This proposed rule is issued pursuant to the Dairy Production Stabilization Act (Act) of 1983 [7 U.S.C. 4501-4514].

The Office of Management and Budget has waived the review process required by Executive Order 12866 for this action.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This proposed rule is not intended to have a retroactive effect. If adopted, this rule would not preempt any State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule.

The Dairy Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under Section 4509 of the Dairy Act, any person subject to the Dairy Order may file with the Secretary a petition stating that the Dairy Order, any provision of the Dairy Order, or any obligation imposed in connection with the Dairy Order is not in accordance with the law and request a modification of the Dairy Order or to be exempted from the Dairy Order. Such person is afforded the opportunity for a hearing on the petition. After a hearing, the Secretary would rule on the petition. The Dairy Act provides that the district court of the United States in any district in which the person is an inhabitant, or has his principal place of business, has jurisdiction to review the Secretary's ruling on the petition, provided a complaint is filed not later than 20 days after the date of the entry of the ruling.

The Agricultural Marketing Service (AMS) has determined that this rule will not have a significant economic impact on a substantial number of small entities, as defined by the Regulatory Flexibility Act (5 U.S.C. 601-612).

For the purpose of the Regulatory Flexibility Act, small businesses in the dairy industry have been defined as those employing less than 500 employees. For the purpose of the Regulatory Flexibility Act, a dairy farm is considered a “small business” if it has an annual gross revenue of less than $750,000. In the 48 contiguous States, there are approximately 70,000 dairy farms subject to the provisions of this Dairy Order. Most of the parties subject to the Dairy Order are considered small entities.

The proposed rule would amend the Dairy Order by modifying the number of member seats on the Dairy Board in six of the 13 geographic regions. The proposed amendment is being made to better reflect the geographic distribution of milk produced within each of the 13 regions of the contiguous 48 States.

The Dairy Order is administered by a 36-member Board representing 13 geographic regions within the contiguous 48 States. The Dairy Order provides that the Dairy Board shall review the geographic distribution of milk production throughout the United States and, if warranted, shall recommend to the Secretary a reapportionment of the regions and/or modification of the number of members from regions in order to better reflect the geographic distribution of milk production volume in the 48 contiguous States.

Based on a review of the 2007 geographic distribution of milk production, the Dairy Board has concluded that the number of Dairy Board members for six of the 13 geographical regions should be changed. The Dairy Board was last modified in 2003 based on 2002 milk production.

The proposed amendment should not have a significant economic impact on persons subject to the Dairy Order. The proposed changes merely would allow representation of the Dairy Board to better reflect geographic milk production in the contiguous 48 States.

In accordance with the Office of Management and Budget (OMB) regulation [5 CFR part 1320] which implements the Paperwork Reduction Act of 1995 [44 U.S.C. chapter 35], the information collection requirements and recordkeeping provisions imposed by the Dairy Order have been previously approved by OMB and assigned OMB Control No. 0581-0093. No relevant Federal rules have been identified that duplicate, overlap, or conflict with this rule.

The Dairy Order is administered by a 36-member Dairy Board representing 13 geographic regions within the contiguous 48 States. The Dairy Order provides in section 1150.131 that the Dairy Board shall review the geographic distribution of milk production volume throughout the contiguous 48 States and, if warranted, shall recommend to the Secretary a reapportionment of the regions and/or modification of the number of members from regions in order to best reflect the geographic distribution of milk production in the contiguous 48 States. The Dairy Board is required to conduct the review at least every five years and not more than every three years. The Dairy Board was last modified in 2003 based on 2002 milk production.

Based on a review of the 2007 geographic distribution of milk production, the Dairy Board has concluded that the number of Dairy Board members for six of the 13 geographic regions should be changed.

The Dairy Order specifies the formula to be used to determine the number of Dairy Board seats in each of the 13 geographic regions designated in the Dairy Order. Under the formula, the total milk production for the contiguous 48 states for the previous calendar year is divided by 36 to determine a factor of pounds of milk represented by each Dairy Board member. The resulting factor is then divided into the pounds of milk produced in each region to determine the number of Dairy Board members for each region. Accordingly, the following table summarizes by region the volume of milk production distribution for 2007, the percentage of total milk production, the current number of Dairy Board seats per region, and the proposed number of Dairy Board seats for each region.

In 2007, total milk production was 185,558 million pounds and each of the Dairy Board members would represent 5,154 million pounds of milk. For 2002, total milk production was 169,643 million pounds of milk and each of the Board members represented 4,712 million pounds of milk.

Based on the 2007 milk production data, the Dairy Board proposes that member representation in Region 2 (California), Region 3 (Arizona, Colorado, Idaho, Montana, Nevada, Utah, and Wyoming), and Region 4 (Arkansas, Kansas, New Mexico, Oklahoma, and Texas) each be increased by one member, and member representation in Region 1 (Oregon and Washington), Region 11 (Delaware, Maryland, New Jersey, and Pennsylvania), and Region 12 (New York) each be decreased by one member.

Milk production in Region 2 increased to 40,683 million pounds in 2007, up from 34,884 million pounds in 2002, indicating eight Dairy Board members (40,683 divided by 5,154 = 8) compared to seven Dairy Board members based on 2002 milk production data. Milk production in Region 3 increased to 21,212 million pounds in 2007, up from 16,291 million pounds in 2002, indicating four Dairy Board members (21,212 divided by 5,154 = 4) compared to three Dairy Board members based on 2002 milk production data. Milk production in Region 4 increased to 18,200 million pounds in 2007, up from 15,313 million pounds in 2002, indicating four Dairy Board members (18,200 divided by 5,154 = 4) compared to three Dairy Board members based on 2002 milk production data.

Milk production in Region 1 increased to 7,764 million pounds in 2007, up from 7,713 million pounds in 2002. The Dairy Board has determined that Region 1 milk production data does not continue to support 2 seats. Based on the data, the Dairy Board is recommending that one seat from Region 1 be assigned to another region, thereby reducing Region 1 Dairy Board members from two members to one member. In Region 11, milk production decreased to 12,008 million pounds in 2007 down from 12,492 million pounds in 2002, indicating two Dairy Board members for the region (12,008 divided by 5,154 = 2) compared to three members based on 2002 data. Also, in Region 12, milk production decreased to 12,103 million pounds in 2007 down from 12,217 million pounds in 2002, indicating two Dairy Board members for the region (12,103 divided by 5,154 = 2) compared to three members based on 2002 data.

Accordingly, it is proposed that member representation in Region 2 be increased from seven members to eight members, and Region 3 and Region 4 representation each be increased from three members to four members; Region 1 representation be decreased from two members to one member and Region 11 and Region 12 representation each be decreased from three members to two members.

A 15-day comment period is provided for interested persons to comment on this proposed rule. Twelve terms of existing Dairy Board members will expire on October 31, 2008. Thus, a 15-day comment period is provided to allow for a timely appointment of new Dairy Board members based on the current geographic distribution of milk production in the contiguous 48 States.

For the reasons set forth in the preamble, it is proposed that 7 CFR part 1150 be amended as follows:

Please note that all comments received are considered part of the public record and made available for public inspection online at http://www.regulations.gov. Such information includes personal identifying information (such as your name, address, etc.) voluntarily submitted by the commenter.

If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be posted online, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also locate all the personal identifying information you do not want posted online in the first paragraph of your comment and identify what information you want redacted.

If you want to submit confidential business information as part of your comment but do not want it to be posted online, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify confidential business information to be redacted within the comment. If a comment has so much confidential business information that it cannot be effectively redacted, all or part of that comment may not be posted on http://www.regulations.gov.

Personal identifying information identified and located as set forth above will be placed in the agency's public docket file, but not posted online. Confidential business information identified and located as set forth above will not be placed in the public docket file. If you wish to inspect the agency's public docket file in person by appointment, please see the FOR FURTHER INFORMATION CONTACT paragraph.

This rule proposes to amend 8 CFR parts 1001, 1003, and 1292 by changing the present definitions and procedures concerning professional conduct for practitioners, which term includes attorneys and representatives, who practice before the Executive Office for Immigration Review (EOIR). The proposed rule seeks to implement measures in response to the Attorney General's recent assessment of the Board of Immigration Appeals (Board) and the Immigration Courts with respect to the authority that each tribunal utilizes in disciplining and deterring professional misconduct. The proposed rule also aims to improve EOIR's ability to effectively regulate practitioner conduct by implementing technical changes with respect to the definition of attorney and clarifying who is authorized to represent and appear on behalf of individuals in proceedings before the Board and the immigration judges.

The final regulations concerning representation and appearances were last promulgated on May 1, 1997 (62 FR 23634). The regulations for the rules and procedures concerning professional conduct were last promulgated as a final rule on June 27, 2000 (65 FR 39513). The professional conduct final rule outlined the authority of the EOIR General Counsel to investigate complaints and pursue disciplinary sanctions against attorneys and other practitioners who appear before the immigration judges and the Board and revised the process for the adjudication of those complaints. As a result, the EOIR General Counsel is now responsible for enforcing the prohibition against criminal, unethical, unprofessional and frivolous conduct occurring before the immigration judges and the Board. See Professional Conduct for Practitioners—Rules and Procedures, 65 FR 39513 (June 27, 2000).

The former Immigration and Naturalization Service (INS) incorporated by reference in its regulations EOIR's grounds for discipline and procedures for disciplinary proceedings. INS did so when both it and EOIR were part of the Department of Justice. Since the promulgation of the final professional conduct rule in June of 2000, the functions of the former INS were transferred from the Department of Justice to the Department of Homeland Security (DHS) pursuant to the Homeland Security Act of 2002, Public Law No. 107-296, 116 Stat. 2135, 2178 (Nov. 25, 2002), as amended (codified primarily at 6 U.S.C. 101 et seq. ). Accordingly, the Attorney General reorganized title 8 of the Code of Federal Regulations, creating a new chapter V in 8 CFR for functions retained by the Department of Justice, beginning with 8 CFR part 1001. 68 FR 9824 (Feb. 28, 2003); 68 FR 10349 (March 5, 2003). Chapter V now contains the regulations governing EOIR, while the immigration regulations of DHS are contained in chapter I in 8 CFR. The rules and procedures concerning professional conduct for representation and appearances before the immigration judges and the Board are now codified in 8 CFR part 1003, subpart G. The rules for representation and appearances before the immigration judges and the Board are codified in 8 CFR part 1292. The rules for representation and appearances and for professional conduct before DHS and its components remain codified in 8 CFR parts 103 and 292.

Both sets of rules provide a unified process for disciplinary hearings whether the hearing is instituted by EOIR or by DHS. See generally Matter of Shah, 24 I&N Dec. 282 (BIA 2007) (imposing discipline on attorney who knowingly and willfully misled USCIS by presenting an improperly obtained certified Labor Condition Application in support of a nonimmigrant worker petition). For instance, 8 CFR 292.3(b) provides for the imposition of disciplinary sanctions against practitioners who appear before DHS for violating the grounds of discipline stated in 8 CFR 3.102 (now codified as § 1003.102). See also 8 CFR 1292.3(b) (parallel EOIR regulations). Further, DHS disciplinary hearings are to be heard and decided according to 8 CFR 3.106(a), (b), and (c) (now codified as § 1003.106), which govern EOIR disciplinary hearings. See 8 CFR 292.3(f) (DHS regulations) and 1292.3(b), (f) (parallel EOIR regulations). Finally, both sets of rules provide for cross-discipline, which allows EOIR to request that any discipline imposed against a practitioner for misconduct before DHS also be imposed with respect to that practitioner's ability to represent clients before the immigration judges and the Board, and vice versa. See 8 CFR 292.3(e)(2) (DHS) and 1003.105(b) (EOIR).

This proposed rule amends only the EOIR regulations governing representation and appearances, and professional conduct under chapter V in 8 CFR. This rule does not make any changes to the DHS regulations governing representation and appearances or professional conduct.

