Conservation Plans; managing species habitat; conducting management-oriented research on the ecology and biology of the species; reviewing and revising management and recovery guidelines; locating additional populations; and establishing new populations within the historic range of the species.
The Service solicits written comments on this draft revised recovery plan. All comments received by the date specified above will be considered prior to approval of this plan.
The authority for this action is section 4(f) of the Endangered Species Act, 16 U.S.C. 1533(f).
The Fish and Wildlife Service gives notice that the comment period is extended on the notice of receipt of applications for two applications submitted by International Animal Consulting Group, Inc. The applications were submitted to satisfy requirements of the Marine Mammal Protection Act of 1972,
Bureau of Land Management, Interior.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, the Bureau of Land Management (BLM) announces its intention to request an extension of approval for the collection of information from applicants to lease and develop solid minerals other than coal and oil shale. The BLM uses the information supplied to determine
Comments on the proposed information collection must be received by March 27, 2000 to be considered.
Comments may be mailed to: Regulatory Affairs Group, 1849 C St., N.W., Room 401LS, Washington, D.C. 20240. Comments may be sent by Internet to: WOComment@wo.blm.gov. Please include: “Attn.: 1004-0121” and your name and address in your Internet message. Comments will be available for public review at the L Street address during regular business hours (7:45 am to 4:15 pm, Monday through Friday).
Philip Allard, Solid Minerals Group, (202) 452-5195. For assistance in reaching the above contact, individuals who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern time, Monday through Friday, except holidays.
The regulations at 5 CFR 1320.12(a) require BLM to provide 60-day notice in the
BLM plans to seek from the Office of Management and Budget extension of approval for the information collection requirements in 43 CFR Parts 3500 through 3590, which cover the leasing of solid minerals other than coal and oil shale and operations on those leases. These regulations implement the statutory authority governing leasing activities on Federal lands found in the Mineral Leasing Act of 1920 (30 U.S.C. 181 et seq.), the Mineral Leasing Act for Acquired Lands of 1947 (30 U.S.C. 351-359), Section 402 of Reorganization Plan No. 3 of 1946 (5 U.S.C. Appendix), the Multiple Mineral Development Act of 1954 (30 U.S.C. 521-531), the National Environmental Policy Act of 1969 (42 U.S.C. 4321), and the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701 et seq.).
The implementing regulations outline procedures for members of the public to submit applications, offers, statements, petitions, and various forms. The information required in the applications, statements and petitions is needed by BLM to determine applicant qualifications to hold a lease to obtain a benefit under the terms of the MLA, its subsequent amendments, related statutes, and the regulations. Information collection requirements are based on the statutory requirements concerning the qualifications and eligibility to hold title to or interest in Federal mineral leases and on the regulatory requirements relating to the identification, location and quality of minerals under application and identification of proposed operational activities. The affected public consists of all present and prospective holders of Federal solid mineral leases other than coal or oil shale, prospecting permits, use permits, and exploration licenses.
Based on its experience administering the leasing program, BLM estimates that it will take an average of about 14 hours per response to complete the applications, petitions, offers and statements required. The applicants will have access to records, plats and maps necessary for providing legal land descriptions. The type of information necessary is outlined in the regulations and is already maintained by the respondents for their own record keeping purposes and needs only to be compiled in a reasonable format. The estimate also includes the time required for assembling the information, as well as the time of clerical personnel, if needed.
BLM estimates that approximately 276 filings will be made annually for a total of 3,760 reporting hours. Respondents vary from individuals to small businesses and major corporations. Any interested member of the public may request and obtain, without charge, copies of any of forms listed in this notice by contacting the person identified under
All responses to this notice will be summarized and included in the request for Office of Management and Budget
Bureau of Land Management, Interior.
Updating Scratchgravel Hills Area Recreation Management Restrictions.
Under authority of 43 CFR 8364.1 and as a result of the approval of the Scratchgravel Hills Cooperative Agreement on July 11, 1985, the following restrictions for the use of the Scratchgravel Hills, adjacent to Helena, Montana, became effective August 15, 1985:
1. The use, possession afield, or discharge of all firearms is prohibited year-round in the Scratchgravel Hills, except during such big game seasons as may be established by the Montana Department of Fish, Wildlife, and Parks.
2. The possession and use of fireworks is prohibited year-round.
To comply with requests from the Helena Interagency Fire Dispatch Center, Lewis and Clark County Sheriff Department, local fire districts and Scratchgravel Hills residents, this notice adds the following restriction:
3. The building, maintaining, attending or using a campfire, charcoal fire, cooking fire or warming fire is prohibited year-round.
These regulations apply to public lands in:
The purpose of these restrictions is to minimize hazards to visitors and surrounding residences, and to minimize the possibility of wildfire. The public lands within the designated area will remain open to other resource and recreation uses unless otherwise restricted.
Penalties: As prescribed under the Federal Land Policy and Management, 43 USC Section 1733 (a). Violation is punishable by fines and/or imprisonment under 43 CFR 8360.0-7.
These management restrictions will go into effect upon publication in the
Steve Hartmann, Acting Field Manager, P.O. Box 3388, Butte, Montana 59702, 406-494-5059.
In accordance with Departmental policy, 28 CFR 50.7, notice is hereby given that a proposed consent decree in Civil Action No. 99-2673-Civ-T-24B was lodged with the United States District Court for the Middle District of Florida on November 23, 1999.
In this action the United States sought injunctive relief and recovery of response costs under Sections 106(a) and 107 of CERCLA, 42 U.S.C. 9606(a) and 9607, with respect to the Stauffer Chemical Superfund Site in Tarpon Springs, Florida (“the Site”).
Under a proposed Consent Decree, Atkemix Thirty-Seven, Inc., the present owner and operator of the Site, and Rhone-Poulenc Ag Company, Inc., the former owner and operator of the Site, have agreed to perform the remedy chosen by EPA to clean up the Site, pay the government's remaining past response costs, and pay future response costs, in settlement of the government's claims under Sections 106 and 107 of CERCLA, 42 U.S.C. 9606 and 9607.
The Department of Justice will extend the public comment period for an additional thirty (30) days and will receive comments until February 22, 2000 relating to the proposed consent decree. Comments should be addressed to the Assistant Attorney General for the Environment and Natural Resources Division, Department of Justice, Washington, DC 20530, and should refer to
The proposed consent decree may be examined at the Office of the United States Attorney, 400 North Tampa Street, Suite 3200, Tampa Florida 33602; the Region 4 Office of the Environmental Protection Agency, 61 Forsyth Street, Atlanta, Georgia 30303, and at the Consent Decree Library, Post Office Box 7611, Washington, DC 20044-7611, (202) 514-1547. A copy of the proposed consent decree may be obtained by mail from the Consent Decree Library, Post Office Box 7611, Washington, DC 20044-7611. In requesting a copy please refer to the referenced case and enclose a check in the amount of 25 cents per page for reproduction costs, payable to the Consent Decree Library.
Notice is hereby given that on November 17, 1999 a proposed Consent Decree (the “Consent Decree”) in
In this action the United States sought to recover the United States Department of Agriculture Forest Service's (“Forest Service”) past costs incurred in connection with past response actions at the Holden Mine Site (the “Site”), located in the Wenatchee National Forest in Chelan County, Washington. Throughout the history of mining operations at Holden Mine, large quantities of mine tailings were deposited in and around the Site and caused releases of hazardous substances. In 1989 and 1990 the Forest Service performed a variety of actions costing approximately $6 million to stabilize the tailings and prevent further environmental degradation. Under the Consent Decree, Intalco will reimburse the Forest Service $3.1 million for those past costs. Under an Administrative Order on Consent entered into between the Forest Service, Intalco, the Environmental Protection Agency and the State of Washington, Department of Ecology, Intalco is performing a Remedial Action and Feasibility Study for the Site, which is expected to result in selection of a remedy to address hazardous substances at the Site. Under
The Department of Justice will receive for a period of thirty (30) days from the date of this publication comments relating to the Consent Decree. Comments should be addressed to the Assistant Attorney General of the Environment and Natural Resources Division, Department of Justice, Washington, D.C., 20530, and should refer to
The Consent Decree may be examined at the Office of the United States Attorney, Suite 300, United States Courthouse, 920 West Riverside, Spokane, Washington, 99210; at the Office of the Wenatchee National Forest, 215 Melody Lane, Wenatchee, Washington, 98801; at the Office of the Holden Village, Holden, Washington; and a copy may be obtained from the Department of Justice Consent Decree Library, P.O. Box 7611, Washington, D.C. 20044-7611. In requesting a copy, please enclose a check in the amount of $26.75 payable to the Consent Decree Library.
In accordance with departmental policy, 28 CFR 50.7, notice is hereby given that on January 6, 2000, a proposed consent decree in
The Amended Complaint in the above-referenced civil action seeks injunctive relief and civil penalties for violations of the Safe Drinking Water Act, 42 U.S.C. 300f
The proposed consent decree would require defendants to achieve and maintain compliance with the Safe Drinking Water Act, applicable regulations thereunder, and terms of the UIC permit for the Smith E 01 Well. In addition, the proposed consent decree would require defendants to pay a civil penalty of $50,000.
The Department of Justice will receive, for a period of thirty (30) days from the date of this publication, comments relating to the proposed Consent Decree. Comments should be addressed to the Assistant Attorney General for the Environment and Natural Resources Division, United States Department of Justice, P.O. Box 7611, Ben Franklin Station, Washington, D.C. 20044-7611, and should refer to
The proposed Consent Decree may be examined at the Office of the United States Attorney for the Eastern District of Michigan, 231 West Fort Street, Suite 2001, Detroit, MI 48226; and at the Region 5 Office of the United States Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604-3590. A copy of the proposed Consent Decree may be obtained in person or by mail from the Consent Decree Library, P.O. Box 7611, Ben Franklin Station, Washington, D.C. 20044-7611. In requesting a copy, please refer to DJ #90-5-1-1-4482, and enclose a check in the amount of $3.50 (14 pages at 25 cents per page for reproduction costs). Makes checks payable to the Consent Decree Library.
In accordance with 28 CFR 50.7, the Department of Justice gives notice that a proposed stipulation and settlement agreement in
The United States brought its action pursuant to Section 3008(a) and (g) of the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”), 42 U.S.C. 6928(a) and (g). The Complaint alleged that at relevant times the Defendants were the owners and/or operators of a manufacturing facility in Richland, Michigan (Richland Facility), where Defendants stored and disposed of hazardous waste in violation of RCRA. The Complaint sought: (1) The imposition of injunctive orders requiring Defendants to cease the improper storage and disposal of hazardous waste, and to prepare and implement closure plans for the Richland Facility's hazardous waste regulated units; and (2) the assessment of civil penalties for the alleged violations of RCRA.
The United States and its co-plaintiff, the State of Michigan, prevailed against Ladney and two other defendants in a 1992 train in this case. The proposed stipulation and settlement agreement would resolve Ladney's liability to the United States' claims against Ladney under RCRA. Ladney will be required to pay the United States $100,000.
The Department of Justice will receive, for a period of thirty (30) days from the date of this publication, comments relating to the proposed stipulation and settlement agreement. In accordance with RCRA Section 7003(d), 42 U.S.C. 6973(d), commentors also may request an opportunity for a public meeting in the affected areas to discuss the proposed covenants not to sue under RCRA Section 7003, 42 U.S.C. 6973.
All comments, and/or requests for a public meeting under RCRA Section 7003(d) should refer to
The proposed stipulation and settlement agreement may be examined at: (1) The Office of the United States Attorney for the Western District of Michigan, 330 Ionia, NW., Grand Rapids, Michigan 49503, (616) 456-2404; and (2) the United States Environmental Protection Agency (Region 5), 77 West Jackson Boulevard, Chicago, Illinois 60604-3590 (contact Stuart Hersh (312)-886-6235).
A copy of the proposed stipulation and settlement agreement may also be obtained by mail from the Department of Justice Consent Decree Library, P.O. Box 7611, Washington, DC 20044. In
Notice is hereby given that Smith International, Inc. (“Smith”) has filed with the United States District Court for the District of Columbia a motion to modify the judgment in
This case was filed on December 23, 1993, and alleged that the merger of Dresser Industries, Inc. (“Dresser”) and Baroid Corporation (“Baroid”) might substantially lessen competition in the United States in the manufacture and sale of two oil field service products, including drilling fluids, in violation of Section 7 of the Clayton Act. The Final Judgment was entered on April 12, 1994 and modified on September 19, 1996.
Under the Final Judgment, Dresser was required to divest either its 64 percent partnership interest in M-I Drilling Fluids Company or Baroid's wholly owned subsidiary, Baroid Drilling Fluids, Inc. Pursuant to the judgment, Dresser divested its partnership interest in M-I to Smith.
Paragraph IV.F. of the Final Judgment states that the purchaser of the divested drilling fluids business may not combine that business with any one of three named companies. One of those companies is Schlumberger Ltd. (“Schlumberger”). In July 1999, Smith formed a drilling fluids joint venture with Schlumberger, and the United States petitioned the United States District Court for the District of Columbia to find Smith and Schlumberger in civil and criminal contempt for violating the Final Judgment by forming the joint venture. In December 1999, the District Court found Smith and Schlumberger guilty of criminal contempt and imposed a $750,000 fine against each company. Smith and Schlumberger settled the civil contempt case, agreeing to disgorge a total of $13.1 million in joint venture profits.
Smith's motion proposes modifying the Final Judgment to remove Schlumberger from Paragraph IV.F. The United States has consented, subject to the comment period, to the modification as being in the public interest because of Schlumberger's failure to achieve more than 2 percent of the U.S. drilling fluid market in the six years since the Final Judgment was filed.
Copies of the Complaint and Judgment, the pleadings related to the 1996 modification, Smith's motion and supporting memorandum, and the United States' consent are available for inspection in Room 215, Antitrust Division, U.S. Department of Justice, 325 7th St., NW., Washington, DC 20530 and at the Office of the Clerk of the United States District Court for the District of Columbia, Third Street and Constitution Avenue, NW., Washington, DC 20001. Copies of any of these materials may be obtained upon request and payment of a copying fee.
Comments to the Department of Justice and to the Court regarding the proposed modification of the Final Judgment are invited from members of the public. They should be addressed to Roger W. Fones, Chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice, Suite 500, 325 7th Street, NW., Washington, DC 20530 (202-307-6351.) Such comments must be received within 30 days.
Occupational Safety and Health Administration (OSHA); Labor.
Notice of an opportunity for public comment.
OSHA solicits comments concerning the proposed reduction in, and extension of, the information collection requirements contained in the Inorganic arsenic standard (29 CFR 1910.1018).
The Agency is particularly interested in comments on the following issues:
• Whether the information collection requirements are necessary for the proper performance of the Agency's functions, including whether the information is useful;
• The accuracy of the Agency's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collected; and
• Ways to minimize the burden on employers who must comply; for example, by using automated, electronic, mechanical, and other technological information collection and transmission techniques.
Submit written comments on or before March 27, 2000.
Submit written comments to the Docket Office, Docket No. ICR-1218-0104(2000), Occupational Safety and Health Administration, U.S. Department of Labor, Room N-2625, 200 Constitution Avenue, N.W., Washington, DC 20210; telephone: (202) 693-2350. Commenters may transmit written comments of 10 pages or less in length by facsimile to (202) 693-1648.
Nancy Dorris, Directorate of Policy, Occupational Safety and Health Administration, U.S. Department of Labor, Room N-3641, 200 Constitution Avenue, N.W., Washington, DC 20210; telephone: (202) 693-2444. A copy of the Agency's Information Collection Request (ICR) supporting the need for the information collection requirements in the Inorganic arsenic standard is available for inspection and copying in the Docket Office, or you may request a mailed copy by telephoning Nancy Dorris or Todd R. Owen at (202) 693-2444. For electronic copies of the ICR on the Inorganic arsenic standard, contact OSHA on the Internet at
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to
OSHA proposes to extend the OMB approval for the collection of information (paperwork) contained in the Inorganic arsenic standard (29 CFR 1910.1018). OSHA will summarize the comments submitted in response to this notice, and will include this summary in the request to OMB to extend the approval of the information collection requirements contained in the Inorganic arsenic standard (29 CFR 1910.1018).
Charles N. Jeffress, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506) and Secretary of Labor's Order No. 6-96 (62 FR 111).
Occupational Safety and Health Administration (OSHA); Labor.
Notice of an opportunity for public comment.
OSHA solicits comments concerning the proposed reduction in, and extension of, the information collection requirements contained in the Coke Oven Standard (29 CFR 1910.1029).
The Agency is particularly interested in comments on the following issues:
• Whether the information collection requirements are necessary for the proper performance of the Agency's functions, including whether the information is useful;
• The accuracy of the Agency's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collected; and
• Ways to minimize the burden on employers who must comply; for example, by using automated, electronic, mechanical, and other technological information collection and transmission techniques.
Submit written comments on or before March 27, 2000.
Submit written comments to the Docket Office, Docket No. ICR-1218-0128(2000), Occupational Safety and Health Administration, U.S. Department of Labor, Room N-2625, 200 Constitution Avenue, NW., Washington, DC 20210; telephone: (202) 693-2350. Commenters may transmit written comments of 10 pages or less in length by facsimile to (202) 693-1648.
Todd Owen, Directorate of Policy, Occupational Safety and Health Administration, U.S. Department of Labor, Room N-3641, 200 Constitution Avenue, NW., Washington, DC 20210; telephone: (202) 693-2444. A copy of the Agency's Information Collection request (ICR) supporting the need for the information collection requirements in the Coke oven emissions standard is available for inspection and copying in the Docket Office, or you may request a mailed copy by telephoning Todd R. Owen at (202) 693-2444. For electronic copies of the ICR on the Coke Oven Emissions Standard, contact OSHA on the Internet at http://www.osha-slc.gov.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and continuing information collection requirements in accordance with the Paperwork Reduction Act of 1995 (PRA-95) (44 U.S.C. 3506(c)(2)(A)). This program ensures that information is in the desired format, reporting burden (time and costs) is minimal, collection instruments clearly understood, and OSHA's estimate of the information burden is correct. The Occupational Safety and Health Act of 1970 (the Act) authorizes information collection by employers as necessary or appropriate for enforcement of the Act or for developing information regarding the causes and prevention of occupational injuries, illnesses, and accidents (29 U.S.C. 657).
The information collection requirements in the Coke Oven Emissions Standard provide protection for employees from the adverse health effects associated with exposure to coke oven emissions. In this regard, the Coke Oven Emissions Standard requires employers to monitor employees' exposure to coke oven emissions, monitor employee health, and provide employees with information about their exposures and the health effects of exposure to coke oven emissions.
OSHA proposes to extend the OMB approval for the collection of information (paperwork) contained in
Charles N. Jeffress, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506) and Secretary of Labor's Order No 6-96 (62 FR 111).
Signed at Washington, D.C., on January 19, 2000.
Occupational Safety and Health Administration (OSHA); Labor.
Notice of an opportunity for public comment.
OSHA solicits comments concerning the proposed reduction in, and extension of, the information collection requirements contained in the 1,3-Butadiene Standard (29 CFR 1910.1051).
The Agency is particularly interested in comments on the following issues:
• Whether the information collection requirements are necessary for the proper performance of the Agency's functions, including whether the information is useful;
• The accuracy of the Agency's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collected; and
• Ways to minimize the burden on employers who must comply; for example, by using automated, electronic, mechanical, and other technological information collection and transmission techniques.
Submit written comments on or before March 27, 2000.
Submit written comments to the Docket Office, Docket No. ICR-1218-0170(2000), Occupational Safety and Health Administration, U.S. Department of Labor, Room N-2625, 200 Constitution Avenue, NW, Washington, DC 20210; telephone: (202) 693-2350. Commenters may transmit written comments of 10 pages or less in length by facsimile to (202) 693-1648.
Todd R. Owen, Directorate of Policy, Occupational Safety and Health Administration, U.S. Department of Labor, Room N-3641, 2000 Constitution Avenue, NW, Washington, DC 20210; telephone: (202) 693-2444. A copy of the Agency's Information Collection Request (ICR) supporting the need for the information collection requirements in the 1,3-Butadiene Standard is available for inspection and copying in the Docket Office, or you may request a mailed copy by telephoning Todd R. Owen at (202) 693-2444. For electronic copies of the ICR on the 1,3-Butadiene Standard, contact OSHA on the Internet at
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and continuing information collection requirements in accordance with the Paperwork Reduction Act of 1995 (PRA-95) (44 U.S.C. 3506(c)(2)(A)). This program ensures that information is in the desired format, reporting burden (time and costs) is minimal, collection instruments clearly understood, and OSHA's estimate of the information burden is correct. The Occupational Safety and Health Act of 1970 (the Act) authorizes information collection by employers as necessary or appropriate for enforcement of the Act or for developing information regarding the causes and prevention of occupational injuries, illnesses, and accidents (29 U.S.C. 657).
The information collection requirements in the 1,3-Butadiene Standard provide protection for employees from the adverse health effects associated with exposure to 1,3-Butadiene. In this regard, the 1,3-Butadiene Standard requires employers to: Monitor employees' exposure to 1,3-Butadiene; develop and maintain compliance and exposure-goal programs if employee exposures to 1,3-Butadiene are above the Standard's permissible exposure limits or action level; monitor employee health; maintain employee exposure-monitoring and medical records, and provide employees with information about their exposures and the health effects of exposure to 1,3-Butadiene.
OSHA proposes to extend the OMB approval for the collection of information (paperwork) contained in the 1,3-Butadiene Standard (29 CFR 1910.1051). OSHA will summarize the comments submitted in response to this notice, and will include this summary in the request to OMB to extend the approval of the information collection requirements contained in the 1,3-Butadiene Standard (29 CFR 1910.1051).
Charles N. Jeffress, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506) and Secretary of Labor's Order No. 6-96 (62 FR 111).
Signed at Washington, D.C. on January 19, 2000.
The U.S. National Commission of Libraries and Information Science.
Closed Meeting (Closing this meeting is taken in accordance with the exemption provided under Title 45, CFR, Part 1703.202(a)(9): February 17, 2000 from 8:30 a.m. to 10:30 a.m., Los Angeles Times Building, 145 South Spring Street, Los Angeles, CA. Discussion Topic: The National Award for Library Service. Open Meetings: February 17, 2000 from 10:45 a.m. to 5:00 p.m., Los Angeles Times Building, 145 South Spring Street, Los Angeles, CA.
Administrative matters
The role of the Commission in the areas of literacy and information literacy; focus will be on activities of school, academic and public libraries as well as Federal government initiatives.
For security reasons, the
To request further information or to make special arrangements for persons with disabilities, contact Barbara Whiteleather (telephone: 202-606-9200; fax: 202-606-9203; e-mail: bwhiteleather@nclis.gov) no later than one week in advance of the meeting.
National Aeronautics and Space Administration (NASA)
The National Aeronautics and Space Administration, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. 3506(c)(2)(A)). Information collection is required to ensure proper use of and disposition of rights to inventions made in the course of, and data developed under NASA contracts.
All comments should be submitted on or before March 27, 2000.
All comments should be addressed to Mr. Phillip Smith Code BFZ, National Aeronautics and Space Administration, Washington, DC 20546-0001.
Ms. Carmela Simonson, NASA Reports Officer, (202) 358-1223.
Northeast Dairy Compact Commission.
Notice of meeting.
The Compact Commission will hold its monthly meeting to consider matters relating to administration and enforcement of the price regulation, including the reports and recommendations of the Commission's standing Committees. The Commission will also continue its deliberative meeting, which was convened at the December 1, 1999 and January 5, 2000 Commission meetings, to consider whether to implement an assessment/refund supply management program.
The meeting will begin immediately following the public hearing on technical amendments to the Over-order Price Regulation scheduled to commence at 10 a.m. on Wednesday, February 2, 2000.
The meeting will be held at The Centennial Inn, Armenia White Room, 96 Pleasant Street, Concord, New Hampshire (I-93 Exit 14).
Kenneth M. Becker, Executive Director, Northeast Dairy Compact Commission, 34 Barre Street, Suite 2, Montpelier, VT 05602. Telephone (802) 229-1941.
7 U.S.C. 7256.
The U.S. Nuclear Regulatory Commission (NRC) is considering
On November 21, 1994, SFC requested a license amendment to remove the requirements for an emergency plan (EP) because the facility was no longer operating. License conditions to preclude a uranium uptake by members of the public from postulated fire involving UF
In 1998, SFC commenced activities to wash all remaining cylinders. SFC has completed cylinder washing, thereby removing the residual UF
If the NRC approves the LA, the approval will be documented in a LA to NRC's license SUB-1010. However, before approving the proposed LA, NRC will need to make the findings required by the Atomic Energy Act of 1954, as amended, and NRC's regulations. These findings will be documented in a Safety Evaluation Report and an Environmental Assessment.
NRC hereby provides notice that this is a proceeding on an application for an amendment of a license falling within the scope of Subpart L, “Informal Hearing Procedures for Adjudication in Materials Licensing Proceedings,” of NRC's rules of practice for domestic licensing proceedings in 10 CFR Part 2. Pursuant to § 2.1205(a), any person whose interest may be affected by this proceeding may file a request for a hearing in accordance with § 2.1205(d). A request for a hearing must be filed within thirty (30) days of the date of publication of this
The request for a hearing must be filed with the Office of the Secretary either:
1. By delivery to: Secretary, U.S. Nuclear Regulatory Commission, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852-2738; between 7:45 am and 4:15 pm Federal workdays; or
2. By mail, telegram, or facsimile addressed to: Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. Attention: Rulemakings and Adjudications Staff.
In accordance with 10 CFR § 2.1205(f), each request for a hearing must also be served, by delivering it personally or by mail, to:
1. The applicant, Sequoyah Fuels Corporation, PO Box 610, Gore, Oklahoma, Attention: Mr. John Ellis, and;
2. The NRC staff, by delivery to the Executive Director for Operations, U.S. Nuclear Regulatory Commission, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852-2738, between 7:45 am and 4:15 pm Federal workdays, or by mail, addressed to the Executive Director for Operations, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001.
In addition to meeting other applicable requirements of 10 CFR Part 2 of NRC's regulations, a request for a hearing filed by a person other than an applicant must describe in detail:
1. The interest of the requester in the proceeding;
2. How that interest may be affected by the results of the proceeding, including the reasons why the requester should be permitted a hearing, with particular reference to the factors set out in § 2.1205(h):
3. The requester's areas of concern about the licensing activity that is the subject matter of the proceeding; and
4. The circumstance establishing that the request for a hearing is timely in accordance with § 2.1205(d).
The application for the LA and supporting documentation are available for inspection on NRC's Public Electronic Reading Room at
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Weeks of January 24, 31, February 7 and 14, 2000.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and Closed.
9:00 a.m. Briefing on NRC Staff's Response to DOE's Draft Environmental Impact Statement (EIS) for a Proposed HLW Geologic Repository (Public Meeting).
9:25 a.m. Affirmation Session (Public Meeting) (if needed).
9:30 a.m. Briefing on Status of NMSS Programs, Performance, and Plans (Public Meeting) (Contact: Claudia Seelig, 301-415-7243).
There are no meetings scheduled for the Week of January 31.
10:00 a.m. Briefing on Status of Research Programs, Performance, and Plans (Including Status of Thermo-Hydraulics) (Public Meeting) (Contact: Jocelyn Mitchell, 301-415-5289).
9:25 a.m. Affirmation Session (Public Meeting) (if needed).
9:30 a.m. Briefing on Status of CFO Programs, Performance, and Plans (Public Meeting).
9:30 a.m. Briefing on Status of Spent Fuel Projects (Public Meeting).
There are no meetings scheduled for the Week of February 14.
The schedule for commission meetings is subject to change on short notice. To verify the status of meetings call (recording)—(301) 415-1292. Contact person for more information: Bill Hill (301) 415-1661.
By a vote of 5-0 on January 10, the Commission determined pursuant to U.S.C. 552b(e) and § 9.107(a) of the Commission's rules
The NRC Commission Meeting Schedule can be found on the Internet at: http://www.nrc.gov/SECY/smj/schedule.htm
This notice is distributed by mail to several hundred subscribers; if you no longer wish to receive it, or would like to be added to it, please contact the Office of the Secretary, Attn: Operations Branch, Washington, DC 20555 (301-415-1661). In addition, distribution of this meeting notice over the Internet system is available. If you are interested in receiving this Commission meeting schedule electronically, please send an electronic message to wmh@nrc.gov or dkw@nrc.gov.
Nuclear Regulatory Commission.
Proposed policy statement.
The Nuclear Regulatory Commission (NRC) proposes to revise Section D of its current policy statement that NRC staff follows in opening to public observation meetings between the NRC staff and one or more outside persons. The NRC proposes to announce via the Internet from the NRC Web site at
The Commission will not finalize revisions to the Policy Statement or discontinue its current methods of informing the public of open staff meetings until public comments have been received and evaluated as to whether changes in the proposed course are warranted.
Submit comments by March 27, 2000. Comments received after this date will be considered if it is practical to do so, but the Commission is only able to guarantee its consideration of comments received on or before this date.
Send comments to: Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. ATTN: Rulemakings and Adjudications Staff.
Hand deliver comments to: 11555 Rockville Pike, Rockville, Maryland, between 7:30 a.m. and 4:15 p.m., on Federal workdays.
Examine comments received at the NRC Public Document Room, 2120 L Street NW. (Lower level), Washington, D.C.
A copy of NRC's current Policy Statement on Staff Meetings Open to the Public and this proposed revision to the policy statement are available at the NRC's rulemaking Web site at
John Craig, Office of the Executive Director for Operations, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Telephone: 301-415-8703: email:
The NRC first published its policy on open staff meetings in the
The proposed change would revise Section D to state that staff meetings open to the public will be announced via the Internet from the NRC Web site, (
The NRC does not distribute a summary compilation of meeting notices in the Weekly Compilation of Press Releases; therefore, that provision in Section D has been eliminated. Also, because the public can gain access to the NRC Web site using a computer at the PDR, the proposed revision no longer requires that paper copies of meeting notices be posted at the PDR. Specific comments regarding the discontinuation of announcing staff public meetings through the electronic bulletin board and telephone recording and through the weekly compilation of
This policy statement would also be revised to state that staff meetings will be noticed as soon as the NRC staff is certain that a meeting will be held and that firm arrangements have been made, but generally no fewer than 10 calendar days before the meeting. Under the current policy, the NRC staff is instructed to provide a notice to the public meeting notice coordinator at least 10 days in advance of the date of the meeting, with certain exceptions. The goal of that practice was to ensure that the subsequent administrative processing of the notice for public notification would result in the public having at least a one-week notice of the open staff meeting. However, the current NRC guidance for this policy, Management Directive 3.5, “Public Attendance at Certain Meetings Involving the NRC Staff”, states that “[m]eetings open to the public should normally be
Experience has also shown that sometimes a staff meeting that is going to be open to the public needs to be scheduled quickly, and thus time is not available for the public to receive notice at least 10 calendar days in advance of the meeting. In these cases where an exception to the 10 calendar day policy must be made, the proposed change states that the staff will try to give notice as promptly as possible.
The current policy also provides for such exceptions, but the proposed policy would tie the exceptions to the NRC's strategic plan performance goals. The current draft of the strategic plan includes performance goals to: (1) Maintain safety; (2) increase public confidence; (3) reduce unnecessary regulatory burden; and (4) make NRC activities and decisions more effective, efficient and realistic. When the final version of the strategic plan is available, the Commission will consider whether the performance goals in the plan necessitate additional changes to NRC's policy of opening staff meetings to the public.
With respect to the third and fourth draft performance goals noted above, the Commission anticipates that they would be used sparingly and only when circumstances would not reasonably permit the 10 calendar-day notice. Comment is explicitly requested to identify circumstances in which these performance goals may justify an exception to the 10 calendar-day notice period.
To explain how these performance goals would be used to evaluate whether exceptions should be made to the 10 calendar-day notice period, the following examples are given. To maintain safety, it may be necessary to hold a meeting called on short notice to resolve a licensee safety issue. To increase public confidence, the NRC would hold a meeting as soon as is practical for a critical licensee safety issue requiring immediate attention even if the meeting notice period was less than 10 calendar days. To reduce unnecessary regulatory burden, it may be necessary for the staff to interact with an applicant for a license amendment frequently and on short notice in order to meet aggressive licensing schedules for high-priority reviews. The meeting notice would indicate that meetings will be held on the application for the stated period of time and that specifics on individual meetings will be provided with as much notice as possible. As shown in the three examples, the staff may have to provide less than the 10 calendar-day notice to make activities and decisions more effective, efficient and realistic for aggressive licensing schedules and unforeseen circumstances that require timely response.
Also, the policy is revised to eliminate the current practice of only posting meetings scheduled within 60 days. This restriction was placed in the current policy because of limited computer storage capacity available when the Public Meeting Notice System was designed in the early 1990s.
The Commission is requesting comments on the proposed discontinuation of providing notice of staff meetings open to the public through the electronic bulletin board and telephone recording as well as through the Weekly Compilation of Press Releases and posting in the NRC's Public Document Room.
The Commission will not finalize revisions to the Policy Statement or discontinue its current methods of informing the public of open staff meetings until any public comments have been evaluated as to whether changes in the proposed course are warranted.
Accordingly, the Commission is proposing to revise Section D of the Commission's Policy Statement on Staff Meetings Open to the Public, to read as follows:
1. Meeting announcement information is to be provided to the public as soon as the staff is certain that a meeting will be held and firm date, time, and facility arrangements have been made, but generally no fewer than 10 calendar days before the meeting. Where a meeting must be scheduled but cannot be announced 10 calendar days in advance, the staff will provide as much advance notice as possible. Public notice of meetings will be made via the Internet from the NRC Web site at
2. Meeting announcements will include the date, time, and location of the meeting, as well as its purpose, the NRC office(s) and outside participant(s) in attendance, and the name and telephone number of the NRC contact for the meeting.
For the Nuclear Regulatory Commission.
Securities and Exchange Commission (“Commission”).
Notice of an application for an order under sections 6(c) and 17(b) of the Investment Company Act of 1940 (“Act”) for an exemption from section 17(a) of the Act, under section 6(c) for an exemption from section 17(e) of the Act and rule 17e-1 under the Act, and under section 10(f) of the Act for an exemption from section 10(f).
Liberty All-Star Equity Fund (“Equity Fund”), Liberty All-Star Growth Fund, Inc. (“Growth Fund”), Liberty Funds Trust IX (“Liberty Trust”) on behalf of its sole series, Liberty All-Star Growth & Income Fund (“Growth &
Applicants request an order to permit certain registered management investment companies advised by several investment advisers to engage in principal and brokerage transactions with a broker-dealer affiliated with one of the investment advisers and to purchase securities in offerings underwritten by a principal underwriter affiliated with one of the investment advisers. The transactions would be between a broker-dealer or principal underwriter and a portion of the investment company's portfolio not advised by the adviser affiliated with the broker-dealer or principal underwriter. Applicants also request relief to permit a portion of the portfolio to purchase securities in offerings underwritten by a principal underwriter affiliated with the investment adviser to that portion if the purchase is in accordance with all of the conditions of rule 10f-3 under the Act, except for the provision that would require aggregation of certain purchases.
