Urban sprawl continues to threaten the Nation's farm and ranch land, as social and economic changes over the past three decades have influenced the rate at which land is converted to non-agricultural uses. Population growth, demographic changes, preferences for larger lots, expansion of transportation systems, and economic prosperity have contributed to increases in agricultural land conversion rates. The amount of farm and ranch land lost to development and the quality of farmland being converted are significant concerns. In most States, prime farmland is being converted at two to four times the rate of other, less-productive agricultural land.

There continues to be an important national interest in the protection of farmland. Land use devoted to agriculture provides an important contribution to environmental quality, protection of the Nation's historical and archaeological resources, and scenic beauty.

Effective on the publication date of this notice, NRCS announces the availability of up to $78 million for FRPP, until September 30, 2005. The NRCS State Conservationist must receive proposals for participation within 120 days of the date of this notice. State, Tribal, and local governmental entities and nongovernmental organizations may apply. Selection will be based on the criteria established in this notice and additional criteria developed by the applicable State Conservationist. Pending offers by an eligible entity must be for acquiring an easement for perpetuity, except where State law prohibits a permanent easement.

Under the FRPP, NRCS may provide up to 50 percent of the appraised fair market value of the conservation easement. Landowner donations up to 25 percent of the appraised fair market value of the conservation easement may be considered part of the entity's matching offer. For the entity, two cost-share options are available when providing its matching offer. One option is for the entity to provide, in cash, at least 25 percent of the appraised fair market value of the conservation easement. The second option is for the entity to provide, in cash, at least 50 percent of the purchase price of the conservation easement. The second option may be preferable to an entity in the case of a large bargain sale by the landowner. If the second option is selected, the NRCS share cannot exceed the entity's contribution.

The following two examples illustrate how these two cost-share options may function. Under Option 1, where 25 percent of the appraised fair market value is selected by the entity, the total appraised fair market value of the conservation easement is $1 million. The landowner chooses to donate 40 percent of the appraised fair market value, resulting in the actual easement purchase price being $600,000. In this case, the cooperating entity contributes $250,000, and NRCS contributes $350,000. Option 2, where 50 percent of the purchase price is selected, would occur when a landowner makes a large charitable donation, where 25% of the appraised fair market value exceeds 50 percent of the purchase price. For example, the total appraised fair market value of the conservation easement is $1 million. The landowner chooses to donate 60 percent of the appraised fair market value, resulting in the actual easement purchase price being $400,000. In this case, NRCS and the cooperating entity both contribute $200,000.

For the purposes of this notice, the following definitions apply:

Chief means the Chief of NRCS, USDA.

Commodity Credit Corporation (CCC) is a Government-owned and operated entity that was created to stabilize, support, and protect farm income and prices. CCC is managed by a Board of Directors, subject to the general supervision and direction of the Secretary of Agriculture, who is an ex-officio director and chairperson of the Board. CCC provides the funding for FRPP, and NRCS administers FRPP on its behalf.

Conservation Easement means a voluntary, legally recorded restriction, in the form of a deed, on the use of property, in order to protect resources such as agricultural lands, historic structures, open space, and wildlife habitat.

Conservation Plan is the document that—

(1) Applies to highly erodible cropland;

(2) Describes the conservation system applicable to the highly erodible cropland, and describes the decisions of the person with respect to location, land use, tillage systems, and conservation treatment measures and schedules;

(3) Is approved by the local soil conservation district in consultation with the local committees established under Section 8 (b)(5) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 5909h(b)(5)) and the Secretary, or by the Secretary.

Eligible entities means Federally recognized Indian Tribes, States, units of local government, and certain non-governmental organizations, which have a farmland protection program that purchases agricultural conservation easements for the purpose of protecting topsoil by limiting conversion to non-agricultural uses of the land. Additionally, to be eligible for FRPP, the entity must have pending offers, for acquiring conservation easements for the purpose of protecting agricultural land from conversion to non-agricultural uses.

Eligible land is privately owned land on a farm or ranch that has prime, unique, Statewide, or locally important soil, or contains historical or archaeological resources, and is subject to a pending offer by an eligible entity. Eligible land includes cropland, rangeland, grassland, and pasture land, as well as forest land that is an incidental part of an agricultural operation. Incidental forest land is less than fifty percent of the entire area under easement. Other incidental land that would not otherwise be eligible, but when considered as part of a pending offer, may be considered eligible, if inclusion of such land would significantly augment protection of the associated farm or ranch land.

Fair market value is ascertained through standard real property appraisal methods. Fair market value is the amount in cash, for which in all probability the property would have sold on the effective date of the appraisal, after a reasonable exposure of time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer. Neither the seller nor the buyer act under any compulsion to buy or sell, giving due consideration to all available economic uses of the property at the time of the appraisal. In valuing conservation easements, the appraiser estimates both the fair market value of the whole property before the easement acquisition and the fair market value of the remainder property after the conservation easement has been imposed. The difference between these two values is deemed the value of the conservation easement.

Field Office Technical Guide (FOTG) is the official document for NRCS guidelines, criteria, and standards for planning and applying conservation treatments and conservation management systems. The FOTG contains detailed information on the conservation of soil, water, air, plant, and animal resources applicable to the local area for which it is prepared.

Historical and archaeological resources must be:

(1) Listed in the National Register of Historic Places (established under the National Historic Preservation Act (NHPA), 16 U.S.C. 470, et seq. ), or

(2) Formally determined eligible for listing in the National Register of Historic Places (by the State Historic Preservation Officer (SHPO) or Tribal Historic Preservation Officer (THPO) and the Keeper of the National Register in accordance with Section 106 of the NHPA), or

(3) Formally listed in the State or Tribal Register of Historic Places of the SHPO (designated under Section 101 (b)(1)(B) of the NHPA) or the THPO (designated under Section 101(d)(1)(C) of the NHPA).

Land Evaluation and Site Assessment System (LESA) is the land evaluation system approved by the NRCS State Conservationist used to rank land for farm and ranch land protection purposes, based on soil potential for agriculture, as well as social and economic factors, such as location, access to markets, and adjacent land use. (For additional information see the Farmland Protection Policy Act regulation at 7 CFR part 658.)

Landowner means a person, persons, estate, corporation, or other business or nonprofit entity having fee title ownership of farm or ranch land.

Natural Resources Conservation Service is an agency of the U.S. Department of Agriculture.

Non-governmental organization is defined as any organization that:

(1) Is organized for, and at all times since the formation of the organization, has been operated principally for one or more of the conservation purposes specified in clause (i), (ii), (iii), or (iv) of section 170(h)(4)(A) of the Internal Revenue Code of 1986;

(2) Is an organization described in section 501(c)(3) of that Code that is exempt from taxation under 501(a) of that Code;

(3) Is described in section 509(a)(2) of that Code; or is described in section 509(a)(3) of that Code; and is controlled by an organization described in section 509(a)(2) of that Code.

Other productive soils are soils that are contained on farm or ranch land that is identified as farmland of Statewide or local importance and is used for the production of food, feed, fiber, forage, or oilseed crops. The appropriate State or local government agency determines Statewide or locally important farmland with concurrence from the State Conservationist. Generally, these farmlands produce high yields of crops when treated and managed according to acceptable farming methods. In some States and localities, farmlands of Statewide and local importance may include tracts of land that have been designated for agriculture by State law or local ordinance. 7 CFR part 657, sets forth the process for designating soils as Statewide or locally important.

Pending offer is a written bid, contract, or option extended to a landowner by an eligible entity to acquire a conservation easement before the legal title to these rights has been conveyed for the purpose of limiting non-agricultural uses of the land.

Prime and unique farmland are defined separately, as follows:

(1) Prime farmland is land that has the best combination of physical and chemical characteristics for producing food, feed, fiber, forage, oilseed, and other agricultural crops with minimum inputs of fuel, fertilizer, pesticides, and labor, without intolerable soil erosion, as determined by the Secretary.

(2) Unique farmland is land other than prime farmland that is used for the production of specific high-value food and fiber crops, as determined by the Secretary. It has the special combination of soil quality, location, growing season, and moisture supply needed to economically produce sustained high quality or high yields of specific crops when treated and managed according to acceptable farming methods. Examples of such crops include citrus, tree nuts, olives, cranberries, fruits, and vegetables. Additional information on the definition of prime, unique, or other productive soil can be found in 7 CFR part 657 and 7 CFR part 658.

State Technical Committee means a committee established by the Secretary of the U.S. Department of Agriculture in a State pursuant to 16 U.S.C. 3861 and 7 CFR part 610, subpart C.

State Conservationist means the NRCS employee authorized to direct and supervise NRCS activities in a State, the Caribbean Area (Puerto Rico and the Virgin Islands), or the Pacific Basin Area (Guam, American Samoa, and the Commonwealth of the Northern Marianna Islands).

The CCC, acting through NRCS, will accept proposals submitted to the NRCS State Offices from eligible entities, including federally recognized Indian tribes, States, units of local government, and nongovernmental organizations that have pending offers for acquiring conservation easements for the purposes of protecting topsoil by limiting nonagricultural use of the land and/or protecting historical and archaeological sites on farm and ranch lands.

All proposals must be submitted to the appropriate NRCS State Conservationist within 120 days from the date of this notice. The NRCS State Conservationist may consult with the State Technical Committee (established pursuant to 16 U.S.C. 3861) to evaluate the merits of the proposals.

The NRCS State Conservationist will review and evaluate the proposals based on State, tribal, or local government or nongovernmental organization eligibility, land eligibility, and the extent to which the proposal adheres to FRPP objectives. Proposals must include adequate proof of a pending offer for the subject land. Adequate proof includes a written bid, contract, commitment, or option extended to a landowner. Pending offers based upon appraisals completed and signed by State-certified or licensed appraisers will receive higher priority for FRPP funding. Proposals submitted directly to the NRCS National Office will not be accepted and will be returned to the submitting entity.

Funding awards to participants will be based on National and State criteria. Below is a list of national criteria that will be used by the NRCS State Conservationist to evaluate proposals:

• Acreage of prime and important farm and ranch land estimated to be protected;

• Acreage of prime and important farm and ranch land converted to nonagricultural uses;

• Number or acreage of historic and archaeological sites estimated to be protected on farm or ranch lands;

• Total acres needing protection;

• FRPP cost per acre;

• Rate of land conversion;

• Percentage of funding guaranteed to be provided by cooperating entities;

• History of cooperating entities' commitments to conservation planning and implementing conservation practices;

• Participating entities' histories of acquiring, managing, holding, and enforcing easements (including average annual farmland protection easement expenditures over the past five years, accomplishments, and staff);

• Amount of FRPP funding requested; and

• Participating entities' estimated unfunded backlog of conservation easements on acres eligible for FRPP assistance.

The NRCS State Conservationist will combine the above-mentioned NRCS National criteria with NRCS State ranking criteria. The following examples of NRCS State ranking criteria may be used to evaluate and rank specific parcels, including, but not limited to, proximity to protected clusters, viability of the agricultural operations, parcel size, type of land use, maximum cost expended per acre, and an entity's commitment to assuring farm and ranch succession and transfer to viable farming operations. State ranking criteria will be developed on a State-by-State basis and will be available to interested participating entities before proposal submission. Interested entities should contact their State Conservationist for a complete listing of applicable National and State ranking criteria, and program implementation guidelines.

The NRCS State Conservationist will make awards to eligible entities based on available funds, prior to June 1, 2005. Once selected, eligible entities must work with the appropriate NRCS State Conservationist to finalize and sign cooperative agreements, incorporating all FRPP requirements.

The conveyance document ( i.e. , conservation easement deed or conservation easement deed template) used by the eligible entity must be reviewed and approved by the USDA Office of General Counsel before being recorded. Since title to the easement is held by an entity other than the United States, the conveyance document must contain a clause that all rights conveyed by the landowner under the document will become vested in the United States should the cooperating entity abandon, fail to enforce, or attempt to terminate the conservation easement.

As a condition of participation, all highly erodible land in the easement shall be included in a conservation plan for the future management of the land. The conservation plan will be developed using the standards and specifications of the NRCS Field Office Technical Guide and 7 CFR part 12, unless otherwise determined by the State Conservationist, in partnership with the eligible entity. The conservation plan will be implemented in a timely manner, as determined by the State Conservationist, prior to the easement being recorded.

To be eligible, a Federally recognized Indian tribe, State, unit of local government, or nongovernmental organization must have a farmland protection program that purchases conservation easements for the purpose of protecting prime, unique, or other productive soil or historical and archaeological resources by limiting conversion of farm or ranch land to nonagricultural uses. As a condition of receiving FRPP funds, the cooperating entity shall not use FRPP funds to place an easement on a property in which cooperating entity's employee, board member, or immediate family member of an employee or board member has a property interest.

Proposals must contain the information set forth below in order to receive consideration for assistance:

1. Organization and programs: Eligible entities must describe their farmland protection program, and their record of acquiring and holding permanent agricultural land protection easements or other interests.

Information provided in the proposal should:

(a) Demonstrate a commitment to long-term conservation of agricultural lands through the use of voluntary easements that protect farmland from conversion to nonagricultural uses;

(b) Demonstrate the capability to acquire, manage, and enforce easements;

(c) Demonstrate the number and ability of staff that will be dedicated to monitoring easement stewardship;

(d) Demonstrate the availability of funds for the easement(s) proposed to be acquired. The purchase price may not exceed the appraised fair market value of the conservation easement. If a landowner donation is included in the entity's match, the entity must demonstrate the availability of 25 percent of the appraised fair market value or 50 percent of the purchase price; and

(e) Include pending offer(s). A pending offer is a written bid, contract, commitment, or option extended to a landowner by an eligible entity to acquire a conservation easement that limits nonagricultural uses of the land before the legal title to these rights has been conveyed. The primary purpose of the pending offers must be for the purchase of development rights in order to protect topsoil by limiting conversion to nonagricultural uses. Pending offers having appraisals completed and signed by State-certified general appraisers will receive higher funding priority by the NRCS State Conservationist. Appraisals completed and signed by a State-certified or licensed general appraiser must contain a disclosure statement by the appraiser. The disclosure statement should include at a minimum the following: The appraiser accepts full responsibility for the appraisal, the enclosed statements are true and unbiased, the value of the land is limited by stated assumptions only, the appraiser has no interest in the land, and the appraisal conforms to the Uniform Standards of Professional Appraisal Practice or the Uniform Appraisal Standards for Federal Land Acquisitions.

2. Lands to be acquired: The proposal must describe the lands to be acquired with funding from FRPP. Specifically, the proposal must include the following:

(a) A map showing the proposed protected area(s);

(b) The amount and source of funds currently available for each easement to be acquired;

(c) The criteria used to set the acquisition priorities; and

(d) A detailed description of the land parcels, including:

(i) The priority of the offers;

(ii) The names of the landowners;

(iii) The address and location maps of the parcels;

(iv) The size of the parcels, in acres;

(v) The acres of the prime, unique, or State-wide and locally important soil in the parcels;

(vi) The number or acreage of historical or archaeological sites, if any, proposed to be protected, and a brief description of the sites' significance;

(vii) A map showing the location of other protected parcels in relation to the land parcels proposed to be protected;

(viii) Estimated cost of the easement(s): The consideration to be paid to any landowners for the conveyance of any lands or interests in lands cannot be more than the fair market value of the land or interests conveyed, as determined by an appraiser licensed in the State, in which the parcel is located.

(ix) An example of the cooperating entity's proposed easement deed used to prevent agricultural land conversion;

(x) Indication of the accessibility to markets;

(xi) Indication of an existing agricultural infrastructure, on- and off-farm, and other support system(s);

(xii) Statement regarding the level of threat from urban development;

(xiii) A description of the eligible entity's farmland protection strategy and how the FRPP proposal submitted by the entity corresponds to the entity's strategic plan;

(xiv) Other factors from an evaluation and assessment system used to set priorities. If the eligible entity used the LESA system or a similar land evaluation system as its tool, include the scores for the land parcels slated for acquisition;

(xv) Other partners involved in acquisition of the easement and their estimated financial contribution; and

(xvi) Other information that may be relevant as determined by the NRCS State Conservationist.

When the NRCS State Office has assessed organization eligibility and the merits of each proposal, the NRCS State Conservationist will determine whether the farm or ranch land is eligible for financial assistance from FRPP. NRCS will use the National and State criteria, which may include a LESA system or other similar system, to evaluate the land and rank the parcels.

NRCS will only consider enrolling eligible land in the program that is of sufficient size and has boundaries that allow for efficient management of the area. The land must have access to markets for its products and an infrastructure appropriate for agricultural production. NRCS will not enroll land in FRPP that is owned in fee title by an agency of the United States, is publicly-owned land, or land that is already subject to an easement or deed restriction that limits non-agricultural conversion of farm and ranch land.

NRCS will not enroll otherwise eligible lands if NRCS determines that the protection provided by the FRPP would not be effective because of on-site or off-site conditions. For example, as it relates to on-site conditions, a proposal may nominate a parcel that contains hazardous material, or it may nominate a parcel that contains or may allow over two percent impervious surface coverage on the land under easement. The presence of hazardous waste or the extensive impervious surface coverage will likely cause NRCS to determine that the use of FRPP funds is not appropriate. As it relates to off-site conditions, NRCS may avoid acquiring land that is surrounded by a developed area or slated to be zoned for development by a local government.

NRCS will place a priority on acquiring easements that provide permanent protection from conversion to nonagricultural use. NRCS will place a higher priority on easements acquired by entities that have extensive experience in managing and enforcing easements. NRCS may place a higher priority on lands and locations that help create a large tract of protected area for viable agricultural production and that are under increasing urban development pressure. NRCS may place a higher priority on lands and locations that correlate with the efforts of Federal, State, Tribal, local, or nongovernmental organizations' efforts that have complementary farmland protection objectives ( e.g. , open space or watershed and wildlife habitat protection). NRCS may place a higher priority on lands that provide special social, economic, and environmental benefits to the region. A higher priority may be given to certain geographic regions where the enrollment of particular lands may help achieve National, State, and regional goals and objectives, or enhance existing government or private conservation projects.

The CCC, through NRCS, enters into a cooperative agreement with a selected eligible entity to document participation in FRPP. The cooperative agreement will address, among other subjects:

(1) The easement type, terms, and conditions;

(2) The management and enforcement of the rights acquired;

(3) The role and responsibilities of NRCS and the cooperating entity;

(4) The responsibilities of the easement manager on lands acquired with FRPP assistance; and

(5) Other requirements deemed necessary by the CCC, acting through NRCS, to protect the interests of the United States. The cooperative agreement will also include an attachment listing the pending offers accepted in FRPP, landowners' names, addresses, location map(s), and other relevant information. Interested entities should contact their State Conservationist for a copy of a draft cooperative agreement before submitting an application.

Title: Food Coupon Deposit Document.