Currently, the disciplinary regulations allow EOIR to sanction practitioners, including attorneys and certain non-attorneys who are permitted to represent individuals in immigration proceedings (“representatives”), when discipline is in the public interest; namely, when a practitioner has engaged in criminal, unethical, unprofessional conduct or frivolous behavior. Sanctions may include expulsion or suspension from practice before EOIR and DHS, and public or private censure. EOIR frequently suspends or expels practitioners who are subject to a final or interim order of disbarment or suspension by their state bar regulatory authorities—this is known as “reciprocal” discipline. 1 As of January 2008, EOIR has disciplined 380 practitioners since the rules took effect in 2000.

The Attorney General completed a comprehensive review of EOIR's responsibilities and programs, and determined that the immigration judges should have the tools necessary to control their courtrooms and protect the adjudicatory system from fraud and abuse. Accordingly, the Attorney General determined that the existing regulations, including those at 8 CFR 1003.101-109, should be amended to provide for additional sanction authority for false statements, frivolous behavior, and other gross misconduct. Additionally, the Attorney General found that the Board should have the ability to effectively sanction litigants and practitioners for defined categories of gross misconduct.

As a result, this proposed rule seeks to preserve the fairness and integrity of immigration proceedings, and increase the level of protection afforded to aliens in those proceedings by defining additional categories of behavior that constitute gross misconduct.

In part, the proposed rule responds to the Attorney General's prescribed measures by adding substantive grounds of misconduct pursuant to the American Bar Association Model Rules of Professional Conduct (2006) (ABA Model Rules) that will subject practitioners to sanctions if they violate such standards and fail to provide adequate professional representation for their clients. Specifically, the grounds for sanctionable misconduct have been revised to include language that is similar, and sometimes identical, to the language found in the ABA Model Rules, as such disciplinary standards are widely known and accepted within the legal profession. Although EOIR does not seek to supplant the disciplinary functions of the various state bars, this proposed rule aims to strengthen the existing rules in light of the apparent gaps in the current regulation. See Matter of Rivera-Claros, 21 I&N Dec. 599, 604 (BIA 1996). In addition, these revisions will make the EOIR professional conduct requirements more consistent with the ethical standards applicable in most states.

This proposed rule would also enhance the existing regulation by amending the current procedures and definitions through technical modifications that are more consistent with EOIR's authority to regulate practitioner misconduct. See Koden v. U.S. Dep't of Justice, 564 F.2d 228, 233 (7th Cir. 1977); 8 U.S.C. 1103, 1362. For example, the proposed rule would amend the definition of “attorney” at 8 CFR 1001.1(f) by adding language stating that an attorney is one who is eligible to practice law in a U.S. state or territory. Additionally, this proposed rule would amend the language at 8 CFR 1292.1(a)(2) to clarify that law students and law graduates must be students and graduates of accredited law schools in the United States. Accordingly, the proposed rule will allow EOIR to investigate and prosecute instances of misconduct more effectively and efficiently while ensuring the due process rights of both the client and the practitioner.

Section 1001.1 paragraph (f) defines “attorney” as that term is used in section 8 CFR 1292.1, Representation of others, which regulates who may represent individuals in proceedings before the immigration judges and the Board. The proposed rule would revise the definition of “attorney” to clarify that any attorney who practices before EOIR must be eligible to practice law in at least one State, possession, territory, or Commonwealth of the United States, or the District of Columbia.

Presently, EOIR must recognize an attorney who is in good standing with a state licensing authority so long as the attorney has not been suspended or disbarred. However, in some states, an attorney may be able to obtain a certificate of good standing from the licensing authority, but still be administratively ineligible to practice law in that state. This proposed change will ensure that an attorney may practice before EOIR only if he or she is both in good standing and maintains a status with the state licensing authority that permits practice in the courts of that state. In many jurisdictions, the only status that will permit practice before the state courts will be “active” status. However, in some jurisdictions, inactive or retired attorneys have a limited right to practice before state courts if the inactive or retired attorneys' representation is without compensation (i.e., pro bono). So long as inactive or retired attorneys have such a right to limited practice and they comply with all of the requirements imposed by their state licensing authority in all of their cases before EOIR, then EOIR would consider those attorneys to be eligible to practice law for the purpose of section 1001.1(f).

Section 1003.102 of the regulations sets forth the grounds of discipline against practitioners. This rule proposes to revise paragraphs (e), (k), and (l) and to add several additional grounds of discipline as described below.

Presently, EOIR may impose discipline on a practitioner if the practitioner resigns, with an admission of misconduct, from practice in a state jurisdiction, a federal court, or an executive branch department, board, commission, or other government entity. The result of this rule is that EOIR cannot discipline a practitioner who resigned from practice in another jurisdiction, court, or agency while a disciplinary investigation or proceeding was pending if the practitioner did not admit misconduct during that investigation or proceeding. This provides practitioners with an incentive to resign from another jurisdiction, court, or agency without admitting misconduct in order to continue to practice before EOIR. Therefore, we propose to amend our rule to be consistent with the recommended practice of the American Bar Association, as stated in Rule III(A) of the Model Federal Rules of Disciplinary Enforcement, by permitting the imposition of discipline on an attorney who resigns while a disciplinary investigation or proceeding is pending.

One ground for sanctions is the ineffective assistance of counsel as previously determined by the Board or an immigration judge. This proposed rule would extend this ground to include findings made by federal court judges. Many aliens appeal decisions by the Board to the federal circuit courts, which now receive approximately 750 petitions for review per month challenging decisions of the Board. In such cases, the federal court sometimes makes a finding that an attorney provided ineffective assistance of counsel in an immigration proceeding. Whether such a finding is made by an immigration judge, the Board, or a federal court, the harm to the alien remains the same, and this revision will allow the EOIR disciplinary process to take account of findings of ineffective assistance of counsel in EOIR proceedings made by a federal court.

Currently § 1003.103(l) provides for disciplinary sanctions for practitioners who repeatedly fail to appear for scheduled hearings in a timely manner without good cause. This proposed rule would make the language of this ground more general, to cover failure to appear for “pre-hearing conferences, scheduled hearings, or case-related meetings” in a timely manner.

This rule proposes to add a new ground for disciplinary sanctions at § 1003.102(n) with respect to conduct that is “prejudicial to the administration of justice or undermines the integrity of the adjudicative process.”

The prohibition on conduct prejudicial to the administration of justice is found in the ABA Model Rules and such conduct is widely recognized within the legal profession as a sanctionable offense. See ABA Model Rule 8.4(d) (stating that “[i]t is professional misconduct for a lawyer to * * * engage in conduct that is prejudicial to the administration of justice”). In this regard, EOIR's mandate to fairly and efficiently adjudicate cases under the immigration laws of the country remains the single most important function of the agency. As a result, safeguarding the adjudicative process from abuse is necessary in order to achieve this function, and accordingly, misconduct that jeopardizes or otherwise impairs the administration of justice will be subject to sanctions.

In discerning the most appropriate parameters for this ground, In re Hopkins, 677 A.2d 55, 60-61 (D.C. 1996), is instructive. In that case, the D.C. Court of Appeals held that an attorney's conduct must satisfy the following criteria for such conduct to be viewed as prejudicial to the administration of justice. First, the conduct, which includes any action or inaction, depending on the circumstances, must be considered improper. Improper conduct occurs, for instance, when the practitioner “violates a specific statute, court rule or procedure, or other disciplinary rule,” but impropriety may also be found when, considering all the circumstances, the practitioner “should know that he or she would reasonably be expected to act in such a way as to avert any serious interference with the administration of justice.” Id. at 61.

Second, in order to fall under the domain of the “administration of justice,” the conduct “must bear directly upon the judicial process * * * with respect to an identifiable case or tribunal.” Id. Third, the practitioner's conduct “must taint the judicial process in more than a de minimis way; that is, at least potentially impact upon the process to a serious and adverse degree.” Id. As a result, conduct that will generally be subject to sanctions under this ground includes any action or inaction that seriously impairs or interferes with the adjudicative process when the practitioner should have reasonably known to avoid such conduct.

This rule proposes to add a new ground for disciplinary sanction at section 1003.102(o). As noted above, the revised grounds for disciplinary sanctions include language that is similar, if not identical to, the ABA Model Rules. In this case, the proposed rule incorporates language from ABA Model Rule 1.1, which deals with providing competent representation, and language from the comments on Model Rule 1.1 relating to “Thoroughness and Preparation.” See ABA Model Rule 1.1. While most practitioners competently represent their clients in immigration proceedings, a small percentage of the practitioners do not meet the minimum standards set forth in this rule, which includes the requisite “legal knowledge, skill, thoroughness, and preparation reasonably necessary” for representation, and the use of “methods and procedures meeting the standards of competent practitioners.” As this principle has been one of the hallmarks of the ABA Model Rules, we find that the existing rule should incorporate a provision devoted to competence in order to ensure that all practitioners meet minimal performance standards in rendering services. We note that many clients, given their unfamiliarity with immigration law and their potentially limited ability to communicate and express themselves effectively, are likely to rely heavily on a practitioner's assistance in immigration matters. In addition, the comments in the ABA Model Rules state that the requisite level of attention and preparation are determined, in part, by what is at stake. The stakes are quite high in immigration proceedings, which determine whether aliens are allowed to remain in the United States. As such, competence is perhaps the most fundamental and necessary element in providing representation to clients in immigration proceedings.

This rule proposes to add a new ground for disciplinary sanction at § 1003.102(p). Here, the proposed rule incorporates language from ABA Model Rule 1.2, which primarily deals with the scope of representation, and language from the comments on Model Rule 1.2 relating to “Allocation of Authority between Client and Lawyer.” See ABA Model Rule 1.2. This rule would require a practitioner to “abide by a client's decisions concerning the objectives of representation” and to “consult with the client as to the means by which they are to be pursued.”

Thus, as a general matter, this obligation requires the practitioner to act in accordance with the scope of representation in attempting to meet the client's goals, as determined by the terms of the client-practitioner relationship. The scope of representation, of course, is a fact-specific matter that turns on the specific agreements in each case. By increasing the emphasis on clarity in the scope of representation agreement, this ground will also protect practitioners from spurious complaints of ineffective assistance of counsel by ensuring that parties to a representation agreement fully understand the scope of representation.

To illustrate, clients who submit complaints of ineffective assistance of counsel often allege that they retained representation for the duration of immigration proceedings—meaning that the practitioner who agreed to represent the client consented to carry out the terms of the client-practitioner agreement before the immigration judge and, if necessary, the Board—but that the practitioner in their case failed to submit an appeal brief to the Board after indicating in the Notice of Appeal that a brief would be filed. In most cases, this failure will result in a dismissal of the alien's case and a deportation or removal order will be issued as the final agency decision. If the practitioner had agreed to represent the client not only before the immigration judge but also with respect to an appeal to the Board, the practitioner's negligence or misconduct in failing to file a brief resulted in the client's objectives being thwarted in such instances. Practitioners who fail to abide by the scope of representation will be subject to discipline under this ground.

This rule also requires that the practitioner and client reach a “mutually acceptable resolution” should any disagreements arise, and that if such efforts are unavailing in the face of a fundamental disagreement, the practitioner is allowed to request a withdrawal from the case under the applicable standards. See 8 CFR 1003.17(b) (allowing for a withdrawal or substitution of an attorney or representative when an immigration judge permits such a request based on an oral or written motion) and 1003.38(g) (allowing for a withdrawal or substitution of an attorney or representative when the Board permits such a request based on a written motion); see also Matter of Rosales, 19 I&N Dec. 655, 657 (BIA 1988) (stating that a motion to withdraw “should include evidence that [the practitioner] attempted to advise the respondent, at his last known address, of the date, time, and place of the scheduled hearing,” and “provide the immigration judge with the respondent's last known address. * * *”).

