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Animal and Plant Health Inspection Service, USDA.
Interim rule and request for comments.
We are amending the regulations regarding the payment of indemnity for animals destroyed because of bovine tuberculosis to provide that the Animal and Plant Health Inspection Service will pay owners of the animals an indemnity equal to the difference between the net salvage received and the appraised value of the animals destroyed, up to $3,000 per animal. This action is necessary to further tuberculosis eradication efforts and to protect livestock not infected with bovine tuberculosis from the disease.
This interim rule was effective February 14, 2002. We will consider all comments we receive that are postmarked, delivered, or e-mailed by April 22, 2002.
You may submit comments by postal mail/commercial delivery or by e-mail. If you use postal mail/commercial delivery, please send four copies of your comment (an original and three copies) to: Docket No. 00-106-1, Regulatory Analysis and Development, PPD, APHIS, Station 3C71, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. 00-106-1. If you use e-mail, address your comment to regulations@aphis.usda.gov. Your comment must be contained in the body of your message; do not send attached files. Please include your name and address in your message and “Docket No. 00-106-1” on the subject line.
You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 690-2817 before coming.
APHIS documents published in the
Dr. Joseph Van Tiem, Senior Staff Veterinarian, National Animal Health Programs, VS, APHIS, 4700 River Road Unit 43, Riverdale, MD 20737-1231; (301) 734-7716.
Bovine tuberculosis (tuberculosis) is a contagious, infectious, and communicable disease caused by
Federal regulations implementing this program are contained in 9 CFR part 77, “Tuberculosis,” and in the “Uniform Methods and Rules—Bovine Tuberculosis Eradication” (UMR), January 22, 1999, edition, which is incorporated by reference into the regulations in part 77. Additionally, the regulations in 9 CFR part 50 (referred to below as the regulations) provide for the payment of indemnity to owners of certain animals destroyed because of tuberculosis, in order to encourage destruction of animals that are infected with, or at risk of being infected with, the disease.
Prior to the effective date of this interim rule, when our intent in part 50 was to refer to individual animals infected with tuberculosis, we referred to the animals as being “affected” with the disease. However, such usage is inconsistent with the tuberculosis regulations in part 77, which refer to infected animals as “infected.” Additionally, it is inconsistent with our general policy of using the term “affected” to mean animals that are either infected with or exposed to a disease. Therefore, in this interim rule, wherever our intent is to refer in part 50 only to animals infected with tuberculosis, we are replacing the term “affected with” with “infected with.”
Making such a change, however, creates the situation of our using two different terms in this explanatory
“infected” in parentheses.
Throughout part 50, there are also references to herds that contain infected animals. In some cases in the regulations, these herds are referred to as being “infected” with tuberculosis; in other cases the herds are referred to as being “affected” with the disease. In such cases where reference is made to a herd of animals that includes at least
Prior to the effective date of this interim rule, the regulations in § 50.3 set a maximum dollar figure on the amount that could be paid by APHIS for an animal destroyed because of tuberculosis. When these amounts were established, they approximated the fair market value of the animals, minus any salvage value that could be received for the animals. The limits per animal were as follows:
• $750 for cattle, bison, and captive cervids affected (infected) with tuberculosis;
• $450 for cattle, bison, and captive cervids exposed to tuberculosis;
• $450 for cattle, bison, and captive cervids classified as tuberculosis suspect; and
• $200 for swine exposed to tuberculosis.
For the most part, however, these amounts were set in 1980 and, in recent years, even when added to the amount received by an owner for salvage, they often came to less than the appraised value of the animals. In this interim rule, we are updating the amount that can be paid for animals destroyed because of tuberculosis to once again allow for payment for the appraised value of the animals, minus salvage value.
In recent years, the disparity between the amount that APHIS could pay for an animal destroyed because of tuberculosis and its appraised value has made some owners reluctant to immediately remove a suspect animal from a herd so that confirmation could be made at slaughter of its tuberculosis status. This has sometimes hindered timely detection and traceback of tuberculous animals, because if a suspect animal were sent to slaughter immediately, and was confirmed there as being infected with tuberculosis, traceback of other animals in the infected animal's herd could have begun immediately, to determine whether they had come in contact with animals from other herds.
However, in instances where cattle have been classified as suspects for tuberculosis based on an official tuberculosis test, many owners have decided to wait 60 days (the minimum amount of time required between tests of cattle and bison; the minimum interval for captive cervids is 90 days) to have the animal retested, rather than have the animal destroyed as a suspect, in the hope that on the retest the animal would test negative. In cases where suspect animals have turned out to be infected with the disease, this has delayed the start of traceback procedures.
Also, because they have been unable to obtain appraised value for animals destroyed because of tuberculosis, instead of depopulating an entire herd containing animals known to be infected with or exposed to tuberculosis, owners have often chosen to remove only those animals that have tested positive for the disease. While it is possible to eliminate tuberculosis infection from a herd by the “test and removal” method, depopulation of the herd is the most effective method of ensuring that the infection is eliminated. As reported in the proceedings of the 1994 U.S. Animal Health Association Meeting, up to 33 percent of herds that were released from quarantine through the test and removal method between 1985 and 1994 were found to be affected with tuberculosis by the fifth annual quarantine release test. (VanTiem J.S. and Essey M.A. (1994).—Status of the State/Federal bovine tuberculosis eradication program.
Because depopulation is a significantly more effective method of eradicating tuberculosis than test and removal, APHIS recently amended the tuberculosis regulations in 9 CFR part 77 to encourage depopulation of affected herds in U.S. States or zones where tuberculous animals are detected. Under those regulations, if a tuberculosis-affected herd is detected in a State or zone classified as accredited-free, and the herd is depopulated with no evidence of the spread of the disease, the State or zone may retain its accredited-free status.
To address the discrepancy that has arisen between the indemnity amounts allowed to be paid to owners of animals and the appraised value of the animals, and to accelerate the eradication of tuberculosis from U.S. cattle, bison, and captive cervid herds, as well as from other susceptible livestock, we are amending the regulations in § 50.3 to provide that owners will receive from APHIS an amount equal to the appraised value of livestock destroyed because of tuberculosis, minus the net salvage received for the animals. This formula will apply to cattle, bison, and captive cervids infected with tuberculosis, exposed to tuberculosis, or classified as tuberculosis suspect, as well as to other livestock that are exposed to tuberculosis. (As defined in § 50.1, “livestock” includes cattle, bison, captive cervids, swine, dairy goats, and other hoofed animals (such as llamas, alpacas, and antelope) raised or maintained in captivity for the production of meat and other products, for sport, or for exhibition.)
The regulations in part 50 provide for the payment of indemnity for cattle, bison, and captive cervids destroyed because they are either affected (infected) with tuberculosis, exposed to tuberculosis, or determined to be suspect for tuberculosis. Additionally, the regulations prior to the effective date of this interim rule provided that indemnity could be paid for swine considered to be exposed to tuberculosis by association with a cattle, bison, or captive cervid herd depopulated because of the disease.
We do not consider it consistent or effective, however, to provide for payment of indemnity for swine considered exposed to tuberculosis and not to allow for payment for other susceptible livestock exposed to the disease. In § 50.1, the definition of
In this interim rule, we are amending § 50.3 to provide that the APHIS Administrator is authorized to agree on the part of the U.S. Department of Agriculture (Department) to pay indemnity to owners of the following categories of animals:
1. Cattle, bison, or captive cervids destroyed because they are classified as infected with or exposed to tuberculosis;
2. Cattle, bison, or captive cervids destroyed because they are classified as suspect for tuberculosis, except that indemnity will be withheld for suspect animals until the tuberculosis status of the suspect animal has been determined
3. Other livestock destroyed because they are classified as exposed to tuberculosis by reason of association with a herd destroyed because of tuberculosis, if the designated tuberculosis epidemiologist determines their destruction will contribute to the tuberculosis eradication program.
In each case, the amount of joint State-Federal indemnity payment, together with the amount of net salvage the owner receives when the animals are slaughtered, shall not exceed the appraised value of the animals. Additionally, the Department will in no case pay more than $3,000 for an animal that is destroyed.
The Department and the U.S. Office of Management and Budget are planning to set overall criteria that would govern how the costs of program activities, including the payment of indemnity, are shared among the Federal government and cooperators such as State and local governments, industry and producers. This interim rule may be amended after publication of final cost-sharing criteria.
Provisions regarding the appraisal of cattle, bison, captive cervids, and swine destroyed because of tuberculosis are set forth in § 50.9. Those provisions require that, except for certain situations, cattle, bison, captive cervids, and swine to be destroyed because of tuberculosis be appraised within 15 days after being classified as affected (infected) with tuberculosis, or otherwise being condemned because of the disease. The phrase “animals condemned because of the disease” refers to animals condemned by the Department's Food Safety and Inspection Service with regard to human consumption, due to the presence in the animal of tuberculosis lesions. Such a finding was relevant under the regulations prior to this interim rule because, although a suspect or exposed animal that was condemned at slaughter would not have any salvage value, it would become eligible for the indemnity rate for an affected (infected) animal ($750) rather than the rate for a suspect or exposed animal ($450). However, because this interim rule makes no distinction between infected, exposed, or suspect animals in the amount of indemnity to be paid, there is no need to include a reference to condemned animals.
We are additionally retaining the provisions in § 50.9 that when the animals to be destroyed are appraised, due consideration shall be given to their breeding value as well as to their dairy or meat value, and that animals presented for payment as registered must be accompanied by their registration papers. If the registration papers are temporarily not available, or if the animals are less than 3 years old and unregistered, the appropriate veterinarian in charge may grant a reasonable period of time for presentation of the registration papers.
We are also retaining the provision that APHIS may decline to accept any appraisal that appears to be unreasonable or out of proportion to the value of like animals of like quality.
Prior to the effective date of this interim rule, § 50.9 provided simply that the appraisal shall be done by an independent professional appraiser at the expense of APHIS, except that the veterinarian in charge could waive the requirement for an independent professional appraiser for reasons satisfactory to the veterinarian in charge. This provision was adequate when the amount to be paid for animals destroyed was a relatively low set amount and the appraisal process was conducted simply to ensure that the maximum set amount did not exceed the appraised value of a destroyed animal. However, because indemnity payments will now equal the appraised value of the animals minus net salvage received (up to $3,000 per animal), we consider it appropriate to provide owners of animals with the option of requesting a review by the Administrator of an appraised value that the owner considers inadequate.
Therefore, we are amending § 50.9 to provide that animals for which indemnity is to be paid under the regulations must be appraised at their fair market value by an appraiser selected by APHIS. Should the appraisal made by the appraiser selected by APHIS be deemed inadequate by the owner of the animals, the owner will have 15 days from the receipt of the appraisal to submit to the Administrator a request for a review of the appraisal, along with the reasons why the animals should be appraised at a higher value. The decision by the Administrator regarding the value of the animals is final.
On October 23, 2000, we published a final rule in the
In addition to the revisions to the existing definitions in § 50.1, discussed above, we are adding definitions of
Prior to the effective date of this interim rule, § 50.2 stated that the Administrator cooperates with the proper State authorities in the eradication of tuberculosis and pays Federal indemnities for the destruction of cattle, bison, captive cervids, or swine affected (infected) with or exposed to tuberculosis. We are updating this language to make it consistent with the other provisions in part 50, by stating that the Administrator pays Federal indemnities for the destruction of cattle, bison, and captive cervids that are infected with, exposed to, or suspect for tuberculosis, and for other livestock exposed to tuberculosis.
Prior to the effective date of this interim rule, § 50.4 set forth only the criteria used to classify cattle, bison, or captive cervids as affected (infected) with, exposed to, or suspect for tuberculosis. In this interim rule, we are adding a paragraph (d) to § 50.4 to provide that the designated tuberculosis epidemiologist will determine whether livestock other than cattle, bison, or captive cervids are classified as exposed to tuberculosis by reason of association with an affected herd of cattle, bison, or captive cervids.
Section 50.6 of the regulations sets forth requirements for the identification of animals that are to be destroyed because of tuberculosis. Those provisions include the requirement that, except in certain specified situations, cattle, bison, captive cervids, and swine to be destroyed because of tuberculosis must be identified within 15 days after being classified as reactors or otherwise condemned because of the disease. Consistent with the change we are making to the regulations at § 50.9 regarding the appraisal of animals for which indemnity is to be paid, we are providing in § 50.6 that the 15-day time limit for identifying animals to be destroyed because of tuberculosis applies to animals classified as either tuberculosis reactors or animals suspect for tuberculosis.
Section 50.7 of the regulations sets forth certain requirements for the destruction of cattle, bison, captive cervids, and swine destroyed because of tuberculosis and for which indemnity will be paid. We are amending § 50.7(a) and (b) to make the requirements of the section applicable to all livestock.
Section 50.8 of the regulations provides that the Department may pay one-half or more of the expenses of transporting affected (infected),
Section 50.10 includes provisions for recording information regarding the appraisal of cattle, bison, captive cervids, and swine destroyed because of tuberculosis. We are amending the section to make its provisions applicable to all livestock destroyed because of tuberculosis.
Section 50.11 includes provisions for the reporting of salvage proceeds for cattle, bison, captive cervids, and swine destroyed because of tuberculosis. We are amending the section to make its provisions applicable to all livestock destroyed because of tuberculosis.
Section 50.12 includes provisions for making a claim for indemnity for cattle, bison, captive cervids, and swine destroyed because of tuberculosis. We are amending the section to make its provisions applicable to all livestock destroyed because of tuberculosis. Similarly, we are applying to all livestock destroyed because of tuberculosis the provision in § 50.12 that no charges for holding animals on the farm pending slaughter or for trucking by the owner shall be paid by the Department.
Section 50.14 provides that claims for compensation for cattle, bison, or captive cervids destroyed because of tuberculosis will not be allowed under certain conditions. For instance, compensation will be not be allowed if all cattle, bison, and captive cervids in the claimant's herd have not been tested for tuberculosis, except under certain specified conditions. Nor will claims be paid if there is substantial evidence that the owner of the animals has attempted to obtain indemnity unlawfully or improperly.
In this interim rule, we are amending § 50.14 by revising certain provisions and adding others. We are changing the introductory language of § 50.14, and also § 50.14(d) so that these sections apply to all livestock destroyed because of tuberculosis, not just to cattle, bison, and captive cervids. In § 50.14(d), we are removing references to animals condemned because of tuberculosis, consistent with changes we are making elsewhere in the part.
Prior to this interim rule, paragraph (b) of § 50.14 provided that claims for payment were not allowed if all cattle, bison, and captive cervids 2 years of age or older in the claimant's herd had not been tested for tuberculosis under APHIS or State supervision. However, in our October 2000 final rule, discussed above, we provided that, in general, animals 12 months of age or older in a herd, rather than 2 years of age or older, needed to be tested for a test to qualify as a whole herd test. Consistent with the provisions of part 77, we are applying the testing requirement in § 50.14(b) to animals 12 months of age or older, rather than 2 years of age or older.
Finally, we are adding a new paragraph (g) to § 50.14 to provide that claims for compensation for livestock other than cattle bison, and captive cervids that are destroyed because of association with herds of affected cattle, bison, or captive cervids will not be allowed if any of the following apply: (1) The livestock did not reside among the herd for a period of 4 months or more; (2) the livestock have not received a postmortem examination for tuberculosis; or (3) the livestock were added to a herd that was under quarantine for tuberculosis at the time the livestock were added to the herd, unless an approved herd plan was in effect at that time. The requirement that the livestock must have resided among the herd for a period of 4 months or more is consistent with the change we are making to the definition of herd, discussed above, to provide that a group of animals maintained on common ground will not be considered a herd unless they have been maintained together for at least 4 months.
We are removing § 50.15 because it is no longer necessary. Prior to the effective date of this interim rule, § 50.15 stated that no claim for Federal indemnity for cattle and bison destroyed because of tuberculosis would be paid under the regulations in part 53, but rather would be paid under the regulations in part 50. That section was added a number of years ago when the provisions that are currently in part 50 were established. Those provisions have been in place long enough now to make it unnecessary to state that tuberculosis indemnity payments will not be paid under part 53.
We are also removing § 50.16 because it is no longer necessary. Prior to the effective date of this interim rule, § 50.16 contained provisions governing the payment of indemnity for cattle on the island of Molokai in Hawaii that had been exposed to tuberculosis. These provisions provided that, under certain conditions, indemnity could be paid for exposed cattle on Molokai that were moved to a quarantined feedlot. Because tuberculosis no longer exists among livestock on Molokai, we are removing the provisions of § 50.16.
This rulemaking is necessary on an emergency basis to ensure that livestock affected by tuberculosis are destroyed as soon as possible to allow for rapid detection of the disease and prevent its spread. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the
We will consider comments that are received within 60 days of publication of this rule in the
This rule has been reviewed under Executive Order 12866. The rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget.
The program to eliminate tuberculosis in livestock in the United States was begun in 1917. Since that time, the rate of tuberculosis has been reduced from about 5 percent of susceptible livestock to today's rate of less than .0002 percent. However, the final instances of a disease are often the most difficult to find and eliminate. The action being taken in this interim rule is one component of a strategic plan APHIS has developed to complete the eradication of bovine tuberculosis in domestic livestock. In addition to the
On October 23, 2000, we published in the
Prior to the effective date of this interim rule, the regulations in § 50.3 set a maximum dollar figure on the amount that could be paid by APHIS for an animal destroyed because of tuberculosis. When these amounts were established, they approximated the fair market value of the animals, minus any salvage value that could be received for the animals. For the most part, however, these amounts were set in 1980 and, in recent years, even when added to the amount received by an owner for salvage, they often came to less than the appraised value of the animals. In this interim rule, we are updating the amount that can be paid for animals destroyed because of tuberculosis to once again allow for payment for the appraised value of the animals, minus salvage value.
In recent years, the disparity between the amount that APHIS could pay for an animal destroyed because of tuberculosis and its appraised value has made some owners reluctant to immediately remove a suspect animal from a herd so that confirmation could be made at slaughter of its tuberculosis status. This has sometimes hindered timely detection and traceback of tuberculous animals, because if a suspect animal were sent to slaughter immediately, and was confirmed there as being infected with, traceback of other animals in the infected animal's herd could have begun immediately, to determine whether they had come in contact with animals from other herds.
However, in instances where cattle have been classified as suspects for tuberculosis based on an official tuberculosis test, many owners have decided to wait 60 days (the minimum amount of time required between tests of cattle and bison; the minimum interval for captive cervids is 90 days) to have the animal retested, rather than have the animal destroyed as a suspect, in the hope that on the retest the animal would test negative. In cases where suspect animals have turned out to be infected with the disease, this has delayed the start of traceback procedures.
Also, because they have been unable to obtain appraised value for animals destroyed because of tuberculosis, instead of depopulating an entire herd containing animals known to be infected with or exposed to tuberculosis, owners have often chosen to remove only those animals that have tested positive for the disease. Studies have shown that up to 33 percent of herds that were released from quarantine through the test and removal method between 1985 and 1994 were found to be affected with tuberculosis by the fifth annual quarantine release test. (VanTiem J.S. and Essey M.A. (1994).—Status of the State/Federal bovine tuberculosis eradication program.
Prior to this interim rule, the tuberculosis indemnity regulations allowed for payment for cattle, bison, captive cervids, and swine. In this interim rule, we are also providing payment of indemnity for other livestock considered to be exposed to tuberculosis by reason of association with a depopulated affected herd of cattle, bison, or captive cervids. These “other livestock” are defined as including dairy goats and other hoofed animals, such as llamas, alpacas, and antelope. Our primary concern with such animals is that they might spread tuberculosis to cattle, bison, or captive cervids, among which they are sometimes kept. We anticipate that there will be a low likelihood that indemnity will need to be paid for such other livestock, but we are including them in this regulation to address those limited situations where such indemnity will be necessary.
Currently, herd owners are paid up to $750 for animals infected with tuberculosis and up to $450 for suspect and exposed animals. Initially, these indemnity limits were consistent with the relative market value of the animals. However, prevailing market values of animals vary by weight class, by breed, and by function. During the past 20 years, the value of livestock has increased while the indemnity rates have remained constant. Livestock entities also specialize in high value stock that exceed these limits of Federal indemnity. This interim rule will allow for higher indemnity payments than do the existing regulations by raising the maximum amount that will be paid for cattle, bison, captive cervids, or other livestock destroyed because of tuberculosis. As with the existing regulations, this interim rule provides for payment of indemnity up to a limit set in the regulations. However, the increase in the limit will, in most cases, provide owners with payment equal to the appraised value of the animals. Also, it will continue to allow for payment by APHIS for one-half or more of the cost of transporting affected animals or herds to diagnostic labs or to slaughter.
These changes are expected to speed up the diagnosis of tuberculosis and, if necessary, herd depopulation. This action will produce positive benefits at relatively minimal cost by hastening the eradication of an economically damaging disease from the United States. This action will have long-term positive budgetary effects. If, as expected, many owners respond to this incentive, initial indemnity costs will rise, but the rapid diagnosis and depopulation of bovine tuberculosis herds will aid in reducing costs of the National Tuberculosis Eradication Program. Additionally, both small and large herd owners will experience a positive economic impact as they will now be fairly compensated for the destruction of any suspect animals, thereby allowing the removal of any interstate quarantines. Furthermore, the value of their herds will increase, both domestically and internationally, when tuberculosis is eliminated from the United States.
As of January 1, 2000, the total number of cattle in the United States was approximately 98 million, valued at approximately $58 billion. There were 1,095,960 U.S. operations with cattle.
There are about 112,700 bison on 1,150 premises in the United States, valued at about $250 million. Additionally, in 1999, there were about 165,000 known captive cervids, valued at about $390 million, of which 50.9 percent were deer and 48.9 percent, elk. Cervid operations vary in size and degree of commercialization, and many cervid producers also rely on other sources of income. Most, if not all, cervid operations are relatively small and earn less than $500,000.
Prevailing spot market prices of animals are likely to vary by breed, by market, and by weight class. Generally, purebred animals command much higher prices than nonpurebred animals. Registered animals earn more than nonregistered animals. Prices are likely to be influenced by whether the animal is purebred or crossbred, its grade, and by factors such as calving ease, reproductive soundness, weight and body consistency, the calving season, and the animal's general health. Market conditions can also influence the price of bred cows and heifers and bulls. High calf or dairy product prices can induce an interest in beef cow or dairy cow herd expansion, which will in turn lead to an increased demand for bred heifers.
Average grade bred heifer prices range between $800 and $2,000 and most are around $1,500. Top selling bulls are priced a little above this amount. Average grade 2-year old bison heifers sell for about $2,100 (average of Kansas and Nebraska), with average prices ranging between $975 and $2,900. The prices of 2-year old bison bulls range between $750 and $3,250, with the average price about $1,150. Average grade deer prices range between $600 and $1,000, with an average of about $800. Reported elk prices are at the higher end. Bred heifers average about $4,000, while bulls average about $5,500. All of these prices are spot market prices and are likely to vary over time depending on the market situation and the economic outlook.
There is no salvage value when a reactor or suspect animal is taken to a diagnostic laboratory for postmortem examination for bovine tuberculosis. When an animal is found to be infected, the other animals in the herd are all classified at least as exposed. A reactor is generally not salvageable because the Department's Food Safety and Inspection Service requires the meat to be cooked, and most slaughter plants currently do not cook meat from tuberculous animals. Any exposed or suspect animal with post mortem evidence of bovine tuberculosis is classified as a reactor. Exposed animals that were previously tested and had a response to a presumptive test are classified as reactors. Under the regulations prior to this interim rule, an indemnity of $750 each was paid for reactor animals.
A reactor animal can be reclassified as a suspect animal by the epidemiologist under some conditions and can go to slaughter and receive salvage value and up to $450 indemnity if there are no tuberculosis lesions. Exposed animals have been treated the same as suspect animals with regard to the amount of indemnity, and salvage has been paid accordingly. Salvage values of cattle also vary by weight, age, and type. Salvage values of bred heifers or cows range between $350 and $750, with an average of about $550. Bison bulls sell at about $2 per pound of dressed weight. The dressed weight of a bison averages about 640 pounds, with a range of between 550 and 775 pounds, with a consequent average value of about $1,300 (ranging from $1,100 to $1,450). Bison cows are of lower value and sell at about $1 per pound. Their weight is similar to that of bulls. Elk sell on average for $2 per pound of dressed weight. Elk bulls average 700 pounds, with a range of 600 and 1,000 pounds, while an elk cow averages 500 pounds, with a range of between 450 and 650 pounds. Dressed weight is about 67 percent of live weight. Thus, using an average of $2 per pound, the salvage value of an average elk bull and cow is about $938 and $670, respectively.
Given the variability of spot market prices for cattle, bison, and cervids, the current indemnity payments are not sufficient for replacement bred heifers and live bulls auctioned for breeding purpose. This rule, by making a close connection between indemnity payments of animals destroyed because of tuberculosis and their market values at the time the animals are destroyed, provides owners sufficient incentive to eliminate possibly infected animals. This change is expected to speed up the diagnosis of tuberculosis and, when necessary, subsequent herd depopulation.
Because the number of herds and cattle infected with tuberculosis is small relative to the national cattle supply, it is unlikely that this rule will measurably affect livestock prices. Disease status is only one of the components affecting prices of animals. Accelerated and expanded surveillance and testing could yield more suspect herds or animals. However, complete depopulation of an affected herd has been shown to be the most effective way of eliminating tuberculosis in the United States. Reported recurrences of bovine tuberculosis in herds after release of quarantine by test and removal have been estimated at up to 33 percent.
It is expected that final fiscal year 2001 Federal costs for tuberculosis indemnity will total approximately $775,000, as payment for approximately 1,050 animals. However, slightly more than 1,000 of those animals were from Michigan, where known pockets of infection are disproportionately high in comparison to the rest of the United States. Following the depopulation of herds in Michigan in fiscal year 2001, the number of animals eligible for indemnity in that State is expected to fall significantly.
In the remainder of the United States, there is expected to be an increase in the amount of Federal costs for animals depopulated because of tuberculosis, due to the increase in the maximum amount to be paid per animal under this interim rule, along with the likelihood that a greater percentage of owners with indemnity-eligible animals will choose to have their animals destroyed. Projected indemnity costs for each of the 3 years following the effective date of this interim rule are expected to total approximately $1.6 million, as payment for approximately 1,100 animals per year. As noted above, APHIS has requested appropriated funding for such indemnity payments for the next 3 years. Our goal during that period is to reach the point where there are no reported cases of tuberculosis in the United States. However, even at that point, surveillance for tuberculosis will continue in the United States, and it is expected that sporadic cases of tuberculosis will be detected in this country in future years, and that indemnity will need to be paid for the destruction of those affected animals.
Compared to the significance of the livestock industry in the U.S. economy, these additional short-term costs are small. The livestock industry plays a very important role in the U.S. economy. It accounts for over $60 billion of the U.S. gross domestic product. Additionally, it plays a very significant role in international trade. In 1999, the total earnings from exports of live cattle, beef and veal were
Indemnity payments that will be made under this rule for the current fiscal year will come from emergency funds authorized by the Secretary of Agriculture. APHIS has requested appropriated funding for such indemnity payments for future years. This action will have no effect on other Federal agencies or local governments. State governments, however, will benefit from the rapid diagnostic sampling and, if necessary, the depopulation of affected herds. This action will have long-term ‘positive budgetary effects. Additionally, both small and large herd owners will eventually experience a positive economic effect as a result of this action since they will now have an incentive to destroy suspect animals, thereby allowing the removal of quarantine. The value of their herds will increase when tuberculosis is eliminated from the United States. Expediting increased indemnity payments will further rapid detection of tuberculous animals, and thus protect against the spread of tuberculosis in the United States and accelerate eradication of the disease in U.S. livestock.
Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.
This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are in conflict with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.
This rule contains no new information or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Animal diseases, Bison, Cattle, Hogs, Indemnity payments, Reporting and recordkeeping requirements, Tuberculosis.
Animal diseases, Bison, Cattle, Incorporation by reference, Reporting and recordkeeping requirements, Transportation, Tuberculosis.
21 U.S.C. 111-113, 114, 114a, 114a-1, 120, 121, 125, and 134b; 7 CFR 2.22, 2.80, and 371.4.
The Administrator cooperates with the proper State authorities in the eradication of tuberculosis and pays Federal indemnities for the destruction of cattle, bison, and captive cervids that are infected with, exposed to, or suspect for tuberculosis, as well as for other livestock that are exposed to tuberculosis.
(a) The Administrator is authorized to agree on the part of the Department to pay indemnity to owners of the following animals:
(1) Cattle, bison, or captive cervids destroyed because the animals are infected with or exposed to tuberculosis;
(2) Cattle, bison, or captive cervids that have been classified as suspect for tuberculosis, except that the payment of indemnity for the destruction of suspect cattle, bison, and captive cervids will be withheld until the tuberculosis status of the suspect animal has been determined and, if the cattle, bison, or captive cervid is found to be infected with tuberculosis, until all cattle, bison, and captive cervids 12 months of age or older in the claimant's herd have been tested for tuberculosis under APHIS or State supervision; and
(3) Other livestock destroyed because they are classified as exposed to tuberculosis by the designated tuberculosis epidemiologist by reason of an association with an affected herd of cattle, bison, or captive cervids.
(b) In each case, the joint State-Federal indemnity paid, together with the amount for net salvage the owner receives, may not exceed the appraised value of the animal, as determined in accordance with § 50.9. Additionally, the Department will in no case pay more than $3,000 for an animal that is destroyed.
(d) The designated tuberculosis epidemiologist will determine whether livestock other than cattle, bison, or captive cervids are classified as exposed to tuberculosis by reason of association with an affected herd of cattle, bison, or captive cervids.
(a) Livestock to be destroyed because of tuberculosis must be identified as follows:
(1) Livestock classified as reactors for tuberculosis must be identified within 15 days after being classified as reactors, except that the veterinarian in charge may extend the time limit for identification to 30 days when he or she receives a request for such an extension prior to the expiration date of the original 15-day period allowed and circumstances beyond the control of the owner warrant such an extension, and the Administrator may extend the time limit for identification beyond 30 days upon request in specific cases when circumstances beyond the control of the owner warrant such an extension.
(2) Livestock other than reactors for tuberculosis that are to be destroyed because of tuberculosis must be identified prior to movement from the premises of origin to the place of destruction.
(b)
(c)
(d)
8. Section 50.8, including the section heading, is amended by removing the word “affected” each time it appears, and adding in its place the word “infected”; and by removing the words “cattle, bison, and captive cervids” each time they appear, and adding in their place the word “livestock”.
(a) Livestock to be destroyed because of tuberculosis under § 50.3 must be appraised within 15 days after being classified as infected with tuberculosis, except that the veterinarian in charge may extend the time limit for appraisal to 30 days when he or she receives a
(b) Animals for which indemnity is to be paid under this part must be appraised at their fair market value by an appraiser selected by APHIS. APHIS may decline to accept any appraisal that appears to it to be unreasonable or out of proportion to the value of like animals of a like quality. Should the appraisal made by the appraiser selected by APHIS be deemed inadequate by the owner of the animals, the owner will have 15 days from the receipt of the appraisal to submit to the Administrator a request for a review of the appraisal, along with the reasons why the animals should be appraised at a higher value. The decision by the Administrator regarding the value of the animals is final.
(c) When livestock to be destroyed because of tuberculosis are appraised, due consideration will be given to their breeding value as well as to their dairy or meat value. Livestock presented for payment as registered must be accompanied by their registration papers. If the registration papers are temporarily not available, or if the livestock are less than 3 years old and unregistered, the veterinarian in charge may grant a reasonable time for the presentation of their registration papers.
Claims for compensation for livestock destroyed because of tuberculosis will not be allowed in any of the following cases:
(a) The claimant has failed to comply with any of the requirements of this part:
(b) All cattle, bison, and captive cervids 12 months of age or over in the claimant's herd have not been tested for tuberculosis under APHIS or State supervision:
(c) There is substantial evidence that the owner of the animals or the agent of the owner has in any way been responsible for any attempt to obtain indemnity funds for the animals unlawfully or improperly.
(d) At the time the cattle, bison, or captive cervids in the claimant's herd were tested for tuberculosis, the cattle, bison, captive cervids, or other livestock in the herd belonged to or were on the premises of any person to whom they had been sold, shipped, or delivered for slaughter unless or until all of the cattle, bison, captive cervids, and other livestock remaining on the premises or in the herd from which the tested cattle, bison, or captive cervids originated are tested or otherwise examined for tuberculosis in a manner satisfactory to the Administrator or his or her designated representative.
(e) If the cattle, bison, or captive cervids were added to a herd while the herd was quarantined for tuberculosis, unless an approved herd plan was in effect at the time the claim was filed. As part of the approved herd plan, cattle, bison, or captive cervids added to a herd quarantined for tuberculosis must:
(1) Be from an accredited herd, as defined in § 77.1 of this chapter; or (2)(i) Be from a herd that tested negative to an official tuberculin test, as defined in § 77.1 of this chapter, during the 60 days before the cattle, bison, or captive cervids were added to the claimant's herd; and
(ii) Have been found negative to an official tuberculin test, as defined in § 77.1 of this chapter, during the 60 days before the cattle, bison, or captive cervids were added to the claimant's herd.
(f) For exposed cattle, bison, or captive cervids destroyed during herd depopulation, if a designated tuberculosis epidemiologist has determined that other livestock in the herd have been exposed to tuberculosis by reason of association with tuberculous livestock, and those other livestock determined to have been exposed to tuberculosis have not been destroyed.
(g) For livestock other than cattle, bison, and captive cervids that are destroyed because of association with herds of affected cattle, bison, or captive cervids:
(1) If the livestock did not reside among the herd for a period of 4 months or more;
(2) If the livestock have not received a postmortem examination for tuberculosis; or
(3) If the livestock were added to a herd that was under quarantine for tuberculosis at the time the livestock were added to the herd, unless an approved herd plan was in effect at that time.
21 U.S.C. 111, 114, 114a, 115-117, 120, 121, 134b, and 134f; 7 CFR 2.22, 2.80, and 371.4.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to certain Bombardier Model DHC-8-400 series airplanes, that requires a modification and a replacement affecting the fuel tanks in the wings. All affected airplanes require modification of the clearance of the fuel tank vent lines to the left and the right wing fuel tanks. Some affected airplanes also require replacement of three existing fuel probes from the center fuel tank on the left and right wings with new production fuel probes. This action is prompted by mandatory continuing airworthiness information from a foreign airworthiness authority. The actions specified by this AD are necessary to prevent inadequate clearance between the fuel tank vent lines and the adjacent rib structures of the wings or failure of certain temporary, reworked fuel probes in the center fuel tanks in the wings. Either condition could compromise the airplane's lightning protection system, possibly resulting in a fire or explosion if the airplane were hit by lightning. This action is intended to address the identified unsafe condition.
Effective March 27, 2002.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of March 27, 2002.
The service information referenced in this AD may be obtained from Bombardier, Inc., Bombardier Regional Aircraft Division, 123 Garratt Boulevard, Downsview, Ontario M3K 1Y5, Canada. This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the FAA, New York Aircraft Certification Office, 10 Fifth Street, Third Floor, Valley Stream, New York; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Richard Fiesel, Aerospace Engineer, ANE-171, FAA, New York Aircraft Certification Office, 10 Fifth Street, Third Floor, Valley Stream, New York 11581; telephone (516) 256-7504; fax (516) 568-2716.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Bombardier Model DHC-8-400 series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.
Since the issuance of the notice of proposed rulemaking (NPRM), the FAA has found that paragraph (b) of the NPRM needs to be clarified. That paragraph requires that replacement of the existing fuel probes 1, 2, and 5 with new production fuel probes be accomplished “Prior to the accumulation of 4,000 flight hours * * *” It was our intent that the replacement be accomplished prior to the accumulation of 4,000 “total” flight hours. Therefore, we have revised paragraph (b) of the final rule to specify total flight hours.
After careful review of the available data, the FAA has determined that air safety and the public interest require the adoption of the rule with the change described previously. The FAA has determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.
There are approximately 32 airplanes of the affected design in the worldwide fleet. The FAA estimates that 15 airplanes of U.S. registry will be affected by this AD.
Thirteen airplanes of U.S. registry will be affected by the required modification of the clearance of the fuel tank vent line. It will take approximately 12 work hours to accomplish the required modification, at an average labor rate of $60 per work hour. Required parts will cost approximately $440 per airplane. Based on these figures, the cost impact of the required modification on U.S. operators is estimated to be $15,080, or $1,160 per airplane.
Seven airplanes of U.S. registry will be affected by the required replacement of the numbers 1, 2, and 5 fuel probes. It will take approximately 2 work hours to accomplish the required replacement, at an average labor rate of $60 per work hour. Required parts will be provided by the manufacturer at no cost to the operators. Based on these figures, the cost impact of the required replacement on U.S. operators is estimated to be $840, or $120 per airplane.
The cost impact figures discussed above are based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.
The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
2. Section 39.13 is amended by adding the following new airworthiness directive:
This AD applies to each airplane identified in the preceding applicability provision, regardless of whether it has been modified, altered, or repaired in the area subject to the requirements of this AD. For airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (c) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent inadequate clearance between the fuel tank vent lines and the adjacent rib structures of the wings or failure of certain temporary, reworked fuel probes in the center fuel tanks in the wings, either of which could compromise the airplane's lightning protection system, possibly resulting in a fire or explosion if the airplane were hit by lightning, accomplish the following:
(a) For airplanes having serial numbers 4005, 4006, 4008 through 4010 inclusive, 4012 through 4015 inclusive, and 4018 through 4040 inclusive: Within 120 days after the effective date of this AD, modify the clearance of the fuel tank vent lines to the left and the right wing fuel tanks by wrapping 1 piece of Teflon tube around the vent line at each of 10 stations (2 pieces at station 191.200) and securing it with a clamping band (2 clamping bands at station 191.200), in accordance with the Accomplishment Instructions (including Table 1) and Figure 1 of Bombardier Alert Service Bulletin A84-28-02, dated February 7, 2001.
(b) For airplanes having serial numbers 4006, 4008, 4012 through 4015 inclusive, and 4018 through 4027 inclusive: Prior to the accumulation of 4,000 total flight hours or within 120 days after the effective date of this AD, whichever occurs later: Replace existing fuel probes numbers 1, 2, and 5 from the center fuel tank on the left and the right wings with new production fuel probes, in accordance with Bombardier Service Bulletin 84-28-01, Revision “A,” dated February 8, 2001.
(c) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, New York Aircraft Certification Office (ACO), FAA. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, New York ACO.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the New York ACO.
(d) Special flight permits may be issued in accordance with sections 21.197 and 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199) to operate the airplane to a location where the requirements of this AD can be accomplished.
(e) The actions shall be done in accordance with Bombardier Alert Service Bulletin A84-28-02, dated February 7, 2001; and Bombardier Service Bulletin 84-28-01, Revision “A,” dated February 8, 2001; as applicable. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Bombardier, Inc., Bombardier Regional Aircraft Division, 123 Garratt Boulevard, Downsview, Ontario M3K 1Y5, Canada. Copies may be inspected at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the FAA, New York Aircraft Certification Office, 10 Fifth Street, Third Floor, Valley Stream, New York; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
The subject of this AD is addressed in Canadian airworthiness directive CF-2001-14, dated March 21, 2001.
(f) This amendment becomes effective on March 27, 2002.
Federal Aviation Administration, DOT.
Final rule.
This amendment supersedes an existing airworthiness directive (AD) for Model OH-13E, OH-13H, and OH-13S helicopters manufactured by Bell Helicopter Textron, Inc. (BHTI). That AD currently requires either recurring liquid penetrant or eddy current inspections of the main rotor blade grip (grip) threads for a crack. If a crack is detected, that AD requires, before further flight, replacing the cracked grip with an airworthy grip. That AD also establishes a retirement life of 1200 hours time-in-service (TIS) for each grip. This amendment adds two part numbers (P/N) to the applicability and requires only recurring eddy current inspections of the grip threads. This AD also requires reporting any results of the grip inspections to the FAA Rotorcraft Certification Office. This amendment is prompted by the issuance of an AD for the civil BHTI Model 47 helicopters and the results of an accident investigation, an operator survey conducted by a trade association, various comments concerning the subject of the current AD, and a further analysis of field service data related to the BHTI Model 47 helicopters. The actions specified by this AD are intended to prevent failure of a grip, loss of a main rotor blade, and subsequent loss of control of the helicopter.
March 27, 2002.
Marc Belhumeur, Aviation Safety Engineer, FAA, Rotorcraft Directorate, Rotorcraft Certification Office, Fort Worth, Texas 76193-0170, telephone (817) 222-5177, fax (817) 222-5783.
A proposal to amend 14 CFR part 39 by superseding AD 2000-18-52, Amendment 39-11984 (65 FR 68873, November 15, 2000), which applies to BHTI-manufactured Model OH-13E, OH-13H, and OH-13S helicopters, was published in the
• For grips, P/N 47-120-135-2, 47-120-135-3, 47-120-135-5, 47-120-252-1, 47-120-252-7, 47-120-252-11, and for grips manufactured under Parts Manufacturer Approval, P/N 74-120-252-11, 74-120-135-5, R74-120-252-11, and R74-120-135-5, conduct eddy current inspections of the threads of both grips as follows:
• Within 300 hours TIS since initial installation on any helicopter or within 10 hours TIS for grips with 300 or more hours TIS, or within 200 hours TIS since last liquid penetrant or eddy current inspection, whichever comes first, conduct an eddy current inspection in accordance with the procedures in Appendix 1 of this AD or an equivalent FAA-approved procedure that contains the requirements of the procedure in Appendix 1. Thereafter, conduct the eddy current inspection at intervals not to exceed 300 hours TIS.
• Report the results of each inspection to the FAA Rotorcraft Certification Office by providing the information requested in the sample format report in Appendix 3 of this AD. Information collection requirements contained in this AD have been approved by the Office of Management and Budget (OMB) under the provisions of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501
• Before further flight, replace any cracked grip with an airworthy grip. Also, the AD proposed maintaining the current retirement life of 1200 hours TIS for each affected grip.
Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the proposal or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed. However, a non-substantive change has been made to paragraph (a)(2) of the AD that describes the OMB information collection requirements; this change will neither increase the economic burden on any operator nor increase the scope of the AD.
The FAA estimates that 300 helicopters of U.S. registry will be affected by this AD, that it will take approximately 10 work hours per helicopter to accomplish the disassembly, inspection, and reassembly of the grips from the helicopter, and that the average labor rate is $60 per work hour. Required parts, if a grip needs to be replaced, will cost approximately $4,000 per grip. There are two grips on each helicopter. Based on these figures, the total cost impact of this AD on U.S. operators is estimated to be $2,580,000, assuming one inspection per helicopter and replacement of both grips on each helicopter.
The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth, Texas.
Air transportation, Aircraft, Aviation safety, Safety.
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each helicopter identified in the preceding applicability provision, regardless of whether it has been otherwise modified, altered, or repaired in the area subject to the requirements of this AD. For helicopters that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (e) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent failure of a main rotor blade grip (grip), separation of a main rotor blade, and subsequent loss of control of the helicopter, accomplish the following:
(a) Conduct an eddy current inspection of the threads of both grips for a crack in accordance with Appendix 1 of this AD or an equivalent FAA-approved procedure containing the requirements of the procedure in Appendix 1 within 300 hours time-in-service (TIS) since initial installation on any helicopter or within 10 hours TIS for grips with 300 or more hours TIS or within 200 hours TIS since the last liquid penetrant or eddy current inspection of grip threads, whichever comes first.
(1) Thereafter, conduct the eddy current inspection in accordance with Appendix 1 of this AD or an equivalent FAA-approved procedure containing the requirements of the procedure in Appendix 1 at intervals not to exceed 300 hours TIS.
(2) Report the results of each inspection to the FAA Rotorcraft Certification Office within 7 calendar days. Information collection requirements contained in this AD have been approved by the Office of Management and Budget (OMB) under the provisions of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501
See Appendix 2 of this AD for a list of known eddy current inspection facilities.
(b) If a crack is detected, before further flight, replace any cracked grip with an airworthy grip.
(c) On or before 1200 hours TIS, replace each grip with an airworthy grip.
(d) This AD establishes a retirement life of 1200 hours TIS for the grips, P/N 47-120-135-2, 47-120-135-3, 47-120-135-5, 47-120-252-1, 47-120-252-7, 47-120-252-11, 74-120-252-11, 74-120-135-5, R74-120-252-11, and R74-120-135-5.
(e) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, Rotorcraft Certification Office, FAA. Operators shall submit their requests through an FAA Principal Maintenance Inspector, who may concur or comment and then send it to the Manager, Rotorcraft Certification Office.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the Rotorcraft Certification Office.
(f) Special flight permits may be issued in accordance with 14 CFR 21.197 and 21.199 to operate the helicopter to a location where the requirements of this AD can be accomplished.
(g) This amendment becomes effective on March 27, 2002.
Other FAA Approved repair facilities may be used.
Provide the following information and mail or fax it to:
Manager, Rotorcraft Certification Office, Federal Aviation Administration, Fort Worth, Texas, 76193-0170, USA, Fax: 817-222-5783.
Grip #1———Grip #2
Crack Found (Y/N)
If yes, describe below.
Description of Findings
Who performed the inspections?
If a crack was found, describe the crack size, location, and orientation (provide a sketch or pictures with the grip part and serial number).
Provide any other comments.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to certain Bombardier Model CL-600-2B19 series airplanes, that requires repetitive inspections for cracking of the left and right lower wing planks, and repair, if necessary. The actions specified by this AD are intended to find and fix such cracking, which could result in reduced structural integrity of the wing. This action is intended to address the identified unsafe condition.
Effective March 27, 2002.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of March 27, 2002.
The service information referenced in this AD may be obtained from Bombardier, Inc., Canadair, Aerospace Group, P.O. Box 6087, Station Centre-ville, Montreal, Quebec H3C 3G9, Canada. This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the FAA, New York Aircraft Certification Office, 10 Fifth Street, Third Floor, Valley Stream, New York; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Serge Napoleon, Aerospace Engineer, Airframe and Propulsion Branch, ANE-171, FAA, New York Aircraft Certification Office, 10 Fifth Street, Third Floor, Valley Stream, New York 11581; telephone (516) 256-7512; fax (516) 568-2716.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Bombardier Model CL-600-2B19 series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.
The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.
This is considered to be interim action until final action is identified, at which time the FAA may consider further rulemaking.
The FAA estimates that 214 airplanes of U.S. registry will be affected by this AD, that it will take approximately 1 work hour per airplane to accomplish the required inspections, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $12,840, or $60 per airplane, per inspection cycle.
The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.
The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each airplane identified in the preceding applicability provision, regardless of whether it has been modified, altered, or repaired in the area subject to the requirements of this AD. For airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (d) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To find and fix cracking of the left and right lower wing planks, which could result in reduced structural integrity of the wing, accomplish the following:
(a) Perform an external detailed visual inspection for cracking of the left and right lower wing planks in the area of the rear spar and wing station 148.019, according to Part 2, Accomplishment Instructions, of Bombardier Alert Service Bulletin A601R-57-031, Revision “A,” including Appendix A, dated March 28, 2001. Do the initial inspection at the time shown in paragraph (a)(1), (a)(2), or (a)(3) of this AD, as applicable; and repeat the inspection at least every 5,000 flight cycles.
For the purposes of this AD, a detailed visual inspection is defined as: “An intensive visual examination of a specific structural area, system, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at intensity deemed appropriate by the inspector. Inspection aids such as mirror, magnifying lenses, etc., may be used. Surface cleaning and elaborate access procedures may be required.”