OMB Number: 0584-0314.

Expiration Date: December 31, 2004.

Type of Request: Extension of a currently approved collection.

Abstract: The Food and Nutrition Service (FNS) of the U.S. Department of Agriculture is the Federal Agency responsible for the Food Stamp Program. The Food Stamp Act of 1977, as amended, (the Act) requires that FNS provide for the redemption, through financial institutions, of food coupons accepted by retail food stores from program participants. Section 278.5 of the Food Stamp Program regulations governs financial institution and Federal Reserve participation in the food coupon redemption process.

Form FNS-521, Food Coupon Deposit Document (FCDD) is required to be used by all financial institutions when they deposit food coupons at Federal Reserve Banks. Without the FCDD, no vehicle would exist for financial institutions, Federal Reserve Banks, and the FNS to track deposits of food coupons.

Respondents: Financial institutions and Federal Reserve Banks.

Number of Respondents: 10,000.

Estimated Annual Number of Responses per Respondent: The number of responses is estimated to be 1.814 responses per financial institution or Federal Reserve Bank per year.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average .0097222 hours per response.

Estimated Total Annual Burden: 176 hours.

Title: Child and Adult Care Food Program Regulations.

OMB Number: 0584-0055.

Expiration Date: June 30, 2007.

Type of Request: Revision of a currently approved collection.

Abstract: The Rule amends the Child and Adult Care Food Program (CACFP) regulations to implement Section 199(b) of the Child Nutrition and WIC Reauthorization Act of 2004, Public Law 108-265, which amended Section 17(f)(3)(E)(iii) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1766(f)(3)(E)(iii) to increase the duration of the tiering status determinations from three to five years for family or group day care homes participating in CACFP. This change, which was effective on June 30, 2004, applies to tiering status determinations for day care homes located in the attendance areas of elementary schools in which at least half of the enrolled children are certified eligible to receive free or reduced price school meals. The change also applies to tiering determinations for day care homes operated by providers whose households meet the eligibility guidelines for free or reduced price school meals. Day care home providers receive higher reimbursement rates (tier 1) for CACFP meals served to children in care in those homes.

Estimate of Burden: This change reduces the number of respondents per year by 768.

Estimated Number of Respondents: 2,929,699 respondents.

Average Number of Responses per Respondent: 2.25 responses/respondent.

Estimated Total Annual Burden on Respondents: 5,781,262 burden hours.

Title: Specialty Sugar Import Certificates.

OMB Number: 0551-0025.

Expiration Date of Approval: February 28, 2005.

Type of Request: Extension of a currently approved information collection.

Abstract: The quota system established by Presidential Proclamation 4941 of May 5, 1982, prevented the importation of certain sugars used for specialized purposes which originated in countries which did not have quota allocations. Therefore, the regulation at 15 CFR part 2011 (Allocation of Tariff-Rate Quota on Imported Sugars, Syrups and Molasses, subpart B—Specialty Sugar) established terms and conditions under which certificates are issued permitting U.S. importers holding certificates to enter specialty sugars from specialty sugar source countries under the sugar tariff-rate quotas (TRQ). Nothing in this subpart affects the ability to enter specialty sugars at the over-TRQ duty rates. Applicants for certificates for the import of specialty sugars must supply the information required by 15 CFR 2011.205 to be eligible to receive a specialty sugar certificate. The specific information required on an application must be collected from those who wish to participate in the program in order to grant specialty sugar certificates, ensure that imported specialty sugar does not disrupt the current domestic sugar program, and administer the issuance of the certificates effectively.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 2 hours per response.

Respondents: Importers.

Estimated Number of Respondents: 30.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 60 hours.

Copies of this information collection can be obtained from Kimberly Chisley, the Agency Information Collection Coordinator, at (202) 720-2568.

Request for Comments: The public is invited to submit comments and suggestions to the above address regarding the accuracy of the burden estimate, ways to minimize the burden, including the use of automated collection techniques or other forms of information technology, or any other aspect of this collection of information. Comments on issues covered by the Paperwork Reduction Act are most useful to OMB if received within 30 days of publication of the Notice and Request for Comments, but should be submitted no later than 60 days from the date of this publication to be assured of consideration. All responses to this notice will be summarized and included in the request for OMB approval. All comments will also be a matter of public record. Persons with disabilities who require an alternative means for communication of information (Braille, large print, audiotape, etc.) should contact USDA's Target Center at (202) 720-2600 (voice and TDD).

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 Case Services Team, Regulatory Information Management Services, 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, e.g. new, revision, extension, existing or reinstatement; (2) title; (3) summary of the collection; (4) description of the need for, and proposed use of, the information; (5) respondents and frequency of collection; and (6) reporting and/or recordkeeping burden. OMB invites public comment.

The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology.

Type of Review: Revision.

Title: William D. Ford Federal Direct Loan (Direct Loan) Program Electronic Debit Account Application and Brochure.

Frequency: One time.

Affected Public: Individuals or household.

Reporting and Recordkeeping Hour Burden: Responses— 234,700. Burden Hours— 7,816.

Abstract: A Direct Loan borrower uses this application to request and authorize the automatic deduction of monthly student loan payments from his or her checking or savings account.

Requests for copies of the proposed information collection request may be accessed from http://edicsweb.ed.gov, by selecting the “Browse Pending Collections” link and by clicking on link number 2648. When you access the information collection, click on “Download Attachments” to view. Written requests for information should be addressed to U.S. Department of Education, 400 Maryland Avenue, SW., Potomac Center, 9th Floor, Washington, DC 20202-4700. Requests may also be electronically mailed to the Internet address OCIO_RIMG@ed.gov or faxed to (202) 245-6621. Please specify the complete title of the information collection when making your request.

Comments regarding burden and/or the collection activity requirements should be directed to Sheila Carey at her e-mail address Sheila.Carey@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.

35 U.S.C. 209(c) provides the DOE with authority to grant exclusive or partially exclusive licenses in Department-owned inventions, where a determination can be made, among other things, that the desired practical application of the invention has not been achieved, or is not likely expeditiously to be achieved, under a nonexclusive license. The statute and implementing regulations (37 CFR part 404) require that the necessary determinations be made after public notice and opportunity for filing written objections.

Mobotecusa, a small business, located at Orinda, California, has applied for an exclusive or partially exclusive license to practice the invention and has a plan for commercialization of the invention.

DOE intends to grant the license, upon a final determination in accordance with 35 U.S.C. 209(c), unless within 15 days of publication of this Notice the Technology Transfer Manager, Department of Energy, National Energy Technology Laboratory, P.O. Box 880, Morgantown, WV 26507-0880, receives in writing any of the following, together with the supporting documents:

(i) A statement from any person setting forth reasons why it would not be in the best interest of the United States to grant the proposed license; or

(ii) An application for a nonexclusive license to the invention, in which applicant states that it already has brought the invention to practical application or is likely to bring the invention to practical application expeditiously.

The proposed license will be exclusive or partially exclusive, subject to a license and other rights retained by the U.S. Government, and subject to a negotiated royalty. The Department will review all timely written responses to this notice, and will grant the license if, after expiration of the 15-day notice period, and after consideration of any written responses to this notice, a determination is made, in accordance with 35 U.S.C. 209(c), that the license grant is in the public interest.

The Project was authorized in 1935. Construction on the Project, which includes Deer Creek Dam and Powerplant on the Provo River in Utah, began in 1938 but, because of World War II, was not completed until 1951. The powerplant, authorized on August 20, 1951, was completed and generation began in 1958. Its maximum operating capacity is 5,300 kilowatts.

Provo River Project power is now marketed independently from the Salt Lake City Area Integrated Projects subsequent to a marketing plan that was approved and published in the Federal Register on November 21, 1994. This marketing plan allows Western to market the output of the Project to customers of the Utah Municipal Power Agency and the Utah Associated Municipal Power Systems (Customers) in the Provo River drainage area.

Contract Nos. 94-SLC-0253 and 94-SLC-0254 between the United States and its Customers require that the amount of each annual installment be established in advance by Western and submitted to the Customers on or before August 31 of the year preceding the appropriate fiscal year. Each fiscal year, Western will estimate the Deer Creek Powerplant (DCP) expenses by preparing a power repayment study, which will include estimates of operation, maintenance, and replacement costs for the DCP.

Each annual installment pays the annual amortized portion of the United States investment in the Deer Creek Dam and Reservoir hydroelectric facilities with interest and the associated operation, maintenance, and replacement costs. This repayment schedule does not depend upon the power and energy made available for sale or the rate of generation each year, but is included in the contract in which the Customers pay all operating, maintenance, and replacement expenses of the Project and, in return, receive all of the energy produced by the Project. Western will continue to provide the Customers a revised annual installment by August 31 of each year using the same methodology.

By Delegation Order No. 00-037.00, effective December 6, 2001, the Secretary of Energy delegated: (1) The authority to develop power and transmission rates to Western's Administrator, (2) the authority to confirm, approve, and place such rates into effect on an interim basis to the Deputy Secretary of Energy, and (3) the authority to confirm, approve, and place into effect on a final basis, to remand, or to disapprove such rates to the Commission. Existing DOE procedures for public participation in power rate adjustments (10 CFR part 903) were published on September 18, 1985 (50 FR 37835).

Under Delegation Order Nos. 00-037.00 and 00-001.00A, 10 CFR 903, and 18 CFR 300, I hereby confirm, approve, and place Rate Order No. WAPA-116 into effect on an interim basis. The extension of the rate formula will be promptly submitted to the Commission for confirmation and approval on a final basis.

This action is directed to the public in general. This action may be of particular interest to anyone who may be affected if the AEGL values are adopted by government agencies for emergency planning, prevention, or response programs, such as EPA's Risk Management Program under the Clean Air Act and Amendments Section 112r. It is possible that other Federal agencies besides EPA, as well as State agencies and private organizations, may adopt the AEGL values for their programs. As such, 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 DFO listed under FOR FURTHER INFORMATION CONTACT .

1. Docket. EPA has established an official public docket for this action under docket identification (ID) number OPPT-2004-0121. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the EPA Docket Center, Rm. B102-Reading Room, EPA West, 1301 Constitution Ave., NW., Washington, DC. The EPA Docket Center is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The EPA Docket Center Reading Room telephone number is (202) 566-1744 and the telephone number for the OPPT Docket, which is located in EPA Docket Center, is (202) 566-0280.

2. Electronic access . You may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/ .

An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I.B.1. Once in the system, select “search,” then key in the appropriate docket ID number.

For additional information on the scheduled meeting, the agenda of the NAC/AEGL Committee, or the submission of information on chemicals to be discussed at the meeting, contact the DFO listed under FOR FURTHER INFORMATION CONTACT .

The meeting of the NAC/AEGL Committee will be open to the public. Oral presentations or statements by interested parties will be limited to 10 minutes. Interested parties are encouraged to contact the DFO to schedule presentations before the NAC/AEGL Committee. Since seating for outside observers may be limited, those wishing to attend the meeting as observers are also encouraged to contact the DFO at the earliest possible date to ensure adequate seating arrangements. Inquiries regarding oral presentations and the submission of written statements or chemical-specific information should be directed to the DFO.

Another meeting of the NAC/AEGL Committee is scheduled for March or April, 2005.

Parts of this meeting of the Board will be open to the public (limited space available), and parts will be closed to the public. In order to increase the accessibility to Board meetings, persons requiring assistance should make arrangements in advance. The matters to be considered at the meeting are:

• November 18, 2004 (Open).

• Farm Credit System Building Association Quarterly Report.

• Corporate Report.

• FCS of America Termination Summary.

• Governance—Proposed Rule.

• OSMO Quarterly Report.

Background

On July 23, 2004, the Federal Reserve published a notice in the Federal Register (69 FR 43996) requesting comment on proposed revisions to the BHC rating system. The BHC rating system is an internal rating system used by the Federal Reserve as a management information and supervisory tool that defines the condition of all BHCs, including financial holding companies (FHCs), in a systematic way. First and foremost, a BHC's rating provides a summary evaluation of the BHC's condition for use by the supervisory community. Second, the BHC rating forms the basis of supervisory responses and actions. Third, the BHC rating provides the basis for supervisors' discussion of the firm's condition with BHC management. Fourth, the BHC rating determines whether the BHC is entitled to expedited applications processing and to certain regulatory exemptions.

The former BHC rating system, implemented in 1979 and commonly referred to as the BOPEC rating system, focused on the financial condition of discrete legal entities, consolidated capital, and consolidated earnings. It also included composite financial condition and management ratings. Since that time, a number of changes have occurred in the financial services industry, prompting a shift in supervisory policies and procedures away from historical analyses of financial condition, toward more forward looking assessments of risk management and financial factors. In order to address this shift, the Federal Reserve introduced a risk management rating for all bank holding companies in the mid-1990s. Although this adjustment proved an effective tool for assessing risk management, it was not the central focus of the rating system. Moreover, as the banking industry has continued to evolve over the past decade, the focus of the Federal Reserve's examination program for bank holding companies has increasingly centered on a comprehensive review of financial risk and the adequacy of risk management. As a result, in order to more fully align the rating process for BHCs with current supervisory practices, the Federal Reserve is revising the BHC rating system to emphasize risk management; introduce a comprehensive and adaptable framework for analyzing and rating financial factors; and provide a framework for assessing and rating the potential impact of the nondepository entities of a holding company on the subsidiary depository institution(s).

Each BHC is assigned a composite rating (C) based on an evaluation and rating of its managerial and financial condition and an assessment of future potential risk to its subsidiary depository institution(s). The main components of the rating system represent: Risk Management (R); Financial Condition (F); and potential Impact (I) of the parent company and nondepository subsidiaries (collectively nondepository entities) on the subsidiary depository institutions. While the Federal Reserve expects all bank holding companies to act as a source of strength to their subsidiary depository institutions, the Impact rating focuses on downside risk—that is, on the likelihood of significant negative impact by the nondepository entities on the subsidiary depository institution. A fourth component rating, Depository Institution (D), will generally mirror the primary regulator's assessment of the subsidiary depository institutions. Thus, the primary component and composite ratings are displayed:

In order to provide a consistent framework for assessing risk management, the R component is supported by four subcomponents that reflect the effectiveness of the banking organization's risk management and controls. The subcomponents are: Board and Senior Management Oversight; Policies, Procedures, and Limits; Risk Monitoring and Management Information Systems; and Internal Controls. The F component is similarly supported by four subcomponents reflecting an assessment of the quality of the banking organization's Capital; Asset Quality; Earnings; and Liquidity. A simplified version of the rating system that requires only the assignment of the risk management component rating and composite rating will be applied to noncomplex bank holding companies with assets at or below $1 billion.

Composite, component, and subcomponent ratings are assigned based on a 1 to 5 numeric scale. A 1 numeric rating indicates the highest rating, strongest performance and practices, and least degree of supervisory concern, whereas a 5 numeric rating indicates the lowest rating, weakest performance, and the highest degree of supervisory concern.

The Federal Reserve recognizes the interrelationship between the risk management and financial performance components of the revised rating system, an interrelationship that is inherent in all supervisory rating systems. As such, examiners are expected to consider that a risk management factor may have a bearing on the assessment of a financial subcomponent or component rating and vice versa. In general, however, the risk management component and subcomponents should be viewed as the forward-looking component of the rating system and the financial condition component and subcomponents should be viewed as the current component of the rating system. For example, a BHC's ability to monitor and manage market risk (or sensitivity to market risk) should be evaluated together with the organization's ability to monitor and manage all risks under the R component of the rating system. However, poor market risk management may also be reflected in the F component if it impacts earnings or capital.

The Federal Reserve received a total of 13 comments regarding the proposed revisions to the BHC rating system. The comments came from banking organizations, trade associations, several Reserve Banks and one law firm. Commenters generally supported changes to the rating system, stating that the move to a more forward-looking assessment of risk management systems and the condition of the consolidated organization is appropriate.

Many commenters recommended that the rating scale for the subcomponents under the risk management rating be changed from a three point qualitative scale to a five point numeric rating scale in order to provide more granularity and consistency with the rest of the rating system. In response, the Federal Reserve has changed the rating scale for the risk management subcomponent ratings to a five point numeric rating scale.

Several commenters raised concerns that the new rating system is signaling a move by the Federal Reserve to lessen its reliance on the work of primary bank regulators and other functional nonbank regulators in its supervision of BHCs. The revised BHC rating system was developed to align the BHC rating process with the Federal Reserve's current supervisory practices in carrying out consolidated or umbrella supervision of BHCs. As such, the revised rating system and the accompanying implementation guidance is not intended to signal a shift in the Federal Reserve's supervisory practices of coordinating with and relying to the greatest extent possible on the work of primary bank and other functional nonbank regulators. This intent is clearly stated in the final policy.

Commenters also raised concerns about the ability of the Federal Reserve to apply the new rating system in a consistent manner due to the large number of subcomponent ratings in the new system and the inherent subjectivity in the rating process. As is the case with all supervisory rating systems, there is some subjectivity inherent in the revised BHC rating system; however, the Federal Reserve has made and will continue to make every effort to provide appropriate examiner guidance and training around the revised BHC rating system to ensure that the system is applied in a consistent manner. In addition, the Federal Reserve notes that the subcomponents under the R rating are based on the same guidance that has been used to rate risk management since 1995 and are therefore familiar to examination staff. Examination staff also is very familiar with assigning capital, asset quality, earnings, and liquidity ratings, as these components are important elements of our existing rating systems. The Federal Reserve believes that the subcomponents will increase consistency and transparency in the rating process by providing a clearer basis for the component ratings.

Commenters raised concerns about the possibility of one factor being weighted too heavily in the composite rating due to overlap between the component ratings and because the proposal stated that the composite rating may not be the numerical average of the component ratings. There is an interrelationship among the component ratings in the revised BHC rating system that is inherent in all supervisory rating systems. Federal Reserve examiners will consider that a risk management factor may have a bearing on the assessment of a financial subcomponent or component rating and vice versa, and weight that factor proportionately in the overall composite rating. Consistent with current rating practices for the BOPEC and CAMELS rating systems, some components may be given more weight than others in determining the composite rating, depending on the importance of that component in the overall condition of the BHC. In general, assignment of a composite rating may incorporate any factor that bears significantly on the overall condition and soundness of the BHC. Therefore, the composite rating is not derived by computing the arithmetic average of the component ratings. Nevertheless, the composite rating generally bears a close relationship to the component ratings assigned.