One of the primary goals of this proposed rule is to preserve the fairness and integrity of the adjudicative process in immigration proceedings. However, this goal cannot be achieved when a practitioner fails to adhere to his or her clients' objectives by effectively withdrawing from their case without providing them ample notice so that they can retain another practitioner to represent them. Indeed, improper withdrawals in immigration proceedings have been discussed by various federal circuit courts of appeals, which have generally held that such withdrawals violate a client's right to receive a fundamentally fair hearing. See, e.g., Gjeci v. Gonzales, 451 F.3d 416, 422 (7th Cir. 2006) (stating that “a lawyer's professional responsibility upon withdrawal includes the duty to take reasonable steps to avoid foreseeable prejudice to the rights of the client, including giving notice to the client, allowing time for the employment of other counsel, and delivering to the client all [necessary] papers and property. * * *”) (citing ABA Model Rule 1.16(d) (2004)). Furthermore, immigration judges have stated that they are frequently forced to reschedule cases due to a practitioner's failure to inform the client of his or her possible nonappearance at a scheduled hearing or to properly request a withdrawal from the case. Given the considerable caseloads that immigration judges are required to manage, a practitioner's failure to appear or improper withdrawal in a case not only may result in significant harm to the client. Such conduct may also impede the immigration judges', and consequently the agency's, ability to efficiently adjudicate cases, causing unnecessary delays for other parties seeking to have their cases timely heard and adjudicated.

This rule proposes to add a new ground for disciplinary sanction at section 1003.102(q). In this instance, the proposed rule incorporates language from ABA Model Rule 1.3, which pertains to acting with “reasonable diligence and promptness in representing a client,” and language from the comments to Model Rule 1.3 relating to: (1) Controlling and managing one's workload so that each matter can be handled competently; (2) acting with reasonable promptness particularly with respect to time and filing restrictions; and (3) continuing the representation to the conclusion of all matters undertaken for the client, unless the relationship is terminated pursuant to 8 CFR 1003.17(b) for proceedings before the immigration courts or 8 CFR 1003.38(g) for proceedings before the Board. See ABA Model Rule 1.3.

Given that most practitioners appearing in immigration matters exemplify high standards of professional conduct, this provision will primarily affect those whose conduct raises questions about their fitness to represent aliens in such matters. Nonetheless, the gravity of the consequences of failing to act diligently cannot be overstated in this context, as immigration proceedings are meant to determine who is allowed to lawfully remain in this country. Diligence is a particularly important aspect of representing clients in immigration proceedings because those proceedings are subject to numerous filing requirements and other time-sensitive conditions. Unfortunately, in too many cases, an alien's interests may be compromised due to a practitioner's failure to observe time-related and filing considerations. Indeed, complaints of ineffective assistance of counsel often include allegations regarding a practitioner's failure to timely submit notices, applications, briefs, or other relevant matters pursuant to recognized rules and practices governing filing requirements. See, e.g., 8 CFR 1003.38(b) (requiring that the Notice of Appeal be filed with the Board within 30 days after an immigration judge issues his or her decision); 8 CFR 1003.2(b)(2) (requiring that a motion to reconsider be filed within 30 days after the mailing of the Board's decision); 8 CFR 1003.2(c)(2) (requiring that a motion to reopen be filed within 90 days after the date of the final administrative decision). In such instances, a client's interests might be seriously compromised if a practitioner fails to meet these deadlines.

The duty to act diligently will often function in tandem with the scope of representation, as discussed above. To the extent of the agreed-upon scope of representation, the practitioner is required to handle all matters both competently and in a timely manner, and disputes with the client do not obviate his or her duties in this regard unless the relationship is formally terminated, as described above.

Thus, given that the duty to diligently represent a client exemplifies a practitioner's most basic duty to execute the terms of the representation within a reasonable time, combined with the fact that the appeals process and most applications for relief operate under time-sensitive constraints, this proposed addition to the sanctionable grounds of misconduct represents a significant measure to safeguard the public against negligent and defective representation.

This rule proposes to add a new ground for disciplinary sanction at section 1003.102(r). Here, the proposed rule incorporates language from ABA Model Rule 1.4, which deals with the duty to maintain communication with the client, and language from the comments on Model Rule 1.4 relating to “Communicating with Client.” See ABA Model Rule 1.4. Specifically, this duty includes (1) promptly informing and consulting with the client in any matter when his or her informed consent is reasonably required; (2) reasonably consulting with the client about the means by which the client's objectives are to be accomplished; (3) keeping the client reasonably informed about the status of the matter; and (4) promptly complying with reasonable requests for information. Id. This proposed rule also mandates that when a practitioner's prompt response is not feasible, he or she, or a member of his or her staff, “should acknowledge receipt of the request and advise the client when a response may be expected.”

A practitioner's duty to maintain communication with a client is of fundamental importance. For instance, some practitioners fail to inform clients of scheduled hearings. In addition, negligence in discussing relevant facts and issues often prevents a client's objectives from being met. Ineffective assistance of counsel claims routinely involve the failure of the practitioner to meet with the client sufficiently in advance of a scheduled hearing to review material and substantive issues. And some practitioners subject clients to inadequate impromptu meetings that occur immediately before the time in which testimony by the client is to be presented to the immigration judge. Often, such poor and insufficient communication with a client not only jeopardizes the client's case but also undermines the integrity of the administrative process, which requires an examination of all relevant information while giving sufficient opportunities to the respective parties to present necessary and relevant evidence. Communications with a client should be scheduled sufficiently in advance to provide proper notice of the date and time of scheduled hearings, allow proper preparation for the hearing, and permit submission of motions, applications, evidence, and other matters in compliance with applicable deadlines, including advance filing deadlines set by the immigration judge. Finally, given the nature of immigration proceedings, the regulation makes clear that it is the obligation of the practitioner to ensure that all necessary communications are in a language that the client understands.

This rule proposes to add a new ground for disciplinary sanction at section 1003.102(s). In this instance, the proposed rule incorporates language from ABA Model Rule 3.3, which deals with, inter alia, the duty to “disclose to the tribunal legal authority in the controlling jurisdiction known to the practitioner to be directly adverse to the position of the client and not disclosed by opposing counsel.” See ABA Model Rule 3.3. This rule is meant to deter a practitioner from neglecting to cite specific legal authority to the adjudicator that is known to be adverse to a client's position. Adequate representation requires an individualized assessment of a given client's factual history and the legal issues involved in his or her claim, while specifically addressing case law or other legal standards that are contrary to such a claim. Representation that fails to disclose such integral information undermines the purpose and credibility of the administrative process, and undermines the level of trust and confidence that a client has toward a practitioner.

This rule proposes to add a new ground for disciplinary sanction at section 1003.102(t). This ground of the proposed rule is patterned after language in Rule 11 of the Federal Rules of Civil Procedure (FRCP), which requires that all pleadings, motions, or other papers submitted to a court be signed by at least one attorney of record, or when the client is unrepresented, by the party. In each case where the alien is represented, this proposed rule requires that “every pleading, application, motion, or other filing * * * be signed by the practitioner of record in his or her individual name.”

In this regard, the proposed rule subjects a practitioner to sanctions should he or she fail to submit a signed and completed Notice of Entry of Appearance as Attorney or Representative when the practitioner has “prepared, completed, or otherwise participated in the completion or submission of any pleading, application, motion, or other filing, and * * * [h]as been deemed to engage in a pattern or practice of failing to submit such Forms as required.” This includes the submission of Form EOIR-28, as required by § 1003.17(a) for cases pending before an immigration judge and Form EOIR-27, as required by § 1003.3(a)(3), for appeals filed with the Board.

This provision is intended to address the growing problem of practitioners who seek to avoid the responsibilities of formal representation by routinely failing to submit the required notice of entry of appearance forms. Furthermore, the difficulties in pursuing a practitioner for discipline for participating in the preparation of false or misleading documents are apparent when the practitioner fails to submit a completed notice of entry of appearance form.

The United States Court of Appeals for the Ninth Circuit has recognized that the notice of appearance requirement at 8 CFR 1003.38(g) serves important purposes. See Singh v. INS, 315 F.3d 1186, 1189 (9th Cir. 2003) (noting that the Board “has a substantial interest in assuring that, at any given time, there is no ambiguity as to who has been given, and who has accepted, the responsibility of representing a party before it.”). Pursuant to the regulations, “the notice of appearance constitutes an affirmative representation by the purported representative to the [Board] that he or she is qualified to be a representative under the applicable regulations, that he or she has been authorized by the party on whose behalf he or she appears, and that he or she accepts the responsibility of representation until relieved.” Id. The court also held that a client's due process right to be represented by counsel of his or her choice is not impaired by “reasonable rules of process” that can be satisfied with minimal effort. See id. at 1190-91.

Given that these amendments are meant to advance the level of professional conduct in immigration matters and foster increased transparency in the client-practitioner relationship, the Department does not believe that a practitioner who agrees to undertake a client's case—thereby causing the client to reasonably rely on his or her claims as to the competency of such representation—should be able to avoid the legal obligations that flow from such a relationship. Thus, any practitioner who accepts responsibility for rendering immigration-related services to a client should be held accountable for his or her actions, including the loss of the privilege of practicing before the immigration judges and the Board, when such conduct fails to meet the minimal standards of professional conduct described in section 1003.102. In this regard, these provisions are similar to the policies of the Internal Revenue Service and other federal agencies that require signatures of professionals retained to assist in the filing of various forms and applications. In this context, the goals of incorporating such measures include accountability for the preparer and presenter of documents that are submitted to the government and the elimination of fraudulent practices that undermine a client's ability to seek recourse against a practitioner when the practitioner fails to formally acknowledge representation and subsequently provides ineffective assistance of counsel or otherwise engages in misconduct.

This rule proposes to add a new ground for disciplinary sanction at section 1003.102(u) with respect to filings made to an adjudicator. In such circumstances, the proposed rule will subject a practitioner to sanctions if he or she “repeatedly files notices, motions, briefs, or claims that reflect little or no attention to the specifics of a client's case, but rather rely on boilerplate language indicative of a substantial failure to competently and diligently represent the client.” This addition to the grounds of sanctionable misconduct is being proposed because of the frequency with which this kind of behavior occurs and to ensure that practitioners are fully aware that such conduct is considered inappropriate and unacceptable.

The Board has experienced situations in which the same practitioner repeatedly, on behalf of different clients, files boilerplate briefs and motions, with no recitation of the specific facts and little or no application of law to the facts of a case. Moreover, the Board has experienced situations in which the same practitioner repeatedly submits appellate briefs that are nearly identical, with little or no regard for the specific facts in his or her client's case. EOIR has also observed that in these situations, the practitioners often fail to brief the issues that are critical to their client's case.

Practitioners who engage in this behavior may be subject to sanctions when the behavior indicates a substantial failure to competently and diligently represent the client. See, e.g., ABA Model Rules 1.1, 1.3, and proposed § 1003.102(o). While such behavior may be subject to sanctions under other grounds, the Department believes that a separate category for practitioners who repeatedly engage in this behavior will tend to deter practitioners from taking advantage of clients who lack the knowledge or language skills to protect themselves. This additional category will also enhance the government's ability to preserve the integrity of immigration matters as well as prevent abuse of the administrative process.

Section 1003.103(a) allows for immediate suspension of a practitioner who has been convicted of a serious crime, or an attorney who has been disbarred or suspended or has resigned with an admission of misconduct. This rule proposes to revise section 1003.103(a)(1) to clarify that immediate suspension under this section may be imposed against an attorney placed on an interim suspension in state licensing authority or federal court discipline proceedings pending a final resolution of the underlying disciplinary matter. Certain misconduct poses such an immediate threat to the public that a state licensing authority or federal court will immediately suspend an attorney pending final determination of the ultimate discipline to be imposed. An attorney who is thus restricted by a state licensing authority or federal court in the practice of law is not authorized to represent individuals pursuant to 8 CFR 1292 (representation and appearances). Accordingly, this proposed rule clarifies the existing regulation to ensure conformity with the rules on representation and appearances, and also to ensure that individuals in immigration proceedings are sufficiently protected from practitioners who engage in the most egregious misconduct. Further, we propose to remove the requirement that an attorney resign with an admission of misconduct and instead add a new standard, which permits an immediate suspension when an attorney resigns while a disciplinary investigation or proceeding is pending. This change is consistent with our proposal to modify section 1003.102(e) as explained earlier.

This rule proposes to revise section 1003.103(a)(2) to clarify that notices of immediate suspensions may be posted publicly. This change is proposed to ensure consistency with 8 CFR 1003.106(c), which currently provides that notice of disciplinary sanctions may be posted publicly, and corrects an oversight in the prior publication of the rule.