The application was filed on September 16, 1999. Applicants have agreed to file an amendment during the notice period, the substance of which is reflected in this notice.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on February 14, 2000 and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons may request notification of a hearing by writing to the Commission's Secretary.
Secretary, Commission, 450 5th Street, NW, Washington, D.C. 20549-0609. Applicants: Equity Fund, Growth Fund, Liberty Trust and LAMCO, 600 Atlantic Avenue, Boston, MA 02210-2214; LVIT, One Financial Center, Boston, MA 02111; J.P. Morgan, 522 Fifth Avenue, New York, NY 10036; Morgan Securities, 60 Wall Street, New York, NY 10260; and William Blair, 222 W. Adams Street, Chicago, IL 60606.
Anu Dubey, Senior Counsel, at (202) 942-0687, or Michael W. Mundt, Branch Chief, at (202) 942-0564 (Division of Investment Management, Office of Investment Company Regulation).
The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 450 5th Street, NW, Washington, DC 20549-0102 (tel. 202-942-8090).
1. Equity Fund, a Massachusetts business trust, and Growth Fund, a Maryland corporation, are registered under the Act as closed-end management investment companies. Liberty Trust and LVIT are Massachusetts business trusts registered under the Act as open-end management investment companies.
2. LAMCO is registered as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”) and is responsible for the general management and investment of each Fund's assets. LAMCO also provides administrative services to each Fund, some of which are delegated to LAMCO's affiliate, Colonial Management Associates, Inc. The assets of each Fund are allocated by LAMCO among three to five subadvisers (“Subadvisers”). Each Subadviser has discretion to purchase and sell securities for a discrete portion of a Fund portfolio's assets in accordance with the Fund's objectives, policies, and restrictions. Each Subadviser is paid a fee by LAMCO out of the management fee received by LAMCO from the Funds. None of the Subadvisers (except by virtue of serving as Subadviser to a discrete portion of a Fund) has any affiliation with the Funds or LAMCO or with any person that serves as promoter or principal underwriter to the Funds.
3. J.P. Morgan, a subsidiary of J.P. Morgan & Co. Incorporated (“JPM Incorporated”), a bank holding company, is an investment adviser registered under the Advisers Act that serves as Subadviser to Growth Fund, Equity Fund, and Equity Fund, VS. Morgan Securities is a broker-dealer registered under the Securities Exchange Act of 1934 (“Exchange Act”) and, as a wholly-owned subsidiary of JPM Incorporated, is under common control with J.P. Morgan. William Blair is an investment adviser registered under the Advisers Act and a broker-dealer registered under the Exchange Act that serves as Subadviser to Growth Fund through its investment management services department. William Blair conducts brokerage activities through its institutional sales and trading department, an operating division separate from its investment management services department.
4. The requested relief would permit: (a) William Blair, Morgan Securities, or any broker-dealer registered under the Exchange Act that itself serves as Subadviser (either directly or through a separate operating division) or is an affiliated person (an “Affiliated Broker-Dealer”) of J.P. Morgan, William Blair, or another investment adviser serving as Subadviser (an “Affiliated Subadviser”) to one or more Multi-Managed Funds (as defined below) to engage in principal transactions with a portion of the Fund that is advised by another Subadviser that is not an affiliated person of the Affiliated Broker-Dealer or the Affiliated Subadviser (an “Unaffiliated Subadviser”) (each such portion, an “Unaffiliated Portion”); (b) an Affiliated Broker Dealer to provide brokerage services to an Unaffiliated Portion, and the Unaffiliated Portion to utilize such brokerage services, without complying with rule 17e-1(b) and (c) under the Act; (c) an Unaffiliated Portion to purchase securities during the existence of an underwriting syndicate, a principal underwriter of which is an Affiliated Subadviser or an affiliated person of an Affiliated Subadviser (an “Affiliated Underwriter”); and (d) a portion of the Fund advised by an Affiliated Subadviser (“Affiliated Portion”) to purchase securities during the existence of an underwriting syndicate, a principal underwriter of which is an Affiliated Underwriter, in accordance with the conditions of rule 10f-3, except that paragraph (b)(7) of the rule would not require the aggregation of purchases by the Affiliated Portion with purchases by an Unaffiliated Portion.
5. Applicants request that the exemptive relief apply to the Funds or any existing or future registered management and investment company (a) advised by LAMCO or any entity controlling, controlled by, or under common control (within the meaning of section 2(a)(9) of the Act) with LAMCO and (b) at least one other investment adviser registered under the Advisers Act or exempt from such registration (the Funds and such investment companies, each a “Multi-Managed
1. Section 17(a) of the Act generally prohibits sales and purchases of securities between a registered investment company and an affiliated person of, promoter of, or principal underwriter for such company, or any affiliated person of an affiliated person, promoter, or principal underwriter. Section 2(a)(3)(e) of the Act defines an affiliated person to be any investment adviser of an investment company, and section 2(a)(3)(C) of the Act defines an affiliated person of another person to include any person directly or indirectly controlling, controlled by, or under common control with such person. Applicants state that an Affiliated Subadviser would be an affiliated person of a Fund, and an Affiliated Broker-Dealer would be either an Affiliated Subadviser or an affiliated person of the Affiliated Subadviser, and thus an affiliated person of an affiliated person (“second-tier affiliate”) of a Fund, including the Unaffiliated Portion. Accordingly, applicants state that any transactions to be effected by an Unaffiliated Subadviser on behalf of an Unaffiliated Portion of a Fund with an Affiliated Broker-Dealer are subject to the prohibitions of section 17(a).
2. Applicants seek relief under sections 6(c) and 17(b) to exempt principal transactions prohibited by section 17(a) because an Affiliated Broker-Dealer is deemed to be an affiliated person or a second-tier affiliate of an Unaffiliated Portion solely because an Affiliated Subadviser is the Subadviser to another portion of the same Fund. The requested relief would not be available if the Affiliated Broker-Dealer (except by virtue of serving as a Subadviser to a discrete portion of a Fund) is an affiliated person or a second-tier affiliate of LAMCO, the unaffiliated Subadviser making the investment decision, or any officer, director or employee of the Multi-Managed Fund.
3. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned, and the proposed transaction is consistent with the policy of each registered investment company and the general purposes of the Act. Section 6(c) of the Act permits the Commission to exempt any person or transaction from any provision of the Act if the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policies and provisions of the Act.
4. Applicants contend that section 17(a) is intended to prevent persons who have the power to control an investment company from using that power to the person's own pecuniary advantage. Applicants assert that when the person acting on behalf of an investment company has no direct or indirect pecuniary interest in a party to a principal transaction, the abuses that section 17(a) is designed to prevent are not present. Applicants state that if an Unaffiliated Subadviser purchases securities on behalf of an Unaffiliated Portion in a principal transaction with an Affiliated Broker-Dealer, any benefit that might inure to the Affiliated Broker-Dealer would not be shared by the Unaffiliated Subadviser. In addition, applicants state that Subadvisers are paid on the basis of a percentage of the value of the assets allocated to their management. The execution of a transaction to the disadvantage of the Unaffiliated Portion would disadvantage the Unaffiliated Subadviser to the extent that it diminishes the value of the Unaffiliated Portion. Applicants further submit that LAMCO's power to dismiss Subadvisers or to change the portion of a Fund allocated to each Subadviser reinforces a Subadviser's incentive to maximize the investment performance of its own portion of the Fund.
5. Applicants state that each Subadviser's contract assigns it responsibility to manage a discrete portion of the Fund. Each Subadviser is responsible for making independent investment and brokerage allocation decisions based on its own research and credit evaluations. Applicants represent that LAMCO does not dictate brokerage allocation or investment decisions to any Fund advised by a Subadviser, or have the contractual right to do so. Applicants contend that, in managing a discrete portion of a Fund, each Subadviser acts for all practical purposes as though it is managing a separate investment company.
6. Applicants state that the proposed transactions will be consistent with the policies of the Fund involved, since each Unaffiliated Subadviser is required to manage the Unaffiliated Portion in accordance with the investment objectives and related investment policies of the Fund as described in its registration statement. Applicants also assert that permitting the transactions will be consistent with the general purposes of the Act and in the public interest because the ability to engage in the transactions increases the likelihood of a Fund achieving best price and execution on its principal transactions, while giving rise to none of the abuses that section 17(a) was designed to prevent.
1. Section 17(e)(2) of the Act prohibits an affiliate or a second-tier affiliate of a registered investment company from receiving compensation for acting as broker in connection with the sale of securities to or by the investment company if the compensation exceeds the limits prescribed by the section unless otherwise permitted by rule 17e-1 under the Act. Rule 17e-1 sets forth the conditions under which an affiliated person or a second-tier affiliate of an investment company may receive a commission which would not exceed the “usual and customary broker's commission” for purposes of section 17(e)(2). Rule 17e-1(b) requires the investment company's board of directors, including a majority of the directors who are not interested persons under section 2(a)(19) of the Act, to adopt certain procedures and to determine at least quarterly that all transactions effected in reliance on the rule complied with the procedures. Rule 17e-1(c) specifies the records that must be maintained by each investment company with respect to any transaction effected pursuant to rule 17e-1.
2. As discussed above, applicants state that an Affiliated Broker-Dealer is either an affiliated person (as Subadviser to another portion of the Fund) or a second-tier affiliate of an Unaffiliated Portion and thus subject to section 17(e). Applicants request an exemption under section 6(c) from section 17(e) and rule 17e-1 to the extent necessary to permit an Unaffiliated Portion to pay brokerage compensation to an Affiliated Broker-Dealer acting as broker in the ordinary course of business in connection with the sale of securities to or by such Unaffiliated Portion, without complying with the requirements of rule 17e-1 (b)
3. Applicants believe that the proposed brokerage transactions involve no conflicts of interest or possibility of self-dealing and will meet the standards of section 6(c). Applicants assert that the interests of an Unaffiliated Subadviser are directly aligned with the interests of the Unaffiliated Portion it advises, and an Unaffiliated Subadviser will enter into brokerage transactions with Affiliated Broker-Dealers only if the fees charged are reasonable and fair as required by rule 17e-1(a). Applicants also note that an Unaffiliated Subadviser has a fiduciary duty to obtain best price and execution for the Unaffiliated Portion.
1. Section 10(f) of the Act, in relevant part, prohibits a registered investment company from knowingly purchasing or otherwise acquiring, during the existence of any underwriting or selling syndicate, any security (except a security of which the company is the issuer) a principal underwriter of such is an officer, director, member of an advisory board, investment adviser, or employee of the company, or an affiliated person of any of those persons. Section 10(f) also provides that the Commission may exempt by order any transaction or classes of transactions from any of the provisions of section 10(f), if and to the extent that such exemption is consistent with the protection of investors. Rule 10f-3 under the Act exempts certain transactions from the prohibitions of section 10(f) if specified conditions are met. Paragraph (b)(7) of rule 10f-3 limits the securities purchased by the investment company, or by two or more investment companies having the same investment adviser, to 25% of the principal amount of the offering of the class of securities.
2. Applicants state that each Subadviser, although under contract to manage only a distinct portion of a Fund, is considered an investment adviser to the entire Fund. As a result, applicants believe that all purchases of securities by an Unaffiliated Portion from an underwriting syndicate a principal underwriter of which is an Affiliated Underwriter would be subject to section 10(f).
3. Applicants request relief under section 10(f) from that section to permit an Unaffiliated Portion to purchase securities during the existence of an underwriting or selling syndicate, a principal underwriter of which is an Affiliated Underwriter. Applicants request relief from section 10(f) only to the extent those provisions apply solely because an Affiliated Subadviser is an investment adviser to the Fund. The requested relief would not be available if the Affiliated Underwriter (except by virtue of serving as Subadviser to a discrete portion of a Fund) is an affiliated person or a second-tier affiliate of LAMCO, the Unaffiliated Subadviser making the investment decision with respect to the Unaffiliated Portion of the Fund, or any officer, director, or employee of the Multi-Managed Fund. Applicants also seek relief from section 10(f) to permit an Affiliated Portion to purchase securities during the existence of an underwriting syndicate, a principal underwriter of which is an Affiliated Underwriter, provided that the purchase will be in accordance with the conditions of rule 10f-3, except that paragraph (b)(7) of the rule will not require the aggregation of purchases by the Affiliated Portion with purchases by an Unaffiliated Portion.
4. Applicants state that section 10(f) was adopted in response to concerns about the “dumping ” of otherwise unmarketable securities on investment companies, either by forcing the investment company to purchase unmarketable securities from its underwriting affiliate, or by forcing or encouraging the investment company to purchase the securities from another member of the syndicate. Applicants submit that these abuses are not present in the context of the Funds because a decision by an Unaffiliated Subadviser to purchase securities from an underwriting syndicate, a principal underwriter of which is an Affiliated Underwriter, involves no potential for “dumping.” In addition, applicants assert that aggregating purchases would serve no purpose because there is no collaboration among Subadvisers, and any common purchases by an Affiliated Subadviser and an Unaffiliated Subadviser would be coincidence.
Applicants agree that any order granting the requested relief will be subject to the following conditions:
1. Each Fund relying on the requested order will be advised by an Affiliated Subadviser and at least one Unaffiliated Subadviser and will be operated in the manner described in this application.
2. No Affiliated Subadviser, Affiliated Broker-Dealer or Affiliated Underwriter (except by virtue of serving as Subadviser to a discrete portion of a Fund) will be an affiliated person or a second-tier affiliate of LAMCO, any Unaffiliated Subadviser or any officer, director or employee of a Multi-Managed Fund.
3. No Affiliated Subadviser will directly or indirectly consult with any Unaffiliated Subadvisers concerning allocation of principal or brokerage transactions.
4. No Affiliated Subadviser will participate in any arrangement whereby the amount of its subadvisory fees will be affected by the investment performance of an Unaffiliated Subadviser.
5. With respect to purchases of securities by an Affiliated Portion of a Fund during the existence of any underwriting or selling syndicate, a principal underwriter of which is an Affiliated Underwriter, the conditions of rule 10f-3 will be satisfied except that paragraph (b)(7) will not require the aggregation of purchases by the Affiliated Portion of the Fund with purchases by an Unaffiliated Portion.
For the Commission, by the Division of Investment Management, under delegated authority.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94-409, that the Securities and Exchange Commission will hold the following meeting during the week of January 24, 2000.
A closed meeting will be held on Tuesday, January 25, 2000 at 11:00 a.m.
Commissioner Hunt, as duty officer, determined that no earlier notice thereof was possible.
Commissioners, Counsel to the Commission, the Secretary to the
The General Counsel of the Commission, or his designee has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(4), (8), (9)(A) and (10) and 17 CFR 200.402(a)(4), (8), (9)(A) and (10), permit consideration for the scheduled matters at the closed meeting.
Commissioner Hunt, as duty officer, voted to consider the items listed for the closed meeting in a closed session.
The subject matters of the closed meeting scheduled for Tuesday, January 25, 2000, will be:
A litigation matter;
Institution and settlement of injunctive actions; and
Institution and settlement of administrative proceedings of an enforcement nature.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact:
The Office of the Secretary at (202) 942-7070.
On February 5, 1999, the National Association of Securities Dealers, Inc. (“NASD”), through its wholly-owned subsidiary, The Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The NASD implemented SOES in 1984 to provide for the automatic execution of small retail agency orders at the best bid or offer (the “inside market”).
SelectNet is an electronic, screen-based order routing system that allows market makers and order entry firms (referred to collectively as “participants”) to negotiate securities transactions in Nasdaq securities through computer communications rather than by telephone.
SelectNet currently allows participants to broadcast orders to all market participants or to preference an order to a designated market maker. Although SelectNet is an order delivery service rather than an order execution service, Nasdaq believes that a preferenced SelectNet order presented to a market maker at its displayed quote generally gives rise to liability under Exchange Act Rule 11Ac1-1 (“Firm Quote Rule”) for the market maker to execute the transaction at that price.
Nasdaq has designated SelectNet as the link to the electronic communications networks (“ECNs”) pursuant to the Commission's Order Handling Rules.
Nasdaq maintains that although SOES and SelectNet provide valuable services to market participants, the operation of two separate and independent execution systems has resulted in the long-standing problem of potential dual liability for market makers. According to Nasdaq, multiple access points to a market maker's quote, through SOES and SelectNet as well as a firm's internal order delivery and telephone facilities, can routinely subject market makers to unintended double liability for orders that reach a market maker's quote at or near the same time through different systems. Nasdaq asserts that the potential for unexpected and increased order liability reduces market maker incentives to commit capital and display larger quote sizes, thereby depriving the Nasdaq market of valuable liquidity.
Nasdaq proposes to implement a new trading environment to address these problems. Specifically, Nasdaq proposes to modify SOES and SelectNet to (1) Re-establish SelectNet as a non-liability order delivery and execution system for NNM securities; and (2) Recast SOES as it is used to trade NNM securities.
B. NNMS
As proposed, NNMS would: (1) Increase the maximum order size for NNM securities that are eligible for automatic execution to 9,900 shares;
1. Automatic Executions for Orders of up to 9,900 Shares in NNM Securities
SOES currently permits the automatic execution of retail agency orders of 200, 500, or 1,000 shares at the inside market. NNMS will provide automatic executions at the inside market for orders of up to 9,900 shares in NNM securities. Automatic executions through NNMS will be available not only for retail agency orders, but also for market makers' proprietary orders and for the orders of order entry firms.
2. Reserve Size
The NNMS reserve size functionality would allow a market maker or its customer to display publicly part of the full size of its order or interest with the remainder of its order or interest held in undisplayed reserve. The undisplayed portion of the order or interest would be displayed in whole or in part as the displayed portion of the order or interest is executed. To use the reserve size function, a market maker must initially display a minimum of 1,000 shares in its quotation, or in its agency quotation, if the Commission approves the display of separate agency quotes, and it must refresh its proprietary or agency quote to a minimum of 1,000 shares. After a market maker's or its customer's displayed quotation was decremented to zero due to NNMS executions, Nasdaq would refresh the market maker's or its customer's displayed size from reserve size to a level designated by the market maker or its customer or, in the absence of such a designation, to the automatic refresh size (
Orders entered in NNMS would be executed automatically against displayed quotations and reserve size (including agency quotes, if the Commission approves the display of separate agency quotes), in price/time priority. For quotations at the same price level, NNMS would yield priority to all displayed quotations over reserve size, so that NNMS would execute against displayed quotations in time priority and then against reserve size in time priority.
The No Dec feature allows continuous executions against a market maker's quotation at the same price without decrementing the quoted size. Nasdaq proposes to eliminate the No Dec feature for NNM securities. Nasdaq believes that the No Dec feature has become less important because market makers now are able to manage their quotations by displaying their actual size. In addition, Nasdaq believes that the No Dec feature will become less important in a market where market makers will have the ability to refresh their quotations at a size they determine. Nasdaq also believes that the No Dec feature inhibits quote competition among market participants and discourages the full display of trading interest.
Nasdaq proposes to eliminate the existing SOES preferencing feature for NNM securities because it is inconsistent with the processing of orders in time priority as contemplated in Nasdaq's new trading environment. Nasdaq also believes that preferencing in an automatic execution system reduces incentives for market makers to compete aggressively for orders by showing the full size and true price of their trading interest. Moreover, Nasdaq believes that the preferencing feature might place the agency quotes of public customers at a disadvantage.
NNMS would impose a $0.50 per side fee for each execution. To reduce user cost and facilitate the use of NNMS's reserve size functionality, a simultaneous and instantaneous execution against an NNMS participant's displayed size and reserve size would be treated for billing purposes as a single execution.
Like today, under the proposal, a market maker's failure to update a fully exhausted quote would result in the system placing the market maker's quote in a “closed” state that, if not updated within five minutes, would be cause for suspension of the market maker's quote for 20 business days.
Through rule changes requiring the use of “oversized” preferenced SelectNet orders, Nasdaq proposes to eliminate the use of most SelectNet liability orders and thereby re-establish SelectNet as an order delivery and negotiation system. Specifically, subject to the exceptions discussed below, Nasdaq proposes to revise its rules to implement an “oversized order requirement,” which will prohibit members from directing a SelectNet preferenced order to an NNMS market maker, including the market maker's agency quote, if the Commission approves the display of separate agency quotes, unless the preferenced order is designated as either (1) “All-or-None” (“AON”) of a size that is at least 100 shares greater than the displayed amount of the NNMS market maker's quote to which the order is directed; or (2) “Minimum Acceptable Quantity” (“MAQ”) with a MAQ value of at least 100 shares greater than the displayed amount of the NNMS market maker's quote to which the order is directed. SelectNet will be programmed to reject preferenced messages that fail to satisfy these requirements.
As discussed below, the oversized order requirement will not apply to UTP exchanges, which will be able to send and receive SelectNet liability orders. In addition, market participants will continue to use SelectNet liability orders to access ECNs that choose to participate in Nasdaq's new trading environment as order entry ECNs.
Under the proposal, SelectNet will continue to serve as the primary linkage between UTP exchanges and Nasdaq. UTP exchanges will continue to receive and be obligated to execute preferenced SelectNet liability orders, and they will retain their ability to send SelectNet preferenced liability orders to Nasdaq market makers. Although a market maker may be subject to dual liability if a UTP exchange accesses the market maker with a SelectNet liability order and, at the same time, an NNMS market maker or order entry firm accesses the market maker via NNMS, Nasdaq believes that the potential dual liability will be manageable.
An ECN will be able to participate in NNMS as either an order entry ECN or as a full participant ECN. The manner in which an ECN chooses to participate in NNMS will be governed by an
An order entry ECN will participate in Nasdaq in substantially the same manner as ECNs participate in Nasdaq today. Market participants will continue to access order entry ECNs via the SelectNet linkage and will be able to send preferenced SelectNet messages (
A full participant ECN will agree to provide automatic executions for orders the ECN receives from other NNMS participants through NNMS. A full participant ECN will not receive SelectNet preferenced liability orders.
Due to the time and the technology constraints affecting some ECNs, Nasdaq believes that, on an interim basis, ECNs should have an option regarding their manner of participation in Nasdaq's new system. Accordingly, Nasdaq does not propose at this time to require all ECNs to register as full participant ECNs, although Nasdaq will reconsider this issue in the future.
For Nasdaq SmallCap securities, the trading rules for automatic execution through SOES will remain unchanged. Accordingly, participation in the automatic execution system for SmallCap securities will continue to be voluntary, and automatic executions will be available only for the small orders of public customers. The current maximum order size limits also will remain in effect. After Nasdaq has had experience with NNMS, it will consider whether the functionality of the NNMS system should be made available for the trading of SmallCap securities.
Nasdaq originally proposed to revise NASD Rule 4730(b)(3) (to be renumbered as NASD Rule 4753(b)(3)) to provide that during locked and crossed markets, SOES will execute orders against the quotations of market makers in SmallCap securities that are locked or crossed at 17-second intervals, rather than five-second intervals, as currently required. Nasdaq amended its proposal to maintain the current five-second delay between SOES executions during locked and crossed markets.
Nasdaq proposes technical, non-substantive changes to several rules in the NASD Rule 4600 Series and throughout the NASD Manual. In particular, Nasdaq proposes to revise NASD Rule 4613, “Character of Quotations,” to eliminate the references to SOES tier sizes for the NNM quotations of market makers. In addition, Nasdaq will rescind or conform other rules that refer to SOES, including NASD Rule 4611(f), “Registration as a Nasdaq Market Maker,” NASD Rule 4619, “Withdrawal of Quotations and Passive Market Making,” NASD Rule 4620, “Voluntary Termination of Registration,” NASD Rule 4632, “Trade Reporting,” NASD Rule 4618(c), “Clearance and Settlement,” and the NASD Rule 4700 Series (SOES).
The Commission received 79 comment letters regarding the proposed rule change. The commenters included broker-dealers, registered representatives, ECNs, academics, professional associations, and a registered national securities exchange.
Fourteen commenters supported the proposal but voiced concerns with some aspects of the proposed changes. Morgan Stanley Dean Witter (“Morgan Stanley”), for example, generally supported the proposed rule change because it will reduce instances of double liability for market makers, but recommended several modifications to the proposal.
Forty-one commenters opposed or noted concerns with the proposal without expressing general support for the proposed changes.
Nasdaq responded to the commenters in Amendment Nos. 1 and 2 to the proposal.
Thirty-two commenters objected to the elimination of most preferenced SelectNet liability orders for NNM securities. Many of the commenters asserted that the elimination of SelectNet liability orders will limit their ability to obtain executions at quotes outside the current inside market (
Other commenters maintained that the oversized order requirement might fail to provide an effective means for accessing a quotation because, in some instances, it would require an investor to assume an unwanted short position. For example, an investor seeking to sell 500 shares would be required to assume an 800-share short position to SelectNet preference a market maker quoting 1200 shares.
Other commenters believed that the proposed changes could undermine the integrity of the Nasdaq market. For example, one commenter feared that the elimination of SelectNet liability orders would produce a market that could permit market makers to refuse to fill an order and not move their quote.
One commenter recommended that the proposed system be designed to require a market maker to honor all orders in a manner consistent with the Firm Quote Rule at the price and up to the size the market maker elects to display until the market maker exhausts or changes his quotation.
Other commenters suggested that Nasdaq address the issue of dual liability by retaining SelectNet liability orders only for quotations outside the current inside market.
Other commenters expressed concern that market makers will continue to be exposed to potential double liability through SelectNet liability orders from UTP exchanges.
As noted above, the proposal will allow ECNs to participate in NNMS either as full participants or as order entry participants. Several ECNs criticized both alternatives. One commenter, for example, asserted that full participation would disadvantage an ECN because (1) The ECN's reserve quotations would not participate in the NNMS sweep of the ECN's top-of-the-file orders;
Similarly, another commenter asserted that an order entry ECN would be able to execute transactions against preferenced SelectNet orders but, unlike market makers and full participant ECNs, would not be able to interact automatically with other NNMS orders on the basis of strict price/time priority.
On the other hand, other commenters criticized the proposal for providing two levels of participation for ECNs. One commenter asserted that because the proposal allows ECNs, but not other market participants, to choose between two levels of participation in NNMS, the proposal fails to promote fair competition between market participants and therefore is inconsistent with the Congressional finding in Section 11A(a)(1)(C) under the Act.
Other commenters also believed that Nasdaq should require ECNs to become full participants in NNMS, and, accordingly, subject to automatic executions.
The Chicago Stock Exchange (“CHX”) asserted that the proposal improperly excludes the UTP exchanges, including the CHX, from full participation in NNMS.
Several commenters raised technology issues in connection with the proposal, including concerns regarding the capability of Nasdaq's systems to promptly deliver messages relating to the trading process. In this regard, one commenter recommended that Nasdaq “demonstrate that it has the capability to deliver immediately to market makers and executing broker-dealers executions, quote updates, size decrements, and other message traffic that is critical to the trading process.”
Two commenters expressed concern that SOES, which uses technology inferior to that used by SelectNet, will replace SelectNet as the primary means of inter-participant trading.
In addition, several commenters noted that firms must have sufficient time to modify their computer systems to implement the proposed changes. In
Although many commenters supported Nasdaq's proposal to establish a maximum automatic execution order entry size of 9,900 shares for NNMS securities, one commenter maintained that the 9,900-share order entry size was arbitrary,
Other commenters believed that allowing automatic executions for orders of up to 9,900 shares would drastically reduce small investors' access to executions
On the other hand, Charles Schwab maintained that increasing the availability of the automatic execution system would provide market makers with a crucial tool to access the best available prices in the market, and, consequently, to manage risk and obtain liquidity for customer orders.
Several commenters believed that the proposed rule change would allow market makers, but not order entry firms, to engage in proprietary trading against market makers' quotes on NNMS.
Although many commenters supported the proposed reduction in the delay between automatic executions against a market maker from 17 seconds to five seconds, Morgan Stanley expressed concern that the reduction would provide market makers with insufficient time to react to virtually continuous executions against their quotations and would create significant difficulty for market makers in maintaining control over their positions and effectuating a coherent market making strategy.
Several commenters supported the reserve size feature, asserting that it would increase liquidity and facilitate more rapid executions of larger-sized orders.
Archipelago asserted that Nasdaq should retain the No Dec feature because it reduces quote update traffic, thereby mitigating the capacity strain on Nasdaq's network. Morgan Stanley believed that the No Dec feature serves as a useful quote maintenance tool that Nasdaq should retain in a modified form.
However, two commenters favored the elimination of the No Dec feature.
One commenter expressed concern that the fee system for NNMS might operate in a discriminatory and anticompetitive manner.
After carefully considering all of the comments, the Commission finds, for the reasons discussed below, that the proposed rule change is consistent with the Act and the rules and regulations applicable to the NASD. In particular, the Commission finds that the proposal is consistent with the requirements of Sections 15A(b)(6) and (11), and 11A(a)(1)(C) of the Act.
Specifically, as discussed more fully below, the Commission finds that the proposed changes are designed to protect investors and the public interest and to assure the economically efficient execution of securities transactions by allowing market makers, public customers, and order entry firms to obtain automatic executions for orders of up to 9,900 shares in NNM securities. By reducing instances of double liability for market makers in NNM securities, the proposal potentially may encourage market makers in NNM securities to display larger sized quotations, thereby adding liquidity to the market for NNM securities and helping to assure the economically efficient execution of transactions in NNM securities. In addition, by reducing the delay between executions against a market maker from 17 seconds to five seconds, the proposal may facilitate the price discovery process and promote quote competition among market makers, thus helping to ensure the best execution of customer orders. The Commission believes that the proposed changes potentially may enhance the efficiency and increase the depth and liquidity of the market for NNM securities, to the benefit of all market participants.
SOES currently permits the automatic execution of retail agency orders of 200, 500, or 1,000 shares at the inside market. NNMS will provide automatic executions at the inside market for orders of up to 9,900 shares in NNM securities. Automatic executions through NNMS will be available not only for retail agency orders, but also for market makers' proprietary orders and for the orders of order entry firms.
Several commenters expressed concerns regarding the automatic execution feature of NNMS. Specifically, the commenters maintained that the 9,900-share order entry size was arbitrary,
In response to the concern about the availability of NNMS, Nasdaq clarified that NNMS will be available to all NASD member firms, including order entry firms.
The Commission believes that the proposed automatic execution feature of NNMS is consistent with Section 15A(b)(6) of the Act because it is designed to protect investors and the public interest. In addition, the Commission believes that the proposed automatic execution feature of NNMS is consistent with Congress's finding in Section 11A(a)(1)(C)(i) of the Act that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the economically efficient execution of securities transactions. In this regard, the Commission believes that the immediacy and certainty of order execution for NNM orders of up to 9,900 shares should strengthen the Nasdaq market and benefit market participants by permitting the prompt, efficient execution of orders of up to 9,900 shares at the best available price. Because NNMS will provide automatic executions against displayed quotations and against reserve size, NNMS's automatic execution feature will provide prompt access to all of the available liquidity in a security at the current inside market.
In addition, the Commission notes that the proposal will extend the benefits associated with automatic executions to order entry firms and to the proprietary orders of market makers. The Commission agrees with the NASD that allowing automatic executions for broker-dealers' proprietary trades potentially may encourage broker-dealers to commit capital to the market, thereby adding to the depth and liquidity of the market for NNM securities.
Further, the Commission believes that the 9,900-share maximum order size is reasonable in light of the system constraint of the NNMS automatic execution platform. According to the NASD, the 9,900-share maximum order size should accommodate the size of the orders that are likely to be processed through NNMS.
With regard to small investors' access to executions, the Commission notes that NNMS's automatic execution feature will be available equally for the orders of market makers, order entry firms, and public customers. Accordingly, the Commission believes that the automatic execution feature of NNMS is reasonably designed to provide market makers, order entry firms, and public customers with equal access to the current inside market in NNM securities.
The reserve size feature of NNMS will allow an NNMS market maker or its customer to display publicly part of the full size of its order or interest with the remainder held in reserve on an undisplayed basis to be displayed in whole or in part as the displayed part is executed. To use the reserve size feature, a market maker's quotation, including its agency quotation, if the Commission approves the display of separate agency quotes, initially must display a minimum of 1,000 shares, and the quotation must be refreshed to 1,000 shares to continue using the reserve size feature.
Several commenters expressed concerns with the reserve size feature. In particular, some commenters questioned Nasdaq's ability to monitor and ensure the proper use of the reserve size feature.
In response to the commenters, Nasdaq asserted that reserve size would be likely to increase the amount of shares market participants commit to the market because the non-display of the reserve shares would lessen the potential negative price impacts associated with the display of larger trading interest.
The Commission believes that the reserve size feature will encourage participation in NNMS by providing market makers and their customers with greater flexibility in the handling of large orders. Increased participation in NNMS should, in turn, enhance the depth and the liquidity of the market for NNM securities, to the benefit of all market participants. The requirement that a market participant display a minimum of 1,000 shares to use the reserve size feature should encourage market participants to display orders of at least 1,000 shares, which may reduce volatility and enhance market depth at a given price. In addition, because all displayed quotations in NNMS at the same price level will have priority over reserve size quotations at that price level, NNMS will provide an incentive for market participants to display their orders.
The Commission also believes that reserve size could prove useful to institutions wishing to minimize the market impact of their orders. In addition, the reserve size feature of NNMS will allow market makers quoting in Nasdaq to compete more effectively with alternative trading systems that provide a reserve size feature. The Commission expects NASD Regulation to monitor trading to ensure the proper use of the reserve size feature (particularly priority rules) and compliance with the requirements applicable to the use of reserve size.
Nasdaq proposes to reduce the current 17-second delay between executions against the same market maker to five seconds. As noted above, one commenter believed that the proposed five-second delay between executions against a market maker would provide market makers with insufficient time to react to executions against their quotations and would create significant difficulty for market makers in maintaining control over their positions and effectuating a coherent market making strategy.
In response, Nasdaq maintained that a five-second interval delay (with an additional two-second internal Nasdaq system processing time) is an appropriate compromise between the need for fast executions and the need to provide market makers with adequate time to manage their capital risk through monitoring and updating their quotes in response to rapidly changing market conditions.
The Commission believes that the proposal to reduce the delay between executions against the same market maker from 17 seconds to five seconds will help to ensure that a market maker has no more time than is necessary after an execution before it must update its quotes. This requirement will help to ensure that a market maker cannot attempt to avoid its market making obligations by delaying after an NNMS execution before entering an updated quote.
As discussed more fully in Section IV.I,
Nasdaq proposes to eliminate the No Dec feature for NNM securities. The No Dec feature allows continuous executions against a market maker's quotation at the same price without decrementing the quoted size. Nasdaq believes that the No Dec feature has become less important because market makers are able to manage their quotations by displaying their actual size. In addition, Nasdaq believes that the No Dec feature will become less important in a market where market makers will have the ability to refresh their quotations at a size they determine.
Several commenters questioned the elimination of the No Dec feature. One commenter maintained that Nasdaq should retain the No Dec feature because it reduces quote update traffic, thereby mitigating the capacity strain on Nasdaq's network.