(1) For airplanes that have accumulated 6,500 total flight cycles or less as of the effective date of this AD: Inspect prior to the accumulation of 7,000 total flight cycles.
(2) For airplanes that have accumulated 6,501 total flight cycles, but fewer than 13,500 total flight cycles, as of the effective date of this AD: Inspect prior to the accumulation of 13,700 total flight cycles, or within 500 flight cycles after the effective date of this AD, whichever occurs first.
(3) For airplanes that have accumulated 13,500 total flight cycles or more as of the effective date of this AD: Inspect within 200 flight cycles after the effective date of this AD.
Inspections accomplished prior to the effective date of this AD in accordance with Bombardier Alert Service Bulletin A601R-57-031, dated March 22, 2001, are considered acceptable for compliance with paragraph (a) of this AD.
There is no terminating action available at this time for the repetitive inspections required by paragraph (a) of this AD.
(b) If any crack is found during any inspection according to paragraph (a) of this AD: Before further flight, repair per a method approved by either the Manager, New York Aircraft Certification Office (ACO), FAA; or Transport Canada Civil Aviation (or its delegated agent).
(c) Submit a report of inspection findings (both positive and negative) to Bombardier Aerospace Technical Help Desk, fax (514) 855-8500, at the applicable time specified in paragraph (c)(1) or (c)(2) of this AD. Information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) under the provisions of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501
(1) For airplanes on which the inspection is accomplished after the effective date of this AD: Submit the report within 30 days after performing the inspection required by paragraph (a) of this AD.
(2) For airplanes on which the inspection has been accomplished prior to the effective date of this AD: Submit the report within 30 days after the effective date of this AD.
(d) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, New York ACO. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, New York ACO.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the New York ACO.
(e) Special flight permits may be issued in accordance with sections 21.197 and 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199) to operate the airplane to a location where the requirements of this AD can be accomplished.
(f) The inspections shall be done in accordance with Bombardier Alert Service Bulletin A601R-57-031, Revision “A,” including Appendix A, dated March 28, 2001. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Bombardier, Inc., Canadair, Aerospace Group, P.O. Box 6087, Station Centre-ville, Montreal, Quebec H3C 3G9, Canada. Copies may be inspected at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the FAA, New York Aircraft Certification Office, 10 Fifth Street, Third Floor, Valley Stream, New York; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
The subject of this AD is addressed in Canadian airworthiness directive CF-2001-15, dated March 30, 2001.
(g) This amendment becomes effective on March 27, 2002.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to all Short Brothers Model SD3-60, SD3-60 SHERPA, and SD3-SHERPA series airplanes, that requires a one-time inspection of the wiring harness and power cables of the heated windshield to detect inadequate clearance, inadequate support, or chafing. This amendment also requires corrective action (including re-routing for adequate clearance or replacing damaged cables, as applicable), if necessary. The actions specified by this AD are intended to prevent chafing or damage of the power cables of the heated windshield, which could cause arcing and result in smoke and fire in the cockpit. This action is intended to address the identified unsafe condition.
Effective March 27, 2002.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of March 27, 2002.
The service information referenced in this AD may be obtained from Short Brothers, Airworthiness & Engineering Quality, P.O. Box 241, Airport Road, Belfast BT3 9DZ, Northern Ireland. This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Todd Thompson, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington, 98055-4056; telephone (425) 227-1175; fax (425) 227-1149.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to all Short Brothers Model SD3-60, SD3-60 SHERPA, and SD3-SHERPA series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.
The statement of unsafe condition in the “Summary” section and subsequent sections of this AD have been changed for clarification to include a reference to the wiring harness of the power cables and to clarify certain wording.
Paragraph (a) of the proposed rule specifies a general visual inspection of the power cables to the heated windshield to detect inadequate clearance, chafing, and inadequate support. However, paragraph (a) of the proposed rule does not make clear that the inspection includes inspecting the wiring harness and ensuring that the harness is securely supported. Therefore, for clarification, we have changed paragraph (a) of this final rule to require a general visual inspection of the wiring harness and power cables of the heated windshield to detect inadequate clearance between the cables and the flight instruments, and to ensure that the harness is securely supported and no chafing of the protective cover on the cables is evident.
In addition, we have changed paragraphs (b), (c), and (d) of the proposed rule to paragraphs (a)(1), (a)(2), and (a)(3) in this final rule, as they are subparagraphs of paragraph (a), and we have clarified certain wording in those paragraphs. We find that these changes do not expand the scope of the proposed AD but merely provide clarification of the requirements of this AD.
After careful review of the available data, the FAA has determined that air safety and the public interest require the adoption of the rule with the changes described previously. The FAA has determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.
The FAA estimates that 78 airplanes of U.S. registry will be affected by this AD, that it will take approximately 1 work hour per airplane to accomplish the required inspection, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $4,680, or $60 per airplane.
The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.
The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
1. The authority citation for part 39 continues to read as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each airplane identified in the preceding applicability provision, regardless of whether it has been modified, altered, or repaired in the area subject to the requirements of this AD. For airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (b) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent chafing or damage of the power cables of the heated windshield, which could cause arcing and result in smoke and fire in the cockpit, accomplish the following:
(a) Within 90 days after the effective date of this AD: Perform a general visual inspection of the wiring harness and power cables of the heated windshield to detect inadequate clearance between the cables and the flight instruments, and to ensure that the harness is securely supported and no chafing of the protective cover on the cables is evident, in accordance with Short Brothers Service Bulletin SD3 SHERPA-30-2 (for Model SD3 SHERPA series airplanes), SD360 SHERPA-30-2 (for Model SD3-60 SHERPA series airplanes), or SD360-30-26 (for Model SD3-60 series airplanes); all dated April 2, 2001; as applicable. If no evidence of chafing is found and clearance and support of the power cables is adequate, no further action is needed.
For the purposes of this AD, a general visual inspection is defined as: “A visual examination of an interior or exterior area, installation, or assembly to detect obvious damage, failure, or irregularity. This level of inspection is made under normally available lighting conditions such as daylight, hangar lighting, flashlight, or drop-light, and may require removal or opening of access panels or doors. Stands, ladders, or platforms may be required to gain proximity to the area being checked.”
(1) If no evidence of chafing is found, but clearance or support of the harness is inadequate: Prior to further flight, re-route the power cable for adequate clearance or provide additional support of the cable harness, as applicable, in accordance with Short Brothers Service Bulletin SD3 SHERPA-30-2 (for Model SD3 SHERPA series airplanes), SD360 SHERPA-30-2 (for Model SD3-60 SHERPA series airplanes), or SD360-30-26 (for Model SD3-60 series airplanes); all dated April 2, 2001; as applicable.
(2) If evidence of chafing is found, but there is no damage to the outer nylon protective cover resulting in exposure of the glass fiber braid: Prior to further flight, re-route the power cables for adequate clearance, in accordance with Short Brothers Service Bulletin SD3 SHERPA-30-2 (for Model SD3 SHERPA series airplanes), SD360 SHERPA-30-2 (for Model SD3-60 SHERPA series airplanes), or SD360-30-26 (for Model SD3-60 series airplanes); all dated April 2, 2001; as applicable.
(3) If evidence of chafing is found, and there is damage to the outer nylon protective cover resulting in exposure of the glass fiber braid: Prior to further flight, replace the damaged power cable with a new cable, in accordance with Short Brothers Service Bulletin SD3 SHERPA-30-2 (for Model SD3 SHERPA series airplanes), SD360 SHERPA-30-2 (for Model SD3-60 SHERPA series airplanes), or SD360-30-26 (for Model SD3-60 series airplanes); all dated April 2, 2001; as applicable.
(b) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, International Branch, ANM-116.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the International Branch, ANM-116.
(c) Special flight permits may be issued in accordance with sections 21.197 and 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199) to operate the airplane to a location where the requirements of this AD can be accomplished.
(d) The actions shall be done in accordance with Short Brothers Service Bulletin SD3 SHERPA-30-2, dated April 2, 2001; Short Brothers Service Bulletin SD360 SHERPA-30-2, dated April 2, 2001; and Short Brothers Service Bulletin SD360-30-26, dated April 2, 2001; as applicable. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Short Brothers, Airworthiness & Engineering Quality, P.O. Box 241, Airport Road, Belfast BT3 9DZ, Northern Ireland. Copies may be inspected at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
The subject of this AD is addressed in British airworthiness directive 001-04-2001.
(e) This amendment becomes effective on March 27, 2002.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to certain Dornier Model 328-100 and -300 series airplanes, that requires testing of the left- and right-hand potentiometer levers of the aileron flight control system, and follow-on or corrective action, as applicable. This amendment is necessary to prevent detachment of an aileron potentiometer lever, which could result in jamming of the elevator and/or aileron flight control systems and consequent reduced controllability of the airplane. This action is intended to address the identified unsafe condition.
Effective March 27, 2002.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of March 27, 2002.
The service information referenced in this AD may be obtained from
Tom Groves, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (425) 227-1503; fax (425) 227-1149.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Dornier Model 328-100 and -300 series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the single comment received.
One commenter, the airplane manufacturer, states that a new potentiometer lever, having part number (P/N) 001A271A2062 002, has been developed and approved. The new lever prevents detachment of an aileron potentiometer lever, which could result in jamming of the elevator and/or aileron flight control systems. The FAA infers that the commenter is requesting that the FAA add the new lever P/N to paragraph (c) of the proposed rule.
The FAA agrees. We have revised paragraph (c)(1) and (c)(2) of the AD to permit operators to comply with the requirements of that paragraph by replacing the potentiometer lever with a new lever, P/N 001A271A2062 002, or with P/N 001A271A2062 000, which was the “new” lever P/N at the time the NPRM was issued. Although the lever P/Ns were not referred to in the NPRM, we have added them to the final rule to help clarify and differentiate the description of a “new” potentiometer lever. Paragraph (c)(2) of the final rule has also been revised to specify that operators may replace the potentiometer levers by using either the method provided by subparagraph (c)(2)(i) or (c)(2)(ii) of the final rule.
After careful review of the available data, including the comment noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the changes described previously. The FAA has determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.
The FAA estimates that 89 Dornier Model 328-100 and -300 series airplanes of U.S. registry will be affected by this AD, that it will take approximately 2 work hours per airplane to accomplish the required test, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $10,680, or $120 per airplane, per test cycle.
The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.
The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each airplane identified in the preceding applicability provision, regardless of whether it has been modified, altered, or repaired in the area subject to the requirements of this AD. For airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (d) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent detachment of the aileron potentiometer lever, which could result in jamming of the elevator and/or aileron flight control systems and reduced controllability of the airplane, accomplish the following:
(a) Within 30 days after the effective date of this AD, test the left- and right-hand potentiometer levers of the aileron flight control system to determine whether, with the bolt in position and the clamping force across the splines relaxed, the levers can be pulled off the splined shaft, in accordance with the Dornier service bulletin listed in paragraph (a)(1) or (a)(2) of this AD, as applicable.
(1)
(2)
(b) If, as a result of the test required by paragraph (a) of this AD, any lever cannot be removed, before further flight, retighten the nut and bolt and replace the split pin, in accordance with the Dornier service bulletin listed in paragraph (a)(1) or (a)(2) of this AD, as applicable.
(c) If, as a result of the test required by paragraph (a) of this AD, any lever can be detached from the splined shaft, perform the actions specified in paragraph (c)(1) or (c)(2) of this AD, as applicable.
(1) If a potentiometer lever having either part number (P/N) 001A271A2062 000 or
(2) If a potentiometer lever is not available from stock or from the airplane manufacturer, before further flight, reassemble the existing lever with loctite, in accordance with the Dornier service bulletin listed in paragraph (a)(1) or (a)(2) of this AD, as applicable and, within 4,000 flight hours or 24 months after the effective date of this AD, whichever comes first, replace the lever with a new lever having P/N 001A271A2062 000 or 001A271A2062 002; in accordance with a method specified in paragraph (c)(2)(i) or (c)(2)(ii) of this AD.
(i) In accordance with a method approved by either the Manager, International Branch, ANM-116, FAA; or the Luftfahrt-Bundesamt (LBA) (or its delegated agent).
(ii) In accordance with the Dornier service bulletin specified in paragraph (a)(1) or (a)(2) of this AD, as applicable.
(d) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, International Branch, ANM-116. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, International Branch, ANM-116.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the International Branch, ANM-116.
(e) Special flight permits may be issued in accordance with sections 21.197 and 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199) to operate the airplane to a location where the requirements of this AD can be accomplished.
(f) Except as provided by paragraph (c)(2)(i) of this AD, the actions shall be done in accordance with Dornier Service Bulletin SB-328-27-359, dated March 29, 2001; or Dornier Service Bulletin SB-328J-27-064, Revision 1, dated April 12, 2001; as applicable. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from
The subject of this AD is addressed in German airworthiness directive 2001-167/2, dated June 28, 2001, and German airworthiness directive 2001-168, dated June 14, 2001.
(g) This amendment becomes effective on March 27, 2002.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), that is applicable to Honeywell International Inc. (formerly AlliedSignal Inc. and Textron Lycoming) LTS101 series turboshaft and LTP101 series turboprop engines. This amendment requires a one-time visual inspection for surface finish and a one-time fluorescent penetrant inspection for cracks of certain impellers installed on LTS101 series turboshaft and LTP101 series turboprop engines. This amendment is prompted by a report of a machining discrepancy that may have occurred during manufacture of the affected impellers. The actions specified by this AD are intended to prevent impeller failure from cracks in the impeller back face area, which could result in an uncontained engine failure.
Effective date March 27, 2002.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of March 27, 2002.
The service information referenced in this AD may be obtained from Honeywell International Inc. Aerospace Services Attn.: Data Distribution, M/S 64-3/2101-201, PO Box 29003, Phoenix, AZ 85038-9003; telephone (602) 365-2493, fax (602) 365-5577. This information may be examined, by appointment, at the Federal Aviation Administration (FAA), New England Region, Office of the Regional Counsel, 12 New England Executive Park, Burlington, MA; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Robert Baitoo, Aerospace Engineer, Los Angeles Aircraft Certification Office, FAA, Transport Airplane Directorate, 3960 Paramount Blvd., Lakewood, CA 90712-4137; telephone (562) 627-5245, fax (562) 627-5210.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that is applicable to Honeywell International Inc. (formerly AlliedSignal Inc. and Textron Lycoming) LTS101 series turboshaft and LTP101 series turboprop engines was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the proposal or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.
The FAA estimates that 600 engines installed on aircraft of U.S. registry would be affected by this AD and that it would take approximately 4 work hours per engine to accomplish the inspection. The average labor rate is $60 per work hour. There are no required parts costs. Based on these figures, the total cost effect of this AD on U.S. operators is estimated to be $144,000.
This final rule does not have federalism implications, as defined in Executive Order 13132, because it would not have a substantial direct
For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) if promulgated, will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained by contacting the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
This airworthiness directive (AD) is applicable to Honeywell International Inc. (formerly AlliedSignal Inc. and Textron Lycoming) LTS101 series turboshaft and LTP101 series turboprop engines with the following centrifugal compressor impeller part numbers (P/N's) installed: 4-101-052-57 and 4-101-052-62, except those with a P/N or serial number (SN) listed in paragraphs 1.A.(1) through 1.A.(3) of AlliedSignal Service Bulletin (SB) LT 101-72-30-0186, dated October 1, 1999, or Honeywell International Inc. SB LT 101-72-30-0186, Revision 1, dated April 25, 2000. These engines are installed on, but not limited to Aerospatiale AS350, Eurocopter MBB-BK117 and HH-65A, Bell 222, Page Thrush, Air Tractor AT-302, Piaggio P.166-DL3, Riley International R421, and Pacific Aero 08-600 aircraft.
This AD applies to each engine identified in the preceding applicability provision, regardless of whether it has been modified, altered, or repaired in the area subject to the requirements of this AD. For engines that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (d) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
Compliance with this AD is required as indicated, unless already done.
To prevent impeller failure from cracks in the impeller back face area, which could result in an uncontained engine failure, do the following:
(a) Within 900 gas generator (Ng) cycles after the effective date of this AD, conduct a one-time visual inspection for surface finish and fluorescent penetrant inspection of impellers P/N 4-101-052-57 and 4-101-052-62 for cracks in accordance with paragraphs 3.A through 3.F. of the Accomplishment Instructions of AlliedSignal SB LT 101-72-30-0186, dated October 1, 1999, or Honeywell International Inc. SB LT 101-72-30-0186, Revision 1, dated April 25, 2000.
(b) Replace all impellers that exceed the acceptable limits of the Accomplishment Instructions of AlliedSignal Service Bulletin (SB) LT 101-72-30-0186, dated October 1, 1999, or Honeywell International Inc. SB LT 101-72-30-0186, Revision 1, dated April 25, 2000, with a serviceable impeller.
(c) After the effective date of this AD, do not install impeller P/N's 4-101-052-57 or 4-101-052-62, except those with an impeller P/N or SN listed in paragraphs 1. A.(1) through 1. A.(3) of AlliedSignal SB LT 101-72-30-0186, dated October 1, 1999, or Honeywell International Inc. SB LT 101-72-30-0186, Revision 1, dated April 25, 2000.
(d) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, Los Angles Aircraft Certification Office (LAACO). Operators must submit their request through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, LAACO.
Information concerning the existence of approved alternative methods of compliance with this airworthiness directive, if any, may be obtained from the LAACO.
(e) Special flight permits may be issued in accordance §§ 21.197 and 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199) to operate the aircraft to a location where the requirements of this AD can be done.
(f) The inspections must be done in accordance with the following SB's:
(g) This amendment becomes effective on March 27, 2002.
National Oceanic and Atmospheric Administration, Department of Commerce.
Final rule.
The National Oceanic and Atmospheric Administration (NOAA) issues this final rule to remove and reserve regulations concerning the policies and procedures relating to the disclosure of information and employee testimony in litigation not involving the United States. These regulations are removed because they have been superseded by other regulations. The intended effect is to ensure that NOAA policies and procedures are consistent and not redundant with other regulations of the Department of Commerce.
Effective February 20, 2002.
Glenn E. Tallia, NOAA Senior Counselor for Atmospheric and Space Services and Research (GCW), SSMC 3, Mail Stop 15861, 1315 East-West Highway, Silver Spring, MD 20910; (301) 713-1337.
NOAA issues this final rule to remove provisions from its internal conduct regulations, codified at 15 CFR part 909. This part contains policies and procedures regarding disclosure of information and employee testimony in litigation not involving the United States. This part is removed and reserved because it has been superseded by regulations on the same topic promulgated by the Department of Commerce, and codified at 15 CFR part 15, subpart B.
This final rule has been determined to be not significant for purposes of E.O. 12866.
Pursuant to 5 U.S.C. 553(b)(A), prior notice and an opportunity for public comment and not required for this rule of agency organization, management and procedures. Further, this rule of agency organization, management and procedures is not a substantive rule, and is therefore not subject to the 30-day delay in effective date requirement of 5 U.S.C. 553(d).
As this rule is not subject to the requirement to provide prior notice and an opportunity for public comment pursuant to 5 U.S.C. 553, or any other law, it is not subject to the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601
This rule does not contain or involve any information collection requirements that require the approval of the Office of Management and Budget pursuant to the Paperwork Reduction Act, 44 U.S.C. chapter 35.
Courts, Government employees.
Accordingly, for the reasons set forth in the preamble and under the authority contained in 5 U.S.C. 301; 15 U.S.C. 1501, 1512, 1513, 1515 and 1518; Reorganization Plan No. 5 of 1950; 3 CFR, 1949-1953 Comp., p. 1004; and 44 U.S.C. 3101; remove and reserve 15 CFR part 909.
Coast Guard, DOT.
Temporary final rule.
The Coast Guard is establishing moving and fixed security zones extending 100 yards around all cruise ships and tank ships that enter, are moored in, or depart from the San Francisco Bay and Delta ports, California. This security zone is needed for national security reasons to protect the public and ports from potential subversive acts. Entry into these security zones is prohibited, unless specifically authorized by the Captain of the Port San Francisco Bay, or his designated representative.
The regulation is effective from 11:59 p.m. PST on December 21, 2001 to 11:59 p.m. PDT on June 21, 2002.
Documents indicated in this preamble as being available in the docket are part of docket COTP San Francisco Bay 01-012 and are available for inspection or copying at Coast Guard Marine Safety Office San Francisco Bay, Coast Guard Island, Alameda, California, 94501, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays.
Lieutenant Ross Sargent, U.S. Coast Guard Marine Safety Office San Francisco Bay, at (510) 437-3073.
We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b), the Coast Guard finds that good cause exists for not publishing an NPRM. On September 11, 2001, two commercial aircraft were hijacked and flown into the World Trade Center in New York, New York, inflicting catastrophic human casualties and property damage. A similar attack was inflicted upon the Pentagon in Arlington, Virginia, while a fourth commercial aircraft was hijacked and crashed in rural western Pennsylvania on the same day. National security and intelligence officials warn that future terrorist attacks against civilian targets may be anticipated. Due to the potential catastrophic impact of an attack on cruise ships and tank ships, this rulemaking is urgently required to prevent possible terrorist strikes against these vessels within San Francisco Bay and Delta ports. The delay inherent in the NPRM process is contrary to the public interest insofar as it would render cruise ships and tank ships in San Francisco and Delta ports vulnerable to subversive activity, sabotage and terrorist attack.
For the same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
Based on the September 11, 2001, terrorist hijackings and attacks on the World Trade Center in New York, the Pentagon in Arlington, Virginia, there is an increased risk that subversive activity could be launched by vessels or persons in close proximity to the San Francisco Bay and Delta ports, against cruise ships and tank ships entering, departing, or moored within the San Francisco Bay and Delta ports. The terrorist acts against the United States on September 11, 2001, have increased the need for safety and security measures on U.S. ports and waterways.
In response to these terrorist acts, and in order to prevent similar occurrences, the Coast Guard has established a security zone around cruise ships and tank ships to protect persons, transiting vessels, adjacent waterfront facilities, and the adjacent land of the San Francisco Bay and Delta ports. These security zones are necessary to prevent damage or injury to any vessel or waterfront facility, and to safeguard ports, harbors, or waters of the United States near the San Francisco Bay and Delta, California.
This zone will be enforced by the official patrol (Coast Guard commissioned, warrant or petty officers) onboard Coast Guard vessels and patrol craft. The official patrol may also be onboard patrol craft and resources of any government agency that has agreed to assist the Coast Guard in the performance of its duties. Persons and vessels are prohibited from entering into this security zone unless authorized by the Captain of the Port (COTP) or his designated representative. Each person and vessel in a security zone shall obey any direction or order of the COTP. The COTP may remove any person, vessel, article, or thing from a security zone. No person may board, or take or place any article or thing on board any vessel in a security zone without the permission of the COTP.
Pursuant to 33 U.S.C. 1232, any violation of the security zone described herein, is punishable by civil penalties (not to exceed $27,500 per violation, where each day of a continuing violation is a separate violation), criminal penalties (imprisonment for not more than 6 years and a fine of not more than $250,000), in rem liability against the offending vessel, and license sanctions. Any person who violates this regulation, using a dangerous weapon, or who engages in conduct that causes bodily injury or fear of imminent bodily injury to any officer authorized to enforce this regulation, also faces imprisonment up to 12 years (class C felony).
This security zone prohibits all vessels and people from approaching cruise ships and tank ships that are underway or moored in the San Francisco Bay and Delta ports. Specifically, no vessel or person may close to within 100 yards of a cruise ship or tank ship that is entering, moored, or departing the San Francisco Bay and Delta ports.
A security zone is automatically activated when a cruise ship or tank ship passes a line drawn between San Francisco Main Ship Channel buoys 7 and 8 (LLNR 4190 & 4195, positions 37°46.9′N, 122°35.4′W & 37°46.5′N, 122°35.2′W, respectively) while entering port and remains in effect while the vessel is moored within in the San Francisco Bay and Delta ports. When activated, this security zone will encompass a portion of the waterway described as a 100-yard radius around a cruise ship or tank ship in the San Francisco Bay and Delta ports. This security zone is automatically deactivated when the cruise ship or tank ship passes a line drawn between San Francisco Main Ship Channel buoys 7 and 8 (LLNR 4190 & 4195, positions 37°46.9′N, 122°35.4′W & 37°46.5′N, 122°35.2′W, respectively) on its departure from port. Vessels and people may be allowed to enter an established security zone on a case-by-case basis with authorization from the Captain of the Port.
This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Transportation (DOT)(44 FR 11040, February 26, 1979).
The size of the zones are the minimum necessary to provide adequate protection for cruise ships and tank ships, their crews, other vessels and crews operating in the vicinity of cruise ships and tank ships, adjoining areas and the public. These zones will encompass a small portion of the waterway for a limited duration. Also, vessels and people may be allowed to enter the zones on a case-by-case basis with authorization from the Captain of the Port. Any hardships experienced by persons or vessels are considered minimal compared to the national interest in protecting cruise ships and tank ships, their crews and the public.
Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. The security zones will not have a significant economic impact on a substantial number of small entities for several reasons: Small vessel traffic can pass safely around the area and vessels engaged in recreational activities, sightseeing and commercial fishing have ample space outside of the security zones to engage in these activities. When a cruise ship or tank ship is at anchor, vessel traffic will have ample room to maneuver around the security zones. Small entities and the maritime public will be advised of these security zones via public notice to mariners.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offer to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. If the rule will affect your small business, organization, or government jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed under
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).
This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. It has not been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.
We have considered the environmental impact of this rule and concluded that under figure 2-1, paragraph (34)(g), of Commandant Instruction M16475.lD, this rule is categorically excluded from further environmental documentation. A “Categorical Exclusion Determination” is available in the docket for inspection or copying where indicated under
Harbors, Marine safety, Navigation (water), Reports and record keeping requirements, Security measures, Waterways.
33 U.S.C. 1231; 50 U.S.C. 191, 33 CFR 1.05-1(g), 6.04-1, 6.04-6, 160.5; 49 CFR 1.46.
(a)
(b)
(i) No person or vessel may enter or remain in a security zone without the permission of the Captain of the Port;
(ii) Each person and vessel in a security zone shall obey any direction or order of the Captain of the Port;
(iii) The Captain of the Port may take possession and control of any vessel in a security zone;
(iv) The Captain of the Port may remove any person, vessel, article, or thing from a security zone;
(v) No person may board, or take or place any article or thing on board, any vessel in a security zone without the permission of the Captain of the Port; and
(vi) No person may take or place any article or thing upon any waterfront facility in a security zone without the permission of the Captain of the Port.
(2) The Captain of the Port will notify the public via published notice to mariners.
(3) Nothing in this section shall be construed as relieving the owner or person in charge of any vessel from complying with the rules of the road and safe navigation practice.
(4) The regulations of this section will be enforced by the Captain of the Port San Francisco Bay, or his authorized representative.
(c)
Environmental Protection Agency.
Direct final notice of partial deletion of the California Gulch Superfund Site from the National Priorities List.
The Environmental Protection Agency (EPA) Region 8 is publishing a direct final notice of partial deletion of the subunits A and B, residential waste rock piles, and the parks and playgrounds within Operable Unit 9 (OU 9) of the California Gulch Superfund Site (Site), Lake County, Colorado from the National Priorities List (NPL).
The NPL, promulgated pursuant to section 105 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) of 1980, as amended, is appendix B of 40 CFR part 300, which is the National Oil and Hazardous Substance Pollution Contingency Plan (NCP). This direct final partial deletion is being published by EPA with the concurrence of the State of Colorado, through the Colorado Department of Public Health and Environment, because EPA has determined that all appropriate response actions under CERCLA have been completed, and therefore further remedial action pursuant to CERCLA is not appropriate.
OU 9 includes the Residential Populated Areas. EPA issued a Record of Decision (ROD) for OU 9 on September 2, of 1999. The Remedial Investigation has shown that the taking of remedial measures is not appropriate for subunits A and B of the Residential Populated Areas. Proposal to partially delete subunits A and B of the Residential Populated Areas was made by the State of Colorado, through the Colorado Department of Public Health and Environment, on November 3, 2000.
The Removal Action for the residential waste rock piles within OU 9 was completed on December 22, 1999 and the Removal Action Completion Report was submitted to EPA in July 2001. The Remedial Action for the parks and playgrounds within OU9 was completed on September 27, 2000.
The Site has been divided into 12 Operable Units (OUs). This direct final partial deletion pertains only to the subunits A and B, residential waste rock piles, and parks and playgrounds within OU 9 of the Site. Response activities will continue at the remaining OUs. Furthermore, this partial deletion does not alter the status of the Site-wide Surface and Ground Water, OU 12, which is not proposed for deletion and remains on the NPL.
This direct final partial deletion action will be effective April 22, 2002 unless EPA receives adverse comments by March 22, 2002. If adverse comments are received, EPA will publish a timely withdrawal of the direct final partial deletion in the
Comments may be mailed to: Rebecca Thomas, Remedial Project Manager, Environmental Protection Agency, Region 8, Mail Code 8EPR-SR, 999 18th Street, Suite 300, Denver, CO 80202,
Viewing hours: 8:00 A.M. to 4:30 P.M., Monday through Friday, excluding holidays. and Lake County Pubic Library, 1115 Harrison Avenue, Leadville, CO 80461, (719) 486-0569.
Rebecca Thomas, Remedial Project Manager, Environmental Protection Agency, Region 8, Mail Code 8EPR-SR, 999 18th Street, Suite 300, Denver, CO 80202,
EPA Region 8 is publishing this direct final notice of partial deletion of subunits A and B, residential waste rock piles, and the parks and playgrounds within OU 9, California Gulch Superfund Site from the NPL.
The EPA identifies sites that appear to present a significant risk to public health or the environment and maintains the NPL as the list of those sites. As described in the § 300.425(e)(3) of the NCP, sites partially deleted from the NPL remain eligible for remedial actions if conditions at a partially deleted site warrant such action.
Because EPA considers this action to be noncontroversial and routine, EPA is taking it without prior publication of a notice of intent to partially delete. This action will be effective April 22, 2002, unless EPA receives adverse comments by March 22, 2002 on this document. If adverse comments are received within the 30-day public comment period on this document, EPA will publish a timely withdrawal of this direct final partial deletion before the effective date of the partial deletion and the partial deletion will not take effect. EPA will, as appropriate, prepare a response to comments and continue with the deletion process on the basis of the notice of intent to partially delete and the comments already received. There will be no additional opportunity to comment.
Section II of this document explains the criteria for deleting sites from the NPL. Section III discusses procedures that EPA is using for this action. Section IV discusses the subunits A and B, residential waste rock piles, and the parks and playgrounds within OU 9, California Gulch Superfund Site and demonstrates how it meets the deletion criteria. Section V discusses EPA's action to partially delete the Site from the NPL unless adverse comments are received during the public comment period.
Section 300.425(e) of the NCP provides that releases may be partially deleted from the NPL where no further response is appropriate. In making a determination to partially delete a Site from the NPL, EPA shall consider, in consultation with the State, whether any of the following criteria have been met:
i. Responsible parties or other persons have implemented all appropriate response actions required;
ii. All appropriate Fund-financed (Hazardous Substance Superfund Response Trust Fund) response under CERCLA has been implemented, and no further response action by responsible parties is appropriate; or
iii. The remedial investigation has shown that the release poses no significant threat to public health or the environment and, therefore, the taking of remedial measures is not appropriate.
Even if a site is partially deleted from the NPL, where hazardous substances, pollutants, or contaminants remain at the partially deleted site above levels that allow for unlimited use and unrestricted exposure, CERCLA section
The following procedures apply to the partial deletion of the Site:
(1) The EPA consulted with the State of Colorado on the partial deletion of the Site from the NPL prior to developing this direct final notice of partial deletion.
(2) The State of Colorado concurred with partial deletion of the Site from the NPL.
(3) Concurrently with the publication of this direct final notice of partial deletion, a notice of the availability of the parallel notice of intent to partially delete was published today in the “Proposed Rules” section of the
(4) The EPA placed copies of documents supporting the partial deletion in the Site information repositories identified above.
(5) If adverse comments are received within the 30-day public comment period on this document, EPA will publish a timely notice of withdrawal of this direct final notice of partial deletion before its effective date and will prepare a response to comments and continue with the deletion process on the basis of the notice of intent to partially delete and the comments already received.
Partial deletion of a site from the NPL does not itself create, alter, or revoke any individual's rights or obligations. Partial deletion of a site from the NPL does not in any way alter EPA's right to take enforcement actions, as appropriate. The NPL is designed primarily for informational purposes and to assist EPA management. Section 300.425(e)(3) of the NCP states that the partial deletion of a site from the NPL does not preclude eligibility for future response actions, should future conditions warrant such actions.
While EPA does not believe that any future response action within the subunits A and B, residential waste rock piles, and the parks and playgrounds within Operable Unit 9 will be needed, if future conditions warrant such action, the deleted areas will remain eligible for future response actions. Furthermore, this partial deletion does not alter the status of the Site-wide Surface and Ground Water, Operable Unit 12, of the California Gulch Superfund Site, which is not proposed for deletion and remains on the NPL.
The following provides EPA's rationale for deleting the subunits A and B, residential waste rock piles, and parks and playgrounds within OU 9 of the California Gulch Site from the NPL:
The California Gulch Superfund Site is located in Lake County, Colorado approximately 100 miles southwest of Denver. The Site is in a highly mineralized area of the Colorado Rocky Mountains covering 16
Subunits A and B are located within the outlaying areas of Leadville zoned for residential use. The residential waste rock piles are located on the eastern side Leadville. The majority of the parks and playgrounds are located within Leadville. A map and site coordinates of the general location of subunits A and B and the residential waste rock piles are included in the docket at the information repositories listed above. The docket also includes a map of the parks and playgrounds.
The California Gulch Superfund Site was listed on the National Priorities List on September 8, 1983, 48 FR 40658 (1983). Mining, mineral processing, and smelting activities have occurred at the Site for more than 130 years. Mining in the District began in 1860, when placer gold was discovered in California Gulch. As the placer deposits were exhausted, underground workings became the principal method for removing gold, silver, lead, and zinc ore. As these mines were developed, waste rock was excavated along with the ore and placed near the mine entrances. Ore was crushed and separated into metallic concentrates at mills, with mill tailing generally slurried into tailing impoundments. The Site was placed on the NPL because of concerns about the impact of mine drainage on surface waters in California Gulch and the impact of heavy metals loading in the Arkansas River.
In order to expedite the clean up of the Site, EPA agreed, pursuant to the 1994 Consent Decree, to divide the Site into twelve Operable Units (OUs). With the exception of OU 12, the operable units pertain to distinct geographical areas corresponding to areas of responsibility for the identified responsible parties and/or to distinct sources of contamination. EPA has taken responsibility for operable units where either no responsible party could be identified, the United States was a responsible party, or cash-out settlements had been reached with the responsible parties.
Under the 1994 Consent Decree, OUs 2 through 11 were designated to deal with areas where the appropriate responsible party or the United States would conduct source remediation. OU 12, which covers the entire Site, was designated to address site-wide surface and groundwater. OU 12 will be addressed after completion of source remediation in OUs 2 through 11. The Consent Decree recognized that additional source remediation or other appropriate response actions related to surface or ground water could occur as part of OU 12 anywhere within the 16.5 square mile of the Site. As determined by the Remedial Investigation, taking of remedial measures is not appropriate for subunits A and B. Therefore, surface and groundwater within subunits A and B require no consideration for OU 12.
EPA is partially deleting the subunits A and B, residential waste rock piles, and parks and playgrounds within OU 9 because all appropriate CERCLA response actions have been completed in these areas as described in Section IV. Response actions are not complete at most of the other OUs at the Site. Those OUs will remain on the NPL are not the subject of this partial deletion. The OUs are as follows:
Operable Unit 9 of the California Gulch Site contains the Residential Populated Areas. The area encompasses the City of Leadville, Stringtown, and outlying areas zoned for residential use. Pursuant to the 1994 Consent Decree, Asarco Incorporated is responsible for conducting all appropriate response actions at OU 9.
Leadville has been classified as a National Historic Landmark. The State Historic Preservation Officer (SHPO) and the Advisory Council on Historic Preservation (ACHP) are contacted prior to remedial activities within OU 9. Procedures outlined in the EPA/SHPO/ACHP Programmatic Agreement will be followed to safeguard cultural resources. As a part of the Lake County Community Health Program, structures built before 1950 will be assessed by SHPO. SHPO will then determine the property's contributions to the historic district prior to action. Cultural Resource Mitigation activities were performed for the Non-Time Critical Removal Action in accordance with the Final Mitigation Plan for Selected Mine Waste piles, Operable Unit 9, California Gulch Superfund Site, Lake County, Colorado (September 4, 1997).
A site-wide Phase I Remedial Investigation (Phase I RI), which primarily addressed surface and groundwater contamination, was issued in January 1987. As a result of the Phase I RI, EPA developed the first operable unit at the Site, the Yak Tunnel. This first operable unit was designed to address the largest single source of metallic loading.
The Phase I RI was followed by a number of additional site-wide studies, including the Tailing Disposal Area Remedial Investigation Report, Baseline Human Health Risk Assessment Part A, Part B, and Part C, Ecological Risk Assessment for Terrestrial Ecosystems, Baseline Aquatic Ecological Risk Assessment, Groundwater RI, Surface Water RI, Waste Rock RI, and Site-wide Screening Feasibility Study (FS). OU 9 specific studies were also conducted, including the Soil-Lead in Residential Populated Areas RI, Parks and Playgrounds Engineering Evaluation and Cost Analysis (EE/CA), Mine Waste Engineering Evaluation and Cost Analysis EE/CA, and the Final Residential Soil FS.
Studies have determined lead to be the primary contaminant of concern in OU 9. The Remedial Investigation, completed in May of 1994, identified soils as the primary exposure pathway to the residential population at the site. The Final Residential Soil Feasability Study, completed in November of 1998, evaluated the residential soils of properties, yards and open space areas where lead levels exceeded the trigger level of 3,500 ppm and presented seven remedial alternatives.
Subunits A and B are located within the outlying areas zoned for residential use within OU 9. The Remedial Investigation and Terrestrial Risk Assessment have shown that taking of remedial measures is not appropriate for subunits A and B. Proposal to partially delete subunits A and B of the Residential Populated Areas was made by the State of Colorado through the Colorado Department of Public Health and Environment on November 3, 2000.
A Mine Waste Engineering Evaluation and Cost Analysis was prepared in December 1995 to identify Removal Action alternatives for the mine waste piles within OU 9. Removal (Response) Actions for the mine waste piles were described in the Non-Time Critical Removal Action Memorandum signed August 15, 1996. Activities included removal of 14 residential waste rock piles with lead concentrations greater than 3,500 ppm. Pursuant to the Action Memorandum, Asarco conducted the removal action in 1997 and 1999. Residential waste rock piles with lead concentrations greater than 3,500 ppm lead were removed and placed at end use locations. Residential waste rock piles which fell below action trigger levels were left in place.
The four piles with the highest lead concentrations were removed in 1997 and the remaining ten piles were removed in 1999. During the 1997 removal action, four piles (Hibschle #14 and #15, Wolcott #19, Hope/Last Chip #109) were removed and placed within Operable Unit 6 (OU 6). Approximately 42,400 cubic yards of waste material were placed within the Hams Tailings Pile (OU 6), then compacted and capped with 30 inches of clean borrow soil.
During the 1999 removal action, the ten waste piles removed included:
In addition, eight suspected mine shafts were identified for closure during construction. The method of closure selected for the shafts was a monolithic concrete plug. Confirmation sampling showed that removal had successfully lowered levels to below site clean up levels of 3,500 ppm lead. Thus, no long term monitoring is required. This removal action is consistent with the performance of the final remedial action for OU 9 and is considered as the final remedy for waste mine piles within OU 9.
A Parks and Playgrounds Engineering Evaluation and Cost Analysis (EE/CA) was prepared in November of 1994. Based on the finding that soils at all parks and playgrounds were below the trigger level of 3,500 ppm lead, EPA approved no further action for the areas addressed by the work plan.
Subsequent to the Parks and Playgrounds EE/CA, one additional playground area was identified in Leadville. A Soil Remediation Site Plan was developed under the direction of the Kids First Program, pursuant to the Record of Decision for Residential Soils. Testing revealed that soils exceeded the trigger level of 3,500 ppm lead, and remedial actions involved the removal of 231 cubic yards of soil. Existing playground equipment was also removed. The excavated area was then filled with top soil and revegetated. Soil confirmation samples indicated that the soil lead concentrations were below the established action levels of 3,500 ppm lead.
Based on the successful completion of the Removal Action and the Remedial Action, there are no further response actions planned or scheduled for subunits A and B, residential waste rock piles, and the park and playgrounds within OU 9.
Because this decision results in hazardous substances remaining on site,
The Draft Mine waste Engineering Evaluation and Cost Analysis (EE/CA) was issued for public comment. A public meeting was held on December 19, 1995 to discuss the Removal Action for the mine waste piles located within OU 9. The EPA notified the citizens of Leadville by the release of and acceptance of public comment concerning the Mine Waste EE/CA for OU 9.
In November of 1998, EPA issued a Proposed Plan describing the Agency's preferred alternative to address risks to residents from lead in soils and other sources within OU 9. A public meeting to discuss the Proposed Plan was held in Leadville on November 19, 1998. Public comment on the Proposed Plan was accepted from November 12, 1998 through December 14, 1998. EPA then issued a Record of Decision for OU 9 presenting the selected remedy for the Residential Populated Areas of OU 9, California Gulch Superfund Site.
The State of Colorado, through the Colorado Department of Health and Environment, submitted a proposal for the deletion of subunits A and B within OU 9 on November 3, 2000. The petition of partial deletion requested EPA proceed with preparation of the Notice of Intent for Partial Deletion (NOIPD).
Public Participation activities have been satisfied as required in CERCLA section 113(k), 42 U.S.C. 9613(k), and section117, 42 U.S.C. 9617. Documents in the deletion docket which EPA relied on for recommendation of the partial deletion from the NPL are available to the public in the information repositories.
The EPA, with concurrence of the State of Colorado, has determined that all appropriate responses under CERCLA have been completed, and that no further response actions, under CERCLA, other than five-year reviews, are necessary. Therefore, EPA is deleting subunits A and B, residential waste rock piles, and the parks and playgrounds within OU 9, California Gulch Superfund Site from the NPL.
Because EPA considers this action to be noncontroversial and routine, EPA is taking it without prior publication. This action will be effective April 22, 2002 unless EPA receives adverse comments by March 22, 2002. If adverse comments are received within the 30-day public comment period, EPA will publish a timely withdrawal of this direct final notice of partial deletion before the effective date of the deletion and it will not take effect and, EPA will prepare a response to comments and continue with the deletion process on the basis of the notice of intent to partially delete and the comments already received. There will be no additional opportunity to comment.
Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.
33 U.S.C. 1321(c)(2); 42 U.S.C. 9601-9657; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 FR 2923, 3 CFR, 1987 Comp., p. 193.
National Aeronautics and Space Administration (NASA).
Final rule.
This final rule amends the NASA FAR Supplement (NFS) by revising the Major Breach of Safety or Security clause to more clearly state that a major breach of security is an act or omission by the contractor that results in various outcomes (compromise of classified information; illegal technology transfer, etc.); to clarify that two of the outcomes are equipment or property damage from vandalism greater than $250,000, or theft greater than $250,000; and to correctly identify the Occupational Safety and Health Administration (OSHA). In addition, the guidance for award fee evaluation factors is revised to be consistent with the Major Breach of Safety or Security clause.
February 20, 2002.
Jeff Cullen, NASA Headquarters Office of Procurement, Contract Management Division (Code HK), Washington, DC 20546; 202-358-1784; e-mail:
This final rule revises 1852.223-75, Major Breach of Safety or Security. The current major breach of security description contained in paragraph (b) of the clause includes outcomes that
Additionally, the clause states that a major breach of security may arise from damage or loss greater than $250,000 to the Government, but it is not clear if this outcome is a standalone provision or if it applies to other outcomes in the clause (e.g., does a major breach occur if illegal technology transfer or theft occurs, and the result is damage or loss greater than $250,000 to the Government). This revision will remove the reference to damage or loss greater than $250,000 to the Government, but also clarify that two of the outcomes are equipment or property damage from vandalism greater than $250,000, or theft greater than $250,000.
Also, the definition of major breach of safety or security in 1816.405-274, Award Fee Evaluation Factors, will be revised to make it consistent with the revised 1852.223-75, Major Breach of Safety or Security definition.
Lastly, OSHA is corrected to read as the Occupational Safety and Health Administration in 1852.223-75, Major Breach of Safety or Security clause and in 1816.405-274, Award Fee Evaluation Factors.
This final rule does not constitute a significant revision within the meaning of FAR 1.501 and Public Law 98-577, and publication for public comment is not required. However, NASA will consider comments from small entities concerning the affected NFS Parts 1816 and 1852 in accordance with 5 U.S.C. 610.
The Paperwork Reduction Act does not apply because the changes to the NFS do not impose recordkeeping or information collection requirements, or collections of information from offerors, contractors, or members of the public which require the approval of the Office of Management and Budget under 44 U.S.C. 3501,
Government procurement.
42 U.S.C. 2473 (c)(1).
(c) * * *
(2) A major breach of safety must be related directly to the work on the contract. A major breach of safety is an act or omission of the Contractor that consists of an accident, incident, or exposure resulting in a fatality or mission failure; or in damage to equipment or property equal to or greater than $1 million; or in any “willful” or “repeat” violation cited by the Occupational Safety and Health Administration (OSHA) or by a state agency operating under an OSHA approved plan.
(3) A major breach of security may occur on or off Government installations, but must be directly related to the work on the contract. A major breach of security is an act or omission by the contractor that results in compromise of classified information, illegal technology transfer, workplace violence resulting in criminal conviction, sabotage, compromise or denial of information technology services, equipment or property damage from vandalism greater than $250,000, or theft greater than $250,000.
(b) Security is the condition of safeguarding against espionage, sabotage, crime (including computer crime), or attack. A major breach of security may constitute a breach of contract that entitles the Government to exercise any of its rights and remedies applicable to material parts of this contract, including termination for default. A major breach of security may occur on or off Government installations, but must be related directly to the work on the contract. A major breach of security is an act or omission by the Contractor that results in compromise of classified information, illegal technology transfer, workplace violence resulting in criminal conviction, sabotage, compromise or denial of information technology services, equipment or property damage from vandalism greater than $250,000, or theft greater than $250,000.
National Aeronautics and Space Administration.
Final rule.
This final rule amends the NASA FAR Supplement (NFS) to revise the criteria for incrementally funding contracts and establish dollar thresholds for incremental funding and deobligations under contracts. These changes will further limit the number of contracts eligible to be incrementally funded and the number of incremental funding and deobligation modifications.
February 20, 2002.
Ron Lentz, NASA Headquarters (Code HK), Washington, DC, (202) 358-0416, e-mail:
Currently, NFS 1832.702-70 limits the incremental funding of cost-reimbursement and fixed-price contracts. In spite of these restrictions, numerous incremental funding modifications are being issued against
NASA certifies that this final rule will not 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
The Paperwork Reduction Act does not apply because this final rule does not impose any new record keeping or information collection requirements, or collection of information from offerors, contractors, or members of the public that require the approval of the Office of Management and Budget under 44 U.S.C. 3501,
Government procurement.
42 U.S.C. 2473(c)(1).
(a) Cost-reimbursement contracts may be incrementally funded only if all the following conditions are met:
(1) The total value of the contract (including options as defined in FAR Subpart 17.2) is—
(i) $500,000 or more for R&D contracts under which no supplies are deliverable; or
(ii) $1,000,000 or more for all other contracts.