Section 1003.103(b) provides that summary disciplinary proceedings shall be initiated “promptly” against a practitioner who has been convicted of a serious crime, or an attorney who is subject to a final order of suspension or disbarment or who has resigned with an admission of misconduct. In reciprocal discipline cases (when an attorney has already been suspended or disbarred), summary disciplinary proceedings can only be initiated by EOIR once a final order has been issued in the state licensing authority or federal court disciplinary proceeding. 8 CFR 1003.102(e)(1). Such state licensing authority or federal court disciplinary proceedings can sometimes take months, if not years, to complete. Because EOIR summary disciplinary proceedings found at 8 CFR 1003.103(b) require the submission of a certified copy of the final order from the licensing state or federal court, EOIR cannot commence those proceedings until the underlying disciplinary process has been completed. Therefore, this rule proposes to revise § 1003.103(b) to clarify that EOIR summary disciplinary proceedings will be promptly commenced upon receipt of a certified copy of the final decision of the state licensing authority or federal court. Consistent with the proposed changes to §§ 1003.102(e) and 1003.103(a)(1), we propose to modify this provision by changing the basis for summary disciplinary proceedings from a resignation with an admission of misconduct to a resignation while a disciplinary investigation or proceeding is pending.

Section 1003.103(b)(2)—in addition to §§ 1003.106(a)(1)(iv), 1003.106(b), and 1003.107(b)(1)—currently employs a burden of proof that requires the practitioner, counsel for the government, or adjudicating official to demonstrate certain aspects of the disciplinary proceeding by “clear, unequivocal, and convincing evidence.” This proposed rule would amend the burden of proof in these instances by removing the term “unequivocal” in order to conform with the standard of “clear and convincing evidence” that is currently used by immigration judges and the Board in, inter alia, determining deportability. See section 240(c)(3) of the Act, 8 U.S.C. 1229a(c)(3). This change in the burden of proof was originally mandated by section 304 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), which removed the term “unequivocal” from section 240(c)(3) of the Act. See id. (stating that the government “has the burden of establishing by clear and convincing evidence that * * * the alien is deportable”). Further, the current rule at § 1003.106(a)(1)(v) states that “[d]isciplinary proceedings shall be conducted in the same manner as Immigration Court proceedings as is appropriate. * * *” See 8 CFR 1003.106(a)(1)(v). Thus, in order to provide a disciplinary process that corresponds to existing procedures and burdens of proof, as well as authorize adjudicating officials to utilize prevailing standards and terminology in the course of their decisionmaking, this rule proposes to eliminate the “unequivocal” language in the aforementioned sections. While such a change likely will not result in much, if any, measurable effect, it is appropriate to maintain consistency with existing procedures in proceedings before the immigration judges to allow all parties to operate under a familiar and widely accepted framework.

Section 1003.104(d) provides that EOIR shall make a referral to the Inspector General and, if appropriate, to the FBI of credible information or allegations of criminal conduct involving a practitioner. In the light of experience, and the transfer of the authority of the former INS to DHS, this rule proposes to revise section 1003.104(d) also to provide for referral of such information or allegations to DHS, the U.S. Attorney, or other law enforcement agency.

Section 1003.105 provides that EOIR will serve a Notice of Intent to Discipline, containing a statement of the charge(s) and a preliminary inquiry report, if sufficient evidence exists to warrant charging a practitioner with professional misconduct. We propose to modify this section regarding service of the Notice of Intent to Discipline and to limit the circumstances under which we will serve a preliminary inquiry report with a Notice of Intent to Discipline. We also plan to divide this section into two subparagraphs. Finally, we plan to specify that we will serve a copy of the Notice of Intent to Discipline on the practitioner who was the subject of the preliminary inquiry, and that the Office of the General Counsel for EOIR will file the Notice of Intent to Discipline with the Board.

Section 1003.105 currently states that the Office of the General Counsel for EOIR will serve a Notice of Intent to Discipline in the manner specified in 8 CFR 103.5a. Although § 103.5a was originally promulgated when former INS was part of the Department of Justice, section 103.5a is now a DHS regulation. Accordingly, we are removing the cross-reference to a DHS regulation and replacing it with a full text explanation of how we will serve a Notice of Intent to Discipline. For this same reason and as indicated below, we are proposing to delete two cross-references to § 103.5a that appear in § 1003.106, and instead cross-reference existing EOIR regulations concerning service.

We propose to state that service of a Notice of Intent to Discipline will be made either by certified mail to the practitioner's last known address or personal delivery. As proposed, a practitioner's last known address will be the address that EOIR has on record for the practitioner if the practitioner is representing a party before EOIR on the date the Notice of Intent to Disqualify is served. If the practitioner does not have an active case before EOIR, the last known address of the practitioner would depend on the practitioner's status. If the practitioner is an attorney, then the last known address would be the address that the attorney's state licensing authority has on record for the attorney. The last known address for an accredited representative would be that of the recognized organization with which the accredited representative is affiliated. Finally, the last known address for an accredited official would be the embassy of the foreign government that employs the accredited official.

We also propose to limit the circumstances under which we will prepare and serve a copy of a preliminary inquiry report with the Notice of Intent to Disqualify. A preliminary inquiry report summarizes the source of any information uncovered in the investigation of a disciplinary complaint, including the administrative record of immigration proceedings, a record of state licensing authority or federal court disciplinary proceedings, or a record of criminal conviction. In summary disciplinary cases brought either as a result of state licensing authority or federal court disciplinary proceedings, or criminal convictions, the preliminary inquiry document provides no additional information that is not also contained in the Notice of Intent to Discipline. Therefore, this rule proposes to revise § 1003.105(a) to state that in summary disciplinary proceedings EOIR is not required to file a preliminary inquiry report along with the Notice of Intent to Discipline.

Section 1003.106 sets forth hearing procedures for disciplinary proceedings. In summary discipline cases brought either as a result of state licensing authority or federal court disciplinary proceedings or criminal convictions, the underlying basis to impose sanctions against a practitioner already has been established via a disciplinary or criminal proceeding. In such cases, there may be no need to re-litigate or replicate the factual findings given that such authorized tribunals or agencies have already made a finding of misconduct, or a violation of criminal law which is often tantamount to a finding of misconduct. Thus, in order to promote efficiency and avoid conducting unnecessary evidentiary hearings, this rule proposes to amend the language in 8 CFR 1003.105(c)(3) and 8 CFR 1003.106 to provide that a hearing will be held in disciplinary cases when a practitioner can demonstrate that such a hearing is warranted.

Specifically, when a practitioner who is subject to summary disciplinary proceedings pursuant to § 1003.103(b) requests a hearing, he or she must make a prima facie showing either that “[h]e or she can rebut the presumption of professional misconduct by establishing one or more of the exceptions set forth in [sections] 1003.103(b)(2)(i)-(iii)” or that “[m]itigating factors exist and should be considered with regard to the level of discipline to be imposed.” The proposed rule also retains the provision that the opportunity for a hearing will be deemed waived when such a request is not made.

Sections 1003.105(d)(2) and 1003.106(c) contain provisions stating that any final order imposing discipline shall take effect no sooner than fifteen days from the date of the order to provide disciplined practitioners an opportunity to withdraw from pending matters and notify clients. However, in cases in which the Board has already imposed an immediate suspension pursuant to § 1003.103, the practitioner has already ceased practice and has had the opportunity to withdraw from pending immigration matters. Therefore, by the time the Board issues a final order imposing a suspension or expulsion, the practitioner does not need the fifteen-day waiting period, as described above, prior to the effective date of the final order of discipline. Accordingly, this rule proposes to delete the fifteen-day waiting period at 8 CFR 1003.105(d)(2) and 1003.106(c) for cases in which the Board has already imposed an immediate suspension prior to the issuance of a final order of discipline.

As discussed above in conjunction with the proposed changes to § 1003.105, we have decided to delete two cross-references to a DHS regulation, 8 CFR 103.5a, in § 1003.106. We propose to modify § 1003.106 to cross-reference EOIR's existing regulations concerning service.

Section 1003.107 permits a practitioner's reinstatement following an expulsion or suspension provided that the practitioner complies with the procedures set forth in the regulation. This rule proposes to add a paragraph clarifying the practitioner's obligation to renew his or her notice of entry of appearance by filing the appropriate forms in every case in which he or she resumes representation before the Board and the Immigration Courts.

In § 1292.1, paragraph (a)(2) provides that law students and law graduates may represent individuals in proceedings before the immigration judges and the Board. This provision has created some confusion about graduates of foreign law schools who claim to be eligible to practice before EOIR. The rule on appearances by law students and law graduates was promulgated with the intent that such individuals would provide representation only under proper supervision and within the context of pro bono representation sponsored by an accredited law school or a non-profit organization. See 55 FR 49250 (Nov. 27, 1990). This rule was not intended to permit graduates of foreign law schools to practice law before EOIR without becoming duly licensed in the United States. This proposed rule would amend the language at 8 CFR 1292.1(a)(2) to clarify that law students and law graduates must be students and graduates of accredited U.S. law schools.

This proposed rule also removes paragraph (a)(6) of § 1292.1, which refers to foreign attorneys in matters being adjudicated outside the United States. While the corresponding provision in the DHS regulations, 8 CFR 292.1(a)(6), is relevant for foreign attorneys who are involved in DHS adjudications conducted abroad, this provision is not necessary for EOIR regulations since all EOIR adjudications are conducted in the United States.

The Attorney General, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and, by approving it, certifies that this rule will not have a significant economic impact on a substantial number of small entities. This rule affects only those practitioners who practice immigration law before EOIR. This rule will not affect small entities, as that term is defined in 5 U.S.C. 601(6), because the rule is similar in substance to the existing regulatory process.

This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Act of 1996 (5 U.S.C. 804). This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

The Attorney General has determined that this rule is a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review, and, accordingly, this rule has been submitted to the Office of Management and Budget for review.

This rule will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

The provisions of the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this proposed rule because there are no new or revised record keeping or reporting requirements.

For the reasons set forth in the preamble, parts 1001, 1003, and 1292 of title 8 of the Code of Federal Regulations are proposed to be amended as follows:

The Home Mortgage Disclosure Act (HMDA) requires depository and certain for-profit, nondepository institutions to collect, report to regulators, and disclose to the public data about originations and purchases of home mortgage loans (home purchase and refinancing) and home improvement loans, as well as loan applications that do not result in originations (for example, applications that are denied or withdrawn).

HMDA data can be used to help determine whether institutions are serving the housing needs of their communities. The data help public officials target public investment to attract private investment where it is needed. HMDA data also assist in identifying possible discriminatory lending patterns and in enforcing antidiscrimination statutes.

The Board's Regulation C implements HMDA. The data reported under Regulation C include, among other items, application date; loan type, purpose, and amount; the property location and type; the race, ethnicity, sex, and annual income of the loan applicant; the action taken on the loan application (approved, denied, withdrawn, etc.), and the date of that action; whether a loan is covered by the Home Ownership and Equity Protection Act (HOEPA); lien status (first lien, subordinate lien, or unsecured); and loan pricing (rate spread). 1

HMDA and Regulation C were adopted in 1975, and have been amended numerous times over the years. The loan price reporting requirement was added in the most recent amendments and took effect beginning with the collection of data for calendar year 2004. (67 FR 7222, February 15, 2002; 67 FR 30771, May 8, 2002; and 67 FR 43218, June 27, 2002.) Institutions must report the difference between a loan's APR and the yield on Treasury securities of comparable maturity if that difference is 3.0 percentage points or more for a first-lien loan, or 5.0 percentage points or more for a subordinate-lien loan. If the rate spread for a loan is less than the 3.0 or 5.0 percentage point threshold, it is not reported. The Treasury yield used is as of the 15th day of a month most closely preceding the date the loan's interest rate was set by the institution for the final time before closing (rate lock date). The Board provides Treasury yields for various maturities, via the Federal Financial Institutions Examination Council (FFIEC) Web site, to assist institutions in calculating the rate spread.

The Board is proposing a method for determining when price information is reported that is similar in concept to Regulation C's current method but different in the particulars. The proposed rule, like the current rule, would set a threshold above a market rate to trigger reporting. But the market rate the Board is proposing is different, and therefore so is the threshold. Instead of yields on Treasury securities of comparable maturity, the proposed rule would use a survey-based estimate of market rates for the lowest-risk prime mortgages, referred to as the “average prime offer rate,” for comparable types of transactions.