In response, Nasdaq asserted that the elimination of the No Dec feature will allow market participants to more easily execute multiple customer orders at the inside and move the market to new quote levels, thereby aiding the price discovery process.
The Commission believes that it is reasonable for Nasdaq to eliminate the No Dec feature for NNM securities. Specifically, the Commission believes that the elimination of the No Dec feature should result in quicker executions and prompt access to the available liquidity at the current inside market. The Commission also believes that the elimination of the No Dec feature may allow the market to adjust more quickly to information, thereby facilitating price discovery and improving the efficiency of the Nasdaq market.
The Commission notes that market makers now have the ability to quote in actual size, and therefore have an enhanced ability to manage their quotations. In addition, NNMS's reserve size refresh and autoquote refresh features should help market makers that elect to use reserve size to manage their quotations.
With regard to the commenter's concern that the elimination of the No Dec feature might strain the capacity of Nasdaq's network, the Commission does not believe, based on Nasdaq's representations regarding planned enhancements to its systems
Nasdaq proposes to eliminate the SOES preferencing feature for NNM securities because it is inconsistent with the processing of orders in time priority and because the preferencing feature might place the agency quotations of public customers, if the Commission approves the display of separate agency quotes, at a disadvantage. In addition, Nasdaq believes that preferencing in an automatic execution system reduces incentives for market makers to compete aggressively for orders by showing the full size and true price of their trading interest.
The Commission believes that it is reasonable for Nasdaq to eliminate the SOES preferencing feature to provide for the processing of orders in price/time priority. The processing of orders in price/time priority should help to ensure that all orders are processed in a fair, equal, and orderly manner. Accordingly, the Commission finds that the elimination of SOES preferencing is designed to protect investors and the public interest by helping Nasdaq to maintain a fair and orderly market.
Nasdaq proposes to revise SelectNet to require the use of “oversized” preferenced SelectNet Orders. As discussed above, the proposed oversized order provisions will allow members to direct a SelectNet preferenced order to an NNMS market maker, including the market maker's agency quote, if the Commission approves the display of separate agency quotes, only if the order is designated as AON or MAQ for a size that is at least 100 shares greater than the displayed amount of the quote to which the order is directed. The oversized order requirement is designed to reduce instances of double liability for market makers. UTP exchanges, however, will continue to send and receive SelectNet liability orders. In addition, order entry ECNs will be able to receive SelectNet liability orders.
As discussed above, thirty-two commenters objected to the elimination of SelectNet liability orders. Among other things, the commenters argued that (1) the ability to preference outside the current inside market is crucial to investors who, in some cases, would be willing to forego the inside price to access the liquidity outside the current inside market;
In response to the commenters, Nasdaq maintained that the elimination of SelectNet preferencing was essential to achieving two of the proposal's goals, the reduction of dual liability
In response to the commenters' concerns regarding their ability to access quotations outside the inside market in the absence of SelectNet liability orders, Nasdaq stated that market participants may attempt to access such quotations through oversized SelectNet orders or through traditional means of communication.
In response to the commenters who raised concerns about the potential for manipulative activity in NNMS, Nasdaq asserted that NASD Regulation would closely monitor quotation and order entry activity to ensure the protection of all market participants.
The Commission believes that the oversized order requirement and the resulting elimination of most SelectNet liability orders is a reasonable means to address the problem of double liability.
With regard to obtaining access to liquidity outside the current inside market, the Commission notes that market participants may attempt to access quotations outside the current inside market through the use of oversized SelectNet orders or through traditional means of communication (
As discussed above, several commenters believed that the proposed reduction in SelectNet liability orders would result in misleading or inaccurate quotations because market makers would not be required to trade at their quotations.
Under the proposal, an ECN may participate in NNMS as either an order entry ECN or as a full participant ECN. Market participants will access an order entry ECN through SelectNet liability orders, and an order entry ECN will not provide automatic executions for orders received from those participants. An order entry ECN may request order entry capability in NNMS, which will allow it to obtain automatic executions against the quotations of NNMS market makers, including agency quotes, if the Commission approves the separate display of agency quotes.
A full participant ECN will provide automatic executions for orders the ECN receives through NNMS. Like an order entry ECN, a full participant ECN may request order entry capability in NNMS to obtain automatic executions for orders it sends through NNMS.
As discussed more fully above, ECNs and other market participants criticized the provisions of the proposal relating to ECN participation in NNMS. Two ECNs asserted that order entry participation would marginalize an ECN and was not a viable means for participating in NNMS.
One market maker criticized the proposal for providing two levels of participation for ECNs but not for other market participants.
In response to the concerns regarding ECN participation, Nasdaq stated that it proposed two levels of ECN participation after some ECNs indicated that their systems were not capable of supporting a full automatic execution interface with Nasdaq at this time.
With regard to the interaction of an ECN's reserve size with NNMS, Nasdaq stated that ECNs currently do not allow Nasdaq access to the reserve size share amounts residing in their systems.
In response to concerns that NNMS will provide an opportunity for manipulative and fraudulent quotation and order entry activity, Nasdaq stated, as noted above, that NASD Regulation would closely monitor quotation and order entry activity to ensure the protection of all market participants.
The Commission finds that Nasdaq's proposal for ECN participation in NNMS provides an effective means for integrating ECNs into NNMS. By allowing an ECN to participate in NNMS either as a full participant ECN or as an order entry ECN, the proposal provides ECNs with the flexibility to determine the method of participation in NNMS that is most appropriate for the ECN at this time. The Commission also believes that providing two options for ECN participation in NNMS is reasonable and necessary because, according to Nasdaq, some ECNs currently are not capable of supporting a full automatic execution interface with Nasdaq. Moreover, it is not likely that ECNs that choose order entry participation will be marginalized because ECNs are frequently at the best quote in the market. Further, these ECNs have the ability to obtain automatic executions against the quotes of NNMS market makers if they so choose.
With regard to the concern that the lack of uniform access to ECN quotes will provide opportunities for manipulative and fraudulent quotation and order entry strategies in NNMS, the Commission expects NASD Regulation to carefully monitor trading in NNMS to detect manipulative quotation or order entry strategies and to bring appropriate disciplinary action against a market participant who engages in such strategies or other conduct that is inconsistent with just and equitable principles of trade.
Under the proposal, SelectNet will continue to serve as the primary linkage between UTP exchanges and Nasdaq. UTP exchanges will receive and be obligated to execute preferenced SelectNet liability orders and they will retain their ability to send SelectNet preferenced liability orders to Nasdaq market makers.
The CHX asserted that the proposal improperly excludes the UTP exchanges, including the CHX, from full participation in NNMS.
In response, Nasdaq noted that Nasdaq market makers currently are not able to obtain automatic executions against exchange specialists.
The Commission believes that it is reasonable for Nasdaq to continue to use SelectNet as the primary linkage between Nasdaq and the UTP exchanges, allowing UTP exchange specialists to access the Nasdaq market through SelectNet liability orders. The Commission believes that the use of SelectNet linkage will provide UTP exchange specialists with adequate access to the Nasdaq market.
Several commenters expressed concerns regarding Nasdaq's technological capability to implement the proposed changes. In particular, one commenter noted that Nasdaq's systems must be able to promptly deliver critical message traffic, including messages relating to executions, size decrements, and quote updates.
In response, Nasdaq indicated that it has and will continue to take all appropriate steps to assure the adequacy and sufficiency of the proposed systems changes.
In response to the commenters' concerns regarding Nasdaq's ability to provide prompt notice of an execution, Nasdaq asserted that the delays in execution report delivery result from competition for system resources in the Nasdaq central message switch.
Nasdaq also noted that it is in the process of testing a Transmission Control Protocol/Internet Protocol (“TCP/IP”)-based, API communications protocol for NNMS, which Nasdaq expects to implement by the end of February 2000.
The Commission believes that the proposed enhancements to Nasdaq's systems, including the new Tandem S-Series host processors and software modifications, the improved central message switch, and the TCP/IP-based, API communications protocol for NNMS, will help to ensure that Nasdaq has the technological capability to implement the proposed changes. The Commission expects that Nasdaq will implement these changes before it moves to the new NNMS trading platform. The Commission also expects Nasdaq to provide sufficient lead time for market participants before implementing NNMS, and to closely monitor operation of NNMS and to implement additional technological changes as necessary.
One commenter expressed concern that the fee system for NNMS may operate in a discriminatory and anticompetitive manner.
In response, Nasdaq noted that the fees to be assessed under NNMS mirror the current fees for Nasdaq's automatic execution facilities (
The Commission believes that the proposed NNMS fees provide for the equitable allocation of reasonable dues, fees, and other changes, consistent with Section 15A(b)(5) of the Act.
The Commission believes that it is reasonable for Nasdaq to retain the current five-second delay between SOES executions against the quotation of market maker in SmallCap securities during locked and crossed markets.
The Commission believes that the proposed technical, non-substantive amendments to the NASD Manual will clarify the NASD's rules to reflect the proposed changes. Because these changes will reduce confusion and help to ensure compliance with the NASD's rules, the Commission finds that the changes are designed to protect investors and the public interest.
The Commission finds good cause for approving Amendment Nos. 1, 2, and 3 to the proposal prior to the thirtieth day after the date of publication of notice of filing thereof in the
Interested persons are invited to submit written data, views, and arguments concerning Amendment Nos. 1, 2, and 3, including whether Amendment Nos. 1, 2, and 3 are consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. § 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the NASD. All submissions should refer to File No. SR-NASD-99-11 and should be submitted by February 15, 2000.
For the reasons discussed above, the Commission finds that the proposal is consistent with the Act (specifically, Sections 11A and 15A of the Act) and the rules and regulations thereunder applicable to a national securities association.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
1. Letter from John M. Schaible, President, NexTrade, to Jonathan G. Katz, Secretary, SEC, dated May 3, 1999.
2. Letter from Steven Weil to SEC, dated May 8, 1999 (“Weil Letter I”).
3. Letter from Steven Weil to Jonathan G. Katz, Secretary, SEC, dated May 7, 1999. (“Weil Letter II”).
4. Letter from Kenneth D. Pasternak, President, and Walter F. Raquet, Chief Operating Officer, Knight Securities, Inc., to Jonathan G. Katz, Secretary, SEC, dated May 21, 1999 (“Knight Letter I”).
5. Letter from James M. Hensley, President, Sierra Nevada Securities, Inc., to Jonathan G. Katz, Secretary, SEC, dated May 24, 1999 (“Sierra Nevada Letter”).
6. Letter from Brent M. Weisenborn, Chairman, Security Investment Company of Kansas City (“KCMO”), to Jonathan G. Katz, Secretary, SEC, dated May 25, 1999 (“Weisenborn Letter”).
7. Letter from Mktmaven to SEC (sent by e-mail) dated May 24, 1999 (“Mktmaven Letter”).
8. Letter from Samuel F. Lek, Chief Executive Officer, Lek Schoenau & Company, Inc., to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Lek Letter”).
9. Letter from James F. Mytinger, Treasurer, Kansas City Securities Association, to Jonathan G. Katz, Secretary, SEC, dated May 26, 1999 (“KCSA Letter”).
10. Letter from Christopher Halford, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Halford Letter”).
11. Letter from Stuart Cave, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Cave Letter”).
12. Letter from Ludwell G. Gaines III, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Gaines Letter”).
13. Letter from Steven R. Hook, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Hook Letter”).
14. Letter from Richard Kitzmiller, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Kitzmiller Letter”).
15. Letter from Jeffrey Frankel, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Frankel Letter”).
16. Letter from Bruce K. Schmidt, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Schmidt Letter”).
17. Letter from James F. Mytinger, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Mytinger Letter”).
18. Letter from Trent McCann, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“McCann Letter”).
19. Letter from Lance Turpin, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Turpin Letter”).
20. Letter from Kyle Malmstrom, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Malmstrom Letter”).
21. Letter from Ron F. Boyle III, KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Boyle Letter”).
22. Letter from Carl L. Means, Jr., KCMO, to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Means Letter”).
23. Letter from Oren Galchen to Jonathan G. Katz, Secretary, SEC, dated May 22, 1999 (“Galchen Letter”).
24. Letter from Richard Y. Roberts, Thelen Reid & Priest LLP, on behalf of the Electronic Traders Association (“ETA”), to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“ETA Letter”).
25. Letter from Robin Roger, Principal and Counsel, Morgan Stanley Dean Witter, to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“Morgan Stanley Letter”).
26. Letter from Dan Liu, Executive Vice President,
27. Letter from David K. Whitcomb, Professor of Finance and Economics, Rutgers University, Faculty of Management, Department of Finance and Economics, to Jonathan G. Katz, Secretary, SEC, dated June 1, 1999 (“Whitcomb Letter”).
28. Letter from Brian Hyndman, President,
29. Letter from Diane Murphy, Managing Director/Nasdaq Trading, BancBoston Robertson Stephens, to Jonathan G. Katz, Secretary, SEC, dated June 1, 1999 (“BancBoston Letter”).
30. Letter from Bruce Miller, Professor of Accounting, The Anderson School at UCLA, to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“Miller Letter”).
31. Letter from Timothy J. Wilson to Jonathan G. Katz, Secretary, SEC, dated May 23, 1999. (“Wilson Letter”).
32. Letter from Craig S. Tyle, General Counsel, Investment Company Institute, to Jonathan G. Katz, Secretary, SEC, dated June 1, 1999 (“ICI Letter”).
33. Letter from Dinuka L. Samarasinghe to Jonathan G. Katz, Secretary, SEC, dated May 23, 1999 (“Samarasinghe Letter”).
34. Letter from Gregg Giaquinto, In-House Counsel, Electronic Trading Group, L.L.C. (“ETG”), to Jonathan G. Katz, Secretary, SEC, dated June 1, 1999 (“ETG Letter”).
35. Letter from Paul R. Rudd to Jonathan G. Katz, Secretary, SEC, dated May 23, 1999 (“Rudd Letter”).
36. Letter from William B. Norman to Jonathan G. Katz, Secretary, SEC, dated May 25, 1999 (“Norman Letter”).
37. Letter from Michael O'Reilly to Jonathan G. Katz, Secretary, SEC, dated May 25, 1999 (“O'Reilly Letter”).
38. Letter from Gabriel Levin to Jonathan G. Katz, Secretary, SEC, dated May 21, 1999 (“Levin Letter”).
39. Letter from Jeremy Zucker to Jonathan G. Katz, Secretary, SEC, dated March 29, 1999 (“Zucker Letter”).
40. Letter from David O'Leary to Jonathan G. Katz, Secretary, SEC, undated, received June 3, 1999 (“O'Leary Letter”).
41. Letter from Tolga Erman to Jonathan G. Katz, Secretary, SEC, dated May 25, 1999 (“Erman Letter”).
42. Letter from Piers Fennell to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“Fennell Letter”).
43. Letter from Mike Wolverton to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“Wolverton Letter”).
44. Letter from Neal King to Jonathan G. Katz, Secretary, SEC, dated May 24, 1999 (“King Letter”).
45. Letter from Nikhil Atreya to Jonathan G. Katz, Secretary, SEC, dated May 27, 1999 (“Atreya Letter”).
46. Letter from Joel Haber to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“Haber Letter”).
47. Letter from Joshua Weintraub to Jonathan G. Katz, Secretary, SEC, undated, received June 2, 1999 (“Weintraub Letter”).
48. Letter from Bryan D. Chung to Jonathan G. Katz, undated, received June 2, 1999 (“Chung Letter”).
49. Letter from Jeffrey A. Deeney to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“Deeney Letter”).
50. Letter from Steven Weil to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“Weil Letter III”).
51. Letter from Bob Sievers, Access Securities, to SEC, dated June 2, 1999 (“Sievers Letter”).
52. Letter from Steve Swanson, President, Mount Pleasant Brokerage Services, LP, to Jonathan G. Katz, Secretary, SEC, dated June 1, 1999 (“Mt. Pleasant Letter”).
53. Letter from Arthur J. Kearney, Chairman, and Leopold Korins, President and CEO, Security Traders Association (“STA”) to Jonathan G. Katz, Secretary, SEC, dated June 3, 1999 (“STA Letter”).
54. Letter from Howard Teitelman to Jonathan G. Katz, Secretary, SEC, dated May 20, 1999 (“Teitelman Letter”).
55. Letter from Justin Schiller to Jonathan G. Katz, Secretary, SEC, undated, received June 4, 1999 (“Schiller Letter”).
56. Letter from James T. Snell, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated May 24, 1999 (“Snell Letter”).
57. Letter from Matthew D. Nemcic to Jonathan G. Katz, Secretary, SEC, undated, received June 3, 1999 (“Nemcic Letter”).
58. Letter from Kenneth D. Pasternak, President, and Walter F. Raquet, Chief Operating Officer, Knight Securities, Inc., to Jonathan G. Katz, Secretary, SEC, dated June 4, 1999 (“Knight Letter II”).
59. Letter from Richard D. Schenkman, Executive Vice President, Instinet Corporation, to Jonathan G. Katz, Secretary, SEC, dated June 7, 1999 (“Instinet Letter”).
60. Letter from Paul B. O'Kelly, Chicago Stock Exchange (“CHX”), to Jonathan G. Katz, Secretary, SEC, dated June 7, 1999 (“CHX Letter”).
61. Letter from Bernard L. Madoff, Chairman, Trading Committee, Securities Industry Association (“SIA”), to Jonathan G. Katz, Secretary, SEC, dated June 2, 1999 (“SIA Letter”).
62. Letter from Brian L. Mack to Jonathan G. Katz, Secretary, SEC, dated May 28, 1999 (“Mack Letter”).
63. Letter from Jon Vercellone to Jonathan G. Katz, Secretary, SEC, undated, received June 4, 1999 (“Vercellone Letter”).
64. Letter from Yu-Hui J. Lin to Jonathan G. Katz, Secretary, SEC, dated May 30, 1999 (“Lin Letter”).
65. Letter from Cornel Catrina to Jonathan G. Katz, Secretary, SEC, dated May 29, 1999 (“Catrina Letter”).
66. Letter from William H. Sulya, Senior Vice President and Director of Nasdaq/OTC Trading, A.G. Edwards & Sons, Inc. (“A.G. Edwards”), to Margaret H. McFarland, Deputy Secretary, SEC, dated June 7, 1999 (“A.G. Edwards Letter”).
67. Letter from Greg Swenson to Jonathan G. Katz, Secretary, SEC, undated, received June 8, 1999 (“Swenson Letter”).
68. Letter from Kevin M. Foley, Bloomberg L.P. (“Bloomberg”), to Jonathan G. Katz, Secretary, SEC, dated June 4, 1999 (“Bloomberg Letter”).
69. Letter from Hill, Thompson, Magid & Co., Inc. (“Hill”), to Jonathan G. Katz, Secretary, SEC, dated June 7, 1999 (“Hill Letter”).
70. Letter from Mike Cormack, Manager, Equity Trading, American Century Investment Management (“ACIM”), to Jonathan G. Katz, Secretary, SEC, dated June 3, 1999 (“ACIM Letter”).
71. Letter from Ephraim F. Sudit, Ph.D., Professor of Accounting and Information Systems, Rutgers University, to Jonathan G. Katz, Secretary, SEC, dated June 1, 1999 (“Sudit Letter”).
72. Letter from Matthew D. Lang, Senior Compliance Officer, USCC Trading, to Jonathan G. Katz, Secretary, SEC, dated June 8, 1999 (“USSC Trading Letter I”).
73. Letter from Robert L. Padala, Managing Director, Over-the-Counter Trading, Donaldson, Lufkin & Jenrette (“DLJ”), to Jonathan G. Katz, Secretary, SEC, dated June 14, 1999 (“DLJ Letter”).
74. Letter from Gerald D. Putnam, Chief Executive Officer, Archipelago, L.L.C. (“Archipelago”), to Jonathan G. Katz, Secretary, SEC, dated June 14, 1999 (“Archipelago Letter”).
75. Letter from Darren Caris, Torrey Pines Securities, to Jonathan G. Katz, Secretary, SEC, dated June 16, 1999 (“Caris Letter”).
76. Letter from Neil C. Feldman, President, USCC Trading, to Jonathan G. Katz, Secretary, SEC, dated June 17, 1999 (“USCC Trading Letter II”).
77. Letter from Lon Gorman, Executive Vice President, Charles Schwab (“Schwab”), to Jonathan G. Katz, Secretary, SEC, dated June 16, 1999 (“Schwab Letter”).
78. Letter from Michael T. Dorsey, Senior Vice President and General Counsel, Knight Securities, Inc., to Jonathan G. Katz, Secretary, SEC, dated June 23, 1999 (“Knight Letter III”).
79. Letter from Maria A. Silverstein, The Security Traders Association of New York, to Jonathan G. Katz, Secretary, SEC, and Robert Colby, Deputy Director, Division of Market Regulation, SEC, dated March 22, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act” or “Exchange Act”),
The NASD and Nasdaq are proposing to amend the rules of the NASD to establish authority to halt trading in certain specific circumstances in securities included in the OTC Bulletin Board Service (“OTCBB”). The NASD and Nasdaq are also proposing to make changes to the Plan Of Allocation And Delegation Of Functions By NASD To Subsidiaries to clarify that the Stockwatch section of Nasdaq would have authority to effectuate OTCBB halts. Below is the text of the proposed rule change. Proposed new language is in
The Stockwatch section handles the trading halt functions for The Nasdaq Stock market
In its filing with the Commission, Nasdaq included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
Based on this review, the NASD and Nasdaq are proposing to expand Nasdaq's authority so that Nasdaq may impose quotation and trading halts in OTCBB securities when: (1) The OTCBB security is dually listed or registered and a foreign regulatory authority or market halts trading in the security; (2) the OTCBB security is a derivative or component of a security listed on Nasdaq, a domestic exchange, or foreign exchange/market (
Currently, NASD Rule 4120 authorizes Nasdaq to impose trading halts in Nasdaq-listed securities and securities listed on a national securities exchange and traded in the third market. There are, however, no rules that grant Nasdaq authority to impose trading or quotation halts in OTCBB securities. Additionally, unlike the Nasdaq market, there is no listing agreement between Nasdaq and OTCBB issuers, and thus Nasdaq does not have the ability to compel such issuers to disclose information to Nasdaq. Accordingly, it is difficult for Nasdaq to unilaterally imposes halts in the OTCBB because, in most cases, information from the issuer is necessary to assess the situation and determine if a a halt and/or resumption of trading is appropriate.
For this and the proposed halts described below, an OTCBB halt would be lifted if Nasdaq determines that the basis of the halt no longer exists or upon the passage of five trading days, which ever occurs first.
For both Nasdaq-listed and OTCBB securities, Nasdaq publishes the record date of the action and the ex-date in its “Daily List” on the Nasdaq Websites. This provides information to broker-dealers, clearing agencies, and the public regarding the record date and settlement of such trades. For Nasdaq-listed securities, if an issuer does not provide the information in a timely manner, Nasdaq may request the Rule 10b-17 information from the issuer and halt trading pending receipt of such information.
While OTCBB issuers are also required to give the NASD information proscribed by Exchange Act Rule 10b-17 in a timely manner, Nasdaq does not currently have authority to institute trading halts in an OTCBB security when such information has not been timely provided. In the past, OTCBB issuers have failed to provide the NASD with the information required by Exchange Act Rule 10b-17, such as a stock split or the payment of a cash dividend, which has caused confusion in the marketplace because the information has been disseminated unevenly. When this has occurred, some market participants had become aware of the information (which impacts the pricing of the security) and had adjusted their quotes and/or trading activity accordingly. Others, however, had been unaware of this information and did not adjust their quotes and/or trading activity, thus resulting in anomalous pricing. In these situations, unlike Nasdaq-listed stocks, Nasdaq was not able to halt trading, gather information and issue a clarifying UPC notice. Rather, trading continued despite the uneven distribution of information or the distribution of misinformation, while Nasdaq staff attempted to gather information to clarify the situation. To minimize the potential for disorderly markets and investor confusion, the NASD and Nasdaq are proposing to halt trading and quotations in an OTCBB security when the issuer fails to give the NASD notice of the information specified in Exchange Act Rule 10b-17.
Finally, the NASD and Nasdaq are proposing to amend the Plan Of Allocation And Delegation Of Functions By NASD To Subsidiaries to clarify that the Stockwatch section of Nasdaq would have authority to effectuate OTCBB halts
The NASD and Nasdaq believe that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
The NASD and Nasdaq do not believe that the proposed rule change will impose any inappropriate burden on competition.
Written comments were neither solicited nor received.
Within 35 days of the publication of this notice in the
(A) By order approve the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Persons making written submissions should file six copies thereof the the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the NASD.
All submissions should refer to File No. SR-NASD-99-33 and schould be submitted by February 15, 2000.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The NYSE proposes to amend NYSE Rule 431, “Margin Requirements,” to establish margin requirements for day trading in customer accounts of member organizations. The text of the proposal is below. Deletions are in brackets, and additions are in italics.
No change to 431(a) through (b)(3).
(b)(4) equity of at least $2,000 except that cash need not be deposited in excess of the cost of any security purchased (this equity and cost of purchase provision shall not apply to “when distributed” securities in a cash account).
Withdrawals of cash or securities may be made from any account which has a debit balance, “short” position or commitments, provided it is in compliance with Regulation T of the Board of Governors of the Federal Reserve System and after such withdrawal the equity in the account is at least the greater of $2,000
No change to 431(c) through (f)(8)(A)(iii).
(f)(8)(B) Day Trading.
Whenever day trading occurs in a customer's margin account the [margin to be maintained]
(f)(8)(C) When the equity in a customer's account, after giving consideration to the other provisions of this Rule, is not sufficient to meet the requirements of paragraph (f)(8)(A) or (B) additional cash or securities must be received into the account to meet any deficiency within [seven]
.10-.20 No change.
In its filing with the Commission, the NYSE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The NYSE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend NYSE Rule 431 to implement specific requirements for day trading in customer accounts of member organizations. The primary purpose of the proposal is to require that minimum levels of equity and margin be deposited and maintained in day trading accounts sufficient to support the risks associated with day trading activities.
NYSE Rule 431 prescribes the minimum margin amount required to be maintained in customer accounts of member organizations. As a result of recent amendments to federal margin regulations and a rapidly changing industry environment, the Exchange established, in April 1996, a Rule 431 Committee (the “Committee”) to review margin requirements and make recommendations for change. The Committee established subcommittees to review specific provisions of NYSE Rule 431. A special subcommittee was formed recently to address the risks associated with day trading in customer accounts. The Exchange's Board of Directors has approved a number of proposed amendments resulting from Committee recommendations.
This proposal amends NYSE Rule 431 to establish special maintenance margin requirements for customers that engage in day trading, and specific minimum equity requirements and buying power limitations for customers that demonstrate a pattern of day trading.
According to the Exchange, the recent growth and advances in technology have contributed to a dramatic increase in day trading by customers and in the establishment of broker-dealers whose primary business is to provide customers with direct links to the securities markets by allowing them to trade their own portfolios on-line. In this environment, day traders attempt to make profits on intra-day price movements of stock in the securities markets.
The proposed amendments to NYSE Rule 431(f)(8)(B) define “day trading” as “the purchase and sale of the same security in the same day in a margin account.” An exception to the definition is provided when: (1) a long security position is carried in the account overnight, and sold the next day prior to any new purchases of that security; or (2) a short security position is carried overnight and purchased the next day prior to any new sales of that security, (
A customer will be deemed as a “pattern day trader” if there are four or more day trades within five business days in an account, provided that the number of day trades is more than 6% of total trades in the account for the five day period.
The proposal also defines “day trading buying power” to provide a maximum level of day trading allowed by “pattern day traders” without restrictions. For equity securities, buying power is the equity in the account at the close of the business day, less any maintenance margin, multiplied by four. For non-equity securities, buying power shall be computed using applicable special maintenance margin requirements pursuant to other provisions of the Rule.
The proposed amendments require day traders to maintain special maintenance margin commensurate with their levels of day trading activity. For day trades in equity securities, the required special maintenance margin is 25% of the cost of all day trades during the day. For non-equity securities, margin required is the same as maintenance margin required pursuant to other provisions of NYSE Rule 431. However, when two or more day trades occur on the same day in the customer's account, the required margin may be based on the highest open position
Further, under the amended Rule, the time frame for meeting day trading special maintenance margin calls will be reduced from seven business days to five business days. If the special maintenance margin call is not met within five business days from the date the special margin deficiency occurred, pattern day traders will be restricted to day trading on a cash available basis only for 90 days, or until the special call for additional funds is met. Member organizations will incur a one time capital charge for the amount of any unmet deficiency on the sixth business day.
Currently, NYSE Rule 431 requires $2,000 minimum equity for a customer to open a margin account. The Exchange is proposing to require that a pattern day trader's account maintain a minimum equity of $25,000 at all times. In the event that a pattern day trader's account falls below the required minimum equity, no further day trades will be permitted until the requisite equity level is maintained. In addition, member organizations that have advance knowledge or reason to believe that a new account will pattern day trade must require the customer to deposit $25,000 minimum equity into the account prior to the commencement of day trading activity.
The proposal will also restrict pattern day traders from trading in excess of their day trading buying power. If the day trading buying power is exceeded, and this results in a special maintenance margin deficiency, the following actions must be taken by member organizations: (i) the account will be margined based on the total cost of all day trade purchases for that day; and (ii) the customer's day trading buying power will be reduced by the maintenance margin amount required.
To provide greater financial stability to such accounts, the proposal requires that a day trading customer deposit into the day trading account a sufficient amount of money to meet minimum equity and maintenance margin requirements. Such deposits will not be allowed to be withdrawn for at least two business days.
In addition, pattern day traders will be prohibited from utilizing “cross guarantees” otherwise permitted in margin accounts. These prohibitions are intended to address instances where margin calls in day trading accounts are met by cross-guarantees within different customer accounts at the same broker-dealer. The net effect of these prohibitions is to require that each pattern day trading account meets its requirements independently by utilizing funds actually on deposit in the account.
The Exchange believes the proposed rule change is consistent with the requirements of Section 6(5)(b) of the Act,
The Exchange believes that the proposed rule change is also consistent with Section 7(a) of the Act
The Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange has neither solicited nor received written comments on the proposed rule change.
Within 35 days of the date of publication of this notice in the
A. by order approve the proposed rule change, or
B. institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Copies of the submissions, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any persons, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-NYSE-99-47 and should be submitted by February 15, 2000.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend its customs and practices for calculating continuing annual listing fees for Canadian companies.
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
It has been the custom and practice of the Exchange to calculate the continuing annual fee for Canadian companies listed before September 8, 1989 on the basis of total worldwide shares, with a 50% discount for companies with more than half of their operations outside the United States. The continuing annual fee for Canadian companies listed after September 8, 1989 and all other non-U.S. companies has been calculated based on shares issued in the U.S. The proposed change will calculate continuing annual fees for all Canadian companies based on shares issued in the U.S., thereby conforming the continuing annual fee for Canadian companies listed before September 8, 1989, to the standard applied to all other non-U.S. companies.
The Exchange believes the basis under the Act for the proposed rule change is the requirement under Section 6(b)(4)
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were solicited or received with respect to the proposed rule change.
Within 35 days of the date of publication of this notice in the
A. by order approve the proposed rule change, or
B. institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-NYSE-00-01 and should be submitted by February 15, 2000.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The PCX is proposing to adopt a new rule to allow the ITS Coordinator
In its filing with the Commission, the PCX included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The PCX has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
At the PCX, there are generally two registered specialists per equity issue traded on the Exchange.
Currently, any PCX specialist may send an outbound ITS commitment to another market center without that ITS Coordinator's assistance. A PCX specialist who is not an ITS Coordinator may also receive inbound ITS commitments without the involvement of the ITS Coordinator, as long as the ITS Coordinator is not designated to participate in the trade as a result of the inbound commitment.
The current PCX rules do not expressly authorize the ITS Coordinator to accept ITS commitments on behalf of other specialists. The ITS Coordinator needs to obtain the verbal consent of the other specialist before accepting an inbound commitment on behalf of that other specialist. The PCX is now proposing to provide the ITS Coordinator with the express authority to accept ITS commitments on behalf of other specialists. The Exchange believes that this rule change is necessary in order to assure that there will be no delays in the acceptance of inbound ITS commitments, where there is more than one specialist quoting at the price of the inbound commitment.
For example, assume Specialist A and Specialist B (PCX specialists) are both bidding $20 (the national best bid) for 500 shares of XYZ stock. If the PCX receives an inbound ITS commitment to sell 1,000 shares of stock, and if Specialist A is the ITS Coordinator, then Specialist A will confirm with Specialist B that 500 shares of XYZ may be accepted by Specialist A on Specialist B's behalf. The proposed rule change would allow Specialist A to accept the 500 shares on Specialist B's behalf, on the ground that Specialist B's bid for 500 shares is still outstanding at the time that Specialist A receives the inbound commitment for 1,000 shares. Whenever an inbound ITS commitment is received on the PCX, the specialists whose quotes prompted the inbound commitment will be notified by a “shadow” message that the inbound commitment has been received on the PCX.
Specifically, the PCX is proposing to adopt new Rule 5.20, Commentary .04, which will provide that in the case of the assignment of an ITS stock to more than one PCX Registered Specialist, the PCX Coordinating Specialist or PCX Registered Specialist at whose ITS station an ITS commitment to trade is received is authorized to accept such commitment at the PCX bid or offer price, if still available (or at a better price if available), and up to the size of the PCX bid or offer without the need to communicate with other PCX members.
The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange has neither solicited nor received written comments on the proposed rule change.
Within 35 days of the date of this notice in the
A. by order approve such proposed rule change, or
B. institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing including whether the proposed rule is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the PCX. All submissions should refer to File No. SR-PCX-99-37 and should be submitted by February 15, 2000.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” or “Act”),
Phlx requests permanent approval for the elimination of position and exercise limits
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Phlx requests permanent approval of the pilot program eliminating position and exercise limits on FLEX equity options. FLEX equity options at the Phlx have been trading since January 1998.
In addition to eliminating position and exercise limits, the pilot program required that a member or member organization (other than a Specialist or Registered Options Trader) report to the Exchange information for each account that maintains a position on the same side of the market in excess of the position limit established pursuant to the applicable exchange rule for Non-FLEX Equity options of the same class. The report included information regarding the FLEX Equity option position, positions in any related instrument, the purpose or strategy for the position, and the collateral used by the account.
Furthermore, the Commission, in its order approving the pilot program, required the Exchange to submit a report containing a description of: (i) the types of strategies used by FLEX Equity options market participants and whether FLEX Equity options are being used in lieu of existing standardized equity options; (ii) the type of market participants using FLEX Equity option both before and during the pilot program, including how the utilization of FLEX Equity options has changed; (iii) the average size of FLEX Equity option contracts both before and during the pilot program, the size of the largest FLEX Equity option contract on any given day both before and during the pilot program, and the size of the largest FLEX Equity option held by any single customer/member both before and during the pilot program; and (iv) any impact on the prices of underlying stocks during the establishment or unwinding of FLEX positions that are greater than three times the standard position limit. Phlx filed its report, which will be discussed below, on July 15, 1999.