Commenters also raised questions about whether the Federal Reserve intends to impose de facto capital requirements on nondepository subsidiaries, whether the language in the proposal around the use of market indicators is signaling more extensive use of these references in the rating process, and whether the Federal Reserve intends to run the BOPEC rating system in conjunction with the revised BHC rating system for some time period of time. The Federal Reserve has clarified in the final policy that, consistent with current practice, the revised BHC rating system assesses the consolidated capital adequacy of the organization and is not intended to impose de facto capital requirements on nondepository subsidiaries. In addition, the Federal Reserve has clarified and simplified the language around the use of market indicators in the revised rating system to indicate that, consistent with current practice, examination staff should use these indicators as a source of information complementary to the examination process. Also, the Federal Reserve is implementing a quality assurance program around the new rating system during the first year of implementation that includes a mechanism to collect feedback from examination staff to address any significant implementation issues and to discuss difficult rating decisions to ensure consistent application of the revised rating system.

Finally, a few commenters suggested that BHC understanding of the revised rating system would be enhanced if the Federal Reserve were to utilize a temporary dual implementation period during which the BOPEC rating system and the revised rating system would be applied simultaneously and a BHC's BOPEC rating would prevail. The Federal Reserve has determined that a direct and prompt adoption of the revised rating system is preferable because the revised rating system better reflects current supervisory practices and because use of a single rating system would minimize regulatory burden on both examination staff and institutions. To ensure that BHCs understand the revised rating system, examination staff will be prepared to discuss the differences and similarities between the revised rating system and the BOPEC system with senior BHC officials during the first inspection cycle under the revised rating system. Moreover, during the first inspection cycle under the revised rating system, in situations in which a BHC has received a ratings downgrade, examiners will be prepared to discuss with senior BHC officials the new ratings and how they compare with the BOPEC ratings for that institution.

The numeric ratings for bank holding companies under the revised BHC rating system will be disclosed to the bank holding company for its confidential use, in accordance with current disclosure practices. Under no circumstances should the bank holding company or any of its directors, officers, or employees disclose or make public any of the ratings.

The revised BHC rating system becomes effective January 1, 2005, and is to be used for all BHC inspections commencing after that date. Inspections opened in 2004 and closed in 2005 may assign either the BOPEC rating or the RFI/C(D) rating. Although the timing of implementation is relatively close to the December release of the final rating system, supervision and examination staff at all twelve Reserve Banks and the Board of Governors have had and will continue to receive appropriate training in the revised rating system. Moreover, the revised rating system was developed and reviewed over a number of years with participation from a wide range of Federal Reserve System supervision and examination staff. Because the revised BHC rating system incorporates factors that have been routinely considered by examiners for years in evaluating a BHC's condition, the revised rating system should not have a significant effect on the conduct of inspections or on the regulatory burden of supervised institutions.

The bank holding company (BHC) rating system provides an assessment of certain risk management and financial condition factors that are common to all BHCs, as well as an assessment of the potential impact of the parent BHC and its nondepository subsidiaries (collectively nondepository entities) on the BHC's subsidiary depository institutions. Under this system, the Federal Reserve endeavors to ensure that all BHCs, including financial holding companies (FHCs), are evaluated in a comprehensive and uniform manner, and that supervisory attention is appropriately focused on the BHCs that exhibit financial and operational weaknesses or adverse trends. The rating system serves as a useful vehicle for identifying problem or deteriorating BHCs, as well as for categorizing BHCs with deficiencies in particular areas. Further, the rating system assists the Federal Reserve in following safety and soundness trends and in assessing the aggregate strength and soundness of the financial industry.

Each BHC  1 is assigned a composite rating (C) based on an overall evaluation and rating of its managerial and financial condition and an assessment of future potential risk to its subsidiary depository institution(s). The main components of the rating system represent: Risk Management  2 (R); Financial Condition (F); and Impact (I) of the nondepository entities on the subsidiary depository institutions. While the Federal Reserve expects all bank holding companies to act as a source of strength to their subsidiary depository institutions, the Impact rating focuses on downside risk—that is, on the likelihood of significant negative impact by the nondepository entities on the subsidiary depository institution(s). A fourth rating, Depository Institution(s) (D), will generally mirror the primary regulator's assessment of the subsidiary depository institution(s). Thus, the primary component and composite ratings are displayed:

In order to provide a consistent framework for assessing risk management, the R component is supported by four subcomponents that reflect the effectiveness of the banking organization's risk management and controls. The subcomponents are: Board and Senior Management Oversight; Policies, Procedures, and Limits; Risk Monitoring and Management Information Systems; and Internal Controls. The F component is also supported by four subcomponents reflecting an assessment of the quality of the consolidated banking organization's Capital; Asset Quality; Earnings; and Liquidity.

Composite, component, and subcomponent ratings are assigned based on a 1 to 5 numeric scale. A 1 numeric rating indicates the highest rating, strongest performance and practices, and least degree of supervisory concern, whereas a 5 numeric rating indicates the lowest rating, weakest performance, and the highest degree of supervisory concern.

The following three sections contain detailed descriptions of the composite, component, and subcomponent ratings, implementation guidance by BHC type, and definitions of the ratings.

C is the overall composite assessment of the BHC as reflected by consolidated risk management, consolidated financial strength, and the potential impact of the nondepository entities on the subsidiary depository institutions. The composite rating encompasses both a forward-looking and static assessment of the consolidated organization, as well as an assessment of the relationship between the depository and nondepository entities. Consistent with current Federal Reserve practice, the C rating is not derived as a simple numeric average of the R, F, and I components; rather, it reflects examiner judgment with respect to the relative importance of each component to the safe and sound operation of the BHC.

R represents an evaluation of the ability of the BHC's board of directors and senior management, as appropriate for their respective positions, to identify, measure, monitor, and control risk. The R rating underscores the importance of the control environment, taking into consideration the complexity of the organization and the risk inherent in its activities.

The R rating is supported by four subcomponents that are each assigned a separate rating. The four subcomponents are as follows: (1) Board and Senior Management Oversight; (2) Policies, Procedures and Limits; (3) Risk Monitoring and Management Information Systems; and (4) Internal Controls. 3 The subcomponents are evaluated in the context of the risks undertaken by and inherent in a banking organization and the overall level of complexity of the firm's operations. They provide the Federal Reserve System with a consistent framework for evaluating risk management and the control environment. Moreover, the subcomponents provide a clear structure and basis for discussion of the R rating with BHC management, reflect the principles of SR Letter 95-51, are familiar to examiners, and parallel the existing risk assessment process.

This subcomponent evaluates the adequacy and effectiveness of board and senior management's understanding and management of risk inherent in the BHC's activities, as well as the general capabilities of management. It also includes consideration of management's ability to identify, understand, and control the risks undertaken by the institution, to hire competent staff, and to respond to changes in the institution's risk profile or innovations in the banking sector.

This subcomponent evaluates the adequacy of a BHC's policies, procedures, and limits given the risks inherent in the activities of the consolidated BHC and the organization's stated goals and objectives. This analysis will include consideration of the adequacy of the institution's accounting and risk disclosure policies and procedures.

This subcomponent assesses the adequacy of a BHC's risk measurement and monitoring, and the adequacy of its management reports and information systems. This analysis will include a review of the assumptions, data, and procedures used to measure risk and the consistency of these tools with the level of complexity of the organization's activities.

This subcomponent evaluates the adequacy of a BHC's internal controls and internal audit procedures, including the accuracy of financial reporting and disclosure and the strength and influence, within the organization, of the internal audit team. This analysis will also include a review of the independence of control areas from management and the consistency of the scope coverage of the internal audit team with the complexity of the organization.

F represents an evaluation of the consolidated organization's financial strength. The F rating focuses on the ability of the BHC's resources to support the level of risk associated with its activities. The F rating is supported by four subcomponents: capital (C), asset quality (A), earnings (E), and liquidity (L). The CAEL subcomponents can be evaluated along individual business lines, product lines, or on a legal entity basis, depending on what is most appropriate given the structure of the organization. The assessment of the CAEL components should utilize benchmarks and metrics appropriate to the business activity being evaluated.

Consistent with current supervisory practices, examination staff should continue to review relevant market indicators, such as external debt ratings, credit spreads, debt and equity prices, and qualitative rating agency assessments as a source of information complementary to examination findings.

C reflects the adequacy of an organization's consolidated capital position, from a regulatory capital perspective and an economic capital perspective, as appropriate to the BHC. 6 The evaluation of capital adequacy should consider the risk inherent in an organization's activities and the ability of capital to absorb unanticipated losses, to provide a base for growth, and to support the level and composition of the parent company and subsidiaries' debt.

A reflects the quality of an organization's consolidated assets. The evaluation should include, as appropriate, both on-balance sheet and off-balance sheet exposures, and the level of criticized and nonperforming assets. Forward-looking indicators of asset quality, such as the adequacy of underwriting standards, the level of concentration risk, the adequacy of credit administration policies and procedures, and the adequacy of management information systems for credit risk may also inform the Federal Reserve's view of asset quality.

E reflects the quality of consolidated earnings. The evaluation considers the level, trend, and sources of earnings, as well as the ability of earnings to augment capital as necessary, to provide ongoing support for a BHC's activities.

L reflects the consolidated organization's ability to attract and maintain the sources of funds necessary to support its operations and meet its obligations. The funding conditions for each of the material legal entities in the holding company structure should be evaluated to determine if any weaknesses exist that could affect the funding profile of the consolidated organization.

Like the other components and subcomponents, the I component is rated on a five point numerical scale. However, the descriptive definitions of the numerical ratings for I are different than those of the other components and subcomponents. The I ratings are defined as follows:

1—Low likelihood of significant negative impact;

2—Limited likelihood of significant negative impact;

3—Moderate likelihood of significant negative impact;

4—Considerable likelihood of significant negative impact; and

5—High likelihood of significant negative impact.

The I component is an assessment of the potential impact of the nondepository entities on the subsidiary depository institution(s). The I assessment will evaluate both the risk management practices and financial condition of the nondepository entities—an analysis that will borrow heavily from the analysis conducted for the R and F components. Consistent with current practices, nondepository entities will be evaluated using benchmarks and analysis appropriate for those businesses. In addition, for functionally regulated nondepository subsidiaries, examination staff will continue to rely, to the extent possible, on the work of those functional regulators to assess the risk management practices and financial condition of those entities. In rating the I component, examination staff is required to evaluate the degree to which current or potential issues within the nondepository entities present a threat to the safety and soundness of the subsidiary depository institution(s). In this regard, the I component will give a clearer indication of the degree of risk posed by the nondepository entities to the federal safety net than does the current rating system.

The I component focuses on the aggregate impact of the nondepository entities on the subsidiary depository institution(s). In this regard, the I rating does not include individual subcomponent ratings for the parent company and nondepository subsidiaries. An I rating is always assigned for each BHC; however, as is currently the case, nonmaterial nondepository subsidiaries 7 may be excluded from the I analysis at examiner discretion. Any risk management and financial issues at the nondepository entities that potentially impact the safety and soundness of the subsidiary depository institution(s) should be identified in the written comments under the I rating. This approach is consistent with the Federal Reserve's objective not to extend bank-like supervision to nondepository entities.

The analysis of the parent company for the purpose of assigning an I rating should emphasize weaknesses that could directly impact the risk management or financial condition of the subsidiary depository institution(s). Similarly, the analysis of the nondepository subsidiaries for the purpose of assigning an I rating should emphasize weaknesses that could negatively impact the parent company's relationship with its subsidiary depository institution(s) and weaknesses that could have a direct impact on the risk management practices or financial condition of the subsidiary depository institution(s). The analysis under the I component should consider existing as well as potential issues and risks that may impact the subsidiary depository institution(s) now or in the future. Particular attention should be paid to the following risk management and financial factors in assigning the I rating:

• Strategic Considerations: The potential risks posed to the subsidiary depository institution(s) by the nondepository entities' strategic plans for growth in existing activities and expansion into new products and services;

• Operational Considerations: The spillover impact on the subsidiary depository institution(s) from actual losses, a poor control environment, or an operational loss history in the nondepository entities;

• Legal and Reputational Considerations: The spillover effect on the subsidiary depository institution(s) of complaints and litigation that name one or more of the nondepository entities as defendants, or violations of laws or regulations, especially pertaining to intercompany transactions where the subsidiary depository institution(s) is involved; and

• Concentration Considerations: The potential risks posed to the subsidiary depository institution(s) by concentrations within the nondepository entities in business lines, geographic areas, industries, customers, or other factors.

• Capital Distribution: The distribution and transferability of capital across the legal entities;

• Intra-Group Exposures: The extent to which intra-group exposures, including servicing agreements, have the potential to undermine the condition of subsidiary depository institution(s); and,

• Parent Company Cash Flow and Leverage: The extent to which the parent company is dependent on dividend payments, from both the nondepository subsidiaries and the subsidiary depository institution(s), to service debt and cover fixed charges. Also, the effect that these upstreamed cash flows have had, or can be expected to have, on the financial condition of the BHC's nondepository subsidiaries and subsidiary depository institution(s).

The (D) component will generally reflect the composite CAMELS rating assigned by the subsidiary depository institution's primary supervisor. In a multi-bank BHC, the (D) rating will reflect a weighted average of the CAMELS composite ratings of the individual subsidiary depository institutions, weighted by both asset size and the relative importance of each depository institution within the holding company structure. In this regard, the CAMELS composite rating for a subsidiary depository institution that dominates the corporate culture may figure more prominently in the assignment of the (D) rating than would be dictated by asset size, particularly when problems exist within that depository institution.

The (D) component conveys important supervisory information, reflecting the primary supervisor's assessment of the legal entity. The (D) component stands outside of the composite rating although significant risk management and financial condition considerations at the depository institution level are incorporated in the consolidated R and F ratings, which are then factored into the C rating.

Consistent with current practice, if, in the process of analyzing the financial condition and risk management programs of the consolidated organization, a major difference of opinion regarding the safety and soundness of the subsidiary depository institution(s) emerges between the Federal Reserve and the depository institution's primary regulator, then the (D) rating should reflect the Federal Reserve's evaluation.

To highlight the presence of one or more problem depository institution(s) in a multi-bank BHC whose depository institution component, based on weighted averages, might not otherwise reveal their presence ( i.e. , depository institution ratings of 1, 2 or 3), a problem modifier, “P” would be attached to the depository institution rating ( e.g. , 1P, 2P, or 3P). Thus, 2P would indicate that, while on balance the depository subsidiaries are rated satisfactory, there exists a problem depository institution (composite 4 or 5) among the subsidiary depository institutions. The problem identifier is unnecessary when the depository institution component is rated 4 or 5.

The Federal Reserve revised the BHC rating system to align the rating system with current Federal Reserve supervisory practices. The rating system will require analysis and support similar to that required by the former BOPEC rating system for BHCs of all sizes. 8 As such, the level of analysis and support will vary based upon whether a BHC has been determined to be “complex” or “noncomplex.”  9 In addition, the resources dedicated to the inspection of each BHC will continue to be determined by the risk posed by the subsidiary depository institution(s) to the federal safety net  10 and the risk posed by the BHC to the subsidiary depository institution(s).

Consistent with SR 02-1, examination staff will assign only an R and C rating for all companies in the shell BHC program (noncomplex BHCs with assets under $1 billion). The R rating is the M rating from the subsidiary depository institution's CAMELS rating. To provide consistent rating terminology across BHCs of all sizes, the terminology is changed to R from the former M. The C rating is the subsidiary depository institution's composite CAMELS rating.

For all noncomplex, one-bank holding companies with assets of greater than $1 billion, examination staff will assign all component and subcomponent ratings; however, examination staff should continue to rely heavily on information and analysis contained in the primary regulator's report of examination for the subsidiary depository institution to assign the R and F ratings. If examination staff have reviewed the primary regulator's examination report and are comfortable with the analysis and conclusions contained in that report, then the BHC ratings should be supported with concise language that indicates that the conclusions are based on the analysis of the primary regulator. No additional analysis will be required.

Please note, however, in cases where the analysis and conclusions of the primary regulator are insufficient to assign the ratings, the primary regulator should be contacted to ascertain whether additional analysis and support may be available. Further, if discussions with the primary regulator do not provide sufficient information to assign the ratings, discussions with BHC management may be warranted to obtain adequate information to assign the ratings. In most cases, additional information or support obtained through these steps will be sufficient to permit the assignment of the R and F ratings. To the extent that additional analysis is deemed necessary, the level of analysis and resources spent on this assessment should be in line with the level of risk the subsidiary depository institution poses to the federal safety net. In addition, any activities that involve information gathering with respect to the subsidiary depository institution should be coordinated with and, if possible, conducted by, the primary regulator of that institution.

Examination staff are required to make an independent assessment in order to assign the I rating, which provides an evaluation of the impact of the BHC on the subsidiary depository institution. Analysis for the I rating in non-complex one-bank holding companies should place particular emphasis on issues related to parent company cash flow and compliance with sections 23A and 23B of the Federal Reserve Act.

For all noncomplex BHCs with assets of greater than $1 billion and more than one subsidiary depository institution, examination staff will assign all component and subcomponent ratings of the new system. Examiners should rely, to the extent possible, on the work conducted by the primary regulators of the subsidiary depository institutions to assign the R and F ratings. However, any risk management or other important functions conducted by the nondepository entities of the BHC, or conducted across legal entity lines, should be subject to review by Federal Reserve examination staff. These reviews should be conducted in coordination with the primary regulator(s). The assessment for the I rating requires an independent assessment by Federal Reserve examination staff.

For complex BHCs, examination staff will assign all component and subcomponent ratings of the new rating system. The ratings analysis should be based on the primary and functional regulators' assessment of the subsidiary entities, as well as on the examiners' assessment of the consolidated organization as determined through off-site review and the BHC inspection process, as appropriate. The resources needed for the inspection and the level of support needed for developing a full rating will depend on the complexity of the organization, including structure and activities ( see footnote 7), and should be commensurate with the level of risk posed by the subsidiary depository institution(s) to the federal safety net and the level of risk posed by the BHC to the subsidiary depository institution(s).

Examination staff are required to assign the full rating system for nontraditional BHCs. Nontraditional BHCs include BHCs in which most or all nondepository entities are regulated by a functional regulator and in which the subsidiary depository institution(s) are small in relation to the nondepository entities. The rating system is not intended to introduce significant additional work in the rating process for these organizations. As discussed above, the level of analysis conducted and resources needed to inspect the BHC and to assign the consolidated R and F ratings should be commensurate with the level of risk posed by the subsidiary depository institution(s) to the federal safety net and the level of risk posed by the BHC to the subsidiary depository institution(s). The report of examination by, and other information obtained from, the functional and primary bank regulators should provide the basis for the consolidated R and F ratings. On-site work, to the extent it involves areas that are the primary responsibility of the functional or primary bank regulator, should be coordinated with and, if possible, conducted by, those regulators. Examination staff should concentrate their independent analysis for the R and F ratings around activities and risk management conducted by the parent company and non-functionally regulated nondepository subsidiaries, as well as around activities and risk management functions that are related to the subsidiary depository institution(s), for example, audit functions for the depository institution(s) and compliance with sections 23A and 23B.

Examination staff are required to make an independent assessment of the impact of the nondepository entities on the subsidiary depository institution(s) in order to assign the I rating.