(2) The period of performance exceeds one year.
(3) The funds are not available to fund the total contract value fully at award.
(4) Initial funding of the contract is $100,000 or more.
(b) Fixed-price contracts, other than those for research and development, shall not be incrementally funded.
(c)(1) Fixed-price contracts for research and development may be incrementally funded if the conditions of 1832.702-70(a)(1) through (4) are met and the initial funding of the contract is at least 50 percent of the total fixed price.
(2) Incrementally funded fixed-price contracts shall be fully funded as soon as adequate funding becomes available.
(d) Except for a modification issued to fully fund a contract, incremental funding modifications shall not be issued for amounts totaling less than $25,000.
(e) Except for a modification issued to close out a contract, modifications deobligating funds shall not be issued for amounts totaling less than $25,000.
(f) The procurement officer, with the concurrence of the installation Comptroller, may waive any of the conditions set forth in paragraphs 1832.702-70(a) through (e). The procurement officer shall maintain a record of all such approvals during the fiscal year.
(g) A class deviation from the conditions set forth in paragraphs 1832.702-70(a) through (e) exists to permit incremental funding of contracts under Phase II of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. This deviation exists with the understanding that the contracts will be fully funded when funds become available.
Food and Drug Administration, HHS.
Proposed rule.
The Food and Drug Administration (FDA) is proposing three actions that will provide consistent regulation of dental mercury and dental amalgam products. FDA is proposing to issue a separate classification regulation for encapsulated amalgam alloy and dental mercury, a preamendments device, intended to be mixed in a single-use capsule to form filling material for the treatment of dental caries as class II (special controls); to amend the classification for amalgam alloy, a class II preamendments device, by adding special controls; and to reclassify from class I (general controls) to class II the preamendments device dental mercury intended for use as a component of amalgam alloy in the restoration of a dental cavity or broken tooth. These actions are being taken because the agency believes that there is sufficient information to establish special controls that will provide reasonable assurance of the safety and effectiveness of these devices. Elsewhere in this issue of the
Submit written or electronic comments by May 21, 2002. See section XI of this document for the proposed effective date of a final rule based on this document.
Submit written comments to the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20057. Submit electronic comments to http://www.fda.gov/dockets/ecomments.
Susan Runner, Center for Devices and Radiological Health (HFZ-410), Food and Drug Administration, 9200 Corporate Blvd., Rockville, MD 20850, 301-827-5283.
In light of the information described below, FDA has reconsidered its regulatory approach to dental amalgam products. FDA is proposing to regulate amalgam products in a uniform manner, and apply class II special controls to these products to provide a reasonable assurance of safety and effectiveness. Specifically, FDA is proposing to:
1. Issue a separate classification regulation for encapsulated amalgam alloy and dental mercury. This product would be class II with special controls consisting of conformance to voluntary industry standard specifications in the following: (1) International Standards Organization “(ISO) 1559:1995 Dental Materials-Alloys for Dental Amalgam,” and (2) American National Standards Institute/American Dental Association (ANSI/ADA) “Specification No. 6-1987 for Dental Mercury” and FDA's guidance document entitled “Special Control Guidance Document on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling.”
2. Reclassify dental mercury from class I to class II with special controls consisting of conformance to voluntary industry standard specifications in ANSI/ADA's “Specification No. 6-1987 for Dental Mercury” and FDA's guidance document entitled “Special Control Guidance Document on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling.”
3. Amend the class II classification regulation of amalgam alloy to provide for special controls consisting of conformance to voluntary industry standard specifications in “ISO 1559:1995 Dental Materials—Alloys for Dental Amalgam” and FDA's guidance document entitled “Special Control Guidance Document on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling.”
The Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 301
Under the 1976 amendments, class II devices were defined as those devices for which there is insufficient information to show that general controls themselves will assure safety and effectiveness, but there is sufficient information to establish performance standards to provide such assurance. The SMDA broadened the definition of class II devices to mean those devices for which there is insufficient information to show that general controls themselves will assure safety and effectiveness, but there is sufficient information to establish special controls to provide such assurance. Special controls may include performance standards; postmarket surveillance; patient registries; and the development, and dissemination of guidelines, recommendations, and any other appropriate actions the agency deems necessary (section 513(a)(1)(B) of the act).
Under section 513 of the act, devices that were in commercial distribution before May 28, 1976 (the date of enactment of the amendments), generally referred to as preamendments devices, are classified after FDA has: (1) Received a recommendation from a device classification panel (an FDA advisory committee); (2) published the panel’s recommendation for comment, along with a proposed regulation classifying the device; and (3) published a final regulation classifying the device.
Devices that were not in commercial distribution prior to May 28, 1976, generally referred to as postamendments devices, are classified automatically by statute (section 513(f) of the act) into class III without any FDA rulemaking process. Those devices remain in class III and require premarket approval, unless and until FDA issues an order finding the device to be substantially equivalent, under section 513(i) of the act, to a predicate device that does not require premarket approval. The agency determines whether new devices are substantially equivalent to previously marketed devices by means of premarket notification procedures in section 510(k) of the act (21 U.S.C. 360(k)) and part 807 of the regulations (21 CFR part 807).
A preamendments device that has been classified into class III may be marketed, by means of premarket notification procedures, without submission of a premarket approval application (PMA) until FDA issues a final regulation under section 515(b) of the act (21 U.S.C. 360e(b)) requiring premarket approval.
Reclassification of classified preamendments devices is governed by section 513(e) of the act. This section provides that FDA may, by rulemaking, reclassify a device (in a proceeding that parallels the initial classification proceeding) based upon “new information.” The reclassification can be initiated by FDA or by the petition of an interested person. The term “new information,” as used in section 513(e) of the act, includes information developed as a result of a reevaluation of the data before the agency when the device was originally classified, as well as information not presented, not available, or not developed at that time. (See, e.g.,
Dental amalgam is a dental restorative material that is used as filling material in the treatment of dental caries. Dental amalgam is a mixture of approximately equal parts of elemental mercury (43 to 54 percent) and an amalgam alloy containing other metals, predominately silver, but also tin and copper, with smaller amounts of zinc, palladium, or indium sometimes present. The mercury and amalgam alloy components are mixed in the dentist’s office to form dental amalgam. FDA has regulated dental mercury and amalgam alloy separately, with dental mercury § 872.3700 (21 CFR 872.3700) being regulated as a class I device and amalgam alloy § 872.3050 (21 CFR 872.3050) as a class II device.
In the
Although the agency acknowledged the risks presented by dental mercury (i.e., mercury poisoning and adverse tissue reaction), the agency believed that general controls, including labeling for the device bearing adequate directions for use and warnings under section 502 of the act (21 U.S.C. 352), would warn dentists about the rare risks of allergic reactions among patients and the risk of toxicity to dental health professionals. The agency concluded that the establishment of performance standards for these devices would not reduce these risks. Accordingly, FDA found that general controls alone were sufficient to provide reasonable assurance of the safety and effectiveness of the device. In the same issue of the
In the
In 1991 to 1992, under the auspices of the Committee to Coordinate Environmental Health and Related Programs (CCEHRP), the U.S. Public Health Service (PHS), a component of the Department of Health and Human Services (HHS), performed a comprehensive risk assessment of dental amalgam.
The PHS performed this comprehensive risk assessment because of heightened public concern about the safety of this product as a result of anecdotal reports of mercury toxicity from amalgam fillings and the alleviation of chronic disease conditions when the fillings were removed. These reports and the public’s reaction to them prompted senior PHS officials to order a fresh look at all relevant data to determine if such safety concerns had any basis in fact. In 1993, a CCEHRP Subcommittee on Risk Management issued a report on its findings (Ref. 1) (hereinafter referred to as the PHS report).
In preparing this assessment, the CCEHRP relied upon a number of scientific review groups that included clinicians, scientists, and public health experts from the PHS, the Environmental Protection Agency, and the health care and academic sectors (Ref. 1). One group referred to as the Ad Hoc Subcommittee on the Benefits of
The Risk Assessment Subcommittee, comprised of 34 senior level experts from the fields of health promotion and disease prevention, dentistry, dental materials, toxicology, and biostatistics, reviewed the existing body of scientific literature (Ref. 1). It examined nearly 120 publications that reported the results of studies on levels of exposure to mercury and its salts. In conducting its review, the Risk Assessment Subcommittee paid close attention to the amount of mercury absorbed by study subjects and the consequences, if any, of lifetime exposure among people with dental amalgam restorations (Ref. 1).
The Risk Assessment Subcommittee found that historic experience with dental amalgams did not offer persuasive evidence of adverse health effects related to amalgam treatments other than a few reported cases of hypersensitivity (Ref. 1). In terms of evidence concerning adverse effects of low level, long-term mercury exposure, the Risk Assessment Subcommittee reviewed studies that reported neurological and psychological changes resulting from long-term, low-level mercury exposure. The Risk Assessment Subcommittee could not draw unambiguous conclusions or develop a risk assessment based on these endpoints because these studies were judged to have serious methodological flaws (Ref. 1).
Given the shortcomings of the occupational studies, the Risk Assessment Subcommittee also decided against using occupational exposure data as the basis for establishing an acceptable level of exposure to long-term, low-level mercury vapor: in other words, the Risk Assessment Subcommittee recommended against a “no observed adverse effect level” (Ref. 1).
Based on its review, the Risk Assessment Subcommittee arrived at four general conclusions:
1. In low-level occupational exposure, the subclinical effects detected have occurred in groups with mean tissue mercury levels that are only tenfold higher than those of the general population. However, the relationship between the observed effects and the tissue levels is unclear, as is the relationship between subclinical effects and a hazard to health.
2. Available data are not sufficient to indicate that health hazards can be identified in nonoccupationally exposed persons. Because there are no scientifically acceptable studies with sensitive, standardized measurements for physiological and behavioral changes in nonoccupationally exposed persons, it is not possible to determine whether those changes observed in persons with low-level occupational exposure to mercury might also occur as a result of exposure to mercury from dental amalgams. Adverse health consequences, however, cannot be totally dismissed.
3. The margin of safety may be lower in some individuals because of previously developed sensitivity to mercury or because body burdens of mercury are already high as a result of past exposure to other sources. It is possible, therefore, that some persons may respond adversely to the incremental exposure derived from dental amalgam restorations.
4. At the mercury doses produced by amalgam fillings, the evidence is not persuasive that the wide variety of nonspecific symptoms attributable to fillings and “improvement” after their removal are ascribable to mercury from the fillings. Conversely, the evidence is not persuasive that the potential for toxicity at the levels attributable to dental amalgams should be totally disregarded. The potential for effects at levels of exposure produced by dental amalgam restorations has not been fully explored (Ref. 1).
In addition to examining the risks of dental amalgam, a companion PHS subcommittee reviewed the benefits of this product (PHS report Ref. 1). It concluded that dental amalgam, which has been used successfully to treat millions of individuals for over 100 years, is an effective restorative material that offers many advantages over other materials. These advantages include wide potential applications, ease of manipulation, reasonable clinical serviceability, and relatively low cost. These findings, which are discussed in greater detail later in this document, were subjected to external review and found to be highly credible (Ref. 1).
On the basis of the assessment of available science on the risks and benefits of amalgam products, the PHS report recommended that FDA, the National Institute of Health, Centers for Disease Control and Prevention, Office of the Assistant Secretary for Health, and the National Institute of Dental Research implement a comprehensive strategy to address concerns about amalgam products. Specifically, the PHS report recommended the development of a research agenda, a method to monitor research, and a public and professional educational campaign. The PHS report also recommended that FDA carry out the following regulatory initiatives: (1) Combine elemental mercury and dental alloy, which are presently regulated separately, into a single product for regulatory purposes; (2) require manufacturers of all dental restorative materials, including dental amalgam, to label their products with the ingredients to help dentists identify patients who may exhibit allergic hypersensitivity to these substances; and (3) encourage dentists and patients to report to FDA adverse effects from all restorative materials. (Ref. 1).
The HHS Environmental Health Policy Committee, the successor to the CCEHRP, met in mid-1995 and reaffirmed the findings and policy approaches outlined in the 1993 PHS report (Ref. 2).
In 1993, several individuals filed citizen petitions related to the regulation of dental amalgam and dental mercury (Ref. 3). These petitions requested that FDA take numerous actions with respect to dental amalgam and mercury, including banning dental mercury, reclassifying dental mercury into class III, imposing restrictions on amalgam, conducting environmental assessments and issuing environmental policy statements, issuing policy statements addressing patients and health care workers, and convening a special panel to review the merits of these requests.
The petitioners submitted numerous scientific publications they believed supported the conclusion that dental mercury and amalgam were unsafe. FDA convened a group of experts to assess these additional studies. After reviewing the additional studies cited in the petitions, the group of experts did not find that any of the studies supported claims that individuals with dental amalgam fillings will experience adverse effects including neurologic, renal, or developmental effects. Their conclusions concerning the risks of amalgam were consistent with the conclusions in the 1993 and 1995 PHS reports. (Ref. 4).
After review of the existing information about the safety of dental amalgam and mercury, including additional information cited by petitioners, FDA responded that it intended to propose to place amalgam products into class II, not class III. FDA
The U.S. Government has funded several studies related to dental amalgam. Since 1982, a large-scale epidemiological study, commonly referred to as the “Ranch Hand Study,” has been continuing to assess the possible links between exposure of the U.S. military personnel to the herbicide Agent Orange, used during the Vietnam War, and reported health effects. The extensive medical and oral health database developed in support of this study, drawn from approximately 1,200 study participants, made it possible for persons with different research interests to use selected data in the pursuit of their own studies. Oral health information, dental records from military archives, and measures of mercury levels in blood and urine samples enabled the National Institute of Dental and Craniofacial Research to initiate a two-pronged study. One aspect of the study entailed the establishment of mercury levels from amalgam fillings and the occurrence of various reported health symptoms. The other aspect involved a longitudinal cohort assessment in which the number of amalgam restorations were determined retrospectively and comparisons made of reported health effects between groups with high and low exposure levels and those with no exposure. To date, no discernible causal or correlational connection has been observed between study subjects with amalgam fillings and adverse health effects. The period of observation is continuing. The government has sponsored several other continuing studies that relate to amalgam fillings with results anticipated in 2003.
There have been a number of major reviews by international authorities of the nature and magnitude of health risks associated with dental amalgam restorations. The majority of these assessments are based upon extensive reviews of the available body of relevant scientific literature and consensus among leading researchers and renowned experts from the fields of oral health, toxicology, medicine, and other related disciplines. The following overview identifies these individual reviews and provides the overall conclusions of each.
In 1994, an expert group convened by Sweden’s National Board of Health and Welfare took the position that: “Scrutiny of the results of recent research * * * has not shown that mercury from amalgam has an adverse effect on health, with the exception of isolated cases of allergic reactions” (Ref. 6).
At the request of senior U.S. health officials, in 1994, a delegation of PHS scientists and regulators organized a nine-country information exchange forum in Berlin, Germany for the purpose of determining the scientific bases for national policies governing the use of dental amalgam. In 1998, a report memorializing the conclusions of this group was published. The report concluded that: (1) No systemic dose-dependent toxic effects have been shown to be related to amalgam; (2) local reactions to dental amalgam fillings do occur but are relatively rare; (3) the benefits of restoring teeth with dental amalgam outweigh significantly the documented risks; and (4) there is no indication that clinically satisfactory dental amalgam fillings should be removed (Ref. 7).
In 1995, Canadian health authorities released a report on amalgam safety (Ref. 8), which concluded:
Dental amalgam contributes detectable amounts of mercury to the [human] body, and is the largest source of mercury exposure for average Canadians. However, this exposure is not causing illness in the general population. Current evidence does not indicate that mercury contributes to Alzheimer’s disease, amyotrophic lateral sclerosis, multiple sclerosis or Parkinson’s disease.
In 1996, the University of Otego’s Wellington School of Medicine in New Zealand, which serves as the World Health Organization (WHO) Collaborating Centre in Oral Health, enlisted four prominent researchers to conduct a review of available scientific reports on amalgam safety. In a draft report, three of the researchers concluded: “* * * the assumption of a cause-and-effect relationship between amalgam and cases of ill health is evidence of an overreaction and unwise, considering the endemic prevalence of amalgam in the population” (Ref. 9).
In 1997, the Canadian province of Quebec undertook its own evaluation of the state of the science relating to amalgam safety. Taking a somewhat equivocal stance, Quebec authorities stated:
The mainstream scientific view holds that mercury exposure, even at very low levels attributable to dental amalgam, might be affecting people adversely, but the evidence currently available is inadequate to determine if this is the case. Existing evidence is weak, but the information base is inadequate to conclude that dental amalgam has no effects that might be of concern (Ref. 10).
In early 1997, WHO convened a “consultation meeting” at its headquarters in Geneva, Switzerland to re-visit WHO’s policy on dental amalgam use with the current science. In attendance were government officials, scientists, and representatives from the dental profession and dental trade industry from 10 of the world’s major industrialized nations and 2 of WHO’s regional offices. At the end of this meeting, the participants issued the following consensus statement:
Dental amalgam restorations are considered safe, but components of amalgam and other dental restorative materials may, in rare instances, cause local side effects or allergic reactions. The small amount of mercury released from amalgam restorations, especially during placement and removal, has not been shown to cause any other adverse health effects. (Ref 11).
In 1997, the Oral Health section of WHO's Division of Non-Communicable Diseases issued a publication based upon the working papers and presentations by participants at the 1997 WHO conference noted above. The publication included and gave WHO sanction to the consensus statement adopted by the participants at the 1997 WHO consultation meeting and provided supporting technical and scientific evidence on a wide range of discrete issues relating to dental amalgam (Ref. 11).
For example, in a section entitled “Direct Restorative Dental Materials in Oral Health Care Amalgam, Composites and Glass Ionomers,” the document states:
Expert groups, convened by the Swedish National Board of Health and Welfare and the Swedish Medical Research Council (SOS, 1987) and the Department of Health and Human Services, USA (1993), have studied possible health effects of the use of mercury-containing amalgam. These study groups concluded that while it is well documented that individuals with amalgam fillings have higher concentrations of mercury in all tissues studied than those who have no amalgam fillings, there is no direct evidence of an adverse effect of mercury from amalgam tooth fillings on general health (Ref. 11).
In the section titled “Toxic and Allergenic Risks Due to Dental Biomaterials”, the document states:
Mercury from dental amalgam has been accused of being a toxic agent causing serious consequences to health, including various sclerosis, Alzheimer’s disease, myalgic encephalitis, epilepsy, etc. without any proof having ever been presented. On the other hand, we know that certain allergies to mercury are involved in the appearance of lichenoid reactions, even if they are not the only responsible cause. The very rare epidemiological estimation of risk of allergy gives us percentages that go from 0.04% to
A third paper presented in the WHO publication entitled “Mercury Exposure From Dental Amalgam Fillings: Absorbed Dose and the Potential for Adverse Health Effects” stated: “It is concluded that no signs of renal toxicity could be found in conjunction with mercury released from amalgam fillings.” Additionally, the paper recited the findings of a number of researchers who conducted studies on human subjects with symptoms allegedly caused by amalgam fillings. One study found that: “No symptom group had a higher estimated daily uptake of inhaled mercury vapor, or any higher mercury concentrations in blood and urine than the control group.” Another study reported:
No significant differences regarding release of mercury vapor [sic] from the amalgam fillings before and after gum-chewing between the test subjects and the matched controls in a few spot measurements were found. Furthermore, no significant differences were found regarding urinary mercury levels and total excretion of proteins in urine. No damage in renal function was noted.
December 1998 marked the culmination of a 2-year long study by an ad hoc working group constituted by the European Commission (the Commission) on amalgam safety and regulatory policies among the Commission’s 15 member states. Comprised of leading dental professionals, researchers, and academics from western Europe, and with oversight by the Commission’s medical devices expert group, the ad hoc working group issued a comprehensive assessment containing a number of conclusions, as follows:
In recent years, toxicological and biocompatibility aspects of dental amalgam have been reviewed extensively, both nationally and internationally, and risk analyses carried out. Currently available data indicate that mercury from dental amalgam will not cause an unacceptable health risk to the general population. * * * levels of mercury found in tissues, blood and urine and associated with dental amalgam fillings are considerably below the levels at which systemic dependent toxic effects have been shown to occur * * *. The hypothesis that there is a significant toxicological risk from dental amalgam fillings cannot be substantiated by the available evidence * * *. Local reactions to dental amalgam fillings and other dental restorative materials do occur but are relatively rare * * *. There is no scientific evidence that the use of dental amalgam is related to adverse effects on pre- and post-natal health or fertility.
Notwithstanding general international consensus about the level of risk, some Nordic countries, such as Denmark, Finland, Norway, and Sweden, have placed legal restrictions on dental amalgam for environmental concerns (Refs. 7 and 11). In addition, several European countries have taken very conservative approaches.
The Dental Products Panel (hereinafter referred to as the Panel) met on December 1, 2, and 3, 1993, and June 29, 1994, to discuss amalgam products. In addition to testimony from FDA staff, the Panel heard testimony from representatives of ADA, the American Dental Trade Association, and PHS. The Panel also reviewed the 1993 PHS report and an updated literature review. FDA requested that the Panel make a classification recommendation only on the encapsulated dental amalgam alloy and mercury.
After considering this testimony and information, the Panel unanimously recommended to classify encapsulated amalgam alloy and mercury for the restoration of teeth into class II. Specifically, the Panel recommended voluntary performance standards that could be issued by a group such as the Association for the Advancement of Medical Instrumentation (AAMI), voluntary testing guidelines, education, that the product be used only upon the written or oral authorization of a practitioner licensed by law to administer or use the device, and that the device be used only by persons with training or expertise in its use (Ref. 12).
The Panel identified encapsulated amalgam alloy and mercury as a device composed of elemental mercury and amalgam alloy separated by a septum, which when placed in a dental amalgamator produces dental amalgam that is intended for the restoration of teeth. This product is hereinafter referred to in this document as encapsulated alloy/mercury.
Class II (special controls): The Panel recommended that the establishment of special controls be a medium priority.
The Panel, after considering the persons for whom the generic device is intended, and the proposed conditions for use for the generic device, gave the following reasons in support of its recommendation to classify the encapsulated alloy/mercury into class II.
1. General controls by themselves are insufficient to provide a reasonable assurance of the safety and effectiveness of the device.
2. There is sufficient information to establish special controls to provide reasonable assurance of safety and effectiveness.
3. Special controls will provide a reasonable assurance of safety and effectiveness.
The Panel based its recommendation on the review of the PHS report, other published literature, on expert testimony presented to the Panel, and on the Panel member’s personal knowledge of, and experience with, the devices. The PHS report has been summarized under section IV.A of this document.
The Panel also reviewed a wide range of literature during its deliberation on the classification of encapsulated alloy/mercury in addition to the data described in the PHS report. The majority of the literature reviewed states that there is no compelling reason to change the current usage patterns of dental amalgam. There is, however, acknowledgement that continued research in the area is prudent. The following paragraphs describe specific information detailing the literature.
One of the articles reviewed indicated that mercury vapor is released from amalgam restorations. This article stated that there is release of mercury vapor from restorations during chewing, tooth brushing, and other oral activities. The author, however, indicated that there is insufficient knowledge about the metabolism of mercury vapor in the human to predict the health significance
Another article reviewed by the panel demonstrated that mercury vapor can be analyzed in the oral cavity, especially following removal of amalgams, and during the setting and polishing of the amalgam. This study also demonstrated a significant direct correlation between the size of the amalgam restoration and the amount of vapor released. The study, however, concludes that mercury vapor exposure is of short duration and infrequent and is well below the exposure limits that are considered harmful (Ref. 14).
Another article indicated that although there is evidence of mercury vapor released from amalgam restorations there is no proof of a causal link of this specific source of the heavy metal to any major human health problem (Ref. 15).
One article indicated that Dental Amalgam remains one of the most versatile restorative materials in use (Ref. 16). The article further stated that certain measures should be instituted to assure patient and health care professional safety. These include the potential for chemical sensitivity to any of the elements and compounds found in dental amalgam. Similar concerns were also raised in the PHS report. The article reported that the chemical sensitivity response to specific compounds and elements in a dental amalgam are no different than other sensitivity reactions (Ref. 16). It further stated that evidence suggests that sensitivities to chemicals can occur within a small portion of the population.
Several articles addressed the benefits versus the risks of dental amalgam, and these articles agreed that, although dental amalgam can release minute amounts of elemental mercury, occupational studies indicate that the severity of response to this heavy metal follows a dose response pattern (Refs. 16 and 17). A dose response effect has not been demonstrated at a level of exposure associated with dental amalgams (Refs. 16 and 18). It also is noted that mercury is absorbed from many sources, including food and air, and there has been no demonstration that most people experience any clinical effects from this small additional body burden of mercury from amalgams (Ref. 16). The articles also stated that if there are adverse health effects from mercury in dental amalgam they may be so subtle and nonspecific that they would be difficult to detect, and noted that true allergies to dental amalgam rarely have been reported but do exist (Refs. 16 and 19).
One article directly examined the claims of mercury poisoning from dental amalgam (Ref. 19). This article and others concluded that although it is not possible to completely rule out adverse effects in a minority of susceptible patients, there is insufficient evidence to justify claims that mercury from dental amalgam restorations has an adverse effect on health on the vast majority of patients (Refs. 16 and 19). Other articles indicated that, although mercury vapor in high concentrations can have deleterious effects on organ systems, there is no evidence of risk at the levels generated by chewing with amalgam restorations (Refs. 13 and 15). The regulatory issues related to amalgam were addressed in one article. This article emphasized the need for continued surveillance and the need for practitioner input to report problems in performance with dental devices (Ref. 20).
The Panel stated that there were no major risks associated with encapsulated amalgam alloy/mercury when used as directed, but recognized there was a small population of patients that may demonstrate allergic reactions to the materials in amalgam. The Panel noted that improper usage of the product also presented risks associated with mercury toxicity. The Panel specifically identified improper storage, trituration, and handling as contributing to this risk.
FDA is proposing classification actions in this document for dental mercury and dental amalgam products. FDA believes that the uniform regulation of all these products as class II devices, and the application of certain uniform special controls is appropriate, given the same risks are presented by the potential toxicity of mercury in each of these devices. This approach is consistent with the recommendation in the PHS report to regulate these products in a uniform manner. FDA believes that sufficient information exists to develop special controls, which will provide reasonable assurance of the safety and effectiveness of these devices.
With respect to encapsulated alloy/mercury, FDA agrees with the Panel’s recommendation and is proposing that this product be classified into class II (special controls). Specifically, FDA is following the Panel’s recommendation and proposing that labeling guidance and relevant recognized voluntary consensus standards be applied as special controls to these products.
FDA is also proposing to reclassify dental mercury as identified in § 872.3700 from class I to class II with labeling guidance and a relevant recognized voluntary consensus standard as special controls.
Lastly, FDA is proposing to add labeling guidance and a relevant voluntary consensus standard as special controls for the existing class II device, amalgam alloy, as identified in § 872.3050. Currently, no performance standard or other special controls are designated for amalgam alloy.
Before making this proposal, FDA carefully examined extensive information about the safety and effectiveness of dental restorative materials that contain mercury. As stated previously, public concern about the safety of dental amalgam engendered several national and international comprehensive reviews of scientific information about the risks and benefits of these products. FDA examined the 1993 and 1995 PHS reports, information presented to the Panel and the Panel’s recommendations, information submitted in support of citizen petition’s requests, and numerous reports of international health organizations and foreign countries that conducted comprehensive risk assessments of dental products that contain mercury.
In preparing the 1993 and 1995 PHS reports described in section IV.A of this document, the experts convened by the PHS conducted a comprehensive review of the scientific literature to assess the benefits and risks posed by dental restorative materials containing mercury (Ref. 1). In assessing the benefits of these products, the Benefits Assessment Subcommittee performed a literature search using the Medline system (Ref.1). The scientific material reviewed for this report included well-qualified, prospective studies using objective assessment methods; cross-sectional studies reporting data for a given point or points in time; retrospective studies reporting the longevity of dental restorations; and articles published in peer-reviewed scientific journals (Ref. 1).
In assessing the risks associated with dental restorative materials containing mercury, the Risk Assessment Subcommittee viewed the body of significant literature that described the evidence for possible health effects produced from exposure to mercury from dental amalgam (Ref. l). The Risk Assesment Subcommittee reviewed an extensive number of studies relating to
FDA also examined the information reviewed by its expert Panel in 1994, and the Panel’s recommendation. In making its recommendation, the Panel reviewed the 1993 PHS report, testimony from several professional and health organizations, and additional scientific literature as described in section V.D of this document.
FDA also carefully examined numerous studies, as described in section IV.B of this document, submitted by petitioners as evidence that amalgam fillings cause detrimental physiological and psychological effects.
Lastly, FDA reviewed the comprehensive reports of several international health organizations and foreign countries on the risks associated with these products, described in section IV.D of this document. In preparing these reports, these countries and organizations conducted extensive reviews and assessments of existing literature and scientific information.
For purposes of classification, FDA is to determine the safety and effectiveness of a device, in part, by weighing the probable benefits to health from use of the device against any probable risks of injury or illness from such use (section 513(a)(2) of the act).
Over the past 100 years, amalgam fillings have provided great benefit by restoring the structure of teeth of millions of individuals. Products used to make amalgam fillings are used today in the following situations (Ref. 1):
• Individuals of all ages;
• Stress-bearing areas and in small to moderate sized cavities in the posterior teeth;
• Teeth with severe destruction of structure;
• For cast-metal, metal-ceramic, and ceramic restorations as a foundation;
• When a patient’s commitment to oral hygiene is poor; and
• When moisture control is problematic with patients.
These products provide substantial benefits over other dental restorative materials because amalgam fillings offer a broad range of applicability in clinical situations, durability, ease of use and relative insensitivity to variations in handling technique and oral conditions (Ref. 1).
Dental amalgam can release minute amounts of elemental mercury, a metal whose toxicity at high exposure levels is well established. Estimates of human uptake of mercury from amalgam fillings have ranged between 1.24 and 27 micrograms (μg) per day, a factor of more than twentyfold. However, the widely varying experimental conditions and assumptions in calculations undoubtedly contribute to the wide range of results. Non-physiologic-based models resulted in estimates likely being several times too high. Recalculations correcting for these factors produced estimates of less than 5 μg per day. Studies have demonstrated higher blood and urine levels of mercury in individuals with amalgam fillings. However, estimates of mean daily mercury exposure from all sources vary (Ref. 1).
There is also evidence that mercury levels in body fluids spike during placement and removal of amalgam fillings and then decline over time, but no controlled clinical studies of health consequences of this phenomenon have been conducted. Occupational studies indicate that subclinical effects may occur at exposure levels tenfold higher than those typically experienced by the general population. Severity of response generally follows a dose-response pattern. There is no valid scientific evidence demonstrating specific adverse responses or a dose effect in humans at levels of mercury exposure associated with dental amalgam (Ref. 1).
Mercury is absorbed from many sources, including food and air. Because of the variability of exposures to mercury from all sources in the population, the margin of safety for some persons may be lowered when mercury from amalgam fillings is added. There is no valid scientific evidence that the general population treated with dental amalgam experiences any adverse clinical effects from this additional body burden of mercury arising from amalgam use (Ref. 1).
As stated previously, public concern has been expressed over the toxic effects of mercury from amalgam fillings and certain persons have attributed a variety of detrimental physiological and psychological effects to mercury toxicity from amalgam fillings. In response to these concerns, numerous national and international reviews have examined reports of adverse effects from amalgam fillings, and FDA has reviewed substantial information about amalgam risks, as described in sections IV and V of this document.
After review of the scientific evidence and review of numerous studies submitted in support of banning or upclassifying dental restorative products containing mercury, FDA does not find any persuasive evidence that the physiological and psychological symptoms attributed to amalgam fillings are caused by amalgam fillings. Furthermore, FDA does not find any persuasive evidence that there is any improvement of these symptoms after removal of amalgam fillings. Although there are studies purporting to support the view that amalgam products pose risks to persons beyond the small subpopulation of hypersensitive individuals, conclusions cannot be drawn from these studies because they are methodologically flawed.
This position concerning the evidence of risks posed by amalgam fillings is supported by the findings of the PHS reports (Ref. l), international health organizations, foreign governments, and the recommendations of FDA’s expert advisory Panel as described in sections IV and V of this document. FDA does believe that there are some risks associated with dental products used in amalgam fillings from mercury toxicity that are associated with improper storage, trituration, and handling of the product. However, FDA does not believe that there are any major risks associated with toxicity of mercury when these products are used as directed. FDA believes there are also risks of allergic reaction to these products in a small subpopulation of individuals.
FDA believes that valid scientific evidence, as defined in § 860.7(c)(2), exists to determine the safety and effectiveness of dental amalgam: Namely, certain studies described in the PHS report; the studies and reports upon which the Panel based its recommendation; studies and reports reviewed by international health organizations and foreign governments; and most notably the significant human
Although the degree of risk is not known to a certainty, FDA must make an assessment to weigh the probable benefits with the probable risks associated with the use of the device, in accordance with the criteria for a reasonable assurance of safety under § 860.7(d)(1). The statute states that FDA’s classification decisions are to be predicated on a “reasonable assurance of safety and effectiveness,” not an absolute assurance of safety and effectiveness (section 513(a)(1) of the act). Moreover, the statute directs FDA, in determining what is a “reasonable assurance” of safety and effectiveness, to assess “probable risk,” not absolute risk (section 513(a)(2) of the act). FDA believes that the benefits and risks of encapsulated alloy/mercury and amalgam alloy are sufficiently characterized to make a determination that these products should be classified into class II with special controls. FDA notes that there is more significant human experience with dental amalgam than any other restorative material, and that, accordingly, more is known about the risks of dental amalgam than any other restorative material (Ref. 1).
Given the known risks of untreated caries, the longstanding history of successful use of dental amalgam restorations, the benefits of products used in amalgam fillings over other alternative materials, and the overall lack of valid scientific evidence that persons whose carious teeth are treated with dental amalgam experience any adverse health effects, other than a very small number of people who are hypersensitive to mercury, FDA believes that the probable benefits of restorative dental products containing mercury outweigh the probable risks of using these products.
The agency acknowledges that a small subpopulation of persons that already have high body burdens of mercury or suffer from allergies may respond adversely to the additional mercury exposure from amalgam fillings. For these subpopulations, the agency believes the risks can be addressed by labeling and by using alternative filling materials.
FDA believes that special controls, such as those described below by the Panel, will address those risks presented by dental amalgam products, both to hypersensitive individuals and health care workers, and that class II with special controls will provide a reasonable assurance of the safety and effectiveness of dental amalgam products.
FDA is proposing a labeling guidance and relevant recognized voluntary consensus standards as special controls for dental mercury and dental amalgam products. These special controls are consistent with the Panel’s recommendations for special controls for encapsulated amalgam alloy and dental mercury, and FDA believes they address the risks related to toxicity associated with improper handling of dental mercury and dental amalgam products, and the risks for the small subpopulation of individuals who are allergic to ingredients in these products.
FDA's proposed guidance recommends that dental amalgam and dental mercury labeling lists all ingredients. By doing so, the clinician would be made aware of all materials he/she is placing in a patient’s mouth, and would be able to avoid use of the product if the patient had known hypersensitivities to ingredients in amalgam products. This guidance also addresses risks to hypersensitive patients by recommending labeling instructing the practitioner not to use these products in hypersensitive persons, and of steps to take if allergic reactions do occur. FDA believes the guidance also controls the risks related to toxicity from improper storage, trituration, and handling by recommending instructions for storage, handling, and use. Finally, the guidance describes the prescription labeling requirements. FDA is including labeling aspects of the current edition of “ISO 1559:1995” and ANSI/ADA's “Specification No. 6-1987,” described below, into its labeling guidance.
The agency has adopted good guidance practices (GGPs) regulation, which set forth the agency’s policies and procedures for the development, issuance, and use of guidance documents (21 CFR 10.115). Elsewhere in this issue of the
FDA is also proposing “ISO 1559:1995 Dental Materials—Alloys for Dental Amalgam” as a special control for both encapsulated alloy/mercury and amalgam alloy. This standard was developed by international governmental and nongovernmental committees in liaison with ISO, a worldwide federation of national standards bodies. The standard describes appropriate specifications and test methods for alloys composed mainly of silver, tin, and copper used in amalgam. The alloy may be in either powder or tablet form, or in capsules with portions of alloy and mercury. It describes the minimum silver content and the maximum content of tin, copper, indium, palladium, platinum, zinc, and mercury. It also describes the recommended physical properties of the alloy, specifically, maximum percent creep, percent dimensional change, and compressive strength after 1 hour and after 24 hours. This standard also describes the test methods for determining physical properties. This standard addresses consistency of chemical composition and the important physical properties of the restorative material. This aspect of the special control allows the practitioner to know what substances are contained in the product, which will allow the practitioner to provide better counsel to patients who are allergic.
The standard also addresses the risks identified by the panel related to improper storage, tituration, and handling by providing recommendations, specifications, and instructions for proper handling, storage, and tituration.
This standard also has packaging and labeling instructions including a recommendation to list elements present in the alloy that are in concentrations greater than 0.1 percent, (see ISO 1559: 1995 section 7.2.1(f)). These packaging and labeling recommendations are consistent with the FDA labeling guidance discussed previously in all respects except one: The recommendation concerning the listing of ingredients. The specification in ISO 1559:1995 section 7.2.1(f) suggests listing only those elements present in the alloy in concentrations greater than 0.1 percent mass/mass (m/m), whereas the FDA labeling guidance recommends listing all ingredients in the product labeling. FDA is not incorporating this aspect of section 7.2.1 of ISO 1559:1995 as a special control because it believes all ingredients, even in concentrations smaller than 0.1 percent(m/m) could cause allergic reactions in some subset of persons. Therefore, FDA believes that practitioners should be informed of all ingredients. If practitioners are informed of the ingredients they will be able to counsel patients on appropriate treatment options.
This standard may be obtained from the International Organization for Standardization, Case Postale, Geneva, Switzerland, CH-1121. ISO also maintains a site on the Internet at http://www.iso.org.
FDA is also proposing to adopt ANSI/ADA's “Specification No. 6-1987 for Dental Mercury” as a special control for dental mercury (§ 872.3700) and encapsulated alloy/mercury (§ 872.3070). This standard specifies the specifications and test methods for mercury suitable for the preparation of dental amalgam and provides recommendations for packaging and marketing. It recommends packaging in air tight containers, and providing hazard warnings regarding mercury hygiene. This standard will allow the dentist to be aware of the physical properties of the mercury that will be used for restorations that will enable the dentist to better counsel allergic patients and will alert the dentist to mercury hygiene procedures. The risks identified by the Panel, including toxicity resulting from improper handling and storage that may result in systemic absorption of liquid mercury through the skin, local chemical sensitivity reaction, and inhalation of minute amounts of mercury vapor, are addressed in the standard by detailed recommendations for mercury manipulation and its packaging information, transport and handling procedures. This standard may be obtained from ANSI/AAMI, 11 West 42d St., New York, NY 10036. ANSI also maintains a site on the Internet at http://www.ansi.org.
The agency has determined under 21 CFR 25.34(b) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
FDA has tentatively determined that this proposed rule does not contain any new information collection requirements and, therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not necessary.
FDA has examined the impacts of the proposed rule under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612) (as amended by subtitle D of the Small Business Regulatory Fairness Act of 1996 (Public Law 104-121)), and the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Order 12366 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes that this proposed rule is consistent with the regulatory philosophy and principles identified in the Executive order. In addition, the classification actions are not significant regulatory actions as defined by the Executive order. If a rule has a significant economic impact on a substantial number of small entities, the Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities.
The agency certifies that these proposed classification actions, if finalized, will not have a significant economic impact on a substantial number of small entities. In addition, this proposed rule will not impose costs of $100 million or more on either the private sector or State, local, and tribal governments in the aggregate, and therefore a summary statement of analysis under section 202(a) of the Unfunded Mandates Reform Act of 1995 is not required.
The proposed classification actions will affect the three separate devices: Dental mercury, amalgam alloy, and encapsulated dental amalgam. Professional dental groups have recommended the use of encapsulated dental amalgam over the other separate products. According to FDA data, encapsulated amalgam now accounts for over 99 percent of the amalgam market. Encapsulated dental amalgam is typically purchased and stored in packages of 80 capsules. These packages are kept at hand in dental clinics until needed. A typical restoration is expected to require two capsules of amalgam.
According to FDA records, there are 35 manufacturers of dental mercury, amalgam alloy, and encapsulated dental amalgam. In total, FDA expects that 40 distinct products will be affected by the proposed classification actions. Over 200 million dental restorations were performed during the last year for which FDA has data (1999), of which 64 million utilized dental amalgam (ADA, 1999). There are currently approximately 155,000 active dentists operating in 145,000 separate clinics (Bureau of Labor Statistics, 1998).
FDA is proposing to: (1) Issue a separate classification regulation for encapsulated amalgam alloy and dental mercury; (2) amend the classification for amalgam alloy by adding special controls; and (3) reclassify dental mercury from class I (general controls) to class II. FDA is proposing that all three products would have the same labeling guidance as a special control. In addition, FDA is proposing that dental mercury would have a voluntary ANSI standard as a special control, encapsulated alloy and dental mercury would have voluntary ANSI and ISO standards as special controls, and the amalgam alloy products would have a voluntary ISO standard as a special control.
FDA does not expect any change in costs related to the voluntary standard special controls. Manufacturers that export encapsulated amalgam are already responsible for meeting these voluntary standards, and other manufacturers currently follow equivalent standardized methods. Any change in performance test procedures is likely to result in little, if any, incremental change in production costs.
The special control labeling guidance, however, would entail some minimal costs to manufacturers. While some manufacturer’s products currently include ingredient labeling, there is no consistent industry format. FDA is recommending a consistent label that will allow interested consumers of dental amalgam to easily obtain necessary information that may result in mercury exposure avoidance. Thus, FDA believes that manufacturers of these products will redesign their labeling or develop for the first time ingredient labeling as a result of these proposed classification actions.
FDA has developed estimates of the costs of enhanced labeling for dental amalgam. This estimate is based on costs developed by a consultant firm (Eastern Research Group (ERG)) for developing labeling for similar medical devices, specifically medical gloves (Ref. 21). These estimates include the costs of artwork, design, regulatory review, production, and application. Overall, the cost of developing a new label under these guidelines is estimated to be $1,444 (or approximately $1,500). FDA expects that 40 labels will be developed, 1 label for each product produced by the 35 manufacturers of the three devices. Thus, the total cost of designing and applying enhanced labels is expected to equal $60,000 for 40 products. Over an estimated 5-year useful life (based on estimated cycle of labeling in the device industry), the average annualized cost to industry of this requirement (at 7 percent discount rate) is approximately $15,000.
FDA does not expect the proposed classification actions to affect dental clinics.
FDA believes the costs of developing new labeling (approximately $1,500) per product are not significant for a substantial number of small entities. The dental instrument and supplies industry, standard industrial code (SIC 3843) is typified by small establishments. Only about 35 of the approximately 650 establishments in the industry have more than 100 employees. (According to the Small Business Administration, any entity with fewer than 500 employees is considered small for this industry). These establishments are highly specialized (93 percent of their shipments are in this industry group) and concentrated (97 percent of dental sales were from these establishments). Total value of shipments was estimated at $2.0 billion, or about $125,000 per employee.
The Bureau of Census (Census) has estimated that 12 percent of all industry shipments come from dental establishments with fewer than five employees. Using the Census figures for dental manufacturers that have fewer than five employees, the average value of their shipments would equal $1.25 million per year. The proposed classification actions would result in the design and application of enhanced labeling, at a cost of $1,500 per product. There are 35 manufacturers producing 40 products. Assuming one manufacturer produces six products, the costs for the manufacturer producing six products would be $9,000 and the cost for manufacturers producing one product would be $1,500. The costs would only be approximately 0.1 percent to 0.7 percent (less than 1.0 percent) of the expected revenues for an extremely small entity. Thus, under to the Regulatory Flexibility Act (5 U.S.C. 605(b)), FDA certifies that the proposed regulations will not have a significant economic impact on a substantial number of small entities.
Interested persons may submit to the Dockets Management Branch (address above) written or electronic comments regarding this proposal by May 21, 2002. Two copies of any comments are to be submitted, except that individuals may submit one copy. Comments are to be identified with the docket number found in brackets in the heading of this document. Received comments may be seen in the office above between 9 a.m. and 4 p.m. Monday through Friday.
FDA proposes that any final rule that may issue based on this proposal become effective 30 days after its date of publication in the
The following references have been placed on display in the Dockets Management Branch (address above) and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday.
1. Dental Amalgam: A Scientific Review and Recommended Public Health Service Strategy for Research, Education and Regulation; Public Health Service, U.S. Department of Health and Human Services, January 1993.
2. Update Statement by the U.S. Public Health Service on the Safety of Dental Amalgam, September 1, 1995.
3. Citizen petition Docket No. 93P-0424, citizen petition Docket No. 94P-0354/CP1, and citizen petition from Dr. Baylin et al.
4. Summary of the documented review of scientific studies referenced in the dental amalgam petitions, May 28, 1997.
5. Response to citizen petition Docket No. 93P-0424/CP1, letter to Robert E. Reeves, Esq., dated October 31, 1997; response to citizen petition Docket No. 94P-0354, letter to Robert E. Reeves, Esq., dated November 10, 1997; and response to citizen petition submitted to the National Institute for Environmental Health Sciences referred to FDA for reply, letter to Michael A. Baylin, D.D.S. dated October 31, 1997.
6. Swedish National Board of Health and Welfare, Possible Health Effects and Dental Amalgam, 1994.
7. Dental Amalgam—A Report with Reference to the Medical Devices Directive 93/42/EEC from an Ad Hoc Working Group Mandated by the European Commission, June 1998.
8. The Safety of Dental Amalgam, Health Canada, 1995.
9. Dental Amalgam and Human Health (A Current Consensus); WHO Collaborating Centre in Oral Health, Wellington School of Medicine, University of Otego, Wellington, New Zealand, June 1996.
10. The Safety of Dental Amalgam: A State of the Art Review, Conseil d’Evaluation des Technologies de la Sante’ de Quebec, April 1997.
11. Consensus Statement on Dental Amalgam, World Health Organization Consultation on Assessing the Risks and Benefit to Oral Health, Oral Care and Environment Using Dental Amalgam and its Replacement, March 7, 1997, draft.
12. Transcript from 1993 meeting of the Food and Drug Administration Dental Products (Advisory) Panel, December 1 to 3, 1993, and transcript from 1994 meeting of the Food and Drug Administration's Dental Products (Advisory) Panel, June 29, 1994.
13. Enwonwu, C. O., “Potential Health Hazard of Use of Mercury in Dentistry: Critical Review of the Literature”
14. Haikel, Y. et al. “Exposure to mercury vapor during setting, removing, and polishing amalgam restorations”
15. Mandel, Irwin D, “Amalgam Hazards; An Assessment of Research”
16. Corbin, Stephen B, “The Benefits and Risks of Dental Amalgam: Current Findings Reviewed”
17. Mackert, J. R., “Factors Affecting Estimation of Dental Amalgam Mercury Exposure from Measurements of Mercury Vapor Levels in Intra-oral Expired Air”
18. Mackert J. Rodway, “Dental Amalgam and Mercury”
19. Reinhardt, John W., “Risk Assessment of Mercury Exposure from Dental Amalgams”
20. Jacobson, Elizabeth D., “Regulatory Issues in Dentistry: How Dentists Can Participate”
21. Eastern Research Group; “Preliminary Estimates: Labeling and Related Testing Costs for Medical Glove Manufacturers,” memorandum, January 18, 1999.