The basis under the Act for the proposed rule change is the requirement under Section 6(b)(5)
The proposed rule change will impose no burden on competition.
No written comments were solicited or received with respect to the proposed rule change.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room, located at the above address. Copies of such filing will also be available for inspection and copying at
The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange, and, in particular, with the requirements of Sections 6 and 11A of the Act.
The Commission also believes that the proposed rule change is consistent with Section 11A of the Act in that the permanent elimination of position and exercise limits for FLEX Equity options allows the Exchange to better compete with the growing over-the-counter (“OTC”) market in customized equity options, thereby encouraging fair competition among brokers and dealers and exchange markets. The attributes of the Exchange's options markets versus a OTC market include, but are not limited to, a centralized market center, an auction market with posted transparent market quotations and transaction reporting, parameters and procedures for clearance and settlement, and the guarantee of The Options Clearing Corporation (“OCC”) for all contracts traded on the Exchange.
The Commission has generally taken a gradual, evolutionary approach toward expansion of position and exercise limits. Given that the current pilot program has run for the past two years without incident, the Commission believes that it is appropriate to approve the pilot on a permanent basis, First, the FLEX Equity options market is characterized by large, sophisticated institutional investors (or extremely high net worth individuals), who have both the experience and ability to engage in negotiated, customized transactions. For example, with a required minimum size of 250 contracts (or the number of contracts having $1 million of underlying equivalent value) to open a transaction in a new series,
As described above, the Exchange has adopted important safeguards that will allow it to monitor large positions in order to identify instances of potential risk and to assess additional margin and/or capital charges, if necessary. The Exchange requires each member or member organization (other than a Specialist, a Registered Options Trader, a Market Maker, or a Designated Primary Market Maker) that maintains a position on the same-side of the market in excess of the position limit level established pursuant to the applicable Exchange rule
The Commission believes that it is reasonable to treat FLEX Equity options differently than regular standardized options. FLEX options compete directly with OTC options. The Commission believes that it would be beneficial to attract OTC activity back to a more transparent market with a clearinghouse guarantee. Hence, a liberalization of position limits for FLEX Equity options is a measured deregulatory means to enable the Exchange to compete with the OTC market while preserving important oversight safeguards.
As noted above, the Exchange was required to submit a report assessing the effects of the pilot program. This information was required to allow the Commission to valuate the consequences of the program and to determine whether permanent approval was appropriate. The Commission has reviewed Phlx's report. Although the Commission cannot entirely rule out the potential for future adverse effects on the securities markets for the FLEX Equity options or component securities underlying FLEX Equity options, the report supports permanent approval of the pilot because such effects and abuses have not occurred over the two year pilot period.
In the report, the Exchange indicates that there were no instances of any unusual market effects developing out of FLEX trades. Through 1998, there were a total of 189 trades, 47 transacted by institutions and 142 undertaken by retail customers. The average institutional trade size was 772 contracts with the largest trade involving 8,000 contracts. Retail investor trades averaged 120 contracts with the largest trade involving 1,760 contracts.
Finally, given the size and sophisticated nature of the FLEX Equity options market, the reporting and margin requirements, and the fact that the pilot program has run the past two years without incident, the Commission
The Commission finds good cause for approving the proposed rule change prior to the thirtieth day after the date of publication of notice thereof in the
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
The United States government, through an interagency working group chaired by the U.S. Department of State, is seeking authority to negotiate an annex to the United States-Canada Air Quality Agreement of 1991. The proposed annex would seek to address transboundary ground-level ozone air quality problems by establishing commitments to reduce emissions of major constituents of air pollution. In preparation for the proposed negotiations, the United States will establish a negotiating team consisting of representatives of the U.S. Department of State, the U.S. Environmental Protection Agency, and other interested U.S. government agencies. In addition, three representatives of interested party groups (one each from industry/mining/labor, U.S. states, and environmental groups) will be invited to participate on the U.S. delegation to the talks. The first negotiating session is expected to take place in Ottawa, Canada, in February 2000. The U.S. Department of State will host a public meeting in advance of this session to outline issues likely to arise in the context of the negotiations, to invite public comment, and to invite interested parties to collaborate on selecting their group's representative on the U.S. delegation. The public meeting will take place on Friday, February 4, 2000, from 9:00 a.m. to 11:00 a.m. in Room 1107 of the U.S. Department of State, 2201 C Street NW, Washington, D.C. To expedite their entrance into the building, attendees should provide to Eunice Mourning of the Office of Environmental Policy, U.S. Department of State (tel. 202-647-9266, fax 202-647-5947) their name, organization, date of birth and Social Security number by close of business on Wednesday, February 2, 2000. Attendees should enter the C Street entrance and bring picture identification with them. For further information, please contact Ms. Cornelia Weierbach, U.S. Department of State, Office of Environmental Policy (OES/ENV), Room 4325, 2201 C Street NW, Washington DC 20520. Phone 202-647-4548, fax 202-647-5947, e-mail weierbachcm@state.gov.
The United States and Canada committed themselves to addressing transboundary air pollution issues in the 1991 United States-Canada Air Quality Agreement. Since that Agreement entered into force, work has focused on achieving reductions in emissions of the two major acid rain pollutants: sulfur dioxide (SO
In April 1997, President Clinton met with Canadian Prime Minister Chretien to discuss, among other issues, bilateral transboundary pollution control initiatives. At that time, the U.S. Environmental Protection Agency (EPA) Administrator and the Canadian Minister of the Environment signed the Program to Develop a Joint Plan of Action for Addressing Transboundary Air Pollution. The focus of this initiative was on ground-level ozone and particulate matter. In June 1998, these officials endorsed a report from the U.S.-Canada Air Quality Committee in which the Committee undertook to deliver, by April 1999, recommendations on the negotiation of an ozone annex to the U.S.-Canada Air Quality Agreement. On April 6, 1999, the Committee recommended the negotiation of an ozone annex to the U.S.-Canada Air Quality Agreement. Both the Administrator and the Minister agreed with this recommendation.
The United States has a strong regulatory program under the Clean Air Act (the Act) to reduce significantly emissions of ozone forming pollutants— NO
The EPA has established national ambient air quality standards (NAAQS) for several pollutants, including ozone. To help achieve these air quality standards, EPA has issued a series of national regulations over the past 20 years designed to continue to diminish significantly emissions of VOCs and NO
Under the Act, EPA requires stringent levels of control for newly built or modified industrial sources of ozone precursor emissions of NO
Parties to the U.N. Economic Commission for Europe's (UNECE) Convention on Long-Range Transboundary Air Pollution (LRTAP) recently signed a Protocol to Abate Acidification, Eutrophication, and Ground-Level Ozone (the LRTAP Protocol). The U.S. and Canada are both Parties to the LRTAP Convention, and each has signed the Protocol. Under the LRTAP Protocol, the U.S. and Canada have agreed to bring forward emission reduction commitments for SO
In order to further the public interest, the Department of State, in consultation with other U.S. government agencies, will invite three representatives from among all interested members of the public to participate in the negotiations as (non-U.S. government) members of the U.S. delegation. One individual will be invited to represent each of the following groups: industry/mining/labor, U.S. states, and environmental/public interest groups. Organizations that are members of each group are invited to nominate a spokesperson and collaborate on the selection of the representative who will participate on the U.S. delegation.
The spokesperson of each group should notify the Office of Environmental Policy, U.S. Department of State, not later than February 11, 2000, of the group's selection of its representative. Further discussion of this process will take place at the February 4, 2000 public meeting.
The United States and Canada expect to begin negotiations on the ozone annex in February 2000, and expect to complete negotiations by the end of 2000, with negotiating sessions to occur every three to four months. In preparation for the proposed negotiation, the Administration is preparing its position for the negotiation, and has scheduled a public meeting to be held on Friday, February 4, 2000 from 9:00 a.m. to 11:00 a.m. in Room 1107 of the U.S. Department of State. Members of the Interagency Committee who will participate in the proposed negotiation will provide an overview of U.S. preparations for the first session. The U.S. Department of State is issuing this notice to help ensure that interested and potentially affected parties are aware of and knowledgeable about these negotiations, and have an opportunity to offer comments. Prior to subsequent briefings, we will be contacting organizations/individuals that have expressed an interest by mail, fax or e-mail. Those organizations/individuals which cannot attend the February 4, 2000 meeting, but wish to either submit a written comment or to remain informed, should provide Eunice Mourning of the Office of Environmental Policy, U.S. Department of State (phone 202-647-9266; fax 202-647-5947) with their statement and/or their name, organization, address, telephone and fax numbers, and their e-mail address.
Tennessee Valley Authority (Meeting No. 1515).
9 a.m. (CST), January 27, 2000.
TVA Environmental Research Center Auditorium, Muscle Shoals, Alabama.
Open.
Approval of minutes of meeting held on December 8, 1999.
B1. Supplement to contract with U.S. Fleet Leasing for fleet maintenance services.
B2. Cooperative/contract agreement with Bicentennial Volunteers, Incorporated, for volunteer, special projects, and staff augmentation services.
C1. Supplement to Contract No. 99PPW-235218-002 with ABB Environmental Systems to design, manufacture, and deliver selective catalytic reduction process equipment for any TVA fossil plant.
C2. Supplement to Contract No. 98P6D-195379 with General Electric Company for the manufacture and turnkey installation of new simple cycle dual fuel combustion turbine generating units.
E1. Public auction sale of approximately 0.23 acre of land located on Cherokee Lake in Grainger County, Tennessee (Tract No. XCK-581) to resolve an existing house encroachment on one lot and to provide adequate area on a second adjoining lot to permit home construction.
E2. Grant of permanent easement, without charge, except for payment of TVA's administrative costs, to the State of Tennessee for highway improvement purposes, affecting 5 acres of land on Watts Bar Lake in Rhea County, Tennessee (Tract No. XTWBR-141H).
E3. Grant of a permanent recreation easement, without charge, except for payment of TVA's administrative costs,
E4. Grants of two permanent easements, without charge, except for payment of TVA's administrative costs, to Notla Water Authority for a water treatment facility and raw water intake site, affecting approximately 21 acres of land located on Nottely Lake in Union County, Georgia (Tract No. XTNLR-34WP and XTNLR-35E).
E5. Sale of noncommercial, nonexclusive permanent easements to Mark Margetts (Tract No. XTELR-211RE), Oscar Lidstrom (Tract No. XTELR-213RE), and Michael Campbell (Tract No. XTELR-214RE) for construction and maintenance of recreational water-use facilities, affecting approximately 0.34 acre of Tellico Lake shoreline in Loudon and Monroe Counties, Tennessee.
E6. Grant of a permanent easement, without charge, except for TVA's administrative costs, for the upgrade of a wastewater treatment plant, to Jefferson City, Tennessee, affecting approximately 1.3 acres of land on Cherokee Lake in Jefferson County, Tennessee (Tract No. XTCK-64SP).
E7. Public auction sale of approximately 3.4 acres of a portion of the Oxford, Mississippi, primary substation property located in Lafayette County, Mississippi (Tract No. XOXPSS-1).
E8. Public auction sale of approximately 3.07 acres of TVA land (the site of the former Mayfield, Kentucky, Area Operating Headquarters) located in Graves County, Kentucky (Tract No. XMAH-1).
F1. Filing of condemnation cases to acquire permanent easements and rights-of-way for electric transmission lines at the Shelby-Covington Tap to Brighton Transmission Line, in Tipton County, Tennessee, and Murfreesboro-Smyrna No. 2 Transmission Line, in Rutherford County, Tennessee.
For more information: Please call TVA Public Relations at (423) 632-6000, Knoxville, Tennessee. Information is also available at TVA's Washington Office (202) 898-2999.
The following Agreements were filed with the Department of Transportation under the provisions of 49 U.S.C. sections 412 and 414. Answers may be filed within 21 days after the filing of the application.
Finally Adopted Resos/Recommended Practices r1-49 Minutes—PSC/Minutes/012 dated December 16, 1999.
Mail Vote 059—Resolution 070tt—TC3 Excursion Fares between South East Asia and South Asian Subcontinent.
The following Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits were filed under Subpart Q of the Department of Transportation's Procedural Regulations (See 14 CFR 302.1701 et seq.). The due date for Answers, Conforming Applications, or Motions to Modify Scope are set forth below for each application. Following the Answer period DOT may process the application by expedited procedures. Such procedures may consist of the adoption of a show-cause order, a tentative order, or in appropriate cases a final order without further proceedings.
Federal Highway Administration (FHWA), DOT.
Notice of Intent.
The FHWA is issuing this notice to advise the public that a programmatic Environmental Impact Statement (EIS) will be prepared for the I-70 Mountain Corridor from the intersection of State Highway C470 in Jefferson County to Glenwood Springs in Garfield County, a distance of approximately 140 miles crossing five counties in Colorado.
Mr. Scott Sands, FHWA Colorado Division, 555 Zang Street, Room 250, Denver, CO 80228, Telephone: 303/969-6730, extension 362.
Pursuant to Section 102(2)(C) of the National Environmental Policy Act of 1969, as amended (NEPA), and as implemented by the Council on Environmental Quality (CEQ) regulations (40 CFR parts 1500-1508) and FHWA regulations (23 CFR part 771), the FHWA, in cooperation with the Colorado Department of Transportation (CDOT), is issuing this notice of intent to prepare a programmatic Tier 1 EIS. The EIS will be prepared in compliance with CEQ regulations at 40 CFR 1501.7 and as authorized by 40 CFR 1502.20 and 23 CFR 771.111(g), to take a broad view of the transportation issues and alternative solutions to assist in identifying needed safety and mobility improvements and reducing congestion on the I-70 Mountain Corridor. The Federal Railroad Administration, though not having jurisdiction over the project, will serve as a cooperating agency, providing technical assistance on rail technology.
Recognizing the need to act on projected increases in congestion and other mobility problems that have been forecasted over a period of the next 20 years, CDOT commissioned the I-70 Mountain Corridor Major Investment Study (MIS), which was completed in late 1998. The recommended improvements resulting from the MIS address alternatives for increased safety and to accommodate existing and future traffic demand. Reference is made to such MIS, which is available for examination at the Colorado Department of Transportation, Region One, 18500 East Colfax Avenue, Aurora, Colorado 80011.
As the next step and to meet objectives in the MIS, CDOT planned to prepare a site-specific EIS to address a 16-mile-long corridor between U.S. 40 and Floyd Hill, Clear Creek County (
The programmatic EIS will enable CDOT and FHWA to address the transportation problems of the I-70 Mountain Corridor comprehensively as part of the overall I-70 Mountain Corridor transportation system. The overall project termini will extend from C470 to Glenwood Springs in order to assess the transportation problems within the I-70 Mountain Corridor. While the project termini are proposed to match the problem area, some of the proposed solutions will extend into other major locales or corridors (
The approach to the assessment of environmental impacts will begin with agency and public scoping to identify the issues and concerns associated with the corridor. The results of scoping will help define the alternatives and the scope of the environmental studies to be conducted. Alternatives proposed in the MIS and identified through scoping will be evaluated and screened to narrow the range of alternatives considered for the I-70 Mountain Corridor programmatic EIS. Alternatives examined will be eliminated either through screening or advanced to environmental analysis for the programmatic EIS. The assessment will focus on cumulative environmental impacts. The studies and assessment will be documented in the draft programmatic EIS. After its publication, the draft programmatic EIS will be available for agency and public review and comment, and public hearings will be held. On the basis of the draft programmatic EIS and the comments received, a preferred alternative 20-year plan and 50-year vision will be selected and preparation of the final programmatic EIS and Record of Decision will proceed.
The Record of Decision for the programmatic EIS will not result in the environmental clearance of any I-70 transportation-related improvements. However, individual projects could proceed for I-70 improvements if they comply with 23 CFR 771.111(f) criteria: (1) Connect logical termini and be of sufficient length to address environmental issues on a broad scope, (2) have independent utility or independent significance, and (3) not restrict consideration of alternatives for other reasonably foreseeable transportation improvements. To date, projects that comply with 23 CFR 771.111(f) include the Eagle County Airport Interchange, Hogback Park-n-Ride, Georgetown Rockslide Mitigation Project, Colorado Intermountain Fixed Guideway Authority Demonstration and Testing Project, Intermountain Connection Project, and Eisenhower Tunnel Lighting Improvements. If any other projects emerge during the programmatic EIS that comply with 23 CFR 771.111(f), they will be noticed publicly in advance. At present, it is anticipated that the I-70 Mountain Corridor programmatic EIS process will be completed in late 2002.
Integral with the programmatic EIS process, CDOT and FHWA will conduct an extensive and broad public involvement program to keep federal, state, and local agencies, organizations, and interested individuals informed and to provide ample opportunities for such agencies, organizations, and the public to participate throughout the three-year process. To ensure that the full range of issues and alternatives related to this proposed action are identified and addressed, written comments, suggestions, or questions should be directed to the FHWA at the address provided above or directed to:
Ms. Cecelia Joy, Planning and Environmental Manager, Colorado Department of Transportation-Region 1, 18500 East Colfax Avenue, Aurora, Colorado 80011, Telephone: 303/757-9112.
Information describing the purpose of the project, proposed alternatives, area to be evaluated, public involvement program, and preliminary project schedule will be available upon request by contacting Cecelia Joy at the address and telephone number noted above. Scoping comments may be made verbally or in writing to Ms. Joy and at future public meetings, the locations, dates, and times of which will be announced through public notice (newspaper advertisements and other means), as contemplated by 40 CFR 1506.6 and the following CDOT public notice procedure for comparable actions.
Issued on: January 13, 2000.
Federal Highway Administration (FHWA), DOT.
Notice of intent.
The FHWA is issuing this notice to advise the public that an environmental impact statement will be prepared for a proposed expressway
Mr. Robert F. Tally, Team Leader, District Operations—North, California Division, 980 9th Street, Suite 400, Sacramento, CA 95814-2724, Telephone: (916) 498-5020.
The FHWA, in cooperation with the California Department of Transportation (Caltrans) and the Merced County Department of Public Works, will prepare an environmental impact statement (EIS) on a proposal to construct a regional arterial, the Campus Parkway, in Merced County. The proposed project would involve the construction of an alignment, between the State Route 99/Mission Avenue Interchange to the southwest and the Bellevue Road to the northeast. The project would be approximately 10.5 kilometers (6.5 miles) in length.
Construction of this corridor is considered necessary to provide for the locally projected future traffic demand and conform with the regional transportation planning for the year 2020. The proposed project would provide access to the Merced's eastern industrial area, the northern area of the city of Merced, and the University Community Specific Use Development Plan area near Lake Yosemite, which encompasses the site for the campus of the University of California at Merced. Alternatives under consideration include: (1) Taking no action and (2) constructing a four-lane limited access highway on the ultimate six-lane Right-of-Way. Incorporated into and studied with the various build alternatives will be design variations of grade and alignment.
Letter describing the proposed action and soliciting comments will be sent to appropriate Federal, State, and Local agencies, and to private organizations and citizens who have previously expressed or are known to have interest in this proposal. Public information meetings will be held in Merced County between March and November 2000. In addition, a public hearing will be held. Public notice will be given of the time and place of the meetings and hearing. The draft EIS will be available for public and agency review and comment prior to the public hearing. No formal scoping meeting is planned at this time.
To ensure that the full range of issues relate to this proposed action are addressed and all significant issues are identified, comments and suggestions are invited from all interested parties. Comments or questions concerning this proposed action and the EIS should be directed to the FHWA at the address provided above.
Issued on: January 19, 2000.
Kansas City Southern Industries, Inc. (KCSI), Kansas City Southern Lines, Inc. (KCSL), The Kansas City Southern Railway Company (KCSR), KCS Transportation Company (KCST), Gateway Western Railway Company (GWWR), and Gateway Eastern Railway Company (GWER) (collectively, applicants),
The applicants reported that they intended to consummate the transaction immediately upon the effective date of the exemption. The earliest the transaction could be consummated was January 17, 2000, 7 days after the exemption was filed.
The purpose of the transaction is to facilitate the planned spinoff of KCSI's financial subsidiaries into a corporation separate from KCSI, and to bring all of KCSI's commonly controlled railroads under the direct control of KCSR.
This is a transaction within a corporate family of the type specifically exempted from prior review and approval under 49 CFR 1180.2(d)(3). The applicants state that the transaction will not result in adverse changes in service levels, significant operational changes, or a change in the competitive balance with carriers outside the corporate family.
Under 49 U.S.C. 10502(g), the Board may not use its exemption authority to relieve a rail carrier of its statutory obligation to protect the interests of its employees. Although applicants do not expect any employees to be adversely affected by this control transaction, they have agreed to apply employee protective conditions pursuant to 49 U.S.C. 11326(a). Therefore, any employees adversely affected by the control transaction will be protected by the conditions set forth in
If the verified notice contains false or misleading information, the exemption is void
An original and 10 copies of all pleadings, referring to STB Finance Docket No. 33844, must be filed with the Surface Transportation Board, Office of the Secretary, Case Control Unit, 1925 K Street, N.W., Washington, DC 20423-0001. In addition, a copy of each pleading must be served on William A. Mullins, Esq., Troutman Sanders, LLP, 1300 I Street, N.W., Suite 500 East, Washington, DC 20005-3314.
Board decisions and notices are available on our website at “WWW.STB.DOT.GOV.”
By the Board, David M. Konschnik, Director, Office of Proceedings.
The use of facsimile signatures and seals on Customs bonds by the
Authorized facsimile signature on file for: James M. Gorman, Attorney-in-fact.
The corporate sureties have provided the Customs Service with a copy of the signature to be used, copies of the corporate seals, and certified copies of the corporate resolutions agreeing to be bound by the facsimile signatures and seals. This approval is without prejudice to the sureties' right to affix signatures and seals manually.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
The Veterans Benefits Administration (VBA), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before March 27, 2000.
Submit written comments on the collection of information to Nancy J. Kessinger, Veterans Benefits Administration (20S52), Department of Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC 20420. Please refer to “OMB Control No. 2900-0114” in any correspondence.
Nancy J. Kessinger at (202) 273-7079 or FAX (202) 275-5947.
Under the PRA of 1995 (Public Law 104-13; 44 U.S.C., 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA'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 respondents, including through the use of automated collection techniques or the use of other forms of information technology.
Without this information, VA would have no means of determining the proper marital status of the veteran.
By direction of the Secretary.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
The Veterans Benefits Administration (VBA), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before March 27, 2000.
Submit written comments on the collection of information to Nancy J. Kessinger, Veterans Benefits Administration (20S52), Department of Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC 20420. Please refer to “OMB Control No. 2900-0321” in any correspondence.
Nancy J. Kessinger at (202) 273-7079 or FAX (202) 275-5947.
Under the PRA of 1995 (Public Law 104-13; 44 U.S.C., 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA'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 respondents, including through the use of automated collection techniques or the use of other forms of information technology.
By direction of the Secretary.
Administration on Children, Youth and Families (ACYF), Administration for Children and Families (ACF), Department of Health and Human Services (DHHS).
Final Rule.
This final rule amends existing regulations concerning Child and Family Services by adding new requirements governing the review of a State's conformity with its State plan under titles IV-B and IV-E of the Social Security Act (the Act), and implements the provisions of the Social Security Act Amendments of 1994 (Pub. L. 103-432), the Multiethnic Placement Act (MEPA) as amended by Pub. L. 104-188, and certain provisions of the Adoption and Safe Families Act (ASFA) of 1997 (Pub. L. 105-89).
In addition, this final rule sets forth regulations that clarify certain eligibility criteria that govern the title IV-E foster care eligibility reviews which the Administration on Children, Youth and Families conducts to ensure a State agency's compliance with statutory requirements under the Act, and makes other technical changes to the race and ethnicity data elements in the Adoption and Foster Care Analysis and Reporting System (AFCARS).
March 27, 2000.
Kathy McHugh, Director, Policy Division, Children's Bureau, Administration on Children, Youth and Families at (202) 401-5789.
Titles IV-B and IV-E of the Social Security Act (the Act) are the primary sources of Federal funds for State child welfare services, foster care and adoption assistance. The Adoption Assistance and Child Welfare Act of 1980 (Pub. L. 96-272), amended title IV-B child welfare services to institute financial incentives for States to provide certain protections for children in foster care under section 427 of the Act. Public Law 96-272 also established Part E of title IV of the Act, “Federal Payments for Foster Care and Adoption Assistance.” The foster care component of the Aid to Families with Dependent Children (AFDC) program, which had been an integral part of the AFDC program under title IV-A of the Act, was transferred to the new title IV-E, effective on October 1, 1982.
In August 1993, under the Omnibus Budget Reconciliation Act of 1993, Public Law 103-66, Congress again amended title IV-B, creating two subparts and extending the range of child and family services funded under title IV-B to include family preservation and family support services. The family preservation and support services were designed to strengthen and support families and children in their own homes, as well as children in out-of-home care.
Later, through the Social Security Amendments of 1994, Congress repealed section 427 and amended section 422 of the Act to include, as State plan assurances, the protections formerly required in section 427 of the Act. As a result, ACF is no longer conducting “427” reviews to determine if a State is eligible to receive additional title IV-B, subpart 1 funds. Besides mandating the Secretary to promulgate regulations for reviews of State child and family service programs, the amendments to the Act at section 1123A required the Department to make technical assistance available to the States, and afforded States the opportunity to develop and implement corrective action plans designed to ameliorate areas of nonconformity before Federal funds are withheld due to the nonconformity.
In 1994, Congress passed the Multiethnic Placement Act (MEPA), Public Law 103-382, to address excessive lengths of stay in foster care experienced by children of minority heritage. One factor believed to be contributing to these excessive lengths of stay in foster care was State agencie’ attempts to place children of minority heritage in foster and adoptive homes with parents of similar racial or ethnic backgrounds. The MEPA forbids the delay or denial of a foster or adoptive placement based on the race, color, or national origin of the prospective foster parent, adoptive parent, or child involved. At the same time, Congress added a title IV-B State plan requirement to section 422(b)(9) of the Act, to compel States to make diligent efforts to recruit prospective foster and adoptive parents who reflect the racial and ethnic diversity of the children in the State for whom foster and adoptive homes are needed.
As originally enacted, section 553 of MEPA permitted States to consider the cultural, ethnic, or racial background of the child and the capacity of the prospective foster or adoptive parent to meet the needs of a child of such background, as one of several factors in making foster and adoptive placements. In 1996, through section 1808, “Removal of Barriers to Interethnic Adoptions,” of the Small Business Job Protection Act (Pub. L. 104-188), Congress repealed section 553 of MEPA, believing that the “permissible consideration” language therein was being used to obfuscate the intent of MEPA. Section 1808 of Public Law 104-188 amended title IV-E by adding a State plan requirement, section 471(a)(18) of the Act, which prohibits the delay or denial of a foster or adoptive placement based on the race, color, or national origin of the prospective foster parent, adoptive parent, or child involved. Section 1808 of Public Law 104-188 also dictates a penalty structure and corrective action planning for any State that violates section 471(a)(18) of the Act.
On November 19, 1997, President Clinton signed the first broad-based child welfare reform legislation since Public Law 96-272 was enacted in 1980. The Adoption and Safe Families Act (ASFA) of 1997, Public Law 105-89, seeks to provide States with the necessary tools and incentives to achieve the original goals of Public Law 96-272: safety; permanency; and child and family well-being. The impetus for the ASFA was a general dissatisfaction with the performance of State’ child welfare systems in achieving these goals for children and families. The ASFA seeks to strengthen the child welfare system's response to a child's need for safety and permanency at every point along the continuum of care. In part, the law places safety as the paramount concern in the delivery of child welfare
A Notice of Proposed Rulemaking (NPRM) was published in the
Prior to developing the NPRM, we consulted extensively with the child welfare field. We conducted a series of focus groups related to the child and family services reviews with representatives of State programs and national organizations, as well as with family and child advocates. In addition, State and Federal teams conducted 12 in-depth on-site pilots of the child and family services reviews that shaped our development of the regulation. We also conducted pilots of the title IV-E eligibility reviews in 12 States during the fiscal years 1995 through 1998. Shortly after the enactment of ASFA, we held focus groups in Washington, D.C. and in each of the 10 Federal regions to obtain input from the field on the implementation of the new law.
We received a wide range of written comments on the NPRM, representing a multitude of perspectives on Federal monitoring of State child welfare programs and meeting title IV-E statutory requirements. We received widespread support for an outcomes-focused approach to the child and family services reviews and the inclusion of a program improvement process subsequent to determinations of substantial nonconformity, and have thus retained these features in the final rule. We also received comments expressing concerns about other provisions of the NPRM.
The major concerns from commenters centered around provisional and two-tiered licensing systems for foster care homes, objectivity and clarity of substantial conformity determinations in the child and family services reviews, the enforcement of the Multiethnic Placement Act (as amended), documentation of reasonable efforts and other judicial determinations, and exemptions and exceptions from the termination of parental rights provisions. We amended and clarified many aspects of the final rule in response to these major issues and to other comments. To guide us in maintaining an appropriate balance in our analysis of the comments and decisionmaking for the final rule we used several principles. Those principles are to:
We believe that the Adoption and Safe Families Act of 1997 clearly establishes safety, permanency and well-being as the key goals for State child welfare systems. We were mindful, therefore, to have regulatory provisions that would support these statutory goals. For example, in the NPRM we proposed to prohibit provisional, or less than full licensure of foster care providers for title IV-E purposes. Many commenters opposed this prohibition for various reasons. Some were concerned that since relative caregivers were often granted less than full licensure, disallowing this practice for title IV-E purposes would reduce kinship care and the stability it can provide in a child's life. While we encourage States to consider permanency in kinship care arrangements, the ASFA clearly requires the safety of the child to be the paramount concern that will guide all child welfare services. In addition, the statute on its face requires that a home is fully licensed or approved as meeting the State's licensing standards for the purpose of title IV-E eligibility. Therefore, we decided to retain the proposed prohibition on less than full licensure, in part because the statute as amended by ASFA compels us to ensure that children are in safe placements.
We also chose to strengthen our focus on safety, permanency and well-being in the child and family services reviews in a number of ways. Many commenters were unclear about how we would measure these outcomes, so we have strengthened our process for measuring and determining substantial conformity with the safety and permanency outcomes in particular, through the statewide assessment. We also heard concerns that one of the safety outcomes was in fact two separate outcomes, so we have divided the first safety outcome accordingly. We believe that these modifications will help clarify our expectations for States to achieve these outcomes.
Another example of strengthening our focus on permanency is in the termination of parental rights provisions. Many commenters believed that certain groups of children in foster care should be exempted from the application of the provision for States to file a petition to terminate parental rights. Consistent with the statutory framework and desire for timely permanency for all children in foster care, we have clarified that no group of children is to be exempted from the TPR provision and State or tribal agencies may make exceptions to the TPR requirements only on a case-by-case basis.
As we noted in the NPRM, we have dramatically changed the focus of State program reviews by examining the results that child and family services programs achieve, rather than the accuracy and completeness of the case file documentation. Most commenters overwhelmingly supported this approach as one that would improve the provision of child welfare services for children and families, and we have thus retained a focus on outcomes in the final rule.
Some of the comments, however, also suggested that the flexibility that is inherent in an outcomes-based approach must be properly balanced with sufficient Federal oversight and State accountability. We agree that flexibility and accountability must be balanced, and have strengthened several provisions in the final rule in this respect. For example, for States who were determined to be out of substantial compliance on a child and family services review, we proposed to allow States two years, with a possible extension to three years, to complete a program improvement plan. Some commenters supported this length of time as sufficiently flexible to address needed areas of improvement, while others believed the program improvement period to be too long. In response, we have clarified that we do not expect States to take the full two
We also believe it necessary to ensure State accountability in the areas of documentation of reasonable efforts and contrary to the welfare determinations and requirements related to enforcement of section 471(a)(18) of the Act. Some commenters were concerned that the documentation requirements and enforcement of section 471(a)(18) of the Act were too inflexible. However, we believe that State accountability and Federal oversight in these critical areas of child and family protections and anti-discrimination consistent with the statute, will lead to better outcomes for children and families.
As we analyzed the comments, we carefully considered whether Federal regulations were the appropriate vehicle to address certain comments. We believe that we can better respond to some comments in a venue separate from the regulatory process, such as through technical assistance activities or program guidance.
For instance, some commenters requested regulations on title IV-E training or programs under title IV-B of the Act. We have very limited authority to expand the scope of the final rule beyond the issues presented for public comment in the NPRM, but we are now aware of certain issues that we may consider for future clarification. Other commenters asked for specific guidance on working to reunify children with parents who have substance abuse problems, or guidelines for judges on reasonable efforts, while others requested information about “best practices” in concurrent planning. We are committed to providing practice level guidance and will provide technical assistance in a variety of forms rather than in regulation. Other commenters requested Federal funds to subsidize legal guardianships, or train courts and their staff. Under current authority, title IV-E funds cannot be used for these purposes. However, we can direct States to our resource centers who may have information on seeking non-Federal funding sources for such initiatives.
This final rule incorporates many provisions of recently enacted legislation, including the Adoption and Safe Families Act of 1997, the Multiethnic Placement Act of 1994 as amended, and the Social Security Act Amendments of 1994. We received some comments that criticized us for not focusing on the requirements of ASFA and other amending legislation. We believe that some commenters were unclear that, to a large extent, provisions of ASFA, MEPA, etc. amend the Social Security Act (the Act), and that we refer to the requirements by their citation in the Act, rather than their citations in the amending legislation. We believe that this final rule does address the requirements of the amending legislation in the context of the existing requirements of titles IV-B and IV-E of the Act.
In addition to the guidance provided by this final rule, we encourage administrators to use the appropriate statutes as references in implementing Federal requirements. Also, the final rule amends existing regulations at 45 CFR part 1355 and 45 CFR part 1356. Therefore, we encourage the reader to examine and implement the rules herein in conjunction with existing regulations that have not been amended.
Discussed below are some of the major changes and provisions of the final rule. A more thorough response to the individual comments can be found in the section-by-section discussion.
Overall, we received comments that requested greater clarity on several definitions. We frequently encountered comments that noted that the Federal definitions did not encompass the variety of State definitions or practice. Where a definition was not essential to the proper implementation of the program, we chose to be flexible and leave definitions to the State's discretion. In particular, we deleted definitions of a “full hearing” and a “temporary custody hearing” as the comments revealed that they were limiting and not helpful to States. We also received comments that requested additional definitions for terminology used in the statute or in the regulation,
The proposed definition of the “date a child is considered to have entered foster care” elicited many comments requesting more clarity and State flexibility. In response, we have revised the definition to mirror the statutory language more closely. The “date a child is considered to have entered foster care” is no longer different for children placed in foster care under voluntary placement agreements, but more consistently applied. We also have clarified that a State can use a date earlier than the outside Federal limit set in the statute to begin the “clock” for satisfying the requirements for holding periodic reviews, permanency hearings, and for the termination of parental rights (TPR).