All component and subcomponent ratings are rated on a five point numeric scale. With the exception of the I component, ratings will be assigned in ascending order of supervisory concern as follows: 1—Strong; 2—Satisfactory; 3—Fair; 4—Marginal; and 5—Unsatisfactory.

A description of the I component ratings is in the I section below.

As is current Federal Reserve practice, the component ratings are not derived as a simple numeric average of the subcomponent ratings; rather, weight afforded to each subcomponent in the overall component rating will depend on the severity of the condition of that subcomponent and the relative importance of that subcomponent to the consolidated organization. Similarly, some components may be given more weight than others in determining the composite rating, depending on the situation of the BHC. Assignment of a composite rating may incorporate any factor that bears significantly on the overall condition and soundness of the BHC, although generally the composite rating bears a close relationship to the component ratings assigned.

Rating 1 (Strong). BHCs in this group are sound in almost every respect; any negative findings are basically of a minor nature and can be handled in a routine manner. Risk management practices and financial condition provide resistance to external economic and financial disturbances. Cash flow is more than adequate to service debt and other fixed obligations, and the nondepository entities pose little risk to the subsidiary depository institution(s).

Rating 2 (Satisfactory). BHCs in this group are fundamentally sound but may have modest weaknesses in risk management practices or financial condition. The weaknesses could develop into conditions of greater concern but are believed correctable in the normal course of business. As such, the supervisory response is limited. Cash flow is adequate to service obligations, and the nondepository entities are unlikely to have a significant negative impact on the subsidiary depository institution(s).

Rating 3 (Fair). BHCs in this group exhibit a combination of weaknesses in risk management practices and financial condition that range from fair to moderately severe. These companies are less resistant to the onset of adverse business conditions and would likely deteriorate if concerted action is not effective in correcting the areas of weakness. Consequently, these companies are vulnerable and require more than normal supervisory attention and financial surveillance. However, the risk management and financial capacity of the company, including the potential negative impact of the nondepository entities on the subsidiary depository institution(s), pose only a remote threat to its continued viability.

Rating 4 (Marginal). BHCs in this group have an immoderate volume of risk management and financial weaknesses, which may pose a heightened risk of significant negative impact on the subsidiary depository institution(s). The holding company's cash flow needs may be being met only by upstreaming imprudent dividends and/or fees from its subsidiaries. Unless prompt action is taken to correct these conditions, the organization's future viability could be impaired. These companies require close supervisory attention and substantially increased financial surveillance.

Rating 5 (Unsatisfactory). The critical volume and character of the risk management and financial weaknesses of BHCs in this category, and concerns about the nondepository entities negatively impacting the subsidiary depository institution(s), could lead to insolvency without urgent aid from shareholders or other sources. The imminent inability to prevent liquidity and/or capital depletion places the BHC's continued viability in serious doubt. These companies require immediate corrective action and constant supervisory attention.

Rating 1 (Strong). A rating of 1 indicates that management effectively identifies and controls all major types of risk posed by the BHC's activities. Management is fully prepared to address risks emanating from new products and changing market conditions. The board and management are forward-looking and active participants in managing risk. Management ensures that appropriate policies and limits exist and are understood, reviewed, and approved by the board. Policies and limits are supported by risk monitoring procedures, reports, and management information systems that provide management and the board with the information and analysis that is necessary to make timely and appropriate decisions in response to changing conditions. Risk management practices and the organization's infrastructure are flexible and highly responsive to changing industry practices and current regulatory guidance. Staff has sufficient experience, expertise and depth to manage the risks assumed by the institution.

Internal controls and audit procedures are sufficiently comprehensive and appropriate to the size and activities of the institution. There are few noted exceptions to the institution's established policies and procedures, and none is material. Management effectively and accurately monitors the condition of the institution consistent with the standards of safety and soundness, and in accordance with internal and supervisory policies and practices. Risk management processes are fully effective in identifying, monitoring, and controlling the risks to the institution.

Rating 2 (Satisfactory). A rating of 2 indicates that the institution's management of risk is largely effective, but lacking in some modest degree. Management demonstrates a responsiveness and ability to cope successfully with existing and foreseeable risks that may arise in carrying out the institution's business plan. While the institution may have some minor risk management weaknesses, these problems have been recognized and are in the process of being resolved. Overall, board and senior management oversight, policies and limits, risk monitoring procedures, reports, and management information systems are considered satisfactory and effective in maintaining a safe and sound institution. Risks are controlled in a manner that does not require more than normal supervisory attention.

The BHC's risk management practices and infrastructure are satisfactory and generally are adjusted appropriately in response to changing industry practices and current regulatory guidance. Staff experience, expertise and depth are generally appropriate to manage the risks assumed by the institution.

Internal controls may display modest weaknesses or deficiencies, but they are correctable in the normal course of business. The examiner may have recommendations for improvement, but the weaknesses noted should not have a significant effect on the safety and soundness of the institution.

Rating 3 (Fair). A rating of 3 signifies that risk management practices are lacking in some important ways and, therefore, are a cause for more than normal supervisory attention. One or more of the four elements of sound risk management 11 (active board and senior management oversight; adequate policies, procedures, and limits; adequate risk management monitoring and management information systems; comprehensive internal controls) is considered less than acceptable, and has precluded the institution from fully addressing one or more significant risks to its operations. Certain risk management practices are in need of improvement to ensure that management and the board are able to identify, monitor, and control all significant risks to the institution. Also, the risk management structure may need to be improved in areas of significant business activity, or staff expertise may not be commensurate with the scope and complexity of business activities. In addition, management's response to changing industry practices and regulatory guidance may need to improve.

The internal control system may be lacking in some important aspects, particularly as indicated by continued control exceptions or by a failure to adhere to written policies and procedures. The risk management weaknesses could have adverse effects on the safety and soundness of the institution if corrective action is not taken by management.

Rating 4 (Marginal). A rating of 4 represents deficient risk management practices that fail to identify, monitor, and control significant risk exposures in many material respects. Generally, such a situation reflects a lack of adequate guidance and supervision by management and the board. One or more of the four elements of sound risk management is deficient and requires immediate and concerted corrective action by the board and management.

The institution may have serious identified weaknesses, such as an inadequate separation of duties, that require substantial improvement in internal control or accounting procedures, or improved adherence to supervisory standards or requirements. The risk management deficiencies warrant a high degree of supervisory attention because, unless properly addressed, they could seriously affect the safety and soundness of the institution.

Rating 5 (Unsatisfactory). A rating of 5 indicates a critical absence of effective risk management practices with respect to the identification, monitoring, or control over significant risk exposures. One or more of the four elements of sound risk management is considered wholly deficient, and management and the board have not demonstrated the capability to address these deficiencies.

Internal controls are critically weak and, as such, could seriously jeopardize the continued viability of the institution. If not already evident, there is an immediate concern as to the reliability of accounting records and regulatory reports and the potential for losses if corrective measures are not taken immediately. Deficiencies in the institution's risk management procedures and internal controls require immediate and close supervisory attention.

Rating 1 (Strong). An assessment of Strong signifies that the board and senior management are forward-looking, fully understand the types of risk inherent in the BHC's activities, and actively participate in managing those risks. The board has approved overall business strategies and significant policies, and ensures that senior management is fully capable of managing the activities that the BHC conducts. Consistent with the standards of safety and soundness, oversight of risk management practices is strong and the organization's overall business strategy is effective.

Senior management ensures that risk management practices are rapidly adjusted in accordance with enhancements to industry practices and regulatory guidance, and exposure limits are adjusted as necessary to reflect the institution's changing risk profile. Policies, limits, and tracking reports are appropriate, understood, and regularly reviewed.

Management provides effective supervision of the day-to-day activities of all officers and employees, including the supervision of the senior officers and the heads of business lines. It hires staff that possess experience and expertise consistent with the scope and complexity of the organization's business activities. There is a sufficient depth of staff to ensure sound operations. Management ensures compliance with laws and regulations and that employees have the integrity, ethical values, and competence consistent with a prudent management philosophy and operating style.

Management responds appropriately to changes in the marketplace. It identifies all risks associated with new activities or products before they are launched, and ensures that the appropriate infrastructure and internal controls are established.

Rating 2 (Satisfactory). An assessment of Satisfactory indicates that board and senior management have an adequate understanding of the organization's risk profile and provide largely effective oversight of risk management practices. In this regard, the board has approved all major business strategies and significant policies, and ensures that senior management is capable of managing the activities that the BHC conducts. Oversight of risk management practices is satisfactory and the organization's overall business strategy is generally sound.

Senior management generally adjusts risk management practices appropriately in accordance with enhancements to industry practices and regulatory guidance, and adjusts exposure limits as necessary to reflect the institution's changing risk profile, although these practices may be lacking in some modest degree. Policies, limits, and tracking reports are generally appropriate, understood, and regularly reviewed, and the new product approval process adequately identifies the associated risks and necessary controls.

Senior management's day-to-day supervision of management and staff at all levels is generally effective. The level of staffing, and its experience, expertise, and depth, is sufficient to operate the business lines in a safe and sound manner. Minor weaknesses may exist in the staffing, infrastructure, and risk management processes for individual business lines or products, but these weaknesses have been identified by management, are correctable in the normal course of business, and are in the process of being addressed. Weaknesses noted should not have a significant effect on the safety and soundness of the institution.

Rating 3 (Fair). An assessment of Fair signifies that board and senior management oversight is lacking in some important way and, therefore, is a cause for more than normal supervisory attention. The weaknesses may involve a broad range of activities or be material to a major business line or activity. Weaknesses in one or more aspect of board and senior management oversight have precluded the institution from fully addressing one or more significant risks to the institution. The deficiencies may include a lack of knowledge with respect to the organization's risk profile, insufficient oversight of risk management practices, ineffective policies or limits, inadequate or under-utilized management reporting, an inability to respond to industry enhancements and changes in regulatory guidance, or failure to execute appropriate business strategies. Staffing may not be adequate or staff may not possess the experience and expertise needed for the scope and complexity of the organization's business activities. The day-to-day supervision of officer and staff activities, including the management of senior officers or heads of business lines, may be lacking. Certain risk management practices are in need of improvement to ensure that management and the board is able to identify, monitor, and control all significant risks to the institution. Weaknesses noted could have adverse effects on the safety and soundness of the institution if corrective action is not taken by management.

Rating 4 (Marginal). An assessment of Marginal represents deficient oversight practices that reflect a lack of adequate guidance and supervision by management and the board. A number of significant risks to the institution have not been adequately addressed, and the board and senior management function warrants a high degree of supervisory attention. Multiple board and senior management weaknesses are in need of immediate improvement. They may include a significant lack of knowledge with respect to the organization's risk profile, largely insufficient oversight of risk management practices, ineffective policies or limits, inadequate or considerably under-utilized management reporting, an inability to respond to industry enhancements and changes in regulatory guidance, or failure to execute appropriate business strategies. Staffing may not be adequate or possess the experience and expertise needed for the scope and complexity of the organization's business activities, and the day-to-day supervision of officer and staff activities, including the management of senior officers or heads of business lines, may be considerably lacking. These conditions warrant a high degree of supervisory attention because, unless properly addressed, they could seriously affect the safety and soundness of the institution.

Rating 5 (Unsatisfactory). An assessment of Unsatisfactory indicates a critical absence of effective board and senior management oversight practices. Problems may include a severe lack of knowledge with respect to the organization's risk profile, insufficient oversight of risk management practices, wholly ineffective policies or limits, critically inadequate or under-utilized management reporting, a complete inability to respond to industry enhancements and changes in regulatory guidance, or failure to execute appropriate business strategies. Staffing may be inadequate, inexpert, and/or inadequately supervised. The deficiencies require immediate and close supervisory attention, as management and the board have not demonstrated the capability to address them. Weaknesses could seriously jeopardize the continued viability of the institution.

Rating 1 (Strong). An assessment of Strong indicates that the policies, procedures, and limits provide for effective identification, measurement, monitoring, and control of the risks posed by all significant activities, including lending, investing, trading, trust, and fiduciary activities. Policies, procedures, and limits are consistent with the institution's goals and objectives and its overall financial strength. The policies clearly delineate accountability and lines of authority across the institution's activities. The policies also provide for the review of new activities to ensure that the infrastructure necessary to identify, monitor, and control the associated risks is in place before the activities are initiated.

Rating 2 (Satisfactory). An assessment of Satisfactory indicates that the policies, procedures and limits cover all major business areas, are thorough and substantially up-to-date, and provide a clear delineation of accountability and lines of authority across the institution's activities. Policies, procedures, and limits are generally consistent with the institution's goals and objectives and its overall financial strength. Also, the policies provide for adequate due diligence before engaging in new activities or products. Any deficiencies or gaps that have been identified are minor in nature and in the process of being addressed. Weaknesses should not have a significant effect on the safety and soundness of the institution.

Rating 3 (Fair). An assessment of Fair signifies that deficiencies exist in policies, procedures, and limits that require more than normal supervisory attention. The deficiencies may involve a broad range of activities or be material to a major business line or activity. The deficiencies may include policies, procedures, or limits (or the lack thereof) that do not adequately identify, measure, monitor, or control the risks posed by significant activities; are not consistent with the experience of staff, the organization's strategic goals and objectives, or the financial strength of the institution; or do not clearly delineate accountability or lines of authority. Also, the policies may not provide for adequate due diligence before engaging in new activities or products. Weaknesses noted could have adverse effects on the safety and soundness of the institution unless corrective action is taken by management.

Rating 4 (Marginal). An assessment of Marginal indicates deficient policies, procedures, and limits that do not address a number of significant risks to the institution. Multiple practices are in need of immediate improvement, which may include policies, procedures, or limits (or the lack thereof) that ineffectively identify, measure, monitor, or control the risks posed by significant activities; are not commensurate with the experience of staff, the institution's strategic goals and objectives, or the financial strength of the institution; or do not delineate accountability or lines of authority. Moreover, policies may be considerably lacking with regards to providing for effective due diligence before engaging in new activities or products. These conditions warrant a high degree of supervisory attention because, unless properly addressed, they could seriously affect the safety and soundness of the institution.

Rating 5 (Unsatisfactory). An assessment of Unsatisfactory indicates a critical absence of effective policies, procedures, and limits. Policies, procedures, or limits (or the lack thereof) are largely or entirely ineffective with regard to identifying, measuring, monitoring, or controlling the risks posed by significant activities; are completely inconsistent with the experience of staff, the organization's strategic goals and objectives, or the financial strength of the institution; or do not delineate accountability or lines of authority. Also, policies may be completely lacking with regard to providing for effective due diligence before engaging in new activities or products. Critical weaknesses could seriously jeopardize the continued viability of the institution and require immediate and close supervisory attention.

Rating 1 (Strong). An assessment of Strong indicates that risk monitoring practices and MIS reports address all material risks. The key assumptions, data sources, and procedures used in measuring and monitoring risk are appropriate, thoroughly documented, and frequently tested for reliability. Reports and other forms of communication are consistent with activities, are structured to monitor exposures and compliance with established limits, goals, or objectives, and compare actual versus expected performance when appropriate. Management and board reports are accurate and timely and contain sufficient information to identify adverse trends and to thoroughly evaluate the level of risk faced by the institution.

Rating 2 (Satisfactory). An assessment of Satisfactory indicates that risk monitoring practices and MIS reports cover major risks and business areas, although they may be lacking in some modest degree. In general, the reports contain valid assumptions that are periodically tested for accuracy and reliability and are adequately documented and distributed to the appropriate decision-makers. Reports and other forms of communication generally are consistent with activities; are structured to monitor exposures and compliance with established limits, goals, or objectives; and compare actual versus expected performance when appropriate. Management and board reports are generally accurate and timely, and broadly identify adverse trends and the level of risk faced by the institution. Any weaknesses or deficiencies that have been identified are in the process of being addressed.

Rating 3 (Fair). An assessment of Fair signifies that weaknesses exist in the institution's risk monitoring practices or MIS reports that require more than normal supervisory attention. The weaknesses may involve a broad range of activities or be material to a major business line or activity. They may contribute to ineffective risk identification or monitoring through inappropriate assumptions, incorrect data, poor documentation, or the lack of timely testing. In addition, MIS reports may not be distributed to the appropriate decision-makers, adequately monitor significant risks, or properly identify adverse trends and the level of risk faced by the institution. Weaknesses noted could have adverse effects on the safety and soundness of the institution if corrective action is not taken by management.

Rating 4 (Marginal). An assessment of Marginal represents deficient risk monitoring practices or MIS reports that, unless properly addressed, could seriously affect the safety and soundness of the institution. A number of significant risks to the institution are not adequately monitored or reported. Ineffective risk identification may result from notably inappropriate assumptions, incorrect data, poor documentation, or the lack of timely testing. In addition, MIS reports may not be distributed to the appropriate decision-makers, may inadequately monitor significant risks, or fail to identify adverse trends and the level of risk faced by the institution. The risk monitoring and MIS deficiencies warrant a high degree of supervisory attention because, unless properly addressed, they could seriously affect the safety and soundness of the institution.

Rating 5 (Unsatisfactory). An assessment of Unsatisfactory indicates a critical absence of risk monitoring and MIS. They are wholly deficient due to inappropriate assumptions, incorrect data, poor documentation, or the lack of timely testing. Moreover, MIS reports may not be distributed to the appropriate decision-makers, fail to monitor significant risks, or fail to identify adverse trends and the level of risk faced by the institution. These critical weaknesses require immediate and close supervisory attention, as they could seriously jeopardize the continued viability of the institution.

Rating 1 (Strong). An assessment of Strong indicates that the system of internal controls is robust for the type and level of risks posed by the nature and scope of the organization's activities. The organizational structure establishes clear lines of authority and responsibility for monitoring adherence to policies, procedures, and limits, and wherever applicable, exceptions are noted and promptly investigated. Reporting lines provide clear independence of the control areas from the business lines and separation of duties throughout the organization. Robust procedures exist for ensuring compliance with applicable laws and regulations, including consumer laws and regulations. Financial, operational, and regulatory reports are reliable, accurate, and timely. Internal audit or other control review practices provide for independence and objectivity. Internal controls and information systems are thoroughly tested and reviewed; the coverage, procedures, findings, and responses to audits and review tests are well documented; identified material weaknesses are given thorough and timely high level attention; and management's actions to address material weaknesses are objectively reviewed and verified. The board or its audit committee regularly reviews the effectiveness of internal audits and other control review activities.