Medical devices.
1. The authority citation for 21 CFR part 872 continues to read as follows:
21 U.S.C. 351, 360, 360c, 360e, 360j, 371.
(b)
(1) International Standard “ISO 1559:1995 Dental Materials—Alloys for Dental Amalgam,” and
(2) FDA's “Special Control Guidance for Industry on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling.”
(a)
(b)
(1) “ISO 1559:1995 Dental Materials—Alloys for Dental Amalgam,”
(2) ANSI/ADA's “Specification No. 6-1987 for Dental Mercury,” and
(3) FDA's “Special Control Guidance for Industry on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling.”
(b)
(1) ANSI/ADA “Specification No. 6-1987 for Dental Mercury,” and
(2) FDA's “Special Control Guidance Document on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling.”
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking and notice of public hearing.
This document contains proposed regulations relating to golden parachute payments to provide guidance to taxpayers who must comply with section 280G. Proposed regulations under section 280G were previously published in the
Written or electronic comments must be received by June 5, 2002. Requests to speak and outlines of topics to be discussed at the public hearing scheduled for June 26, 2002, must be received by June 5, 2002.
Send submissions to CC:ITA:RU (REG-209114-90), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 5 p.m. to: CC:ITA:RU (REG-209114-90), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC or sent electronically, via the IRS Internet site
Concerning the regulations, Erinn Madden at (202) 622-6030 (not a toll-free number). To be placed on the attendance list for the hearing, please contact LaNita M. Vandyke at (202) 622-7180.
This document contains proposed amendments to 26 CFR part 1 under section 280G of the Internal Revenue Code (Code). Sections 280G and 4999 of the Code were added to the Code by sec. 67 of the Deficit Reduction Act, Public Law 98-369 (98 Stat. 585). Section 280G was amended by sec. 1804(j) of the Tax Reform Act of 1986, Public Law 99-514 (100 Stat. 2807), sec. 1018(d) of the Technical and Miscellaneous Revenue Act of 1988, Public Law 100-647 (102 Stat. 3581) and sec. 1421 of the Small Business Job Protection Act of 1996, Public Law 104-188 (110 Stat. 1755).
Section 280G denies a deduction to a corporation for any excess parachute payment. Section 4999 imposes a 20-percent excise tax on the recipient of any excess parachute payment. Related provisions include section 275(a)(6), which denies the recipient a deduction for the section 4999 excise tax, and section 3121(v)(2)(A), which relates to Federal Insurance Contributions Act. Proposed regulations (PS-217-84) under section 280G were previously published in the
Section 280G denies a deduction to a corporation for any excess parachute payment. Section 4999 imposes a 20-percent excise tax on the recipient of any excess parachute payment. The disallowance of the deduction under section 280G is not contingent on the imposition of the excise tax under section 4999, and the imposition of the excise tax under section 4999 is not contingent on the disallowance of the deduction under section 280G. For example, an individual may be subject to the 20-percent excise tax under section 4999 even though the payor is a foreign corporation not subject to United States income tax.
Section 280G(b)(2)(A) defines a
Section 280G(b)(1) defines the term excess parachute payment as an amount equal to the excess of any parachute payment over the portion of the disqualified individual's base amount that is allocated to such payment. For this purpose, the portion of the base amount allocated to a parachute payment is the amount that bears the same ratio to the base amount as the present value of the parachute payment bears to the aggregate present value of all such payments to the same disqualified individual.
Generally, excess parachute payments may be reduced by certain amounts of reasonable compensation. Section 280G(b)(4)(B) provides that, except in the case of securities violation parachute payments, the amount of an excess parachute payment is reduced by any portion of the payment that the taxpayer establishes by clear and convincing evidence is reasonable compensation for personal services actually rendered by the disqualified individual before the date of change in ownership or control. Such reasonable compensation is first offset against the portion of the base amount allocated to the payment.
The 1989 proposed regulations provided guidance regarding the application of section 280G to corporations and individuals. Although many aspects of the 1989 proposed regulations were well-received, the IRS has received numerous comments requesting modification and clarification of the 1989 proposed regulations. In response, these proposed regulations clarify and revise, as described below, the 1989 proposed regulations. Many aspects of the 1989 proposed regulations are preserved, and these proposed regulations retain the same organizational structure as the 1989 proposed regulations. Major modifications to the 1989 proposed regulations are described below.
A payment constitutes a parachute payment only if the payment is made to (or for the benefit of) a disqualified individual. Section 280G(c) defines the term
The determination of whether an individual is a disqualified individual under these proposed regulations is substantially the same as under the 1989 proposed regulations, with three significant changes. First, Q/A-17 of the 1989 regulations provides a
Second, these proposed regulations modify the annualized compensation method for determining who is a highly-compensated individual under Q/A-19. Under the 1989 proposed regulations, no individual whose annualized compensation during the disqualified individual determination period is less than $75,000 is treated as a highly-compensated individual, even if the individual otherwise satisfies the definition of a highly-compensated individual. Q/A-19 is modified to provide that an individual must have annualized compensation equal to at least the amount described in section 414(q)(1)(B)(i). This amount for 2002 is $90,000 and is adjusted periodically for cost-of-living increases. This modification both updates the amount provided in the 1989 proposed regulations and provides a mechanism to update this amount periodically without further amendment of these regulations.
Finally, these proposed regulations change the disqualified individual determination period under Q/A-20. Under the 1989 proposed regulations, the disqualified individual determination period is the portion of the year of the corporation ending on the date of the change in ownership or control and the immediately preceding twelve months (with an option to use the calendar year or the corporation's fiscal year). Q/A-20 of these proposed regulations is modified to change this period to the twelve months prior to and ending on the date of the change in ownership or control of the corporation. Under this rule, the disqualified individual determination period is the same length for any change in ownership or control and is not affected by the date of the change in ownership or control.
A payment may be a parachute payment only if it is a payment in the nature of compensation. All payments, in whatever form, are payments in the nature of compensation if the payments arise out of the employment relationship or are associated with the performance of services. In Q/A-11, these proposed regulations clarify that payments in the nature of compensation include cash, the right to receive cash, or a transfer of property.
Q/A-13 of the 1989 proposed regulations provides that the transfer of a nonstatutory option is treated as a payment in the nature of compensation (even if the option does not have a readily ascertainable fair market value within the meaning of § 1.83-7(b)). The 1989 proposed regulations reserve the issue of the treatment of statutory options (i.e., options to which section 421 applies). These proposed regulations revise Q/A-13 to address the treatment of statutory stock options to provide that nonstatutory stock options and statutory stock options are treated the same. Because both the transfer of a statutory option and the transfer of a nonstatutory stock option are payments in the nature of compensation, there is no basis for distinguishing between these two types of options for purposes of section 280G.
In addition, these proposed regulations revise Q/A-13 with respect to the valuation of both statutory and nonstatutory stock options. Under the 1989 proposed regulations, the value of an option with an ascertainable fair market value is determined under all the facts and circumstances, including the difference between the option's exercise price and the value of the property at the time of vesting, the probability of an increase or decrease in the value of such property, and the length of the option exercise period.
Since the issuance of the 1989 proposed regulations, commentators have indicated that Q/A-13 does not provide sufficient guidance about the determination of the value of a stock option. In particular, commentators question whether the intrinsic value of the option (the difference between the exercise price and the value of the property, or spread) determined at the time of the change in ownership or control, or a value determined under a valuation model such as Black-Scholes, should be used for purposes of section 280G. Using the factors listed in the 1989 proposed regulations results in a value different from the value obtained from using only the difference between the exercise price and the value of the property. Commentators have also noted that valuation methods other than spread are often complicated and difficult to apply in some circumstances, particularly when the stock underlying the option is not publicly traded.
These proposed regulations continue to provide for the use of the factors described in the 1989 proposed regulations. To provide further guidance on acceptable and administrable methods for valuing stock options, these proposed regulations delegate authority to the Commissioner to provide methods for valuation of stock options
To be a parachute payment, a payment in the nature of compensation to a disqualified individual must be contingent on a change in ownership or control. Q/A-22 of the 1989 proposed regulations provides guidance on when a payment is contingent on a change in ownership or control. Generally, a payment is treated as contingent on a change in ownership or control if the payment would not in fact have been made had no change in ownership or control occurred. A payment generally is treated as one which would not in fact have been made in the absence of a change in ownership or control unless it is substantially certain, at the time of the change, that the payment would have been made whether or not the change in ownership or control occurred.
These proposed regulations clarify in Q/A-22 that a payment is contingent on a change in ownership or control if the payment would not have been made absent the change in ownership or control, even if the payment is also contingent on a second event, such as termination of employment within a period following the change in ownership or control. In addition, as under the 1989 proposed regulations, a payment generally is treated as contingent on a change in ownership or control if (a) the payment is contingent on an event that is closely associated with such a change, (b) a change in ownership or control actually occurs, and (c) the event is materially related to the change in ownership or control. The fact that a payment that is contingent on an event closely associated with a change in ownership or control is also conditioned on the occurrence of a second event does not affect the determination that the payment is contingent on a change in ownership or control as the result of the occurrence of the first event.
Under Q/A-24 of the 1989 proposed regulations, the entire amount of a payment is generally treated as contingent on a change in ownership or control. These proposed regulations clarify that the general rule of Q/A-24(a) (and not the special rules in either Q/A-24(b) or (c), discussed below) applies to the payment of amounts due under an employment agreement on a termination of employment or change in ownership or control that, without regard to the change, would have been paid for the performance of services after the termination of employment or change in ownership or control, as applicable. Also, the general rules of Q/A-24(a) apply to the accelerated payment of an amount that is otherwise payable only on the attainment of a performance goal or contingent on an event or condition other than the continued performance of services for a specified period of time. In situations governed by Q/A-24(a), the determination of whether a portion of the payment is reasonable compensation for services rendered before, on, or after the change in ownership or control is determined under Q/As-38 through 44. With respect to amounts due under an employment agreement, however, in most situations, a reduction for reasonable compensation for services rendered before the change in ownership or control is inappropriate, given the general expectation that an individual is not under-compensated for services rendered before a change in ownership or control. See Conf. Rep. No. 98-861, at 852 (1984).
Q/A-24(b) and (c) provide an objective method for determining the portion of a payment that is treated as contingent on a change in ownership or control for certain types of payments. These rules are not appropriate in situations such as the acceleration of salary payments under an employment agreement, when the periodic nature of the payments for services means that there is no issue in determining the amount of the payment that is accelerated, or in situations where a payment is conditioned on achievement of a performance goal or other event.
As under the 1989 proposed regulations, these proposed regulations provide that a payment is treated as contingent on a change in ownership or control if the change accelerates the time at which the payment is made or accelerates the vesting of a payment. Q/A-24(b) and (c) provide rules for determining the portion of such payment that is treated as contingent on the change in ownership or control. These proposed regulations clarify when Q/A-24(b) and (c) apply to a contingent payment.
These proposed regulations clarify that Q/A-24(b) applies if a payment is vested, without regard to the change in ownership or control, and is treated as contingent on a change in ownership or control because the change accelerates the time the payment is made. For example, if an individual has a vested right to a payment at normal retirement age under a nonqualified deferred compensation plan, but instead that payment is made immediately following a change in ownership or control, Q/A-24(b) applies to determine the portion, if any, of the payment that is treated as contingent on the change in ownership or control.
These regulations clarify that Q/A-24(c) applies to a payment that becomes vested as a result of a change in ownership or control to the extent that (i) without regard to the change, the payment was contingent only on the performance of services for the corporation for a specified period of time and (ii) the payment is attributable, at least in part, to the performance of services before the date the payment is made or becomes certain to be made. For example, if an individual will receive a bonus if employed at the end of a 3-year period, but the bonus is paid immediately on the date of the change of control, Q/A-24(c) applies to determine the portion of the payment that is treated as contingent on the change in ownership or control.
Q/A-24(b) provides that, when a payment is accelerated, the portion of the payment that is contingent on the change is the amount by which the accelerated payment exceeds the present value of the payment absent acceleration. Q/A-24(b) further provides that if the amount of a payment without acceleration is not reasonably ascertainable, and the acceleration does not significantly increase the value of the payment, then the present value of the payment absent the acceleration is equal to the amount of the accelerated payment. As a result, the value of the accelerated payment is equal to the value of the payment absent acceleration and no portion of the payment is treated as contingent on a change in control. If the value of a payment absent acceleration is not reasonably ascertainable and the acceleration significantly increases the value of the payment, the future value of the payment is equal to the amount
Q/A-24(c) provides that the portion of the payment treated as contingent on the change when both vesting and payment are accelerated is the lesser of (1) the payment or (2) the amount determined under Q/A-24(b) plus an additional amount to reflect the lapse of the obligation to perform additional services. Q/A-24(c) provides that for purposes of determining the amount under paragraph (b), the acceleration of the vesting of a stock option or the lapse of a restriction on restricted stock is considered to increase significantly the value of the payment.
Because Q/A-24(b) and (c) operate to provide an objective basis for determining the portion of a payment that is earned as of the date of a change in ownership or control, and therefore, not contingent on a change in ownership or control, these proposed regulations clarify that the rules in Q/As-38 through 44 (which provide rules related to reasonable compensation for services rendered), are inapplicable if the special rules in Q/A-24(b) or (c) apply to a payment.
These proposed regulations follow the same approach as the 1989 proposed regulations for determining when a change in ownership or control occurs. However, these proposed regulations clarify that, for purposes of determining whether two or more persons acting as a group are considered to own more than 50 percent of the total fair market value or total voting power of the stock of a corporation on the date of a merger, acquisition, or similar transaction involving that corporation, a person who owns stock in both corporations involved in the transaction is treated as acting as a group with respect to the other shareholders in a corporation only to the extent of such person's ownership of stock in that corporation prior to the transaction, and not with respect to his or her ownership in the other corporation. For example, assume individual A owns stock in both corporations X and Y when corporation X acquires stock in Y in exchange for X stock. In determining whether corporation Y has undergone a change in ownership or control, individual A is considered to be acting as a group with other shareholders in corporation Y only to the extent of A's holdings in corporation Y prior to the transaction, and not with respect to A's ownership in X. In determining whether Corporation X has undergone a change in ownership or control, individual A is considered to be acting as a group with other shareholders in Corporation X only to the extent of individual A's holdings in Corporation X prior to the transaction, and not with respect to individual A's ownership interest in Corporation Y. This rule applies without regard to the type of shareholder involved (i.e., whether the shareholder is an individual or an institutional shareholder, such as a corporation, mutual fund, or trust).
Comments are requested with respect to whether the change in ownership or control rules in these proposed regulations should be further revised. Comments are also requested with respect to whether additional guidance is necessary regarding the application of the change in ownership or control provisions, and these proposed regulations in general, in the context of specific business situations such as bankruptcy.
Section 280G specifically exempts from the definition of the term
The most significant revisions made by these proposed regulations with respect to exempt payments are clarifications to the shareholder approval requirements which must be met for payments with respect to a corporation in which no stock is readily tradeable on an established securities market or otherwise immediately before the change in ownership or control.
Section 280G(b)(5)(B) provides that the shareholder approval requirements are met if two conditions are satisfied. First, the payment is approved by a vote of the persons who owned, immediately before the change in ownership or control, more than 75% of the voting power of all outstanding stock of the corporation. Second, there is adequate disclosure to shareholders of all material facts concerning all payments which (but for this rule) would be parachute payments with respect to a disqualified individual. Since the issuance of the 1989 proposed regulations, commentators have indicated that the 1989 proposed regulations do not fully explain how the shareholder approval requirements operate or accurately reflect business practices connected with a change in ownership or control.
The proposed regulations clarify the process of obtaining shareholder approval within the structure provided by section 280G(b)(5)(B). Under this section, a shareholder approval vote is valid only if (1) it is a vote of more than 75% of the shareholders entitled to vote based on ownership in the corporation immediately before the change in ownership or control, and (2) disclosure is made with respect to all payments that would otherwise be parachute payments for an individual.
The first step in obtaining shareholder approval is to identify the shareholders entitled to vote. Q/A-7 is revised to clarify that stock held by a disqualified individual (or by certain entity shareholders) is not entitled to vote with respect to a payment to be made to any disqualified individual and that this stock is disregarded in determining whether the more than 75% approval requirement has been met. Once the stock entitled to vote is determined, more than 75% of the voting power of such stock must approve the payment. Q/A-7 also includes a rule of administrative convenience providing that a vote to approve the payment does not fail to be a vote of the shareholders who own stock immediately before the change in ownership or control if eligibility to vote is based on the shareholders of record at the time of any vote taken in connection with a transaction or event giving rise to the change in ownership or control within the three-month period ending on the date of the change in ownership or control. This rule only applies if the disclosure requirements are also met.
These proposed regulations further clarify that not all parachute payments must be subject to a shareholder vote to satisfy the shareholder approval requirements with respect to a payment. It is permissible for only a portion of the payments that would otherwise be made to a disqualified individual to be subject to vote. For example, assume that a disqualified individual with a base amount of $150,000 would receive payments that (but for the exemption for a corporation with no readily tradeable stock) would be parachute payments including (i) a bonus payment of $200,000, (ii) vesting in stock options with a fair market value of $500,000, $200,000 of which is contingent on the change in ownership or control, and (iii) severance payments of $100,000. In this
These proposed regulations also clarify that the shareholder approval requirements are met by a single vote on all payments submitted to the vote, including payments to more than one disqualified individual (assuming the disclosure requirements, described below, are also met).
The shareholder approval requirements also require adequate disclosure of all material facts concerning the amount of all parachute payments. For this purpose, the proposed regulations clarify that the amount of all parachute payments to be made to each disqualified individual, and not just the amount of the payments subject to vote, is a material fact. These proposed regulations also clarify that shareholders should be provided with basic information about the type of payments involved (e.g., vesting of stock options or severance payments). This disclosure of information must be made to all shareholders entitled to vote, not just to shareholders with 75% of the voting power entitled to vote.
The determination of whether amounts are reasonable compensation is relevant for two purposes. First, an excess parachute payment is reduced by any portion of the payment that constitutes reasonable compensation for services actually rendered before a change in ownership or control. Second, amounts that are reasonable compensation for services to be rendered after a change in ownership or control are exempt from the definition of parachute payment. In both situations, reasonable compensation for services must be demonstrated by clear and convincing evidence.
These proposed regulations clarify two issues with respect to reasonable compensation for services performed after a change in ownership or control. The proposed regulations clarify that clear and convincing evidence that a payment is reasonable compensation for services rendered after a change in ownership or control exists if the individual's annual compensation after the change in ownership or control (apart from normal increases) is not significantly greater then the individual's annual compensation before the change in ownership or control, provided that the individual's duties and responsibilities are substantially the same after the change in ownership or control as they were before the change in ownership or control. If the individual's duties and responsibilities have changed, then the clear and convincing evidence must demonstrate that the individual's annual compensation after the change in ownership or control is not significantly greater than the compensation customarily paid by the employer, or by comparable employers, to persons performing comparable services.
Payments to an individual under an agreement that requires the individual to refrain from providing services (such as under a covenant not to compete) may also constitute reasonable compensation for services to be rendered on or after the date of the change in ownership or control. Under Q/A-42 of these proposed regulations, an agreement is treated as an agreement to refrain from services (rather than an agreement for severance pay) if it is demonstrated with clear and convincing evidence that the agreement substantially constrains the individual's ability to perform services and there is a reasonable likelihood that the agreement will be enforced against the individual. If, under the facts and circumstances, the agreement does not satisfy these criteria, the payments under the agreement are instead treated as severance payments under Q/A-44. If the agreement does satisfy these criteria, then the agreement is treated as an agreement for the performance of services, and the payment are exempt from the definition of
Commentators have asked whether a payment with respect to a tax-exempt entity is exempt from the definition of the term
First, the payment must be made by a corporation undergoing a change in ownership or control that is a
Second, the organization must meet the definition of
As noted above, the term
Under the 1989 proposed regulations,
Accordingly, the term
Once all parachute payments are identified, the determination of what portion, if any, of each parachute payment is an excess parachute payment is made. This determination is based on the aggregate present value of all parachute payments. These proposed regulations modify the method described in Q/A-33 of the 1989 proposed regulations for determining the present value of a payment contingent on an uncertain future event or condition. Under Q/A-33 of these proposed regulations, if there is at least a 50-percent probability that the payment will be made, the entire present value of a contingent payment should be included for purposes of determining if there are excess parachute payments. If there is less than a 50-percent probability, then the present value of the contingent payment is not included. Once it is certain whether or not the payment will be made, the 3-times-base amount test in Q/A-30 is reapplied if the initial determination as to whether to include the payment was incorrect. If the inclusion or exclusion of the payment for purposes of Q/A-30 at the time of the change in ownership or control was correct, there is no need to reapply the 3-times-base-amount test. In addition, if it is reasonably estimated that there is a less than 50-percent probability that the payment will be made and the payment is not included in the 3-times-base-amount test, but the payment is later made, the 3-times-base-amount test is not reapplied if the test without regard to the contingent payment resulted in a determination that the individual received (or would receive) excess parachute payments and no base amount is allocated to the contingent payment.
Finally, Q/A-31 provides guidance on determining the present value of an obligation to provide health care over a period of years. Under these proposed regulations, the determination of the present value of this obligation should be calculated in accordance with generally accepted accounting principles. For purposes of Q/A-31, it is permissible for the obligation to provide health care to be measured by projecting the cost of premiums for purchased health care insurance, even if no health care insurance is actually purchased. If the obligation to provide health care is made in coordination with a health care plan that the corporation makes available to a group, then the premiums used for this purpose may be group premiums. This method only applies for purposes of determining present value. Premiums for health care insurance can be used for purposes of determining a corporation's loss of deduction or the excise tax obligation for a disqualified individual only to the extent such premiums are actually paid for health care insurance used to satisfy the corporation's obligation to provide health care.
In general, the excise tax under section 4999 is due at the time that the payment is considered made under Q/A-11 through 13. Q/A-11(b) of these proposed regulations clarifies that, except as provided in Q/A-12 or 13, a payment is considered made in the taxable year that it is includible in the disqualified individual's gross income, or for benefits excludible from income, in the year the benefit is received. Q/A-11(c) of these proposed regulations permits a disqualified individual, for purposes of section 4999, to treat certain payments as made in the year of the change in ownership or control (or the first year for which a payment contingent on a change in ownership or control is certain to be made), even though the payment is not yet includible in income (or otherwise received). This treatment is not available, however, for a payment if the present value is not reasonably ascertainable within the meaning of section 3121(v) and § 1.3121(v)-1(e)(4) or for a payment related to health benefits or coverage. These proposed regulations indicate in Q/A-11(c) that the Commissioner may provide through published guidance that Q/A-11(c) is or is not available with respect to other types of payments.
According to Q/A-11(c) of these proposed regulations, the payment of the excise tax under section 4999 must be made based on the amount calculated for purposes of determining excess parachute payments. Therefore, to the extent that the determination of whether there is an excess parachute payment is based on an incorrect valuation of the payment, the excise tax payment under this provision is also incorrect.
These regulations are proposed to apply to any payments that are contingent on a change in ownership or control occurring on or after January 1, 2004. Taxpayers may rely on these proposed regulations until the effective date of the final regulations. Alternatively, taxpayers may rely on the 1989 proposed regulations for any payment contingent on a change in ownership or control that occurs prior to January 1, 2004.
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and, because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f), this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any written or electronic comments (a signed original and eight (8) copies) that are submitted timely to the IRS. All comments will be available for public inspection and copying.
A public hearing has been scheduled for June 26, 2002, beginning at 10 a.m. in the IRS Auditorium of the Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. All
The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit written comments and an outline of the topics to be discussed and the time to be devoted to each topic (signed original and eight (8) copies) by June 5, 2002. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the schedule of speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.
The principal author of these proposed regulations is Erinn Madden, Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
The proposed amendments to 26 CFR part 1 are as follows:
1. The authority citation for part 1 is amended by adding the following entry in numerical order to read in part as follows:
26 U.S.C. 7805 * * *
Section 1.280G-1 also issued under 26 U.S.C. 280G (b) and (e). * * *
2. Section § 1.280G-1 is added to read as follows:
The following questions and answers relate to the treatment of golden parachute payments under section 280G of the Internal Revenue Code of 1986, as added by section 67 of the Tax Reform Act of 1984 (Pub. L. 98-369; 98 Stat. 585) and amended by section 1804(j) of the Tax Reform Act of 1986 (Pub. L. 99-514; 100 Stat. 2807), section 1018(d) (6)-(8) of the Technical and Miscellaneous Revenue Act of 1988 (Pub. L. 100-647; 102 Stat. 3581), and section 1421 of the Small Business Job Protection Act of 1996 (Pub. L. 104-188, 110 Stat. 1755). The following is a table of contents for this section:
Q-1: What is the effect of Internal Revenue Code section 280G?
A-1: (a) Section 280G disallows a deduction for any excess parachute payment paid or accrued. For rules relating to the imposition of a nondeductible 20-percent excise tax on the recipient of any excess parachute payment, see Internal Revenue Code sections 4999, 275(a)(6), and 3121(v)(2)(A).
(b) The disallowance of a deduction under section 280G is not contingent on the imposition of the excise tax under section 4999. The imposition of the excise tax under section 4999 is not contingent on the disallowance of a deduction under section 280G. Thus, for example, because the imposition of the excise tax under section 4999 is not contingent on the disallowance of a deduction under section 280G, a payee may be subject to the 20-percent excise tax under section 4999 even though the disallowance of the deduction for the excess parachute payment may not directly affect the federal taxable income of the payor.
Q-2: What is a parachute payment for purposes of section 280G?
A-2: (a) The term
(1) Is in the nature of compensation;
(2) Is made or is to be made to (or for the benefit of) a disqualified individual;
(3) Is contingent on a change—
(i) In the ownership of a corporation;
(ii) In the effective control of a corporation; or
(iii) In the ownership of a substantial portion of the assets of a corporation; and
(4) Has (together with other payments described in paragraphs (a)(1), (2), and (3) of this A-2 with respect to the same disqualified individual) an aggregate present value of at least 3 times the individual's base amount.
(b) Hereinafter, a change referred to in paragraph (a)(3) of this A-2 is referred to as a change in ownership or control. For a discussion of the application of paragraph (a)(1), see Q/A-11 through Q/A-14; paragraph (a)(2), Q/A-15 through Q/A-21; paragraph (a)(3), Q/A-22 through Q/A-29; and paragraph (a)(4), Q/A-30 through Q/A-36.
(c) The term
Q-3: What is an excess parachute payment for purposes of section 280G?
A-3: The term excess
Q-4: What is the effective date of section 280G and this section?
A-4: In general, section 280G applies to payments under agreements entered into or renewed after June 14, 1984. Section 280G also applies to certain payments under agreements entered into on or before June 14, 1984, and amended or supplemented in significant relevant respect after that date. This section applies to any payment contingent on a change in ownership or control which occurs on or after January 1, 2004. For a discussion of the application of the effective date, see Q/A-47 and Q/A-48.
Q-5: Are some types of payments exempt from the definition of the term
A-5: (a) Yes, the following five types of payments are exempt from the definition of
(1) Payments with respect to a small business corporation (described in Q/A-6 of this section);
(2) Certain payments with respect to a corporation no stock in which is readily tradeable on an established securities market (or otherwise) (described in Q/A-6 of this section);
(3) Payments to or from a qualified plan (described in Q/A-8 of this section);
(4) Certain payments made by a corporation undergoing a change in ownership or control that is described in any of the following sections of the Internal Revenue Code: section 501(c) (but only if such organization is subject to an express statutory prohibition against inurement of net earnings to the benefit of any private shareholder or individual, or if the organization is described in section 501(c)(1) or section 501(c)(21)), section 501(d), or section 529, collectively referred to as
(5) Certain payments of reasonable compensation for services to be rendered on or after the change in ownership or control (described in Q/A-9 of this section).
(b) Deductions for payments exempt from the definition of
Q-6: Which payments with respect to a corporation referred to in paragraph (a)(1), (a)(2), or (a)(4) of Q/A-5 of this section are exempt from the definition of
A-6: (a) The term
(1) Any payment to a disqualified individual with respect to a corporation which (immediately before the change in ownership or control) was a small business corporation (as defined in section 1361(b) but without regard to section 1361(b)(1)(C) thereof),
(2) Any payment to a disqualified individual with respect to a corporation (other than a small business corporation described in paragraph (a)(1) of this A-6) if—
(i) Immediately before the change in ownership or control, no stock in such
(ii) The shareholder approval requirements described in Q/A-7 of this section are met with respect to such payment; or
(3) Any payment to a disqualified individual made by a corporation which is a tax-exempt organization (as defined in paragraph (a)(4) of Q/A-5 of this section), but only if the corporation meets the definition of a tax-exempt organization both immediately before and immediately after the change in ownership or control.
(b) For purposes of paragraph (a)(1) of this A-6, the members of an affiliated group are not treated as one corporation.
(c) The requirements of paragraph (a)(2)(i) of this A-6 are not met if a substantial portion of the assets of a corporation undergoing a change in ownership or control consists (directly or indirectly) of stock in another entity (or any ownership interest in such entity) and stock of such entity (or any ownership interest in such entity) is readily tradeable on an established securities market or otherwise. For this purpose, such stock constitutes a substantial portion of the assets of an entity if the total fair market value of the stock is equal to or exceeds one third of the total gross fair market value of all of the assets of the entity. If a corporation is a member of an affiliated group (which group is treated as one corporation under A-46 of this section), the requirements of paragraph (a)(2)(i) of this A-6 are not met if any stock in any member of such group is readily tradeable on an established securities market or otherwise.
(d) For purposes of paragraph (a)(2)(i) of this A-6, the term
(e) For purposes of paragraph (a)(2)(i) of this A-6, stock is treated as readily tradeable if it is regularly quoted by brokers or dealers making a market in such stock.
(f) For purposes of paragraph (a)(2)(i) of this A-6, the term
(g) The following examples illustrate the application of this exemption:
A small business corporation (within the meaning of paragraph (a)(1) of this A-6) operates two businesses. The corporation sells the assets of one of its businesses, and these assets represent a substantial portion of the assets of the corporation. Because of the sale, the corporation terminates its employment relationship with persons employed in the business the assets of which are sold. Several of these employees are highly-compensated individuals to whom the owners of the corporation make severance payments in excess of 3 times each employee's base amount. Since the corporation is a small business corporation immediately before the change in ownership or control, the payments are not parachute payments.
Assume the same facts as in
Stock of Corporation S is wholly owned by Corporation P, stock in which is readily tradeable on an established securities market. The Corporation S stock equals or exceeds one third of the total gross fair market value of Corporation P, and thus, represents a substantial portion of the assets of Corporation P. Corporation S makes severance payments to several of its highly-compensated individuals that are parachute payments under section 280G and Q/A-2 of this section. Because stock in Corporation P is readily tradeable on an established securities market, the payments are not exempt from the definition of parachute payments under this A-6.
A is a corporation described in section 501(c)(3), and accordingly, its net earnings are prohibited from inuring to the benefit of any private shareholder or individual. A transfers substantially all of its assets to another corporation resulting in a change in ownership or control. Contingent on the change in ownership or control, A makes a payment that, but for the potential application of the excemption described in A-5(a)(4), would constitute a
B is a corporation described in section 501(c)(15). B does not meet the definition of a
Q-7: How are the shareholder approval requirements referred to in paragraph (a)(2)(ii) of Q/A-6 of this section met?
A-7: (a)
(1) Such payment was approved by more than 75 percent of the voting power of all outstanding stock of the corporation entitled to vote (as described in this A-7) immediately before the change in ownership or control; and
(2) There was adequate disclosure to all persons entitled to vote (as described in this A-7) of all material facts concerning all material payments which (but for Q/A-6 of this section) would be parachute payments with respect to a disqualified individual.
(b)
(2)
(3)
(4)
(5)
(c)
(d)
(e)
Corporation S has two shareholders—Corporation P, which owns 76 percent of the stock of Corporation S, and A, a disqualified individual. No stock of Corporation P or S is readily tradeable on an established securities market (or otherwise). Stock of Corporation S equals or exceeds one third of the assets of Corporation P, and thus, represents a substantial portion of the assets of Corporation P. All of the stock of Corporation S is sold to Corporation M. Contingent on the change in ownership of Corporation S, severance payments are made to the officers of Corporation S in excess of 3 times each officer's base amount. If the payments are approved by a separate vote of the persons who hold, immediately before the sale, more than 75 percent of the voting power of the outstanding stock of Corporation P and the disclosure rules of paragraph (a)(2) of this A-7 are complied with, the shareholder approval requirements of this A-7 are met, and the payments are exempt from the definition of
Corporation M is wholly owned by Partnership P. No interest in either M or P is readily tradeable on an established securities market (or otherwise). Stock of Corporation M equals or exceeds one third of the assets of Partnership P, and thus, represents a substantial portion of the assets of Partnership P. Corporation M undergoes a change in ownership or control. Partnership P has one general partner and 200 limited partners. None of the limited partners are entitled to vote on issues involving the management of the partnership investments. If the payments that would be parachute payments if the shareholder approval requirements of this A-7 are not met are approved by the general partner and the disclosure rules of paragraph (a)(2) of this A-7 are complied with, the shareholder approval requirements of this A-7 are met, and the payments are exempt from the definition of
Corporation A has several shareholders including X and Y, who are disqualified individuals with respect to Corporation A. No stock of Corporation A is readily tradeable on an established securities market (or otherwise). Corporation A undergoes a change in ownership or control. Contingent on the change, severance payments are payable to X and Y that are in excess of 3 times each individual's base amount. To determine whether the approval requirements of paragraph (a)(1) of this A-7 are satisfied regarding the payments to X and Y, the stock of X and Y is not considered outstanding, and X and Y are not eligible to vote.
Assume the same facts as in
Assume the same facts as in
Corporation C has three shareholders—Partnership, which owns 20 percent of the stock of Corporation C; A, an individual who owns 60 percent of the stock of Corporation C; and B, an individual who owns 20 percent of Corporation C. Stock of Corporation C does not represent a substantial portion of the assets of Partnership. No interest in either Partnership or Corporation C is readily tradeable on an established securities market (or otherwise). P, a one-third partner in Partnership, is a disqualified individual with respect to Corporation C. Corporation C undergoes a change in ownership or control. Contingent on the change, a severance payment is payable to P in excess of 3 times P's base amount. To determine the persons who comprise the “more than 75 percent group” referred to in paragraph (a)(1) of this A-7 who must approve the payment to P, one third of the stock held by Partnership is not considered outstanding stock. If, however, P is the person authorized by Partnership to approve the payment, none of the shares of Partnership are considered outstanding stock.
X, an employee of Corporation E, is a disqualified individual with respect to Corporation E. No stock in Corporation E is readily tradeable on an established securities market (or otherwise). X, Y, and Z are all employees and disqualified individuals with respect to Corporation E. Each individual has a base amount of $100,000. Corporation E undergoes a change in ownership or control. Contingent on the change, a severance payment of $400,000 is payable to X; $600,000 is payable to Y; and $1,000,000 is payable to Z. Corporation E provides a ballot to each Corporation E shareholder entitled to vote under paragraph(a)(1) of this A-7 listing the payments of $400,000 to X; $600,000 to Y; and $1,000,000 to Z. Next to each name and corresponding amount on the ballot, Corporation E requests approval (with a “yes” and “no” box) of each total payment to be made to each individual and states that if the payment is not approved the payment will not be made. Adequate disclosure, within the meaning of this A-7 is made to each shareholder entitled to vote under this A-7. More than 75 percent of the Corporation E shareholders who are entitled to vote under paragraph (a)(1) of this A-7, approve each payment to each individual. The shareholder approval requirements of this A-7 are met, and the payments are exempt from the definition of
Assume the same facts as in
B, an employee of Corporation X, is a disqualified individual with respect to Corporation X. Stock of Corporation X is not readily tradeable on an established securities market (or otherwise). Corporation X undergoes a change in ownership or control. B's base amount is $205,000. Under B's employment agreement with Corporation X, in the event of a change in ownership or control, B's stock options will vest and B will receive a severance and bonus payment. Contingent on the change, B's stock options immediately vest with a fair market value of $500,000, $200,000 of which is contingent on the change, and B will receive a $200,000 bonus payment and a $400,000 severance payment. Corporation X distributes a ballot to every shareholder of Corporation X who immediately before the change is entitled to vote. The ballot lists the following payments to be made to B: the contingent payment of $200,000 attributable to options, a $200,000 bonus payment, and a $400,000 severance payment. The ballot requests shareholder approval of the $200,000 bonus payment to B and states that whether or not the $200,000 bonus payment is approved, B will receive $200,000 attributable to options and a $400,000 severance payment. More than 75 percent of the shareholders entitled to vote approve the $200,000 bonus payment to B. The shareholder approval requirements of this A-7 are met, and the $200,000 payment is exempt from the definition of
Q-8: Which payments under a qualified plan are exempt from the definition of
A-8: The term
(a) A plan described in section 401(a) which includes a trust exempt from tax under section 501(a);
(b) An annuity plan described in section 403(a);
(c) A simplified employee pension (as defined in section 408(k)); or
(d) A simple retirement account (as defined in section 408(p)).
Q-9: Which payments of reasonable compensation are exempt from the definition of
A-9: Except in the case of securities violation parachute payments, the term parachute payment does not include any payment (or portion thereof) which the taxpayer establishes by clear and convincing evidence is reasonable compensation for personal services to be rendered by the disqualified individual on or after the date of the change in ownership or control. See Q/A-37 of this section for the definition and treatment of securities violation parachute payments. See Q/A-38 through Q/A-44 of this section for rules on determining amounts of reasonable compensation.
Q-10: Who may be the payor of parachute payments?
A-10: Parachute payments within the meaning of Q/A-2 of this section may be paid, directly or indirectly, by—
(a) The corporation referred to in paragraph (a)(3) of Q/A-2 of this section,
(b) A person acquiring ownership or effective control of that corporation or ownership of a substantial portion of that corporation's assets, or
(c) Any person whose relationship to such corporation or other person is such as to require attribution of stock ownership between the parties under section 318(a).
Q-11: What types of payments are in the nature of compensation?
A-11: (a)
(b)
(c)
(d)
Q-12: If a property transfer to a disqualified individual is a payment in the nature of compensation, when is the payment considered made (or to be made), and how is the amount of the payment determined?
A-12: (a) Except as provided in this A-12 and Q/A-13 of this section, a transfer of property is considered a payment made (or to be made) in the taxable year in which the property transferred is includible in the gross income of the disqualified individual under section 83 and the regulations thereunder. Thus, in general, such a payment is considered made (or to be made) when the property is transferred (as defined in § 1.83-3(a)) to the disqualified individual and becomes substantially vested (as defined in § 1.83-3(b) and (j)) in such individual. In such case, the amount of the payment is determined under section 83 and the regulations thereunder. Thus, in general, the amount of the payment is equal to the excess of the fair market value of the transferred property (determined without regard to any lapse restriction, as defined in § 1.83-3(i)) at the time that the property becomes substantially vested, over the amount (if any) paid for the property.
(b) An election made by a disqualified individual under section 83(b) with respect to transferred property will not apply for purposes of this A-12. Thus, even if such an election is made with respect to a property transfer that is a payment in the nature of compensation, the payment is generally considered made (or to be made) when the property is transferred to and becomes substantially vested in such individual.
(c) See Q/A-13 of this section for rules on applying this A-12 to transfers of stock options.
(d) The following example illustrates the principles of this A-12:
On January 1, 2006, Corporation M gives to A, a disqualified individual, a bonus of 100 shares of Corporation M stock in connection with the performance of services to Corporation M. Under the terms of the bonus arrangement A is obligated to return the Corporation M stock to Corporation M unless the earnings of Corporation M double by January 1, 2009, or there is a change in ownership or control of Corporation M before that date. A's rights in the stock are treated as substantially nonvested (within the meaning of § 1.83-3(b)) during that period because A's rights in the stock are subject to a substantial risk of forfeiture (within the meaning of § 1.83-3(c)) and are nontransferable (within the meaning of § 1.83-3(d)). On January 1, 2008, a change in ownership or control of Corporation M occurs. On that day, the fair market value of the Corporation M stock is $250 per share. Because A's rights in the Corporation M stock become substantially vested (within the meaning of § 1.83-3(b)) on that day, the payment is considered made on that day, and the amount of the payment for purposes of this section is equal to $25,000 (100 × $250). See Q/A-38 through 41 for rules relating to the reduction of the excess parachute payment by the portion of the payment which is established to be reasonable compensation for personal services actually rendered before the date of a change in ownership or control.
Q-13: How are transfers of statutory and nonstatutory stock options treated?
A-13: (a) For purposes of this section, an option (including an option to which section 421 applies) is treated as property that is transferred not later than the time at which the option becomes substantially vested (whether or not the option has a readily ascertainable fair market value as defined in § 1.83-7(b)). Thus, for purposes of this section, the vesting of such an option is treated as a payment in the nature of compensation. The value of an option with an ascertainable fair market value at the time the option vests is determined under all the facts and circumstances in the particular case. Factors relevant to such a determination include, but are not limited to: the difference between the option's exercise price and the value of the property subject to the option at the time of vesting; the probability of the value of such property increasing or decreasing; and the length of the period during which the option can be exercised. Valuation may be determined by any method prescribed by the Commissioner in published guidance for purposes of this A-13. See Q/A-33 of this section for the treatment of options the granting or vesting of which is contingent on a change in ownership or control and that do not have an ascertainable fair market value at the time of granting or vesting.
(b) Any money or other property transferred to the disqualified individual on the exercise, or as consideration on the sale or other disposition, of an option described in paragraph (a) of this A-13 after the time such option vests is not treated as a payment in the nature of compensation to the disqualified individual under Q/A-11 of this section. Nonetheless, the amount of the otherwise allowable deduction under section 162 or 212 with respect to such transfer is reduced by the amount of the payment described in paragraph (a) of this A-13 treated as an excess parachute payment.
Q-14: Are payments in the nature of compensation reduced by consideration paid by the disqualified individual?
A-14: Yes, to the extent not otherwise taken into account under Q/A-12 and Q/A-13 of this section, the amount of any payment in the nature of compensation is reduced by the amount of any money or the fair market value of any property (owned by the disqualified individual without restriction) that is (or will be) transferred by the disqualified individual in exchange for the payment. For purposes of the preceding sentence, the fair market value of property is determined as of the date the property is transferred by the disqualified individual.
Q-15: Who is a disqualified individual?
A-15: (a) For purposes of this section, an individual is a disqualified individual with respect to a corporation if, at any time during the
(1) A shareholder (but see Q/A-17 of this section);
(2) An officer (see Q/A-18 of this section); or
(3) A highly-compensated individual (see Q/A-19 of this section).
(b) A director is a disqualified individual with respect to a corporation if, at any time during the
Q-16: Is a personal service corporation treated as an individual?
A-16: (a) Yes. For purposes of this section, a personal service corporation (as defined in section 269A(b)(1)), or a noncorporate entity that would be a personal service corporation if it were a corporation, is treated as an individual.
(b) The following example illustrates the principles of this A-16:
Corporation N, a personal service corporation (as defined in section 269A(b)(1)), has a single individual as its sole shareholder and employee. Corporation N performs personal services for Corporation M. The compensation paid to Corporation N by Corporation M puts Corporation N within the group of the highly-compensated individuals of Corporation M as determined under A-19 of this section. Thus, Corporation N is treated as a highly-compensated individual with respect to Corporation M.
Q-17: Are all shareholders of a corporation considered shareholders for purposes of paragraph (a)(1) of Q/A-15 of this section?
A-17: (a) No, only an individual who owns stock of a corporation with a fair market value that exceeds 1 percent of the fair market value of the outstanding shares of all classes of the corporation's stock is treated as a disqualified individual with respect to the corporation by reason of stock ownership. An individual who owns a lesser amount of stock may, however, be a disqualified individual with respect to the corporation if such individual is an officer or highly-compensated individual with respect to the corporation. For purposes of determining the amount of stock owned by an individual, the constructive ownership rules of section 318(a) apply.
(b) The following examples illustrates the principles of this A-17:
E, an employee of Corporation A, received options under Corporation A's Stock Option Plan. E's stock options vest three years after the date of grant. E is not an officer or highly compensated individual during the disqualified individual determination period and does not own any other Corporation A stock. Two years after the options are granted to E, all of Corporation A's stock is acquired by Corporation B. Under Corporation A's Stock Option Plan, E's options are converted to Corporation B options and the vesting schedule remains the same. To determine whether E is a disqualified individual based on E's stock ownership, the stock underlying the unvested options held by E on the date of the change in ownership or control is not considered constructively owned by E under section 318(a). Because E does not own, or constructively own, Corporation A stock with a fair market value exceeding 1 percent of the total fair market value of all of the outstanding shares of all classes of Corporation A and E is not an officer or highly-compensated individual during the disqualified individual determination period, E is not a disqualified individual within the meaning of A-15 of this section with respect to Corporation A.
Assume the same facts as in Example 1 except that Corporation A's Stock Option Plan provides that all unvested options will vest immediately on a change in ownership or control. To determine whether E is a disqualified individual based on E's stock ownership, the stock underlying the options that vest on the change in ownership or control is considered constructively owned by E under section 318(a). If the stock constructively held by E exceeds 1 percent of the total fair market value of all of the outstanding shares of all classes of Corporation A stock, E is a disqualified individual within the meaning of this A-15 of this section with respect to Corporation A.
Assume the same facts as in
Q-18: Who is an officer?
A-18: (a) For purposes of this section, whether an individual is an officer with respect to a corporation is determined on the basis of all the facts and circumstances in the particular case (such as the source of the individual's authority, the term for which the individual is elected or appointed, and the nature and extent of the individual's duties). Generally, the term
(b) An individual who is an officer with respect to any member of an affiliated group that is treated as one corporation pursuant to Q/A-46 of this section is treated as an officer of such one corporation.
(c) No more than 50 employees (or, if less, the greater of 3 employees, or 10 percent of the employees (rounded up to the nearest integer)) of the corporation (in the case of an affiliated group treated as one corporation, each member of the affiliated group) are treated as disqualified individuals with respect to a corporation by reason of being an officer of the corporation. For purposes of the preceding sentence, the number of employees of the corporation is the greatest number of employees the corporation has during the disqualified individual determination period (as defined in Q/A-20 of this section). If the number of officers of the corporation exceeds the number of employees who may be treated as officers under the first sentence of this paragraph (c), then the employees who are treated as officers for purposes of this section are the highest paid 50 employees (or, if less, the greater of 3 employees, or 10 percent of the employees (rounded up to the nearest integer)) of the corporation when ranked on the basis of compensation (as determined under Q/A-21 of this section) paid during the disqualified individual determination period.
Q-19: Who is a highly-compensated individual?
A-19: (a) For purposes of this section, a highly-compensated individual with respect to a corporation is any individual who is, or would be if the individual were an employee, a member of the group consisting of the lesser of the highest paid 1 percent of the employees of the corporation (rounded up to the nearest integer), or the highest paid 250 employees of the corporation, when ranked on the basis of compensation (as determined under Q/A-21 of this section) paid during the disqualified individual determination period (as defined in Q/A-20 of this section). For purposes of the preceding sentence, the number of employees of the corporation is the greatest number of employees the corporation has during the disqualified individual determination period (as defined in Q/A-20 of this section). However, no individual whose annualized
(b) An individual who is not an employee of the corporation is not treated as a highly-compensated individual with respect to the corporation on account of compensation received for performing services (such as brokerage, legal, or investment banking services) in connection with a change in ownership or control of the corporation, if the services are performed in the ordinary course of the individual's trade or business and the individual performs similar services for a significant number of clients unrelated to the corporation.