We received many comments on the definition of a “foster family home” that urged us to allow provisional licensure and a two-tiered system of licensing and approval. Despite these comments, we are prohibiting these practices, consistent with the statute, to ensure that children receiving title IV-E funds are placed safely in licensed homes. In recognition that some time may lapse between the date when a foster family home satisfies all requirements for licensure or approval and the actual date the license is issued, we will allow States to claim title IV-E reimbursement during this period, not to exceed 60 days. To accommodate those States where current State practice is not consistent with the requirements for foster family homes, we will allow a six-month period for States to bring current foster family homes to the appropriate licensing standards.
We received many comments in response to the proposed child and family services review process that have helped us strengthen it significantly from that proposed in the NPRM. In the NPRM and in the early pilot reviews, we relied heavily on the findings from the on-site reviews to make determinations about substantial conformity. In the final rule, we believe we have balanced our use of statewide quantitative indicators with case-specific qualitative observations in our decision-making about substantial conformity. Among the major changes we have made in the child and family review process are the following: We have strengthened the use of the statewide assessment, selected particular statewide data indicators to use in determining substantial
Most of the comments we received, particularly from the States, strongly favored the change to the results-and outcome-based review process proposed in the NPRM from the prior emphasis on compliance with procedural requirements. Similarly, we received very strong support for proposing a review process that provides time for States to improve programs and enhance services to children and families rather than one that imposes immediate penalties for nonconformity with certain requirements. A number of comments also indicated concerns about the details of the review process and raised issues about the overall approach that ACF is taking in reinventing the child and family services reviews.
Since we did not include all of the details of the reviews in the proposed rule, we would like to explain the procedures in more detail prior to addressing the major changes we made to the child and family services review.
We will review State programs in two areas: (1) Outcomes for children and families in the areas of safety, permanency, and child and family well-being; and (2) systemic factors that directly impact the State's capacity to deliver services leading to improved outcomes. The outcomes are as follows:
1. Children are, first and foremost, protected from abuse and neglect.
2. Children are safely maintained in their homes whenever possible and appropriate.
1. Children have permanency and stability in their living situations.
2. The continuity of family relationships and connections is preserved for children.
1. Families have enhanced capacity to provide for their children's needs.
2. Children receive appropriate services to meet their educational needs.
3. Children receive adequate services to meet their physical and mental health needs. Each outcome is evaluated by using specific performance indicators and two outcomes are evaluated using data indicators as well.
State programs will also be reviewed to determine the extent to which the State agency has implemented State plan requirements that build the capacity to deliver services leading to improved outcomes. We describe such State plan requirements as systemic factors. These systemic factors include: (1) Statewide information systems; (2) case review system; (3) quality assurance system; (4) staff and provider training; (5) service array; (6) agency responsiveness to the community; and (7) foster and adoptive parent licensing, recruitment and retention. Each of the systemic factors subject to review is based on specific State plan requirements. Our review and assessment of the systemic factors will be based on the extent to which the State is in conformity with those State plan requirements.
We also want to clarify how the various components of the review process will inform decisions regarding substantial conformity.
Four sources of information are included in the child and family services reviews in order to make decisions about substantial conformity:
• Statewide AFCARS and NCANDS data on foster care, adoption and child protective services, including the State's performance on statewide data indicators with respect to the national standards for such;
• Narrative information on outcomes and systemic factors;
• Case-specific qualitative information and family interviews on outcomes; and
• Interviews with non-case-specific State and local community representatives on outcomes and systemic factors.
To complete this review effort, several tools will be used, including:
• A field-tested CFSR procedures manual that addresses the steps to be followed in the reviews and supplements information included in the rule;
• A statewide assessment instrument that directs the utilization of statewide foster care, adoption and child protection data to complete a narrative discussion of the outcomes and systemic factors reviewed, and the State's performance in meeting the standards for the statewide data indicators;
• An on-site intensive review instrument;
• Interview protocols for use with State and local stakeholders; and
• A summary of findings and recommendations form that enables the review team to address each outcome and systemic factor reviewed. This form, when completed, serves as the report of the review findings to the State.
There are five steps in the review process, from the point of initiating the review to assessing penalties where determinations of nonconformity are made:
• Prior to the State beginning work on the statewide assessment, ACF prepares and transmits data profiles of the State's foster care and child protective service populations, using AFCARS and NCANDS data submitted by the State. Some examples of the data included in the profiles include the length of stay in foster care, foster care re-entries, and repeat maltreatment rates of children. The data will indicate whether or not the State meets the national standards for those statewide data indicators used to determine substantial conformity.
• The State then completes the statewide assessment. This task requires the State to examine the data relative to the State programs, goals, and objectives, and consider them in light of the outcomes for children and families subject to review. The State also addresses in narrative the systemic issues under review relative to their influence on the State's capacity to deliver effective services. Based on the quantitative and qualitative findings of the statewide assessment, the State and the ACF Regional Office jointly make decisions about the locations of the on-site review activities and the types of cases that will be reviewed on-site.
• The on-site review is conducted by a joint Federal-State team that combines both the outcomes and the systemic factors being reviewed. In reviewing for the outcomes, a sample of cases is reviewed intensively using information from the case record and interviews with family members, the caseworker, and service providers involved with the family. The findings from the sample of cases are combined with the State's performance on selected Statewide data indicators to make determinations about substantial conformity on the outcomes. In reviewing for the systemic factors, interviews are conducted with State and local representatives,
• The review team recommends a determination regarding substantial conformity, for each of the outcomes and systemic factors reviewed. The basis for the determinations is a
• States are immediately informed of any penalties associated with outcome and systemic factors determined not to be in substantial conformity. Program improvement plans are developed to address each area of nonconformity and the State has a limited period of time to successfully complete the program improvement plan before penalties are actually taken.
A number of the comments we received reflected a need for more clarity regarding the overall process. As noted earlier, we did not include all the details of the reviews in the proposed rule, but chose to regulate only the basic framework of the process, including the overall approach to the reviews, the standards for substantial conformity, and the State plan requirements subject to review as required in section 1123A of the Act. We chose to address specifics about how the reviews will be conducted, the performance indicators that will be used to measure outcomes, and some aspects of the process for determining substantial conformity in a procedures manual we developed separately from the NPRM. This procedures manual will supplement the regulation with additional detail that State and Federal staff will need to conduct the reviews. The procedures manual will be in final form for the initial reviews to be conducted following publication of this rule.
While we recognize the need to be clear on the details of the review process, we also need to maintain the flexibility to make appropriate changes that support the results-focused approach to Federal reviews of State programs. Although we have field-tested the proposed review process extensively in 12 States to date, we believe that not regulating certain aspects of the review process affords both the Federal government and the States an ongoing opportunity to benefit from lessons learned in future reviews and make improvements to the process where needed.
We have made significant changes to the review protocol in response to the concerns raised through public comment. The most significant concerns relate to:
• The process and specific criteria for determining substantial conformity with State plan requirements;
• The degree of subjectivity involved in determining substantial conformity;
• The small sample size used in the on-site portion of the reviews; and,
• The amount of penalties associated with nonconformity.
The following addresses the major issues noted above that were the subject of the majority of the comments and changes to the regulation:
Most of the respondents to the NPRM generally supported a determination of “substantial conformity,” rather than requiring a determination of conformity on each specific title IV-B and IV-E State plan requirement. Of particular concern to commenters were:
• The standards used to make determinations of substantial conformity for outcomes;
• The process for resolving discrepancies in the aggregate data from the statewide assessment and the information obtained from the on-site review; and,
• The criteria used to determine substantial conformity for the systemic factors being reviewed.
Standards used to make determinations of substantial conformity for outcomes. The primary concerns regarding this issue include a lack of clarity with respect to how substantial conformity is determined and the standards that States are expected to meet in achieving substantial conformity. Commenters particularly requested that we set a more tangible, objective standard for substantial conformity. In response to these comments, and concerns raised about the sample size for the on-site portion of the review, statewide data indicators that are measured against national standards, in combination with the findings of the on-site review, will be used to determine substantial conformity.
Outcome S1: Children are, first and foremost, protected from abuse and neglect. Data indicators: Repeat maltreatment. Of all children who were victims of substantiated or indicated child abuse and/or neglect during the period under review, what percentage had another substantiated or indicated report within a 12-month period?
Maltreatment of children in foster care. Of all children in foster care in the State during the period under review, what percentage was the subject of substantiated or indicated maltreatment by a foster parent or facility staff?
Outcome P1: Children will have permanency and stability in their living situations. Data indicators: Foster care re-entries. Of all children who entered care during the period under review, what percentage re-entered foster care within 12 months of a prior foster care episode?
Length of time to achieve the permanency plan.
Of all children who were reunified with their parents or caretakers at the time of discharge from foster care, what percentage was reunified in less than 12 months from the time of the latest removal from home?
Of all children who exited care to a finalized adoption, what percentage exited care in less than 24 months from the time of the latest removal from home?
Stability of foster care placement. Of all children served who have been in foster care less than 12 months from the time of the latest removal from home, what percentage have had no more than two placement settings?
Length of stay in foster care. For a recent cohort of children entering foster care for the first time in the State, what is the median length of stay in care prior to discharge?
The national standard for each statewide data indicator identified above will be based on the 75th percentile of all State’ performance for that data indicator, as reported in AFCARS and NCANDS. We considered using the 90th percentile and the median to establish the national standard and rejected both because these standards, respectively, were deemed either too high or too low. This is illustrated, based on 1998b (April 1-September 30) AFCARS data, and 1997 NCANDS data (available for repeat maltreatment only) in the chart below.
We recognize that we have set a high standard. However, we think it is attainable and that our overall approach for moving States to the standard through continuous improvement is sound.
We anticipate that the standard for each data indicator based on AFCARS data will be derived from the 1998b, 1999c (complete Federal fiscal year) and 2000a (October 1-March 31) reporting periods and the standard for each data indicator based on NCANDS data will be derived from the 1997 and 1998 reports. However, if we have more current and complete data available, for example the 1998 and 1999 NCANDS reports, we will use these data submissions to develop the standard. By using multiple reporting periods we will increase the number of States that participate in setting the standard.
As we considered how to develop the national standard, we noticed that States with smaller caseloads were clustered in the upper percentiles with respect to performance on the data indicators. We did not want States with larger caseloads to be disadvantaged, therefore, we explored setting multiple standards based on caseload size. We derived the variable “number of children in foster care per 10,000 children under 18 years old in the general population” and used it to test State performance on certain statewide data indicators. We found no correlation between the variables. In short, caseload size was not useful in explaining the variation in State performance with respect to the national standards, so it was not considered in setting the national standards.
Because this concept of setting a national standard for data and basing substantial conformity, in part, on a State's ability to meet such a standard is untested, we purposely limited the number of outcomes to which we assigned statewide data indicators. For example, we did not assign data indicators to Safety Outcome #2 or Permanency Outcome #2, although we will consider adding indicators to those outcomes at a later time. We will also consider adding to or revising the data indicators listed above as needed. For example, we will consider adding timeliness of initiating investigations of child maltreatment to the safety outcomes later if there is a broad enough national data base through NCANDS to support that indicator. In addition, to date, there are no uniform national data indicators collected through AFCARS or NCANDS that can be used to review for the Well-being outcomes.
We expect the statewide data indicators to change over time and, therefore, did not regulate them. We chose to base the first set of statewide data indicators on the outcome measures that were developed in accordance with section 203 of the ASFA for two reasons:
• We received many comments requesting that the section 203 measures and the child and family services reviews be consistent with one another; and,
• The section 203 measures were developed in conjunction with a consultation group and were published in the
We would also like to note that many of the data indicators and performance measures we selected are consistent with and support the work of ACF in meeting the requirements of the Government Performance and Results Act of 1993 (GPRA). Under GPRA, Federal agencies are required to work with the States to establish performance goals and monitor performance results for all Federal programs. We believe that the outcomes and data indicators used in the CFSR support one of ACF's objectives under GPRA to increase the safety, permanency, and well-being of children and youth.
We have, however, in regulation, retained our authority to add new data indicators, change existing data indicators, and suspend the use of data indicators as appropriate. We took a similar approach to setting the national standards. The standards will not change every year. Rather, we have retained our authority to periodically review and revise the standards if experience with the reviews indicates adjustments are necessary.
Resolving discrepancies in the aggregate data from the statewide assessment and the information obtained from the on-site review pertaining to the outcomes. We received a number of comments addressing this issue, particularly concerning how discrepancies between the two sets of information will be resolved. New § 1355.33(d) provides more detailed information on the steps we will take to resolve discrepancies between the aggregate data and the findings of the on-site portion of the review. In order to resolve discrepancies between the statewide assessment and the findings of the on-site portion of the review we will provide the State the option of either of the following:
• The submission of additional information by the State that will explain or resolve the discrepancy, such as additional data or analysis of the existing data, or
• ACF and the State will review additional cases, but only for the indicators with a discrepancy that must be resolved. The total number of cases reviewed may not exceed 150 cases, and will represent a statistically significant sample with a 90 percent (or 95 percent in subsequent reviews) compliance rate, a tolerable sampling error of 5 percent, and a confidence coefficient of 95 percent. The conclusions made from reviewing the additional cases will form the basis for determining substantial conformity.
Criteria used to determine substantial conformity for the systemic factors being reviewed. The concerns related to determining substantial conformity for the systemic factors: (1) Statewide information systems, (2) case review system, (3) quality assurance system, (4) staff and provider training, (5) service array, (6) agency responsiveness to the community, and (7) foster and adoptive parent licensing, recruitment and retention were similar to those for the outcome areas: A lack of clarity on how substantial conformity is determined and on the standards that States are expected to meet in achieving substantial conformity. In response to these concerns, we have established a process for rating the State's conformity with State plan requirements that is based on information obtained from the statewide assessment and the on-site stakeholder interviews. Information from the statewide assessment and interviews with stakeholders on-site must support a determination of substantial conformity. The review team will rate the State's performance for each systemic factor using a Likert-type scale, with criteria attached to each rating, based on the total information obtained from a variety of stakeholders interviewed on-site.
Except for “information system capacity,” all of the systemic factors reviewed have more than one State plan requirement associated with them that are included in the review process. A State's conformity with each systemic factor will be rated on a scale of 1-4, based on the extent to which there are processes in place which meet the State plan requirements associated with that systemic factor. For example:
The statewide assessment requires the State to evaluate each of the State plan requirements. Information from that source is used in part to determine how the State is complying with each State plan requirement. During the on-site review, selected local and statewide stakeholders will be interviewed and asked a series of questions that relate to the State plan requirements. Not every stakeholder interviewed will be able to address each systemic issue thoroughly. Thus, for each systemic factor, the review team must use the total information obtained from all the interviews to evaluate the extent to which the requirements are being met. Both the information from the statewide assessment and the stakeholder interviews must indicate that the State should receive a “3” rating or better for that systemic factor in order for the State to be found in substantial conformity. To ensure objectivity in the information gathered through stakeholder interviews, we have amended the regulation at § 1355.33(c)(4)(iv) to set minimum requirements with respect to the selection of stakeholders who must be interviewed.
Many respondents to the NPRM indicated that we needed to strengthen the rule to assure increased objectivity in making determinations of substantial conformity. Given the focus of the reviews on qualitative measures and degrees of outcome achievement, concerns raised included reviewers making subjective judgments on outcome achievement, holding States accountable for these judgments, and a lack of clarity on the standards used to make decisions.
We agree that the need to insure objectivity in the decision-making process is extremely important. In fact, we realized early in the design process of the reviews that proposing a results-focused review, as opposed to the checklist-style reviews of documentation conducted in the past, would raise concerns about the level of objectivity in the reviews. However, to design a review process that focuses on results and outcomes we must evaluate not only what happens to children and families as a result of the State’ interventions, but the circumstances and mitigating factors that affect both the interventions and the results. To accomplish this, our review process must utilize both quantitative and qualitative assessments. We also realize that determinations regarding outcome
As noted in the NPRM, we included several criteria and procedures in the pilot reviews that were designed to make the reviews as objective as possible and to result in consistency among reviewers and across States in making critical judgments about outcome achievement. Those measures include:
• Using statewide aggregate data and qualitative information from the statewide assessment to understand and interpret the status of outcomes and systemic factors;
• Applying uniform criteria or performance indicators that guide reviewers to an accurate conclusion about the extent to which the outcome is being achieved in each case;
• Training State and Federal reviewers in the use of standardized review instruments and protocols; and,
• Using a quality assurance procedure during the course of the review by requiring local team leaders to review case ratings and debrief daily with reviewers to ensure that criteria are applied consistently.
In piloting the reviews, we also determined that the objectivity and uniformity of the process could be strengthened in several areas. For example, we learned that the Statewide assessment was prepared differently among the pilot States and that the manner of collecting the data for the safety and permanency profiles was not uniform, particularly in States where AFCARS or NCANDS data were unavailable. These factors made it difficult to rely upon information in the statewide assessment.
In regard to case selection, we found that the manner of selecting cases for the on-site review varied among States in ways that made it difficult to assure randomness. Through the pilots and the comments we received on the instruments, we became aware that the protocols used to review cases could be improved to reflect, more objectively, those factors that determine conformity with State plan requirements.
In response to these lessons and others, we have strengthened the provisions for objectivity in the reviews by adding a number of measures to the final rule and the CFSR procedures manual. We are also making substantial changes to the content of the instruments used in the reviews that will assist in making objective determinations and addressing the relevant areas of State plan conformity.
Most of the comments regarding subjectivity were related to the on-site review. The comments we received concerning subjectivity in the review process arise from genuine concerns that States be held accountable to an objective set of criteria. We also have learned from the pilot reviews that we must be willing to accept the professional judgment of reviewers in determining substantial conformity. Where there are adequate procedures in place to assure consistency and accuracy in decision-making, as we have described above, we believe professional judgments will be objective.
We recognize that it is much more difficult to determine whether or not a child is safe than it is to determine, for example, that a date on a court order meets specified time frames. Reviewing for outcomes requires gathering both qualitative and quantitative information, examining the information within an appropriate context and, ultimately, making a judgment about how well the outcome is or is not being achieved. Caseworkers in the field must make these judgments every day, and children's lives depend upon the accuracy of that process. A review process that only checks for procedural requirements and does not evaluate the quality of the decision-making process and service delivery that we expect of caseworkers is not likely to yield findings that will help States improve those processes where needed.
In the NPRM, we proposed to review a sample of 30-50 cases. Most of the comments we received indicated strong concerns that reviewing only 30-50 cases may not be representative of the State’ service populations and would not lead to credible judgments of substantial conformity. A number of commenters questioned how such a small sample could be statistically valid and expressed concern over imposing penalties based on a small sample of cases. Some respondents indicated a fear that we would be basing decisions about substantial conformity on “anecdotal” information in the absence of a much larger sample.
Clearly, to many of the commenters, sample size is a major issue, and we wish to explain our rationale for making only modest changes to this feature of the review in the final rule, based on the lessons we learned in the course of piloting the new review process. We want to emphasize that two changes also address these concerns about the sample size: Adding the statewide data indicators and a process to resolve discrepancies that may include reviewing additional cases.
• We found little discrepancy between the statewide data and the findings from the small sample. We should note that we experienced minimal disagreement among reviewers (State and Federal) and between the statewide data and the findings made on the basis of the small samples in the pilot reviews. The findings of the pilots were similar to those noted in State quality assurance systems, where those systems were in place in pilot States. In most situations, the findings provided State officials with sufficient details about the functioning of their programs to make improvements where needed and to build on existing strengths in their programs.
• We learned that we cannot make accurate decisions in a results-focused review by only reviewing documentation in records. We began by pulling a large sample in the first four pilot States. We conducted a record review in all the cases, similar to prior reviews, except we were attempting to capture both qualitative outcome and quantitative information from the records. In a smaller subsample of the larger sample, we interviewed the relevant parties and focused less on record documentation and more on what was actually occurring in each case. Inevitably, the review team found that the small sample and the strategy of in-depth analysis through interviews was a more reliable source of information on outcomes and conformity with applicable requirements. The information obtained solely from the case records was often incomplete, not current, and left information gaps. Basically, we learned that we cannot apply traditional checklist-type reviews of documentation to determine the quality of decision-making and service delivery.
• We learned that reviewing cases intensely, including all the relevant interviews, requires a large number of staff resources and is an extremely time-consuming process. The process of reviewing case records and conducting multiple interviews in each case reviewed, combined with other review team activities, allows a reviewer time for only two cases, possibly three, in one week. Even with a sample size of 50 cases, the process requires a team of approximately 25 reviewers in order to complete the on-site review in one week. Increasing the sample to 150 cases or more would mean that either a team of 75 reviewers would be needed to review a State in one week, or 25
As originally proposed in the NPRM, the sample would be comprised of both in-home and foster care cases. In-home cases do not provide insight into the State's performance with respect to the permanency outcomes, meaning that not every case in the sample would inform decisions regarding substantial conformity for the permanency outcomes. On the other hand, we need to assure that the sample accurately captures information on in-home service cases in order to examine the safety outcomes based on recent practice and for children who never entered the foster care system.
Therefore, in certain circumstances, the sample size may be increased to assure that all program areas identified in the statewide assessment for further review are adequately represented. In addition, we are requiring, in regulation, that the sample of 30-50 cases include children who entered foster care in the State during the year under review.
We have also added provisions to the rule for resolving discrepancies between the aggregate data and the findings of the on-site review that address the sample of cases reviewed. We are providing States the option of resolving such discrepancies through the submission of additional information, or by ACF and the State reviewing additional cases that, in combination with the 30-50 cases reviewed on-site, will be a sufficient number to comprise a statistically significant sample. ACF and the State will determine jointly the exact number of additional cases to be reviewed, however, the total number of cases may not exceed 150. We chose a maximum of 150 cases because it exceeds the highest number of cases necessary to review a sample that will be statistically significant with a compliance rate of 90 percent (or 95 percent for subsequent reviews), a tolerable sampling error of 5 percent and a confidence coefficient of 95 percent. In order to assure that the sample of cases reviewed in the on-site review and the additional cases actually comprise one random sample, we will randomly select the oversample of 150 cases for the on-site review, from which a subsample of 30-50 cases will be drawn. If the State chooses a review of additional cases to resolve a discrepancy, those cases will be selected from the same oversample. In this manner, we believe we will address concerns about the size of the sample, particularly in cases where discrepancies in the findings exist and must be resolved.
We recognize that the sample size does not represent a faultless approach to reviewing State programs, and we fully understand the varying perspectives on this issue. We must emphasize, however, that the quality of information gathered from the overall process, and not the on-site sample in isolation, will benefit children and families by tracking their outcomes and allowing States to focus on program improvements where needed.
We have made an important change in the final rule regarding withholding of funds in situations where States remain in nonconformity continuously on the same outcomes or systemic factors, and for States that elect not to engage in a program improvement plan. The final rule provides for graduated penalties in successive reviews if areas of nonconformity remain uncorrected. We have also applied the maximum withholding to those States that do not implement program improvement plans to correct the areas of nonconformity.
The comments we received on the imposition of penalties raised a number of issues that we considered in making this change to the rule. Some comments indicated concerns that the Federal government is not meeting its stewardship responsibilities by not taking a more aggressive approach to penalizing States found not to be in substantial conformity. Other comments indicated that the potential for penalties is substantial and could have a serious effect on the capacity of States to administer their programs. We also were encouraged to use the process for imposing penalties to assure that program improvements are made when and where they are needed.
We wish to note that we have not proposed an “all or nothing” approach to penalizing States. We have been faithful to the statutory mandate that applicable penalties be commensurate with the extent of nonconformity. Further, we have designed a review process that is based on substantial conformity with the requirements, rather than total compliance without exception, to be consistent with the statutory mandate. Penalties are attached to each outcome and systemic factor determined to be in nonconformity. We are providing time-limited opportunities for States to make needed program improvements prior to withholding of Federal funds for nonconformity. Only when States fail to take advantage of program improvement opportunities or complete a plan successfully will they be faced with an actual loss of Federal funding as a result of the child and family services reviews.
At the same time, we have taken seriously the stewardship responsibilities of the Federal government in enforcing conformity with State plan requirements. These responsibilities are clear and we have not abandoned them. We intend to withhold Federal funds where States are not using those funds to achieve their designated purpose. To clarify that the need to make program improvements will be strongly enforced, we are strengthening sections of the final rule to assure that penalties will be taken in a timely and certain manner.
We do not wish to impose penalties in a manner that will impair a State's ability to provide essential services to children and families. However, we have a responsibility to assure that State plan requirements are met and that children and families are served in ways that will provide for their safety, permanency, and well-being.
We received a large response to the section of the regulation that enforces the Multiethnic Placement Act, as amended. Several commenters sought practice guidance on how to implement the law. We believe that we have addressed these issues in other forums through policy issuances and HHS-funded technical assistance and guides. Other commenters were concerned that we were not maintaining the partnership approach exemplified in the child and family services reviews. We have made no changes to the regulation in response to these comments, since we find that the statute is definitive in the manner in which we are to implement corrective action and enforce compliance with section 471(a)(18) of the Act.
In response to other comments, we have:
• Clarified that we will consider a State in violation of section 471(a)(18) when it maintains a policy, practice, law or procedure that, on its face, clearly violates section 471(a)(18) of the Act;
• Required States to notify ACF upon a final court finding that the State has violated section 471(a)(18) of the Act;
• Allowed States up to 30 days to develop a corrective action plan to respond to a violation of section 471(a)(18) of the Act resulting from a
• Clarified which title IV-E funds will be reduced in the event of a violation of section 471(a)(18) of the Act; and
• Added a definition of the term “entity.”
Many commenters believed that the requirements for reasonable efforts and contrary to the welfare determinations as proposed were inconsistent with current State practice. In some instances we agree that the regulation was unnecessarily restrictive, and have made the following changes to preserve State flexibility while keeping within the statute and maintaining the integrity of the program:
• Removed the distinction between emergency and non-emergency removals in the sections of the rule on contrary to the welfare and reasonable efforts to prevent removal. This change is in response to concerns that the distinction was artificial.
• Allowed States up to 60 days to obtain a judicial determination with regard to reasonable efforts to prevent removal of a child from home. This responds to concerns that our proposed policy restricted the timing for obtaining such a determination to a specific date rather than within a specified time frame.
• Consolidated the requirements regarding reasonable efforts to reunify the child with the family and efforts to make and finalize alternate permanent placements into a single requirement to be more consistent with actual State practice. Within 12 months of the date the child is considered to have entered foster care, the State is to obtain a judicial determination that the State agency made reasonable efforts with respect to the permanency plan that is in effect.
In other areas, we explained why we are maintaining our policy position rather than changing the regulation in response to commenter’ concerns. We affirmed that judicial determinations regarding contrary to the welfare and reasonable efforts are inextricably linked to a child's eligibility for title IV-E. The statute makes these judicial determinations eligibility requirements which we cannot change despite the many opposing comments. We also retained the requirement for the State to make a contrary to the welfare determination in the first court order sanctioning the removal of the child from the home, because it is a longstanding critical protection for children and families. Finally, we are not relaxing the documentation requirements or allowing
To clarify our existing policy with regard to the timing of the case plan, we have amended the regulation to allow States up to 60 days from a child's removal from the home to develop the case plan. We also made a significant policy shift in the requirements for subsequent permanency hearings. We are now requiring subsequent permanency hearings for all children, including children placed in a permanent foster home or a preadoptive home. We believe that the ASFA compels us to ensure, through the protection of a permanency hearing, that permanency will be achieved for these children.
We received a significant number of requests to limit the TPR provision to only certain groups of the foster care population. We are unable to make this change in the regulation, as no statutory authority exists for doing so, and the clear intent of ASFA was to speed critical decision-making for all children in foster care. We clarify in the final rule that the exceptions to the requirement to file a petition for TPR must be done on a case-by-case basis and added additional examples of a compelling reason. We also clarify that States must begin the process of finding and approving an adoptive family for a child when the State files a petition for TPR.
We made several changes to strengthen and clarify the title IV-E reviews. The title IV-E reviews are designed to review the eligibility of children in foster care and providers receiving title IV-E funds. Those changes to the final rule include:
• Clarifying that when using an alternate sampling methodology when AFCARS data are unavailable, we will review a six-month period that coincides with the AFCARS reporting period;
• Allowing all State’ initial primary reviews to be held at a 15 percent threshold of ineligible cases regardless of whether or not the review occurs within the first three years of the final rule;
• Providing, on a case-by-case basis, an extension of a program improvement plan when a legislative change is necessary for the State to achieve substantial compliance; and
• Increasing the initial amount of time to develop a program improvement plan from 60 days to 90 days for States found not to be in substantial conformity as a result of a title IV-E foster care eligibility review.
Several issues of note recurred as themes throughout the comments and the regulation. One was the application of the rules to certain populations, such as Indian tribal children, adjudicated delinquent children, and unaccompanied refugee minors. We clarify how in particular the provisions of the final rule apply to these populations of children, but also emphasize that overall the statute must apply to these children as they would any other child in foster care. We have no statutory authority to exempt any group from provisions such as the safety requirements or termination of parental rights requirements. Furthermore, we strongly believe that, while these requirements must apply to all children, the statute affords the State agency the flexibility to engage in appropriate individual case planning.
For Indian tribes, numerous other issues were raised with regard to how title IV-E requirements and, more specifically, the recent amendments made by the Adoption and Safe Families Act apply to Indian tribes as sovereign nations. While we are committed to the government-to-government relationship between the Federal government and Indian tribes, the foster care program under title IV-E is statutorily targeted to State agencies, and Indian tribes cannot receive title IV-E funds directly. Indian tribes can gain access to title IV-E funds on behalf of title IV-E eligible children if they enter into agreements with State agencies. Accordingly, Indian tribes must operate within the parameters of a particular State plan and the specifics of the agreement. Some commenters also requested that we explain how the requirements of the Indian Child Welfare Act work in the context of the ASFA. Although we can affirm that States must comply with ICWA and that nothing in this regulation supersedes ICWA requirements, we cannot expound on ICWA requirements since they fall outside of our statutory authority.
This section amends 45 CFR 1355.20 to revise the definitions of foster care and foster family home and to define new terms used throughout the regulation.
We also have removed to the reference to the agency's responsibility for the placement and care of the child so that the definition more closely follows the statutory language and is consistent with actual practice.
We have, however, created an exception. Under § 1356.21(k), we permit constructive removals (
We want to take this opportunity, however, to note that the purpose of the 60-day limit at section 475(5)(F) of the Act is to ensure that periodic reviews, permanency hearings, and application of the TPR provision are not delayed as a result of contested involuntary removals. The danger of such a delay often does not exist when children are removed from their homes pursuant to a voluntary placement agreement. When children are removed from home via a voluntary placement agreement, we encourage States to use the date the child is placed in foster care (rather than 60 days later) as the date for calculating when to hold periodic reviews, permanency hearings, and for complying with the TPR provision.
The date a child is considered to have entered foster care is, however, related to maintaining a child's eligibility for title IV-E funding. Under § 1356.21(b)(2), we require the State to use the date the child is considered to have entered foster care in determining when to obtain a judicial determination that it made reasonable efforts to finalize a permanency plan. We intentionally linked the timing for obtaining this judicial determination to the date the child is considered to have entered foster care so that such determinations could occur at the permanency hearing, the logical time for making such determinations.
ACYF-PA-87-02 requires States to satisfy the requirements for developing case plans, holding periodic reviews and permanency hearings (the requirements at section 427 of the Act at the time ACYF-PA-87-02 was written) for all children supervised by or under the responsibility of another public agency with which the title IV-B/IV-E agency has an agreement under title IV-E, and on whose behalf the State makes title IV-E foster care maintenance payments. Since the State cannot claim Federal financial participation under title IV-E for children in detention facilities, the “clock” for calculating when to comply with the requirements for developing case plans, holding periodic reviews and permanency hearings, and the TPR provision begins when the child is placed in foster care.
Although the ASFA was passed long after ACYF-PA-87-02 was issued, we think that the existing policy is an appropriate interpretation of section 475(5)(F) with respect to adjudicated delinquents who enter foster care subsequent to placement in a detention facility.
For example, we believe that we would encumber State systems by requiring a State to hold six-month periodic reviews based on the date the child is removed from the home while holding permanency hearings based on section 475(5)(F) of the Act. In that situation, the State would be obliged to hold two periodic reviews prior to the permanency hearing, the second of which would have to be held two months before the permanency hearing if the date of entry into foster care were 60 days from the date the child is removed from the home. Therefore, we have not made any changes to the final rule as a result of this comment.
Section 471(a)(10) of the Act requires that a State's title IV-E plan provide for the establishment or designation of a State authority that is responsible for establishing and maintaining standards for foster family homes and child care institutions. This section also requires that the title IV-E State plan provide for the application of these standards to “any” foster family home or child care institution receiving either title IV-B or title IV-E funds. Further, the statutory definition of “foster family home” in section 472(c) of the Act states that a foster family home is a home “* * * which is licensed by the State in which it is situated or has been approved (by the State licensing authority) as meeting the standards established for such licensing.” Clearly, the statute did not intend that there be separate standards for licensing and approval.
The plain language of the statute requires that, to be considered a foster family home for the purpose of title IV-E eligibility, the home must be either licensed or approved as meeting State licensing standards. It also is clear from the language in section 471(a)(10) of the Act that the State licensing standards must be applied to “any” foster family home that receives funding under titles IV-E or IV-B. The licensing provisions of the Act make no exceptions for different categories of foster care providers, including relative caretakers.
In past title IV-E foster care eligibility reviews, we have verified the existence of a license without differentiating among the types, and we understand State concerns in this regard. We also agree that placements that meet the
Since there seems to be some confusion over the nomenclature used in the draft regulation, we have revised the regulatory language in § 1355.20 to remove the reference to provisional licensure and to articulate that before a State may claim title IV-E funds, it must find that the home meets the State's licensing standards.
However, we recognize that some time may elapse between the date that satisfaction of the requirements is received and documented and the date on which the license is actually issued. We have concluded that 60 days is an ample period of time to allow between the time the State receives all the information on a home and the date on which the full license is issued. Therefore, we are permitting States to claim title IV-E reimbursement during the period of time between the date a prospective foster family home satisfies all requirements for licensure or approval and the date the actual license is issued, not to exceed 60 days.
National Child Abuse and Neglect Data System (NCANDS). No comments were received on this definition and therefore no changes are being made to the language proposed in the NPRM.
The requirement does extend to other public agencies with which the State agency has an agreement. In accordance with ACYF-PIQ-85-2, title IV-E requirements extend to any other public agency with which the State agency enters an agreement for the performance of title IV-E administrative functions, including responsibility for placement and care of the child.
This section describes the scope of the child and family services reviews as including programs administered by States under titles IV-B and IV-E of the Act.
All of the relevant comments on this section are addressed in the following sections.
This section specifies the review timetable for the initial and the subsequent reviews as required by section 1123A of the Act, and sets forth rules for reinstatement of reviews based on information that a State is not in substantial conformity.
This section sets forth the timetable for the initial child and family services reviews.
We considered combining the child and family services and the title IV-E reviews but believe that conducting the two reviews at the same time would pose a serious burden on States, given the intensity of the review processes and the level of State effort required for each. We will coordinate the actual timing of the two different reviews such that States will not be over-burdened.