Rating 2 (Satisfactory). An assessment of Satisfactory indicates that the system of internal controls adequately covers major risks and business areas, with some modest weaknesses. In general, the control functions are independent from the business lines, and there is appropriate separation of duties. The control system supports accuracy in record-keeping practices and reporting systems, is adequately documented, and verifies compliance with laws and regulations, including consumer laws and regulations. Internal controls and information systems are adequately tested and reviewed, and the coverage, procedures, findings, and responses to audits and review tests are documented. Identified material weaknesses are given appropriate attention and management's actions to address material weaknesses are objectively reviewed and verified. The board or its audit committee reviews the effectiveness of internal audits and other control review activities. Any weaknesses or deficiencies that have been identified are modest in nature and in the process of being addressed.

Rating 3 (Fair). An assessment of Fair signifies that weaknesses exist in the system of internal controls that require more than normal supervisory attention. The weaknesses may involve a broad range of activities or be material to a major business line or activity. The weaknesses may include insufficient oversight of internal controls and audit by the board or its audit committee; unclear or conflicting lines of authority and responsibility; a lack of independence between control areas and business activities; or ineffective separation of duties. The internal control system may produce inadequate or untimely risk coverage and verification, including monitoring compliance with both safety and soundness and consumer laws and regulations; inaccurate records or financial, operational, or regulatory reporting; a lack of documentation for work performed; or a lack of timeliness in management review and correction of identified weaknesses. Weaknesses noted could have adverse effects on the safety and soundness of the institution if corrective action is not taken by management.

Rating 4 (Marginal). An assessment of Marginal represents a deficient internal control system that does not adequately address a number of significant risks to the institution. The deficiencies may include neglect of internal controls and audit by the board or its audit committee; conflicting lines of authority and responsibility; a lack of independence between control areas and business activities; or no separation of duties in critical areas. The internal control system may produce inadequate, untimely, or nonexistent risk coverage and verification in certain areas, including monitoring compliance with both safety and soundness and consumer laws and regulations; inaccurate records or financial, operational, or regulatory reporting; a lack of documentation for work performed; or infrequent management review and correction of identified weaknesses. The internal control deficiencies warrant a high degree of supervisory attention because, unless properly addressed, they could seriously affect the safety and soundness of the institution.

Rating 5 (Unsatisfactory). An assessment of Unsatisfactory indicates a critical absence of an internal control system. There may be no oversight by the board or its audit committee; conflicting lines of authority and responsibility; no distinction between control areas and business activities; or no separation of duties. The internal control system may produce totally inadequate or untimely risk coverage and verification, including monitoring compliance with both safety and soundness and consumer laws and regulations; completely inaccurate records or regulatory reporting; a severe lack of documentation for work performed; or no management review and correction of identified weaknesses. Such deficiencies require immediate and close supervisory attention, as they could seriously jeopardize the continued viability of the institution.

Rating 1 (Strong). A rating of 1 indicates that the consolidated BHC is financially sound in almost every respect; any negative findings are basically of a minor nature and can be handled in a routine manner. The capital adequacy, asset quality, earnings, and liquidity of the consolidated BHC are more than adequate to protect the company from reasonably foreseeable external economic and financial disturbances. The company generates more than sufficient cash flow to service its debt and fixed obligations with no harm to subsidiaries of the organization.

Rating 2 (Satisfactory). A rating of 2 indicates that the consolidated BHC is fundamentally financially sound, but may have modest weaknesses correctable in the normal course of business. The capital adequacy, asset quality, earnings and liquidity of the consolidated BHC are adequate to protect the company from external economic and financial disturbances. The company also generates sufficient cash flow to service its obligations; however, areas of weakness could develop into areas of greater concern. To the extent minor adjustments are handled in the normal course of business, the supervisory response is limited.

Rating 3 (Fair). A rating of 3 indicates that the consolidated BHC exhibits a combination of weaknesses ranging from fair to moderately severe. The company has less than adequate financial strength stemming from one or more of the following: modest capital deficiencies, substandard asset quality, weak earnings, or liquidity problems. As a result, the BHC and its subsidiaries are less resistant to adverse business conditions. The financial condition of the BHC will likely deteriorate if concerted action is not taken to correct areas of weakness. The company's cash flow is sufficient to meet immediate obligations, but may not remain adequate if action is not taken to correct weaknesses. Consequently, the BHC is vulnerable and requires more than normal supervision. Overall financial strength and capacity are still such as to pose only a remote threat to the viability of the company.

Rating 4 (Marginal). A rating of 4 indicates that the consolidated BHC has either inadequate capital, an immoderate volume of problem assets, very weak earnings, serious liquidity issues, or a combination of factors that are less than satisfactory. An additional weakness may be that the BHC's cash flow needs are met only by upstreaming imprudent dividends and/or fees from subsidiaries. Unless prompt action is taken to correct these conditions, they could impair future viability. BHCs in this category require close supervisory attention and increased financial surveillance.

Rating 5 (Unsatisfactory). A rating of 5 indicates that the volume and character of financial weaknesses of the BHC are so critical as to require urgent aid from shareholders or other sources to prevent insolvency. The imminent inability of such a company to service its fixed obligations and/or prevent capital depletion due to severe operating losses places its viability in serious doubt. Such companies require immediate corrective action and constant supervisory attention.

The financial condition subcomponents can be evaluated along business lines, product lines, or legal entity lines—depending on which type of review is most appropriate for the holding company structure.

Rating 1 (Strong). A rating of 1 indicates that the consolidated BHC maintains more than adequate capital to support the volume and risk characteristics of all parent and subsidiary business lines and products; provide a sufficient cushion to absorb unanticipated losses arising from the parent and subsidiary activities; and support the level and composition of parent and subsidiary borrowing. In addition, a company assigned a rating of 1 has more than sufficient capital to provide a base for the growth of risk assets and the entry into capital markets as the need arises for the parent company and subsidiaries.

Rating 2 (Satisfactory). A rating of 2 indicates that the consolidated BHC maintains adequate capital to support the volume and risk characteristics of all parent and subsidiary business lines and products; provide a sufficient cushion to absorb unanticipated losses arising from the parent and subsidiary activities; and support the level and composition of parent and subsidiary borrowing. In addition, a company assigned a rating of 2 has sufficient capital to provide a base for the growth of risk assets and the entry into capital markets as the need arises for the parent company and subsidiaries.

Rating 3 (Fair). A rating of 3 indicates that the consolidated BHC may not maintain sufficient capital to ensure support for the volume and risk characteristics of all parent and subsidiary business lines and products; the unanticipated losses arising from the parent and subsidiary activities; or the level and composition of parent and subsidiary borrowing. In addition, a company assigned a rating of 3 may not maintain a sufficient capital position to provide a base for the growth of risk assets and the entry into capital markets as the need arises for the parent company and subsidiaries. The capital position of the consolidated BHC could quickly become inadequate in the event of asset deterioration or other negative factors and therefore requires more than normal supervisory attention.

Rating 4 (Marginal). A rating of 4 indicates that the capital level of the consolidated BHC is significantly below the amount needed to ensure support for the volume and risk characteristics of all parent and subsidiary business lines and products; the unanticipated losses arising from the parent and subsidiary activities; and the level and composition of parent and subsidiary borrowing. In addition, a company assigned a rating of 4 does not maintain a sufficient capital position to provide a base for the growth of risk assets and the entry into capital markets as the need arises for the parent company and subsidiaries. If left unchecked, the consolidated capital position of the company might evolve into weaknesses or conditions that could threaten the viability of the institution. The capital position of the consolidated BHC requires immediate supervisory attention.

Rating 5 (Unsatisfactory). A rating of 5 indicates that the level of capital of the consolidated BHC is critically deficient and in need of immediate corrective action. The consolidated capital position threatens the viability of the institution and requires constant supervisory attention.

Rating 1 (Strong). A rating of 1 indicates that the BHC maintains strong asset quality across all parts of the organization, with a very low level of criticized and nonperforming assets. Credit risk across the organization is commensurate with management's abilities and modest in relation to credit risk management practices.

Rating 2 (Satisfactory). A rating of 2 indicates that the BHC maintains satisfactory asset quality across all parts of the organization, with a manageable level of criticized and nonperforming assets. Any identified weaknesses in asset quality are correctable in the normal course of business. Credit risk across the organization is commensurate with management's abilities and generally modest in relation to credit risk management practices.

Rating 3 (Fair). A rating of 3 indicates that the asset quality across all or a material part of the consolidated BHC is less than satisfactory. The BHC may be facing a decrease in the overall quality of assets currently maintained on and off balance sheet. The BHC may also be experiencing an increase in credit risk exposure that has not been met with an appropriate improvement in risk management practices. BHCs assigned a rating of 3 require more than normal supervisory attention.

Rating 4 (Marginal). A rating of 4 indicates that the BHC's asset quality is deficient. The level of problem assets and/or unmitigated credit risk subjects the holding company to potential losses that, if left unchecked, may threaten its viability. BHCs assigned a rating of 4 require immediate supervisory attention.

Rating 5 (Unsatisfactory). A rating of 5 indicates that the BHC's asset quality is critically deficient and presents an imminent threat to the institution's viability. BHCs assigned a rating of 5 require immediate remedial action and constant supervisory attention.

Rating 1 (Strong). A rating of 1 indicates that the quantity and quality of the BHC's consolidated earnings over time are more than sufficient to make full provision for the absorption of losses and/or accretion of capital when due consideration is given to asset quality and BHC growth. Generally, BHCs with a 1 rating have earnings well above peer-group averages.

Rating 2 (Satisfactory). A rating of 2 indicates that the quantity and quality of the BHC's consolidated earnings over time are generally adequate to make provision for the absorption of losses and/or accretion of capital when due consideration is given to asset quality and BHC growth. Generally, BHCs with a 2 earnings rating have earnings that are in line with or slightly above peer-group averages.

Rating 3 (Fair). A rating of 3 indicates that the BHC's consolidated earnings are not fully adequate to make provisions for the absorption of losses and the accretion of capital in relation to company growth. The consolidated earnings of companies rated 3 may be further clouded by static or inconsistent earnings trends, chronically insufficient earnings, or less than satisfactory asset quality. BHCs with a 3 rating for earnings generally have earnings below peer-group averages. Such BHCs require more than normal supervisory attention.

Rating 4 (Marginal). A rating of 4 indicates that the BHC's consolidated earnings, while generally positive, are clearly not sufficient to make full provision for losses and the necessary accretion of capital. BHCs with earnings rated 4 may be characterized by erratic fluctuations in net income, poor earnings (and the likelihood of the development of a further downward trend), intermittent losses, chronically depressed earnings, or a substantial drop from the previous year. The earnings of such companies are generally substantially below peer-group averages. Such BHCs require immediate supervisory attention.

Rating 5 (Unsatisfactory). A rating of 5 indicates that the BHC is experiencing losses or a level of earnings that is worse than that described for the 4 rating. Such losses, if not reversed, represent a distinct threat to the BHC's solvency through erosion of capital. Such BHCs require immediate and constant supervisory attention.

Rating 1 (Strong). A rating of 1 indicates that the BHC maintains strong liquidity levels and well developed funds management practices. The parent company and subsidiaries have reliable access to sufficient sources of funds on favorable terms to meet present and anticipated liquidity needs.

Rating 2 (Satisfactory). A rating of 2 indicates that the BHC maintains satisfactory liquidity levels and funds management practices. The parent company and subsidiaries have access to sufficient sources of funds on acceptable terms to meet present and anticipated liquidity needs. Modest weaknesses in funds management practices may be evident, but those weaknesses are correctable in the normal course of business.

Rating 3 (Fair). A rating of 3 indicates that the BHC's liquidity levels or funds management practices are in need of improvement. BHCs rated 3 may lack ready access to funds on reasonable terms or may evidence significant weaknesses in funds management practices at the parent company or subsidiary levels. However, these deficiencies are considered correctable in the normal course of business. Such BHCs require more than normal supervisory attention.

Rating 4 (Marginal). A rating of 4 indicates that the BHC's liquidity levels or funds management practices are deficient. Institutions rated 4 may not have or be able to obtain a sufficient volume of funds on reasonable terms to meet liquidity needs at the parent company or subsidiary levels and require immediate supervisory attention.

Rating 5 (Unsatisfactory). A rating of 5 indicates that the BHC's liquidity levels or funds management practices are critically deficient and may threaten the continued viability of the institution. Institutions rated 5 require constant supervisory attention and immediate external financial assistance to meet maturing obligations or other liquidity needs.

The I component rating reflects the aggregate potential impact of the nondepository entities on the subsidiary depository institution(s). It is rated on a five point numerical scale. Ratings will be assigned in ascending order of supervisory concern as follows:

1—Low likelihood of significant negative impact;

2—Limited likelihood of significant negative impact;

3—Moderate likelihood of significant negative impact;

4—Considerable likelihood of significant negative impact; and

5—High likelihood of significant negative impact.

Rating 1 (Low Likelihood of Significant Negative Impact). A rating of 1 indicates that the nondepository entities of the BHC are highly unlikely to have a significant negative impact on the subsidiary depository institution(s) due to the sound financial condition of the nondepository entities, the strong risk management practices within the nondepository entities, or the corporate structure of the BHC. The BHC maintains an appropriate capital allocation across the organization commensurate with associated risks. Intra-group exposures, including servicing agreements, are very unlikely to undermine the financial condition of the subsidiary depository institution(s). Parent company cash flow is sufficient and not dependent on excessive dividend payments from subsidiaries. The potential risks posed to the subsidiary depository institution(s) by strategic plans, the control environment, risk concentrations, or legal or reputational issues within or facing the nondepository entities are minor in nature and can be addressed in the normal course of business.

Rating 2 (Limited Likelihood of Significant Negative Impact). A rating of 2 indicates a limited likelihood that the nondepository entities of the BHC will have a significant negative impact on the subsidiary depository institution(s) due to the adequate financial condition of the nondepository entities, the satisfactory risk management practices within the parent nondepository entities, or the corporate structure of the BHC. The BHC maintains adequate capital allocation across the organization commensurate with associated risks. Intra-group exposures, including servicing agreements, are unlikely to undermine the financial condition of the subsidiary depository institution(s). Parent company cash flow is satisfactory and generally does not require excessive dividend payments from subsidiaries. The potential risks posed to the subsidiary depository institution(s) by strategic plans, the control environment, risk concentrations, or legal or reputational issues within the nondepository entities are modest and can be addressed in the normal course of business.

Rating 3 (Moderate Likelihood of Significant Negative Impact). A rating of 3 indicates a moderate likelihood that the aggregate impact of the nondepository entities of the BHC on the subsidiary depository institution(s) will have a significant negative impact on the subsidiary depository institution(s) due to weaknesses in the financial condition and/or risk management practices of the nondepository entities. The BHC may have only marginally sufficient allocation of capital across the organization to support risks. Intra-group exposures, including servicing agreements, may have the potential to undermine the financial condition of the subsidiary depository institution(s). Parent company cash flow may at times require excessive dividend payments from subsidiaries. Strategic growth plans, weaknesses in the control environment, risk concentrations or legal or reputational issues within the nondepository entities may pose significant risks to the subsidiary depository institution(s). A BHC assigned a 3 impact rating requires more than normal supervisory attention, as there could be adverse effects on the safety and soundness of the subsidiary depository institution(s) if corrective action is not taken by management.

Rating 4 (Considerable Likelihood of Significant Negative Impact). A rating of 4 indicates that there is a considerable likelihood that the nondepository entities of the BHC will have a significant negative impact on the subsidiary depository institution(s) due to weaknesses in the financial condition and/or risk management practices of the nondepository entities. A 4-rated BHC may have insufficient capital within the nondepository entities to support their risks and activities. Intra-group exposures, including servicing agreements, may also have the immediate potential to undermine the financial condition of the subsidiary depository institution(s). Parent company cash flow may be dependent on excessive dividend payments from subsidiaries. Strategic growth plans, weaknesses in the control environment, risk concentrations or legal or reputational issues within the nondepository entities may pose considerable risks to the subsidiary depository institution(s). A BHC assigned a 4 impact rating requires immediate remedial action and close supervisory attention because the nondepository entities could seriously affect the safety and soundness of the subsidiary depository institution(s).

Rating 5 (High Likelihood of Significant Negative Impact). A rating of 5 indicates a high likelihood that the aggregate impact of the nondepository entities of the BHC on the subsidiary depository institution(s) is or will become significantly negative due to substantial weaknesses in the financial condition and/or risk management practices of the nondepository entities. Strategic growth plans, a deficient control environment, risk concentrations or legal or reputational issues within the nondepository entities may pose critical risks to the subsidiary depository institution(s). The parent company also may be unable to meet its obligations without excessive support from the subsidiary depository institution(s). The BHC requires immediate and close supervisory attention, as the nondepository entities seriously jeopardize the continued viability of the subsidiary depository institution(s).

The (D) component identifies the overall condition of the subsidiary depository institution(s) of the BHC. For BHCs with only one subsidiary depository institution, the (D) component rating generally will mirror the CAMELS composite rating for that depository institution. To arrive at a (D) component rating for BHCs with multiple subsidiary depository institutions, the CAMELS composite ratings for each of the depository institutions should be weighted, giving consideration to asset size and the relative importance of each depository institution within the overall structure of the organization. In general, it is expected that the resulting (D) component rating will reflect the lead depository institution's CAMELS composite rating.

If in the process of analyzing the financial condition and risk management programs of the consolidated organization, a major difference of opinion regarding the safety and soundness of the subsidiary depository institution(s) emerges between the Federal Reserve and the depository institution's primary regulator, then the (D) rating should reflect the Federal Reserve's evaluation.

As stated above, the 2005 draft Guidelines reflect shifts in the epidemiology of tuberculosis, advances in scientific understanding, and changes in health-care practice that have occurred in the United States in the last decade. In the context of diminished risk of health-care-associated transmission of M. tuberculosis, the 2005 Draft Guidelines places emphasis on actions needed to maintain momentum and expertise needed to avert another resurgence of tuberculosis and to eliminate the lingering threat to healthcare workers, which is mainly from patients or others with unsuspected and undiagnosed infectious tuberculosis disease. Whereas previous Guidelines were aimed primarily at hospital-based facilities, the 2005 CDC Guidelines have been expanded to address a broader concept: health-care-associated settings go beyond the previously defined facilities. CDC expects to publish final Guidelines in 2005.

In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.

Collecting applications for the Medical Device Fellowship Plan will allow FDA's Center for Devices and Radiological Health (CDRH) to easily and efficiently elicit and review information from students and health care professionals who are interested in becoming involved in CDRH activities. The process will reduce the time and cost of submitting written documentation to the agency and lessen the likelihood of applications being misrouted within the agency mail system. It will assist the agency in promoting and protecting the public health by encouraging outside persons to share their expertise with CDRH.

In the Federal Register of September 20, 2004 (69 FR 56228), FDA published a 60-day notice requesting public comment on the information collection provisions. No comments were received.

FDA estimates the burden of this collection of information as follows:

FDA based these estimates on the number of inquiries that have been received about the program and requests for application forms over the past year. We anticipate the number of interested individuals and universities, and subsequent number of applications, to increase as we continue to develop an outreach program and an alumni base.