(c) In determining the total number of employees of a corporation for purposes of this A-19, employees are not counted if they normally work less than 17
Q-20: What is the disqualified individual determination period?
A-20: The disqualified individual determination period is the twelve-month period prior to and ending on the date of the change in ownership or control of the corporation.
Q-21: How is
A-21: (a) For purposes of determining who is a disqualified individual, the term
(b) For purposes of this A-21, a predecessor entity is any entity which, as a result of a merger, consolidation, purchase or acquisition of property or stock, corporate separation, or other similar business transaction transfers some or all of its employees to the changed corporation or to a related entity or to a predecessor entity of the changed corporation. The term
(1) All members of a controlled group of corporations (as defined in section 414(b)) that includes the changed corporation or a predecessor entity;
(2) All trades or business (whether or not incorporated) that are under common control (as defined in section 414(c)) if such group includes the changed corporation or a predecessor entity;
(3) All members of an affiliated service group (as defined in section 414(m)) that includes the changed corporation or a predecessor entity; and
(4) Any other entities required to be aggregated with the changed corporation or a predecessor entity pursuant to section 414(o) and the regulations thereunder (except leasing organizations as defined in section 414(n)).
(c) For purposes of Q/A-18 and Q/A-19 of this section, compensation that was contingent on the change in ownership or control and that was payable in the year of the change is not treated as compensation.
Q-22: When is a payment contingent on a change in ownership or control?
A-22: (a) In general, a payment is treated as contingent on a change in ownership or control if the payment would not, in fact, have been made had no change in ownership or control occurred, even if the payment is also conditioned on the occurrence of another event. A payment generally is treated as one which would not, in fact, have been made in the absence of a change in ownership or control unless it is substantially certain, at the time of the change, that the payment would have been made whether or not the change occurred. (But see Q/A-23 of this section regarding payments under agreements entered into after a change in ownership or control.) A payment that becomes vested as a result of a change in ownership or control is not treated as a payment which was substantially certain to have been made whether or not the change occurred. For purposes of this A-22,
(b)(1) For purposes of paragraph (a), a payment is treated as contingent on a change in ownership or control if—
(i) The payment is contingent on an event that is closely associated with a change in ownership or control;
(ii) A change in ownership or control actually occurs; and
(iii) The event is materially related to the change in ownership or control.
(2) For purposes of paragraph (b)(1)(i) of this A-22, a payment is treated as contingent on an event that is closely associated with a change in ownership or control unless it is substantially certain, at the time of the event, that the payment would have been made whether or not the event occurred. An event is considered closely associated with a change in ownership or control if the event is of a type often preliminary or subsequent to, or otherwise closely associated with, a change in ownership or control. For example, the following events are considered closely associated with a change in the ownership or control of a corporation: The onset of a tender offer with respect to the corporation; a substantial increase in the market price of the corporation's stock that occurs within a short period (but only if such increase occurs prior to a change in ownership or control); the cessation of the listing of the corporation's stock on an established securities market; the acquisition of more than 5 percent of the corporation's stock by a person (or more than one person acting as a group) not in control of the corporation; the voluntary or involuntary termination of the disqualified individual's employment; a significant reduction in the disqualified individual's job responsibilities; and a change in ownership or control as defined in the disqualified individual's employment agreement (or elsewhere) that does not meet the definition of a change in ownership or control described in Q/A-27, 28, or 29 of this section. Whether other events are treated as closely associated with a change in ownership or control is based on all the facts and circumstances of the particular case.
(3) For purposes of determining whether an event (as described in paragraph (b)(2) of this A-22) is materially related to a change in ownership or control, the event is presumed to be materially related to a change in ownership or control if such event occurs within the period beginning one year before and ending one year after the date of change in ownership or control. If such event occurs outside of the period beginning one year before and ending one year after the date of change in ownership or control, the event is presumed not materially related to the change in ownership or control. A payment does
(c) A payment that would in fact have been made had no change in ownership or control occurred is treated as contingent on a change in ownership or control if the change in ownership or control (or the occurrence of an event that is closely associated and materially related to a change in ownership or control within the meaning of paragraph (b)(1) of this A-22), accelerates the time at which the payment is made. Thus, for example, if a change in ownership or control accelerates the time of payment of deferred compensation that is vested without regard to the change in ownership or control, the payment may be treated as contingent on the change. See Q/A-24 of this section regarding the portion of a payment that is so treated. See also Q/A-8 of this section regarding the exemption for certain payments under qualified plans and Q/A-40 of this section regarding the treatment of a payment as reasonable compensation.
(d) A payment is treated as contingent on a change in ownership or control even if the employment or independent contractor relationship of the disqualified individual is not terminated (voluntarily or involuntarily) as a result of the change.
(e) The following examples illustrate the principles of this A-22:
A corporation grants a stock appreciation right to a disqualified individual, A, more than one year before a change in ownership or control. After the stock appreciation right vests and becomes exercisable, a change in ownership or control of the corporation occurs, and A exercises the right. Assuming neither the granting nor the vesting of the stock appreciation right is contingent on a change in ownership or control, the payment made on exercise is not contingent on the change in ownership or control.
A contract between a corporation and B, a disqualified individual, provides that a payment will be made to B if the corporation undergoes a change in ownership or control and B's employment with the corporation is terminated at any time over the succeeding 5 years. Eighteen months later, a change in the ownership of the corporation occurs. Two years after the change in ownership, B's employment is terminated and the payment is made to B. Because it was not substantially certain that the corporation would have made the payment to B on B's termination of employment if there had not been a change in ownership, the payment is treated as contingent on the change in ownership under paragraph (a) of this A-22. This is true even though B's termination of employment is presumed not to be, and in fact may not be, materially related to the change in ownership or control.
A contract between a corporation and C, a disqualified individual, provides that a payment will be made to C if C's employment is terminated at any time over the succeeding 3 years (without regard to whether or not there is a change in ownership or control). Eighteen months after the contract is entered into, a change in the ownership of the corporation occurs. Six months after the change in ownership, C's employment is terminated and the payment is made to C. Termination of employment is considered an event closely associated with a change in ownership or control. Because the termination occurred within one year after the date of the change in ownership, the termination of C's employment is presumed to be materially related to the change in ownership under paragraph (b)(3) of this A-22. If this presumption is not successfully rebutted, the payment will be treated as contingent on the change in ownership under paragraph (b) of this A-22.
A contract between a corporation and a disqualified individual, D, provides that a payment will be made to D upon the onset of a tender offer for shares of the corporation's stock. A tender offer is made on December 1, 2008, and the payment is made to D. Although the tender offer is unsuccessful, it leads to a negotiated merger with another entity on June 1, 2009, which results in a change in the ownership of the corporation. It was not substantially certain, at the time of the onset of the tender offer, that the payment would have been made had no tender offer taken place. The onset of a tender offer is considered closely associated with a change in ownership or control. Because the tender offer occurred within one year before the date of the change in ownership of the corporation, the onset of the tender offer is presumed to be materially related to the change in ownership. If this presumption is not rebutted, the payment will be treated as contingent on the change in ownership. If no change in ownership or control had occurred, the payment would not be treated as contingent on a change in ownership or control; however, the payment still could be a parachute payment under Q/A-37 of this section if the contract violated a generally enforced securities law or regulation.
A contract between a corporation and a disqualified individual, E, provides that a payment will be made to E if the corporation's level of product sales or profits reaches a specified level. At the time the contract was entered into, the parties had no reason to believe that such an increase in the corporation's level of product sales or profits would be preliminary or subsequent to, or otherwise closely associated with, a change in ownership or control of the corporation. Eighteen months later, a change in the ownership of the corporation occurs and within one year after the date of the change, the corporation's level of product sales or profits reaches the specified level. Under these facts and circumstances (and in the absence of contradictory evidence), the increase in product sales or profits of the corporation is not an event closely associated with the change in ownership or control of the corporation. Accordingly, even if the increase is materially related to the change, the payment will not be treated as contingent on a change in ownership or control.
Q-23: May a payment be treated as contingent on a change in ownership or control if the payment is made under an agreement entered into after the change?
A-23: (a) No., payments are not treated as contingent on a change in ownership or control if they are made (or to be made) pursuant to an agreement entered into after the change (a post-change agreement). For this purpose, an agreement that is executed after a change in ownership or control pursuant to a legally enforceable agreement that was entered into before the change is considered to have been entered into before the change. (See Q/A-9 of this section regarding the exemption for reasonable compensation for services rendered on or after a change in ownership or control.) If an individual has a right to receive a parachute payment under an agreement entered into prior to a change in ownership or control (pre-change agreement) and gives up that right as bargained-for consideration for benefits under a post-change agreement, the agreement is treated as a post-change agreement only to the extent the value of the payments under the agreement exceed the value of the payments under the pre-change agreement. To the extent payments under the agreement have the same value as the parachute payments under the pre-change agreement, such payments retain their character as parachute payments subject to this section.
(b) The following examples illustrate the principles of this A-23:
Assume that a disqualified individual is an employee of a corporation. A change in ownership or control of the corporation occurs, and thereafter the individual enters into an employment agreement with the acquiring company. Because the agreement is entered into after the change in ownership or control occurs, payments to be made under the agreement are not treated as contingent on the change.
Assume the same facts as in
Assume the same facts as in
Q-24: If a payment is treated as contingent on a change in ownership or control, is the full amount of the payment so treated?
A-24: (a)(1)
(2)
(b)
(c)(1)
(i) Without regard to the change in ownership or control, the payment was contingent only on the continued performance of services for the corporation for a specified period of time; and
(ii) The payment is attributable, at least in part, to the performance of services before the date the payment is made or becomes certain to be made.
(2) The portion of the payment subject to paragraph (c) of this A-24 that is treated as contingent on the change in ownership or control is the lesser of—
(i) The amount of the accelerated payment; or
(ii) The amount described in paragraph (b) of this A-24, plus an amount, as determined in paragraph (c)(4) of this A-24, to reflect the lapse of the obligation to continue to perform services.
(3) For purposes of this paragraph (c) of this A-24, the acceleration of the vesting of a stock option or the lapse of a restriction on restricted stock is considered to significantly increase the value of a payment.
(4) The amount reflecting the lapse of the obligation to continue to perform services (described in paragraph (c)(2)(ii) of this A-24) is 1 percent of the amount of the accelerated payment multiplied by the number of full months between the date that the individual's right to receive the payment is vested and the date that, absent the acceleration, the payment would have been vested. This paragraph (c)(4) applies to the accelerated vesting of a payment in the nature of compensation even if the time at which the payment is made is not accelerated.
(d)
(2)
(3)
(e)
(f)
(ii) Because E was vested in $500,000 of benefits under the SERP prior to the change in ownership or control and the change merely accelerated the time at which the payment was made to E, only a portion of the payment, as determined under paragraph (b) of this A-24, is treated as contingent on the change. Thus, the portion of the payment that is treated as contingent on the change is the amount by which the amount of the accelerated payment ($500,000) exceeds the present value of the payment absent the acceleration.
(iii) Assume that instead of having a vested account balance of $500,000 on the date of the change in ownership or control, E will vest in his account balance of $500,000 in 2 years if E continues to perform services for the next 2 years. Assume further that the SERP provides that all unvested SERP benefits vest immediately on a change in ownership or control and are paid to the participants. Because the vesting of the SERP payment, without regard to the change, depends only on the performance of services for a specified period of time and the payment is attributable, in part, to the performance of services before the change in ownership or control, only a portion of the $500,000 payment, as determined under paragraph (c) of this A-24, is treated as contingent on the change. The portion of the payment that is treated as contingent on the change is the lesser of the amount of the accelerated payment or the amount by which the accelerated payment exceeds the present value of the payment absent the acceleration, plus an amount to reflect the lapse of the obligation to continue to perform services.
(iv) Assume further that under the SERP E's vested account balance of $500,000 will be paid to E on the change in ownership or control and an additional $70,000 will be credited to E's account. Because the $500,000 was vested without regard to the change in ownership or control, paragraph (b) of this A-24 applies to the $500,000 payment. Because the $70,000 is not vested, without regard to the change, and is not attributable to the performance of services prior to the change, the entire $70,000 payment is contingent on the change in ownership or control under paragraph (a) of this A-24.
(ii) Assume that the contract provides that the retention bonus will vest on a change in ownership or control, but will not be paid until January 15, 2011 (the original date in the contract). Because the payment of $500,000 was contingent only on F's performance of services for a specified period and is attributable, in part, to the performance of services before the change in ownership or control, only a portion of the $500,000 payment is treated as contingent on the change. Because there is no accelerated payment, the portion of the payment treated as contingent on the change is an amount reflecting the lapse of the obligation to continue to perform services which is $115,000 (1% × 23 months × $500,000).
(i) On January 15, 2006, a corporation gives to a disqualified individual, in connection with her performance of services to the corporation, a bonus of 1,000 shares of the corporation's stock. Under the terms of the bonus arrangement, the individual is obligated to return the stock to the corporation if she terminates her employment for any reason prior to January 15, 2011. However, if there is a change in the ownership or effective control of the corporation prior to January 15, 2011, she ceases to be obligated to return the stock. The individual's rights in the stock are treated as substantially nonvested (within the meaning of § 1.83-3(b) and (j)) during that period. On January 15, 2008, a change in the ownership of the corporation occurs. On that day, the fair market value of the stock is $500,000.
(ii) Under these facts, the payment was contingent only on performance of services for a specified period and is attributable, in part, to the performance of services before the change in ownership or control. Thus, only a portion of the payment is treated as contingent on the change in ownership or control. The portion of the payment that is treated as contingent on the change is the amount by which the present value of the accelerated payment on January 15, 2009 ($500,000), exceeds the present value of the payment that was expected to have been made on January 15, 2011, plus an amount reflecting the lapse of the obligation to continue to perform services. At the time of the change, it cannot be reasonably ascertained what the value of the stock would been on January 15, 2011. The acceleration of the lapse of a restriction on stock is treated as significantly increasing the
(i) On January 15, 2006, a corporation grants to a disqualified individual nonqualified stock options to purchase 30,000 shares of the corporation's stock. The options do not have a readily ascertainable fair market value at the time of grant. The options will be forfeited by the individual if he fails to perform personal services for the corporation until January 15, 2009. The options will, however, vest in the individual at an earlier date if there is a change in ownership or control of the corporation. On January 16, 2008, a change in the ownership of the corporation occurs and the options become vested in the individual. On January 16, 2008, the options have an ascertainable fair market value of $600,000.
(ii) The payment of the options to purchase 30,000 shares was contingent only on performance of services for the corporation until January 15, 2009, and is attributable, in part, to the performance of services before the change in ownership or control. Therefore, only a portion of the payment is treated as contingent on the change. The portion of the payment that is treated as contingent on the change is the amount by which the accelerated payment on January 16, 2008 ($600,000) exceeds the present value on January 16, 2008, of the payment that was expected to have been made on January 15, 2009, absent the acceleration, plus an amount reflecting the lapse of the obligation to continue to perform services. At the time of the change, it cannot be reasonably ascertained what the value of the options would have been on January 15, 2009. The acceleration of vesting in the options is treated as significantly increasing the value of the payment. Therefore, the value of such options on January 15, 2009, is deemed to be $600,000, the amount of the accelerated payment. The present value on January 16, 2008 of a $600,000 payment to be made on January 15, 2009, is $549,964.13. Thus, the portion of the payment treated as contingent on the change is $116,035.87, the sum of $50,035.87 ($600,000 ^ $549,964.13), plus an amount reflecting the lapse of the obligation to continue to perform services which is $66,000 (1% × 11 months × $600,000).
(i) The facts are the same as in Example 5, except that the options become vested periodically (absent a change in ownership of control), with one-third of the options vesting on January 15, 2007, 2008, and 2009, respectively. Thus, options to purchase 20,000 shares vest independently of the January 16, 2008, change in ownership and the options to purchase the remaining 10,000 shares vest as a result of the change.
(ii) The payment of the options to purchase 10,000 shares was contingent only on performance of services for the corporation until January 15, 2009, and is attributable, in part, to the performance of services before the change in ownership or control. Therefore, only a portion of the payment is treated as contingent on the change. The portion of the payment that is treated as contingent on the change is the amount by which the accelerated payment on January 16, 2008 ($200,000) exceeds the present value on January 16, 2008, of the payment that was expected to have been made on January 15, 2009, absent the acceleration, plus an amount reflecting the lapse of the obligation to perform services. At the time of the change, it cannot be reasonably ascertained what the value of the options would have been on January 15, 2009. The acceleration of vesting in the options is treated as significantly increasing the value of the payment. Therefore, the value of such options on January 15, 2009, is deemed to be $200,000, the amount of the accelerated payment. The present value on January 16, 2008, of a $200,000 payment to be made on January 15, 2009, is $183,328.38. Thus, the portion of the payment treated as contingent on the change is $38,671.62, the sum of $16,671.62 ($200,000 ^ $183,328.38), plus an amount reflecting the lapse of the obligation to continue to perform services which is $22,000 (1% × 11 months × $200,000).
Assume the same facts as in
On January 1, 2002, E, a disqualified individual with respect to Corporation X, enters into an employment agreement with Corporation X under which E will be paid wages of $200,000 each year during the 5-year employment agreement. The employment agreement provides that if a change in ownership or control of Corporation X occurs, E will be paid the present value of the remaining salary under the employment agreement. On January 1, 2003, a change in ownership or control of Corporation X occurs, E is terminated, and E receives a payment of the present value of $200,000 for each of the 4 years remaining under the employment agreement. Because the payment represents future salary under an employment agreement (i.e., amounts otherwise attributable to the performance of services for periods that begin after the termination of employment), the general rule of paragraph (a) of this A-24 applies to the payment. See Q/A-42(c) and 44 of this section for the treatment of the remaining payments under an employment agreement.
Q-25: Is there a presumption that certain payments are contingent on a change in ownership or control?
A-25: Yes, for purposes of this section, any payment is presumed to be contingent on such change unless the contrary is established by clear and convincing evidence if the payment is made pursuant to—
(a) An agreement entered into within one year before the date of a change in ownership or control; or
(b) An amendment that modifies a previous agreement in any significant respect, if the amendment is made within one year before the date of a change in ownership or control. In the case of an amendment described in paragraph (b) of this A-25, only the portion of any payment that exceeds the amount of such payment that would have been made in the absence of the amendment is presumed, by reason of the amendment, to be contingent on the change in ownership or control.
Q-26: How may the presumption described in Q/A-25 of this section be rebutted?
A-26: (a) To rebut the presumption described in Q/A-25 of this section, the taxpayer must establish by clear and convincing evidence that the payment is not contingent on the change in ownership or control. Whether the payment is contingent on such change is determined on the basis of all the facts and circumstances of the particular case. Factors relevant to such a determination include, but are not limited to, the content of the agreement or amendment and the circumstances surrounding the execution of the agreement or amendment, such as whether it was entered into at a time when a takeover attempt had commenced and the degree of likelihood that a change in ownership or control would actually occur. However, even if the presumption is rebutted with respect to an agreement, some or all of the payments under the agreement may still be contingent on the change in ownership or control pursuant to Q/A-22 of this section.
(b) In the case of an agreement described in paragraph (a) of Q/A-25 of this section, clear and convincing evidence that the agreement is one of the three following types will generally rebut the presumption that payments under the agreement are contingent on the change in ownership or control—
(1) A
(2) A contract between a corporation and an individual that replaces a prior
(3) A contract between a corporation and an individual who did not perform services for the corporation prior to the one year period before the change in ownership or control occurs, if the contract does not provide for payments that are significantly different in amount, timing, terms, or conditions from those provided under contracts entered into by the corporation (other than contracts that themselves were entered into within one year before the change in ownership or control and in contemplation of the change) with individuals performing comparable services.
(c) For purposes of this section, the term
(d) The following examples illustrate the application of the presumption:
A corporation and a disqualified individual who is an employee of the corporation enter into an employment contract. The contract replaces a prior contract entered into by the same parties more than one year before the change and the new contract does not provide for any increased payments other than a cost of living adjustment, does not accelerate the payment of amounts due at a future time, and does not modify (to the individual's benefit) the terms or conditions under which payments will be made. Clear and convincing evidence of these facts rebuts the presumption described in A-25 of this section. However, payments under the contract still may be contingent on the change in ownership or control pursuant to Q/A-22 of this section.
Assume the same facts as in
A corporation and a disqualified individual, who is an employee of the corporation, enter into an employment contract within one year of a change in ownership of the corporation. Under the contract, in the event of a change in ownership or control and subsequent termination of employment, certain payments will be made to the individual. A change in ownership occurs, but the individual is not terminated until 2 years after the change. If clear and convincing evidence does not rebut the presumption described in A-25 of this section, because the payment is made pursuant to an agreement entered into within one year of the date of the change in ownership, the payment is presumed contingent on the change under A-25 of this section. This is true even though A's termination of employment is presumed not to be materially related to the change in ownership or control under Q/A-22 of this section.
Q-27: When does a change in the ownership of a corporation occur?
A-27: (a) For purposes of this section, a change in the ownership or control of a corporation occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the corporation that, together with stock held by such person or group, owns more than 50 percent of the total fair market value or total voting power of the stock of such corporation. However, if any one person, or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation (within the meaning of Q/A-28 of this section)). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section.
(b) For purposes of paragraph (a) of this A-27, persons will not be considered to be acting as a group merely because they happen to purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of an entity that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity shareholder, owns stock in both entities that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in an entity only to the extent of his ownership in that entity prior to the transaction giving rise to the change and not with respect to his ownership interest in the other entity.
(c) For purposes of this A-27, section 318(a) applies to determine stock ownership.
(d) The following examples illustrate the principles of this A-27:
Corporation M has owned stock with a fair market value equal to 19 percent of the value of the stock of Corporation N (an otherwise unrelated corporation) for many years prior to 2006. Corporation M acquires additional stock with a fair market value equal to 15 percent of the value of the stock of Corporation N on January 1, 2006, and an additional 18 percent on February 21, 2007. As of February 21, 2007, Corporation M has acquired stock with a fair market value greater than 50 percent of the value of the stock of Corporation N. Thus, a change in the ownership of Corporation N is considered to occur on February 21, 2007 (assuming that Corporation M did not have effective control of Corporation N immediately prior to the acquisition on that date).
All of the corporation's stock is owned by the founders of the corporation. The board of directors of the corporation decides to offer shares of the corporation to the public. After the public offering, the founders of the corporation own a total of 40 percent of the corporation's stock, and members of the public own 60 percent. If no one person (or more than one person acting as a group) owns more than 50 percent of the corporation's stock (by value or voting power) after the public offering, there is no change in the ownership of the corporation.
Corporation P merges into Corporation O (a previously unrelated corporation). In the merger, the shareholders of Corporation P receive Corporation O stock in exchange for their Corporation P stock. Immediately after the merger, the former shareholders of Corporation P own stock with a fair market value equal to 60 percent of the value of the stock of Corporation O, and the former shareholders of Corporation O own stock with a fair market value equal to 40 percent of the value of the stock of Corporation O. The former shareholders of Corporation P will be treated as acting as a group in their acquisition of Corporation O stock. Thus, a change in the ownership of Corporation O occurs on the date of the merger.
Assume the same facts as in
A, an individual, owns stock with a fair market value equal to 20 percent of the value of the stock of Corporation Q. On January 1, 2007, Corporation Q acquires in a redemption for cash all of the stock held by shareholders other than A. Thus, A is left as the sole shareholder of Corporation O. A change in ownership of Corporation O is considered to occur on January 1, 2007 (assuming that A did not have effective control of Corporation Q immediately prior to the redemption).
Assume the same facts as in
A-28: (a) For purposes of this section, a change in the effective control of a corporation is presumed to occur on the date that either—
(1) Any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 20 percent or more of the total voting power of the stock of such corporation; or
(2) A majority of members of the corporation's board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation's board of directors prior to the date of the appointment or election.
(b) The presumption of paragraph (a) of this A-28 may be rebutted by establishing that such acquisition or acquisitions of the corporation's stock, or such replacement of the majority of the members of the corporation's board of directors, does not transfer the power to control (directly or indirectly) the management and policies of the corporation from any one person (or more than one person acting as a group) to another person (or group). For purposes of this section, in the absence of an event described in paragraph (a) (1) or (2) of this A-28, a change in the effective control of a corporation is presumed not to have occurred.
(c) If any one person, or more than one person acting as a group, is considered to effectively control a corporation (within the meaning of this A-28), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation (or to cause a change in the ownership of the corporation within the meaning of Q/A-27 of this section).
(d) For purposes of this A-28, persons will not be considered to be acting as a group merely because they happen to purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of an entity that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity shareholder, owns stock in both entities that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in an entity only to the extent of his ownership in that entity prior to the transaction giving rise to the change and not with respect to his ownership interest in the other entity.
(e) Section 318(a) applies to determine stock ownership for purposes of this A-28.
(f) The following examples illustrate the principles of this A-28:
Shareholder A acquired the following percentages of the voting stock of Corporation M (an otherwise unrelated corporation) on the following dates: 16 percent on January 1, 2005; 10 percent on January 10, 2006; 8 percent on February 10, 2006; 11 percent on March 1, 2007; and 8 percent on March 10, 2007. Thus, on March 10, 2007, A owns a total of 53 percent of M's voting stock. Because A did not acquire 20 percent or more of M's voting stock during any 12-month period, there is no presumption of a change in effective control pursuant to paragraph (a)(1) of this A-28. In addition, under these facts there is a presumption that no change in the effective control of Corporation M occurred. If this presumption is not rebutted (and thus no change in effective control of Corporation M is treated as occurring prior to March 10, 2007), a change in the ownership of Corporation M is treated as having occurred on March 10, 2007 (pursuant to Q/A-27 of this section) because A had acquired more than 50 percent of Corporation M's voting stock as of that date.
A minority group of shareholders of a corporation opposes the practices and policies of the corporation's current board of directors. A proxy contest ensues. The minority group presents its own slate of candidates for the board at the next annual meeting of the corporation's shareholders, and candidates of the minority group are elected to replace a majority of the current members of the board. A change in the effective control of the corporation is presumed to have occurred on the date the election of the new board of directors becomes effective.
Q-29: When does a change in the ownership of a substantial portion of a corporation's assets occur?
A-29: (a) For purposes of this section, a change in the ownership of a substantial portion of a corporation's assets occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than one third of the total gross fair market value of all of the assets of the
(b) A transfer of assets by a corporation is not treated as a change in the ownership of such assets if the assets are transferred to—
(1) A shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock;
(2) An entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the corporation;
(3) A person, or more than one person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the corporation; or
(4) An entity, at least 50 percent of the total value or voting power is owned, directly or indirectly, by a person described in paragraph (b)(3) of this A-29.
(c) For purposes of paragraph (b) and except as otherwise provided, a person's status is determined immediately after the transfer of the assets. For example, a transfer of assets pursuant to a complete liquidation of a corporation, a redemption of a shareholder's interest, or a transfer to a majority-owned subsidiary of the corporation is not treated as a change in the ownership of the assets of the transferor corporation.
(d) For purposes of this A-29, persons will not be considered to be acting as a group merely because they happen to purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of an entity that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity shareholder, owns stock in both entities that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in an entity only to the extent of his ownership in that entity prior to the transaction giving rise to the change and not with respect to his ownership interest in the other entity.
(e) For purposes of this A-29, section 318(a) applies in determining stock ownership.
(f) The following examples illustrate the principles of this A-29:
Corporation M acquires assets having a gross fair market value of $500,000 from Corporation N (an unrelated corporation) on January 1, 2006. The total gross fair market value of Corporation N's assets immediately prior to the acquisition was $3 million. Since the value of the assets acquired by Corporation M is less than one-third of the fair market value of Corporation N's total assets immediately prior to the acquisition, the acquisition does not represent a change in the ownership of a substantial portion of Corporation N's assets.
Assume the same facts as in
All of the assets of Corporation P are transferred to Corporation O (an unrelated corporation). In exchange, the shareholders of Corporation P receive Corporation O stock. Immediately after the transfer, the former shareholders of Corporation P own 60 percent of the fair market value of the outstanding stock of Corporation O and the former shareholders of Corporation O own 40 percent of the fair market value of the outstanding stock of Corporation O. Because Corporation O is an entity more than 50 percent of the fair market value of the outstanding stock of which is owned by the former shareholders of Corporation P (based on ownership of Corporation P prior the change), the transfer of assets is not treated as a change in ownership of a substantial portion of the assets of Corporation P. However, a change in the ownership (within the meaning of Q/A-27) of Corporation O occurs.
Q-30: Are all payments that are in the nature of compensation, are made to a disqualified individual, and are contingent on a change in ownership or control, parachute payments?
A-30: (a) No, to determine whether such payments are parachute payments, they must be tested against the individual's
(b) The following examples illustrate the principles of this A-30:
A is a disqualified individual with respect to Corporation M. A's base amount is $100,000. Payments in the nature of compensation that are contingent on a change in the ownership of Corporation M totaling $400,000 are made to A on the date of the change. The payments are parachute payments since they have an aggregate present value at least equal to 3 times A's base amount of $100,000 (3 × $100,000 = $300,000).
Assume the same facts as in
Q-31: As of what date is the present value of a payment determined?
A-31: (a) Except as provided in this section, the present value of a payment is determined as of the date on which the change in ownership or control occurs, or, if a payment is made prior to such date, the date on which the payment is made.
(b)(1) For purposes of determining whether a payment is a parachute payment, if a payment in the nature of compensation is the right to receive payments in a year (or years) subsequent to the year of the change in ownership or control, the value of the payment is the present value of such payment (or payments) calculated in accordance with Q/A-32 of this section and based on reasonable actuarial assumptions.
(2) If the payment in the nature of compensation is an obligation to provide health care, then for purposes of this A-31 and for applying the 3-times-base-amount test under Q/A-30 of this section, the present value of such obligation should be calculated in accordance with generally accepted accounting principles. For purposes of Q/A-30 and this A-31, the obligation to provide health care is permitted to be measured by projecting the cost of premiums for purchased health care insurance, even if no health care insurance is actually purchased. If the obligation to provide health care is made in coordination with a health care plan that the corporation makes available to a group, then the premiums
Q-32: What discount rate is to be used to determine present value?
A-32: For purposes of this section, present value generally is determined by using a discount rate equal to 120 percent of the applicable Federal rate (determined under section 1274(d) and the regulations thereunder) compounded semiannually. The applicable Federal rate to be used for this purpose is the Federal rate that is in effect on the date as of which the present value is determined. See Q/A-24 and 35 of this section. However, for any payment, the corporation and the disqualified individual may elect to use the applicable Federal rate that is in effect on the date that the contract which provides for the payment is entered into, if such election is made in the contract.
Q-33: If the present value of a payment to be made in the future is contingent on an uncertain future event or condition, how is the present value of the payment determined?
A-33: (a) In certain cases, it may be necessary to apply the 3-times-base-amount test of Q/A-30 of this section or to allocate a portion of the base amount to a payment described in paragraphs (a)(1), (2), and (3) of Q/A-2 of this section at a time when the aggregate present value of all such payments cannot be determined with certainty because the time, amount, or right to receive one or more such payments is contingent on the occurrence of an uncertain future event or condition. For example, a disqualified individual's right to receive a payment may be contingent on the involuntary termination of such individual's employment with the corporation. In such a case, it must be reasonably estimated whether the payment will be made. If it is reasonably estimated that there is a 50-percent or greater probability that the payment will be made, the full amount of the payment is considered for purposes of the 3-times-base-amount test and the allocation of the base amount. Conversely, if it is reasonably estimated that there is a less than 50-percent probability that the payment will be made, the payment is not considered for either purpose.
(b) If the estimate made under paragraph (a) of this A-33 is later determined to be incorrect, the 3-times-base-amount test described in Q/A-30 of this section must be reapplied (and the portion of the base amount allocated to previous payments must be reallocated (if necessary) to such payments) to reflect the actual time and amount of the payment. Whenever the 3-times-base-amount test is applied (or whenever the base amount is allocated), the aggregate present value of the payments received or to be received by the disqualified individual is redetermined as of the date described in A-31 of this section, using the discount rate described in A-32 of this section. This redetermination may affect the amount of any excess parachute payment for a prior taxable year. Alternatively, if, based on the application of the 3-times-base-amount test without regard to the payment described in paragraph (a) of this A-33, a disqualified individual is determined to have an excess parachute payment or payments, then the 3-times-base-amount test does not have to be reapplied when a payment described in paragraph (a) of this A-33 is made (or becomes certain to be made) if no base amount is allocated to such payment.
(c) The following examples illustrate the principles of this A-33:
A, a disqualified individual with respect to Corporation M, has a base amount of $100,000. Under A's employment agreement with Corporation M, A is entitled to receive a payment in the nature of compensation in the amount of $250,000 contingent on a change in ownership or control of Corporation M. In addition, the agreement provides that if A's employment is terminated within 1 year after the change in ownership or control, A will receive an additional payment in the nature of compensation in the amount of $150,000, payable 1 year after the date of the change in ownership or control. A change in ownership or control of Corporation M occurs and A receives the first payment of $250,000. Corporation M reasonably estimates that there is a 50-percent probability that, as a result of the change, A's employment will be terminated within 1 year of the date of the change. For purposes of applying the 3-times-base-amount test (and if the first payment is determined to be a parachute payment, for purposes of allocating a portion of A's base amount to that payment), because M reasonably estimates that there is a 50-percent or greater probability that, as a result of the change, A's employment will be terminated within 1 year of the date of the change, Corporation M must assume that the $150,000 payment will be made to A as a result of the change in ownership or control. The present value of the additional payment is determined under Q/A-31 and Q/A-32 of this section.
Assume the same facts as in
B, a disqualified individual with respect to Corporation P, has a base amount of $200,000. Under B's employment agreement with Corporation P, if there is a change in ownership or control of Corporation P, B will receive a severance payment of $600,000 and a bonus payment of $400,000. In addition, the agreement provides that if B's employment is terminated within 1 year after the change, B will receive an additional payment in the nature of compensation of $500,000. A change in ownership or control of Corporation P occurs, and B receives the $600,000 and $400,000 payments. At the time of the change in ownership or control, Corporation P reasonably estimates that there is a less than 50-percent probability that B's employment will be terminated within 1 year of the change. For purposes of applying the 3-times-base-amount test, because Corporation P reasonably estimates that there is a less than 50-percent probability that B's employment will be terminated within 1 year of the date of the change, Corporation P assumes that the $500,000 payment will not be made to B. Eleven months after the change in ownership or control, B's employment is terminated, and the $500,000 payment is made to B. Because B was determined to have excess parachute payments without regard to the $500,000 payment, the 3-times-base-amount test is not reapplied and the base amount is not reallocated to include the $500,000 payment. The entire $500,000 payment is treated as an excess parachute payment.
A-34: (a) The base amount of a disqualified individual is the average annual compensation for services performed for the corporation with respect to which the change in ownership or control occurs (or for a predecessor entity or a related entity) which was includible in the gross income of such individual for taxable years in the base period (including amounts that were excluded under section 911), or which would have been includible in such gross income if such person had been a United States citizen or resident. See Q/A-35 of this section for the definition of base period and for examples of base amount computations.
(b) If the base period of a disqualified individual includes a short taxable year or less than all of a taxable year, compensation for such short or incomplete taxable year must be annualized before determining the average annual compensation for the base period. In annualizing compensation, the frequency with which payments are expected to be made over an annual period must be taken into account. Thus, any amount of compensation for such a short or
(c) Because the base amount includes only compensation that is includible in gross income, the base amount does not include certain items that constitute parachute payments. For example, payments in the form of excludible fringe benefits are not included in the base amount but may be treated as parachute payments.
(d) The base amount includes the amount of compensation included in income under section 83(b) during the base period.
(e) The following example illustrates the principles of this A-34:
A disqualified individual, D, receives an annual salary of $500,000 per year during the 5-year base period. D defers $100,000 of D's salary each year under the corporation's nonqualified deferred compensation plan. D's base amount is $400,000 ($400,000 × (5/5)).
Q-35: What is the base period?
A-35: (a) The base period of a disqualified individual is the most recent 5 taxable years of the individual ending before the date of the change in ownership or control. For this purpose, the date of the change in ownership or control is the date the corporation experiences one of the events described in Q/A-27, Q/A-28, or Q/A-29 of this section. However, if the disqualified individual was not an employee or independent contractor of the corporation with respect to which the change in ownership or control occurs (or a predecessor entity or a related entity as defined in Q/A-21 of this section) for this entire 5-year period, the individual's base period is the portion of such 5-year period during which the individual performed personal services for the corporation or predecessor entity or related entity.
(b) The following examples illustrate the principles of Q/A-34 of this section and this Q/A-35:
A disqualified individual, D, was employed by a corporation for 2 years and 4 months preceding the taxable year in which a change in ownership or control of the corporation occurs. D's includible compensation income from the corporation was $30,000 for the 4-month period, $120,000 for the first full year, and $150,000 for the second full year. D's base amount is $120,000, ((3 × $30,000) + $120,000 + $150,000)/ 3.
Assume the same facts as in
Q-36: How is the base amount determined in the case of a disqualified individual who did not perform services for the corporation (or a predecessor entity or a related entity as defined in Q/A-21 of this section), prior to the individual's taxable year in which the change in ownership or control occurs?
A-36: (a) In such a case, the individual's base amount is the annualized compensation for services performed for the corporation (or a predecessor entity or related entity) which—
(1) Was includible in the individual's gross income for that portion, prior to such change, of the individual's taxable year in which the change occurred (including amounts that were excluded under section 911), or would have been includible in such gross income if such person had been a United States citizen or resident;
(2) Was not contingent on the change in ownership or control; and
(3) Was not a securities violation parachute payment.
(b) The following examples illustrate the principles of this A-36:
On January 1, 2006, A, an individual whose taxable year is the calendar year, enters into a 4-year employment contract with Corporation M as an officer of the corporation. A has not previously performed services for Corporation M (or any predecessor entity or related entity as defined in Q/A-21 of this section). Under the employment contract, A is to receive an annual salary of $120,000 for each of the 4 years that he remains employed by Corporation M with any remaining unpaid balance to be paid immediately in the event that A's employment is terminated without cause. On July 1, 2006, after A has received compensation of $60,000, a change in the ownership of Corporation M occurs. Because of the change, A's employment is terminated without cause, and he receives a payment of $420,000. It is established by clear and convincing evidence that the $60,000 in compensation is not contingent on the change in ownership or control, but the presumption that the $420,000 payment is contingent on the change is not rebutted. Thus, the payment of $420,000 is treated as contingent on the change in ownership of Corporation M. In this case, A's base amount is $120,000 (2 × $60,000). Since the present value of the payment which is contingent on the change in ownership of Corporation M ($420,000) is more than 3 times A's base amount of $120,000 (3 × $120,000 = $360,000), the payment is a parachute payment.
Assume the same facts as in
Q-37: Must a payment be contingent on a change in ownership or control in order to be a parachute payment?
A-37: (a) No, the term
(1) Pursuant to an agreement that violates any generally enforced Federal or State securities laws or regulations; and
(2) In connection with a potential or actual change in ownership or control.
(b) A violation is not taken into account under paragraph (a)(1) of this A-37 if it is merely technical in character or is not materially prejudicial to shareholders or potential shareholders. Moreover, a violation will be presumed not to exist unless the existence of the violation has been determined or admitted in a civil or criminal action (or an administrative action by a regulatory body charged with enforcing the particular securities law or regulation) which has been resolved by adjudication or consent. Parachute payments described in this A-37 are referred to in this section as securities violation payments.
(c) Securities violation parachute payments that are not contingent on a change in ownership or control within the meaning of Q/A-22 of this section are not taken into account in applying the 3-times-base-amount test of Q/A-30 of this section. Such payments are considered parachute payments regardless of whether such test is met with respect to the disqualified individual (and are included in allocating base amount under Q/A-38 of this section). Moreover, the amount of a securities violation parachute payment treated as an excess parachute payment shall not be reduced by the portion of
(d) The rules in paragraph (b) of this A-37 also apply to securities violation parachute payments that are contingent on a change in ownership or control if the application of these rules results in greater total excess parachute payments with respect to the disqualified individual than would result if the payments were treated simply as payments contingent on a change in ownership or control (and hence were taken into account in applying the 3-times-base-amount test and were reduced by, or did not include, any applicable amount of reasonable compensation).
(e) The following examples illustrate the principles of this A-37:
A, a disqualified individual with respect to Corporation M, receives two payments in the nature of compensation that are contingent on a change in the ownership or control of Corporation M. The present value of the first payment is equal to A's base amount and is not a securities violation parachute payment. The present value of the second payment is equal to 1.5 times A's base amount and is a securities violation parachute payment. Neither payment includes any reasonable compensation. If the second payment is treated simply as a payment contingent on a change in ownership or control, the amount of A's total excess parachute payments is zero because the aggregate present value of the payments does not equal or exceed 3 times A's base amount. If the second payment is treated as a securities violation parachute payment subject to the rules of paragraph (b) of this A-37, the amount of A's total excess parachute payments is 0.5 times A's base amount. Thus, the second payment is treated as a securities violation parachute payment.
Assume the same facts as in
B, a disqualified individual with respect to Corporation N, receives two payments in the nature of compensation that are contingent on a change in the control of Corporation N. The present value of the first payment is equal to 4 times B's base amount and is a securities violation parachute payment. The present value of the second payment is equal to 2 times B's base amount and is not a securities violation parachute payment. B establishes by clear and convincing evidence that the entire amount of the first payment is reasonable compensation for personal services to be rendered after the change in ownership or control. If the first payment is treated simply as a payment contingent on a change in ownership or control, it is exempt from the definition of
Assume the same facts as in
Q-38: How is the amount of an excess parachute payment computed?
A-38: (a) The amount of an excess parachute payment is the excess of the amount of any parachute payment over the portion of the disqualified individual's base amount that is allocated to such payment. For this purpose, the portion of the base amount allocated to any parachute payment is the amount that bears the same ratio to the base amount as the present value of such parachute payment bears to the aggregate present value of all parachute payments made or to be made to (or for the benefit of) the same disqualified individual. Thus, the portion of the base amount allocated to any parachute payment is determined by multiplying the base amount by a fraction, the numerator of which is the present value of such parachute payment and the denominator of which is the aggregate present value of all such payments. See Q/A-31, Q/A-32, and Q/A-33 of this section for rules on determining present value and Q/A-34 of this section for the definition of
(b) The following example illustrates the principles of this A-38:
An individual with a base amount of $100,000 is entitled to receive two parachute payments, one of $200,000 and the other of $400,000. The $200,000 payment is made at the time of the change in ownership or control, and the $400,000 payment is to be made at a future date. The present value of the $400,000 payment is $300,000 on the date of the change in ownership or control. The portions of the base amount allocated to these payments are $40,000 (($200,000/$500,000) × $100,000) and $60,000 (($300,000/$500,000) × $100,000), respectively. Thus, the amount of the first excess parachute payment is $160,000 ($200,000—$40,000) and that of the second is $340,000 ($400,000—$60,000).
Q-39: May the amount of an excess parachute payment be reduced by reasonable compensation for personal services actually rendered before the change in ownership or control?
A-39: (a) Generally, yes, except that in the case of payments treated as securities violation parachute payments or when the portion of a payment that is treated as contingent on the change in ownership or control is determined under paragraph (b) or (c) of Q/A-24 of this section, the amount of an excess parachute payment is reduced by any portion of the payment that the taxpayer establishes by clear and convincing evidence is reasonable compensation for personal services actually rendered by the disqualified individual before the date of the change in ownership or control. Services reasonably compensated for by payments that are not parachute payments (for example, because the payments are not contingent on a change in ownership or control and are not securities violation parachute payments, or because the payments are exempt from the definition of parachute payment under Q/A-6 through Q/A-9 of this section) are not taken into account for this purpose. The portion of any parachute payment that is established as reasonable compensation is first reduced by the portion of the disqualified individual's base amount that is allocated to such parachute payment; any remaining portion of the parachute payment established as reasonable compensation then reduces the excess parachute payment.
(b) The following examples illustrate the principles of this A-39:
Assume that a parachute payment of $600,000 is made to a
Assume the same facts as in
Q-40: How is it determined whether payments are reasonable compensation?
A-40: (a) In general, whether payments are reasonable compensation for personal services actually rendered, or to be rendered, by the disqualified individual is determined on the basis of all the facts and circumstances of the particular case. Factors relevant to such a determination include, but are not limited to, the following—
(1) The nature of the services rendered or to be rendered;
(2) The individual's historic compensation for performing such services; and
(3) The compensation of individuals performing comparable services in situations where the compensation is not contingent on a change in ownership or control.
(b) For purposes of section 280G, reasonable compensation for personal services includes reasonable compensation for holding oneself out as available to perform services and refraining from performing services (such as under a covenant not to compete).
Q-41: Is any particular type of evidence generally considered clear and convincing evidence of reasonable compensation for personal services?
A-41: Yes, a showing that payments are made under a nondiscriminatory employee plan or program (as defined in Q/A-26 of this section) generally is considered to be clear and convincing evidence that the payments are reasonable compensation. This is true whether the personal services for which the payments are made are actually rendered before, or to be rendered on or after, the date of the change in ownership or control. Q/A-46 of this section (relating to the treatment of an affiliated group as one corporation) does not apply for purposes of this A-41. No determination of reasonable compensation is needed for payments under qualified plans to be exempt from the definition of
Q-42: Is any particular type of evidence generally considered clear and convincing evidence of reasonable compensation for personal services to be rendered on or after the date of a change in ownership or control?
A-42: (a) Yes, if payments are made or to be made to (or on behalf of) a disqualified individual for personal services to be rendered on or after the date of a change in ownership or control, a showing of the following generally is considered to be clear and convincing evidence that the payments are reasonable compensation for services to be rendered on or after the date of the change in ownership or control—
(1) The payments were made or are to be made only for the period the individual actually performs such personal services; and
(2) If the individual's duties and responsibilities are substantially the same after the change in ownership or control, the individual's annual compensation for such services is not significantly greater than such individual's annual compensation prior to the change in ownership or control, apart from normal increases attributable to increased responsibilities or cost of living adjustments. If the scope of the individual's duties and responsibilities are not substantially the same, the annual compensation after the change is not significantly greater than the annual compensation customarily paid by the employer or by comparable employers to persons performing comparable services. However, except as provided in paragraph (b) of this A-42, such clear and convincing evidence will not exist if the individual does not, in fact, perform the services contemplated in exchange for the compensation.
(b) Generally, an agreement under which the disqualified individual must refrain from performing services (such as a covenant not to compete) is an agreement for the performance of personal services for purposes of this A-42 to the extent that it is demonstrated by clear and convincing evidence that the agreement substantially constrains the individual's ability to perform services and there is a reasonable likelihood that the agreement will be enforced against the individual. In the absence of clear and convincing evidence, payments under the agreement are treated as severance payments under Q/A-44 of this section.
(c) If the employment of a disqualified individual is involuntarily terminated before the end of a contract term and the individual is paid damages for breach of contract, a showing of the following factors generally is considered clear and convincing evidence that the payment is reasonable compensation for personal services to be rendered on or after the date of change in ownership or control—
(1) The contract was not entered into, amended, or renewed in contemplation of the change in ownership or control;
(2) The compensation the individual would have received under the contract would have qualified as reasonable compensation under section 162;
(3) The damages do not exceed the present value (determined as of the date of receipt) of the compensation the individual would have received under the contract if the individual had continued to perform services for the employer until the end of the contract term;
(4) The damages are received because an offer to provide personal services was made by the disqualified individual but was rejected by the employer; and
(5) The damages are reduced by mitigation. Mitigation will be treated as occurring when such damages are reduced (or any payment of such damages is returned) to the extent of the disqualified individual's earned income (within the meaning of section 911(d)(2)(A)) during the remainder of the period in which the contract would have been in effect. See Q/A-44 of this section for rules regarding damages for a failure to make severance payments.