This section sets forth the timetables for subsequent child and family services reviews.
sbull; A full or partial child and family services review can be reinstated whenever information from any source indicates that the State is not in substantial conformity;
• The standard for achieving substantial conformity is high;
• States in substantial conformity are required to complete a statewide assessment at the three-year point between full reviews;
• The title IV-B five-year Child and Family Services plan, and the related annual updates, provide significant insight into the functioning of the State child welfare program and a mechanism for identifying potential conformance issues with respect to safety and permanency.
Because we believe that other types of reviews and information gathering provide insight into State performance between on-site reviews, we have not changed the requirement to review States every five years if they are determined to be in substantial conformity. Likewise, we have not eliminated or changed the requirement for the statewide assessment to be completed every three years because we believe that the use of information from that source is an important mechanism for helping States maintain successful performance.
In order to address the comments about assuring the safety and permanency of children between reviews, we have changed the requirement for States determined not to be in substantial conformity to be reviewed at two-year intervals, rather than three-year intervals.
This section sets forth the requirements for a reinstatement of a full or partial review and describes the types of information that may require a review.
We do recognize that the specific sources mentioned in the NPRM, and others not mentioned, may not always provide accurate information about the State’ compliance with State plan requirements. The provision for ACF to conduct detailed inquiries prior to initiating more frequent reviews is designed to address this issue by ascertaining the validity of the information. A decision whether or not to reinstate reviews to determine substantial conformity will only be made after the validity of the information is determined.
This new section was added to set parameters for addressing noncompliance with title IV-B and IV-E State plan requirements that are outside the scope of a child and family services review.
This section sets forth the review process and outlines general procedures for the statewide assessment and the on-site review.
(1)
(2)
(3)
AFCARS is the statutorily-mandated information collection system for the Federal child welfare programs. Thus, it is the appropriate data source for use in Federal reviews.
This section states that the review will be a two-phase process and describes the composition of the review team.
This section describes the first phase of the full review, the statewide assessment.
• In § 1355.33(b)(1), we require that the statewide assessment address each systemic factor under review, including the statewide information system, case review system, quality assurance system, staff training, service array, agency responsiveness to the community, and foster and adoptive parent licensing, recruitment and retention.
• In § 1355.33(b)(2), we require that the State, using data from AFCARS, NCANDS, or, for the initial review, another source approved by ACF, assess the outcome areas of safety, permanency, and well-being of children and families served by the State agency, including a discussion of the State's performance in meeting the national standard established for the statewide data indicators.
• In § 1355.33(b)(5), we require that the completed statewide assessment include a list of all the persons external to the State agency who had input into the preparation of the statewide assessment in order to assure that the required participation and consultation in § 1355.33(a)(2)(ii) and (iv) actually occurred.
• In § 1355.33(b)(6), we require that the State submit the statewide assessment to ACF within 4 months of our transmission of the information for the statewide assessment to the State. We anticipate that we will need 60 days to review the statewide assessment and notify the State of any potential areas that might be an issue during the on-site review. It will also afford the State an opportunity to gather additional information in advance of the review to clarify any concerns raised; and,
• In § 1355.33(c)(5), we regulate the size of the on-site sample of cases to be reviewed and require that the cases be selected randomly from AFCARS and NCANDS, or, for the initial review, another approved source. This will promote consistency and help to eliminate bias in the sample.
This section describes the second phase of the full review, the on-site review.
States have complete flexibility in establishing procedures to ensure that confidentiality requirements are met. During the pilot reviews, some States chose to require the reviewers who were not State or Federal employees to sign confidentiality agreements prior to reviewing confidential information.
This new section was added to describe the steps we will take in resolving discrepancies between the aggregate data and the findings of the on-site review.
ACF will provide States with the option of submitting additional information to resolve the discrepancy, or for ACF and the State to review additional cases, using only those indicators in which the discrepancy occurred. ACF and the State will determine an additional number of cases to be reviewed, not to exceed a total of 150 cases. As described in section 1355.33(c)(6), the additional cases, in combination with the 30-50 cases reviewed on-site, will comprise a statistically significant sample with a 90 percent (or 95 percent for subsequent reviews) compliance rate, a tolerable error rate of 5 percent, and a confidence coefficient of 95 percent. We will pull the additional cases from an oversample of cases for the on-site review, so that both sets of cases will comprise one sample. Only those indicators in which the discrepancy occurred will be subject to review.
This section describes the partial review process.
We redesignated § 1355.33(d) as § 1355.33(e) and made a technical edit to clarify that the partial review requirements in this section relate to the partial child and family services reviews. We have also clarified that a partial review does not substitute for the regularly scheduled full reviews.
This section describes the manner in which ACF will notify States of whether the State is operating in substantial conformity.
This section pertains to the criteria that must be satisfied to find a State in substantial conformity, including a discussion of outcomes, level of achievement of outcomes, and criteria related to a State agency's capacity to deliver services leading to improved outcomes for children and families.
This section describes the elements on which a State's substantial conformance with title IV-B and title IV-E State plan requirements will be based.
This section sets forth the criteria related to outcomes that will be evaluated to determine a State's substantial conformance.
Therefore, in response to this comment, a new paragraph (d) under § 1355.32, “Partial reviews based on noncompliance with State plan requirements that are outside the scope of a child and family services review” has been added to clarify parameters for addressing issues regarding compliance with title IV-B and title IV-E State plan requirements that are outside the scope of these reviews. If needed, we will conduct partial reviews to resolve such issues regarding compliance. Partial reviews of this nature will not necessarily follow the prescribed format of the child and family services review. Rather, such partial reviews will address whatever the Secretary deems necessary in order to make a determination concerning State plan compliance.
If a State is determined to be out of compliance with a State plan requirement under either title IV-E or title IV-B, there will be an opportunity for program improvement, consistent with section 1123A of the Act, before funds are withheld.
Outcome S1: Children are, first and foremost, protected from abuse and neglect.
Outcome S2: Children are safely maintained in their homes whenever possible and appropriate.
In this manner, we will address safety as a State's primary concern while measuring compliance with the statutory requirement to maintain children safely in their own homes when possible.
This section describes criteria for seven core systemic factors that will be evaluated to determine the State agency's capacity to deliver services that improve outcomes for children and families.
Similarly, because the child and family service reviews are designed to review the entire system of child and family services, which includes both titles IV-B and IV-E, this review process is not designed for tribes that receive title IV-B funding only. Furthermore, section 1123A of the Act directed the Department to develop a review system for State compliance with the State plans under titles IV-B and IV-E of the Act. Therefore, tribes that receive title IV-B allocations will not be reviewed under the child and family services review process.
This section states that copies of the review instruments will be made available to the State.
This section pertains to the development of program improvement plans for States determined not to be in substantial conformity with State plan requirements, including the time frames for submission and implementation of the plans.
This section describes elements of a program improvement plan for those States found not to be operating in substantial conformity.
The use of the term “program improvement plan” in no way deviates from statutory requirements since the result is still that the State must correct any identified areas of nonconformity with State plan requirements. The term “program improvement plan” underscores the intent of the reviews to serve as a means of assisting States to help families and children experience improved outcomes as a result of the services provided by the State and funded by the State and Federal governments. Failure to successfully complete a program improvement plan will result in penalties.
This section sets forth the condition, under which States found to be operating in substantial conformity may voluntarily develop and implement a program improvement plan.
There were no comments on this section and no changes have been made to this section.
This section sets forth the approval process for the program improvement plan.
This section sets forth the time frame for successful completion of provisions in a State's program improvement plan.
• ACF will require time frames for a program improvement plan to be consistent with the seriousness and complexity of the remedies required for any areas determined not in substantial conformity.
• We are requiring in paragraph (d)(2) that particularly egregious areas of nonconformity impacting the safety of children in the State's responsibility receive priority in both the content and time frames of the program improvement plans and must be satisfactorily addressed in less than two years.
• We are adding a requirement to paragraph (d)(3) that the Secretary approve any extensions of deadlines in the program improvement plans and any requests to extend the program improvement plan by a third year. The circumstances under which requests for extensions would be approved are expected to be very rare and will require compelling documentation. Requests for extensions must be received by ACF at least 60 days prior to the affected completion date.
• Finally, in paragraph (d)(4) we are requiring that monitoring of the implementation of the State’ program improvement plans include quarterly status reports by the States to ACF, unless the State and ACF agree to less frequent reports. These reports will inform ACF of the State's progress in implementing the plan.
This section describes the joint process the State agency and ACF will use to evaluate the program improvement plan. This section also describes the frequency of evaluating progress and the terms for renegotiating a program improvement plan.
No comments were received on this section. Changes were made to this section only to the extent necessary to keep it consistent with the changes made to the other sections of § 1355.35.
This section requires that elements of the program improvement plan be incorporated into the goals and objectives of the State's CFSP and annual reviews and progress reports related to the CFSP.
No comments were received on this section and no changes have been made to the final rule.
This section sets forth the penalties associated with a State's failure to operate a program in substantial conformity; implements the statutory
This section defines “title IV-B funds” and “title IV-E funds” for the purpose of this section.
This section describes the manner in which ACF will determine the amount of the State title IV-B and IV-E funds to be withheld if the State is not operating in substantial conformity.
To strengthen our commitment to program improvement through the review process, we have added these sections to the final rule that will increase the penalty for outcomes and systemic factors that remain in continuous nonconformity on successive reviews. States that continue to remain out of substantial conformity on successive reviews can now be penalized up to two percent per outcome or systemic factor at the second full review in which the nonconformity continues, and up to three percent per outcome or systemic factor at the third and subsequent full reviews in which the nonconformity continues. We believe the possibility of increased withholding of funds will encourage States to engage in active program improvement planning and make efforts to resolve areas of nonconformity as early as possible.
We believe that this revised penalty structure is in accordance with the Social Security Act Amendments of 1994 (Pub. L. 103-342), since we are making the amount of the penalty commensurate with the level of nonconformity and providing States an opportunity to engage in corrective action prior to withholding funds. We tried to establish penalties in amounts that create significant motivators for States to improve programs while not denying services to needy children that are critical to their safety, permanency, and well-being. We believe the approach contained in these final rules balances the issues in a manner that promotes the overall goal of program improvement in States.
The State's entire title IV-B allocation is included in the pool from which penalties will be taken because we are reviewing for all the programs funded by title IV-B in the State. A portion of the title IV-E administrative funds is included in the pool from which penalties will be taken, since a smaller percentage of title IV-E requirements are reviewed in the child and family services reviews.
In addressing the comments that advocated for funding reinvestment, the statute specifically mandates withholding Federal funds as penalties for nonconformity, rather than reinvesting. Also, the statutes for various programs carry penalty provisions that HHS cannot waive in favor of a consolidated, performance-based incentive system in child welfare.
We recognize the commenter’ concerns that States found to be the most egregious in their non-conformity, based on the child and family services reviews, may also be determined out of conformity in other reviews,
This section describes the circumstances under which ACF will suspend the withholding of funds for those States found not to be operating in substantial conformance.
We did not receive comments on this particular section and have made no changes to the regulation.
This section describes the circumstances under which ACF will terminate the withholding of State funds related to nonconformity.
We did not receive comments on this particular section and have made no changes to the regulation.
This section describes the circumstances under which ACF will withhold funds for those States determined not to be in substantial conformity.
This section provides that States must make certain sources of information related to the child and family services reviews available for public inspection.
This section implements the enforcement of section 471(a)(18) of the Act which specifically prohibits the denial of the opportunity to any person to become an adoptive or a foster parent, or the delay or denial of the placement of a child in an adoptive or foster family home on the basis of the race, color, or national origin of the child or of the adoptive or foster parent. In addition to the specific comments on § 1355.38, we received a number of general comments and requests related to the statutory language itself at section 471(a)(18) of the Act.
Many commenters requested that the final rule include a section on what constitutes a delay or denial of a child's adoptive or foster care placement and when race, color, or national origin can be used in child placement decisions. Several commenters also requested that the final rule include a discussion of good social work practice and define “best interest of the child” as it relates to section 471(a)(18) of the Act. A large number of commenters also requested that the final rule include language that stated that compliance with section 471(a)(19) (which allows the State to give preference to a relative over a non-related caregiver) and section 422(b)(9) (which requires the State to make diligent efforts to recruit potential foster and adoptive families that reflect the ethnic and racial diversity of children needing an adoptive or foster home) would not be considered a violation of section 471(a)(18) of the Act.
Also, many commenters believed the tone of the section to be adversarial and requested that the section be revised to mirror the partnership approach used in the child and family services review. A few commenters believed the enforcement of section 471(a)(18) of the Act is too heavily focused on the rights of adults rather than the needs of the child. Additionally, a few commenters were concerned that vigorous enforcement of section 471(a)(18) of the Act may have a negative effect on the quality of services available to children.
In contrast to these comments, one commenter voiced concern that § 1355.38 did not adequately enforce section 471(a)(18) of the Act. The commenter believed that additional enforcement mechanisms and administrative authority should be included in the final rule.
The regulatory language in § 1355.38 closely follows the statutory language and represents our commitment to diligently enforce these provisions of law. We have made only limited revisions to this portion of the regulation in response to comments, as we believe that enforcement of section 471(a)(18) of the Act is clearly defined by the statute. We would like to note that the statutory language guiding this section is very different from that underpinning the child and family services reviews, and it is this distinction that accounts for the difference in the approaches taken.
The request for guidance on what constitutes a delay or denial of a child's adoptive or foster care placement and when race, color, or national origin can be used in child placement decisions; a discussion section on good social work practice; and the inclusion of a definition of “best interest of the child” as it relates to section 471(a)(18) of the Act all represent practice level issues. Practice level issues are more appropriately addressed through technical assistance rather than regulation. Also, the determination of delay or denial in foster care or adoption is based on the facts of the specific case. Thus, we did not include
We also did not include qualifying statements regarding relative preference and/or diligent recruitment in the final rule. The activities regulated in this final rule are procedural directives for implementation of financial sanctions. Thus, we do not intend to cite all the activities which may or may not violate section 471(a)(18) of the Act. Given the number of comments received, we are providing the following discussion on relative preference and diligent recruitment as they relate to section 471(a)(18) of the Act:
• Section 471(a)(19) of the Act allows the State to give preference to an adult relative over a nonrelated caregiver, when placing a child for adoption or in foster care provided that the relative caregiver meets all relevant child protection standards. Relative preference recognizes the importance of maintaining biological relationships. Prioritizing biological ties is not a form of race preference; rather it is an acknowledgment of the significance of these ties. Relatives come under the same scrutiny as nonrelatives and must meet the same Federal title IV-E requirements to become foster and/or adoptive parents. In all circumstances, the best interests of the child must determine a placement decision. A State's appropriate use of the relative placement preference does not constitute a violation of section 471(a)(18) of the Act.
• Section 422(b)(9) of the Act requires the State to make diligent efforts to recruit potential foster and adoptive families that reflect the ethnic and racial diversity of children in the State needing an adoptive or foster home. Diligent recruitment activities are necessary to ensure that all qualified members of a community, who may be excluded from or reluctant to request services, have the opportunity to become a foster or adoptive parent. Diligent recruitment can provide a broad pool of placement resources for those children waiting for foster or adoptive homes. A State's general diligent recruitment activities do not constitute a violation of section 471(a)(18) of the Act. General diligent recruitment activities should not discriminate on the basis of race, color or national origin by excluding families who are not targeted for services and denying them the opportunity to be a part of the pool of available families for children of different backgrounds.
• The purpose of the Multiethnic Placement Act of 1994 (MEPA) was threefold: (1) To decrease the length of time a child waits to be adopted; (2) to prevent discrimination in foster care and adoption; and (3) to promote the recruitment of ethnic and minority families that reflect the children in the public child welfare system. We do not interpret any of these purposes to be mutually exclusive. In the Removal of Barriers to Interethnic Adoption (IEP) provisions, which amended MEPA, Congress further clarified that race, color, or national origin should not be routinely considered in foster care and adoption placements. The IEP also contained enforcement provisions. The IEP did not change the recruitment provision contained at section 422(b)(9) of the Act.
We recommend that the State or entity review Federal policy guidance already issued on the MEPA, as amended by IEP (found at
Rather than attempting to identify the multiple situations which may lead to a violation of section 471(a)(18) of the Act, we have found that providing technical assistance to specific State questions is most useful. Technical assistance is available through the ACF and OCR regional offices, as well as through the federally funded national resource centers. Periodically the Department will review the issues raised to determine the need for additional guidance.
Specific questions and comments are addressed in the following paragraphs.
Section 1355.38(a) Determination That a Violation Has Occurred in the Absence of a Court Finding
This section sets forth the requirements for determining a violation of section 471(a)(18) of the Act during the course of a child and family services review, the filing of a complaint, or some other mechanism.
This section sets forth the requirements for corrective action and penalties for a violation of section 471(a)(18) of the Act with respect to a person or based on a court finding.
This section sets forth the requirements for corrective action when a State's statute, regulation, policy, procedure, or practice is found to be in violation of section 471(a)(18) of the Act.
A State's completion of a corrective action plan within the specified time will not, in itself, prevent the assessment of a penalty. The completed corrective action plan must result in the State coming into compliance with section 471(a)(18) of the Act to avoid incurring a penalty. We have revised the final rule to clarify this point at § 1355.38(c)(1) and also at (g)(1)-(4).
Additionally, we have revised § 1355.38(c)(3) to provide the State with
This section describes the contents of a corrective action plan.
We did not receive comments related to this section but have revised this section to coincide with changes made in § 1355.38(c). Paragraph (d)(4) defines the completion date for the corrective action and deletes the option to extend the corrective action completion date.
This section describes the evaluative steps that ACF will take to review the implementation of corrective action plans submitted by States who have been found to be in violation of section 471(a)(18) of the Act.
We received no comments related to this section but revised this section to coincide with changes made to § 1355.38(c) and (d). This section now states that ACF will evaluate the corrective action plan within 30 days of the six-month completion date.
This section defines the term “title IV-E funds” in the context of this section.
This section describes the circumstances under which a State's title IV-E funds will be reduced by ACF due to a violation of section 471(a)(18) of the Act.
This section describes the specific amount a State's title IV-E funds will be reduced by ACF in the event of a section 471(a)(18) violation and provides instructions related to interest liability.
This section provides States found not to be in substantial conformity with titles IV-B and IV-E State plan requirements, or in violation of section 471(a)(18) of the Act, with an opportunity to appeal.
We have made a technical amendment to conform with new Federal requirements related to the collection of race and ethnicity data. On October 30, 1997, the Office of Management and Budget (OMB) published a notice in the
The revised standards have five categories for data on race: American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White. The new standards allow individuals of mixed race to identify with more than one race. Also, OMB revised the two categories for data on ethnicity to: “Hispanic or Latino” and “Not Hispanic or Latino.” The AFCARS currently collects information on the race and ethnicity of children in foster care and those who have been adopted, foster parents, and adoptive parents. However, we must change the definitions of the racial classifications, revise ethnicity classifications, and allow multiple-race identification in AFCARS race data elements to comply with the OMB Directive. In ACYF-CB-PI-99-01 (issued January 27, 1999) we informed States of the required changes to the AFCARS collection of race data as a result of a change in OMB policy. States were directed to change race and ethnicity collections for the report period beginning October 1, 1999. Since these changes are already underway in the States and a matter of HHS policy, we are codifying these changes as technical amendments in this final rule.
We removed a reference to the former protections in section 427 of the Act in paragraph (a)(2) and replaced it with the correct citation. Congress repealed section 427 of the Act with Public Law 103-432, effective October 1, 1997. The protections previously included in section 427 of the Act are now included as assurances in section 422(b)(10) of the Act.
In Appendix A to part 1355, Section I, we included the new race and ethnicity classifications consistent with OMB's Statistical Policy Directive Number 15. All of the foster care race elements (elements II.C.1, IX.C.1 and IX.C.3) are listed in the element chart alphabetically as they are in the directive.
In section II to appendix A, we removed the obsolete reference to the section 427 protections and replaced it with the correct statutory reference. In Section II, II.C.1, we added new race definitions and made an editorial change regarding how a person's race and ethnicity is determined. Consistent with the OMB Directive, we make this change to emphasize that self-identification or self-reporting is the preferred method of gathering information on race or ethnicity except where this is not practical. Obviously, in the case of young children, racial or ethnic self-identification is not practical and is therefore primarily determined by the parent. We recommend that caseworkers ask children (if age appropriate) and adults to identify all the racial categories that apply.
In ACYF-CB-PI-99-01 we provided policy guidance on the use of the category “unable to determine” as it applies to situations where a parent or other adult caretaker is unwilling to identify their race or that of the child. We have included that clarification in this regulation. If a parent or caretaker is unwilling to identify a race, then the State should classify the information as “unable to determine,” indicating that the State attempted to gather the information but was unable to do so. This will provide for better data as the State will not overstate the amount of missing data for this element and jeopardize conformity with the missing data standards. Finally, we amend the way that a State must code the data for the race categories to properly identify a single race, multiple race or “unable to determine” response.
We have made changes similar to those above in Section II, II.C.2, which define the Hispanic and Latino ethnicity classifications. In addition, we have deleted the last sentence of the paragraph that required the State to indicate that the child is not of Hispanic ethnicity only when the origin of the child is clear. We believe that this distinction is unnecessary and inconsistent with our approach to other regulatory definitions on race and ethnicity.
In Section II, IX.C, we now cross-reference only the definitions of race and ethnicity classifications used in the section on child demographics (II.C). The existing regulations also cross-reference the definition of “unable to determine,” however, this definition as stated is not applicable to adults. For adults, the code “f. unable to determine,” must be used only in circumstances where the parent is unwilling to identify his or her race or ethnicity. During AFCARS pilot reviews, we found that States were inappropriately coding missing information as “unable to determine.” When data is missing or not known because the State has not asked an individual for information on race or ethnicity, the response must be left blank.
Finally, in Section II, we have deleted paragraph IX.D on coding ethnicity data. This paragraph incorrectly cross-referenced the section on disabilities. We have incorporated the relevant portions of the instruction in paragraph IX.C.
In appendix B to part 1355, we have made the same amendments to the race and ethnicity adoption data elements as those listed above for the foster care elements.
In appendix D to part 1355, we amended the race and ethnicity elements in the foster care and adoption record layouts consistent with the OMB directive. We amended the coding notes that precede each record layout table to clarify that the race classifications are now elements where more than one response is allowed.
We also made a technical change to the foster care and adoption record layouts to accommodate the year 2000 century date change. Prior to October 1996, States were required by regulation to report date information in decade format. In response to the year 2000 and the data issues associated with the processing of date information, we issued an information memorandum, ACYF-IM-CB-96-08 (April 17, 1996), requiring States to report in century date format. We are now making the requisite technical change to the regulation.
In appendix E to part 1355, we made several technical edits to replace all references to “Hispanic origin” with “Hispanic or Latino ethnicity” in order to be consistent with the OMB directive (see element charts and Section B.2.a.(8)). In section A.2.a.(18) for foster care and section B.2.a.(9) for adoption, we have added an internal consistency validation for race elements. Internal consistency validations evaluate the logical relationship between data elements in a record. We also revised cross-references to the internal consistency checks throughout the Appendix to accommodate the addition.
This section implements the authority of ACF Regional HUB Directors and Administrators and the Commissioner of ACYF to approve State plans and amendments that govern State programs under section 471 of the Act.
No comments were received on this section and no changes were made in the final rule.
In this section, we clarified existing policies and set forth additional foster care maintenance requirements which have a direct impact on determining the eligibility of children in the title IV-E foster care program.
This section introduces the title IV-E implementation requirements for eligibility of Federal financial participation (FFP) under the title IV-E foster care program.
This section sets forth the ASFA requirement that the State hold the child's health and safety as its paramount concern when making reasonable efforts.
This section sets forth the statutory requirement of a judicial determination that reasonable efforts were made to prevent removal of a child from his or her home.
In terms of practice, there is a profound effect on the child and family once a child is removed from home, even for a short time, that cannot be undone. If the child is returned after services have been delivered, or even immediately, the State has reunified the family, not prevented a removal.
The statute requires that title IV-E eligibility be established at the time of a removal. If the State does not make reasonable efforts to prevent a removal or fails to obtain a judicial determination with respect to such efforts, the child can never become eligible for title IV-E funding for that entire foster care episode because there is no opportunity to establish eligibility at a later date. Once title IV-E eligibility is initially established, the judicial determination regarding the reasonable efforts the State made to finalize a permanency plan is required to maintain title IV-E eligibility.
This section (formerly § 1356.21(b)(3) and (b)(4) of the NPRM) describes the requirements for obtaining a judicial determination to finalize a permanency plan.
In determining whether the State made reasonable efforts to finalize a permanency plan, the court's determination should be based on the permanency plan that is in effect at the time at which the agency is seeking such a determination. We are not requiring the State to obtain judicial determinations on its efforts regarding permanency plans that it has abandoned.
We realize that obtaining reasonable efforts determinations regarding finalizing permanency plans every 12 months while a child is in foster care is a significant departure from current practice and that States will need transition time to implement this requirement for children who have been in foster care for more than 12 months. Therefore, we will not take adverse action against States who cannot comply with this requirement for a period of 12 months from the effective date of this final rule.
Finally, we think it appropriate to permit the State agency to alter the permanency plan outside a permanency hearing and will not require the court to approve such a plan before the State agency can act on it. When a State agency has placement and care responsibility for a child, it is responsible for setting and acting on the appropriate permanency plan. We understand that, in some States, courts provide such active oversight during the course of a permanency hearing that the court actually sets the permanency plan. That is the State's prerogative. Federal law does not require the courts to play such a prescriptive role in the permanency planning process. Section 475(5)(C) of the Act requires the court to review the permanency plan presented to it by the State agency.
We believe that the six-month periodic reviews will encourage a timely permanency planning process. These reviews must determine, in part: “the continuing necessity for and appropriateness of the placement, the extent of compliance with the case plan * * * and to project a likely date by which the child may be returned to and safely maintained in the home or placed for adoption or legal guardianship.” Thus, the statute already compels States to review reasonable efforts to achieve permanency every six months.
This section (formerly § 1356.21(b)(5) in the NPRM) describes the circumstances in which reasonable efforts to prevent a removal or to reunify a child with his or her family are not required.
The aforementioned interpretation of the statute should not be construed to support unwarranted attempts to preserve families. Rather, when reasonable efforts are required, the State agency and the courts must determine the level of effort that is reasonable, based on safety considerations and the circumstances of the family. Sometimes, based on its assessment of a family, the State agency determines that it is reasonable to make no effort to maintain the child in the home or to reunify the child and family. In such circumstances, if the court determines that the agency's assessment of the family is accurate and its actions were appropriate, the court should find that the agency's efforts in such cases were reasonable, not that reasonable efforts were not required.
This section (formerly § 1356.21(b)(6) in the NPRM) implements the statutory provision which provides States the option of using concurrent planning.
This section (formerly § 1356.21(b)(7) in the NPRM) provides for the use of the Federal Parent Locator Service (FPLS) to search for absent parents in order to expedite permanency for children.
This section sets forth the requirements that there be a judicial determination stating that remaining in the home would be contrary to the child's welfare.
The contrary to the welfare determination was the first of the existing protections afforded to children and their families by the Federal foster care program and has been in effect since the inception of the program in 1961 when it was operated under title IV-A. The statute then, and now, recognizes the severity of removing a child, even temporarily, from home. This protection is in place because Congress believed that judicial oversight would prevent unnecessary removals and act as a safeguard against potential inappropriate agency action. This policy is consistent with Congressional intent and stands as proposed in the NPRM. The contrary to the welfare determination must be made in the first court order sanctioning the removal of the child from home, as is explicitly required at section 472(a)(1) of the Act.
This section establishes the documentation requirements for the reasonable efforts and contrary to the welfare determinations.
Our primary concern is that judicial determinations be made on a case-by-case basis and it was not our intent to create a policy that was overly prescriptive and burdensome. States have a great deal of flexibility in satisfying this requirement. The suggestion that the court order reference the facts of a court report, related psychiatric or psycho-social report, or sustained petition as a mechanism for demonstrating that judicial determinations are made on a case-by-case basis is an excellent one and would satisfy this requirement. If the State can demonstrate that such determinations are made on a case-by-case basis through a checklist then that is acceptable also.
* * * (t)he judicial determinations themselves need not necessarily include the exact terms “contrary to the welfare” and “reasonable efforts,” but must convey that the court has determined that reasonable efforts have been made or are/were not required (as described in section 471(a)(15) of the Act), and that it would be contrary to the welfare of a child to remain at home.
This section defines trial home visits for the purposes of establishing title IV-E eligibility.
This section establishes the case review system requirements for the title IV-E foster care program.
This section establishes the development and documentation requirements for case plans.
The “permanency plan,” while it may be described in the case plan or may be a portion of the case plan, is what the planned permanency living arrangement will be for the child,
In addition, we are clarifying in the regulation at § 1356.21(g)(3) that it is not permissible for courts to extend their responsibilities to include ordering a child's placement with a specific foster care provider. To be eligible for title IV-E foster care maintenance payments the child's placement and care responsibility must either lie with the State agency, or another public agency with whom the State has an agreement according to section 472(a)(2) of the Act. Once a court has ordered a placement with a specific provider, it has assumed the State agency's placement responsibility. Consequently, the State cannot claim FFP for that placement.
This section implements the new ASFA requirements related to permanency hearings and modifies and clarifies existing policy. It also sets forth requirements for an administrative body appointed or approved by the court to conduct permanency hearings.
Although the paragraph in question has been deleted from the regulation, we wanted to take this opportunity to respond to the observation that the State may not claim FFP when the court orders a specific placement for a child. The commenter is correct. Section 472(a)(2) of the Act requires responsibility for the child's placement and care to be with the State agency. When the court orders a specific placement, it in essence takes on the State's responsibility for the child's placement and the child becomes ineligible for title IV-E funding. To make this clear, we have amended § 1356.21(g) to note this restriction. The court may sanction a permanent foster family home through its oversight of the permanency plan, however, this does not give the court the authority to determine a specific placement for the child.
Finally, we recognize that States will need transition time to begin holding subsequent permanency hearings for children who formerly were exempt from this requirement. We will not take adverse action against a State that cannot comply with this requirement for a period of 12 months from the effective date of this final rule.
This section implements the new ASFA provisions regarding termination of parental rights.
The requirement in section 475(5)(E) of the Act applies to Indian tribal children as it applies to any other child under the placement and care responsibility of a State or tribal agency receiving title IV-B or IV-E funds. While we recognize that termination of parental rights and adoption may not be a part of an Indian tribe's traditional belief system or legal code, we have no statutory authority to provide a general exemption for Indian tribal children from the requirement to file a petition for TPR. If an Indian tribe that receives title IV-B or IV-E funds has placement and care responsibility for an Indian child, the Indian tribe must file a petition for TPR or, if appropriate, document the reason for an exception to the requirement in the case plan, on a case-by-case basis.
We encourage States to use the six-month periodic review to review the continuing appropriateness of an exception to the requirement to file a petition for TPR within the context of the requirements in section 475(5)(B) of the Act. States also have another opportunity to reevaluate the decision not to pursue a TPR petition at the permanency hearing, which must be held at least every 12 months. The permanency hearing must address whether the child's permanency plan is to reunify the child with the family, file a petition for TPR and move toward adoption, or place the child with a fit and willing relative, legal guardian, or in another planned permanent living arrangement. The State is required to reevaluate the permanency plan during the course of the permanency hearing, regardless of whether the State agency has previously applied an exception to the requirement to file a petition for TPR. As such, we believe there are multiple safeguards to ensure that children do not languish in foster care.
On the other hand, many commenters supported the inclusion of the examples of compelling reasons. Some commenters expressed that the examples provided critical guidance to the field and would temper concerns about increases in the number of “junk” petitions and legal orphans. Other commenters wanted us to include the language from the preamble discussion on the examples in the regulation text, and some wanted us to expand the list of examples of compelling reasons. Commenters suggested that the expanded list of compelling reasons could include: A child belongs to a particular population (
This section implements the statutory provision related to the title IV-E eligibility of the child of a minor parent who is in foster care.
Section 1356.21(k) describes, for the purposes of meeting the requirements of section 471(a)(1) of the Act, a “removal.” Section 1356.21(l) sets forth the required conditions for living with a specified relative prior to removal from the home.
Because of the complexity of this issue, we thought it best to explain again how the policy has changed before discussing the comments on this section of the regulation. To be eligible for title IV-E funding, a child must, among other things, be removed from the home of a relative as the result of a voluntary placement agreement or a judicial determination that continuation in the home would be contrary to the child's welfare. Under prior policy, we interpreted the term “removal” to mean a physical removal. As a result, if a child was residing with an interim caretaker who was a relative between the time the child lived with the custodial parent and when he or she entered foster care, and the State intended to remove custody from the
As a result of the comments we received on this proposed policy, we closely examined the examples provided in the preamble to the NPRM and the proposed regulatory text against the statute. As a result of this further review, we do not believe that example (3) on page 50078 of the preamble should have been included. In example (3), the living with and removal from requirements were satisfied by a
We offer a summary of examples to clarify when a child would be eligible for title IV-E foster care under the rule. These examples presume that the child is eligible for AFDC (according to the State plan in effect on July 16, 1996) in the home of the parent or other specified relative:
• The child lived with either a related or nonrelated interim caretaker for less than six months prior to the State's petition to the court for removal of the child. The State licenses the home as a foster family home and the child continues to reside in that home in foster care. The child is eligible for title IV-E foster care if he or she lived with the parent within six months of the State's petition to the court, and was constructively removed from the parent (
• The child lived with either a related or nonrelated interim caretaker for more than six months prior to the State's petition to the court. The State licenses the home as a foster family home and the child remains in that home in foster care. The child is ineligible for title IV-E foster care since he or she had not lived with the specified relative within six months of the State's petition to the court, and was not removed from the home of a relative. (The constructive removal does not apply to this situation because it had been more than six months since the child lived with the parent.)
• The child lives with a related interim caretaker for seven months before the caretaker contacts the State to remove the child from his/her home. The agency petitions the court and the court removes custody from the parents and the agency physically removes the child from the home of the interim related caretaker. The child would not be eligible for title IV-E foster care since he or she had not lived with the parent or other specified relative from whom there was a constructive removal within six months of the initiation of court proceedings. (Although the child was physically removed from the home of the related interim caretaker, that removal cannot be used to determine title IV-E eligibility since the removal was not the result of a voluntary placement agreement or judicial determination, as required in section 472(a)(1) of the Act. Nor does constructive removal apply to this situation because it had been more than six months since the child lived with the parent from whom custody was removed.)
• The child lived with a nonrelated interim caretaker for seven months before the caretaker asks the State to remove the child from his/her home and place the child in foster care. The child is ineligible for title IV-E foster care because he or she had not lived with a parent or other specified relative within six months of the petition.