In addition, we would expect applicants who are not selected for their preferred term of employment to reapply at a later date. For these reasons we would expect that the number of applications submitted in the second and third years would increase substantially. During the first year, we expect to receive 100 applications. We believe that we will receive approximately 100 applications the second year and 100 applications the third year. FDA believes it will take individuals 1 hour to complete the application. This is based on similar applications submitted to FDA.

The agency requests nominations for a no-voting industry representative to the advisory committee identified below.

The Cellular, Tissue and Gene Therapies Advisory Committee (formerly the Biological Response Modifiers Advisory Committee) reviews and evaluates available data relating to the safety, effectiveness, and appropriate use of human cells, human tissues, gene transfer therapies and xenotransplantation products which are intended for transplantation, implantation, infusion and transfer in the prevention and treatment of a broad spectrum of human diseases and in the reconstruction, repair or replacement of tissues for various conditions. The committee also considers the quality and relevance of FDA's research program which provides scientific support for the regulation of these products, and makes appropriate recommendations to the Commissioner of Food and Drugs.

Any organization in the biologics manufacturing industry wishing to participate in the selection of a nonvoting member to represent industry on the Cellular, Tissue and Gene Therapies Advisory Committee (formerly the Biological Response Modifiers Advisory Committee) should send a letter stating that interest to FDA contact identified above within 30 days of publication of this notice. Persons who nominate themselves as an industry representative for the advisory committee will not participate in the selection process. It is, therefore, recommended that nominations be made by someone within an organization, trade association, or firm who is willing to participate in the selection process. Within the subsequent 30 days, FDA will send a letter to each organization and a list of all nominees along with their resumes. The letter will state that the interested organizations are responsible for conferring with one another to select a candidate, within 60 days after receiving the letter, to serve as the nonvoting member representing industry interests on the advisory committee. If no individual is selected within the 60 days, the Commissioner of Food and Drugs may select the nonvoting member to represent industry interests.

Individuals may nominate themselves or an organization representing the biologics manufacturing industry may nominate one or more individuals to serve as nonvoting industry representatives. A current curriculum vitae (which includes the nominee's business address, telephone number, and e-mail address) and the name of the committee of interest should be sent to FDA contact person. FDA will forward all nominations to the organizations that have expressed interest in participating in the selection process for that committee.

FDA has a special interest in ensuring that women, minority groups, individuals with physical disabilities, and small businesses are adequately represented on its advisory committees. Therefore, the agency encourages nominations for appropriately qualified candidates from these groups.

This notice is issued under the Federal Advisory Committee Act (5 U.S.C. app. 2) and 21 CFR part 14, relating to advisory committees.

The Department of Homeland Security (DHS) is establishing two new department-wide systems of records and one new system of records within DHS headquarters under the Privacy Act of 1974 (5 U.S.C. 552a). These systems of records are part of DHS's ongoing integration and management efforts.

The Privacy Act embodies fair information principles in a statutory framework governing the means by which the United States Government collects, maintains, uses and disseminates personally identifiable information. The Privacy Act applies to information that is maintained in a “system of records.” A “system of records” is a group of any records under the control of an agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual. Individuals may request their own records that are maintained in a system of records in the possession or under the control of DHS by complying with DHS Privacy Act regulations, 6 CFR Part 5.

The Homeland Security Act of 2002, Public Law 107-296, section 222, 116 Stat. 2135, 2155 (Nov. 25, 2002) (HSA), requires the Secretary of DHS to appoint a senior official to oversee implementation of the Privacy Act and to undertake other privacy-related activities. The systems of records being published today help to carry out the DHS Chief Privacy Officer's statutory activities.

The Privacy Act requires each agency to publish in the Federal Register a description denoting the type and character of each system of records that the agency maintains, and the routine uses that are contained in each system in order to make agency recordkeeping practices transparent, to notify individuals regarding the uses to which personally identifiable information is put, and to assist the individual to more easily find such files within the Agency.

DHS is here publishing the descriptions of three systems of records. Two Department-wide systems cover records kept by all component agencies within DHS as well as DHS Headquarters relating to the processing of Freedom of Information Act and Privacy Act requests, and mailing and other lists used within DHS for administrative and outreach purposes.

The other system covers DHS records that pertain to civil rights and civil liberties complaints submitted to the DHS Office of Civil Rights and Civil Liberties (CRCL). Section 705 of the HSA, 116 Stat. at 2220-21, requires the DHS Officer for Civil Rights and Civil Liberties, who is appointed by the Secretary, to review and assess information alleging abuses of civil rights, civil liberties, and racial and ethnic profiling by employees and officials of the Department and to submit a report on these activities. The CRCL system of records will maintain the records that are created and obtained in order to carry out this statutory mandate.

In accordance with 5 U.S.C. 552a(r), DHS has provided a report of these new systems of records to the Office of Management and Budget (OMB) and to the Congress.

Under FEMA's debt collection regulations, 44 CFR 11.36(b), FEMA is required to maintain current credit data on FEMA's debtors including, the individual debtor's own financial statement, executed under penalty for false claim, concerning his/her assets and liabilities and his/her income and expenses. FEMA Form 22-13, Debt Collection Financial Statement, collects such data directly from the individual debtor. FEMA uses this data to understand the debtor's financial condition and locate their assets to accurately determine a debtor's ability to pay debts or to set arrangements for installment payments of debts.

Title: Debt Collection Financial Statement.

Type of Information Collection: Revision of a currently approved collection.

OMB Number: 1660-0011.

Form Numbers: FEMA Form 22-13, Debt Collection Financial Statement.

Abstract: FEMA may request debtors to provide personal financial information on FEMA Form 22-13 concerning their current financial position. With this information, FEMA evaluates whether to allow debtors to pay the FEMA debts under installment repayment agreements and if so, under what terms. FEMA also uses this data to determine whether to compromise, suspend, or completely terminate collection efforts on respondent's debts. This data is also used to locate the debtor's assets if the debts are sent for judicial enforcement.

Affected Public: Individuals or Households.

Estimated Total Annual Burden Hours: 225 hours.

Estimated Costs: The annualized cost for this information collection is $5100, based on 300 respondents spending 45 minutes (.75 hours) per form at an average hourly rate of $22.27 per 2003 Department of Labor's National Employment, Hours, and Earnings Tables.

Comments: Written comments are solicited to (a) evaluate whether the proposed data collection is necessary for the proper performance of the agency, including whether the information shall have practical utility; (b) evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) enhance the quality, utility, and clarity of the information to be collected; and (d) minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g. , permitting electronic submission of responses. Comments should be received within 60 days of the date of this notice.

The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Under Secretary for Emergency Preparedness and Response, Department of Homeland Security, under Executive Order 12148, as amended, Anthony A. Russell, of FEMA is appointed to act as the Federal Coordinating Officer for this declared disaster.

This action terminates my appointment of Michael J. Hall as Federal Coordinating Officer for this disaster.

Notice is hereby given that, in a letter dated November 15, 2004, the President declared a major disaster under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5206 (the Stafford Act), as follows:

The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Under Secretary for Emergency Preparedness and Response, Department of Homeland Security, under Executive Order 12148, as amended, William Lokey, of FEMA is appointed to act as the Federal Coordinating Officer for this declared disaster.

I do hereby determine the following areas of the State of Alaska to have been affected adversely by this declared major disaster:

Notice is hereby given that, in a letter dated November 15, 2004, the President declared a major disaster under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5206 (the Stafford Act), as follows:

The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Under Secretary for Emergency Preparedness and Response, Department of Homeland Security, under Executive Order 12148, as amended, James N. Russo, of FEMA is appointed to act as the Federal Coordinating Officer for this declared disaster.

I do hereby determine the following areas of the State of Delaware to have been affected adversely by this declared major disaster:

Notice is hereby given that the incident period for this disaster is closed effective November 17, 2004.

Notice is hereby given that the incident period for this disaster is closed effective November 17, 2004.

The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Under Secretary for Emergency Preparedness and Response, Department of Homeland Security, under Executive Order 12148, as amended, Jesse F. Munoz, of FEMA is appointed to act as the Federal Coordinating Officer for this declared disaster.

This action terminates my appointment of James N. Russo as Federal Coordinating Officer for this disaster.

The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Under Secretary for Emergency Preparedness and Response, Department of Homeland Security, under Executive Order 12148, as amended, Jesse F. Munoz, of FEMA is appointed to act as the Federal Coordinating Officer for this declared disaster.

This action terminates my appointment of James N. Russo as Federal Coordinating Officer for this disaster.

The notice of a major disaster declaration for the State of New York is hereby amended to include Individual Assistance for the following areas among those areas determined to have been adversely affected by the catastrophe declared a major disaster by the President in his declaration of October 1, 2004:

Notice is hereby given that the incident period for this disaster is now August 13, 2004, through and including September 16, 2004.

The BLM will work closely with interested parties to identify the management decisions that are best suited to the needs of the public. This public process will take into account local, regional, and national needs and concerns. This notice initiates the public scoping process to identify planning issues and to develop planning criteria.

After gathering public comments on the issues the plan should address, the suggested issues will be placed in one of three categories:

1. Issues to be resolved in the plan;

2. Issues resolved through policy or administrative action; or

3. Issues beyond the scope of this plan.

Rationale will be provided in the plan for each issue placed in category two or three. In addition to these major issues, a number of management questions and concerns will be addressed in the plan. The public is encouraged to help identify these questions and concerns during the scoping process.

An interdisciplinary approach will be used to develop the plan in order to consider the variety of resource issues and concerns identified. Disciplines involved in the planning process will include specialists with expertise in lands and realty, wildlife, subsistence, fisheries, vegetation, outdoor recreation, fire management, minerals and geology, forestry, archaeology, paleontology, hydrology, soil, sociology and economics. The planning area includes lands adjacent to Bristol Bay and Goodnews Bay on the west side of the Aleutian Range, and extends southward on the Alaska Peninsula to Big Creek, south of South Naknek. Within this area there are approximately 3.6 million acres (surface estate) of BLM-administered lands occurring primarily as blocks of land, with some small scattered tracts. Approximately 979,171 acres have been selected by Native Corporations, and 914,933 acres have been selected by the State of Alaska, but have not been conveyed.

Preliminary issues and management concerns have been identified by BLM and other agencies, and in prior meetings with individuals and user groups. They represent the BLM's knowledge to date on the existing issues and concerns with current management. Some concerns that will be addressed in the planning effort include the management of subsistence; oil and gas; access; locatable minerals; D1 and D2 lands; and Wild and Scenic Rivers.

Public Participation: Public meetings will be held throughout the plan scoping and preparation period. In order to ensure local community participation and input, public meetings will be scheduled in a number of communities within the planning area. Early participation by all of those interested is encouraged and will help determine the future management of lands within the Bay planning area. At least 15 days public notice will be given for activities where the public is invited to attend. The minutes and list of attendees for each meeting will be available to the public and open for 30 days to any participant who wishes to clarify the views they expressed. Written comments will be accepted throughout the planning process at the address shown above.

Freedom of Information Act Considerations: Public comments submitted for this planning effort, including names and street addresses of respondents, will be available for public review at the Anchorage Field Office during regular business hours (7:30 a.m. to 4 p.m.), Monday through Friday, except holidays. All submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, will be made available for public inspection in their entirety. Individual respondents may request confidentiality. If you wish to withhold your name or address from public review or from disclosure under the Freedom of Information Act, you must state this prominently at the beginning of your comments. Such requests will be honored to the extent allowed by law.

The National Science Foundation, as directed by the Antarctic Conservation Act of 1978 (Pub. L. 95-541), as amended by the Antarctic Science, Tourism and Conservation Act of 1996, has developed regulations for the establishment of a permit system for various activities in Antarctica and designation of certain animals and certain geographic areas a requiring special protection. The regulations establish such a permit system to designate Antarctic Specially Protected Areas.

The applications received are as follows:

1. Applicant: Permit Application No. 2005-017, Peter Doran Earth and Environmental Sciences (MC186), University of Illinois at Chicago, Chicago, IL 60607.

Take. The applicant plans to collect bone samples from mummified penguins and seals located on the ice surface of the Dry Valley lakes. The radiocarbon dates of the bones may help to determine the age of the lake ice covers.

Taylor Valley Lakes.

December 1, 2004 to February 15, 2005.

The Nuclear Regulatory Commission (NRC) plans to issue Interim Staff Guidance (ISG) documents for fuel cycle facilities. These ISG documents provide clarifying guidance to the NRC staff when reviewing either a license application or a license amendment request for a fuel cycle facility under 10 CFR part 70. The NRC is soliciting public comments on the ISG documents which will be considered in the final versions or subsequent revisions.

The purpose of this notice is to provide the public an opportunity to review and comment on a draft Interim Staff Guidance document for fuel cycle facilities. Interim Staff Guidance-10 provides guidance to NRC staff relative to determining whether the minimum margin of subcriticality (MoS) is sufficient to provide an adequate assurance of subcriticality for safety to demonstrate compliance with the performance requirements of 10 CFR 70.61(d).

The document related to this action is available electronically at the NRC's Electronic Reading Room at http://www.nrc.gov/reading-rm/adams.html . From this site, you can access the NRC's Agencywide Document Access and Management System (ADAMS), which provides text and image files of NRC's public documents. The ADAMS ascension number for the document related to this notice is ML043290270. If you do not have access to ADAMS or if there are problems in accessing the document located in ADAMS, contact the NRC Public Document Room (PDR) Reference staff at 1-800-397-4209, 301-415-4737, or by e-mail to pdr@nrc.gov .

This document may also be viewed electronically on the public computers located at the NRC's PDR, O 1 F21, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852. The PDR reproduction contractor will copy documents for a fee. Comments and questions should be directed to the NRC contact listed above by January 5, 2005. Comments received after this date will be considered if it is practical to do so, but assurance of consideration cannot be given to comments received after this date.

Technical justification for the selection of the minimum margin of subcriticality (MoS) for safety, as required by 10 CFR 70.61(d)

10 CFR 70.61(d) requires, in part, that licensees demonstrate that “under normal and credible abnormal conditions, all nuclear processes are subcritical, including use of an approved margin of subcriticality for safety.” To demonstrate subcriticality, licensees perform validation studies in which critical experiments similar to actual or anticipated calculations are chosen and are then used to establish a mathematical criterion for subcriticality for all future calculations. This criterion is expressed in terms of a limit on the maximum value of the calculated k eff , which will be referred to in this ISG as the upper subcritical limit (USL). The USL includes allowances for bias and bias uncertainty as well as an additional margin which will be referred to hereafter as the minimum margin of subcriticality (MoS). This MoS has been variously referred to within the nuclear industry as subcritical margin, arbitrary margin, and administrative margin. The term MoS will be used throughout this ISG for consistency, but these terms are frequently used interchangeably. This MoS is an allowance for any unknown errors in the calculational method that may bias the result of calculations, beyond those accounted for explicitly in the calculation of the bias and bias uncertainty.

There is little guidance in the fuel facility Standard Review Plans (SRPs) as to what constitutes an acceptable MoS. NUREG-1520, Section 5.4.3.4.4, states that the MoS should be pre-approved by the NRC and that the MoS must “include adequate allowance for uncertainty in the methodology, data, and bias to assure subcriticality.” However, there is little guidance on how to determine the amount of MoS that is appropriate. Partly due to the historical lack of guidance, there have been significantly different margins of subcriticality approved for different fuel cycle facilities over time. In addition, the different ways of defining the MoS and calculating k eff limits significantly compound the potential for confusion. The MoS can have a significant effect on facility operations ( e.g. , storage capacity and throughput) and there has therefore been considerable recent interest in decreasing the margins of subcriticality below what has been accepted historically. These two factors—the lack of guidance and the increasing interest in reducing margins of subcriticality—make clarification of what constitutes acceptable justification for the MoS necessary. In general, consistent with a risk-informed approach to regulation, smaller margins of subcriticality require more substantial technical justification.

The purpose of this ISG therefore is to provide guidance on determining whether the MoS is sufficient to provide an adequate assurance of subcriticality for safety, in accordance with 10 CFR 70.61(d).

The neutron multiplication factor of a fissile system (k eff ) depends, in general, on many different physical variables. The factors that can affect the calculated value of k eff may be broadly divided into the following categories: (1) Geometric form; (2) material composition; and (3) neutron distribution. The geometric form and material composition of the system determine—together with the underlying nuclear data ( e.g. , v, X(E), and the set of cross section data)—the spatial and energy distribution of neutrons in the system ( i.e. , flux and energy spectrum). An error in the nuclear data or in the modeling of these systems can produce an error in the calculated value of k eff . This difference between the calculated and true value of k eff is referred to as the bias 1 . The bias is defined as the difference between the calculated and true values of k eff , by the following equation: β = k calc − k true

The bias of a critical experiment may be known with a high degree of confidence because the true (experimental) value is known a priori (k true ≉ 1). Because both the experimental and the calculational uncertainty are known, there is a determinable uncertainty associated with the bias. The bias for a calculated system other than a critical experiment is not typically known with this same high degree of confidence, because k true is not typically known. The MoS is therefore an allowance for any unknown errors that may affect the calculated value of k eff , beyond those accounted for explicitly in the bias and bias uncertainty. An MoS is needed because the critical experiments chosen will, in general, exhibit somewhat different geometric forms, material compositions, and neutron spectra from those of actual system configurations, and the effect of these differences is difficult to quantify. Bias and bias uncertainty are estimated by calculating the k eff of critical experiments with geometric forms, material compositions, and neutron spectra similar to those of actual or anticipated calculations. However, because of the many factors that can effect the bias, it must be recognized that this is only an estimate of the true bias of the system; it is not possible to guarantee that all sources of error have been accounted for during validation. Thus, use of a smaller MoS requires a greater level of assurance that all sources of uncertainty and bias have been taken into account and that the bias is known with a high degree of accuracy. The MoS should be large compared to known uncertainties in the nuclear data and limitations of the methodology ( e.g. , modeling approximations, convergence uncertainties). It should be noted that this MoS is only needed when subcritical limits are based on the use of calculational methods, including computer and hand calculations. The MoS is not needed when subcritical limits are based on other methods, such as experiment or published data ( e.g. , widely accepted handbooks or endorsed industry standards).

Because the nuclear industry has employed widely different terminology regarding validation and margin, it is necessary to define the following terms as used in this ISG. These definitions are for clarity only and are not meant to prescribe any particular terminology.

Bias: The difference between the calculated and true values of k eff for a fissile system or set of systems.

Bias Uncertainty: The calculated uncertainty in the bias as determined by a statistical method.

Margin of subcriticality (MoS): Margin in k eff applied in addition to bias and bias uncertainty to ensure subcriticality (also known as subcritical, arbitrary, or administrative margin). This term is shorthand for “minimum margin of subcriticality”.