(c) The following examples illustrate the principles of this A-42:
A, a disqualified individual, has a three-year employment contract with Corporation M, a publicly traded corporation. Under this contract, A is to receive a salary for $100,000 for the first year of the contract and, for each succeeding year, an annual salary that is 10 percent higher than the prior year's salary. During the third year of the contract, Corporation N acquires all the stock of Corporation M. Prior to the change in ownership, Corporation N arranges to retain A's services by entering into an employment contract with A that is essentially the same as A's contract with Corporation M. Under
Assume the same facts as in
Assume the same facts as in
Assume the same facts as in
Q-43: Is any particular type of payment generally considered reasonable compensation for personal services actually rendered before the date of a change in ownership or control?
A-43: (a) Yes, payments of compensation earned before the date of a change in ownership or control generally are considered reasonable compensation for personal services actually rendered before the date of a change in ownership or control if they qualify as reasonable compensation under section 162.
Q-44: May severance payments be treated as reasonable compensation?
A-44: (a) No, severance payments are not treated as reasonable compensation for personal services actually rendered before, or to be rendered on or after, the date of a change in ownership or control. Moreover, any damages paid for a failure to make severance payments are not treated as reasonable compensation for personal services actually rendered before, or to be rendered on or after, the date of such change. For purposes of this section, the term
(b) The following example illustrates the principles of this A-44:
A, a disqualified individual, has a three-year employment contract with Corporation X. Under the contract, A will receive a salary of $200,000 for the first year of the contract, and for each succeeding year, an annual salary that is $100,000 higher than the previous year. In the event of A's termination of employment following a change in ownership or control, the contract provides that A will receive the remaining salary due under the employment contract. At the beginning of the second year of the contract, Corporation Y acquires all of the stock of Corporation X, A's employment is terminated, and A receives $700,000 ($300,000 for the second year of the contract plus $400,000 for the third year of the contract) representing the remaining salary due under the employment contract. Because the $700,000 payment is treated as a severance payment, it is not reasonable compensation for personal services on or after the date of the change in ownership or control. Thus, the full amount of the $700,000 is a parachute payment.
Q-45: How is the term
A-45: For purposes of this section, the term
Q-46: How is an affiliated group treated?
A-46: For purposes of this section, and except as otherwise provided in this section, all members of the same affiliated group (as defined in section 1504, determined without regard to section 1504(b)) are treated as one corporation. Rules affected by this treatment of an affiliated group include (but are not limited to) rules relating to exempt payments of certain corporations (Q/A-6, Q/A-7 of this section (except as provided therein)), payor of parachute payments (Q/A-10 of this section), disqualified individuals (Q/A-15 through Q/A-21 of this section (except as provided therein)), rebuttal of the presumption that payments are contingent on a change (Q/A-26 of this section (except as provide therein)), change in ownership or control (Q/A-27, 28, and 29 of this section), and reasonable compensation (Q/A-42, 43, and 44 of this section).
Q-47: What is the general effective date of section 280G?
A-47: (a) Generally, section 280G applies to payments under agreements entered into or renewed after June 14, 1984. Any agreement that is entered into before June 15, 1984, and is renewed after June 14, 1984, is treated as a new contract entered into on the day the renewal takes effect.
(b) For purposes of paragraph (a) of this A-47, a contract that is terminable or cancellable unconditionally at will by either party to the contract without the consent of the other, or by both parties to the contract, is treated as a new
(c) Section 280G applies to payments under a contract entered into on or before June 14, 1984, if the contract is amended or supplemented after June 14, 1984, in significant relevant respect. For this purpose, a
(d)(1) Except as otherwise provided in paragraph (e) of this A-47, a contract is considered to be amended or supplemented in significant relevant respect if provisions for payments contingent on a change in ownership or control (parachute provisions), or provisions in the nature of parachute provisions, are added to the contract, or are amended or supplemented to provide significant additional benefits to the disqualified individual. Thus, for example, a contract generally is treated as amended or supplemented in significant relevant respect if it is amended or supplemented—
(i) To add or modify, to the disqualified individual's benefit, a change in ownership or control trigger;
(ii) To increase amounts payable that are contingent on a change in ownership or control (or, where payment is to be made under a formula, to modify the formula to the disqualified individual's advantage); or
(iii) To accelerate, in the event of a change in ownership or control, the payment of amounts otherwise payable at a later date.
(2) For purposes of paragraph (a) of this A-47, a payment is not treated as being accelerated in the event of a change in ownership or control if the acceleration does not increase the present value of the payment.
(e) A contract entered into on or before June 14, 1984, is not treated as amended or supplemented in significant relevant respect merely by reason of normal adjustments in the terms of employment relationship or independent contractor relationship of the disqualified individual. Whether an adjustment in the terms of such a relationship is considered normal for this purpose depends on all of the facts and circumstances of the particular case. Relevant factors include, but are not limited to, the following—
(1) The length of time between the adjustment and the change in ownership or control;
(2) The extent to which the corporation, at the time of the adjustment, viewed itself as a likely takeover candidate;
(3) A comparison of the adjustment with historical practices of the corporation;
(4) The extent of overlap between the group receiving the benefits of the adjustment and those members of that group who are the beneficiaries of pre-June 15, 1984, parachute contracts; and
(5) The size of the adjustment, both in absolute terms and in comparison with the benefits provided to other members of the group receiving the benefits of the adjustment.
Q-48: What is the effective date of this section?
A-48: This section applies to any payment that is contingent on a change in ownership or control that occurs on or after January 1, 2004. Taxpayers can rely on these rules for the treatment of any parachute payment made after February 20, 2002.
Internal Revenue Service (IRS), Treasury.
Change of date of public hearing; extension of time to submit written comments and outlines of oral comments.
This document changes the date of the public hearing on the proposed regulations that relate to requirements for retirement plans providing catch-up contributions to individuals age 50 or older pursuant to the provisions of section 414(v) and supercedes the notice of public hearing published in the
The public hearing will be held April 30, 2002, beginning at 10 a.m. Written comments and outlines of oral comments must be received by April 15, 2002.
The public hearing will be held in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. Send submissions to CC:ITA:RU (REG-142499-01), Room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 5 p.m. to CC:ITA:RU (REG-142499-01), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC. Alternatively, taxpayers may submit comments directly to the IRS Internet site at www.irs.gov/regs.
Concerning the proposed regulations, R. Lisa Mojiri-Azad or John Ricotta, (202) 622-6060 (not a toll-free number); concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Donna Poindexter (202) 622-7180 (not a toll-free number).
A notice of proposed rulemaking and notice of public hearing that appeared in the
Environmental Protection Agency.
Notice of intent to partially delete the California Gulch Superfund Site from the National Priorities List.
The Environmental Protection Agency (EPA) Region 8 is issuing a notice of intent to partially delete the subunits A and B, residential waste rock piles, and parks and playgrounds within Operable Unit 9 of the California Gulch Superfund Site (Site), located in Lake County, Colorado, from the National Priorities List (NPL) and requests public comments on this notice of intent. The NPL, promulgated pursuant to section 105 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended, is found at appendix B of 40 CFR part 300 which is the National Oil and Hazardous Substances Pollution Contingency Plan (NCP). The EPA and the State of Colorado, through the Colorado Department of Public Health and Environment, have determined that all appropriate response actions under CERCLA, other than operation and maintenance and five-year reviews, have been completed. However, this partial deletion does not preclude future actions under Superfund. In the “Rules and Regulations” Section of today's
Comments concerning this Site must be received by March 22, 2002.
Written comments should be addressed to: Rebecca Thomas, Remedial Project Manager, Environmental Protection Agency, Region 8, Mail Code 8EPR-SR, 999 18th Street, Suite 300, Denver, CO 80202.
Rebecca Thomas, Remedial Project Manager, Environmental Protection Agency, Region 8, Mail Code 8EPR-SR, 999 18th Street, Suite 300, Denver, CO 80202.
For additional information, see the Direct final notice of partial deletion which is located in the Rules section of this
Repositories have been established to provide detailed information concerning this decision at the following address:
Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.
33 U.S.C. 1321(c)(2); 42 U.S.C. 9601-9657; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 FR 2923; 3 CFR, 1987 Comp., p. 193.
Environmental Protection Agency.
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to amend the EPA Acquisition Regulation to revise its policy and procedures regarding the evaluation of contractor performance. This action is necessary because EPA's current regulation eliminates the use of the National Institutes of Health (NIH) Contractor Performance System to record contractor performance histories for construction acquisitions. This revision will allow EPA contracting officers to utilize the NIH system for construction type acquisition in lieu of the Federal Acquisition Regulation prescribed Standard Form 1420, Performance Evaluation (Construction Contracts). The NIH obtained approval from the Civilian Agency Acquisition Council regarding the use of its construction module in lieu of Standard Form 1420.
Comments should be submitted no later than March 22, 2002.
Submit written comments to Frances Smith at the following address: U.S. Environmental Protection Agency, Office of Acquisition Management, Mail Code 3802R, 1200 Pennsylvania Avenue, NW., Ariel Rios Building, Washington, DC 20460. Comments may be sent electronically to
Frances Smith, U.S. Environmental Protection Agency, Office of Acquisition Management, (202) 564-4368.
This proposed rule amends the Environmental Protection Agency Acquisition Regulation Subpart 1509.170 and 1552.209-76 to allow EPA contracting officers to utilize the construction module in the National Institutes of Health's Contractor
This proposed rule is not a significant regulatory action for the purposes of Executive Order 12866; therefore, no review is required by the Office of Information and Regulatory Affairs within the Office of Management and Budget (OMB).
The Paperwork Reduction Act applies to this proposed rule, and the information collection request has been evaluated by the Office of Management and Budget. The Office of Information and Regulatory Affairs within the Office of Management and Budget has issued OMB Clearance No. 9000-0142 for the collection of contractor performance information. Comments regarding Paperwork Reduction Act concerns should be sent to the Office of Management and Budget (Attn: EPA Desk Officer).
The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.
For purposes of assessing the impact of today's proposed rule on small entities, small entity is defined as: (1) A small business that meets the definition of a small business found in the Small Business Act and codified at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.
After considering the economic impacts of today's proposed rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, since the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives “which minimize any significant economic impact of the proposed rule on small entities.” 5 U.S.C. 603 and 604. Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule.
This proposed rule requires no reporting or record-keeping by small or large business contractors. Rather, it provides EPA contractors with a formal opportunity, generally once a year per contract, to review and comment on their specific performance evaluations as conducted by the cognizant EPA contracting officer. Therefore, this proposed rule will have no adverse or significant economic impact on small entities.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess their regulatory actions on State, local, and Tribal governments, and the private sector. This proposed rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and Tribal governments, in the aggregate, or the private sector in one year. Any private sector costs for this action relate to paperwork requirements and associated expenditures that are far below the level established for UMRA applicability. Thus, this proposed rule is not subject to the requirements of sections 202 and 205 of the UMRA.
Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be economically significant as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.
This proposed rule is not subject to Executive Order 13045 because it is not an economically significant rule as defined by Executive Order 12866, and because it does not involve decisions on environmental health or safety risks.
Executive Order 13132 entitled “Federalism” (64 FR 43255, August 10, 1999) requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” as defined in the Executive Order include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Section 6 of Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA also may not issue a regulation that has federalism implications and that preempts State law, unless the Agency consults with State and local officials early in the process of developing the proposed regulation.
This proposed rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Thus, the requirements of section 6 of the Executive Order do not apply to this proposed rule.
Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 6, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by
This proposed rule does not have tribal implications. It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this proposed rule.
In the spirit of Executive Order 13175, and consistent with EPA policy to promote communications between EPA and tribal governments, EPA specifically solicits additional comment on this proposed rule from tribal officials.
EPA will use voluntary consensus standards, as directed by section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note), in its procurement activities. The NTTAA directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.
This rulemaking does not involve technical standards. Therefore, EPA is not considering use of any voluntary consensus standards. EPA welcomes comments on this aspect of the interim rulemaking, and, specifically, invites the public to identify potentially applicable voluntary consensus standards and to explain why such standards should be used in this regulation.
This proposed rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)) because it is not a significant regulatory action under Executive Order 12866.
Government procurement.
Therefore, 48 CFR Chapter 15 is proposed to be amended as set forth below:
1. The authority citation for Parts 1509 and 1552 is revised to read as follows:
5 U.S.C. 301; Sec. 205(c), 63 Stat. 390, as amended, 40 U.S.C. 486(c); and 41 U.S.C. 418b.
2. Section 1509.170-3 is amended by revising paragraphs (a), (c), and adding paragraph (d) to read as follows:
(a) This subpart applies to all EPA acquisitions in excess of $100,000, except for architect-engineer acquisitions, acquisitions awarded under the Federal Acquisition Regulation (FAR) Subpart 8.6, Acquisitions from Federal Prison Industries, Incorporated, FAR Subpart 8.7, Acquisitions from Nonprofit Agencies Employing People Who Are Blind or Severely Disabled, and FAR 13.5, Test Program for Certain Commercial Items. FAR 36.604 provides detailed instructions for architect-engineer contractor performance evaluations.
(c) EPA Form 1900-26, Contracting Officer's Evaluation of Contractor Performance, and EPA Form 1900-27, Project Officer's Evaluation of Contractor Performance, applies to all performance evaluations completed prior to May 26, 1999. Thereafter, EPA Forms 1900-26 and 1900-27 are obsolete, and contracting officers shall complete all contractor performance evaluations by use of the National Institutes of Health's Contractor Performance System in accordance with EPAAR paragraph (a) of this section.
(d) Construction acquisitions shall be completed by use of the NIH construction module. Performance evaluations for construction acquisitions shall be completed in accordance with EPAAR 1509.170-5.
3. Section 1509.170-4 is amended by revising the last sentence of paragraph (f) to read as follows:
(f) * * * Performance categories include quality, cost control, timeliness of performance, business relations, compliance with labor standards, compliance with safety standards, and meeting Small Disadvantaged Business subcontracting requirements.
4. Section 1509.170-5 is amended by revising paragraph (b) to read as follows:
(b) For service type acquisitions, contracting officers shall use the National Institutes of Health (NIH) Contractor Performance System to record evaluations for all contract performance periods expiring after May 26, 1999. For construction type acquisitions, contracting officers shall use the NIH system to record evaluations for all contract performance periods expiring after [the effective date of the final rule].
5. Section 1509.170-8 is amended by revising paragraph (b) to read as follows:
(b) The performance categories and ratings used in the evaluation of contractor performance are described in the clause at 1552.209-76. The NIH system provides instructions to assist contracting officers and project officers with completing evaluations.
6. Section 1552.209-76 is amended by revising the undesignated text between the section heading and paragraph (a), revising paragraphs (a)(2), (b)(2) and (b)(4) to read as follows:
As prescribed in section 1509-170-1, insert the following clause in all applicable solicitations and contracts.
The contracting officer shall complete a Contractor Performance Report (Report) within ninety (90) business days after the end of each 12 months of contract performance (interim Report) or after the last 12 months (or less) of contract performance (final Report) in accordance with EPAAR 1509.170-5. The contractor shall be evaluated based
The contractor may be evaluated based on the following performance categories: Quality, Cost Control, Timeliness of Performance, Business Relations, Compliance with Labor Standards, Compliance with Safety Standards, and Meeting Small Disadvantaged Business Subcontracting Requirements.
(a) * * *
(2) Evaluate contractor performance and assign a rating for quality, cost control, timeliness of performance, compliance with labor standards, and compliance with safety standards performance categories (including a narrative for each rating);
(b) * * *
(2) Assign a rating for the business relations and meeting small disadvantaged business subcontracting requirements performance categories (including a narrative for each rating).
(4) Provide any additional information concerning the quality, cost control, timeliness of performance, compliance with labor standards, and compliance with safety standards performance categories if deemed appropriate for the evaluation or future evaluations (if any), and provide any information regarding subcontracts, key personnel, and customer satisfaction; and
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Response to petition; final determination.
On October 13, 2000, NMFS received a petition dated October 4, 2000, requesting that NMFS revise the present critical habitat designation for the northern right whale under the Endangered Species Act (ESA) by designating a new area within the eastern Bering Sea as critical habitat for right whales in the North Pacific. NMFS has determined that the petition is not warranted at this time. NMFS recognizes that the revision of critical habitat may be prudent, but finds that the extent of critical habitat cannot be determined at this time because the essential biological requirements of the population in the North Pacific Ocean are not sufficiently understood. NMFS will continue to analyze issues raised by the petition following the completion of planned 2002 right whale surveys and research.
Comments and requests for copies of this determination should be addressed to the Division Chief, Marine Mammal Division, Office of Protected Resources, NMFS, 1315 East-West Highway, Silver Spring, MD 20910.
Bradley Smith, Alaska Regional Office, NMFS, Anchorage, AK, (907) 271-5006; Michael Payne, Alaska Regional Office, NMFS, Juneau, AK, (907) 586-7236; or Caroline Good, Marine Mammal Division, Office of Protected Resources, NMFS, Silver Spring, MD, (301) 713-2322.
Right whales in the North Pacific are one of three populations of endangered right whales worldwide. The other populations occur in the North Atlantic and the Southern Hemisphere. The southern right whale is recognized as a separate species but the North Atlantic and North Pacific stocks have heretofore been described as a single species. Recent genetic studies, however, provide conclusive evidence supporting separate species status for these populations, one in the North Atlantic and another in the North Pacific. The International Whaling Commission's (IWC) Scientific Committee formally recognized a three species classification for right whales at its 2000 meeting in Adelaide, Australia. NMFS has reviewed and concurs with the taxonomic changes suggested by the IWC and is working to have the right whale populations listed as distinct species under the Endangered Species Act.
Several right whales have been seen each year from NMFS survey platforms since 1996 (NMFS 2000; LeDuc
Right whales in U.S. waters were listed as endangered under the Endangered Species Conservation Act, the precursor to the ESA, on June 2, 1970 (35 FR 8495; codified at 50 CFR Section 17.11). The species was subsequently listed as endangered under the ESA in 1973, and as depleted under the Marine Mammal Protection Act in the same year. NMFS has the lead responsibility for the recovery program for this species.
NMFS published a Final Recovery Plan for Northern Right Whales (Recovery Plan) in 1991. The 1991 Recovery Plan recommended that a separate plan be prepared for the North Pacific stock “when population numbers are available” and further stated that the plan should identify habitats essential or important to survival and recovery. A draft Recovery Plan for the North Pacific population of right whales (NMFS, unpublished) is being prepared and much of the scientific information in this
NMFS designated critical habitat for northern right whales on June 3, 1994 (59 FR 28793; codified at 50 CFR 226.203). NMFS designated 3 areas in the North Atlantic Ocean off the eastern United States: two feeding and nursery areas in waters off the northeastern United States, and a winter calving and nursery area in waters off the southeastern United States. Not enough information was available to consider critical habitat designation for any other stock of northern right whale including that in the North Pacific at the time of the 1994 designation. The western North Atlantic population was considered the population that stood to benefit most from recovery actions (NMFS 1991).
Section 4(b)(3)(D)(i) of the ESA requires that NMFS, to the maximum extent practicable after receiving a petition to revise existing critical habitat, make a finding as to whether the petition presents substantial scientific or commercial information to demonstrate that the petitioned action may be warranted and publish the finding in the
On June 1, 2001 (66 FR 29773), NMFS published a notice finding the subject petition contained substantial scientific information indicating that revision of critical habitat for the right whale may be warranted and inviting interested persons to submit comments and information concerning revision. NMFS received over 1,000 letters on the petition during the comment period. The comments are addressed in the following paragraphs.
The Bering Sea has undergone profound ecological changes over the past decades. These changes have likely resulted in subsequent changes in species composition and distribution among the zooplankton which comprise the primary prey of right whales. Plankton blooms in the eastern Bering Sea have been observed since 1996 and may be the principle reason that right whales have concentrated in this area in recent years. Therefore, the current sighting aggregations may be the result of conditions that have been present for only a few years. Data are very limited on this subject, but the current sighting distribution data do not support the assertion that the entire area proposed by the petitioner as critical habitat contains the physical and biological features essential to the conservation of right whales.
The distribution of right whales off the eastern United States is congruent with several major shipping ports including the ports of Boston, New York and Jacksonville, among others. Furthermore the areas designated as critical habitat all have major shipping channels running through them.
The likelihood of a vessel striking a right whale in these areas sometime throughout the year, or throughout the lifetime of a whale, is extremely high and this is reflected in the mortality data from recent years. The whales are exposed to a high level of vessel traffic because major shipping channels overlap with calving and foraging grounds.
Conditions in the eastern Bering Sea differ from the East Coast. There are no major ports and no dredged shipping lanes in the area. The major shipping channel runs from Unimak Pass westward below the Pribilof Islands. This is south of the petitioned area and the area where right whales have been sighted in recent years. However, the lack of shipping lanes within the petitioned area does not mean that the whales are free from the risk of ship strike in the surrounding area. Right whales may cross through the Unimak pass shipping lane as they migrate in and out of the Bering Sea. No incident of a ship striking a whale in the eastern Bering Sea has been recorded. The only vessels that routinely operate within the petitioned area are fishing vessels which have no history of striking right whales in the Pacific Ocean.
Many commenters and the petitioner also made similar comments with regard to the likelihood of entanglement in the eastern Bering Sea. Again, most right whales in the North Atlantic have scarring from having been entangled in or come into contact with gillnets or lobster gear. The sighting data in the eastern Bering Sea do not indicate that these whales have similar scarring patterns. No gillnets are used within the petitioned area since they are prohibited by law beyond State waters in Alaska. The principal fisheries in the eastern Bering Sea are the pelagic trawl and crab fisheries. Many of the larger fishing vessels in the eastern Bering Sea are required to have observers, and these observers have never reported an entanglement of a right whale in fishing gear in the eastern Bering Sea. The petitioners refer to an entangled right whale off Kamchatka, Russia; however, NMFS has no information on the circumstances or the gear type that was involved in that entanglement.
Therefore, NMFS is in general agreement with the commenter's conclusions that the potential threats identified in the petition do not occur presently within the petitioned area at levels that require special management or protective measures. If necessary, protective measures could be enacted through formal or informal consultation under section 7 of the ESA or through regulation independent of critical habitat designation. However, as understanding of North Pacific right whales increases (and if human activity in the area changes) special management considerations may be necessary to protect areas essential to the whale's survival.
The natural history information presented in the petition is largely factual and represents a thorough review of existing data. NMFS, however, disagrees with most of the conclusions and statements made by the petitioners based on that review.
The petition largely bases its recommendations for critical habitat revision on the following points: (1) the Right Whale Recovery Plan calls for the protection of habitat essential to the survival and recovery of this stock; (2) revision would benefit the stock, as it would provide an added layer of protection against harm; and (3)the revision is prudent and determinable as defined under 50 CFR 424.12. Further, in the Executive Summary, the petitioners state that “the [right whale] recovery team recommended that once areas essential to the conservation of Pacific right whales were identified, those areas should be designated as critical habitat and protected to the full extent of the law.”
NMFS concurs with the first two of these statements, but disagrees that the revision is determinable at this time. Section 3(5)(A)(i) of the ESA defines critical habitat as specific areas (I) “essential to the conservation of the species” and (II) “which may require special management considerations or protection”.
With regard to section 3(5)(A)(i)(I) most of the information on the distribution and abundance of this species comes from historical whaling records and survey sightings since 1996. NMFS has a paucity of information upon which to determine whether the extent of the area petitioned contains “physical or biological features essential to the conservation of the species.” Based upon the repeated observations of right whales within a relatively small area of the southeastern Bering Sea, NMFS could perhaps conclude that physical features exist within this area that have resulted in biological features (concentrations of prey) that are essential to the successful foraging of the few right whales that have been sighted in recent years. No data exist, however, to indicate from the sighting distribution or known biology that these features (i.e., prey densities sufficient to lead to right whale aggregations) are found throughout the remainder of the area identified in the petition to designate critical habitat. In fact, the sighting distribution suggests that the essential features attracting right whales are not distributed throughout the petitioned area, and may be unique to
The most reasonable conclusion is that a much smaller area than that petitioned may contain physical and biological features that are essential to the conservation of the species, but information is insufficient to extrapolate that conclusion to the entire area petitioned. The lack of a more widespread distribution of these sightings within the petitioned area (or more specifically, the definite clustering of these whales at the same locations since 1996), indicates that the area of sightings is different with regard to successful foraging than the remainder of the area that was identified in the petition.
Another pertinent issue is whether these physical and biological features are permanent or ephemeral. It is not known, based on the literature, whether the zooplankton densities present since 1996 occurred in that location in previous years and, therefore, whether right whale aggregations likewise occurred. Given current population levels, right whales are challenging to detect under almost any circumstances. Nonetheless, right whales have been seen in this area since 1996, and the lack of sightings from any source (there have been numerous vessel surveys in this area since the 1970s that included seabird and marine mammal observers) prior to the mid-1990s would support a conclusion that the whales have recently moved into this area.
If right whales have recently moved into this area, it is possible that the present conditions, which provide sufficient prey densities for foraging, are ephemeral. It would be neither prudent nor beneficial to the species to specify an area as critical habitat only to have the whales aggregate in other unprotected areas in the future. Thus, while the locations where essential features can be found are reasonably well known for the North Atlantic population, such locations and the fidelity of right whales to those locations have not been well established for North Pacific right whales.
With regard to the requirements of section 3(5)(A)(i)(II), NMFS has reviewed all the activities that are present, or may be present, in the petitioned area in the foreseeable future and cannot conclude that the area may require special management considerations. Potential threats from fishing activity, shipping, and oil and gas development do not appear to present any immediate threat to right whales.
Gillnets and lobster gear are the principal gear types implicated in entanglements on the eastern seaboard. Gillnets are not used to fish outside of State of Alaska waters, and are not fished during the period when whales are known to be present in the petitioned area. Therefore, they are unlikely to pose a threat in the petitioned area. Pot gear used in the Bering Sea crab fishery is different from the lobster pot gear that has entangled whales on the East coast. Lobster pots are connected using small-diameter, floating polypropylene line that has a track record of entangling right whales. Bering sea crab gear is different. The pots are much larger, requiring heavier line, and the gear generally does not contain the “entangling” features of lobster gear.
Dredging is not an issue in the eastern Bering Sea. Vessel traffic is not a significant issue in the eastern Bering Sea or the petitioned area. Most large vessels move south of the Pribilof Islands. Finally, lease sales for oil and gas exploration are not scheduled for the 2002-2007 period.
NMFS has stated that the primary benefit of specifying critical habitat is notification to Federal agencies that a certain area is crucial to a listed species, allowing agencies to plan projects while considering the listed species and its needs. The principal activity in this petitioned region is a Federally-managed groundfish fishery. NMFS completed a comprehensive consultation under section 7 of the ESA in November 2000 on the effects of the groundfish fisheries in the Gulf of Alaska and the Bering Sea on species listed under the ESA. There were neither cumulative nor action-specific threats identified in that opinion that would adversely affect the likelihood of survival or recovery for any of the large whales in this area.
Until such time that more information becomes available on the occurrence and distribution of this species, NMFS' conclusion is that no special management considerations apply to the entire area being petitioned for critical habitat designation at this time. However, NMFS does recognize that this situation can change. Potential critical habitat may not require special management measures now, but may require special management sometime in the future.
The question then remains whether those features essential to the conservation of the species exist throughout the petitioned area and whether they are “determinable”.
Regulations at 50 CFR 424.12(a)(2) state that a designation of critical habitat is not determinable when one or both of the following situations exist:
(i) Information sufficient to perform required analyses of the impacts of the designation is lacking, or
(ii) The biological needs of the species are not sufficiently well known to permit identification of an area as critical habitat.
NMFS believes that all required analyses of impacts could be performed. However, NMFS lacks sufficient knowledge of the species' needs to identify critical habitat. Regulations at 50 CFR 424.12 indicate that physical and biological features essential for the conservation of the species include feeding sites. The regulations further state that each critical habitat will be defined by specific limits using reference points and lines as found on standard maps of the area. Ephemeral reference points cannot be used in defining critical habitat.
The area petitioned for critical habitat revision is recognized as a region of the Bering Sea where right whales occurred historically. Also, small, but significant, groups of right whales have been observed in a relatively small area of the southeastern Bering Sea since 1996, and feeding and possible courtship behaviors have been observed. However, the area of the sightings cannot be compared with the area petitioned for revision, or the remainder of the range of the North Pacific right whale, without more comprehensive survey data. Nor could an assessment that this area is essential to the species' conservation be supported.
Given the available information, NMFS concludes that: (1) the information does not indicate that physical or biological features that are essential to the conservation of the species exist throughout the petitioned area; and (2) a much smaller area than the petitioned area may contain such essential features, but the geographic boundaries within which such essential features exist are presently indeterminable. Therefore, at this time NMFS cannot conclude that the petitioned area or any specific region within the petitioned area constitutes critical habitat. The scientific information necessary to make critical habitat “determinable” for the eastern Bering Sea stock of right whales is not currently available. Based on the best available information, NMFS has determined that the petitioned action is not warranted at this time.
Section 4(b)(3)(D)(ii) of the ESA requires that NMFS, within 12 months of the date the petition was received, make a determination on how to proceed with the requested revision and
NMFS will continue with planned research activities during 2002 and evaluate any new information to better define the boundaries of an area that may be considered critical. In addition, NMFS will, through the ESA section 7 consultation process, continue to evaluate whether the area may require special management considerations.
To further define an area that might be essential to this population NMFS intends to:
(1) Conduct an extensive vessel-based survey in the eastern Bering Sea during July-August 2002 using experienced observers trained in the use of “Big Eye” (5X) binoculars. Additionally, passive acoustic techniques (moored-buoys) will be used to detect whales. If right whales continue to be sighted in the relatively limited area identified by prior sightings then the boundaries of what might be considered essential will be revisited. It is probable that the summer foraging season will be the only season for which NMFS can obtain further information on this population during the next 12 month period.
(2) If feasible, attempt to satellite-tag North Pacific right whales to determine movement patterns and distribution, at least during late summer and fall. NMFS anticipates that the whales are not going to remain in one spot as the foraging season ends and fall-winter movements occur. However, whether the population remains in the petitioned area or moves south off the shelf is not known.
(3) Re-examine all genetic information to determine whether the eastern Bering Sea stock and Sea of Okhotsk stock of North Pacific right whales can be differentiated genetically. However, it should be re-emphasized that these stocks are currently considered one species under the ESA and treated as such. There are so few samples available for such an analysis that it is doubtful that NMFS will be able to determine any further similarities or dissimilarities between the two stocks even if they exist.
(4) Conduct an economic analysis (as required by the ESA) on any critical habitat area that may be proposed by NMFS.
(5) Continue to examine historical and newly acquired data to determine whether any area, not just the petitioned area, should be proposed as critical habitat for North Pacific right whales.
All references are available upon request (See
16 U.S.C. 1531,
U.S. Agency for International Development (USAID) is making efforts to reduce the paperwork burden. USAID invites the general public and other Federal agencies to take this opportunity to comment on the following proposed and/or continuing information collections, as required by the Paperwork Reduction Act for 1995. Comments are requested concerning: (a) Whether the proposed or continuing collections of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.
Submit comments on or before April 22, 2002.
Beverly Johnson, Bureau for Management, Office of Administrative Services, Information and Records Division, U.S. Agency for International Development, Room 2.07-106, RRB, Washington, DC 20523, (202) 712-1365 or via e-mail
Forest Service, USDA.
Notice; intent to prepare Environmental Impact Statement.
The USDA, Forest Service will prepare an Environmental Impact Statement (EIS) for weed treatments on the Helena National Forest including wilderness and roadless areas. The treatment plan will utilize an integrated pest management approach, utilizing a variety of chemical, biological and mechanical controls. Chemical treatments will include both ground and aerial herbicide applications.
Further analysis of the proposed action and alternatives to that proposal may result in a decision(s) that includes amendments to the Forest Plan.
Comments concerning the scope of the analysis should be received in writing no later than June 1, 2002.
The responsible official is Thomas J. Clifford, Forest Supervisor, Helena National Forest, Supervisor's Office, 2880 Skyway Drive, Helena, MT 59601. Phone: (406) 449-5201.
Dea Nelson, Townsend Ranger District, 415 So. Front Townsend, MT 59644. Phone: (406) 266-3425.
The project would occur on National Forest lands of the Townsend, Helena, and Lincoln Ranger Districts. Treatments would take place in general forest zones as well as the Elkhorn Wildlife Management Area, the Gates of the Mountains Wilderness Area, the Scapegoat Wilderness Area and inventoried roadless areas. The treatment plan will utilize an integrated pest management approach, utilizing a variety of chemical, biological and mechanical controls. Chemical treatments will include both ground and aerial herbicide applications. Approximately 18,000 acres will be treated with ground based application equipment and approximately 5,000 acres with aerial equipment, either fixed wing or helicopters. Chemical applications will take place at the appropriate time of year for the individual weed species. Biological controls will be introduced where appropriate and as they become available. These will include insects, pathogens, and grazing of livestock such as sheep or goats to control weeds in situations where similar practices have been successful in other locations. Some particularly sensitive area or areas of small, new infestations may be treated mechanically, which could include hand pulling or cultivation.
This EIS will tier to the Helena Forest Plan Final EIS of April 1986, that provides program goals, objectives, and standards and guidelines for conducting management activities in this area. All activities associated with the proposal will be designed to maintain or enhance the resource objectives identified in the Forest Plan.
The Forest Service is seeking information and comments from Federal, State, and local agencies together with organizations or individuals who may be interested in or affected by the proposed action. The Forest Service invites written comments and suggestions on the issues for the proposal and the area being analyzed. Information received will be used in preparation of the Draft EIS.
Preparation of the EIS will include the following steps:
1. Identification of issues to be analyzed in depth.
2. Identification of additional reasonable alternatives.
3. Identification of potential environmental effects of the alternatives.
Alternatives to this proposal will include the “no action” alternative, and other alternatives will examine variations in the amount and method of weed treatment.
The preliminary issues identified are:
1. The potential impacts of noxious weed treatment on wildlife.
2. The potential impacts of noxious weed treatment on water quality and fisheries.
3. The potential impacts of noxious weed treatment on native grasses, forbs, shrubs and trees.
4. The potential effects on human health from herbicide use.
5. The potential effects of noxious weed treatment in Wilderness Areas on the quality of the wilderness experience.
The Forest Service will analyze and disclose in the DEIS and FEIS the environmental effects of the proposed action and a reasonable range of alternatives. The DEIS and FEIS will disclose the direct, indirect and cumulative environmental effects of each alternative and its associated site-specific mitigation measures.
Public participation is especially important at several points of the analysis. Interested parties may visit with the Forest Service officials at any time during the analysis. However, two periods of time are specifically identified for the receipt of comments. The first comment period is during the scoping process when the public is invited to give written comments to the Forest Service. The Helena National Forest would like to receive scoping comments by June 1, 2002. The second review period is during the 45 day review of the DEIS when the public is invited to comment on the DEIS.
The DEIS is expected to be filed with the Environmental Protection Agency (EPA) and available for public review in August, 2002. At that time, the EPA will publish a notice of availability of the DEIS in the
The comment period on the DEIS will be 45 cays from the date the notice of availability is published in the
At this early stage in the scoping process, the Forest Service believes it is important to give reviewers notice of several court rulings related to public participation in the environmental review process. First, reviews of DEIS must structure their participation in the environmental review of the proposal so that it is meaningful and alerts an agency to the reviewer's position and contentions.
To assist the Forest Service in identifying and considered issues and concerns on the proposed action, comments on the DEIS should be as specific as possible. It is also helpful if comments refer to specific pages or chapters of the draft statement. Comments may also address the adequacy of the DEIS or the merits of the alternatives formulated and discussed in the statement. (Reviewers may wish to refer to the Council on Environmental Quality Regulations for implementing the procedural provisions of the National Environmental Policy Act at 40 CFR 1503.3 in addressing these points.)
After the comment period ends on the DEIS, the comments will be analyzed and considered by the Forest Service in preparing the FEIS. The FEIS is expected to be filed in January, 2003.
Forest Service, USDA.
Notice of meeting.
The Deschutes and Ochoco National Forests Resource Advisory Committee will meet on Thursday, March 7, 2002 and Tuesday, March 19, 2002 at the Central Oregon Intergovernmental Council building, main conference room, 2363 SW Glacier Place, Redmond, Oregon. The meeting will begin at 9 a.m. and continue until 5 p.m. Committee members will review projects proposed and make recommendations under Resource Advisory Committee consideration under Title II of the Secure Rural Schools and Community Self-Determination Act of 2000. All Deschutes and Ochoco National Forests Resource Advisory Committee meetings are open to the public. Interested citizens are welcome to attend.
Direct questions regarding this meeting to Leslie Weldon, Designated Federal Official, USDA, Deschutes National Forest, 1645 Highway 20 East, Bend, Oregon 97702, 541-383-5512.
Forest Service, USDA.
Notice of meeting.
The Hood/Willamette Resource Advisory Committee (RAC) will meet on Friday, March 8, 2002. The meeting is scheduled to begin at 9 a.m. and will conclude at approximately 4 p.m. The meeting will be held at the Salem Office of the Bureau of Land Management Office; 1717 Fabry Road SE, Salem, Oregon; (503) 375-5646. The tentative agenda includes: (1) Reviewing and Recommending Projects; (2) Public Forum. The Public Forum is tentatively scheduled to begin at 1 p.m. Time allotted for individual presentations will be limited to 3-4 minutes. Written comments are encouraged, particularly if the material cannot be presented within the time limits for the Public Forum. Written comments may be submitted prior to the March 8 meeting by sending them to Designated Federal Official Donna Short at the address given below.
For more information regarding this meeting, contact Designated Federal Official Donna Short; Sweet Home Ranger District; 3225 Highway 20, Sweet Home, Oregon 97386; (541) 367-9220.
The United States Chemical Safety and Hazard Investigation Board announces that it will convene a Public Meeting beginning at 10:00 a.m. local time on February 27, 2002, at 2175 K Street, Suite 400 Conference Room. Topics will include:
1. Initiation of CSB's investigation into the January 16 fatal toxic gas release that occurred at the Georgia-Pacific Corporation's Naheola Mill.
2. Update on CSB investigation into the July 17, 2001 catastrophic failure of a storage tank containing spent sulfuric acid at Motiva Enterprise's Delaware City (Del.) refinery.
3. Update on CSB investigation into a fatal explosion at the BP Amoco Polymers plant in Augusta, Georgia on March 13, 2001, that killed three workers.
4. Results of the CSB investigation into the fatal incident that occurred on February 2, 2001, at the Bethlehem Steel Burns Harbor Mill in Chesterton, Indiana that killed two workers and injured four others.
5. CSB case study of a destructive explosion that occurred at the plant of Concept Sciences Inc., near Allentown, PA, on February 19, 1999.
6. Update on reactive chemical hazard investigation.
7. Creation of CSB's Office of Prevention, Outreach, and Policy (OPOP).
8. CSB/National Institute of Environmental Health Sciences (NIEHS) Spring Workshop.
9. Participation in American Institute for Chemical Engineers' (AIChE) Center for Chemical Process Safety (CCPS) Activities.
10. CSB Data initiatives.
11. Chief Operating Officer position filling process.
12. Tentative date for next Board meeting.
The meeting will be open to the public. Please notify CSB if a translator or interpreter is needed, 10 business days prior to the public meeting. For more information, please contact the Chemical Safety and Hazard Investigation Board's Office of Congressional and Public Affairs, (202)-261-7600, or visit our Web site at:
Import Administration, International Trade Administration, Department of Commerce.
Notice of Final Results of Antidumping Duty Administrative Review.
On August 13, 2001, the Department of Commerce (the Department) published the preliminary results of the administrative review of the antidumping duty order on stainless steel sheet and strip in coils from Germany. This review covers one manufacturer/exporter. The period of review (POR) is January 4, 1999 through June 30, 2000.
Based on our analysis of the comments received, we have made changes in the margin calculations. Therefore, the final results differ from the preliminary results. The final weighted-average dumping margin for the reviewed firm is listed below in the section entitled “Final Results of the Review.”
February 20, 2002.
Patricia Tran, Michael Heaney, or Robert James at (202) 482-1121, (202) 482-4475, or (202) 482-0649, respectively, Antidumping and Countervailing Duty Enforcement Group III, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.
Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Tariff Act), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to the regulations codified at 19 CFR Part 351 (2000).
For purposes of this order, the products covered are certain stainless steel sheet and strip in coils. Stainless steel is an alloy steel containing, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements. The subject sheet and strip is a flat-rolled product in coils that is greater than 9.5 mm in width and less than 4.75 mm in thickness, and that is annealed or otherwise heat treated and pickled or otherwise descaled. The subject sheet and strip may also be further processed (e.g., cold-rolled, polished, aluminized, coated, etc.) provided that it maintains the specific dimensions of sheet and strip following such processing.
The merchandise subject to this order is classified in the Harmonized Tariff Schedule of the United States (HTS) at subheadings: 7219.13.00.31, 7219.13.00.51, 7219.13.00.71, 7219.13.00.81, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00,
Excluded from the scope of this order are the following: (1) sheet and strip that is not annealed or otherwise heat treated and pickled or otherwise descaled; (2) sheet and strip that is cut to length; (3) plate (i.e., flat-rolled stainless steel products of a thickness of 4.75 mm or more); (4) flat wire (i.e., cold-rolled sections, with a prepared edge, rectangular in shape, of a width of not more than 9.5 mm); and (5) razor blade steel. Razor blade steel is a flat-rolled product of stainless steel, not further worked than cold-rolled (cold-reduced), in coils, of a width of not more than 23 mm and a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5
percent chromium, and certified at the time of entry to be used in the manufacture of razor blades. See Chapter 72 of the HTSUS, “Additional U.S. Note”1(d).
In response to comments by interested parties, the Department has determined that certain specialty stainless steel products are also excluded from the scope of this order. These excluded products are described below.
Flapper valve steel is defined as stainless steel strip in coils containing, by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent manganese. This steel also contains, by weight, phosphorus of 0.025 percent or less, silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent or less. The product is manufactured by means of vacuum arc remelting, with inclusion controls for sulphide of no more than 0.04 percent and for oxide of no more than 0.05 percent. Flapper valve steel has a tensile strength of between 210 and 300 ksi, yield strength of between 170 and 270 ksi, plus or minus 8 ksi, and a hardness (Hv) of between 460 and 590. Flapper valve steel is most commonly used to produce specialty flapper valves for compressors.
Also excluded is a product referred to as suspension foil, a specialty steel product used in the manufacture of suspension assemblies for computer disk drives. Suspension foil is described as 302/304 grade or 202 grade stainless steel of a thickness between 14 and 127 microns, with a thickness tolerance of plus--or-minus 2.01 microns, and surface glossiness of 200 to 700 percent Gs. Suspension foil must be supplied in coil widths of not more than 407 mm, and with a mass of 225 kg or less. Roll marks may only be visible on one side, with no scratches of measurable depth. The material must exhibit residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm over 685 mm length.
Certain stainless steel foil for automotive catalytic converters is also excluded from the scope of this order. This stainless steel strip in coils is a specialty foil with a thickness of between 20 and 110 microns used to produce a metallic substrate with a honeycomb structure for use in automotive catalytic converters. The steel contains, by weight, carbon of no more than 0.030 percent, silicon of no more than 1.0 percent, manganese of no more than 1.0 percent, chromium of between 19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of no more than 0.045 percent, sulfur of no more than 0.03 percent, lanthanum of between 0.002 and 0.05 percent, and total rare earth elements of more than 0.06 percent, with the balance iron.
Permanent magnet iron-chromium-cobalt alloy stainless strip is also excluded from the scope of this order. This ductile stainless steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 percent cobalt, with the remainder of iron, in widths 228.6 mm or less, and a thickness between 0.127 and 1.270 mm. It exhibits magnetic remanence between 9,000 and 12,000 gauss, and a coercivity of between 50 and 300 oersteds. This product is most commonly used in electronic sensors and is currently available under proprietary trade names such as “Arnokrome III.”
Certain electrical resistance alloy steel is also excluded from the scope of this order. This product is defined as a non-magnetic stainless steel manufactured to American Society of Testing and Materials (ASTM) specification B344 and containing, by weight, 36 percent nickel, 18 percent chromium, and 46 percent iron, and is most notable for its resistance to high temperature corrosion. It has a melting point of 1390 degrees Celsius and displays a creep rupture limit of 4 kilograms per square millimeter at 1000 degrees Celsius. This steel is most commonly used in the production of heating ribbons for circuit breakers and industrial furnaces, and in rheostats for railway locomotives. The product is currently available under proprietary trade names such as “Gilphy 36.”
Certain martensitic precipitation-hardenable stainless steel is also excluded from the scope of this order. This high-strength, ductile stainless steel product is designated under the Unified Numbering System (UNS) as S45500-grade steel, and contains, by weight, 11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon, manganese, silicon and molybdenum each comprise, by weight, 0.05 percent or less, with phosphorus and sulfur each comprising, by weight, 0.03 percent or less. This steel has copper, niobium, and titanium added to achieve aging, and will exhibit yield strengths as high as 1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after aging, with elongation percentages of 3 percent or less in 50 mm. It is generally provided in thicknesses between 0.635 and 0.787 mm, and in widths of 25.4 mm. This product is most commonly used in the manufacture of television tubes and is currently available under proprietary trade names such as “Durphynox 17.”
Finally, three specialty stainless steels typically used in certain industrial blades and surgical and medical instruments are also excluded from the scope of this order. These include stainless steel strip in coils used in the production of textile cutting tools (e.g., carpet knives).
All issues raised in the case and rebuttal briefs by parties to this administrative review are addressed in the “Issues and Decision Memorandum” (Decision Memorandum) from Joseph A. Spetrini, Deputy Assistant Secretary for Import Administration to Faryar Shirzad, Assistant Secretary for Import Administration, dated February 11, 2002, which is hereby adopted by this notice. A list of the issues which parties have raised and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as an appendix. Parties can find a complete discussion of all issues raised in this review and the corresponding recommendations in this public memorandum which is on file in room B-099 of the main Department of Commerce building. In addition, a complete version of the Decision Memorandum can be accessed directly on the internet at www.ia.ita.doc.gov. The paper copy and electronic version of the Decision Memorandum are identical in content.
Based on our analysis of comments received, we have made changes in the margin calculations. The changes are listed below:
We determine the following percentage weighted-average margins exist for the period January 4, 1999 through June 30, 2000:
The Department shall determine, and U.S. Customs Service (Customs) shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b), we have calculated exporter/importer-specific assessment rates. With respect to constructed export price sales, we divided the total dumping margins for the reviewed sales by the the total entered value of thosed reviewed sales for each importer. We will direct Customs to assess the resulting percentage margin against the entered Customs values for the subject merchandise on each of the importer's entries under the relevant order during the POR.
The following deposit requirements will be effective upon publication of this notice of final results of administrative review for all shipments of stainless steel sheet and strip in coils from Germany entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(1) of the Tariff Act: (1) The cash deposit rate for the reviewed company will be the rate shown above; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original less-than-fair-value (LTFV) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 13.48 percent. This rate is the ``All Others'' rate from the amended final determination in the LTFV investigations. See Stainless Steel Sheet and Strip in Coils From Germany: Notice of Court Decision and Suspension of Liquidation, 66 FR 57419 (November 15, 2001).