The survey the Board would rely on for the foreseeable future is the Primary Mortgage Market Survey® (PMMS) conducted by Freddie Mac. The Board would conduct its own survey if it became appropriate or necessary to do so. The reporting threshold would be set at 1.5 percentage points above the average prime offer rate for first-lien loans, and 3.5 points for subordinate-lien loans. The lender would report the difference between the transaction's APR and the average prime offer rate on a comparable type of transaction if the difference met or exceeded the threshold.

The proposed amendments are intended to facilitate regulatory compliance by conforming the test for rate spread reporting under Regulation C to the definition of higher-priced mortgage loans under Regulation Z. The proposed amendments will also provide better and more useful pricing data on higher-priced loans reported under Regulation C.

Since the Board adopted Regulation C's reporting benchmark of yields on Treasury securities of comparable maturity, HMDA reporters and others have on various occasions identified shortcomings of this benchmark. Commenters to the January 2008 proposal under Regulation Z (73 FR 1672, January 9, 2008), under which the Board proposed to use Treasury yields as the benchmark to identify higher-priced loans warranting stricter regulations, again identified these shortcomings. Many of these commenters urged the Board to use a benchmark that more closely tracks mortgage rates. They also urged the Board to use the same test for these two purposes under Regulations C and Z, respectively. The Board considered these comments, conducted its own analysis, and concluded that both regulations should rely on a benchmark index that more closely tracks mortgage rates. Accordingly, this proposal would implement essentially the same rule the Board is adopting under Regulation Z.

There are significant advantages to using Treasury yields to set the threshold for reporting price information. Treasuries are traded in a highly liquid market; Treasury yield data are published for many different maturities and can easily be calculated for other maturities; and the integrity of published yields is not subject to question. For these reasons, Treasuries are also commonly used in federal statutes, such as HOEPA, for benchmarking purposes.

As recent events have highlighted, however, using Treasury yields to set the APR threshold for HMDA rate spread reporting has two major disadvantages. The most significant disadvantage is that the spread between Treasuries and mortgage rates changes in the short term and in the long term. Moreover, the comparable Treasury security for a given mortgage loan is quite difficult to determine accurately.

The Treasury-mortgage spread can change for at least three different reasons. First, credit risk may change on mortgages, even for the highest-quality borrowers. For example, credit risk increases when house prices fall. Second, competition for prime borrowers can increase, tightening spreads, or decrease, allowing lenders to charge wider spreads. Third, movements in financial markets can affect Treasury yields but have no effect on lenders' cost of funds or, therefore, on mortgage rates. For example, Treasury yields fall disproportionately more than mortgage rates during a “flight to quality.”

Recent events illustrate how much the Treasury-mortgage spread can swing. The spread averaged about 170 basis points in 2007 but increased to an average of about 220 basis points in the first half of 2008. In addition, the spread was highly volatile in this period, swinging as much as 25 basis points in a week. Thus, the spread may vary significantly from time to time, and long-term predictions of future spreads are highly uncertain.

Changes in the Treasury-mortgage spread can undermine key objectives of the regulation. These changes mean that rate spreads for loans with identical credit risk are reported in some periods but not in others, contrary to the objective of consistent and predictable coverage over time. Moreover, lenders' uncertainty as to when such changes will occur can cause them to set an internal threshold below the regulatory threshold. This may reduce credit availability directly (if a lender's policy is not to make higher-priced loans, to avoid having to report loan pricing for them) or indirectly, by increasing regulatory burden. The recent volatility might lead lenders to set relatively conservative cushions.

Adverse consequences of volatility in the spread between mortgages rates and Treasuries could be reduced simply by setting the regulatory threshold at a high enough level to ensure exclusion of all prime loans. But a threshold high enough to accomplish this objective would likely fail to meet another, equally important objective of covering essentially all of the subprime market. Instead, the Board is proposing to use a benchmark index that more closely follows mortgage market rates, which would make any changes in the spread between mortgage rates and Treasuries largely academic.

The second major disadvantage of using Treasury yields to set the threshold is that the comparable Treasury security for a given mortgage loan is quite difficult to determine accurately. Regulation C determines the comparable Treasury security on the basis of maturity: a loan is matched to a Treasury with the same contract term to maturity. For example, the regulation matches a 30-year mortgage loan to a 30-year Treasury security. This method does not, however, account for the fact that very few loans reach their full maturity, and it causes significant distortions when the yield curve changes shape. 2 These distortions can bias coverage, sometimes in unpredictable ways, and consequently might influence the preferences of lenders to offer certain loan products in certain environments.

As noted above, the Board's objective in setting the rate spread reporting threshold has been to cover subprime mortgages and avoid covering prime mortgages. The same purpose underlies the definition of “higher-priced mortgage loan” the Board has just adopted under Regulation Z. For the reasons discussed in the Regulation Z final rule, the Board believes the definition under Regulation Z, if applied to Regulation C, would better achieve this purpose and ensure more consistent and more useful data. Moreover, using the same definition in both Regulation Z and Regulation C will relieve compliance burdens.

To address the principal drawbacks of Treasury security yields, discussed above, the Board is proposing a rule that relies instead on a rate that more closely tracks rates in the prime mortgage market. Proposed § 203.4(a)(12)(ii) would define an “average prime offer rate” as an annual percentage rate derived from average interest rates, points, and other pricing terms offered by a representative sample of creditors for mortgage transactions that have low-risk pricing characteristics. Comparing a transaction's annual percentage rate to this average offered annual percentage rate, rather than to an average offered contract interest rate, should make reporting more accurate and consistent. If a loan's APR exceeds the average prime offer rate for a comparable transaction by 1.5 or more percentage points for a first-lien loan, or 3.5 or more percentage points for a subordinate-lien loan, the creditor would report the difference. (The basis for selecting these thresholds is explained further in part IV.B. below.) The lender would use the most recently available average prime offer rate as of the date on which the lender sets the rate for the final time before consummation.

To facilitate compliance, the proposed rule and commentary would provide that the Board will derive average prime offer rates from survey data according to a methodology it will make publicly available, and publish these rates in a table on the Internet on at least a weekly basis. This table would indicate how to identify a comparable transaction.

As noted above, the survey the Board intends to use for the foreseeable future is Freddie Mac's PMMS, which contains weekly average rates and points offered by a representative sample of creditors to prime borrowers seeking a first-lien, conventional, conforming mortgage and who would have at least 20 percent equity. The PMMS contains pricing data for four types of transactions: “1-year ARM,” “5/1-year ARM,” “30-year fixed,” and “15-year fixed.” For the two types of ARMs, PMMS pricing data are based on ARMs that adjust according to the yield on one-year Treasury securities; the pricing data include the margin and the initial rate (if it differs from the sum of the index and margin). These data are updated every week and are published on Freddie Mac's Web site ( see http://www.freddiemac.com/dlink/html/PMMS/display/PMMSOutputYr.jsp).

The Freddie Mac PMMS is the most viable option for obtaining average prime offer rates. This is the only publicly available data source that has rates for more than one kind of fixed-rate mortgage (the 15-year and the 30-year) and more than one kind of variable-rate mortgage (the 1-year ARM and the 5/1-year ARM). Having rates on at least two fixed-rate products and at least two variable-rate products supplies a firmer basis for estimating rates for other fixed-rate and variable-rate products (such as a 20-year fixed or a 3/1 ARM).

Other publicly available surveys the Board considered are less suitable for the purposes of this proposal. Only one ARM rate is collected by the Mortgage Bankers Association's Weekly Mortgage Applications Survey and the Federal Housing Finance Board's Monthly Survey of Interest Rates and Terms on Conventional Single-Family Non-Farm Mortgage Loans. Moreover, the FHFB Survey has a substantial lag because it is monthly and reports rates on closed loans. The Board also evaluated two non-survey options involving Fannie Mae and Freddie Mac. One is the Required Net Yield, the prices these institutions will pay to purchase loans directly. The other is the yield on mortgage-backed securities issued by Fannie Mae and Freddie Mac. With either option, data for ARM yields would be difficult to obtain.

These other data sources, however, provide useful benchmarks to evaluate the accuracy of the PMMS. The PMMS has closely tracked these other indices, according to a Board staff analysis. The Board would continue to use them periodically to help it determine whether the PMMS remains an appropriate source of data for average prime offer rates. If the PMMS ceased to be available, or if circumstances arose that rendered it unsuitable for this rule, the Board would consider other alternatives including conducting its own survey.

The Board would use the pricing terms from the PMMS, such as interest rate and points, to calculate an annual percentage rate (consistent with Regulation Z, 12 CFR 226.22) for each of the four types of transactions that the PMMS reports. These annual percentage rates would be the average prime offer rates for transactions of those types. The Board would derive annual percentage rates for other types of transactions from the loan pricing terms available in the survey. The method of derivation the Board would use is being published as part of this proposal ( see Attachment I to this Federal Register notice). When finalized, the method would be published on the Internet along with the table of annual percentage rates.

The Board is proposing a threshold of 1.5 percentage points above the average prime offer rate for a comparable transaction for first-lien loans and 3.5 percentage points for second-lien loans. These thresholds are the same as adopted under Regulation Z's definition of “higher-priced mortgage loan.”

As discussed above, the rate spread reporting requirement was intended to cover the subprime market and generally exclude the prime market; and in the face of uncertainty it is appropriate to err on the side of covering somewhat more than the subprime market. Based on available data, it appears that the existing thresholds capture all of the subprime market and a portion of the alt-A market. 3 Based also on available data, the Board believes that the thresholds it is proposing would cover all, or virtually all, of the subprime market and a portion of the alt-A market. The Board considered loan-level origination data for the period 2004 to 2007 for subprime and alt-A securitized pools. The proprietary source of these data is FirstAmerican Loan Performance. 4 The Board also ascertained from a proprietary database of mostly government-backed and prime loans (McDash Analytics) that coverage of the prime market during the first three quarters of 2007 at these thresholds would have been very limited. The Board recognizes that the recent mortgage market disruption began at the end of this period, but it is the latest period the Board has been able to study in this database.

The Board is proposing a threshold for subordinate-lien loans of 3.5 percentage points. This is consistent with the existing rule under Regulation C, which sets the threshold over Treasury yields for these loans two percentage points above the threshold for first-lien loans. See 12 CFR 203.4(a)(12). The Board recognizes that it would be preferable to set a threshold for second-lien loans above a measure of market rates for second-lien loans, but it does not appear that a suitable measure of this kind exists. Although data are very limited, the Board believes it is appropriate to apply the same difference of two percentage points to the thresholds above market mortgage rates. As noted in the Regulation Z final rule, with rare exceptions, commenters explicitly endorsed, or at least did not raise any objection to, this approach in connection with that rulemaking; the Board is proposing to maintain consistency between the two rules.

The Board recognizes that there are limitations to making judgments about the future scope of this proposed rule based on past data. For example, once a final rule takes effect, the risk premiums for alt-A loans compared to the prime loans reported in the PMMS may be higher than the risk premiums for the period 2004-2007. In that case, coverage of alt-A loans would be higher than an estimate for that period would indicate.

Another important example is prime “jumbo” loans, or loans extended to borrowers with low-risk mortgage pricing characteristics, but in amounts that exceed the threshold for loans eligible for purchase by Freddie Mac or Fannie Mae. The PMMS collects pricing data only on loans eligible for purchase by one of these entities (“conforming loans”). Prime jumbo loans have always had somewhat higher rates than prime conforming loans, but the spread has widened significantly and become much more volatile since August 2007. If this spread remains wider and more volatile when this proposal takes effect in final form, the rule would cover a significant share of transactions that would be prime jumbo loans. While covering prime jumbo loans is not the Board's objective, the Board does not believe that it should set the threshold at a higher level to avoid what may be only temporary coverage of these loans relative to the long time horizon for this rule.

Credit risk and liquidity risk can vary by many factors, including geography, property type, and type of loan. This may suggest to some that different thresholds should be applied to different classes of transactions. This approach would make the regulation inordinately complicated and subject it to frequent revision, which would not be in the interest of creditors, investors, or consumers. Although the simpler approach the Board is proposing—just two thresholds, one for first-lien loans and another for subordinate-lien loans—has its disadvantages, the Board believes they would be outweighed by its benefits of simplicity and stability.