Margin of safety: Margin in one or more system parameters that represents the difference between the value of the parameter at which it is controlled and the value at which the system becomes critical. (This represents an additional margin beyond the MoS.)

Upper Subcritical Limit: The maximum allowable k eff value for a system. Generally, the USL is defined by the equation USL = 1−bias−bias uncertainty−MoS.

Subcritical Limit: The value of a system parameter at which it is controlled to ensure criticality safety, and at which k eff does not exceed the USL (also known as safety limit).

Operating Limit: The value of a system parameter at which it is administratively controlled to ensure that the system will not exceed the subcritical limit. 2

If the USL is defined as described above, then the MoS represents the difference between the average calculated k eff (including uncertainties) and the USL, thus:

MoS = (1−bias−bias uncertainty)−USL.

There are many factors that can affect the code's ability to accurately calculate k eff and that can thus impact the analyst's confidence in the estimation of the bias. Some of these factors are described in detail below.

Because the bias of calculations is estimated based on critical benchmarks with similar geometric form, material composition, and neutronic behavior to the systems being evaluated, the degree of similarity between benchmarks and actual or anticipated calculations is a key consideration in determining the appropriate MoS. The more closely the benchmarks represent the characteristics of systems being validated, the more confidence exists in the calculated bias and bias uncertainty.

Allowing a comparison of the chosen benchmarks to actual or anticipated calculations requires that both the experiments and the calculations be described in sufficient detail to permit independent verification of results. This may be accomplished by submitting input decks for both benchmarks and calculations, or by providing detailed drawings, tables, or other such data to the NRC to permit a detailed comparison of system parameters.

In evaluating benchmark similarity, some parameters are obviously more significant than others. The parameters that can have the greatest effect on the calculated k eff of the system are those that are most significant. Historically, some parameters have been used as trending parameters because these are the parameters that are expected to have the greatest effect on the bias. They include the moderator-to-fuel ratio ( e.g. , H/U, H/X, v m /v f ), isotopic abundance ( e.g. , 235 U, 239 Pu, or overall Pu-content), and parameters characterizing the neutron spectrum ( e.g. , energy of average lethargy causing fission (EALF), or average energy group (AEG)). Other parameters, such as material density or overall geometric shape, are generally considered to be of less importance. Care should be taken that, when basing justification for a reduced MoS on the similarity of benchmarks to actual or anticipated calculations, all important system characteristics that can affect the bias have been taken into consideration. There are several ways to demonstrate that the chosen benchmarks are sufficiently similar to actual or anticipated calculations:

1. NUREG/CR-6698, “Guide to Validation of Nuclear Criticality Safety Calculational Method,” Table 2.3, contains a set of screening criteria for determining benchmark applicability. As is stated in the NUREG, these criteria were arrived at by consensus among experienced NCS specialists and may be considered conservative. The NRC staff considers agreement on all screening criteria to be sufficient justification for demonstrating benchmark similarity. However, less conservative ( i.e. , broader) screening ranges may be used if appropriately justified.

2. Use of an analytical method that systematically quantifies the degree of similarity between benchmarks and design applications, such as Oak Ridge National Laboratory's TSUNAMI code in the SCALE 5 code package.

TSUNAMI calculates a correlation coefficient indicating the degree of similarity between each benchmark and calculation in pair-wise fashion. The appropriate threshold value of the parameter indicating a sufficient degree of similarity is an unresolved issue with the use of this method. However, the NRC staff currently considers a correlation coefficient c k ≥ 0.95 to be indicative of a strong degree of similarity. Conversely, a correlation coefficient < 0.90 should not be used as demonstration of benchmark similarity without significant additional justification. These observations are tentative and are based on the staff's observation that benchmarks and calculations having a correlation of at least 95% also appear to be very similar based on a traditional comparison of system parameters. TSUNAMI should not be used as a “black box,” but may be used to inform the benchmark selection process, due to the evolving nature of this tool.

3. Sensitivity studies may be employed to demonstrate that the system k eff is highly insensitive to a particular parameter. In such cases, a significant error in the parameter will have a small effect on the system bias. One example is when the number density of certain trace materials can be shown to have a negligible effect on k eff . Another example is when the presence of a strong external absorber has only a slight effect on k eff . In both cases, such a sensitivity study may be used to justify why agreement with regard to a given parameter is not important for demonstrating benchmark similarity.

4. Physical arguments may be used to demonstrate benchmark similarity. For example, the fact that oxygen and fluorine are almost transparent to thermal neutrons ( i.e. , cross sections are very low) may be used as justification for why the differences in chemical form between UO 2 F 2 and UO 2 may be ignored.

A combination of the above methods may also prove helpful in demonstrating benchmark similarity. For example, TSUNAMI may be used to identify the parameters to which k eff is most sensitive, or a sensitivity study may be used to confirm TSUNAMI results or justify screening ranges. Care should be taken to ensure that all parameters which can measurably affect the bias are considered when comparing chosen benchmarks to calculations. For example, comparison should not be based solely on agreement in the 235 U fission spectrum if 238 U or 10 B absorption or 1 H scattering have a significant effect on the calculated k eff . A method such as TSUNAMI that considers the complete set of reactions and nuclides present should be used rather than relying on a comparison of only the fission spectra. That all important parameters have been included can be determined based on a study of the k eff sensitivity, as discussed in the next section. It is especially important that all materials present in calculations that can have more than a negligible effect on the bias are included in the chosen benchmarks. In addition, it is necessary that if the parameters associated with calculations are outside the range of the benchmark data, the effect of extrapolating the bias should be taken into account in setting the USL. This should be done by making use of trends in the bias. Both the trend and the uncertainty in the trend should be extrapolated using an established mathematical method.

Some questions that should be asked in evaluating the chosen benchmarks include:

• Are the critical experiments chosen all high-quality benchmarks from reliable ( e.g. , peer-reviewed and widely-accepted) sources?

• Are the benchmarks chosen taken from independent sources?

• Do the most important benchmark parameters cover the entire range needed for actual or anticipated calculations?

• Is the number of benchmarks sufficient to establish trends in the bias across the entire range? (The number depends on the specific statistical method employed.)

• Are all important parameters that could affect the bias adequately represented in the chosen benchmarks?

Sensitivity of the calculated k eff to changes in system parameters is a closely related concept to that of similarity. This is because those parameters to which k eff is most sensitive should weigh more heavily in evaluating benchmark similarity. If k eff is highly sensitive to a given parameter, an error in the parameter could be expected to have a significant impact on the bias. Conversely, if k eff is very insensitive to a given parameter, then an error would be expected to have a negligible impact on the bias. In the latter case, agreement with regard to that parameter is not important to establishing benchmark similarity.

Two major ways to determine the system's k eff sensitivity are:

1. The TSUNAMI code in the SCALE 5 code package can be used to calculate the sensitivity coefficients for each nuclide-reaction pair present in the problem. TSUNAMI calculates both an integral sensitivity coefficient ( i.e. , summed over all energy groups) and a sensitivity profile as a function of energy group. The sensitivity coefficient is defined as the fractional change in k eff for a 1% change in the nuclear cross section. It must be recognized that TSUNAMI only evaluates the k eff sensitivity to changes in the nuclear data, and not to other parameters that could affect the bias and should be considered.

2. Direct sensitivity calculations can also be used to perturb the system and gauge the resulting effect on k eff . Perturbation of the atomic number densities can also be used to confirm the integral sensitivity coefficients calculated by TSUNAMI (as when there is doubt as to convergence of the adjoint flux).

The relationship between the k eff sensitivity and confidence in the bias is the reason that high-enriched uranium fuel facilities have historically required a greater MoS than low-enriched uranium facilities. High-enriched systems tend to be much more sensitive to changes in the underlying system parameters, and in such systems, the effect of any errors on the bias would be greatly magnified. For this same reason, systems involving weapons-grade plutonium would also be more susceptible to undetected errors than low-assay mixed oxide ( i.e. , a few percent Pu). The appropriate amount of MoS should therefore be commensurate with the sensitivity of the system to changes in the underlying parameters.

Some questions that should be asked in evaluating the k eff sensitivity include:

• How sensitive is k eff to changes in the underlying nuclear data ( e.g. , cross sections)?

• How sensitive is k eff to changes in the geometric form and material composition?

• Is the MoS large compared to the expected magnitude of changes in k eff resulting from errors in the underlying system parameters?

Another consideration that may affect the appropriate MoS is the extent to which the physical behavior of the system is known. Fissile systems which are known to be subcritical with a high degree of confidence do not require as much MoS as systems where subcriticality is less certain. An example of a system known to be subcritical would be a finished fuel assembly. These systems typically can only be made critical when highly thermalized, and due to extensive analysis and reactor experience, the flooded case is known to be subcritical in isolation. In addition, the thermal neutron cross sections for materials in finished reactor fuel have been measured with an exceptionally high degree of accuracy (as opposed to the unresolved resonance region). Other examples may include systems consisting of very simple geometry or other idealized situations, in which there is strong evidence that the system is subcritical based on comparisons with highly similar systems in published references such as handbooks or standards. In these cases, the amount of MoS needed may be significantly reduced.

An important factor in determining that the neutron physics of the system is well-known is ensuring that the configuration of the system is fixed. For example, a finished fuel assembly is subject to tight quality assurance checks and has a form that is well-characterized and highly stable. A solution or powder process with a complex geometric arrangement would be much more susceptible to having its configuration change to one whose neutron physics is not well-understood. Experience with similar processes may also be credited.

Some questions that should be asked in evaluating the neutron physics of the system include:

• Is the geometric form and material composition of the system rigid and unchanging?

• Is the geometric form and material composition of the system subject to strict quality assurance?

• Are there other reasons besides criticality calculations to conclude that the system will be subcritical ( e.g. , handbooks, standards, reactor fuel studies)?

• How well-known are the cross sections in the energy range of interest?

Having a high degree of confidence in the estimated bias and bias uncertainty requires both that there be a sufficient quantity of well-behaved benchmarks and that there be a sufficiently rigorous validation methodology. If either the data or the methodology is not adequate, a high degree of confidence in the results cannot be attained. The validation methodology must also be suitable for the data analyzed. For example, a statistical methodology relying on the data being normally distributed about the mean k eff would not be appropriate to analyze data that are not normally distributed. A linear regression fit to data that has a non-linear bias trend would similarly not be appropriate.

Having a sufficient quantity of well-behaved benchmarks means that: (1) There are enough (applicable) benchmarks to make a statistically meaningful calculation of the bias and bias uncertainty; (2) the benchmarks span the entire range of all important parameters, without gaps requiring extrapolation or wide interpolation; and (3) the benchmarks do not display any apparent anomalies. Most of the statistical methods used rely on the benchmarks being normally distributed. To test for normality, there must be a statistically significant number of benchmarks (which may vary depending on the test employed). If there is insufficient data to verify normality to at least the 95% confidence level, then a non-parametric technique should be used to analyze the data. In addition, the benchmarks should provide a continuum of data across the entire validated range so that any variation in the bias as a function of important system parameters may be observed. Anomalies that may cast doubt on the results of the validation may include the presence of discrete clusters of experiments having a lower calculated k eff than the set of benchmarks as a whole, an excessive fluctuation in k eff values ( e.g. , having a X 2 /N ≫ 1), or discarding an unusually high number of benchmarks as outliers ( i.e. , more than 1-2%).

Having a sufficiently rigorous validation methodology means having a methodology that is appropriate for the number and distribution of benchmark experiments, that calculates the bias and bias uncertainty using an established statistical methodology, that accounts for any trends in the bias, and that accounts for all apparent sources of uncertainty in the bias ( e.g. , the increase in uncertainty due to extrapolating the bias beyond the range covered by the benchmark data).

In addition, confidence that the code's performance is well-understood means the bias should be relatively small ( i.e. , bias ≲ 2%), or else the reason for the bias should be known, and no credit must be taken for positive bias. If the absolute value of the bias is very large (especially if the reason for the large bias is unknown), this may indicate that the calculational method is not very accurate, and a larger MoS may be appropriate.

Some questions that should be asked in evaluating the data and the methodology include:

• Is the methodology consistent with the distribution of the data ( e.g. , normal)?

• Are there enough benchmarks to determine the behavior of the bias across the entire area of applicability?

• Does the assumed functional form of the bias represent a good fit to the benchmark data?

• Are there discrete clusters of benchmarks for which the overall bias appears to be non-conservative (especially consisting of the most applicable benchmarks)?

• Has additional margin been applied to account for extrapolation or wide interpolation?

• Have all apparent bias trends been taken into account?

• Has an excessive number of benchmarks been discarded as statistical outliers?

Performance of an adequate code validation alone is not sufficient justification for any specific MoS. The reason for this is that determination of the bias and bias uncertainty is separate from selection of an appropriate MoS. Therefore, performing an adequate code validation is not alone sufficient demonstration that an appropriate MoS has been chosen.

The MoS is a reflection of the degree of confidence in the results of the validation analysis; the MoS is a margin in k eff to provide a high degree of assurance that fissile systems calculated to be subcritical are in fact subcritical. However, there are other types of margin that can provide additional assurance of subcriticality; these margins are frequently expressed in terms of the system parameters rather than k eff . It is generally acknowledged that the margin to criticality in system parameters (termed the margin of safety) is a better indication of the inherent safety of the system than margin in k eff . In addition to establishing subcritical limits on controlled system parameters, licensees frequently establish operating limits to ensure that subcritical limits are not exceeded. The difference between the subcritical limit and the operating limit (if used) of a system parameter represents one type of margin that may be credited in justifying a lower MoS than would be otherwise acceptable. This difference between the subcritical limit and the operating limit should not be confused with the MoS. Confusion often arises, however, because systems in which k eff is highly sensitive to changes in process parameters may require both: (1) A large margin between subcritical and operating limits, and (2) a large MoS. This is because systems in which k eff is highly sensitive to changes in process parameters are highly sensitive to normal process variations and to any potential errors. Both the MoS and the margin between the subcritical and operating limits are thus dependent on the k eff sensitivity of the system.

In addition to the margin between the subcritical and operating limits, there is also usually a significant amount of conservatism in the facility's technical practices with regard to modeling. In criticality calculations, controlled parameters are typically analyzed at their subcritical limits, whereas uncontrolled parameters are analyzed at their worst-case credible condition. In addition, tolerances must be conservatively taken into account. These technical practices generally result in conservatism of at least several percent in k eff . Examples of this conservatism may include assuming optimum concentration in solution processes, neglect of neutron absorbers in structural materials, or requiring at least a 1-inch, tight-fitting reflector around process equipment. The margin due to this conservatism may be credited in justifying a smaller MoS than would otherwise be found acceptable. However, in order to take credit for this as part of the basis for the MoS, it should be demonstrated that the technical practices committed to in the license application will result in a predictable and consistent amount of conservatism in k eff . If this modeling conservatism will not always be present, it should not be used as justification for the MoS.

Some questions that should be asked in evaluating the margin in system parameters include:

• How much margin in k eff is present due to conservatism in the modeling practices?

• Will this margin be present for all normal and credible abnormal condition calculations?

Historically, several licensees have distinguished between normal and abnormal condition k eff limits, in that they have a higher k eff limit for abnormal conditions. Separate limits for normal and abnormal condition k eff values are permissible but are not required.

There is a certain likelihood associated with the MoS that processes calculated to be subcritical will in fact be critical. A somewhat higher likelihood is permissible for abnormal than for normal condition calculations. This is because the abnormal condition should be at least unlikely to occur, in accordance with the double contingency principle. That is, achieving the abnormal condition requires at least one contingency to have occurred and is likely to be promptly corrected upon detection. In addition, there is often additional conservatism present in the abnormal condition because uncontrolled parameters are analyzed at their worst-case credible conditions.

As stated in NUREG-1718, the fact that abnormal conditions meet the standard of being at least unlikely from the standpoint of the double contingency principle may be used to justify having a lower MoS than would be permissible for normal conditions. In addition, the increased risk associated with the less conservative MoS should be commensurate with and offset by the unlikelihood of achieving the abnormal condition. That is, the likelihood that a process calculated to be subcritical will be critical increases when going from a normal to a higher abnormal condition k eff limit. If the normal condition k eff limit is acceptable, then the abnormal limit will also be acceptable provided this increased likelihood is offset by the unlikelihood of going to the abnormal condition because of the controls that have been established. If a single k eff limit is used ( i.e. , no credit for unlikelihood of the abnormal condition), then it must be determined to be acceptable to cover both normal and credible abnormal conditions.

Historically, the argument has been used that the MoS can be estimated based on comparing the results of two statistical methods. In the USLSTATS code issued with the SCALE code package there are two methods for calculating the USL: (1) The Confidence Band with Administrative Margin Approach, which calculates USL-1, and (2) the Lower Tolerance Band Approach, which calculates USL-2. The MoS is an input parameter to the Confidence Band Approach but is not included explicitly in the Lower Tolerance Band Approach. Justification that the MoS chosen in the Confidence Band Approach is adequate has been based on a comparison of USL-1 and USL-2 ( i.e. , the condition that USL-1, including the chosen MoS, is less than USL-2). However, this justification is not sufficient.

The condition that USL-1 < USL-2 is necessary, but not sufficient, to show that an adequate MoS has been selected. These methods are two different statistical treatments of the data, and a comparison between them can only demonstrate whether the MoS is sufficient to bound statistical uncertainties included in the Lower Tolerance Band Approach but not included in the Confidence Band Approach. There may be other statistical or non-statistical errors in the calculation of k eff that are not handled in the statistical treatments. Therefore, the NRC does not consider this an acceptable justification for selection of the MoS.

In addition to complying with paragraphs (b) and (c) of this section, the risk of nuclear criticality accidents must be limited by assuring that under normal and credible abnormal conditions, all nuclear processes are subcritical, including use of an approved margin of subcriticality for safety. [10 CFR 70.61(d)]

Determination of an adequate MoS is strongly dependent upon the specific processes and conditions at the facility being licensed, which is largely the reason that different facilities have been licensed with different limits. Judgement and experience must be employed in evaluating the adequacy of the proposed MoS. Historically, however, an MoS of 0.05 in k eff has generally been found acceptable for a typical low-enriched fuel fabrication facility. This will generally be the case provided there is a sufficient quantity of well-behaved benchmarks and a sufficiently rigorous validation methodology has been employed. For systems involving high-enriched uranium or plutonium, additional MoS may be appropriate to account for the increased sensitivity of k eff to changes in system parameters. There is no consistent precedent for such facilities, but the amount of increased MoS should be commensurate with the increased k eff sensitivity of these systems. Therefore, an MoS of 0.05 in k eff for low-enriched fuel facilities or an MoS of 0.1 for high- enriched or plutonium fuel facilities must be justified but will generally be found acceptable, with the caveats discussed above 3 .

For facility processes involving unusual materials or new process conditions, the validation should be reviewed in detail to ensure that there are no anomalies associated with unique system characteristics.