These deposit requirements shall remain in effect until publication of the final results of the next administrative review.
This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping or countervailing duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping or countervailing duties occurred and the subsequent assessment of doubled antidumping duties.
This notice also serves as a reminder to parties subject to administrative protective orders (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
We are issuing and publishing this determination and notice in accordance with sections 751(a)(1) and 777(i) of the Tariff Act.
Notice of partially closed meeting—Visiting Committee on Advanced Technology.
Pursuant to the Federal Advisory Committee Act, 5 U.S.C. app. 2, notice is hereby given that the Visiting Committee on Advanced
The meeting will convene March 5, 2002 at 8:25 a.m. and will adjourn at Noon on March 6, 2002.
The meeting will be held in the Employees Lounge, Administration Building, at NIST, Gaithersburg, Maryland.
Janet R. Russell, Administrative Coordinator, Visiting Committee on Advanced Technology, National Institute of Standards and Technology, Gaithersburg, MD 20899-1004, telephone number (301) 975-2107.
The Assistant Secretary for Administration, with the concurrence of the General Counsel, formally determined on January 16, 2002, that portions of the meeting of the Visiting Committee on Advanced Technology which involve discussion of proposed funding of the Advanced Technology Program and the Manufacturing Extension Partnership Program may be closed in accordance with 5 U.S.C. 552b(c)(9)(B), because those portions of the meetings will divulge matters the premature disclosure of which would be likely to significantly frustrate implementation of proposed agency actions; and that portions of meetings which involve discussion of the staffing issues of management and other positions at NIST may be closed in accordance with 5 U.S.C. 552b(c)(6), because divulging information discussed in those portions of the meetings is likely to reveal information of a personal nature where disclosure would constitute a clearly unwarranted invasion of personal privacy.
National Institute of Standards and Technology, Commerce.
Notice of meeting.
Pursuant to the Federal Advisory Committee Act, 5 U.S.C. App., notice is hereby given that the Computer System Security and Privacy Advisory Board (CSSPAB) will meet Tuesday, March 5, 2002, from 9 a.m. until 5 p.m., Wednesday, March 6, 2002, from 9 a.m. until 5 p.m. and on Thursday, March 7, 2002, from 9 a.m. until 5 p.m. All sessions will be open to the public. The Advisory Board was established by the Computer Security Act of 1987 (Pub. L. 100-235) to advise the Secretary of Commerce and the Director of NIST on security and privacy issues pertaining to federal computer systems. Details regarding the Board's activities are available at
The meetings will be held on March 5, 6, and 7, 2002, from 9 a.m. until 5 p.m.
The meetings will take place at the General Services Administration, 7th and D Streets, SW., Room 5700, in Washington, DC.
Note that agenda items may change without notice because of possible unexpected schedule conflicts of presenters.
The Board agenda will include a period of time, not to exceed thirty minutes, for oral comments and questions from the public. Each speaker will be limited to five minutes. Members of the public who are interested in speaking are asked to contact the Board Secretariat at the telephone number indicated below. In addition, written statements are invited and may be submitted to the Board at any time. Written statements should be directed to the CSSPAB Secretariat, Information Technology Laboratory, 100 Bureau Drive, Stop 8930, National Institute of Standards and Technology, Gaithersburg, MD 20899-8930. It would be appreciated if 35 copies of written material were submitted for distribution to the Board and attendees no later than March 1, 2002. Approximately 15 seats will be available for the public and media.
Dr. Fran Nielsen, Board Secretariat, Information Technology Laboratory, National Institute of Standards and Technology, 100 Bureau Drive, Stop 8930, Gaithersburg, MD 20899-8930, telephone: (301) 975-3669.
National Institute of Standards and Technology, Commerce.
Notice.
The International Code Council (ICC), promulgator of the International Codes and Standards, maintains a process for updating the entire family of International Codes
The purpose of this request is to increase public participation in the system used by ICC to develop and maintain its codes and standards. The publication of this notice by the National Institute of Standards and Technology (NIST) on behalf of ICC is undertaken as a public service; NIST does not necessarily endorse, approve, or recommend any of the codes or standards referenced in the notice.
Interested persons may submit proposals to the ICC at the address shown below and may participate in the public debate concerning these matters. The hearing dates are as follows:
Updates to the schedule are posted on the ICC website at:
Mike Pfeiffer, PE, Secretary, Code Development, 4051 West Flossmoor Road, Country Club Hills, IL 60478 Telephone 708/799-2300 Extension 338.
ICC produces the only family of Codes and Standards that are comprehensive, coordinated and necessary to regulate the built environment. Federal agencies frequently use these codes and standards as the basis for developing Federal regulations concerning new and existing construction. The Code Development Process is initiated when proposals from interested persons, supported by written data, views, or arguments are solicited and published in the Proposed Changes document. This document is distributed a minimum of 30 days in advance of the first hearing and serves as the agenda. At the first hearing, the ICC Code Development Committee considers testimony on every proposal and acts on them individually (Approval, Disapproval, or Approval as Modified). The results are published in a report entitled the Report of the Public Hearing, which identifies the disposition of each proposal and the reason for the committee's action. Anyone wishing to submit a comment on the committee's action, expressing support or opposition to the action, is provided the opportunity to do so. Comments received are published and distributed in a document called the Final Action Agenda, which serves as the agenda for the second hearing. Proposals that are approved at the second hearing are incorporated in either the Supplement or Edition, as applicable, with the next cycle starting with the submittal deadline for proposals. Proponents of proposals automatically receive a copy of all documents (Proposed Changes, Report of the Public Hearing and Final Action Agenda).
Interested parties also may request a copy, free of charge, from ICC headquarters at:
International Code Council, 5203 Leesburg Pike, Suite 600, Falls Church, VA 22041-3401 or download a copy from the ICC web site at
The maintenance process for ICC Standards such as ICC/ANSI A 117.1 and the ICC Standard on Bleachers, Folding and Telescopic Seating and Grandstands follows a similar process of soliciting proposals, committee action, public comment and ultimately the update and publication of the standard.
Department of the Air Force, DoD.
Notice of Record of Decision.
The Air Force issued a Record of Decision (ROD) on February 8, 2002, to expand the land area of the existing Hardwood Air-to-Surface Gunnery Range. The decision supports high altitude restricted military training airspace, low altitude restricted military training airspace to match the land expansion area, and increase aircraft utilization in existing military operations area airspace in order to enhance combat readiness training. The ROD was issued in accordance with the Council on Environmental Quality's National Environmental Policy Act (NEPA) Regulations (40 CFR 1505.2). The ROD is based on information, analysis, and public comment contained in the Final Environmental Impact Statement, “Hardwood Range Expansion and Associated Airspace Actions,” November 2000 (
Harry Knudsen (301) 836-6295.
President's Advisory Commission on Educational Excellence for Hispanic Americans, Department of Education.
Notice of meeting.
This notice sets forth the schedule and proposed agenda of a forthcoming meeting of the President's Advisory Commission on Educational Excellence for Hispanic Americans (Commission). This notice also describes the functions of the Commission. Notice of this meeting is required under Section 10(a)(2) of the Federal Advisory Committee Act and is intended to notify the public of their opportunity to attend.
Thursday, February 28, 2002, 9 a.m. to 12 p.m.
The Commission meeting will be held in Washington, DC, at The Mayflower Hotel located at 1127 Connecticut Avenue, NW., Washington, DC 20036.
Leslie Sanchez, Executive Director, or Adam Chavarria, Associate Director, White House Initiative on Educational Excellence for Hispanic Americans, 400 Maryland Ave., SW., Washington, DC 20202, (202) 401-1411.
The President's Advisory Commission on Educational Excellence for Hispanic Americans is established under Executive Order 13230 dated October 12, 2001. The Commission is established to provide advice to the Secretary of Education (Secretary) and issue reports to the President concerning: (a) The progress of Hispanic Americans in closing the academic achievement gap and attaining the goals established by the President's No Child Left Behind Act of 2002; (b) the development, monitoring, and coordination of Federal efforts to promote high-quality education for Hispanic Americans; (c) ways to increase parental, State and local, private sector, and community involvement in improving education; and (d) ways to maximize the effectiveness of Federal education initiatives within the Hispanic community.
Individuals who will need accommodations for a disability in order to attend the meeting (
On Wednesday, February 27th, the Commission will be briefed on a number of topics including Executive Order 13230, the No Child Left Behind Act of 2002, and the Federal Advisory Committee Act (FACA). The Commission will also be sworn in at the White House. The Commission's meeting on Wednesday is not subject to FACA because the meeting involves the exchange of facts and information.
On Thursday, the Commission will meet in open session from 9 a.m. to noon. The Commission will be discussing and planning upcoming meetings and events.
Records are kept of all Commission proceedings, and are available for public inspection at the office of the White House Initiative on Educational Excellence for Hispanic Americans from the hours of 9 a.m. to 5 p.m. This notice will not meet the 15-day FACA requirement for announcing meetings in the
Office of Fossil Energy, DOE.
Notice of application.
Maclaren Energy Inc. (Maclaren) has applied for authority to transmit electric energy from the United States to Canada pursuant to section 202(e) of the Federal Power Act.
Comments, protests or requests to intervene must be submitted on or before March 22, 2002.
Comments, protests or requests to intervene should be addressed as follows: Office of Coal & Power Import/Export (FE-27), Office of Fossil Energy, U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585-0350 (FAX 202-287-5736).
Steven Mintz (Program Office) 202-586-9506 or Michael Skinker (Program Attorney) 202-586-2793.
Exports of electricity from the United States to a foreign country are regulated and require authorization under section 202(e) of the Federal Power Act (FPA) (16 U.S.C. 824a(e)).
On January 22, 2002, the Office of Fossil Energy (FE) of the Department of Energy (DOE) received an application from Maclaren to transmit electric energy from the United States to Canada. Maclare is a power marketer that is incorporated under the laws of Canada and is a wholly-owned subsidiary of Great Lakes Power Inc., a Canadian corporation, which has its principal place of business in Toronto, Ontario, Canada. Maclaren operates as a wholesale and retail marketer of electric power and arranges services in related
Maclaren proposes to arrange for the delivery of electric energy to Canada over the existing international transmission facilities owned by Basin Electric Power Cooperative, Bonneville Power Administration, Citizen Utilities, Eastern Maine Electric Cooperative, International Transmission Company, Joint Owners of the Highgate Project, Long Sault, Inc., Maine Electric Power Company, Maine Public Service Company, Minnesota Power Inc., Minnkota Power Cooperative, New York Power Authority, Niagara Mohawk Power Corporation, Northern States Power, and Vermont Electric Transmission Company. The construction, operation, maintenance, and connection of each of the international transmission facilities to be utilized by Maclaren, as more fully described in the application, has previously been authorized by a Presidential permit issued pursuant to Executive Order 10485, as amended.
Any person desiring to become a party to this proceeding or to be heard by filing comments or protests to this application should file a petition to intervene, comment or protest at the address provided above in accordance with §§ 385.211 or 385.214 of the FERC's Rules of Practice and Procedures (18 CFR 385.211, 385.214). Fifteen copies of each petition and protest should be filed with DOE on or before the date listed above.
Comments on the Maclaren application to export electric energy to Canada should be clearly marked with Docket EA-258. Additional copies are to be filed directly with Ginette Berthel, Maclaren Energy Inc., Legal Counsel and Corporate Secretary, 2 Montreal Road West, Masson-Angers, Quebec J8M 1K6.
A final decision will be made on this application after the environmental impacts have been evaluated pursuant to the National Environmental Policy Act of 1969, and a determination is made by the DOE that the proposed action will not adversely impact on the reliability of the U.S. electric power supply system.
Copies of this application will be made available, upon request, for public inspection and copying at the address provided above or by accessing the Fossil Energy Home Page at
National Nuclear Security Administration, Office of Los Alamos Site Operation, Department of Energy.
Notice of Floodplain Involvement.
The Department of Energy's National Nuclear Security Administration, Office of Los Alamos Site Operations hereby provides notice for its proposal to decontaminate and demolish the Omega West Reactor vessel along with the remaining structures associated with the Omega Facility, and to remove the resulting waste from the Los Alamos canyon floodplain and out of the canyon bottom. The Omega Facility, located in Los Alamos Canyon at LANL in New Mexico, housed an old research reactor known as the Omega West Reactor (OWR). The OWR was shut down in 1992 and the fuel removed in 1994. The Facility, originally constructed in 1944, and its associated structures are of advanced age and not in a condition suitable for renovation or reapplication. Further, they are located within a potential flood pathway. There is no foreseeable future use for the Facility, which is eligible for inclusion in the National Register of Historic Places.
Written comments are due to the address below no later than March 7, 2002.
Written comments should be addressed to Jeff Robbins, U.S. Department of Energy, National Nuclear Security Administration, Albuquerque Operations Office, P.O. Box 5400, Albuquerque, New Mexico, 87185 or transmitted by E-mail via Internet to
Rich Nevarez, Document Manager, U.S. Department of Energy, Albuquerque Operations Office, ERD SC-1, PO Box 5400, Albuquerque, New Mexico 87185, Telephone (505) 845-5804, or transmitted by E-mail via Internet to
In May 2000, the Cerro Grande Fire burned across the upper and mid-elevation zones of several watersheds, including the Los Alamos Canyon watershed. Several of the Omega Facility's small support buildings and structures were demolished and disposed of during the first 6 months post Cerro Grande Fire. The remaining buildings, including Building 2-1 that houses the OWR vessel, and the associated structures and utilities and infrastructure, continue to be vulnerable to damage from flooding and mudflows as a result of the fire and the changed environmental conditions upstream from the Facility. While all buildings are vulnerable, the support buildings and structures are especially at risk due to their construction characteristics. An assessment of the floodplain is being included in the Disposition of the Omega West Vessel and Ancillary Structures Environmental Assessment (EA).
According to the requirements of E.O. 11988—Floodplain Management and 10 CFR part 1022—Compliance with Floodplain Environmental Review Requirements, notice is given that NNSA is planning to decontaminate and demolish (D&D) the OWR vessel and the remaining Omega Facility structures located within Los Alamos Canyon at Los Alamos National Laboratory, Los Alamos, New Mexico.
The D&D activities would consist of characterization and removal of radiological and other potential contamination in all the structures and subsequent demolition of the structures; dismantlement of the reactor vessel; segregation, size reduction, packaging, transportation, and disposal of wastes; and removal of several feet of potentially contaminated soil from beneath the reactor vessel. The D&D of the entire Omega Facility is proposed to be conducted using a phased approach. For each individual structure, the initial phase would include the
Once the Omega Facility has been decontaminated, the buildings, structures, foundations, and other facility components would be demolished. All building and structural materials would be removed from the canyon and sent to appropriate disposal sites. The buildings are not expected to be technically difficult to demolish and the resultant wastes can be handled, transported, and disposed of in accordance with standard LANL D&D procedures. The demolition of the OWR vessel and its concrete radiation shielding would generate high exposure rates in the room as the vessel is dismantled. Therefore, a safe method of demolition would be employed that would assure the involved workers could maintain their exposure limits below one rem per year. The OWR vessel and radiation shielding would be horizontally sectioned using diamond wire saws or other similar equipment for cutting the structure. The result cut sections would be packaged as appropriate, transported out of the canyon for eventual disposal.
An assessment of the floodplain effects is being included in the draft EA for the proposed disposition of the OWR vessel and associated structures, which is under preparation. After NNSA issues the assessment, a floodplain statement of findings will be published in the
National Energy Technology Laboratory, Department of Energy (DOE).
Notice of Availability of a Financial Assistance Solicitation.
Notice is hereby given of the intent to issue Financial Assistance Solicitation No. DE-PS26-02NT15373 entitled “Focused Research in Air Quality and Produced Water Management in Oil and Gas Exploration and Production.” The Department of Energy (DOE) National Energy Technology Laboratory (NETL), on behalf of its National Petroleum Technology Office (NPTO), seeks applications for cost-shared research projects that address specific air quality or produced water management issues faced by the oil and gas industry. Applications will either address (1) solutions to air quality issues in emission control technology, monitoring technology or air modeling or (2) produced water management issues in low cost treatment technologies, beneficial use of produced water, or best management practices for handling, treatment and/or disposal. The goal is to provide solutions to issues that are limiting domestic on-shore or off-shore production while providing the same or higher levels of environmental protection.
The solicitation will be available on the DOE/NETL's Internet address at http://www.netl.doe.gov/business and on the “Industry Interactive Procurement System” (IIPS) webpage located at
Keith R. Miles, U.S. Department of Energy, National Energy Technology Laboratory, P.O. Box 10940, MS 921-107, Pittsburgh, PA 15236, E-mail Address: miles@netl.doe.gov, Telephone Number: 412-386-5984.
The Department of Energy (DOE) National Energy Technology Laboratory (NETL), on behalf of its National Petroleum Technology Office (NPTO), is soliciting applications for cost-shared research projects that address specific air quality or produced water management issues faced by the oil and gas industry. The goal is to provide solutions to issues that are limiting domestic on-shore or off-shore production while providing the same or higher levels of environmental protection.
The mission of the Department of Energy's Fossil Energy Oil Program is derived from the National need for increased oil production for national security, requirements for Federal Lands stewardship, and increased protection of the environment. The Oil and Gas Environmental Program supports those goals and the National Energy Policy goal of increasing domestic oil and gas production, by providing technologies and approaches that reduce the cost of effective environmental protection and by providing technologies and approaches that improve environmental protection.
The two areas of interest for this solicitation are:
This area of interest is directed toward providing better tools to meet existing requirements as well as providing a more accurate assessment of the impacts of oil and gas activities on regional air quality. Applications in this area should address emissions control technologies for oil and gas E&P activities or address monitoring and modeling improvements that will provide more accurate assessments and predictions of the impacts of both current and future oil and gas activities on regional air quality. Applications in this area of interest should clearly demonstrate that the results of the project meet current legal and regulatory requirements or that the appropriate government agencies are appropriately involved with the project and support the project goals.
This area of interest is directed toward reducing the cost of produced water management. Applications in this area should address lower cost treatment processes, economic beneficial use of produced water, or best management practices that reduce the overall cost of produced water handling. All applications should clearly describe how a successful project will result in cost savings to operators and the magnitude of those savings. Applications addressing beneficial use of produced water may address treatment technologies designed to meet certain use criteria or may address ecological and/or regulatory concerns that limit producers' options for managing produced water. If implementation of the results of the project are dependent upon approval or concurrence of one or more regulatory agencies, applications should clearly demonstrate that such agencies are appropriately involved with the project and support the project goals.
The goal of this solicitation is to provide solutions to issues that are limiting domestic on-shore or off-shore production while providing the same or higher levels of environmental protection. These air quality and produced water management issues are limiting domestic production by restricting additional development or by adding costs that cause operators to abandon existing wells while substantial recoverable reserves remain in the ground.
The issues listed above are multi-faceted problems. In many cases, the overall solution may vary by region or may require several separate steps to resolve completely. Selected projects are expected to describe the overall problem and the region or regions affected as well as describing how the proposed project fits into the overall solution. Selected projects are also expected to describe as completely as possible the impact that the project will have on increasing or maintaining domestic production. The description of the production impact should discuss in detail the resource affected and the amount of domestic production that can be added or maintained as a result of the successful completion of the project.
DOE anticipates awarding approximately three (3) to seven (7) financial assistance (i.e., Cooperative Agreements) with a project performance period no less than one year in length and up to three years in length. Approximately $7.0 million of DOE funding is planned over a 3-year period for this solicitation. DOE has determined the minimum cost share of twenty percent (20%) of the total estimated project cost is required; details of the cost sharing requirement and the specific funding levels will be contained in the program solicitation.
This solicitation will be targeted for unrestricted competition. However, applications submitted by or on behalf of (1) another Federal agency; (2) a Federally Funded Research and Development Center sponsored by another Federal agency; or (3) a Department of Energy (DOE) Management Operating (M&O) contractor will not be eligible for award under this solicitation. However, an application that includes performance of a portion of the work by a DOE M&O contractor will be evaluated and may be considered for award subject to the provisions to be set forth in Program Solicitation DE-PS26-02NT15373.
The limit on participation by an M&O contractor for an individual project under this solicitation cannot exceed 25% of the total project cost.
Once released, the solicitation will be available for downloading from the IIPS Internet page. At this Internet site you will also be able to register with IIPS, enabling you to submit an application. If you need technical assistance in registering or for any other IIPS function, call the IIPS Help Desk at (800) 683-0751 or E-mail the Help Desk personnel at
Prospective applicants who would like to be notified as soon as the solicitation is available should subscribe to the Business Alert Mailing List at http://www.netl.doe.gov/business. Once you subscribe, you will receive an announcement by E-mail that the solicitation has been released to the public. Telephone requests, written requests, E-mail requests, or facsimile requests for a copy of the solicitation package will not be accepted and/or honored. Applications must be prepared and submitted in accordance with the instructions and forms contained in the solicitation. The actual solicitation document will allow for requests for explanation and/or interpretation.
Golden Field Office, Department of Energy.
Notice of issuance of solicitation for financial assistance applications.
The U.S. Department of Energy (DOE), pursuant to the DOE Financial Assistance Rules, 10 CFR 600.8, is announcing its intention to solicit applications from State and Local Partnerships under the Million Solar Roofs (MSR) Program. DOE's Office of Energy Efficiency and Renewable Energy will consider proposals from interested State and Local Partnerships to help fund their MSR program development and implementation activities. Applications from State Partnerships are encouraged to apply under the MSR Small Grant Program for State Partnerships. For information on the MSR Small Grant Program for State Partnerships, refer to the State Energy Programs Solicitation for Fiscal Year 2002 Special Projects at
The solicitation will be issued mid February 2002.
A copy of the solicitation will be accessible through the Golden Field Office Home Page at
James McDermott, Contract Specialist, at 303-275-4732 or electronically at
The Department of Energy's MSR Initiative is an initiative to support State and Local Partnerships who agree to install solar energy systems on one million buildings in the United States (U.S.) by 2010. This effort includes two types of solar energy technology: (1) solar electric (photovoltaic) systems that produce electricity from sunlight, and (2) solar thermal systems panels that produce heat for domestic hot water, for space heating or for heating swimming pools. The Partnerships bring together business, government and community organizations at the regional level with a commitment to install a pre-determined number (at least 500) of solar energy systems.
There were fifty-seven such existing partnerships under the MSR Initiative, as of October 1, 2001. They received their MSR Partnership designation by writing a letter of commitment to DOE with their goal for actual installations by 2010. In return, DOE provides access to: training and technical assistance from DOE; recognition, outreach tools, support; and opportunities to interface with other partnerships, solar energy
Applications under the solicitation must further the work of State and Local Partnerships, including partners in the building industry, state and local governments, utilities, the solar energy industry, financial institutions and non-governmental organizations, to remove market barriers to solar energy use and to develop and strengthen local demand for solar energy products and applications. There are two types of grants available: Phase 1—New Partnership grants, and Phase 2—Meeting the Commitment grants. Only one application may be submitted per partnership in one or the other of the categories, but not both. Partnerships that have been awarded prior MSR partnership grants in the past may not apply for a Phase 1—New Partnership grant. Newly formed or existing partnerships that have not received prior MSR grants may apply for a Phase 1—New Partnership grant. Any partnership with the prerequisites may apply for a Phase 2—Meeting the Commitment grant.
The project or activity must be conducted in a designated MSR State and Local Partnership area. There is no cost sharing requirement for these grants, although cost sharing will be one of the criteria considered. Subject to the availability of funds, multiple awards for a total of $1,000,000 (DOE funding) in Fiscal Year 2002 are anticipated as a result of this Solicitation. The selected applicants will receive financial assistance under a grant. DOE will fund up to $50,000 per project. DOE anticipates funding approximately 20 to 30 grants in the amount of $10,000 to $50,000 each.
Solicitation number DE-PS36-02GO92005 will include complete information on the program, including technical aspects, funding, application preparation instructions, application evaluation criteria, and other factors that will be considered when selecting applications for funding. No pre-application conference is planned. Issuance of the solicitation is planned for mid February 2002, with applications due 45 days after the solicitation has been issued.
Golden Field Office, Department of Energy.
Notice of issuance of solicitation for financial assistance applications.
The U.S. Department of Energy (DOE), pursuant to the DOE Financial Assistance Rules, 10 CFR 600.8, is announcing its intention to solicit applications for the development of renewable energy on Tribal lands. Through cooperative agreements, DOE intends to provide financial support to conduct feasibility studies and share in the cost of implementing sustainable renewable energy installations on Tribal lands. Under the solicitation, DOE is soliciting Applications from Federally-recognized Tribes or Alaskan Native Corporations (hereafter referred to as “Tribes”) to either: (1) conduct feasibility studies for the development of economically sustainable renewable energy installations on Tribal Lands; or (2) implement sustainable renewable energy development projects.
Issuance of the solicitation is planned for the end of February 2002.
A copy of the solicitation, once it is issued, will be accessible through the Golden Field Office Home Page at
Ruth E. Adams, Contracting Officer, via facsimile at 303-275-4788 or electronically at
DOE's Tribal Energy Program promotes tribal energy self-sufficiency and fosters employment and economic development on Tribal Lands through financial assistance to Native American Tribes and Alaskan Native Corporations for feasibility studies and renewable energy development projects. Under this solicitation, DOE will be soliciting Applications from Federally-recognized Tribes or Alaskan Native Corporations (hereafter referred to as “Tribes”) to either: (1) conduct feasibility studies for the development of economically sustainable renewable energy installations on Tribal Lands; or (2) implement sustainable renewable energy development projects.
Eligible technologies under this solicitation include, but are not limited to the following: photovoltaic, concentrating solar power, solar thermal systems (
DOE will only consider Applications from Federally-recognized Tribes on whose Tribal Lands the project will be located. Applications from a consortium of Tribes will be accepted but must be submitted by a single Tribe representing the consortium. A letter of commitment from an authorized representative of the Tribe (Chief, Governor, President, Chairperson or other representative able to commit the Tribe), as well as from each participating Tribe or project Participant, is required as a part of the Application. For Development Project Applications, a Tribal Council Resolution is preferable to a letter of commitment, but a letter of commitment accompanied by a plan and schedule to obtain a Resolution, will be accepted.
Awards under this solicitation will be cooperative agreements with terms of one to three years depending on the type and scope of the proposed project. Subject to funding availability, the total DOE funding available under this solicitation will be approximately $2,500,000. DOE anticipates selecting 10 to 15 Renewable Energy Feasibility Study Applications and 3 to 5 Renewable Energy Development Project Applications for negotiation toward Award. If funding is appropriated in the Government's Fiscal Year 2003 (October
No cost share is required in order to be considered for feasibility study awards under this solicitation. For development projects, a minimum cost share of 20% of total project costs is required to be considered for award. However, applicants that propose more than the required cost share will be given additional consideration in the selection process. All applicant cost sharing must come from non-Federal sources (
A pre-application conference will be held on March 20, 2002 from 8:00 a.m. to 12:00 noon at the Red Lion Hotel Denver Central, 4040 Quebec Street, Denver, Colorado 80216. For responses at the Pre-Application conference, potential Applicants should submit questions in writing by March 12, 2002. The solicitation will provide information on how to transmit questions. All interested parties are encouraged to attend the pre-application conference. To confirm your participation or obtain additional information, please contact the Solicitation Coordinator at (303) 275-4716 or via facsimile at (303) 275-4788. The pre-application conference is being held in conjunction with the Council of Energy Resource Tribes (CERT) Sustainability Conference. For additional information on the CERT Sustainability Conference to be held March 21-22, 2002 visit
Solicitation number DE-PS36-02GO92006 will include complete information including technical aspects, funding, application preparation instructions, evaluation criteria, and other factors that will be considered when selecting applications for funding. Issuance of the solicitation is planned for the end of February 2002, with applications due approximately 70 days after the solicitation has been issued.
U.S. Department of Energy (DOE).
Correction.
In notice document 02-2712 on page 5277, in the issue of Tuesday, February 5, 2002, please make the following corrections:
On page 5277, in the first column, under the heading “Summary”, in the last line (line 15) the dollar amount should read $200,000.
The Web sites for the Fusion 2002 Summer Study and the Snowmass working groups have both changed. On page 5277, under the heading “Supplementary Information”, in the second column, at the end of the second full paragraph (line 18) the Web site address should read
Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Rocky Flats. The Federal Advisory Committee Act (Pub. L. 92-463, 86 Stat. 770) requires that public notice of these meeting be announced in the
Thursday, March 7, 2002, 6 p.m. to 9:30 p.m.
Jefferson County Airport Terminal Building, Mount Evans Room, 11755 Airport Way, Broomfield, CO.
Ken Korkia, Board/Staff Coordinator, Rocky Flats Citizens Advisory Board, 9035 North Wadsworth Parkway, Suite 2250, Westminster, CO, 80021; telephone (303) 420-7855; fax (303) 420-7579.
1. Quarterly update by representative from the Defense Nuclear Facilities Safety Board
2. Introduction to basic Rocky Flats site geology and hydrology
3. Presentation and discussion on surface soil and surface water contamination
4. Consideration of SSAB Groundwater Workshop final statements
5. Other Board business may be conducted as necessary
Take notice that on February 7, 2002, Colorado Interstate Gas Company (CIG) tendered for filing its final report detailing all negotiated rate revenues and interruptible storage revenue credits distributed for the period October 1, 2000 through September 30, 2001.
CIG states that copies of the filing has been served upon each person designated on the official service list compiled by the Commission's Secretary in this proceeding.
Any person desiring to protest said filing should file a protest with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, in accordance with section 385.211 of the Commission's Rules and Regulations. All such protests must be filed on or before February 20, 2002. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Copies of this filing are on file with the Commission and are available for public inspection. This filing may also be viewed on the Web at
Maclaren Energy, Inc. (Maclaren) submitted for filing a rate schedule under which Maclaren will engage in wholesale electric power and energy transactions at market-based rates. Maclaren also requested waiver of various Commission regulations. In particular, Maclaren requested that the Commission grant blanket approval under 18 CFR part 34 of all future issuances of securities and assumptions of liability by Maclaren.
On August 27, 2001, pursuant to delegated authority, the Director, Office of Markets, Tariffs and Rates-East, granted requests for blanket approval under Part 34, subject to the following:
Any person desiring to be heard or to protest the blanket approval of issuances of securities or assumptions of liability by Maclaren should file a motion to intervene or protest with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214).
Absent a request to be heard in opposition within this period, Maclaren is authorized to issue securities and assume obligations or liabilities as a guarantor, indorser, surety, or otherwise in respect of any security of another person; provided that such issuance or assumption is for some lawful object within the corporate purposes of Maclaren, compatible with the public interest, and is reasonably necessary or appropriate for such purposes.
The Commission reserves the right to require a further showing that neither public nor private interests will be adversely affected by continued approval of Maclaren's issuances of securities or assumptions of liability.
Notice is hereby given that the deadline for filing motions to intervene or protests, as set forth above, is February 25, 2002.
Copies of the full text of the Order are available from the Commission's Public Reference Branch, 888 First Street, NE, Washington, DC 20426. The Order may also be viewed on the Internet at
Take notice that on February 7, 2002, Mississippi River Transmission Corporation (MRT) tendered for filing as part of its FERC Gas Tariff, Fifth Revised Volume No. 1, the following revised tariff sheets to be effective as follows:
MRT states that the purpose of this filing is to correct an administrative error and reflect the correct storage Fuel Use and Loss Percentage effective on October 1, 2001 and November 1, 2001.
Any person desiring to protest said filing should file a protest with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, in accordance with Section 385.211 of the Commission's Rules and Regulations. All such protests must be filed in accordance with Section 154.210 of the Commission's Regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Copies of this filing are on file with the Commission and are available for public inspection. This filing may also be viewed on the Web at
Take notice that on November 19, 2001, Portland Natural Gas Transmission System (Portland) submits an informational filing to comply with the Commission's Order Accepting and Suspending Tariff Sheet Subject to Refund and Conditions and Establishing a Hearing (October 31 suspension order).
Portland states that copies of this filing are being served on all jurisdictional customers, applicable state commissions, and interested parties that have requested service.
Any person desiring to protest said filing should file a protest with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, in accordance with section 385.211 of the Commission's Rules and Regulations. All such protests must be filed on or before February 20, 2002. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Copies of this filing are on file with the Commission and are available for public inspection. This filing may also be viewed on the Web at
Take notice that on February 11, 2002, Public Utility District No. 1 of Snohomish County, Washington (Snohomish) filed a complaint with the Federal Energy Regulatory Commission (Commission) requesting that the Commission mitigate unjust and unreasonable terms and conditions contained in the long-term power supply contract between Snohomish and Morgan Stanley Capital Group (Seller) which was executed in January 2001 for service commencing on April 1, 2001.
Copies of the complaint were served on Seller.
Snohomish has requested privileged treatment of certain information in the complaint, and has filed privileged and public copies of the complaint, a request for privileged treatment, and a protective agreement.
Any person desiring to be heard or to protest this filing should file a motion to intervene or protest with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). All such motions or protests must be filed on or before March 4, 2002. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a motion to intervene. Answers to the complaint shall also be due on or before March 4, 2002. Copies of this filing are on file with the Commission and are available for public inspection. This filing may also be viewed on the Web at
Take notice that on February 4, 2002, Reliant Energy Gas Transmission Company (REGT), whose main office is located at 1111 Louisiana Street, Houston, Texas 77210, filed in Docket No. CP02-80-000, an application requesting authorization to construct, own and operate mainline compression facilities and appurtenances located in Arkansas, pursuant to section 7(c) of the Natural Gas Act (NGA), as amended, and part 157 of the Commission's Rules and Regulations, all as more fully set forth in the application which is on file with the Commission and open to public inspection. Copies of this filing are on file with the Commission and are available for public inspection. This filing may also be viewed on the Web at
Specifically, REGT states that it proposes to construct, own, and operate a 4,740 horsepower compressor station and appurtenant facilities on its Line J system in Jackson County, Arkansas which, upon completion, will enable firm transportation service by REGT to a new electric generating plant being constructed by TPS Dell, LLC (Dell). REGT states that the total construction costs are estimated to be $7.8 million.
REGT states that Dell has requested that firm service commence by October 1, 2002, and REGT requests Commission authorization be granted by June 1, 2002 to enable REGT to commence construction by July 1, 2002 to meet Dell's requested in service date.
Any questions concerning this application may be directed to Lawrence O. Thomas, Director, Rates and Regulatory, Reliant Energy Gas Transmission, PO Box 21734, Shreveport, Louisiana 71151, call (318) 429-2804, fax (318) 429-3133.
There are two ways to become involved in the Commission's review of
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
Comments, protests and interventions may be filed electronically via the Internet in lieu of paper. See, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site under the “e-Filing” link.
If the Commission decides to set the application for a formal hearing before an Administrative Law Judge, the Commission will issue another notice describing that process. At the end of the Commission's review process, a final Commission order approving or denying a certificate will be issued.
Take notice that the following filings have been made with the Commission. Any comments should be submitted in accordance with Standard Paragraph E at the end of this notice.
Take notice that on February 8, 2002, Cinergy Services, Inc. (Cinergy) tendered for filing with the Federal Energy Regulatory Commission (Commission), an amendment to its applications filed in these proceedings on October 29, 2001. This was pursuant to the Commission's January 23, 2002, order issued in the above-captioned proceedings.
Take notice that on February 4, 2002, Wisconsin Power & Light Company (WPL) tendered for filing with the Federal Energy Regulatory Commission (Commission) new rates to be charged under its wholesale electric tariffs W-3A, PR-1, W-4A and DLM-1 to reflect the current cost of service incurred by WPL and its subsidiary South Beloit Water, Gas and Electric Company. WPL has asked that new interim rates become effective on April 22, 2002, and new final rates become effective concurrent with the Commission's final order in this proceeding. In addition WPL requests cancellation of its bundled wholesale electric tariffs W-1, W-3 and W-4.
A copy of this filing has been served upon the Illinois Commerce Commission, the Public Service Commission of Wisconsin and the WPL wholesale electric customers affected by this filing.
Take notice that on February 7, 2002, Consumers Energy Company (Consumers) and Michigan Electric Transmission Company (Michigan Transco) jointly filed a supplemental notice of succession to transfer previously overlooked rate schedules from Consumers to the Michigan Transco. The parties also submitted administrative agreements involving Wolverine Electric Cooperative, Inc. that allocate rights and responsibilities between Consumers and the Michigan Transco.
By acceptance letter dated January 23, 2002, that submittal was accepted by the Commission effective April, 2001, conditioned upon compliance with Order No. 614 within 15 days of the issuance of that acceptance letter. A Compliance Filing in the referenced docket, purporting to satisfy the aforementioned condition, was made by Consumers and Michigan Transco on February 7, 2002.
A full copy of the filing was served upon the Michigan Public Service Commission, and Wolverine Power Supply Cooperative, Inc., The City of Lansing, Board of Water and Light, and City of Grand Haven, Board of Light and Power.
Take notice that on February 7, 2002, Calvert Cliffs Nuclear Power Plant, Inc. tendered for filing an amendment to a service agreement in compliance with Order No. 614 pursuant to the order issued in this docket on January 8, 2002. The January 8 Order accepted the amendment effective November 1, 2001 upon resubmission of the filing in compliance with Order No. 614.
Take notice that on February 7, 2002, Delmarva Power & Light Company (Delmarva) tendered for filing a revised page 3 of an executed Interconnection Agreement between Delmarva and
Copies of the filing were served upon the Delaware Public Service Commission, the Maryland Public Service Commission and the Virginia State Corporation Commission.
Take notice that on February 6, 2002, Alliant Energy Corporate Services, Inc., tendered for filing with the Federal Energy Regulatory Commission (Commission) four executed Service Agreements with Alliant Energy Corporate Services, Inc., establishing Alliant Energy Corporate Services, Inc., as a Long-Term Firm Transmission Customer under the terms of the Alliant Energy Corporate Services, Inc., Open Access Transmission Tariff.
Alliant Energy Corporate Services, Inc., requests effective dates of January 1, 2002, for service agreement with OASIS request numbers 853137, 969127, 969168 and 969198 and accordingly, seeks waiver of the Commission's notice requirement. A copy of this filing has been served upon the Illinois commerce commission, the Minnesota Public Utilities Commission, the Iowa Department of Commerce, and the Public Service Commission of Wisconsin.
Take notice that on February 6, 2002, Alliant Energy Corporate Services, Inc., tendered for filing with the Federal Energy Regulatory Commission (Commission) an executed Service Agreement with GEN-SYS a Form of Service Agreement for Schedule 1 Service Associated With MAPP Schedule F.
Alliant Energy Corporate Services, Inc., requests an effective date of September 1, 2001, and accordingly, seeks waiver of the Commission's notice requirements. A copy of this filing has been served upon the Illinois Commerce Commission, the Minnesota Public Utilities Commission, the Iowa Department of Commerce, and the Public Service Commission of Wisconsin.
Take notice that on February 7, 2002, Duke Energy Enterprise, LLC (Duke Enterprise) tendered for filing pursuant to Section 205 of the Federal Power Act revisions to its proposed FERC Electric Tariff No. 1.
Duke Enterprise requests pursuant to Section 35.11 of the Commission's regulations that the Commission waive the 60-day minimum notice requirement under Section 35.3(a) of its regulations and grant an effective date for this application of February 8, 2002, the date on which Duke Enterprise anticipates commencing the sale of test energy.
Take notice that on February 7, 2002, MidAmerican Energy Company (MidAmerican), 401 Douglas Street, P. O. Box 778, Sioux City, Iowa 51102, filed with the Commission a Non-Firm Transmission Service Agreement with enXco, Inc., dated January 7, 2002, and entered into pursuant to MidAmerican's Open Access Transmission Tariff.
MidAmerican requests an effective date of January 7, 2002, for the Agreement and seeks a waiver of the Commission's notice requirement. MidAmerican has served a copy of the filing on the Iowa Utilities Board and enXco, Inc.
Take notice that on February 6, 2002, PacifiCorp, tendered for filing in accordance with 18 CFR 35 of the Commission's Rules and Regulations, Notice of Cancellation of Service Agreement No. 6 under PacifiCorp's FERC Electric Tariff, Volume No. 12, between PacifiCorp and Public Utility District No. 1 of Cowlitz County effective date April 28, 1997.
Copies of this filing were supplied to the Washington Utilities and Transportation Commission and the Public Utility Commission of Oregon and Public Utility District No. 1 of Cowlitz County .
Take notice that on February 8, 2002, American Transmission Systems, Inc., tendered for filing on behalf of itself and Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company, a Service Agreement for Network Integration Service and Operating Agreement for the Network Integration Transmission Service under the Ohio Retail Electric Program with The New Power Company pursuant to the America Transmission Systems, Inc. Open Access Tariff. This agreement will enable the party to obtain Network integration Service under the Ohio Retail Electric Program in accordance with the terms of the Tariff. The proposed effective date under this agreement is February 6, 2002.
Take notice that on February 8, 2002, American Electric Power Service Corporation submitted for filing an executed ERCOT Generation Interconnection Agreement, dated January 11, 2002, between Central Power and Light Company (CPL) and E. I. du Pont de Nemours and Company. The agreement is pursuant to the AEP Companies' Open Access Transmission Service Tariff (OATT) that has been designated as the Operating Companies of the American Electric Power System FERC Electric Tariff Second Revised Volume No. 6, effective June 15, 2000.
CPL requests an effective date of January 12, 2002. Copies of CPL's filing have been served upon E. I. du Pont de Nemours and Company and the Public Utility Commission of Texas.
Take notice that on February 8, 2002, Service Agreement No. 31, effective December 20, 1995, under Wisconsin Electric Power Company's Coordination Sales Tariff, (FERC Electric Tariff Second Revised Volume 2) and Service Agreement No. 25 effective July 13, 1998, under Wisconsin Electric Power Company's Market Rate Sales Tariff, (FERC Electric Tariff Original Volume No. 8) are to be canceled as requested by the customer Entergy-Koch Trading.
Copies of the filing have been served on Entergy-Koch Trading, Michigan
Take notice that on February 8, 2002, Wisconsin Electric Power Company (Wisconsin Electric), tendered for filing an electric service agreement under its Market Rate Sales Tariff (FERC Electric Tariff, Original Volume No. 8) with IDACORP Energy L.P. Wisconsin Electric respectfully requests an effective date of February 1, 2002 to allow for economic transactions.
Wisconsin Electric requests waiver of any applicable notice requirements to allow for the requested effective date as specified. Copies of the filing have been served on IDACORP Energy, L.P., the Michigan Public Service Commission, and the Public Service Commission of Wisconsin.
Take notice that on February 8, 2002, Virginia Electric and Power Company (the Company) respectfully tendered for filing the Service Agreement by Virginia Electric and Power Company to Allegheny Energy Supply Company, LLC designated as Service Agreement No. 11 under the Company's market-based rate tariff, FERC Electric Tariff, Original Volume No. 6, effective on June 15, 2001.
The Company requests an effective date of January 28, 2002, as requested by the customer. Copies of the filing were served upon Allegheny Energy Supply Company, LLC, the Virginia State Corporation Commission, and the North Carolina Utilities Commission.
Take notice that on February 8, 2002, Commonwealth Edison Company (ComEd) submitted for filing two Form of Service Agreements for Firm Point-To-Point Transmission Service (Service Agreements) and the corresponding Network Upgrade Agreement between ComEd and MidAmerican Energy Co. (MidAmerican) under the terms of ComEd's Open Access Transmission Tariff (OATT).
ComEd requests an effective date of February 1, 2002, and accordingly seeks waiver of the Commission's notice requirements. A copy of this filing was served on MidAmerican.
Take notice that on February 8, 2002, Southwest Power Pool, Inc. (SPP) submitted for filing executed service agreements for Firm Point-to-Point Transmission Service and Non-Firm Point-To-Point Transmission Service with Mirant Americas Energy Marketing, LP (Mirant).
SPP seeks an effective date of January 19, 2002, for these service agreements. Mirant was served with a copy of this filing.
Take notice that on February 8, 2002, Duke Energy Corporation filed an amendment to the Restated Interchange Agreement dated February 10, 1992 between Duke Power Company and South Carolina Public Service Authority.
E. Any person desiring to be heard or to protest such filing should file a motion to intervene or protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with rules 211 and 214 of the Commission's rules of practice and procedure (18 CFR 385.211 and 385.214). All such motions or protests should be filed on or before the comment date. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a motion to intervene. Copies of this filing are on file with the Commission and are available for public inspection. This filing may also be viewed on the web at
The staff of the Federal Energy Regulatory Commission (FERC or Commission) will prepare an environmental assessment (EA) that will discuss the environmental impacts of CMS Trunkline LNG Company, LLC's (Trunkline LNG) Expansion Project involving construction and operation of facilities in Calcasieu Parish, Louisiana.
Trunkline LNG proposes: (1) To expand the LNG storage capacity; (2) to increase the sustainable daily sendout capability to 1,200 million cubic feet per day (MMcfd) and its peaking capacity to 1,300 MMcfd; and (3) to accommodate two LNG tankers at one time. Trunkline LNG seeks authorization to construct and operate the following new facilities at its existing site:
• LNG ship unloading facility with three liquid unloading arms, one vapor return/delivery arm, mooring and breasting dolphins, fendering system, and support trestles;
• One 880,000 barrel (2.9 billion cubic feet of gas equivalent) double-wall LNG storage tank with spill containment dike;
• Three 360 MMcfd first stage LNG pumps;
• Four 192 MMcfd second stage LNG pumps with a recondenser vessel;
• Three 150 MMcfd submerged combustion vaporizers;
• One desuperheater;
• High expansion foam building;
• Electrical building;
• One cryogenic fuel gas/ship vapor return compressor;
• Two 22 megawatt combustion turbine electric generators capable of handling the sendout volume and the unloading of two ships simultaneously; and
• Associated civil, mechanical, electrical, control, and hazard detection systems.
In a related application filed under Docket No. CP02-55-000, CMS Trunkline Gas Company, LLC (Trunkline Gas) seeks authorization to modify its metering facilities under Section 7(c) of the Natural Gas Act and Part 157 of the Commission's regulations. Trunkline Gas would replace two 16-inch-diameter orifice meter runs with two 16-inch-diameter ultrasonic meter runs and associated facilities. The remaining three 16-inch-diameter orifice meter runs would remain in place.
The Trunkline LNG terminal occupies about 125 fenced acres on the Calcasieu Ship Channel. Through ownership and leases, Trunkline LNG has control of 395 acres. The proposed facilities would occupy about 8.8 acres of land within the developed site and 1.2 acres of water within the existing turning basin. Contractor staging and storage would temporarily affect an additional 35.3 acres of land within the developed site and 0.2 acre of water within the existing turning basin.
The National Environmental Policy Act (NEPA) requires the Commission to take into account the environmental impacts that could result from an action whenever it considers the issuance of a Certificate of Public Convenience and Necessity. NEPA also requires us to discover and address concerns the public may have about proposals. We call this “scoping”.
The EA will discuss impacts that could occur as a result of the construction and operation of the proposed project under these general headings:
We will also evaluate possible alternatives to the proposed project or portions of the project, and make recommendations on how to lessen or avoid impacts on the various resource areas.
Our independent analysis of the issues will be presented in the EA. Depending on the comments received during the scoping process, the EA may be published and mailed to Federal, state, and local agencies, public interest groups, interested individuals, affected landowners, newspapers, libraries, and the Commission's official service list for this proceeding. A comment period will be allotted for review if the EA is published. We will consider all comments on the EA before we make our recommendations to the Commission.