Regulation C currently determines the threshold as of the 15th of the month before the rate is locked. This proposal would determine the threshold for a transaction on a more current basis. The proposal would require a creditor to use the most recent average prime offer rate available as of the rate lock date. As the PMMS is updated weekly, the Board will also update average prime offer rates weekly. The Board anticipates that using a more current benchmark will improve reporting accuracy without increasing regulatory burden.

Under the final rule published simultaneously with this proposal, the Regulation Z amendments concerning higher-priced mortgage loans take effect on October 1, 2009. The Board contemplates that any final amendments to Regulation C under this rulemaking would take effect for data collection beginning January 1, 2009. Switching rules for HMDA rate spread reporting in the middle of a calendar year would make the data more difficult to use and interpret. If the Board were to make it effective January 1, 2010, lenders would be required to report HMDA data in 2009 using the old (current) rule based on Treasury security yields while, in October through December of 2009, determining applicability of the Regulation Z higher-priced mortgage loan provisions using the new rule based on average prime offer rates. An effective date of January 1, 2009 would ensure that lenders would not need to maintain two separate systems for determining higher-priced mortgage loans during the final quarter of 2009.

If a loan were consummated on or after January 1, 2009, the lender would be required to determine whether the loan is higher-priced (and, if so, report the rate spread) using the new rule, while if the loan were consummated before January 1, 2009 the lender would continue to use the old (current) rule. The Board recognizes that some loans that close in 2009 will have had their rates locked sometime in 2008 (or earlier). Thus, some loans that close in 2009 (and accordingly would be reported on a lending institution's HMDA report for calendar year 2009) would require a creditor to use pre-2009 average prime offer rates to determine their rate spreads. To address this issue, the Board would publish average prime offer rates on the Internet dating from the beginning of October 2008, which lenders could use for loans that are locked in on or after October 1, 2008 but originated in 2009. Lenders that locked in a rate prior to October 1, 2008 but originated the loan in 2009 (or later) would determine whether and how to report price information for such loans using the old (current) rule. To help data users identify these loans, the Board contemplates adding a notation to each such loan in the publicly available data report for 2009 (based on application date, as the closest available proxy for rate-lock date). The Board expects such loans to comprise a very small percentage (one percent or less) of the 2009 HMDA data, based on staff analysis of past years' data.

The Board requests comments on (1) the proposal to change the reporting benchmark from Treasury yields to average prime offer rates; (2) the Board's plan to use the Freddie Mac PMMS to estimate average prime offer rates, including comment on whether there are more appropriate sources of data; (3) the method the Board proposes to use to derive average prime offer rates from the PMMS data, which is being published as Attachment I to this proposal; (4) the proposed 1.5 and 3.5 percentage point thresholds; (5) the proposed timing for rate spread determination (rate-lock date, with weekly updating of the average prime offer rate benchmarks); (6) the proposed effective date of these amendments; and (7) the costs and benefits of the proposal generally.

In accordance with section 3506 of the Paperwork Reduction Act of 1995 (44 U.S.C. Ch. 35; 5 CFR part 1320 appendix A.1), the Board has reviewed the proposed rule under the authority delegated to the Board by Office of Management and Budget (OMB). The Board may not conduct or sponsor, and an organization is not required to respond to, this information collection unless it displays a currently valid OMB number. The OMB control number is 7100-0247.

The information collection requirements that would be revised by this rulemaking appear in 12 CFR part 203. The information collection is mandatory under 12 U.S.C. 2801-2810. It generates data used to help determine whether financial institutions are serving the housing needs of their communities, to help target investment to promote private investment where it is needed, and to provide data to assist in identifying possibly discriminatory lending patterns and in enforcing antidiscrimination statutes.

The respondents are all types of financial institutions that meet the tests for coverage under the regulation. Under the Paperwork Reduction Act (PRA), however, the Board accounts for the burden of the paperwork associated with the regulation only for state member banks, their subsidiaries, subsidiaries of bank holding companies, U.S. branches and agencies of foreign banks (other than federal branches, federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601-604a; 611-631). Other federal agencies account for the paperwork burden for the institutions they supervise. Respondents must maintain their loan/application registers and modified registers for three years, and their disclosure statements for five years.

The Board has determined that the data collection and reporting are required by law; completion of the loan/application register, submission to the Board, and disclosure to the public upon request are mandatory. The data, as modified according to the regulation, are made publicly available and are not considered confidential. Information that might identify an individual borrower or applicant is given confidential treatment under exemption 6 of the Freedom of Information Act (5 U.S.C. 552(b)(6)).

The current total annual burden to comply with the provisions of Regulation C is estimated to be 156,910 hours for 680 Board-regulated institutions that are deemed to be respondents for the purposes of the PRA. The reporting, recordkeeping, and disclosure burden for this information collection is estimated to vary from 12 to 12,000 hours per respondent per year, with an average of 242 hours for state member banks and an average of 192 hours for mortgage banking subsidiaries and other respondents. This estimated burden includes time to: Gather and maintain the data needed, review the instructions, and complete the register. The Board estimates that respondents regulated by the Board would take, on average, 16 hours (two business days) to revise and update their systems to comply with the proposed threshold for rate spread reporting. This one-time revision would increase the burden by 10,880 hours to 167,790.

Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the Board's functions; including whether the information has practical utility; (2) the accuracy of the Board's estimate of the burden of the proposed information collection, including the cost of compliance; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collection of information should be sent to Michelle Shore, Federal Reserve Board Clearance Officer, Division of Research and Statistics, Mail Stop 151-A, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments sent to the Office of Management and Budget, Paperwork Reduction Project (7100-0247), Washington, DC 20503.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) (RFA) generally requires an agency to perform an assessment of the impact a rule is expected to have on small entities. However, under section 605(b) of the RFA, 5 U.S.C. 605(b), the regulatory flexibility analysis otherwise required under section 604 of the RFA is not required if an agency certifies, along with a statement providing the factual basis for such certification, that the rule will not have a significant economic impact on a substantial number of small entities. Based on its analysis and for the reasons stated below, the Board believes that this proposed rule will not have a significant economic impact on a substantial number of small entities. A final regulatory flexibility analysis will be conducted after consideration of comments received during the public comment period.

The Board is proposing amendments to Regulation C to make the rules for reporting higher-priced loans in the annual Home Mortgage Disclosure Act (HMDA) data consistent with the definition of higher-priced loan in the amendments to Regulation Z (Truth in Lending) that the Board is adopting in final form. The amendments are intended to reduce regulatory burden by allowing mortgage lenders to use a single definition of higher-priced loan, rather than different definitions under the two regulations. The amendments are also intended to result in more useful HMDA data because the new definition of higher-priced loan uses a survey-based estimate of market mortgage rates as the benchmark for reporting.

The purpose of HMDA is to provide to public officials, and to the public, information to enable them to determine whether lending institutions are fulfilling their obligations to serve the housing needs of their communities. The purpose of the law is also to assist public officials in determining the distribution of public sector investments in a manner designed to improve the private investment environment. HMDA data also assist in identifying possibly discriminatory lending patterns and in enforcing antidiscrimination statutes. 12 U.S.C. 2801(b). HMDA authorizes the Board to prescribe regulations to carry out the purposes of the statute. 12 U.S.C. 2804(a).

The act expressly states that the Board's regulations may contain “such classifications, differentiations, or other provisions * * * as in the judgment of the Board are necessary and proper to effectuate the purposes of [HMDA], and prevent circumvention or evasion thereof, or to facilitate compliance therewith.” 12 U.S.C. 2804(a). The Board believes that the amendments to Regulation C discussed above are within Congress's broad grant of authority to the Board to adopt provisions that carry out the purposes of the statute.

The proposed rule would apply to all institutions that are required to report under HMDA. The Board does not have complete data on the asset sizes of all HMDA reporting institutions. Through data from Reports of Condition and Income (“call reports”) of depository institutions and certain subsidiaries of banks and bank holding companies, however, the Board can determine numbers of small entities among those categories. For the majority of HMDA respondents that are non-depository institutions exact asset size information is not available. The Board has somewhat reliable estimates based in large measure on self-reporting from approximately five percent of the non-depository respondents. Based on the best information available for each category of respondent, the Board makes the following estimate of small entities that would be affected by this proposal: Of all HMDA respondents in 2008 (for 2007 activities), which number approximately 8,625, approximately 4,520 had total domestic assets of $165 million or less and thus would be considered small entities for purposes of the Regulatory Flexibility Act.

The Board believes no federal rules duplicate, overlap, or conflict with the proposed revisions to Regulation C. However, the Board solicits comment on this matter.

The Board solicits comment on any significant alternatives that may provide additional ways to reduce regulatory burden associated with this proposed rule.

Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the Board to use “plain language” in all proposed and final rules published after January 1, 2000. The Board invites comments on whether the proposed rules are clearly stated and effectively organized, and how the Board might make the proposed text easier to understand.

Certain conventions have been used to highlight the proposed revisions to the text of Regulation C, Appendix A, and the Official Staff Commentary. New language is shown inside bold arrows, while language that would be deleted is set off in brackets.

For the reasons set forth in the preamble, the Board proposes to amend 12 CFR part 203 as follows:

a. Prompt Corrective Action. In 1998, Congress enacted the Credit Union Membership Access Act (“CUMAA”), Public Law 105-219, 112 Stat. 913 (1998). CUMAA amended the Federal Credit Union Act to mandate a system of regulatory capital standards called “prompt corrective action” (“PCA” or “regulatory capital”) consisting of minimum capital standards and corresponding remedies to improve the net worth of federally-insured “natural person” credit unions. 12 U.S.C. 1790d et seq. In 2000, the NCUA Board implemented a comprehensive system of PCA primarily under part 702. 1 12 CFR 702 et seq.

A credit union's “net worth ratio” determines its classification among five statutory net worth categories. 12 U.S.C. 1790d(c); 12 CFR 702.102. As a credit union's classification among these categories declines, it is subject to an expanding range of PCA remedies to restore its net worth. These remedies consist of four mandatory supervisory actions prescribed by statute, 12 U.S.C. 1790d(e)-(g), and a series of discretionary supervisory actions developed by NCUA. 12 CFR 702.204(b).

CUMMA defines a natural person credit union's “net worth ratio” as the ratio of its net worth to its total assets. 12 U.S.C. 1790d(o)(3). For regulatory capital purposes, 2 it expressly limits a credit union's net worth to “the retained earnings balance of the credit union, as determined under generally accepted accounting principles [“GAAP”].” 12 U.S.C. 1790d(o)(2)(A) (1998). 3 “Not anticipating the consequences this rule addresses, the CUMAA net worth definition thus incorporated GAAP by reference generally, subject to future amendments and interpretations; it did not incorporate GAAP as a snapshot that preserved what GAAP then prescribed or how it was then interpreted.

b. Financial Reporting of Mergers Between Mutual Enterprises. GAAP pertaining to credit union mergers were originally embodied in the financial reporting rules for business combinations established by the Accounting Principles Board's (“APB”) Opinion No. 16, Business Combinations (1970) (“Opinion 16”). At the time CUMAA mandated PCA, the predominant practice for financial reporting of a credit union merger, whether of natural person or corporate credit unions, was to apply the “pooling method.” That method required an acquiring or continuing credit union (“acquiring credit union”) to combine with its own financial statement components the like components of the merging credit union. Consistent with the limited statutory definition of net worth, that method allowed an acquiring credit union to combine its own retained earnings with that of the merging credit union for purposes of measuring the acquirer's post-merger net worth ratio. The “pooling method” presumed that the retained earnings of the merging credit union flowed forward to the acquirer's financial statement, thus qualifying it as retained earnings of the acquirer.

The “pooling method,” in conjunction with the statutory definition of net worth, provided an incentive to merge because it allowed the acquiring credit union to combine the merging credit union's retained earnings, thus enhancing the acquirer's post-merger net worth. From a regulatory standpoint, the acquisition of an operationally troubled credit union by one that will be well capitalized as a result is a preferable alternative to conserving or liquidating the troubled credit union.