In any case, the MoS should not be reduced below a minimum of 0.02.

Reducing the MoS below 0.05 for low-enriched processes or 0.1 for high-enriched or plutonium processes requires substantial additional justification, which may include:

1. An unusually high degree of similarity between the chosen benchmarks and anticipated normal and credible abnormal conditions being validated.

2. Demonstration that the system k eff is highly insensitive to changes in underlying system parameters, such that the worst credible modeling or cross section errors would have a negligible effect on the bias.

3. Demonstration that the system being modeled is known to be subcritical with a high degree of confidence. This requires that there be other strong evidence in addition to the calculations that the system is subcritical (such as comparison with highly similar systems in published references such as handbooks or standards).

4. Demonstration that the validation methodology is exceptionally rigorous, so that any potential sources of error have been accounted for in calculating the USL.

5. Demonstration that there is a dependable and consistent amount of conservatism in k eff due to the conservatism in modeling practices.

In addition, justification of the MoS for abnormal conditions may include:

6. Demonstration that the increased likelihood of a process calculated as subcritical being critical is offset by the unlikelihood of achieving the abnormal condition.

This list is not all-inclusive; other technical justification demonstrating that there is a high degree of confidence in the calculation of k eff may be used.

The guidance in this ISG should supplement the current guidance in the NCS chapters of the fuel facility SRPs (NUREG-1520 and -1718). In addition, NUREG-1718, Section 6.4.3.3.4, should be revised to remove the following sentence: “A minimum subcritical margin of 0.05 is generally considered to be acceptable without additional justification when both the bias and its uncertainty are determined to be negligible.”

Section 8(a)(17) of the Small Business Act, (Act) 15 U.S.C. 637(a)(17), requires that recipients of Federal contracts set aside for small businesses, service-disabled veteran-owned small businesses, SBA's Very Small Business Program or awarded through the SBA's 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. The SBA regulations imposing this requirement are found at 13 CFR 121.406 (b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any “class of products” for which there are no small business manufacturers or processors available to participate in the Federal market.

As implemented in SBA's regulations at 13 CFR 121.1204, in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines “class of products” based on six digit coding systems. The first coding system is the Office of Management and Budget North American Industry Classification System (NAICS). The second is the Product and Service Code established by the Federal Procurement Data System.

The SBA received a request on November 2, 2004 to waive the Nonmanufacturer Rule for Adhesives and Sealants Manufacturing. In response, SBA is currently processing a request to waive the Nonmanufacturer Rule for Adhesives and Sealants Manufacturing, North American Industry Classification System (NAICS) 325520.

The public is invited to comment or provide source information to SBA on the proposed waiver of the nonmanufacturer rule for this NAICS code.

Section 8(a)(17) of the Small Business Act, (Act)15 U.S.C. 637(a)(17), requires that recipients of Federal contracts set aside for small businesses, service-disabled veteran-owned small businesses, SBA's Very Small Business Program or SBA's 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule.

The SBA regulations imposing this requirement are found at 13 CFR 121.406(b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any “class of products” for which there are no small business manufacturers or processors available to participate in the Federal market.

As implemented in SBA's regulations at 13 CFR 121.1204, in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines “class of products” based on six digit coding systems. The first coding system is the Office of Management and Budget North American Industry Classification System (NAICS). The second is the Product and Service Code established by the Federal Procurement Data System.

The SBA received a request on September 7, 2004 to waive the Nonmanufacturer Rule for Small Arms Ammunition Manufacturing.

In response, SBA published notices in the Federal Register on October 18, 2004 and FedBizOpps on October 14, 2004 of intent to the waiver of the Nonmanufacturer Rule for Small Arms Ammunition Manufacturing. In responses to these notices, SBA discovered the existence of a small business manufacturer of that class of products. Accordingly, based on the available information, SBA has determined that there is a small business manufacturer of this class of products, and is therefore terminating the class waiver of the Nonmanufacturer Rule for Small Arms Ammunition Manufacturing, NAICS 332992.

Section 8(a)(17) of the Small Business Act, (Act) 15 U.S.C. 637(a)(17), requires that recipients of Federal contracts set aside for small businesses, service-disabled veteran-owned small businesses, SBA's Very Small Business Program or awarded through the SBA's 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. The SBA regulations imposing this requirement are found at 13 CFR 121.406(b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any “class of products” for which there are no small business manufacturers or processors available to participate in the Federal market.

As implemented in SBA's regulations at 13 CFR 121.1204, in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines “class of products” based on six digit coding systems. The first coding system is the Office of Management and Budget North American Industry Classification System (NAICS). The second is the Product and Service Code established by the Federal Procurement Data System.

The SBA received a request on November 2, 2004 to waive the Nonmanufacturer Rule for Petroleum and Coal Products Manufacturing.

In response, SBA is currently processing a request to waive the Nonmanufacturer Rule for Petroleum and Coal Products Manufacturing, North American Industry Classification System (NAICS) 324110.

The public is invited to comment or provide source information to SBA on the proposed waiver of the nonmanufacturer rule for this NAICS code.

Under section 2104 of the Trade Act of 2002 (Trade Act) (19 U.S.C. 3804), for agreements that will be approved and implemented through trade promotion authority (TPA) procedures, the President must provide the Congress with at least 90 days' written notice of his intent to enter into negotiations and must identify the specific objectives for the negotiations. Before and after the submission of this notice, the President must consult with appropriate Congressional committees and the Congressional Oversight Group (COG) regarding the negotiations. Under the Trade Act of 1974, as amended, the President must (i) afford interested persons an opportunity to present their views regarding any matter relevant to any proposed agreement, (ii) designate an agency or inter-agency committee to hold a public hearing regarding any proposed agreement, and (iii) seek the advice of the U.S. International Trade Commission (ITC) regarding the probable economic effects on U.S. industries and consumers of the removal of tariffs and non-tariff barriers on imports pursuant to any proposed agreement.

On November 15, 2004, after consulting with relevant Congressional committees and the COG, the USTR notified the Congress that the President intends to initiate free trade agreement negotiations with Oman and identified specific objectives for the negotiations. In addition, the USTR has requested that the ITC provide its advice on probable economic effects no later than February 28, 2005. This notice solicits views from the public on these negotiations and provides information on a hearing that will be conducted pursuant to the requirements of the Trade Act of 1974.

To assist the Administration as it continues to develop its negotiating objectives for the proposed agreements, the Chairman of the TPSC invites the written comments and/or oral testimony of interested persons at a public hearing. Comments and testimony may address the reduction or elimination of tariffs or non-tariff barriers on any articles provided for in the Harmonized Tariff Schedule of the United States (HTSUS) that are products of Oman, any concession that should be sought by the United States, or any other matter relevant to the proposed agreements. The TPSC invites comments and testimony on all of these matters and, in particular, seeks comments and testimony addressed to:

(a) General and commodity-specific negotiating objectives for the proposed agreements.

(b) Economic costs and benefits to U.S. producers and consumers of removal of tariffs and non-tariff barriers on articles traded with Oman.

(c) Treatment of specific goods (described by HTSUS numbers) under the proposed agreements, including comments on (1) product-specific import or export interests or barriers, (2) experience with particular measures that should be addressed in the negotiations, and (3) in the case of articles for which immediate elimination of tariffs is not appropriate, a recommended staging schedule for such elimination.

(d) Adequacy of existing customs measures to ensure that imported goods originate from Oman, and appropriate rules of origin for goods entering the United States under the proposed agreements.

(e) Existing sanitary and phytosanitary measures and technical barriers to trade imposed by Oman that should be addressed in the negotiations.

(f) Existing barriers to trade in services between the United States and Oman that should be addressed in the negotiations.

(g) Relevant trade-related intellectual property rights issues that should be addressed in the negotiations.

(h) Relevant investment issues that should be addressed in the negotiations.

(i) Relevant government procurement issues that should be addressed in the negotiations.

(j) Relevant environmental and labor issues that should be addressed in the negotiations.

Comments identifying as present or potential trade barriers laws or regulations that are not primarily trade-related should address the economic, political, and social objectives of such regulations and the degree to which they discriminate against producers of the other country. At a later date, the USTR, through the TPSC, will publish notice of reviews regarding (a) the possible environmental effects of the proposed agreements and the scope of the U.S. environmental review of the proposed agreements, and (b) the impact of the proposed agreements on U.S. employment and labor markets.

A hearing will be held on January 14, 2005, in Rooms 1 and 2, 1724 F Street, NW., Washington, DC. Persons wishing to testify at the hearing must provide written notification of their intent to testify by January 5, 2005. The notification should include: (1) The name, address, and telephone number of the person presenting the testimony; and (2) a short (one or two paragraphs) summary of the presentation, including the subject matter and, as applicable, the product(s) (with HTSUS numbers), service sector(s), or other subjects (such as investment, intellectual property, and/or government procurement) to be discussed. A copy of the testimony must accompany the notification. Remarks at the hearing should be limited to no more than five minutes to allow for possible questions from the TPSC. Persons with mobility impairments who will need special assistance in gaining access to the hearing should contact the TPSC Executive Secretary.

Interested persons, including persons who participate in the hearing, may submit written comments by noon, January 25, 2005. Written comments may include rebuttal points demonstrating errors of fact or analysis not pointed out in the hearing. All written comments must state clearly the position taken, describe with particularity the supporting rationale, and be in English. The first page of written comments must specify the subject matter, including, as applicable, the product(s) (with HTSUS numbers), service sector(s), or other subjects (such as investment, intellectual property and/or government procurement).

In order to facilitate prompt processing of submissions, the Office of the United States Trade Representative strongly urges and prefers electronic (e-mail) submissions in response to this notice. In the event that an e-mail submission is impossible, submissions should be made by facsimile.

Persons making submissions by e-mail should use the following subject line: “United States-Oman Free Trade Agreement,” followed by (as appropriate) “Notice of Intent to Testify,” “Testimony,” or “Written Comments.” Documents should be submitted as either WordPerfect, MSWord, or text (.TXT) files. Spreadsheets submitted as supporting documentation are acceptable as Quattro Pro or Excel. If any document submitted electronically contains business confidential information, the file name of the business confidential version should begin with the characters “BC-,” and the file name of the public version should begin with the characters “P—.” The “P—” or “BC—” should be followed by the name of the submitter. Persons who make submissions by e-mail should not provide separate cover letters; information that might appear in a cover letter should be included in the submission itself. To the extent possible, any attachments to the submission should be included in the same file as the submission itself, and not as separate files.

Written comments, notice of testimony, and testimony will be placed in a file open to public inspection pursuant to 15 CFR 2003.5, except business confidential information exempt from public inspection in accordance with 15 CFR 2003.6. Business confidential information submitted in accordance with 15 CFR 2003.6 must be clearly marked “BUSINESS CONFIDENTIAL” at the top of each page, including any cover letter or cover page, and must be accompanied by a non-confidential summary of the confidential information. All public documents and non-confidential summaries shall be available for public inspection in the USTR Reading Room. The USTR Reading Room is open to the public, by appointment only, from 10 a.m. to noon and 1 p.m. to 4 p.m., Monday through Friday. An appointment to review the file must be scheduled at least 48 hours in advance and may be made by calling (202) 395-6186.

General information concerning the Office of the United States Trade Representative may be obtained by accessing its Internet Web site ( http://www.ustr.gov ).

Under section 2104 of the Trade Act of 2002 (Trade Act) (19 U.S.C. 3804), for agreements that will be approved and implemented through trade promotion authority (TPA) procedures, the President must provide the Congress with at least 90 days' written notice of his intent to enter into negotiations and must identify the specific objectives for the negotiations. Before and after the submission of this notice, the President must consult with appropriate Congressional committees and the Congressional Oversight Group (COG) regarding the negotiations. Under the Trade Act of 1974, as amended, the President must (i) afford interested persons an opportunity to present their views regarding any matter relevant to any proposed agreement, (ii) designate an agency or inter-agency committee to hold a public hearing regarding any proposed agreement, and (iii) seek the advice of the U.S. International Trade Commission (ITC) regarding the probable economic effects on U.S. industries and consumers of the removal of tariffs and non-tariff barriers on imports pursuant to any proposed agreement.

On November 15, 2004, after consulting with relevant Congressional committees and the COG, the USTR notified the Congress that the President intends to initiate free trade agreement negotiations with the UAE and identified specific objectives for the negotiations. In addition, the USTR has requested that the ITC provide its advice on probable economic effects no later than February 28, 2005. This notice solicits views from the public on these negotiations and provides information on a hearing that will be conducted pursuant to the requirements of the Trade Act of 1974.

To assist the Administration as it continues to develop its negotiating objectives for the proposed agreement, the Chairman of the TPSC invites the written comments and/or oral testimony of interested persons at a public hearing. Comments and testimony may address the reduction or elimination of tariffs or non-tariff barriers on any articles provided for in the Harmonized Tariff Schedule of the United States (HTSUS) that are products of the UAE, any concession that should be sought by the United States, or any other matter relevant to the proposed agreement. The TPSC invites comments and testimony on all of these matters and, in particular, seeks comments and testimony addressed to:

(a) General and commodity-specific negotiating objectives for the proposed agreement.

(b) Economic costs and benefits to U.S. producers and consumers of removal of tariffs and non-tariff barriers on articles traded with the UAE.

(c) Treatment of specific goods (described by HTSUS numbers) under the proposed agreement, including comments on

(1) Product-specific import or export interests or barriers,

(2) Experience with particular measures that should be addressed in the negotiations, and

(3) In the case of articles for which immediate elimination of tariffs is not appropriate, a recommended staging schedule for such elimination.

(d) Adequacy of existing customs measures to ensure that imported goods originate from the UAE, and appropriate rules of origin for goods entering the United States under the proposed agreement.

(e) Existing sanitary and phytosanitary measures and technical barriers to trade imposed by the UAE that should be addressed in the negotiations.

(f) Existing barriers to trade in services between the United States and the UAE that should be addressed in the negotiations.

(g) Relevant trade-related intellectual property rights issues that should be addressed in the negotiations.

(h) Relevant investment issues that should be addressed in the negotiations.

(i) Relevant government procurement issues that should be addressed in the negotiations.

(j) Relevant environmental and labor issues that should be addressed in the negotiations.

Comments identifying as present or potential trade barriers laws or regulations that are not primarily trade-related should address the economic, political, and social objectives of such regulations and the degree to which they discriminate against producers of the other country. At a later date, the USTR, through the TPSC, will publish notice of reviews regarding (a) the possible environmental effects of the proposed agreement and the scope of the U.S. environmental review of the proposed agreement, and (b) the impact of the proposed agreement on U.S. employment and labor markets.

A hearing will be held on January 12, 2005, in Rooms 1 and 2, 1724 F Street, NW., Washington, DC. Persons wishing to testify at the hearing must provide written notification of their intent to testify by January 5, 2005. The notification should include: (1) The name, address, and telephone number of the person presenting the testimony; and (2) a short (one or two paragraphs) summary of the presentation, including the subject matter and, as applicable, the product(s) (with HTSUS numbers), service sector(s), or other subjects (such as investment, intellectual property, and/or government procurement) to be discussed. A copy of the testimony must accompany the notification. Remarks at the hearing should be limited to no more than five minutes to allow for possible questions from the TPSC. Persons with mobility impairments who will need special assistance in gaining access to the hearing should contact the TPSC Executive Secretary.

Interested persons, including persons who participate in the hearing, may submit written comments by noon, January 25, 2005. Written comments may include rebuttal points demonstrating errors of fact or analysis not pointed out in the hearing. All written comments must state clearly the position taken, describe with particularity the supporting rationale, and be in English. The first page of written comments must specify the subject matter, including, as applicable, the product(s) (with HTSUS numbers), service sector(s), or other subjects (such as investment, intellectual property and/or government procurement).

In order to facilitate prompt processing of submissions, the Office of the United States Trade Representative strongly urges and prefers electronic (e-mail) submissions in response to this notice. In the event that an e-mail submission is impossible, submissions should be made by facsimile.

Persons making submissions by e-mail should use the following subject line: “United States-United Arab Emirates Free Trade Agreement,” followed by (as appropriate) “Notice of Intent to Testify,” “Testimony,” or “Written Comments.” Documents should be submitted as either WordPerfect, MSWord, or text (.TXT) files. Spreadsheets submitted as supporting documentation are acceptable as Quattro Pro or Excel. If any document submitted electronically contains business confidential information, the file name of the business confidential version should begin with the characters “BC—,” and the file name of the public version should begin with the characters “P—.” The “P—” or “BC—” should be followed by the name of the submitter. Persons who make submissions by e-mail should not provide separate cover letters; information that might appear in a cover letter should be included in the submission itself. To the extent possible, any attachments to the submission should be included in the same file as the submission itself, and not as separate files.

Written comments, notice of testimony, and testimony will be placed in a file open to public inspection pursuant to 15 CFR 2003.5, except business confidential information exempt from public inspection in accordance with 15 CFR 2003.6. Business confidential information submitted in accordance with 15 CFR 2003.6 must be clearly marked “BUSINESS CONFIDENTIAL” at the top of each page, including any cover letter or cover page, and must be accompanied by a non-confidential summary of the confidential information. All public documents and non-confidential summaries shall be available for public inspection in the USTR Reading Room. The USTR Reading Room is open to the public, by appointment only, from 10 a.m. to noon and 1 p.m. to 4 p.m., Monday through Friday. An appointment to review the file must be scheduled at least 48 hours in advance and may be made by calling (202) 395-6186.

General information concerning the Office of the United States Trade Representative may be obtained by accessing its Internet Web site ( http://www.ustr.gov ).

Those states selected for funding were found to meet the objective of the United We Ride initiative which is to implement the President's Executive Order on Human Service Transportation Coordination by breaking down barriers among Federal programs to enhance coordination of human service transportation programs for individuals with disabilities, older adults, and lower income populations who depend on transportation services to access employment, health, and other community services. The purpose of the State Coordination Grants is to increase the overall capacity of states to deliver comprehensive and coordinated human services transportation that meets the needs of transportation-disadvantaged individuals and to increase cross-agency collaboration to facilitate coordination, enhance services, and address redundancies of programs and services. These grants may be used to assist states in conducting a comprehensive state assessment using the United We Ride Framework for Action; developing a comprehensive state action plan for coordinating human services transportation; or, for those states that already have a comprehensive state action plan, to implement one or more of the elements identified in the Framework for Action.

Grant Selections. The solicitation announcement for the United We Ride state coordination grants called for applications to be submitted by August 23, 2004. FTA received 45 proposals, all of which were evaluated and approved by an interagency team of reviewers. Grants will be made for between $19,000 and $35,000. No local match is required for these grants. Of the applicants, 38 are state DOTs and the remaining seven are various other state agencies. We encourage these other state applicants to partner with the state DOTs for submittal of grant applications.