• The child is in a three-generation household in which the mother leaves the home. The grandmother contacts the State agency four months later and the agency petitions the court within six months of the date the child lived with the mother in the home. The State licenses the grandmother's home as a foster family home and the child continues to reside in the home in foster care. The child is eligible for title IV-E foster care since he or she lived with the parent within six months of the State's petition to the court, and was constructively removed from the parent's custody.
The regulatory text has been amended to reflect this change in policy and to more clearly delineate the requirements of living with and removal from the home of a specified relative.
It is a misinterpretation to suggest that the proposed policy narrows title IV-E eligibility for children living with relative caretakers and is discriminatory against relatives as foster caretakers. Rather than limiting a child's eligibility or discriminating against relative homes, the policy supports children remaining with related caretakers when the State determines that they cannot live safely in their own homes, and applies the living with and removal from requirements equitably to both relative and nonrelative caretakers. Under the previous policy, if a parent left a child with a nonrelated caretaker and the agency petitioned the court for
This section sets forth the State plan requirement regarding review of the appropriateness of payments under title IV-E, as well as State licensing/approval standards for foster homes. No comments were received on this paragraph and therefore we made no changes to the regulation.
This section provides the requirements related to foster care goals that must be established by States.
This section implements the new requirement of the case review system that mandates giving notice of hearings and an opportunity to be heard to foster parents, preadoptive parents and relative caregivers.
We also agree with the comment that suggested we clarify that the notification of the opportunity to be heard be given in a timely manner and have revised paragraph (o) accordingly. The right to notification of an opportunity to be heard is meaningless unless the individuals are notified of the opportunity to be heard at the review or hearing in a timely manner.
In addition, we understood the suggestion that we require that the location of the reviews and hearings be accessible to parents to mean the parents from whom the child was removed and not the foster parents, preadoptive parents or relative caretakers. We did not revise the regulation as a result of this comment since such a requirement is not covered by the statutory provision, the purpose of which is to afford the primary caregivers for a child who is in an out-of-home placement the opportunity to provide relevant information about the child at the review and hearing.
In addition, requiring that a State provide notice of an opportunity to be heard to previous caregivers goes beyond the statutory language. The statute requires only that notice be given to caregivers “providing care” for the child. This does not, however, prohibit a State from offering previous caregivers the opportunity to be heard, if the State determines it is appropriate for a particular child's situation.
This section sets forth requirements States must meet to receive Federal financial participation (FFP) for children removed from home under a voluntary placement agreement.
This section pertains to safety requirements for foster care and adoptive home providers, and sets forth conditions under which States cannot license or approve foster and adoptive homes if the State finds that prospective foster or adoptive parents have been convicted of certain crimes.
The regulation at § 1356.30(e), as proposed in the NPRM, would apply more broadly than only to those States that opt out of the criminal records check requirement. Since we may not have made this clear, we have separated the requirements of this paragraph into two sections for the final rule to clarify the criteria for title IV-E eligibility. We revised § 1356.30(e) to apply only in States that opt out of the criminal records check. We also added a paragraph (f) to set forth the safety requirements that must be addressed for child care institutions, which are not covered under the criminal records check provision. This revision only clarifies the requirements; it does not change the substance of the requirements in any way.
However, we recognize that some time may elapse between the date the requirements are satisfied and the date on which the license or approval actually is issued to the foster home. We have concluded that 60 days is an ample period of time to allow between the time the State receives all the information on a home that is required to fully license or approve it and the date on which such license or approval is issued. Therefore, we have revised the definition of “foster family home” in the regulation to allow a State to claim title IV-E reimbursement for a period, not to exceed 60 days, between satisfaction of the approval or licensing requirements and the actual issuance of a full license or approval. This accommodation does not conflict with the statutory requirement that all licensure requirements must be satisfied before a foster home is eligible for title IV-E funding. Rather, it is recognition that a period of time may elapse between when the eligibility criteria are met and the time it takes a State to issue a license or approval.
Although we did not propose amendments to § 1356.50 of the regulations in the NPRM, we are amending it in this final rule to bring the cross-references contained therein into conformity with the new regulations.
This section sets for the fiscal requirements and available federal financial participation for title IV-E costs
In § 1356.60(b) we have made a technical amendment to the existing regulation with regard to matching for title IV-E training, in order to make it consistent with the statute. The existing regulation at § 1356.60(c)(4) authorizes States to use administrative funds at a matching rate of 50% for the training of foster and adoptive parents and staff of licensed or approved child care institutions that provide care for children receiving assistance under title IV-E. The existing regulation also limits associated costs to per diem and travel expenses. Since the promulgation of that regulation, the statute has been amended by section 13715 of the Omnibus Budget Reconciliation Act of 1993, to authorize State’ use of training funds at a 75% match rate for the short-term training of current or prospective foster or adoptive parents as well as staff of licensed child care institutions. Under the statute, a State's claims may include but are not limited to per diem and travel.
The Department has followed the overriding statutory language since it was enacted (see ACYF-PI-94-15 and ACYF-PA-90-01). However, we would like to take this opportunity to make the regulatory language consistent with the statute. Because this change is technical in nature, and does not affect policy, we have included this change in this final rule. We are rescinding existing paragraph § 1356.60(c)(4) and amending § 1356.60(b)(1) to make this technical change.
This section sets forth the requirements governing Federal reviews of State compliance with the title IV-E eligibility provisions as they apply to children and foster care providers under paragraphs (a) and (b) of section 472 of the Act.
This section describes the composition of the on-site review team and the preliminary activities which the State must undertake prior to the on-site review.
We have concerns with the recommendation that the complete payment history be required only after a case is determined to be ineligible. The purpose of the title IV-E foster care eligibility review is to assure that appropriate payments are made on behalf of eligible children at allowable rates to eligible homes and institutions. Our experience has demonstrated that assuring that “appropriate payments are made * * * at allowable rates” is determined as the result of identifying duplicate payments, overpayments, underpayments, erroneous payments and related fiscal issues for each case under review at the time the case is being reviewed. Therefore, we have made no modification to this section.
This section describes the process to be used to select the title IV-E foster care sample of children to be reviewed.
This section describes the requirements subject to the title IV-E eligibility reviews.
This section informs States that a checklist will be used to substantiate child and provider eligibility during the on-site title IV-E foster care eligibility review.
This section sets forth the case record requirement of documentation to verify a child's eligibility.
This section sets forth the requirement for the licensing file for each case under review.
During a title IV-E eligibility review, we will examine a provider's license to determine that; it is an appropriate type of facility (
This section defines the terms “substantial compliance” and “noncompliance,” and describes the disallowances and program improvement plan process.
This section sets forth the requirement for States, determined not to be in substantial compliance, to develop a program improvement plan.
This section sets describes how funds to be disallowed will be determined.
This section provides the requirements for Indian Tribal Organizations to apply for and receive direct funds under title IV-B, subpart 1.
We made a technical change to § 1357.40 in the final rule to incorporate a 1995 change to the regulation that was mistakenly eliminated by a subsequent final rule. On June 2, 1995, we published a final rule (60 FR 28735-28737) amending the regulations governing direct payments to Indian Tribal Organizations (ITOs) for child welfare services. The revised regulations added a description of the formula used to calculate the amount of Federal funds available to eligible ITOs under title IV-B. A new paragraph, § 1357.40(g)(6), was added to implement the new formula. On November 18, 1996, we published a comprehensive final rule for title IV-B, Child and Family Services (61 FR 58632-58663), which amended § 1357.40 and inadvertently omitted the paragraph including the grant formula for ITOs.
We are taking this opportunity to restore the grant formula for ITOs to the regulation as we have been using this formula since it was effective in FFY 1996 (see ACYF-IM-CB-95-28). We have, therefore, made a technical amendment to add the grant formula in a new paragraph, § 1357.40(d)(6).
Executive Order 12866 requires that regulations be drafted to ensure that they are consistent with the priorities and principles set forth in the Executive Order. The Department has determined that this rule is consistent with these priorities and principles. This final rule amends existing regulations concerning Child and Family Services by adding new requirements governing the review of a State's conformity with its State plan under titles IV-B and IV-E of the Social Security Act (the Act), and implements the provisions of the Social Security Act Amendments of 1994 (Pub. L. 103-432), the Multiethnic Placement Act (MEPA) as amended by Public Law 104-188, and certain provisions of the Adoption and Safe Families Act (ASFA) of 1997 (Pub. L. 105-89).
In addition, this final rule sets forth regulations that clarify certain eligibility criteria that govern the title IV-E foster care eligibility reviews that the Administration on Children, Youth and Families (ACYF) conducts to ensure a State agency's compliance with statutory requirements under the Act.
We received no comments on this section.
Executive Order 13132 on Federalism applies to policies that have federalism implications, defined as “regulations, legislative comments or proposed legislation, and other policy statements or actions that 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.” This rule does not have federalism implications as defined in the Executive Order.
As required by Section 654 of the Treasury and General Government Appropriations Act of 1999, we have assessed the impact of this final rule on family well-being. The final rule implements requirements of titles IV-B and IV-E of the Social Security Act relating to Federal monitoring and oversight of State child welfare programs. The rule will promote child safety, child and family well-being and permanence for those children who must be removed from their families temporarily to assure their safety. The final rule will help to ensure that States are taking appropriate steps to protect children and to strengthen, support and stabilize both biological and adoptive families.
The Regulatory Flexibility Act (5 U.S.C. Ch. 6) requires the Federal government to anticipate and reduce the impact of rules and paperwork requirements on small businesses. For each rule with a “significant number of small entities” an analysis must be prepared describing the rule's impact on small entities. “Small entities” are defined by the Act to include small businesses, small nonprofit organizations and small governmental entities. These regulations do not affect small entities because they are applicable to State agencies that administer the child and family services programs and the foster care maintenance payments program.
We received no comments on this section.
The Unfunded Mandates Reform Act (Pub. L. 104-4) requires agencies to prepare an assessment of anticipated costs and benefits before proposing any rule that may result in an annual expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation).
This final rule does not impose any mandates on State, local, or tribal governments, or the private sector that will result in an annual expenditure of $100,000,000 or more. We anticipate that one-third (17) of the States will be reviewed under both review procedures each year and that, each year, approximately five States will be required to complete a corrective action plan in response to section 471(a)(18) compliance issues, for an annual cost of $352,420. This estimate is based on the burden hours associated with each information collection identified in the “Paperwork Reduction Act” section.
This rule is not a major rule as defined in 5 U.S.C., Chapter 8.
Under the Paperwork Reduction Act of 1995, Public Law 104-13, all Departments are required to submit to the Office of Management and Budget (OMB) for review and approval any reporting or record-keeping requirements inherent in a proposed or final rule. This final rule contains information collection requirements in certain sections that the Department has submitted to OMB for its review.
The sections that contain information collection requirements are: 1355.33(b) on statewide assessments, and (c) on-site review; 1355.35(a) on program improvement plan; 1355.38(b) and (c) on corrective action plans; and 1356.71(i) on program improvement plan. Section 1356 on State plan document and submission requirements (OMB Number 0980-0141) and case plan requirements (OMB Number 0980-0140) contains information collections. However, these are approved collections and no changes are being made at this time.
The respondents to the information collection requirements in this rule are State agencies. The Department requires this collection of information: (1) In order to review State’ compliance with the provisions of the statute and implementing regulations of titles IV-B and IV-E of the Act; and (2) effectively implement the statutory requirement at section 1123A of the Act which requires that regulations be promulgated for the review of child and family services programs, and foster care and adoption assistance programs for conformity with State plan requirements.
We received and considered 38 letters in response to the preclearance Notice (63 FR 52703 (October 1, 1998)) published in order to obtain approval of this information collection under the Paperwork Reduction Act. Several commenters submitted comments on the October 1, 1998 Notice in conjunction with their comments on the NPRM. The comment period for the October 1, 1998 Notice closed on December 1, 1998 while the comment period for the NPRM closed on December 17, 1998. In our opinion, to consider late comments constitutes an arbitrary extension of the comment period for certain groups or individuals. Those comments pertaining to the October 1, 1998 Notice that were submitted in conjunction with the comments on the NPRM were late and were not considered.
In the October 1, 1998 Notice, we published, in their entirety, the statewide assessment, on-site review instrument, and stakeholder interview guide used in conducting the child and family service review. Overwhelmingly, the comments we received were very technical in nature. Commenters offered specific suggestions for rephrasing or adding questions, for quantifying responses, for changes in terminology, and for increasing the objectivity of the instruments. In response to the comments received, each instrument has undergone significant revision. We streamlined the statewide assessment so that it targets State performance in satisfying the relevant State plan requirements and reports on the statewide data indicators used for determining substantial conformity. The on-site review instrument and stakeholder interview guide have been revised to increase objectivity in drawing conclusions regarding the State's performance in achieving the outcomes and in implementing the systemic factors. Copies of the instruments will be distributed to all State agencies and posted on the ACF web site immediately following the effective date of this regulation.
Adoption and foster care, Child welfare, Grant programs-Social programs.
Adoption and foster care, Grant programs-social programs
Child and family services, Child welfare, Grant programs-Social programs
42 U.S.C. 620
(a) * * *
(1)
(2)
(1) For the purpose of the child and family services review, the joint Federal and State review of one or more federally-assisted child and family services program(s) in the States, including family preservation and support services, child protective services, foster care, adoption, and independent living services. A partial review may consist of any of the components of the full review, as mutually agreed upon by the State and the Administration for Children and Families as being sufficient to determine substantial conformity of the reviewed components with the State plan requirements of titles IV-B and IV-E as listed in § 1355.34 of this part; and
(2) For the purpose of title IV-B and title IV-E State plan compliance issues that are outside the prescribed child and family services review format,
(1) The hearing required by section 475(5)(C) of the Act to determine the permanency plan for a child in foster care. Within this context, the court (including a Tribal court) or administrative body determines whether and, if applicable, when the child will be:
(i) Returned to the parent;
(ii) Placed for adoption, with the State filing a petition for termination of parental rights;
(iii) Referred for legal guardianship;
(iv) Placed permanently with a fit and willing relative; or
(v) Placed in another planned permanent living arrangement, but only in cases where the State agency has documented to the State court a compelling reason for determining that it would not be in the best interests of the child to follow one of the four specified options above.
(2) The permanency hearing must be held no later than 12 months after the date the child is considered to have entered foster care in accordance with the definition at § 1355.20 of this part or within 30 days of a judicial determination that reasonable efforts to reunify the child and family are not required. After the initial permanency hearing, subsequent permanency hearings must be held not less frequently than every 12 months during the continuation of foster care. The permanency hearing must be conducted by a family or juvenile court or another court of competent jurisdiction or by an administrative body appointed or approved by the court which is not a part of or under the supervision or direction of the State agency. Paper reviews,
(a)
(b)
(1) A State found to be operating in substantial conformity during an initial or subsequent review, as defined in § 1355.34 of this part, must:
(i) Complete a full review every five years; and
(ii) Submit a completed statewide assessment to ACF three years after the
(2) A State program found not to be operating in substantial conformity during an initial or subsequent review will:
(i) Be required to develop and implement a program improvement plan, as defined in § 1355.35 of this part; and
(ii) Begin a full review two years after approval of the program improvement plan.
(c)
(1) ACF may require a full or a partial review at any time, based on any information, regardless of the source, that indicates the State may no longer be operating in substantial conformity.
(2) Prior to reinstating a full or partial review, ACF will conduct an inquiry and require the State to submit additional data whenever ACF receives information that the State may not be in substantial conformity.
(3) If the additional information and inquiry indicates to ACF's satisfaction that the State is operating in substantial conformity, ACF will not proceed with any further review of the issue addressed by the inquiry. This inquiry will not substitute for the full reviews conducted by ACF under § 1355.32(b).
(4) ACF may proceed with a full or partial review if the State does not provide the additional information as requested, or the additional information confirms that the State may not be operating in substantial conformity.
(d)
(1) Conduct an inquiry and require the State to submit additional data.
(2) If the additional information and inquiry indicates to ACF's satisfaction that the State is in compliance, we will not proceed with any further review of the issue addressed by the inquiry.
(3) ACF will institute a partial review, appropriate to the nature of the concern, if the State does not provide the additional information as requested, or the additional information confirms that the State may not be in compliance.
(4) If the partial review determines that the State is not in compliance with the applicable State plan requirement, the State must enter into a program improvement plan designed to bring the State into compliance. The terms, action steps and time-frames of the program improvement plan will be developed on a case-by-case basis by ACF and the State. The program improvement plan must take into consideration the extent of noncompliance and the impact of the noncompliance on the safety, permanency or well-being of children and families served through the State's title IV-B or IV-E allocation. If the State remains out of compliance, the State will be subject to a penalty related to the extent of the noncompliance.
(5) Review of AFCARS compliance will take place in accordance with 45 CFR 1355.40.
(a) The full child and family services reviews will:
(1) Consist of a two-phase process that includes a statewide assessment and an on-site review; and
(2) Be conducted by a team of Federal and State reviewers that includes:
(i) Staff of the State child and family services agency, including the State and local offices that represent the service areas that are the focus of any particular review;
(ii) Representatives selected by the State, in collaboration with the ACF Regional Office, from those with whom the State was required to consult in developing its CFSP, as described and required in 45 CFR part 1357.15(l);
(iii) Federal staff of HHS; and
(iv) Other individuals, as deemed appropriate and agreed upon by the State and ACF.
(b)
(1) Address each systemic factor under review, including the statewide information system; case review system; quality assurance system; staff training; service array; agency responsiveness to the community; and foster and adoptive parent licensing, recruitment and retention;
(2) Assess the outcome areas of safety, permanency, and well-being of children and families served by the State agency using data from AFCARS, NCANDS, or, for the initial review, another source approved by ACF. The State must also analyze and explain its performance in meeting the national standards for the statewide data indicators;
(3) Assess the characteristics of the State agency that have the most significant impact on the agency's capacity to deliver services to children and families that will lead to improved outcomes;
(4) Assess the strengths and areas of the State's child and family services programs that require further examination through an on-site review;
(1) Include a listing of all the persons external to the State agency who participated in the preparation of the statewide assessment pursuant to §§ 1355.33(a)(2)(ii) and (iv); and
(2) Be completed and submitted to ACF within 4 months of the date that ACF transmits the information for the statewide assessment to the State.
(c)
(1) The on-site review will cover the State's programs under titles IV-B and IV-E of the Act, including in-home services and foster care. It will be jointly planned by the State and ACF, and guided by information in the completed statewide assessment that identifies areas in need of improvement or further review.
(2) The on-site review may be concentrated in several specific political subdivisions of the State, as agreed upon by the ACF and the State; however, the State's largest metropolitan subdivision must be one of the locations selected.
(3) ACF has final approval of the selection of specific areas of the State's child and family services continuum described in paragraph (c)(1) of this section and selection of the political subdivisions referenced in paragraph (c)(2) of this section.
(4) Sources of information collected during the on-site review to determine substantial conformity must include, but are not limited to:
(i) Case records on children and families served by the agency;
(ii) Interviews with children and families whose case records have been reviewed and who are, or have been, recipients of services of the agency;
(iii) Interviews with caseworkers, foster parents, and service providers for the cases selected for the on-site review; and
(iv) Interviews with key stakeholders, both internal and external to the agency, which, at a minimum, must include those individuals who participated in the development of the State's CFSP required at 45 CFR 1357.15(1), courts, administrative review bodies, children's guardians ad litem and other
(5) The sample will range from 30-50 cases. Foster care cases must be drawn randomly from AFCARS, or, for the initial review, from another source approved by ACF and include children who entered foster care during the year under review. In-home cases must be drawn randomly from NCANDS or from another source approved by ACF. To ensure that all program areas are adequately represented, the sample size may be increased.
(6) The sample of 30-50 cases reviewed on-site will be selected from a randomly drawn oversample of no more than 150 cases. The oversample must be statistically significant at a 90 percent compliance rate (95 percent in subsequent reviews), with a tolerable sampling error of 5 percent and a confidence coefficient of 95 percent. The additional cases in the oversample not selected for the on-site review will form the sample of cases to be reviewed, if needed, in order to resolve discrepancies between the data indicators and the on-site reviews in accordance with paragraph (d)(2) of this section.
(d)
(1) The submission of additional information by the State; or
(2) ACF and the State will review additional cases using only those indicators in which the discrepancy occurred. ACF and the State will determine jointly the number of additional cases to be reviewed, not to exceed a total of 150 cases to be selected as specified in paragraph (c)(6) of this section.
(e)
(f)
(a)
(1) Its ability to meet national standards, set by the Secretary, for statewide data indicators associated with specific outcomes for children and families;
(2) Its ability to meet criteria related to outcomes for children and families; and
(3) Its ability to meet criteria related to the State agency's capacity to deliver services leading to improved outcomes.
(b)
(1) A State's substantial conformity will be determined by its ability to substantially achieve the following child and family service outcomes:
(i)
(A) Children are, first and foremost, protected from abuse and neglect; and,
(B) Children are safely maintained in their own homes whenever possible and appropriate;
(ii)
(A) Children have permanency and stability in their living situations; and
(B) The continuity of family relationships and connections is preserved for children; and
(iii)
(A) Families have enhanced capacity to provide for their children's needs;
(B) Children receive appropriate services to meet their educational needs; and
(C) Children receive adequate services to meet their physical and mental health needs.
(2) A State's level of achievement with regard to each outcome reflects the extent to which a State has:
(i) Met the national standard(s) for the statewide data indicator(s) associated with that outcome, if applicable; and,
(ii) Implemented the following CFSP requirements or assurances:
(A) The requirements in 45 CFR 1357.15(p) regarding services designed to assure the safety and protection of children and the preservation and support of families;
(B) The requirements in 45 CFR 1357.15(q) regarding the permanency provisions for children and families in sections 422 and 471 of the Act;
(C) The requirements in section 422(b)(9) of the Act regarding recruitment of potential foster and adoptive families;
(D) The assurances by the State as required by section 422(b)(10)(C)(i) and (ii) of the Act regarding policies and procedures for abandoned children;
(E) The requirements in section 422(b)(11) of the Act regarding the State's compliance with the Indian Child Welfare Act;
(F) The requirements in section 422(b)(12) of the Act regarding a State's plan for effective use of cross-jurisdictional resources to facilitate timely adoptive or permanent placements; and,
(G) The requirements in section 471(a)(15) of the Act regarding reasonable efforts to prevent removals of children from their homes, to make it possible for children in foster care to safely return to their homes, or, when the child is not able to return home, to place the child in accordance with the permanency plan and complete the steps necessary to finalize the permanent placement.
(3) A State will be determined to be in substantial conformity if its performance on:
(i) Each statewide data indicator developed pursuant to paragraph (b)(4) of this section meets the national standard described in paragraph (b)(5) of this section; and,
(ii) Each outcome listed in paragraph (b)(1) of this section is rated as “substantially achieved” in 95 percent of the cases examined during the on-site review (90 percent of the cases for a State's initial review). Information from various sources (case records, interviews) will be examined for each outcome and a determination made as to the degree to which each outcome has been achieved for each case reviewed.
(4) The Secretary will, using AFCARS and NCANDS, develop statewide data indicators for each of the specific outcomes described in paragraph (b)(1) of this section for use in determining substantial conformity. The Secretary will add, amend, or suspend any such statewide data indicator(s) when appropriate. To the extent practical and feasible, the statewide data indicators will be consistent with those developed in accordance with section 203 of the Adoption and Safe Families Act of 1997 (Pub. L. 105-89).
(5) The initial national standards for the statewide data indicators described in paragraph (b)(4) of this section will be based on the 75th percentile of all State performance for that indicator, as reported in AFCARS or NCANDS. The Secretary may adjust these national standards if appropriate. The initial national standard will be set using the following data sources:
(i) The 1997 and 1998 submissions to NCANDS (or the most recent and complete 2 years available), for those
(ii) The 1998b, 1999c, and 2000a submissions to AFCARS (or the most recent and complete report periods available), for those statewide data indicators associated with the permanency outcomes.
(c)
(1)
(2)
(i) Provide, for each child, a written case plan to be developed jointly with the child's parent(s) that includes provisions: for placing the child in the least restrictive, most family-like placement appropriate to his/her needs, and in close proximity to the parent’ home where such placement is in the child's best interests; for visits with a child placed out of State at least every 12 months by a caseworker of the agency or of the agency in the State where the child is placed; and for documentation of the steps taken to make and finalize an adoptive or other permanent placement when the child cannot return home (sections 422(b)(10)(B)(ii), 471(a)(16) and 475(5)(A) of the Act);
(ii) Provide for periodic review of the status of each child no less frequently than once every six months by either a court or by administrative review (sections 422(b)(10)(B)(ii), 471(a)(16) and 475(5)(B) of the Act);
(iii) Assure that each child in foster care under the supervision of the State has a permanency hearing in a family or juvenile court or another court of competent jurisdiction (including a Tribal court), or by an administrative body appointed or approved by the court, which is not a part of or under the supervision or direction of the State agency, no later than 12 months from the date the child entered foster care (and not less frequently than every 12 months thereafter during the continuation of foster care) (sections 422(b)(10)(B)(ii), 471(a)(16) and 475(5)(C) of the Act);
(iv) Provide a process for termination of parental rights proceedings in accordance with sections 422(b)(10(B)(ii), 475(5)(E) and (F) of the Act; and,
(v) Provide foster parents, preadoptive parents, and relative caregivers of children in foster care with notice of and an opportunity to be heard in any review or hearing held with respect to the child (sections 422(b)(10)(B)(ii) and 475(5)(G) of the Act).
(3)
(i) Is in place in the jurisdictions within the State where services included in the CFSP are provided;
(ii) Is able to evaluate the adequacy and quality of services provided under the CFSP;
(iii) Is able to identify the strengths and needs of the service delivery system it evaluates;
(iv) Provides reports to agency administrators on the quality of services evaluated and needs for improvement; and
(v) Evaluates measures implemented to address identified problems.
(4)
(i) Supports the goals and objectives in the State’s CFSP;
(ii) Addresses services provided under both subparts of title IV-B and the training plan under title IV-E of the Act;
(iii) Provides training for all staff who provide family preservation and support services, child protective services, foster care services, adoption services and independent living services soon after they are employed and that includes the basic skills and knowledge required for their positions;
(iv) Provides ongoing training for staff that addresses the skills and knowledge base needed to carry out their duties with regard to the services included in the State's CFSP; and,
(v) Provides short-term training for current or prospective foster parents, adoptive parents, and the staff of State-licensed or State-approved child care institutions providing care to foster and adopted children receiving assistance under title IV-E that addresses the skills and knowledge base needed to carry out their duties with regard to caring for foster and adopted children.
(5)
(i) Services that assess the strengths and needs of children and families assisted by the agency and are used to determine other service needs;
(ii) Services that address the needs of the family, as well as the individual child, in order to create a safe home environment;
(iii) Services designed to enable children at risk of foster care placement to remain with their families when their safety and well-being can be reasonably assured;
(iv) Services designed to help children achieve permanency by returning to families from which they have been removed, where appropriate, be placed for adoption or with a legal guardian or in some other planned, permanent living arrangement, and through post-legal adoption services;
(v) Services that are accessible to families and children in all political subdivisions covered in the State's CFSP; and,
(vi) Services that can be individualized to meet the unique needs of children and families served by the agency.
(6)
(i) The State, in implementing the provisions of the CFSP, engages in ongoing consultation with a broad array of individuals and organizations representing the State and county agencies responsible for implementing
(ii) The agency develops, in consultation with these or similar representatives, annual reports of progress and services delivered pursuant to the CFSP (45 CFR 1357.16(a));
(iii) There is evidence that the agency's goals and objectives included in the CFSP reflect consideration of the major concerns of stakeholders consulted in developing the plan and on an ongoing basis (45 CFR 1357.15(m)); and
(iv) There is evidence that the State's services under the plan are coordinated with services or benefits under other Federal or federally-assisted programs serving the same populations to achieve the goals and objectives in the plan (45 CFR 1357.15(m)).
(7)
(i) The State has established and maintains standards for foster family homes and child care institutions which are reasonably in accord with recommended standards of national organizations concerned with standards for such institutions or homes (section 471(a)(10) of the Act);
(ii) The standards so established are applied by the State to every licensed or approved foster family home or child care institution receiving funds under title IV-E or IV-B of the Act (section 471(a)(10) of the Act);
(iii) The State complies with the safety requirements for foster care and adoptive placements in accordance with sections 471(a)(16), 471(a)(20) and 475(1) of the Act and 45 CFR 1356.30;
(iv) The State has in place an identifiable process for assuring the diligent recruitment of potential foster and adoptive families that reflect the ethnic and racial diversity of children in the State for whom foster and adoptive homes are needed (section 422(b)(9) of the Act); and,
(v) The State has developed and implemented plans for the effective use of cross-jurisdictional resources to facilitate timely adoptive or permanent placements for waiting children (section 422(b)(12) of the Act).
(d)
(a)
(1) States found not to be operating in substantial conformity shall develop a program improvement plan. The program improvement plan must:
(i) Be developed jointly by State and Federal staff in consultation with the review team;
(ii) Identify the areas in which the State's program is not in substantial conformity;
(iii)Set forth the goals, the action steps required to correct each identified weakness or deficiency, and dates by which each action step is to be completed in order to improve the specific areas;
(iv) Set forth the amount of progress the statewide data will make toward meeting the national standards;
(v) Establish benchmarks that will be used to measure the State's progress in implementing the program improvement plan and describe the methods that will be used to evaluate progress;
(vi) Identify how the action steps in the plan build on and make progress over prior program improvement plans;
(vii) Identify the technical assistance needs and sources of technical assistance, both Federal and non-Federal, which will be used to make the necessary improvements identified in the program improvement plan.
(2) In the event that ACF and the State cannot reach consensus regarding the content of a program improvement plan or the degree of program or data improvement to be achieved, ACF retains the final authority to assign the contents of the plan and/or the degree of improvement required for successful completion of the plan. Under such circumstances, ACF will render a written rationale for assigning such content or degree of improvement.
(b)
(1) The State and Regional Office agree that there are areas of the State's child and family services programs in need of improvement which can be addressed through the development and implementation of a voluntary program improvement plan;
(2) ACF approval of the voluntary program improvement plan will not be required; and
(3) No penalty will be assessed for the State's failure to achieve the goals described in the voluntary program improvement plan.
(c)
(1) A State determined not to be in substantial conformity must submit a program improvement plan to ACF for approval within 90 calendar days from the date the State receives the written notification from ACF that it is not operating in substantial conformity.
(2) Any program improvement plan will be approved by ACF if it meets the provisions of paragraph (a) of this section.
(3) If the program improvement plan does not meet the provisions of paragraph (a) of this section, the State will have 30 calendar days from the date it receives notice from ACF that the plan has not been approved to revise and resubmit the plan for approval.
(4) If the State does not submit a revised program improvement plan according to the provisions of paragraph (c)(3) of this section or if the plan does not meet the provisions of paragraph (a) of this section, withholding of funds pursuant to the provisions of § 1355.36 of this part will begin.
(d)
(1) ACF retains the authority to establish time frames for the program improvement plan consistent with the seriousness and complexity of the remedies required for any areas determined not in substantial conformity, not to exceed two years.
(2) Particularly egregious areas of nonconformity impacting child safety must receive priority in both the content and time frames of the program improvement plans and must be addressed in less than two years.
(3) The Secretary may approve extensions of deadlines in a program improvement plan not to exceed one year. The circumstances under which requests for extensions will be approved are expected to be rare. The State must provide compelling documentation of the need for such an extension. Requests for extensions must be received by ACF at least 60 days prior to the affected completion date.
(4) States must provide quarterly status reports (unless ACF and the State agree upon less frequent reports) to ACF. Such reports must inform ACF of progress in implementing the measures of the plan.
(e)
(1) The methods and information used to measure progress must be sufficient to determine when and whether the State is operating in subsequent substantial conformity or has reached the negotiated standard with respect to statewide data indicators that fail to meet the national standard for that indicator;
(2) The frequency of evaluating progress will be determined jointly by the State and Federal team members, but no less than annually. Evaluation of progress will be performed in conjunction with the annual updates of the State's CFSP, as described in paragraph (f) of this section;
(3) Action steps may be jointly determined by the State and ACF to be achieved prior to projected completion dates, and will not require any further evaluation at a later date; and
(4) The State and ACF may jointly renegotiate the terms and conditions of the program improvement plan as needed, provided that:
(i) The renegotiated plan is designed to correct the areas of the State's program determined not to be in substantial conformity and/or achieve a standard for the statewide data indicators that is acceptable to ACF;
(ii) The amount of time needed to implement the provisions of the plan does not extend beyond three years from the date the original program improvement plan was approved;
(iii) The terms of the renegotiated plan are approved by ACF; and
(iv) The Secretary approves any extensions beyond the two-year limit.
(f)
(a)
(1) The term “title IV-B funds” refers to the State's combined allocation of title IV-B subpart 1 and subpart 2 funds; and
(2) The term “title IV-E funds” refers to the State's reimbursement for administrative costs for the foster care program under title IV-E.
(b)
(1) A State will have the opportunity to develop and complete a program improvement plan prior to any withholding of funds.
(2) Title IV-B and IV-E funds will not be withheld from a State if the determination of nonconformity was caused by the State's correct use of formal written statements of Federal law or policy provided the State by DHHS.
(3) A portion of the State's title IV-B and IV-E funds will be withheld by ACF for the year under review and for each succeeding year until the State either successfully completes a program improvement plan or is found to be operating in substantial conformity.
(4) The amount of title IV-B and title IV-E funds subject to withholding due to a determination that a State is not operating in substantial conformity is based on a pool of funds defined as follows:
(i) The State's allotment of title IV-B funds for each of the years to which the withholding applies; and
(ii) An amount equivalent to 10 percent of the State's Federal claims for title IV-E foster care administrative costs for each of the years to which withholding applies;
(5) The amount of funds to be withheld from the pool in paragraph (b)(4) of this section will be computed as follows:
(i) Except as provided for in paragraphs (b)(7) and (b)(8) of this section, an amount equivalent to one percent of the funds described in paragraph (b)(4) of this section for each of the years to which withholding applies will be withheld for each of the seven outcomes listed in § 1355.34(b)(1) of this part that is determined not to be substantially achieved; and
(ii) Except as provided for in paragraphs (b)(7) and (b)(8) of this section, an amount equivalent to one percent of the funds described in paragraph (b)(4) of this section for each of the years to which withholding applies will be withheld for each of the seven systemic factors listed in § 1355.34(c) of this part that is determined not to be in substantial conformity.
(6) Except as provided for in paragraphs (b)(7), (b)(8), and (e)(4) of this section, in the event the State is determined to be in nonconformity on each of the seven outcomes and each of the seven systemic factors subject to review, the maximum amount of title IV-B and title IV-E funds to be withheld due to the State's failure to comply is 14 percent per year of the funds described in paragraph (b)(4) of this section for each year.