In 2001, the Financial Accounting Standards Board (“FASB”)—successor to the APB—replaced Opinion 16 as the source of GAAP for business combinations other than those between mutual enterprises with its Financial Accounting Statement No. 141, Business Combinations (2002) (“FAS 141”). FAS 141 replaced the “pooling method” of financial reporting of business combinations with the “purchase method” effective in June 30, 2001.

c. Deferment of “Acquisition Method” for Mutual Combinations. For mergers between mutual enterprises (“mutual combinations”) such as credit unions, FASB deferred the 2001 effective date of FAS 141 pending the outcome of its project on Combinations Between Mutual Enterprises, which explored a “differences-based approach” to mutual combinations. FAS 141 at ¶ 60. While the FAS 141 deferment for mutual combinations is pending, Opinion 16 continues to apply, and credit unions continue to use the “pooling method” of financial reporting of credit union mergers. But that deferment will expire at the end of 2008.

In December 2007, FASB decided that its revised method of financial reporting for business combinations should apply equally to mutual combinations and to combinations between other for-profit enterprises. Financial Accounting Statement No. 141(R), Business Combinations (2007) (“FAS 141(R)”) at ¶ 74. FAS 141(R) will apply to mutual combinations that take place in fiscal years beginning after December 15, 2008. In conjunction with the limited statutory definition of net worth, the net effect of FAS 141(R) is to mandate the “purchase method” of financial reporting—which it renamed the “acquisition method”—for credit union mergers, resulting in the exclusion of a merging credit union's retained earnings from the post-merger net worth of an acquiring credit union.

d. Acquisition Versus Pooling Method of Financial Reporting. The “acquisition method” of financial reporting for credit unions would require the fair value of the net assets acquired in a merger to be classified as a direct addition to the acquirer's equity, not as an addition to its retained earnings. FAS 141(R) at ¶ A67. Because credit unions cannot count additions of equity in their net worth—which is limited by definition to GAAP retained earnings—an acquirer's net worth will not increase as the result of a merger. Moreover, the “acquisition method” may well reduce an acquirer's post-merger net worth because, as a ratio of total assets, it will be diluted by the addition and fair valuation of assets ( i.e. , the denominator of the ratio) acquired in the merger.

Whereas the “pooling method” of financial reporting, when applied in conjunction with the statutory definition of net worth, provided an incentive to merge, the “acquisition method” would have exactly the opposite effect. The acquiring credit union's net worth ratio not only would not increase as a result of a merger, it probably would decline. The risk of being demoted to a lower PCA net worth category, and in turn being exposed to the mandatory and discretionary supervisory actions of PCA, would naturally discourage interest in mergers, thus limiting their availability to rescue troubled credit unions.

e. Statutory Expansion of Net Worth Definition . Concerned that FAS 141(R), in conjunction with the statutory limitation on net worth, would stifle credit union mergers, Congress enacted the Financial Services Regulatory Relief Act, Public Law 109-351, 120 Stat. 1966 (“2006 Relief Act”) in 2006. Section 504 of the 2006 Relief Act expanded the original PCA definition of a natural person credit union's “net worth” to include “any amounts that were previously retained earnings of any other credit union with which [it] has combined.” 12 U.S.C. 1790d(o)(2)(A) (2006). The express purpose of section 504 is to allow the acquiring credit union “to follow the new FASB rule while still allowing the capital of both credit unions to flow forward as regulatory capital and thus preserve the incentive for desirable credit union mergers.” Staff of Senate Comm. on Banking, Housing and Urban Affairs, 109th Cong., Section-By-Section Analysis of Financial Services Regulatory Relief Act of 2006 (Comm. Print 2006) at 3. 4 To conform to the effective date of FAS 141(R), the modifications to part 702 implementing section 504 must take effect in final form on December 31, 2008, so that they will apply to natural person credit union mergers taking place after that date.

The following table compares the financial reporting and regulatory capital consequences of a credit union merger under present GAAP (pre-FAS 141(R)) and under new GAAP (post-FAS 141(R)) both with and without the proposed modifications to part 702:

Corporate credit unions are exempt from PCA, 12 U.S.C. 1790d(m), but they are subject to a minimum “capital ratio” and to a requirement to calculate their “retained earnings ratio” on a monthly basis, both as provided by regulation.

a. Minimum Capital Ratio . A corporate credit union's “capital ratio” is defined as its capital (numerator) divided by its “moving daily average net assets” (denominator). 12 CFR 704.2. Its “capital” consists of the sum of its retained earnings, paid-in capital, and membership capital. Id. Of these, retained earnings and paid-in capital constitute “core capital.” Id. A corporate credit union is required to maintain a minimum capital ratio of four percent (4%) calculated at least monthly. 12 CFR 704.3(d). When its capital ratio falls and remains below that minimum, the corporate credit union is subject to remedies that resemble some of the mandatory and discretionary supervisory actions of PCA ( e.g. , “capital restoration plan,” earnings retention requirement, and “capital directives”). 12 CFR 704.2(g), (h) and (i).

b. Retained Earnings Ratio . A corporate credit union's “retained earnings ratio” is defined as its retained earnings divided by its moving daily average net assets. 12 CFR 704.2. A corporate credit union is required to calculate its “retained earnings ratio” on a monthly basis. 12 CFR 704.3(i). If the retained earnings ratio is less than 2 percent, the credit union becomes subject to an earnings retention requirement. Id .

NCUA welcomes public comment on this proposed rule. To facilitate consideration of the public's views, we ask commenters to organize and identify their comments by credit union type (natural person or corporate) or regulation (part 702 or part 704) and by corresponding topic or definition. General comments, if any, should be included in a separately identified section. Please recognize that NCUA does not establish GAAP, does not oversee FASB, does not have the power to reinstate the “pooling method,” and does not have the authority to override or expand limitations and definitions prescribed by law. Therefore, this rulemaking will not address comments advocating any of these actions.

The 2006 Relief Act's redefinition of “net worth” for natural person credit unions is implemented through Part 702's PCA definitions. The present definition of “net worth,” 12 CFR 702.2(f), is reorganized into subsections and includes the following new subsection:

Proposed subsection (3) is not limited in scope to the acquisition by merger of a credit union as an intact legal entity. FAS 141(R) at ¶3d. The definition of “mutual combination” in the second sentence incorporates the GAAP definition of a “business” and a “business combination.” FAS 141(R) at ¶¶3d-e. This allows subsection (3) to apply to transactions (e.g., certain purchase and assumptions) that convey substantially all of the components of a credit union, even though the components together no longer legally constitute a credit union.

The net effect of the modifications to part 702 is to apply FAS 141(R) to natural person credit union mergers for financial reporting purposes, while for PCA purposes replicating the post-merger net worth that would have resulted under the “pooling method.” These modifications affect only the measurement of a credit union's post-merger regulatory capital under PCA; financial reporting in its Call Report still must adhere to GAAP (i.e., acquirer's retained earnings balance must be reported consistent with GAAP). 12 U.S.C. 1782(a)(6)(C)(i).

The proposed rule modifies part 704 [Corporate Credit Unions] to expand the definitions associated with corporate credit union capital to correspond with the statutory expansion of net worth for natural person credit unions. As such, the definition of the “capital” and “core capital” of a corporate credit union that acquires another credit union by merger is modified to include “the retained earnings of the acquired credit union, or of an integrated set of activities and assets, at the point of acquisition.” The same modification is made to the definition of a corporate credit union's “retained earnings ratio.” Further, to encompass not only the acquisition of a credit union as an intact legal entity, but also as a group of credit union components that together are no longer legally constituted as such, the proposed rule adds a separate definition of “mutual combination” that, like proposed section 702.2(f)(3), incorporates the GAAP definition of “business” and “business combination.”

The NCUA Board has greater flexibility to define corporate credit union capital than the 2006 Relief Act allows for the net worth of natural person credit unions. 12 U.S.C. 1766(a). Therefore, to more closely approximate the regulatory capital result of the “pooling method,” identifiable and unidentifiable intangibles are excluded from the definition of a corporate credit union's “moving daily average net assets” (“MDANA”)—the denominator of the capital ratio. Identifiable intangibles could include existing member relationships (i.e., core deposit intangibles) and unserved portions of a field of membership; unidentifiable intangibles include predominantly goodwill. The purpose of excluding intangibles from the MDANA denominator of the capital ratio is to approximate the denominator of the capital ratio under the “pooling method.” That denominator did not reflect the merging credit union's intangibles, nor the increased valuation of its tangible assets. This approach resembles the approach followed by other Federal banking regulators.

Even though the statutory definition of net worth does not permit natural person credit unions to exclude intangibles, allowing corporate credit unions to do so approximates for regulatory capital purposes the result that would have been achieved under the “pooling method.” The Board welcomes public comment on whether this approach adequately addresses the risk of devaluation and possible loss to the National Credit Union Share Insurance Fund.

The net effect of the modifications to part 704 is to apply FAS 141(R) to financial reporting of corporate credit union mergers while replicating the post-merger capital, capital ratio and retained earnings that would have resulted under the “pooling method.” These modifications to part 704 must take effect in final form on December 31, 2008, to parallel the effective date of the modifications to part 702 that implement the expanded definition of “net worth.”

The Regulatory Flexibility Act requires NCUA to prepare an analysis describing any significant economic impact a proposed regulation may have on a substantial number of small credit unions (primarily those under $10 million in assets). The proposed rule implements an Act of Congress expanding the definition of a natural person credit union's net worth. 12 U.S.C. 1790d(o)(2)(A) (2006). The rule affects the calculation of the post-merger net worth of an acquiring credit union, the vast majority of which exceed $10 million in assets. Accordingly, the proposed rule, if adopted, will not have a significant economic impact on a substantial number of small credit unions. The NCUA Board invites comment on this issue.

NCUA has determined that the proposed rule would not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget. Control number 3133-0154 has been issued for part 702 and control number 3133-0129 has been issued for part 704. Both will be displayed in the table at 12 CFR part 795.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their regulatory actions on State and local interests. NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily adheres to the fundamental federalism principles addressed by the executive order. This proposed rule would apply to all federally-insured credit unions, including State-chartered credit unions, and thus may raise some federalism implications. However, the proposal is unlikely to have a direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government because it facilitates, rather than diminishes, the ability of state-chartered credit unions to combine with other credit unions.

NCUA has determined that the proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998).

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2007-28391 and Airspace Docket No. 07-AAL-10) and be submitted in triplicate to the Docket Management Facility (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov .

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2007-28391 and Airspace Docket No. 07-AAL-10.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov . Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov or the Federal Register' s Web page at http://www.gpoaccess.gov/fr/index.html .

You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see ADDRESSES section for address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the Regional Air Traffic Division, Federal Aviation Administration, Alaska Flight Service Operations, 222 West 7th Avenue, Box 14, Anchorage, AK 99513-7587.

Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 to modify the Norton Sound Low, Woody Island Low, Control 1234L and Control 1487L Offshore Airspace Areas in Alaska.

The Norton Sound Low Offshore Airspace Area would be modified by lowering the offshore airspace floor to 1,200 feet mean sea level (MSL) at the following airports: Within 78 miles of Buckland; within 73 miles of Chevak; within 74 miles of Kotzebue; within 73 miles of Noatak; within 74 miles of Selawik; and within 73 miles of Port Heiden. Also, the Norton Sound Low Offshore Airspace area would be lowered to 700 feet MSL at Port Heiden Airport.

The Woody Island Low Offshore Airspace Area would be modified in the vicinity of the Kodiak, Middleton Island and Port Heiden Airports by lowering the offshore airspace floor to 1,200 feet MSL within 73 miles of Kodiak and Port Heiden Airports, and within 42 miles of the Middleton Island Airport.

Additionally, the Control 1234L Offshore Airspace area would be modified by lowering the offshore airspace floor to 700 feet above the surface within 6.3 miles, and 1,200 feet above the surface within 45 miles, of Nikolski Airport; and within 1,200 feet above the surface within 73 miles of Port Heiden Airport.

Finally, this action would modify the Control 1487L Offshore Airspace Area by lowering the offshore airspace floor to 1,200 feet MSL within 73 miles of Kodiak Airport, and corrects an error in one coordinate adjoining the Woody Island Low Control Area. This correction will align the adjoining airspaces.

Offshore airspace areas are published in paragraph 6007 of FAA Order 7400.9R, signed August 15, 2007, and effective September 15, 2007, which is incorporated by reference in 14 CFR 71.1. The offshore airspace areas listed in this document will be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies offshore airspace areas in Alaska.

As part of this proposal relates to navigable airspace outside the United States, this notice is submitted in accordance with the International Civil Aviation Organization (ICAO) International Standards and Recommended Practices.

The application of International Standards and Recommended Practices by the FAA, Office of System Operations Airspace and AIM, Airspace & Rules, in areas outside the United States domestic airspace, is governed by the Convention on International Civil Aviation. Specifically, the FAA is governed by Article 12 and Annex 11, which pertain to the establishment of necessary air navigational facilities and services to promote the safe, orderly, and expeditious flow of civil air traffic. The purpose of Article 12 and Annex 11 is to ensure that civil aircraft operations on international air routes are performed under uniform conditions.

The International Standards and Recommended Practices in Annex 11 apply to airspace under the jurisdiction of a contracting state, derived from ICAO. Annex 11 provisions apply when air traffic services are provided and a contracting state accepts the responsibility of providing air traffic services over high seas or in airspace of undetermined sovereignty. A contracting state accepting this responsibility may apply the International Standards and Recommended Practices that are consistent with standards and practices utilized in its domestic jurisdiction.

In accordance with Article 3 of the Convention, state-owned aircraft are exempt from the Standards and Recommended Practices of Annex 11. The United States is a contracting state to the Convention. Article 3(d) of the Convention provides that participating state aircraft will be operated in international airspace with due regard for the safety of civil aircraft. Since this action involves, in part, the designation of navigable airspace outside the United States, the Administrator is consulting with the Secretary of State and the Secretary of Defense in accordance with the provisions of Executive Order 10854.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Throughout this document, ``we,'' ``us'' and ``our'' refer to EPA.

Table 1 lists the rule addressed by this proposal with the dates that it was adopted by the local air agency and submitted by the California Air Resources Board.

On June 9, 2008, this rule submittal was found to meet the completeness criteria in 40 CFR Part 51, Appendix V, which must be met before formal EPA review.

There are no previous versions of Rule 1110.2 in the SIP, although the SCAQMD adopted earlier versions of this rule on September 7, 1990; August 12, 1994; and December 9, 1994. Those versions were not submitted to EPA. The SCAQMD adopted an additional version of Rule 1110.2 on November 14, 1997, and CARB submitted that version to us on May 18, 1998. We proposed a limited approval and limited disapproval of that submission on March 18, 1999 (64 FR 13372), but did not finalize that action. While we can act on only the most recently submitted version, we have reviewed materials provided with previous submittals.

NO X helps produce ground-level ozone, smog and particulate matter, which harm human health and the environment. Section 110(a) of the CAA requires States to submit regulations that control NO X emissions. Rule 1110.2 regulates NO X emissions, as well as volatile organic compound (VOC) and carbon monoxide (CO) emissions, from stationary and portable internal combustion engines rated at 50 or more horsepower, including agricultural engines. EPA's technical support document (TSD) has more information about this rule.

Generally, SIP rules must be enforceable (see section 110(a) of the Act), must require Reasonably Available Control Technology (RACT) for each category of sources covered by a Control Techniques Guidelines (CTG) document as well as each major source in nonattainment areas (see sections 182(a)(2) and 182(f)), and must not relax existing requirements (see sections 110(l) and 193). The SCAQMD regulates an ozone nonattainment area (see 40 CFR part 81), so Rule 1110.2 must fulfill RACT. Additionally, SIP rules must require Best Available Control Measures (BACM), including Best Available Control Technology (BACT), in serious particulate matter (PM) nonattainment areas (see CAA sections 189(a)(1) and 189(b)(1)). The SCAQMD regulates a PM nonattainment area classified as serious (see 40 CFR part 81), so Rule 1110.2 must implement BACM for PM precursors, including NO X .

Guidance and policy documents that we use to help consistently evaluate enforceability and RACT or BACM requirements include the following:

1. “State Implementation Plans; Nitrogen Oxides Supplement to the General Preamble; Clean Air Act Amendments of 1990 Implementation of Title I; Proposed Rule,” (the NO X Supplement), 57 FR 55620, November 25, 1992.

2. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook).

3. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).

4. “State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990,” 57 FR 13498 (April 16, 1992); 57 FR 18070 (April 28, 1992).

5. “State Implementation Plans for Serious PM-10 Nonattainment Areas, and Attainment Date Waivers for PM-10 Nonattainment Areas Generally; Addendum to the General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990,” 59 FR 41998 (August 16, 1994).

6. “PM-10 Guideline Document,” EPA 452/R-93-008, April 1993.

7.“Determination of Reasonably Available Control Technology and Best Available Retrofit Control Technology for Stationary Spark-Ignited Internal Combustion Engines” (“the Determination”), California Air Resources Board (November 2001).

8. “Best Available Control Technology Guidelines,” South Coast Air Quality Management District (August 17, 2000; latest revision July 14, 2006).

We believe this rule is consistent with the relevant policy and guidance regarding enforceability, RACT, and SIP relaxations. The rule's emissions limits are more stringent than the corresponding limits in the Determination or other California District rules on internal combustion engines. The emissions limits taking effect in 2011 and 2012 are comparable to the limits expressed by the South Coast AQMD BACT Guidelines. The deficiencies cited in the technical support document (TSD) for the November 14, 1997 version of Rule 1110.2 (TSD dated January 27, 2005), have been adequately remedied or justified in this version. The TSD has more information on our evaluation.

At this time, EPA does not have recommendations to further improve this rule.

Because EPA believes the submitted rule fulfills all relevant requirements, we are proposing to fully approve it as described in section 110(k)(3) of the Act. We will accept comments from the public on this proposal for the next 30 days. Unless we receive convincing new information during the comment period, we intend to publish a final approval action that will incorporate this rule into the federally enforceable SIP.

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 08-113, adopted July 17, 2008, and released July 22, 2008. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC, 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-478-3160 or via e-mail www.BCPIWEB.com. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 08-147, adopted July 17, 2008, and released July 22, 2008. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-478-3160 or via e-mail www.BCPIWEB.com. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 08-148, adopted July 17, 2008, and released July 22, 2008. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-478-3160 or via e-mail www.BCPIWEB.com. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 08-149, adopted July 17, 2008, and released July 22, 2008. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC, 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-478-3160 or via e-mail www.BCPIWEB.com. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

GSA published an Advance Notice of Proposed Rulemaking (ANPR) in the Federal Register at 71 FR 7910, February 15, 2006, with request for comments because GSA was beginning the review and update of the General Services Administration Acquisition Regulation (GSAR).

This GSAR rewrite has—

• Considered comments received from the ANPR, published February 15, 2006.

• Changed “you” to “contracting officer.''

• Maintained consistency with the FAR, but eliminated duplication.

• Revised GSAR sections that are out of date, or which imposed inappropriate burdens on the Government or contractors, especially small businesses.

• Streamlined and simplified wherever possible.

In addition, GSA has recently reorganized into two (2), rather than three (3), services. Therefore, the reorganization of the Federal Supply Service (FSS) and the Federal Technology Service (FTS) into the Federal Acquisition Service (FAS) was considered in the rewrite initiative.

Subpart 525.3, Balance of Payment Programs, is proposed for deletion because FAR Case 99-616, dated November 20, 2006, removed the corresponding FAR coverage. Subpart 525.5, Evaluating Foreign Offers—Supply Contracts, and the related clause at 552.225-70, are proposed for deletion because they were replaced on January 25, 2007, by GSA Acquisition Letter V-07-02 with more current Berry Amendment coverage at Subpart 525.10, Additional Foreign Acquisition Regulations. Subpart 525.6, Trade Sanctions, is proposed for deletion because Federal Acquisition Circular 2005-09, dated April 2006, removed the corresponding FAR coverage. Subpart 552.3, Provision and Clause Matrices, is being revised to delete reference to the clause at 552.225-70 from the Matrix.

As a result of the ANPR, GSA received three comments pertaining to GSAR Part 525.

Comment 1: One commenter suggested revising the GSAR to provide an exception to the Trade Agreements Act (and certain other domestic source requirements) for commercial off-the-shelf items.

Response: The language of the statute does not authorize such exceptions to be made at the agency level.

Comment 2: The second commenter stressed that, in the medical world, there are numerous products that either are already manufactured off-shore in non-designated countries or soon will be according to industry via market research. When these types of medical items begin to be produced off-shore, historically all competitors end up moving production shortly thereafter because of pricing pressures, and none of them or any future competitors initiate production in an acceptable country under the T.A.A. With this in mind, it is felt that exemptions to the T.A.A. via a non-availability determination should be allowed. The contracting officer making the non-availability determination (with approval from the appropriate individual) can continually monitor the availability of FedBizOpps sources sought announcements, SBA Pro-Net searches and possible other methods.

Response: The statute authorizes a head of the contracting activity to make a non-availability determination on an individual item basis, and this authority is specifically addressed at 525.103(d). The procedure for requesting that an item be added to the List of Nonavailable Articles is at FAR 25.104.

Comment 3: The third commenter suggests that GSA consider revising the GSAR to implement supplemental guidance to clarify the application of the Buy American Act (“BAA”), 41 U.S.C. 10a-10d and Executive order 10582, December 17, 1954, and the Trade Agreements Act (“TAA”), 19 U.S.C. 2501 et seq. , to FSS and GWAC Contracts. Contractors seek consistency in treatment under the law and applicable regulations. Knowing when the BAA and TAA apply and how their respective tests will be applied to products and services is of great importance to contractors. Contractors selling commercial items to the Federal Government generally do not manufacture their products based on the origin of supplies or manufacturing locations. The Government, however, requires such contractors to consider these things when they contract to sell commercial products to the Federal Government. Making it easier for contractors to know and understand how the rules will be applied can only improve the procurement system. This is particularly important because an inaccurate certification can result in loss of monies, contracts, serious civil and criminal penalties, or both. Currently there is uncertainty as to whether the BAA or TAA applies to a procurement. The TAA dollar value applicability threshold, which is set out in FAR 25.402, can vary according to whether the country of origin is a Free Trade Agreement (“FTA”) country and whether the contract is for supplies, services or construction.

The commenter also stated that applicability of the Berry Amendment to orders placed under Schedule contracts was not clear.

Response: The statute specifically makes the law (TAA or BAA) applicable to the total value of the acquisition, which the GSA Office of General Counsel has interpreted as meaning the total contract value, not the value of the individual task order. Therefore, the TAA applies to each order issued under the Schedule contract.

GSA issues Schedules for use by many Government agencies. By regulation, restrictions (such as the Berry Amendment) that are not applicable to all agencies are required to be placed in individual task orders to which they do apply, not in the basic Schedule contract.

The commenter correctly states that GSA is not subject to the Berry Amendment. However, the statute is applicable to purchases “made with DOD appropriated funds,” without regard to which agency places the order. GSA Acquisition Letter V-07-02, Implementation of Berry Amendment Contracting Requirements for Assisted Acquisitions Using DOD Funds, dated January 25, 2007, requires the contracting officer for individual task orders to review the requirement and source of funds for Berry Amendment applicability and include the appropriate DFARS clause in the resulting procurement. In other words, any task order issued using DoD appropriated funds must include the Berry Amendment.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

The General Services Administration does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , because there are no substantive changes. An Initial Regulatory Flexibility Analysis has, therefore, not been performed. We invite comments from small businesses and other interested parties. GSA will consider comments from small entities concerning the affected GSAR Parts 525 and 552 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 601, et seq. (GSAR case 2006-G520), in correspondence.

The Paperwork Reduction Act does not apply because the proposed changes to the GSAM do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

Therefore, GSA proposes to amend 48 CFR parts 525 and 552 as set forth below:

1. The authority citation for 48 CFR parts 525 and 552 is revised to read as follows:

2. Subpart 525.3 is removed.

3. Subpart 525.5 is removed.

4. Subpart 525.11 is removed.

5. Section 552.225-70 is removed.