(7) States determined not to be in substantial conformity that fail to correct the areas of nonconformity through the successful completion of a program improvement plan, and are determined to be in nonconformity on the second full review following the first full review in which a determination of nonconformity was made will be subject to increased withholding as follows:
(i) The amount of funds described in paragraph (b)(5) of this section will increase to two percent for each of the seven outcomes and each of the seven systemic factors that continues in nonconformity since the immediately preceding child and family services review;
(ii) The increased withholding of funds for areas of continuous nonconformity is subject to the provisions of paragraphs (c), (d), and (e) of this section;
(iii) The maximum amount of title IV-B and title IV-E funds to be withheld due to the State's failure to comply on the second full review following the first full review in which the determination of nonconformity was made is 28 percent of the funds described in paragraph (b)(4) of this section for each year to which the withholding of funds applies.
(8) States determined not to be in substantial conformity that fail to correct the areas of nonconformity through the successful completion of a program improvement plan, and are determined to be in nonconformity on the third and any subsequent full reviews following the first full review in which a determination of nonconformity was made will be subject to increased withholding as follows:
(i) The amount of funds described in paragraph (b)(5) of this section will increase to three percent for each of the seven outcomes and each of the seven systemic factors that continues in nonconformity since the immediately preceding child and family services review;
(ii) The increased withholding of funds for areas of continuous nonconformity is subject to the provisions of paragraphs (c), (d), and (e) of this section;
(iii) The maximum amount of title IV-B and title IV-E funds to be withheld due to the State's failure to comply on the third and any subsequent full reviews following the first full review in which the determination of nonconformity was made is 42 percent
(c)
(1) For States determined not to be operating in substantial conformity, ACF will suspend the withholding of the State title IV-B and title IV-E funds during the time that a program improvement plan is in effect, provided that:
(i) The program improvement plan conforms to the provisions of § 1355.35 of this part; and
(ii) The State is actively implementing the provisions of the program improvement plan.
(2) Suspension of the withholding of funds is limited to three years following each review, or the amount of time approved for implementation of the program improvement plan, whichever is less.
(d)
(e)
(1) States determined not to be in substantial conformity that fail to successfully complete a program improvement plan will be notified by ACF of this final determination of nonconformity in writing within 10 business days after the relevant completion date specified in the plan, and advised of the amount of title IV-B and title IV-E funds which are to be withheld.
(2) Title IV-B and title IV-E funds will be withheld based on the following:
(i) If the State fails to submit status reports in accordance with § 1355.35(d)(4), or if such reports indicate that the State is not making satisfactory progress toward achieving goals or actions steps, funds will be withheld at that time for a period beginning October 1 of the fiscal year for which the determination of nonconformity was made and ending on the specified completion date for the affected goal or action step.
(ii) Funds related to goals and action steps that have not been achieved by the specified completion date will be withheld at that time for a period beginning October 1 of the fiscal year for which the determination of nonconformity was made and ending on the completion date of the affected goal or action step; and
(iii) The withholding of funds commensurate with the level of nonconformity at the end of the program improvement plan will begin at the latest completion date specified in the program improvement plan and will continue until a subsequent full review determines the State to be in substantial conformity or the State successfully completes a program improvement plan developed as a result of that subsequent full review.
(3) When the date the State is determined to be in substantial conformity or to have successfully completed a program improvement plan falls within a specific quarter, the amount of funds to be withheld will be computed to the end of that quarter.
(4) A State agency that refuses to participate in the development or implementation of a program improvement plan, as required by ACF, will be subject to the maximum increased withholding of 42 percent of its title IV-B and title IV-E funds, as described in paragraph (b)(8) of this section, for each year or portion thereof to which the withholding of funds applies.
(5) The State agency will be liable for interest on the amount of funds withheld by the Department, in accordance with the provisions of 45 CFR 30.13.
The State agency must make available for public review and inspection all statewide assessments (§ 1355.33(b)), report of findings (§ 1355.33(e)), and program improvement plans (§ 1355.35(a)) developed as a result of a full or partial child and family services review.
(a)
(1) If ACF becomes aware of a possible section 471(a)(18) violation, whether in the course of a child and family services review, the filing of a complaint, or through some other mechanism, it will refer such a case to the Department's Office for Civil Rights (OCR) for investigation.
(2) Based on the findings of the OCR investigation, ACF will determine if a violation of section 471(a)(18) has occurred. A section 471(a)(18) violation occurs if a State or an entity in the State:
(i) Has denied to any person the opportunity to become an adoptive or foster parent on the basis of the race, color, or national origin of the person, or of the child, involved;
(ii) Has delayed or denied the placement of a child for adoption or into foster care on the basis of the race, color, or national origin of the adoptive or foster parent, or the child involved; or,
(iii) With respect to a State, maintains any statute, regulation, policy, procedure, or practice that on its face, is a violation as defined in paragraphs (a)(2)(i) and (2)(ii) of this section.
(3) ACF will provide the State or entity with written notification of its determination.
(4) If there has been no violation, there will be no further action. If ACF determines that there has been a violation of section 471(a)(18), it will take enforcement action as described in this section.
(5) Compliance with the Indian Child Welfare Act of 1978 (Pub. L. 95-608) does not constitute a violation of section 471(a)(18).
(b)
(1) A State found to be in violation of section 471(a)(18) with respect to a person, as described in paragraphs (a)(2)(i) and (a)(2)(ii) of this section, will be penalized in accordance with paragraph (g)(2) of this section. A State determined to be in violation of section 471(a)(18) of the Act as a result of a court finding will be penalized in accordance with paragraph (g)(4) of this section. The State may develop, obtain approval of, and implement a plan of corrective action any time after it receives written notification from ACF that it is in violation of section 471(a)(18) of the Act.
(2) Corrective action plans are subject to ACF approval.
(3) If the corrective action plan does not meet the provisions of paragraph (d) of this section, the State must revise and resubmit the plan for approval until it has an approved plan.
(4) A State found to be in violation of section 471(a)(18) by a court must notify ACF within 30 days from the date of entry of the final judgement once all appeals have been exhausted, declined, or the appeal period has expired.
(c)
(1) A State found to have committed a violation of the type described in paragraph (a)(2)(iii) of this section must develop and submit a corrective action plan within 30 days of receiving written
(2) Corrective action plans are subject to ACF approval.
(3) If the corrective action plan does not meet the provisions of paragraph (d) of this section, the State must revise and resubmit the plan within 30 days from the date it receives a written notice from ACF that the plan has not been approved. If the State does not submit a revised corrective action plan according to the provisions of paragraph (d) of this section, withholding of funds pursuant to the provisions of paragraph (g) of this section will apply.
(d)
(1) Identify the issues to be addressed;
(2) Set forth the steps for taking corrective action;
(3) Identify any technical assistance needs and Federal and non-Federal sources of technical assistance which will be used to complete the action steps; and,
(4) Specify the completion date. This date will be no later than 6 months from the date ACF approves the corrective action plan.
(e)
(f)
(g)
(1) Title IV-E funds shall be reduced in specified amounts in accordance with paragraph (h) of this section under the following circumstances:
(i) A determination that a State is in violation of section 471(a)(18) of the Act with respect to a person as described in paragraphs (a)(2)(i) and (a)(2)(ii) of this section, or;
(ii) After a State's failure to implement and complete a corrective action plan and come into compliance as described in paragraph (c) of this section.
(2) Once ACF notifies a State, in writing, that it has committed a section 471(a)(18) violation with respect to a person, the State's title IV-E funds will be reduced for the fiscal quarter in which the State received such written notification and for each succeeding quarter within that fiscal year or until the State completes a corrective action plan and comes into compliance, whichever is earlier.
(3) For States that fail to complete a corrective action plan within 6 months, title IV-E funds will be reduced by ACF for the fiscal quarter in which the State received notification of its violation. The reduction will continue for each succeeding quarter within that fiscal year or until the State completes the corrective action plan and comes into compliance, whichever is earlier.
(4) If, as a result of a court finding, a State is determined to be in violation of section 471(a)(18) of the Act, ACF will assess a penalty without further investigation. Once the State is notified (in writing) of the violation, its title IV-E funds will be reduced for the fiscal quarter in which the court finding was made and for each succeeding quarter within that fiscal year or until the State completes a corrective action plan and comes into compliance, whichever is sooner.
(5) The maximum number of quarters that a State will have its title IV-E funds reduced due to a finding of a State's failure to conform to section 471(a)(18) of the Act is limited to the number of quarters within the fiscal year in which a determination of nonconformity was made. However, an uncorrected violation may result in a subsequent review, another finding, and additional penalties.
(6) No penalty will be imposed for a court finding of a violation of section 471(a)(18) until the judgement is final and all appeals have been exhausted, declined, or the appeal period has expired.
(h)
(1) State agencies that violate section 471(a)(18) with respect to a person or fail to implement or complete a corrective action plan as described in paragraph (c) of this section will be subject to a penalty. The penalty structure will follow section 474(d)(1) of the Act. Penalties will be levied for the quarter of the fiscal year in which the State is notified of its section 471(a)(18) violation, and for each succeeding quarter within that fiscal year until the State comes into compliance with section 471(a)(18). The reduction in title IV-E funds will be computed as follows:
(i) 2 percent of the State's title IV-E funds for the fiscal year quarter, as defined in paragraph (f) of this section, for the first finding of noncompliance in that fiscal year;
(ii) 3 percent of the State's title IV-E funds for the fiscal year quarter, as defined in paragraph (f) of this section, for the second finding of noncompliance in that fiscal year;
(iii) 5 percent of the State's title IV-E funds for the fiscal year quarter, as defined in paragraph (f) of this section, for the third or subsequent finding of noncompliance in that fiscal year.
(2) Any entity (other than the State agency) which violates section 471(a)(18) of the Act during a fiscal quarter with respect to any person must remit to the Secretary all title IV-E funds paid to it by the State during the quarter in which the entity is notified of its violation.
(3) No fiscal year payment to a State will be reduced by more than 5 percent of its title IV-E funds, as defined in paragraph (f) of this section, where the State has been determined to be out of compliance with section 471(a)(18) of the Act.
(4) The State agency or entity, as applicable, will be liable for interest on the amount of funds reduced by the Department, in accordance with the provisions of 45 CFR 30.13.
States determined not to be in substantial conformity with titles IV-B and IV-E State plan requirements, or a State or entity in violation of section 471(a)(18) of the Act:
(a) May appeal, pursuant to 45 CFR part 16, the final determination and any subsequent withholding of, or reduction in, funds to the HHS Departmental Appeals Board within 60 days after receipt of a notice of nonconformity described in § 1355.36(e)(1) of this part, or receipt of a notice of noncompliance by ACF as described in § 1355.38(a)(3) of this part; and
(b) Will have the opportunity to obtain judicial review of an adverse decision of the Departmental Appeals Board within 60 days after the State or entity receives notice of the decision by the Board. Appeals of adverse
(c) The procedure described in paragraphs (a) and (b) of this section will not apply to a finding that a State or entity has been determined to be in violation of section 471(a)(18) which is based on a judicial decision.
(a)
(1) * * *
(2) * * * This includes American Indian children covered under the assurances in section 422(b)(10) of the Act on the same basis as any other child. * * *
c. Remove paragraph IX.D. to read as follows:
C. Race/Ethnicity**
1. Race—In general, a person's race is determined by how they define themselves or by how others define them. In the case of young children, parents determine the race of the child. Indicate all races (a through e) that apply with a “1.” For those that do not apply, indicate a “0.” Indicate “f. Unable to Determine” with a “1” if it applies and a “0” if it does not.
American Indian or Alaska Native—A person having origins in any of the original peoples of North or South America (including Central America), and who maintains tribal affiliation or community attachment.
Asian—A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam.
Black or African American—A person having origins in any of the black racial groups of Africa.
Native Hawaiian or Other Pacific Islander—A person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands.
White—A person having origins in any of the original peoples of Europe, the Middle East, or North Africa.
Unable to Determine—The specific race category is “unable to determine” because the child is very young or is severely disabled and no person is available to identify the child's race. “Unable to determine” is also used if the parent, relative or guardian is unwilling to identify the child's race.
2. Hispanic or Latino Ethnicity—Answer “yes” if the child is of Mexican, Puerto Rican, Cuban, Central or South American origin, or a person of other Spanish cultural origin regardless of race. Whether or not a person is Hispanic or Latino is determined by how they define themselves or by how others define them. In the case of young children, parents determine the ethnicity of the child. “Unable to Determine” is used because the child is very young or is severely disabled and no person is available to determine whether or not the child is Hispanic or Latino. “Unable to determine” is also used if the parent, relative or guardian is unwilling to identify the child's ethnicity.
C. Race—Indicate the race for each of the foster parent(s). See instructions and definitions for the race categories under data element II.C.1. Use “f. Unable to Determine” only when a parent is unwilling to identify his or her race. Hispanic or Latino Ethnicity—Indicate the ethnicity for each of the foster parent(s). See instructions and definitions under data element II.C.2. Use “f. Unable to Determine” only when a parent is unwilling to identify his or her ethnicity.
C. Race/Ethnicity
1. Race—In general, a person's race is determined by how they define themselves or by how others define them. In the case of young children, parents determine the race of the child. Indicate all races (a-e) that apply with a “1.” For those that do not apply, indicate a “0.” Indicate “f. Unable to Determine” with a 1” if it applies and a “0” if it does not.
American Indian or Alaska Native—A person having origins in any of the original peoples of North or South America (including Central America), and who maintains tribal affiliation or community attachment.
Asian—A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam.
Black or African American—A person having origins in any of the black racial groups of Africa.
Native Hawaiian or Other Pacific Islander—A person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands.
White—A person having origins in any of the original peoples of Europe, the Middle East, or North Africa.
Unable to Determine—The specific race category is “unable to determine” because the child is very young or is severely disabled and no person is available to identify the child's race. “Unable to determine” is also used if the parent, relative or guardian is unwilling to identify the child's race.
2. Hispanic or Latino Ethnicity—Answer “yes” if the child is of Mexican, Puerto Rican, Cuban, Central or South American origin, or a person of other Spanish cultural origin regardless of race. Whether or not a person is Hispanic or Latino is determined by how they define themselves or by how others define them. In the case of young children, parents determine the ethnicity of the child. “Unable to Determine” is used because the child is very young or is severely disabled and no other person is available to determine whether or not the child is Hispanic or Latino. “Unable to determine” is also used if the parent, relative or guardian is unwilling to identify the child's ethnicity.
C. Race/Ethnicity—Indicate the race/ethnicity for each of the adoptive parent(s). See instructions and definitions for the race/ethnicity categories under data element II.C. Use “f. Unable to Determine” only when a parent is unwilling to identify his or her race or ethnicity.
(2) Enter date values in year, month and day order (YYYYMMDD),
(3) For elements 8, 11-15, 26-40, 52, 54 and 59-65, which are “select all that apply” elements, enter a “1” for each element that applies, enter a zero for non-applicable elements.
c. foster care Semi-Annual Detailed Data elements Record layout follows:
a. * * *
b. * * *
(3) Enter date values in year, month order (YYYYMM),
c. Foster Care Semi-Annual Summary Data Elements Record Layout follows:
a. * * *
b. * * *
(2) Enter date values in year, month and day order (YYYYMMDD),
(3) For elements 7, 11-15, 25, 27 and 29-32 which are “select all that apply” elements, enter a “1” for each element that applies; enter a zero for non-applicable elements.
c. Adoption Semi-Annual Detailed Data Elements Record Layout follows:
a. * * *
b. * * *
(3) Enter data values in year, month order (YYYYMM),
c. Adoption Semi-Annual Summary Data Element Record Layout follows:
a. * * *
(18) In Elements 8, 52, and 54, race categories (“a” through “e”) and “f. Unable to Determine” cannot be coded “0,” for it does not apply. If any of the race categories apply and are coded as “1” then “f. Unable to Determine” cannot also apply.
a. * * *
(1) Data elements whose values fail internal consistency validations as outlined in A.2.a.(1)-(18) above, and
a. * * *
(8) If the “Family Structure” (Element 22) is option 3, Single Female, then the Mother's Year of Birth (Element 23), the “Adoptive Mother's Race” (Element 25) and “Hispanic or Latino Ethnicity” (Element 26) must be completed. Similarly, if the “Family Structure” (Element 22) is option 4, Single Male, then the Father's Year of Birth (Element 24), the Adoptive Father's Race” (Element 27) and “Hispanic or Latino Ethnicity” (Element 28) must be completed. If the “Family Structure” (Element 22) is option 1 or 2, then both Mother's and Father's “Year of Birth,” “Race” and “Hispanic or Latino Ethnicity” must be completed.
(9) In Elements 7, 25, and 27, race categories (“a” through “e”) and “f. Unable to Determine” cannot be coded “0,” for it does not apply. If any of the race categories apply and are coded as “1” then “f. Unable to Determine” cannot also apply.
a. * * *
(1) Data elements whose values fail internal consistency validations as outlined in 2.a.(1)-(9) above, and
9. The authority citation for Part 1356 continues to read as follows:
42 U.S.C. 620
10. Section 1356.20 is amended by revising the first two sentences of paragraph (e)(4) to read as follows:
(e) * * *
(4)
(a)
(b)
(1)
(i) When a child is removed from his/her home, the judicial determination as to whether reasonable efforts were made, or were not required to prevent the removal in accordance with paragraph (b)(3) of this section, must be made no later than 60 days from the date the child is removed from the home pursuant to paragraph (k) of this section.
(ii) If the determination concerning reasonable efforts to prevent the removal is not made as specified in paragraph (b)(1)(i) of this section, the child is not eligible under the title IV-E foster care maintenance payments program for the duration of that stay in foster care.
(2)
(i) The State agency must obtain a judicial determination that it has made reasonable efforts to finalize the permanency plan that is in effect (whether the plan is reunification, adoption, legal guardianship, placement with a fit and willing relative, or placement in another planned permanent living arrangement) within twelve months of the date the child is considered to have entered foster care in accordance with the definition at § 1355.20 of this part, and at least once every twelve months thereafter while the child is in foster care.
(ii) If such a judicial determination regarding reasonable efforts to finalize a permanency plan is not made, the child becomes ineligible under title IV-E from the end of the twelfth month following the date the child is considered to have entered foster care in accordance with the definition at § 1355.20 of this part, or the end of the month in which the most recent judicial determination of reasonable efforts to finalize a permanency plan was made, and remains ineligible until such a judicial determination is made.
(3)
(i) A court of competent jurisdiction has determined that the parent has subjected the child to aggravated circumstances (as defined in State law, which definition may include but need not be limited to abandonment, torture, chronic abuse, and sexual abuse);
(ii) A court of competent jurisdiction has determined that the parent has been convicted of:
(A) Murder (which would have been an offense under section 1111(a) of title 18, United States Code, if the offense had occurred in the special maritime or territorial jurisdiction of the United States) of another child of the parent;
(B) Voluntary manslaughter (which would have been an offense under section 1112(a) of title 18, United States Code, if the offense had occurred in the special maritime or territorial jurisdiction of the United States) of another child of the parent;
(C) Aiding or abetting, attempting, conspiring, or soliciting to commit such a murder or such a voluntary manslaughter; or
(D) A felony assault that results in serious bodily injury to the child or another child of the parent; or,
(iii) The parental rights of the parent with respect to a sibling have been terminated involuntarily.
(4)
(5)
(c)
(d)
(1) If the reasonable efforts and contrary to the welfare judicial determinations are not included as required in the court orders identified in paragraphs (b) and (c) of this section, a transcript of the court proceedings is the only other documentation that will be accepted to verify that these required determinations have been made.
(2) Neither affidavits nor nunc pro tunc orders will be accepted as verification documentation in support of reasonable efforts and contrary to the welfare judicial determinations.
(3) Court orders that reference State law to substantiate judicial determinations are not acceptable, even if State law provides that a removal must be based on a judicial determination that remaining in the home would be contrary to the child's welfare or that removal can only be ordered after reasonable efforts have been made.
(e)
(f)
(g)
(1) Be a written document, which is a discrete part of the case record, in a format determined by the State, which is developed jointly with the parent(s) or guardian of the child in foster care; and
(2) Be developed within a reasonable period, to be established by the State, but in no event later than 60 days from the child's removal from the home pursuant to paragraph (k) of this section;
(3) Include a discussion of how the case plan is designed to achieve a safe placement for the child in the least restrictive (most family-like) setting available and in close proximity to the home of the parent(s) when the case plan goal is reunification and a discussion of how the placement is consistent with the best interests and special needs of the child. (FFP is not available when a court orders a placement with a specific foster care provider);
(4) Include a description of the services offered and provided to prevent removal of the child from the home and to reunify the family; and
(5) Document the steps to finalize a placement when the case plan goal is or becomes adoption or placement in another permanent home in accordance with sections 475(1)(E) and (5)(E) of the Act. When the case plan goal is adoption, at a minimum, such documentation shall include child-specific recruitment efforts such as the use of State, regional, and national adoption exchanges including electronic exchange systems.
(h)
(1) To meet the requirements of the permanency hearing, the State must, among other requirements, comply with section 475(5)(C) of the Act.
(2) In accordance with paragraph (b)(3) of this section, when a court determines that reasonable efforts to return the child home are not required, a permanency hearing must be held within 30 days of that determination, unless the requirements of the permanency hearing are fulfilled at the hearing in which the court determines that reasonable efforts to reunify the child and family are not required.
(3) If the State concludes, after considering reunification, adoption, legal guardianship, or permanent placement with a fit and willing relative, that the most appropriate permanency plan for a child is placement in another planned permanent living arrangement, the State must document to the court the compelling reason for the alternate plan. Examples of a compelling reason for establishing such a permanency plan may include:
(i) The case of an older teen who specifically requests that emancipation be established as his/her permanency plan;
(ii) The case of a parent and child who have a significant bond but the parent is unable to care for the child because of an emotional or physical disability and the child's foster parents have committed to raising him/her to the age of majority and to facilitate visitation with the disabled parent; or,
(iii) the Tribe has identified another planned permanent living arrangement for the child.
(4) When an administrative body, appointed or approved by the court, conducts the permanency hearing, the procedural safeguards set forth in the definition of
(i)
(i) Whose child has been in foster care under the responsibility of the State for 15 of the most recent 22 months. The petition must be filed by the end of the child's fifteenth month in foster care. In calculating when to file a petition for termination of parental rights, the State:
(A) Must calculate the 15 out of the most recent 22 month period from the date the child entered foster care as defined at section 475(5)(F) of the Act;
(B) Must use a cumulative method of calculation when a child experiences multiple exits from and entries into foster care during the 22 month period;
(C) Must not include trial home visits or runaway episodes in calculating 15 months in foster care; and,
(D) Need only apply section 475(5)(E) of the Act to a child once if the State
(ii) Whose child has been determined by a court of competent jurisdiction to be an abandoned infant (as defined under State law). The petition to terminate parental rights must be filed within 60 days of the judicial determination that the child is an abandoned infant; or,
(iii) Who has been convicted of one of the felonies listed at paragraph (b)(3)(ii) of this section. Under such circumstances, the petition to terminate parental rights must be filed within 60 days of a judicial determination that reasonable efforts to reunify the child and parent are not required.
(2) The State may elect not to file or join a petition to terminate the parental rights of a parent per paragraph (i)(1) of this section if:
(i) At the option of the State, the child is being cared for by a relative;
(ii) The State agency has documented in the case plan (which must be available for court review) a compelling reason for determining that filing such a petition would not be in the best interests of the individual child. Compelling reasons for not filing a petition to terminate parental rights include, but are not limited to:
(A) Adoption is not the appropriate permanency goal for the child; or,
(B) No grounds to file a petition to terminate parental rights exist; or,
(C) The child is an unaccompanied refugee minor as defined in 45 CFR 400.111; or
(D) There are international legal obligations or compelling foreign policy reasons that would preclude terminating parental rights; or
(iii) The State agency has not provided to the family, consistent with the time period in the case plan, services that the State deems necessary for the safe return of the child to the home, when reasonable efforts to reunify the family are required.
(3) When the State files or joins a petition to terminate parental rights in accordance with paragraph (i)(1) of this section, it must concurrently begin to identify, recruit, process, and approve a qualified adoptive family for the child.
(j)
(k)
(1) For the purposes of meeting the requirements of section 472(a)(1) of the Act, a removal from the home must occur pursuant to:
(i) A voluntary placement agreement entered into by a parent or relative which leads to a physical or constructive removal (i.e., a non-physical or paper removal of custody) of the child from the home; or
(ii) A judicial order for a physical or constructive removal of the child from a parent or specified relative.
(2) A removal has not occurred in situations where legal custody is removed from the parent or relative and the child remains with the same relative in that home under supervision by the State agency.
(3) A child is considered constructively removed on the date of the first judicial order removing custody, even temporarily, from the appropriate specified relative or the date that the voluntary placement agreement is signed by all relevant parties.
(l)
(1) The child was living with the parent or specified relative, and was AFDC eligible in that home in the month of the voluntary placement agreement or initiation of court proceedings; or
(2) The child had been living with the parent or specified relative within six months of the month of the voluntary placement agreement or the initiation of court proceedings, and the child would have been AFDC eligible in that month if s/he had still been living in that home.
(m)
(1) The amount of the payments made for foster care maintenance and adoption assistance to assure their continued appropriateness; and
(2) The licensing or approval standards for child care institutions and foster family homes.
(n)
(o)
(a) As a condition of receipt of Federal financial participation (FFP) in foster care maintenance payments for a dependent child removed from his home under a voluntary placement agreement, the State must meet the requirements of:
(1) Section 472 of the Act, as amended;
(2) Sections 422(b)(10) and 475(5) of the Act;
(3) 45 CFR 1356.21 (f), (g), (h), and (i); and
(4) The requirements of this section.
(b) Federal financial participation is available only for voluntary foster care maintenance expenditures made within the first 180 days of the child's placement in foster care unless there has been a judicial determination by a court of competent jurisdiction, within the first 180 days of such placement, to the effect that the continued voluntary placement is in the best interests of the child.
(c) The State agency must establish and maintain a uniform procedure or system, consistent with State law, for revocation by the parent(s) of a voluntary placement agreement and return of the child.
(a) Unless an election provided for in paragraph (d) of this section is made, the State must provide documentation that criminal records checks have been conducted with respect to prospective foster and adoptive parents.
(b) The State may not approve or license any prospective foster or adoptive parent, nor may the State claim FFP for any foster care maintenance or adoption assistance payment made on behalf of a child placed in a foster home
(1) Child abuse or neglect;
(2) Spousal abuse;
(3) A crime against a child or children (including child pornography); or,
(4) A crime involving violence, including rape, sexual assault, or homicide, but not including other physical assault or battery.
(c) The State may not approve or license any prospective foster or adoptive parent, nor may the State claim FFP for any foster care maintenance or adoption assistance payment made on behalf of a child placed in a foster home operated under the auspices of a child placing agency or on behalf of a child placed in an adoptive home through a private adoption agency, if the State finds, based on a criminal records check conducted in accordance with paragraph (a) of this section, that a court of competent jurisdiction has determined that the prospective foster or adoptive parent has, within the last five years, been convicted of a felony involving:
(1) Physical assault;
(2) Battery; or,
(3) A drug-related offense.
(d)(1) The State may elect not to conduct or require criminal records checks on prospective foster or adoptive parents by:
(i) Notifying the Secretary in a letter from the Governor; or
(ii) Enacting State legislation.
(2) Such an election also removes the State's obligation to comport with paragraphs (b) and (c) of this section.
(e) In all cases where the State opts out of the criminal records check requirement, the licensing file for that foster or adoptive family must contain documentation which verifies that safety considerations with respect to the caretaker(s) have been addressed.
(f) In order for a child care institution to be eligible for title IV-E funding, the licensing file for the institution must contain documentation which verifies that safety considerations with respect to the staff of the institution have been addressed.
(a) To be in compliance with the title IV-E State plan requirements, a State must meet the requirements of the Act and 45 CFR 1356.20, 1356.21, 1356.30, and 1356.40 of this part.
(b) To be in compliance with the title IV-E State plan requirements, a State that chooses to claim FFP for voluntary placements must meet the requirements of the Act, 45 CFR 1356.22 and paragraph (a) of this section; and
(b)
(1) Federal financial participation is available at the rate of seventy-five percent (75%) in the costs of:
(i) Training personnel employed or preparing for employment by the State or local agency administering the plan, and;
(ii) Providing short-term training (including travel and per diem expenses) to current or prospective foster or adoptive parents and the members of the state licensed or approved child care institutions providing care to foster and adopted children receiving title IV-E assistance.
(a)
(1) This section sets forth requirements governing Federal reviews of State compliance with the title IV-E eligibility provisions as they apply to children and foster care providers under paragraphs (a) and (b) of section 472 of the Act.
(2) The requirements of this section apply to State agencies that receive Federal payments for foster care under title IV-E of the Act.
(3) The review process begins with a primary review of foster care cases for the title IV-E eligibility requirements. States determined to be in substantial compliance based on the primary review will not be subject to another review for three years. States that are determined not to be in compliance will develop and implement a program improvement plan designed to correct the areas of non-compliance, and a secondary review will be conducted after completion of the program improvement plan.
(b)
(1) The review team must be composed of representatives of the State agency, and ACF's Regional and Central Offices.
(2) The State must provide ACF with the complete payment history for each of the sample and oversample cases prior to the on-site review.
(c)
(1) The list of sampling units in the target population (
(2) A sample of 80 cases (plus a 10 percent oversample of eight cases) from the title IV-E foster care program will be selected for the primary review utilizing probability sampling methodologies. Usually, the chosen methodology will be simple random sampling, but other probability samples may be utilized, when necessary and appropriate.
(3) Cases from the oversample will be substituted and reviewed for each of the original sample of 80 cases which is found to be in error.
(4) At the completion of the primary review, the review team will determine the number of ineligible cases. When the total number of ineligible cases does not exceed eight, ACF can conclude with a probability of 88 percent that in a population of 1000 or more cases the population ineligibility case error rate is less than 15 percent and the State will be considered in substantial compliance. For primary reviews held subsequent to the initial primary reviews, the acceptable population ineligibility case error rate threshold will be reduced from less than 15 percent (eight or fewer ineligible cases)
(5) A State which has been determined to be in “noncompliance” (
(6) At the completion of the secondary review, the review team will calculate both the sample case ineligibility and dollar error rates for the cases determined ineligible during the review. An extrapolated disallowance equal to the lower limit of a 90 percent confidence interval for the population total dollars in error for the amount of time corresponding to the AFCARS reporting period will be assessed if both the child/provider (case) ineligibility and dollar error rates exceed 10 percent. If neither, or only one, of the error rates exceeds 10 percent, a disallowance will be assessed for the ineligible cases for the period of time the cases are ineligible.
(d)
(1) The eligibility of the children on whose behalf the foster care maintenance payments are made (section 472(a)(1)-(4) of the Act) to include:
(i) Judicial determinations regarding “reasonable efforts” and “contrary to the welfare” in accordance with § 1356.21(b) and (c), respectively;
(ii) Voluntary placement agreements in accordance with § 1356.22;
(iii) Responsibility for placement and care vested with the State agency;
(iv) Placement in a licensed foster family home or child care institution; and,
(v) eligibility for AFDC under such State plan as it was in effect on July 16, 1996.
(2) Allowable payments made to foster care providers who comport with sections 471(a)(10), 471(a)(20), 472(b) and (c) of the Act and § 1356.30.
(e)
(f)
(g)
(1) For each case being reviewed, the State agency must make available a licensing file which contains the licensing history, including a copy of the certificate of licensure/approval or letter of approval, for each of the providers in the following categories:
(i) Public child care institutions with 25 children or less in residence;
(ii) Private child care institutions;
(iii) Group homes; and
(iv) Foster family homes, including relative homes.
(2) The licensing file must contain documentation that the State has complied with the safety requirements for foster and adoptive placements in accordance with § 1356.30.
(3) If the licensing file does not contain sufficient information to support a child's placement in a licensed facility, the State agency may provide supplemental information from other sources (
(h)
(1) Disallowances will be taken, and plans for program improvement required, based on the extent to which a State is not in substantial compliance with recipient or provider eligibility provisions of title IV-E, or applicable regulations in 45 CFR parts 1355 and 1356.
(2) Substantial compliance and noncompliance are defined as follows:
(i)
(ii)
(3) ACF will notify the State in writing within 30 calendar days after the completion of the review of whether the State is, or is not, operating in substantial compliance.
(4) States which are determined to be in substantial compliance must undergo a subsequent review after a minimum of three years.
(i)
(1) States which are determined to be in noncompliance with recipient or provider eligibility provisions of title IV-E, or applicable regulations in 45 CFR Parts 1355 and 1356, will develop a program improvement plan designed to correct the areas determined not to be in substantial compliance. The program improvement plan will:
(i) Be developed jointly by State and Federal staff;
(ii) Identify the areas in which the State's program is not in substantial compliance;
(iii) Not extend beyond one year. A State will have a maximum of one year in which to implement and complete the provisions of the program improvement plan unless State legislative action is required. In such instances, an extension may be granted with the State and ACF negotiating the terms and length of such extension that shall not exceed the last day of the first legislative session after the date of the program improvement plan; and
(iv) Include:
(A) Specific goals;
(B) The action steps required to correct each identified weakness or deficiency; and,
(C) a date by which each of the action steps is to be completed.
(2) States determined not to be in substantial compliance as a result of a primary review must submit the program improvement plan to ACF for approval within 90 calendar days from the date the State receives written notification that it is not in substantial compliance. This deadline may be extended an additional 30 calendar days when a State agency submits additional documentation to ACF in support of cases determined to be ineligible as a result of the on-site eligibility review.
(3) The ACF Regional Office will intermittently review, in conjunction with the State agency, the State's
(4) If a State agency does not submit an approvable program improvement plan in accordance with the provisions of paragraphs (i)(1) and (2) of this section, ACF will move to a secondary review in accordance with paragraph (c) of this section.
(j)
(1) States which are in found to be in substantial compliance during the primary or secondary review will have disallowances (if any) determined on the basis of individual cases reviewed and found to be in error. The amount of disallowance will be computed on the basis of payments associated with ineligible cases for the entire period of time that each case has been ineligible.
(2) States which are found to be in noncompliance during the primary review will have disallowances determined on the basis of individual cases reviewed and found to be in error, and must implement a program improvement plan in accordance with the provisions contained within it. A secondary review will be conducted no later than during the AFCARS reporting period which immediately follows the program improvement plan completion date on a sample of 150 cases drawn from the State's most recent AFCARS data. If both the case ineligibility and dollar error rates exceed 10 percent the State is in noncompliance and an additional disallowance will be determined based on extrapolation from the sample to the universe of claims paid for the duration of the AFCARS reporting period (
(3) The State agency will be liable for interest on the amount of funds disallowed by the Department, in accordance with the provisions of 45 CFR 30.13.
(4) States may appeal any disallowance actions taken by ACF to the HHS Departmental Appeals Board in accordance with regulations at 45 CFR Part 16.
42 U.S.C. 620
(d)* * *
(6) In order to determine the amount of Federal funds available for a direct grant to an eligible ITO, the Department shall first divide the State's title IV-B allotment by the number of children in the State, then multiply the resulting amount by a multiplication factor determined by the Secretary, and then multiply that amount by the number of Indian children in the ITO population. The multiplication factor will be set at a level designed to achieve the purposes of the act and revised as appropriate.