To ensure your comments are considered, please carefully follow the instructions in the public participation section beginning on page 4.
We have already identified several environmental issues that we think deserve attention based on a preliminary review of the proposed facilities and the environmental information provided by Trunkline LNG. This preliminary list of issues may be changed based on your comments and our analysis.
• Up to 175 LNG tankers per year would transit the Calcasieu Ship Channel to the terminal by the year 2006.
• Environmental and technical issues associated with the construction and operation of: a LNG ship unloading facility; a 880,000 barrel LNG storage tank; and the expansion of the terminal's sendout capacity.
You can make a difference by providing us with your specific comments or concerns about the project. By becoming a commentor, your concerns will be addressed in the EA and considered by the Commission. You should focus on the potential environmental effects of the proposal, alternatives to the proposal, and measures to avoid or lessen environmental impact. The more specific your comments, the more useful they will be. Please carefully follow these instructions to ensure that your comments are received in time and properly recorded:
• Send an original and two copies of your letter to: Magalie R. Salas, Secretary, Federal Energy Regulatory Commission, 888 First St., NE., Room 1A, Washington, DC 20426.
• Label one copy of the comments for the attention of the Gas 1, PJ-11.1.
• Reference Docket No. CP02-60-000.
• Mail your comments so that they will be received in Washington, DC on or before March 15, 2002.
Comments may also be filed electronically via the Internet in lieu of paper. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's web site at
In addition to asking for written comments, we invite you to attend a public scoping meeting that we will conduct in the project area. The purpose of the scoping meeting is to provide state and local agencies, interested groups, affected landowners, and the general public with an opportunity to learn more about the project and another chance to present us with environmental issues or concerns they believe should be addressed in the EA. A transcript of the meeting will be made so that your comments will be accurately recorded. The location and time is listed below:
March 6, 2002, 7:00 pm, The Chamber—Southwest Louisiana, Ground Floor Meeting Room, 120 West Pujo Street, Lake Charles, LA.
The purpose of the scoping meeting is limited to environmental issues only.
In addition to involvement in the EA scoping process, you may want to become an official party to the proceeding known as an “intervenor”. Intervenors play a more formal role in the process. Among other things, intervenors have the right to receive copies of case-related Commission documents and filings by other intervenors. Likewise, each intervenor must provide 14 copies of its filings to the Secretary of the Commission and must send a copy of its filings to all other parties on the Commission's service list for this proceeding. If you want to become an intervenor you must file a motion to intervene according to rule 214 of the Commission's rules of practice and procedure (18 CFR 385.214) (see appendix).
Affected landowners and parties with environmental concerns may be granted intervenor status upon showing good cause by stating that they have a clear and direct interest in this proceeding which would not be adequately represented by any other parties. You do not need intervenor status to have your environmental comments considered.
Additional information about the proposed project is available from the Commission's Office of External Affairs at (202) 208-1088 or on the FERC website (www.ferc.gov) using the “RIMS” link to information in this docket number. Click on the “RIMS” link, select “Docket #” from the RIMS Menu, and follow the instructions. For assistance with access to RIMS, the RIMS helpline can be reached at (202) 208-2222.
Similarly, the “CIPS” link on the FERC Internet website provides access to the texts of formal documents issued by the Commission, such as orders, notices, and rulemakings. From the FERC Internet website, click on the “CIPS” link, select “Docket #” from the CIPS menu, and follow the instructions. For assistance with access to CIPS, the CIPS helpline can be reached at (202) 208-2474.
Take notice that the following hydroelectric applications have been filed with the Commission and are available for public inspection.
a.
b.
c.
d.
e.
f.
g.
h.
i.
All documents (original and eight copies) should be filed with: Magalie R. Salas, Secretary, Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426.
The Commission's Rules of Practice require all intervenors filing documents with the Commission to serve a copy of that document on each person on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
Comments, recommendations, terms and conditions, and prescriptions may be filed electronically via the Internet in lieu of paper. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site, http://www.ferc.gov, under the “e-Filing” link.
j. This application has been accepted, and is ready for environmental analysis at this time.
k. The existing Soda Project consists of: (1) The 103-foot-high and 433-foot-long concrete gravity Soda dam with a 114-foot-long spillway section; (2) the Soda reservoir with a surface area of 1,100 acres, an active storage capacity of 16,300 acre-feet, and a maximum water surface elevation of 5,720 feet; (3) the Soda powerhouse containing two units with a total installed capacity of 14 megawatts (MW); and (4) other appurtenances.
The existing Grace Development consists of: (1) A 51-foot-high and 180-foot-long rock filled timber crib dam that creates a 250-acre-foot usable storage capacity forebay; (2) a 26,000-foot-long flowline and surge tanks; and (3) a powerhouse with three units with total installed capacity of 33 MW. The Cove Development consists of: (1) A 26.5-foot-high and 141-foot-long concrete dam creating a 60-acre-foot capacity forebay; (2) a 6,125-foot-long concrete and wood flume; (3) a 500-foot-long steel penstock; and (4) a powerhouse with a 7.5-MW unit.
The existing Oneida Project consists of: (1) The 111-foot-high and 456-foot-long concrete gravity Oneida dam; (2) the Oneida reservoir with an active storage of 10,880 acre-feet and a surface area of 480 acres; (3) a 16-foot-diameter, 2,240-foot-long flowline; (4) a surge tank; (5) three 12-foot-diameter, 120-foot-long steel penstocks; ( 6) the Oneida powerhouse with three units with a total installed capacity of 30 MW; and (7) other appurtenances.
l. A copy of the application is on file with the Commission and is available for public inspection. This filing may also be viewed on the Web at http://www.ferc.gov using the “RIMS” link—select “Docket #” and follow the instructions (call 202-208-2222 for assistance). A copy is also available for inspection and reproduction at the address in item g above.
m. The Commission directs, pursuant to section 4.34(b) of the Regulations (see Order No. 533 issued May 8, 1991, 56 FR 23108, May 20, 1991) that all comments, recommendations, terms and conditions and prescriptions concerning the application be filed with the Commission within 60 days from the issuance date of this notice. All reply
All filings must (1) bear in all capital letters the title “COMMENTS”, “REPLY COMMENTS”, “RECOMMENDATIONS,” “TERMS AND CONDITIONS,” or “PRESCRIPTIONS”; (2) set forth in the heading the name of the applicant and the project number of the application to which the filing responds; (3) furnish the name, address, and telephone number of the person submitting the filing; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. All comments, recommendations, terms and conditions or prescriptions must set forth their evidentiary basis and otherwise comply with the requirements of 18 CFR 4.34(b). Agencies may obtain copies of the application directly from the applicant. Each filing must be accompanied by proof of service on all persons listed on the service list prepared by the Commission in this proceeding, in accordance with 18 CFR 4.34(b), and 385.2010.
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
All documents (original and eight copies) should be filed with: Magalie Roman Salas, Secretary, Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426.
The Commission's Rules of Practice require all intervenors filing documents with the Commission to serve a copy of that document on each person on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
Additional study requests may be filed electronically via the Internet in lieu of paper. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site (http://www.ferc.gov) under the “e-Filing” link.
k. This application is not ready for environmental analysis at this time.
l. The existing Newton Falls Hydroelectric Project consists of an upper and a lower development with a combined installed capacity of 2,220 kilowatts (kW). The project produces an average annual generation of 9,500,000 kilowatt-hours. From approximately 1927 until late 2000, the electricity produced by the project was consumed by the adjacent Newton Falls Paper Mill. Since this facility ceased manufacturing operations, almost all electricity produced at the project has been sold to the Niagara Mohawk Power Corporation.
The upper development includes the following constructed facilities: (1) A 40-foot-high, 600-foot-long, concrete gravity dam with 3-foot-high flash boards mounted on the 58-foot-long spillway; (2) a 42-foot-long floodgate structure with four gates; (3) a 650-acre reservoir with a gross storage capacity of 5,930 acre-feet; (4) a reinforced concrete intake structure with a maximum height of 25 feet, equipped with trash racks having 2-inch spacing; (5) a 9-foot-diameter, 1,200-foot-long, wood stave penstock supported on timber cradles and mud sills; (6) a riveted steel surge tank; (7) a 49-foot-long, 26-foot-wide, and 45-foot-high, reinforced concrete and brick powerhouse, containing three vertical Francis turbines with a combined maximum hydraulic capacity of 464 cubic feet per second (cfs) and a net head of 46 feet, directly connected to three generator units having a total installed capacity of 1,540 kilowatts (kW); (8) a 375-foot-long, 60 Hertz transmission line; and (9) appurtenant facilities.
The lower development includes the following constructed facilities: (1) A 28-foot-high, 350-foot-long, concrete gravity dam with 3-foot-high flash boards mounted on the 120-foot-long spillway; (2) a 9-acre impoundment with a gross storage capacity of 115 acre-feet; (3) a 15-foot-high, reinforced concrete intake structure, equipped with trash racks having 2-inch spacing; (4) a 60-foot-long by 40-foot-wide, reinforced concrete powerhouse located immediately downstream of the dam, containing one vertical Francis turbine with a maximum hydraulic capacity of 486 cfs and a net head of 22 feet, directly connected to a 680-kW generator unit; (5) a 2,200-foot-long, 60 Hertz transmission line; and (6) appurtenant facilities.
With the exception of periods of high inflows, the upper development is operated as a daily peaking facility with most generation taking place during the hours of peak electricity demand. This store and release operation is restricted during the months of May and June, the spawning period for smallmouth bass and northern pike, such that daily reservoir drawdowns do not exceed 1 foot from the top of the flash boards. During the remainder of the year, daily peaking causes reservoir drawdowns of up to 2.2 feet from the top of the flash boards.
The tailrace of the upper development discharges directly into the lower development's reservoir. Generally, the hydraulic output of the lower powerhouse is established such that it releases approximately the same flow as the upper one. Consequently, daily drawdowns of the lower reservoir are minimal.
Although the project's current license does not mandate the provision of minimum flows in the project's bypassed reaches, the licensee is required to provide a continuous minimum flow of 100 cfs or project inflow, whichever is less, below the lower development. Further, the existing license does not require the provision of public recreational facilities at the project. Currently, the applicant and concerned agencies and non-governmental organizations are discussing a settlement agreement that would require NFH to implement various environmental enhancement measures at the project.
m.
n. With this notice, we are initiating consultation with the New York State Historic Preservation Officer as required by Section 106, National Historic Preservation Act, and the regulations of the Advisory Council on Historic Preservation, 36 CFR 800.4.
o. Under section 4.32(b)(7) of the Commission's regulations (18 CFR 4.32(b)(7)), if any resource agency, Indian Tribe, or person believes that the applicant should conduct an additional scientific study to form an adequate factual basis for a complete analysis of the application on its merits, they must file a request for the study with the Commission, not later than 60 days after the date the application is filed, and must serve a copy of the request on the applicant.
p. Procedural schedule and final amendments: The application will be processed to include the following actions, some of which may be combined to expedite processing:
Final amendments to the application must be filed with the Commission no later than 30 days from the issuance date of the notice of ready for environmental analysis.
Environmental Protection Agency (EPA).
Notice.
Under titles IV and V of the Act, State and local air permitting authorities develop and administer acid rain programs as part of their title V operating permits programs. The state and local permitting authorities listed in this notice submitted acid rain programs for EPA review that are acceptable to the EPA Administrator as part of their title V operating permits programs. This notice is for informational purposes only and does not supplant any other
Robert Miller, U.S. EPA, Clean Air Markets Division (6204N), 1200 Pennsylvania Ave. NW, Washington, DC 20460, (202) 564-9077.
The following state and local permitting authorities have submitted Acid Rain programs that are acceptable to the EPA Administrator as part of their title V operating permits programs:
The Delaware Department of Natural Resources and Environmental Control in the state of Delaware, the Maryland Department of the Environment in the state of Maryland, the Pennsylvania Department of Environmental Protection in the state of Pennsylvania, the Virginia Department of Environmental Quality in the Commonwealth of Virginia, and the Department of Health, Bureau of Environmental Quality in the District of Columbia;
The Western North Carolina Regional Air Quality Agency in the state of North Carolina;
The Illinois Environmental Protection Agency in the state of Illinois and the Ohio Environmental Protection Agency in the state of Ohio;
The Wyoming Department of Environmental Quality in the State of Wyoming.
Environmental Protection Agency (EPA).
Notice.
This notice announces receipt of an application to amend 524-EUP-93 from Monsanto Company requesting an experimental use permit (EUP) for the plant-pesticide
Comments, identified by docket control number OPP-50875C, must be received on or before March 22, 2002.
Comments and data may be submitted by mail, electronically, or in person. Please follow the detailed instructions for each method as provided in Unit I. of the
By mail: Mike Mendelsohn, Biopesticides and Pollution Prevention Division (7511C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: (703) 308-8715; e-mail address: mendelsohn.mike@epa.gov.
This action is directed to the public in general. This action may, however, be of interest to those persons who are interested in agricultural biotechnology or may be required to conduct testing of chemical substances under the Federal Food, Drug, and Cosmetic Act (FFDCA) or the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under
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You may submit comments through the mail, in person, or electronically. To ensure proper receipt by EPA, it is imperative that you identify docket control number OPP-50875C in the subject line on the first page of your response.
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Do not submit any information electronically that you consider to be CBI. You may claim information that you submit to EPA in response to this document as CBI by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public version of the official record. Information not marked confidential will be included in the public version of the official record without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person listed under
You may find the following suggestions helpful for preparing your comments:
1. Explain your views as clearly as possible.
2. Describe any assumptions that you used.
3. Provide copies of any technical information and/or data you used that support your views.
4. If you estimate potential burden or costs, explain how you arrived at the estimate that you provide.
5. Provide specific examples to illustrate your concerns.
6. Offer alternative ways to improve the notice.
7. Make sure to submit your comments by the deadline in this document.
8. To ensure proper receipt by EPA, be sure to identify the docket control number assigned to this action in the subject line on the first page of your response. You may also provide the name, date, and
Monsanto Company has applied to amend/extend their EUP number 524-EUP-93 (see the
Following the review of the Monsanto Company application and any comments and data received in response to this notice, EPA will decide whether to issue or deny the EUP request for this EUP program, and if issued, the conditions under which it is to be conducted. Any issuance of an EUP will be announced in the
The Agency's authority for taking this action is under 40 CFR part 172.
Environmental protection, Experimental use permits.
Environmental Protection Agency (EPA).
Notice.
EPA has granted experimental use permits (EUPs) to the following pesticide applicants. An EUP permits use of a pesticide for experimental or research purposes only in accordance with the limitations in the permit.
This action is directed to the public in general. Although this action may be of particular interest to those persons who conduct or sponsor research on pesticides, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the information in this action, consult the designated contact person listed for the individual EUP.
You may obtain electronic copies of this document from the EPA Internet Home Page at
EPA has issued the following EUPs:
Persons wishing to review these EUPs are referred to the designated contact person. Inquiries concerning these permits should be directed to the persons cited above. It is suggested that interested persons call before visiting the EPA office, so that the appropriate file may be made available for inspection purposes from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays.
7 U.S.C. 136.
Environmental protection, Experimental use permits.
The Federal Communications Commission (FCC) has received Office of Management and Budget (OMB) approval for the following public information collections pursuant to the Paperwork Reduction Act of 1995, Public Law 104-13. An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid control number. For further information contact Shoko B. Hair, Federal Communications Commission, (202) 418-1379.
Pursuant to the Public Notice, domestic section 214 applications involving acquisitions of corporate control, at a minimum, should specify: (1) A description of the transaction and the parties involved; (2) the type of services the parties provide and the locations where those services are provided; (3) any applications pending or to be filed with the FCC that relate to the same transaction; (4) a copy of the relevant merger agreement, if any; and (5) a statement as to how granting the application will serve the public convenience and necessity, taking into account any adverse effect on competition in any relevant market. In all instances, applications for domestic section 214 authority involving
Public reporting burden for the collections of information are as noted above. Send comments regarding the burden estimates or any other aspect of the collections of information, including suggestions for reducing the burden to Performance Evaluation and Records Management, Washington, DC 20554.
Federal Communications Commission.
The Commission hereby gives notice of the filing of the following agreement(s) under the Shipping Act of 1984. Interested parties can review or obtain copies of agreements at the Washington, DC offices of the Commission, 800 North Capitol Street, NW., Room 962. Interested parties may submit comments on an agreement to the Secretary, Federal Maritime Commission, Washington, DC 20573, within 10 days of the date this notice appears in the
By Order of the Federal Maritime Commission.
Notice is hereby given that the following applicants have filed with the Federal Maritime Commission an application for license as Non-Vessel Operating Common Carrier and Ocean Freight Forwarder—Ocean Transportation Intermediary pursuant to section 19 of the Shipping Act of 1984 as amended (46 U.S.C. app. 1718 and 46 CFR part 515).
Persons knowing of any reason why the following applicants should not receive a license are requested to contact the Office of Transportation Intermediaries, Federal Maritime Commission, Washington, DC 20573.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States. Additional information on all bank holding companies may be obtained from the National Information Center website at www.ffiec.gov/nic/.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than March 15, 2002.
Board of Governors of the Federal Reserve System, February 13, 2002.
General Services Administration.
Notice of policy guidance with request for comment.
The General Services Administration (GSA) is republishing for additional public comment, policy guidance on Title VI's prohibition against national origin discrimination as it affects limited English proficient persons.
Interested persons should submit written comments to the Office of Civil Rights (AK), Room 5127, General Services Administration, 1800 F Street, NW., Washington, DC 20405. Comments may also be submitted by e-mail at
James M. Taylor or K. Evelyn Britton, Office of Civil Rights, Room 5127, General Services Administration, 1800 F Street, NW., Washington, DC 20405, telephone 202-501-0767 or 1-800-662-6376; TDD 1-888-267-7660. Arrangements to receive the policy guidance in an alternative format may be made by contacting the named individuals.
Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d,
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The United States is also home to millions of national origin minority individuals who are LEP. That is, their primary language is not English and they cannot speak, read, write or understand the English language at a level that permits them to interact effectively with recipients of Federal financial assistance. Because of language differences and the inability to effectively speak or understand English, persons with LEP may be subject to exclusion from programs or activities, experience delays or denials of services/benefits, or receive care and services/benefits from recipients of Federal financial assistance based on inaccurate or incomplete information.
Executive Order 13166 (65 FR 50119) dated August 11, 2000 and policy guidance issued by Department of Justice (DOJ) on August 11, 2000 (65 FR 50123), address the responsibility of all recipients of Federal financial assistance to ensure meaningful access for persons with LEP. GSA refers to and incorporates DOJ's policy guidance for recipients as part of this policy guidance, and for the purpose of determining compliance with this policy guidance, within the scope of Title VI of the Civil Rights of 1964, as amended, its implementing regulations and relevant case law.
This policy guidance establishes a four-step process that recipients should follow in developing an effective LEP assistance plan. A key element in this process is stakeholder input. Therefore, recipients should coordinate with local community-based organizations (
Some organizations representing LEP persons may include the National Council of La Raza (NCLR), the League of United Latin American Citizens (LULAC), the National Council of Asian Pacific Americans (NCAPA), the Organization of Chinese Americans (OCA), the National Congress of American Indians (NCAI), the National Urban League (NUL), the National Association for the Advancement of Colored People (NAACP), Mexican American Legal Defense and Educational Fund, Arab American Anti-Discrimination Committee and National Coalition for Haitian Rights. This is not meant to be an exhaustive listing, and different community-based or national origin minority organizations may be available in a recipient's serviced area.
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Section 601 of Title VI of the Civil Rights Act of 1964, 42 U.S.C. section 2000d
State and local laws may provide additional obligations to serve LEP individuals, but cannot compel recipients of Federal financial assistance to violate Title VI. For instance, given our constitutional structure, State or local “English-only” laws do not relieve an entity that receives Federal funding from its responsibilities under Federal anti-discrimination laws. Entities in States and localities with “English-only” laws are certainly not required to accept Federal funding—but if they do, they have to comply with Title VI, including its prohibition against national origin discrimination by recipients of Federal assistance. Thus, failing to make federally assisted programs and activities accessible to individuals who are LEP will, in certain circumstances, violate Title VI.
GSA's implementation regulations provide, in part, at 41 CFR 101-6.204-1:
“No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program to which this subpart applies.”
Specific discriminatory actions prohibited are addressed at 41 CFR 101-6.204-2:
“(a)(1) In connection with any program to which this subpart applies, a recipient may not, directly or through contractual or other arrangements, on the ground of race, color, or national origin:
(i) Deny an individual any services/benefits, financial aid, or other benefit provided under the program;
(ii) Provide any service, financial aid, or other benefit to any individual which is different, or is provided in a different manner, from that provided to others under the program;
(iii) Subject an individual to segregation or separate treatment in any matter related to his receipt of any service, financial aid, or other benefit under the program;
(iv) Restrict an individual in any way in the enjoyment of any advantage or privilege enjoyed by others receiving any service, financial aid, or other benefit under the program;
(v) Treat an individual differently from others in determining whether he satisfies any admission, enrollment, quota, eligibility, membership or other requirement or condition which individuals must meet in order to be provided any service, financial
(vi) Deny an individual an opportunity to participate in the program through the provision of services or otherwise, or afford him an opportunity to do so which is different from that afforded others under the program* * *”
Furthermore, the DOJ coordination regulations for Title VI, located at 28 CFR 42.405(d)(1), provide that:
“(1) Where a significant number or proportion of the population eligible to be served or likely to be directly affected by a federally assisted program (e.g., affected by relocation) needs service or information in a language other than English in order effectively to be informed of or to participate in the program, the recipient shall take reasonable steps, considering the scope of the program and the size and concentration of such population, to provide information in appropriate languages to such persons. This requirement applies with regard to written material of the type which is ordinarily distributed to the public.”
Extensive case law affirms the obligation of recipients of Federal financial assistance to ensure that persons with LEP can meaningfully access federally assisted programs. Specifically, in the case of
More recently, the Eleventh Circuit in
The DOJ states in its policy guidance that Title VI does not require recipients to remove language barriers when English is an essential aspect of the program, or there is another “substantial legitimate justification for the challenged practice.” See Footnote 13 of DOJ's policy guidance.
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(1) Federal surplus personal property may be donated to nonprofit educational and public health activities exempt from taxation under Section 501 of the Internal Revenue Code. The property must be used to aid education or public health, and includes programs for the homeless. Eligible recipients include nonprofit educational and public health activities, such as medical institutions, hospitals, clinics, health centers, and drug abuse treatment centers; schools, colleges and universities; schools for persons with mental or physical disabilities; child care centers; educational radio and televisions licensed by the Federal Communications Commission; museums attended by the public; and libraries. Nonprofit, tax-exempt organizations that provide food, shelter, or support services to homeless people may also be eligible to receive surplus property through the donation program (i.e., soup kitchens, day centers for the homeless, food banks, shelters for battered spouses, half-way houses).
(2) Additionally, public agencies involved in such activities as conservation, economic development, education, park and recreation programs, public safety, public health, programs for the elderly, and programs for the homeless may be eligible for donations of surplus personal property. Public agencies generally include States, their departments, divisions and other instrumentalities; political subdivisions of States, including cities, counties, and other local Government units and economic development districts; instrumentalities created by compact or other agreement between State or political subdivisions; and Indian tribes, bands, groups, pueblos, or communities located on State reservations.
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The steps reasonable for a recipient that serves one LEP person a year may be different than those expected of a recipient that serves several LEP persons per day. However, those who serve a few are still subject to the requirements of Title VI of the Civil Rights Act of 1964 and Executive Order 13166 (65 FR 50119). This plan need not be intricate, and may be as simple as being prepared to use one of the commercially available language lines to obtain interpreter services within a reasonable period of time.
Methods of obtaining estimates of serviced LEP population include taking a census of contacts with LEP persons over a given period of time or using demographic data of the service area. The 1990 U. S. Census information may be found at a local library or on the Internet at www.Census.gov. The 2000 Census data may not be available until the 2001-02 timeframe. In addition to the U. S. Census, other potential resources include State and local government offices; the Mayor's office; the local school superintendent's office; the State education department; the State social services department, and local hospitals; or other elected officials offices. Combining these methods will probably result in the most realistic and accurate estimates.
Local or State Yellow Pages may also be helpful in identifying organizations that serve or represent particular language minority populations. Local national origin minority organizations may be able to provide, or assist in obtaining, certain demographic information regarding LEP populations in the local area. The information that can be obtained and the network established in coordinating this type of effort with members of local and State government offices and minority organizations may prove to be valuable resources for recipients into the future.
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Although past experience may be helpful in determining the frequency of contact, it should not be used as the exclusive criteria since the lack of prior LEP notice and assistance may have contributed to such minimal or non-existent contact.
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Recipients must also consider the importance of the program or activity to the eligible LEP population, both immediately, as well as the long-term. (
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A recipient that has limited resources may consider exploring whether State and local government offices provide translation assistance. These offices may provide resources for the recipient's use.
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(1) Notice of LEP assistance to be provided. Each recipient of Federal financial assistance is to notify the public of available LEP assistance at no cost to the LEP person. This may be done through a brochure or poster in the language(s) identified in the location(s) where the recipient's federally assisted service(s) and/or benefits are being provided. Posters should be placed in a conspicuous place to ensure LEP persons will see it. It may also include posting such notice on the recipient's internet site(s). Sample language to use for such notice is as follows: “Language assistance is available upon request if you cannot speak or write English very well.”
(2) Ensure staff is aware of LEP responsibilities. Recipients are to ensure that GSA's policy regarding LEP responsibilities is communicated to all staff members whose duties may bring them in contact with LEP persons accessing the services and/or benefits of the recipient. This communication should ensure an understanding of the types of LEP assistance being offered by the recipient, and the mechanisms in place for the staff to use when a request for LEP assistance is made.
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(1) In determining what should be translated, identify vital documents and non-vital documents. Vital documents must be translated when a significant number or percentage of the population eligible to be served, or likely to be directly affected by the recipient's program(s) or activities, seeks services or information in a language other than English to communicate effectively. For many larger documents, translation of vital information contained within the document will suffice and the documents need not be translated in their entirety. Non-vital documents/information need not be translated.
(2) OCR recognizes that it may sometimes be difficult to draw a distinction between vital and non-vital documents, particularly when considering outreach or awareness documents. Although meaningful access to a program or activity requires an awareness of the program's existence, OCR recognizes that it would be impossible, from a practical and cost-based perspective, to translate every piece of outreach material into every language. Title VI does not require this of its recipients. However, lack of awareness regarding the existence of a particular program may effectively deny LEP persons meaningful access. Thus, it is important that recipients continually survey and assess the needs of the eligible serviced populations in order to determine whether certain critical outreach materials should be translated into other languages.
(3) The same analysis is to be used in determining the translation of web site information, forms, etc. The decision to place a document or information on the Internet will not affect whether the document or information must be translated. For example, placement on the web site should not change the recipient's original assessment regarding the number or proportion of LEP persons that comprise the intended audience for that document or information. Generally, entire web sites need not be translated. Only the vital information or documents within the web site should be translated. The four-factor analysis as outlined above determines the appropriate language(s) for translation. If the four-factor analysis determines that written information or a document should be translated, the same written document or information should be translated on the recipient's web siteu if the recipient's English version of the information or document is on the web site. A notice regarding the presence of a translated document or information on the web site should be posted at an initial entry point onto the site (usually the homepage).
(4) Oral translation assistance will be provided to those persons with LEP whose language does not exist in written form. This oral translation assistance will explain the contents of vital documents.
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It is also important to note that in some circumstances, verbatim translation of materials may not accurately and appropriately convey the substance of what is contained in the written language. An effective way to address this concern is to reach out to community-based organizations to review translated materials to ensure that the translation is accurate and easily understood by LEP persons.
It is recommended that a different contractor conduct a second review of a translated document, when such document is of a highly technical or complex nature. Another method of ensuring reliability of such documents is to have the document translated back into English to determine if the source document lost important meaning in its foreign translation.
Generally, it is not acceptable for recipients to rely upon an LEP individual's family members or friends to provide the interpreter services. The recipient should meet its obligations under Title VI by supplying competent language services free of cost. In rare emergency situations, the recipient may have to rely on an LEP person's family members or other persons whose language skills and competency in interpreting have not been established. Proper planning by recipients is important in order to ensure that those situations rarely occur. Therefore, it is not acceptable to rely upon an LEP person to provide his/her own interpreter, unless the LEP person requests the use of his/her own interpreter or in the case of an emergency.
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The assistance that the child care center is providing will probably be considered appropriate, given the center's resources, the size of staff, and the size of the LEP population. Thus, OCR would find the center in compliance with Title VI.
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Given the size of the county program, its resources, the size of the eligible LEP population, the frequency of contact and the nature of the program, OCR would likely find the county in violation of Title VI and would require it to develop a comprehensive language assistance program.
d. The intent of this guidance is to provide recipients with information regarding the requirements of Title VI and its implementing regulations for providing meaningful access for LEP persons to federally assisted services and/or benefits. The examples and framework outlined above are not intended to be exhaustive. Thus, recipients have considerable flexibility in determining how to comply with their legal obligation in meeting their LEP responsibilities, and are not required to use all of the suggested methods and options listed. However, recipients must establish and implement policies and procedures for providing language assistance sufficient to fulfill their Title VI responsibilities.
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a. The failure to take all of the steps as outlined herein will not necessarily mean that a recipient has failed to provide meaningful access to LEP persons. OCR will make assessments on a case by case basis and will consider several factors in determining whether the steps taken by a recipient provide meaningful access. (i.e., nature and importance of recipient's services to the serviced population, recipient's size, availability of financial and other resources, and frequency of contact with LEP persons).
b. Those factors include the size of the recipient and the eligible LEP population, the nature of the program or service, the objectives of the program, the total resources available, the frequency with which particular languages are encountered, and the frequency with which LEP persons come into contact with the recipient's program.
c. There are instances where recipients of Federal financial assistance from GSA may also be recipients of Federal financial assistance from other Federal agencies. For instance, hospitals and health clinics may receive financial assistance from the Department of Health and Human Services (DHHS); schools and universities may receive financial assistance from the Department of Education (DOE); police departments and other law enforcement agencies/organizations may receive financial assistance from the Department of Justice (DOJ). In order to avoid the potential for confusion with such recipient organizations as to their LEP responsibilities, OCR will apply, where appropriate, the Federal agency's LEP guidance that is more specific and/or stringent regarding LEP responsibilities and assistance.
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GSA's Title VI regulations provide that OCR will investigate whenever it receives a complaint, report or other information that alleges or indicates possible noncompliance with Title VI. If the investigation results in a finding of compliance, OCR will inform the recipient in writing of this determination, including the basis for the determination. If the investigation results in a finding of noncompliance, OCR will inform the recipient of the noncompliance through a Letter of Findings that identifies the areas of noncompliance and the steps that must be taken to correct the noncompliance, and will attempt to secure voluntary compliance through informal means. If the matter cannot be resolved informally, the procedure for effecting compliance as described at 41 CFR 101-6.211-2,
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OCR is available to provide assistance to recipients seeking to ensure that they operate an effective language assistance program. In addition, during its investigative process, OCR is available to provide technical assistance to enable recipients to come into voluntary compliance. OCR may be reached at 202-501-0767 or toll free 1-800-662-6376, or by mail at General Services Administration, Office of Civil Rights, Title VI, 1800 F Street NW., Suite 5127, Washington, DC, 20405, for further assistance. Arrangements to receive this policy guidance in alternative format may be made by contacting OCR.
Office of the Assistant Secretary for Planning and Evaluation, Department of Health and Human Services.
Notice of meeting—AMENDED.
Notice is hereby given of a public hearing by the Department of Health and Human Services (HHS) Secretary's Advisory Committee on Regulatory Reform. This amended notice includes the exact address for the hearing. As governed by the Federal Advisory Committee Act in accordance with Section 10(a)(2), the Secretary's Advisory Committee on Regulatory Reform is seeking guidance for the Department's efforts to streamline regulatory requirements. The Advisory Committee will advise and make recommendations for changes that would be beneficial in four broad areas: health care delivery, health systems operations, biomedical and health research, and the development of pharmaceuticals and other products. The Committee will review changes identified through regional public hearings, written comments from the public, and consultation with HHS staff.
All meetings and hearings of the Committee are open to the general public. During each meeting, invited witnesses will address how regulations affect health-related issues. Meeting agendas will also allow some time for public comment. Additional information on each meeting's agenda and list of participating witnesses will be posted on the Committee's Web site prior to the meetings
The first public hearing of the Secretary's Advisory Committee on Regulatory Reform will be held on Monday, February 25, 2002, from 9:00 a.m. to 5:00 p.m. and on Tuesday, February 26, 2002, from 9:00 a.m. to 1:00 p.m.
The hearing will be held at the Hyatt Regency Miami in Miami, Florida. The address is 400 SE 2nd Avenue, Miami, FL 33131.
Christy Schmidt, Executive Coordinator, Secretary's Advisory Committee on regulatory Reform, Office of the Assistant Secretary for Planning and Evaluation, 200 Independence Avenue, SW., Room 344G, Washington, DC, 20201, (202) 401-5182.
The Hyatt Regency Miami is in compliance with the Americans with Disabilities Act. Anyone planning to attend the meeting who requires special disability-related arrangements such as sign-language interpretation should provide notice of their need by Thursday, February 21, 2002. Please make any request to Michael Starkweather—phone: 301-628-3141; fax: 301-628-3101; email:
On June 8, 2001, HHS Secretary Thompson announced a Department-wide initiative to reduce regulatory burdens in health care, to improve patient care, and to respond to the concerns of health care providers and industry, State and local Governments, and individual Americans who are affected by HHS rules. Common sense approaches; and careful balancing of needs can help improve patient care. As part of this initiative, the Department is establishing the Secretary's Advisory Committee on Regulatory Reform to provide findings and recommendations regarding potential regulatory changes. These changes would enable HHS programs to reduce burdens and costs associated with departmental regulations and paperwork, while at the same time maintaining or enhancing the effectiveness, efficiency, impact, and access of HHS programs.
This gives notice under the Federal Advisory Committee Act (Pub. L. 92-463) of October 6, 1972, that the Clinical Laboratory Improvement Advisory Committee, of the Centers for Disease Control and Prevention (CDC), of the Department of Health and Human Services, has been renewed for a 2-year period extending through February 19, 2004.
Edward L. Baker, M.D., Executive Secretary, Clinical Laboratory Improvement Advisory Committee, CDC, 4770 Buford Hwy, NE, m/s K-36, Atlanta, Georgia 30333. Telephone 770/488-2402, fax 770/488-2420, e-mail
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces the following committee meeting:
Agenda items are subject to change as priorities dictate.
Roger Rosa, Executive Secretary, BSC, NIOSH, CDC, 200 Independence Avenue, SW., Room 715H, Washington, DC 20201, telephone: 202/205-7856, fax: 202/260-4464.
The Director, Management Analysis and Services Office, has been delegated the authority to sign
The National Center for Environmental Health (NCEH) of the Centers for Disease Control and Prevention (CDC) announces the following meeting.
This meeting is a continuation of that series of public meetings to discuss current status of the VSP and experience to date with program operations.
For a period of 15 days following the meeting, through May 2, 2002, the official record of the meeting will remain open so that additional materials or comments may be submitted to be made part of the record of the meeting. Advanced registration for the meeting is encouraged. Please provide the following information: Name, title, company name, mailing address, telephone number, facsimile number and e-mail address to Dorothy Johnson, facsimile (770)488-4127 or e-mail:
Dave Forney, Chief, VSP, NCEH, CDC, 4770 Buford Highway, NE, M/S F-16, Atlanta, Georgia 30341-3724, telephone (770)488-7333, e-mail:
The Director, Management Analysis and Services Office, has been delegated the authority to sign
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing a hearing on a proposal to withdraw approval of a new animal drug application (NADA). In the
This notice of hearing (NOH) provides factual and legal information concerning CVM's proposal to withdraw the NADA and identifies the factual issues that will be the subject of the evidentiary hearing.
A prehearing conference will be held on April 8, 2002, beginning at 10 a.m. Any person wishing to participate in this hearing shall submit a written notice of participation by March 22, 2002. Disclosure of data and information as required by part 12 (21 CFR part 12) must be made by April 22, 2002.
The prehearing conference will be held in conference room. F, 5600 Fishers Lane, Rockville, MD 20857. You must submit written notices of participation and disclosure of data and information to Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. All submissions must reference docket number 00N-1571.
Robin Thomas Johnson, Office of Policy (HF-26), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-827-3480.
Enrofloxacin belongs to the class of antimicrobial drugs called fluoroquinolones. Fluoroquinolones are used in humans and animals for therapeutic purposes. Bayer Corp., P.O. Box 390, Shawnee Mission, KS 66201-0390, sponsor of NADA 140-828 for enrofloxacin (also known under Bayer's product name “Baytril”) was approved for use in poultry on October 4, 1996, and published on November 5, 1996 (61 FR 56892). The new animal drug is indicated for the control, in chickens, of mortality associated with
In the NOOH published on October 31, 2000 (as revised on January 22, 2001), CVM proposed to withdraw approval of NADA 140-828 for use in poultry under section 512(e)(1)(B) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S. C. 360b(e)(1)(B)) . Section 512(e)(1)(B) states:
(e)(1) The Secretary shall, after due notice and opportunity for hearing to the applicant, issue an order withdrawing approval of an application filed pursuant to subsection (b) with respect to any new animal drug if the Secretary finds —
(B) that new evidence not contained in such application or not available to the Secretary until after such application was approved, or tests by new methods, or tests by methods not deemed reasonably applicable when such application was approved, evaluated together with the evidence available to the Secretary when the application was approved, shows that such drug is not shown to be safe for use under the conditions of use upon the basis of which the application was approved or that subparagraph (I) of paragraph (1) of subsection (d) applies to such drug.
CVM must provide a reasonable basis from which serious questions about the ultimate safety of the drug may be inferred. “‘Serious questions' can be raised where the evidence is not conclusive, but merely suggestive of an adverse effect.” (See 44 FR 54852 at 54861, September 21, l979 (Commissioner's DES Decision.) Once CVM provides a basis for questioning the safety of enrofloxacin, the sponsor will have the ultimate burden of showing the drug's safety.
In accordance with FDA's procedural regulations (§ 12.85) CVM has placed on file with the Dockets Management Branch (address above) copies of all documents in the CVM Director's files containing factual information relating to the issues involved in the hearing, and a narrative statement summarizing the evidence CVM plans to introduce at the hearing. For the benefit of those who are unable to inspect those documents, the information placed on file by CVM is summarized below.
The primary factual issues at the hearing will be whether there is a reasonable basis from which serious questions about the safety of enrofloxacin use in poultry may be inferred, and, if so, whether the use of enrofloxacin under the approved conditions of use in poultry has been shown to be safe. This action is based on CVM's determination that the use of fluoroquinolones in poultry causes the development of fluoroquinolone-resistant
CVM has concluded, based on data from surveillance programs, published literature, and other sources, that the use of fluoroquinolones in poultry is a significant cause of fluoroquinolone-resistant
CVM believes that such people are likely to have had prolonged illnesses or complications. CVM concluded that development of resistance to fluorquinolones among
Upon review of Bayer Corp.'s response to the NOOH, the Acting Principal Deputy Commissioner concludes that a hearing is appropriate with respect to CVM's proposal to withdraw approval of the NADA for enrofloxacin. The issue at the hearing will be as follows:
Whether new evidence shows that enrofloxacin is not now shown to be safe for use under the conditions of use upon the basis of which the application was approved. This issue includes:
A. Whether there is a reasonable basis from which serious questions about the safety of enrofloxacin use in poultry may be inferred, such as:
1. Whether enrofloxacin use in poultry acts as a selection pressure, resulting in the emergence and dissemination of fluoroquinolone-resistant
2. Whether fluoroquinolone-resistant
3. Whether fluoroquinolone-resistant
B. Whether the use of enrofloxacin under the approved conditions of use in poultry has been shown to be safe?
The hearing on these issues will take place in FDA conference room F. Administrative Law Judge Daniel J. Davidson will preside. Parties to the hearing will be CVM and Bayer Corp., the sponsor of the NADA for enrofloxacin. Any other interested person may participate in the hearing and be accorded the rights granted to participants by FDA regulations. Participants are required to assume the obligations of participation as set forth in FDA regulations (see part 12). Written notices of participation shall be filed with the Dockets Management Branch no later than March 22, 2002 (see § 12.45). A notice of participation shall be identified with the docket number found in brackets in the heading of this document and clearly labeled “Enrofloxacin Hearing.”
A prehearing conference will be held on April 8, 2002. All participants are required both to attend the prehearing conference and to be prepared to comply with § 12.92, which sets forth the procedure and matters to be considered at such conference.
As discussed above, CVM has filed with the Dockets Management Branch a narrative statement setting forth its position on the hearing issues and a detailed factual description of the evidentiary background upon which it intends to rely at the hearing. CVM has also filed with the Dockets Management Branch the other documents required by § 12.85, including copies of the relevant portions of NADA, published studies, and other data, bearing on the question of whether enrofloxacin has been shown to be safe for use under the conditions of use upon the basis of which the application was approved. Interested persons may obtain a copy of the narrative statement from the Dockets Management Branch. With the exception of any data withheld from public disclosure under the provisions of 21 CFR 10.20(j), 21 U.S.C. 331(j), or 18 U.S.C. 1905, the data described above may also be examined at the Dockets Management Branch between 9 a.m. to 4 p.m., Monday through Friday. Bayer Corp. shall submit all the written data and information required by § 12.85 by April 22, 2002. All other participants shall submit all written data and information required by § 12.85 by April 22, 2002. Any request to extend the period for submission of the required materials or for a postponement of the scheduled prehearing conference shall be addressed to the Administrative Law Judge.
The prehearing conference and the hearing will be open to the public. Any participants may appear in person, or by or with counsel, or with other qualified representatives, and may be heard on relevant matters.
Because this is a public hearing, it is subject to our guideline concerning the policy and procedures for electronic media coverage of public agency administrative proceedings. This guideline was published in the
This notice is issued under section 512 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360b), and under authority delegated to the Commissioner of Food and Drugs (21 CFR 5.10).
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing its determination that azathioprine 25-milligram (mg) tablet (Imuran) was not withdrawn from sale for reasons of safety or effectiveness. This determination will allow FDA to approve abbreviated new drug applications (ANDAs) for azathioprine 25-mg tablets.
Carol E. Drew, Center for Drug Evaluation and Research (HFD-7), Food and Drug Administration, 5600 Fishers
In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417) (the 1984 amendments), which authorized the approval of duplicate versions of drug products approved under an ANDA procedure. ANDA sponsors must, with certain exceptions, show that the drug for which they are seeking approval contains the same active ingredient in the same strength and dosage form as the “listed drug,” which is a version of the drug that was previously approved under a new drug application (NDA). Sponsors of ANDAs do not have to repeat the extensive clinical testing otherwise necessary to gain approval of an NDA. The only clinical data required in an ANDA are data to show that the drug that is the subject of the ANDA is bioequivalent to the listed drug.
The 1984 amendments include what is now section 505(j)(7) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(7)), which requires FDA to publish a list of all approved drugs. FDA publishes this list as part of the “Approved Drug Products With Therapeutic Equivalence Evaluations,” which is generally known as the “Orange Book.” Under FDA regulations, drugs are withdrawn from the list if the agency withdraws or suspends approval of the drug's NDA or ANDA for reasons of safety or effectiveness, or if FDA determines that the listed drug was withdrawn from sale for reasons of safety or effectiveness (21 CFR 314.162). Regulations also provide that the agency must make a determination as to whether a listed drug was withdrawn from sale for reasons of safety or effectiveness before an ANDA that refers to that listed drug may be approved (§ 314.161(a)(1) (21 CFR 314.161(a)(1))). FDA may not approve an ANDA that does not refer to a listed drug.
On August 31, 2001, AAI International submitted a citizen petition (Docket No. 01P-0383/CP1) under 21 CFR 10.30 to FDA requesting that the agency determine whether azathioprine 25-mg tablet was withdrawn from sale for reasons of safety or effectiveness. Azathioprine 25-mg tablet is the subject of NDA 016-324. FDA approved NDA 016-324, currently held by Prometheus Laboratories, Inc. (Prometheus), on March 21, 1980. FDA has determined that azathioprine 25-mg tablet was withdrawn from sale.
FDA has reviewed its records and, under § 314.161, has determined that azathioprine 25-mg tablet was not withdrawn from sale for reasons of safety or effectiveness. Accordingly, the agency will continue to list azathioprine 25-mg tablet in the “Discontinued Drug Product List” section of the Orange Book. The “Discontinued Drug Product List” delineates, among other items, drug products that have been discontinued from marketing for reasons other than safety or effectiveness. ANDAs that refer to azathioprine 25-mg tablet may be approved by the agency.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is withdrawing approval of 34 abbreviated new drug applications (ANDAs). The holders of the applications notified the agency in writing that the drug products were no longer marketed and requested that the approval of the applications be withdrawn.
Effective March 22, 2002.
Florine P. Purdie, Center for Drug Evaluation and Research (HFD-7), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-594-2041.
The holders of the applications listed in the table in this document have informed FDA that these drug products are no longer marketed and have requested that FDA withdraw approval of the applications. The applicants have also, by their request, waived their opportunity for a hearing.
Therefore, under section 505(e) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(e)) and under authority delegated to the Director, Center for Drug Evaluation and Research (21 CFR 5.82), approval of the applications listed in the table in this document, and all amendments and supplements thereto, is hereby withdrawn, effective March 22, 2002.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of the draft guidance entitled “Special Control Guidance Document on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling.” This draft guidance is neither final nor is it in effect at this time. Elsewhere in this issue of the
Submit written or electronic comments on the draft guidance by May 21, 2002. General comments on agency guidance documents are welcome at any time.
Submit written requests for single copies on a 3.5″ diskette of the draft guidance entitled “Special Control Guidance Document on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling” to the Division of Small Manufacturers Assistance (HFZ-220), Center for Devices and Radiological Health (CDRH), Food and Drug Administration, 1350 Piccard Dr., Rockville, MD 20850. Send two self-addressed adhesive labels to assist that office in processing your request, or fax your request to 301-443-8818. Submit written comments on the draft guidance to the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to http://www.fda.gov/dockets/ecomments. Comments should be identified with the docket number found in brackets in the heading of this document. See the
Susan Runner, Center for Devices and Radiological Health (HFZ-410), Food and Drug Administration, 9200 Corporate Blvd., Rockville, MD 20850, 301-827-5283.
Elsewhere in this issue of the
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). This draft guidance document represents the agency's current thinking on encapsulated amalgam, amalgam alloy, and dental mercury labeling. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the applicable statutes and regulations. This draft guidance document is issued as a level 1 guidance consistent with the GGP regulations.
In order to receive the draft guidance entitled “Special Control Guidance Document on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling ” via your fax machine, call the CDRH Facts-On-Demand system at 800-899-0381 or 301-827-0111 from a touch-tone telephone. At the first voice prompt press 1 to enter the system. At the second voice prompt press 1 to order a document. Enter the document
Persons interested in obtaining a copy of the draft guidance may also do so using the Internet. CDRH maintains an entry on the Internet for easy access to information including text, graphics, and files that may be downloaded to a personal computer with Internet access. Updated on a regular basis, the CDRH home page includes “Special Control Guidance Document on Encapsulated Amalgam, Amalgam Alloy, and Dental Mercury Labeling,” device safety alerts,
Interested persons may submit to the Dockets Management Branch (address above) written or electronic comments regarding this draft guidance by May 21, 2002. Two copies of any comments are to be submitted, except that individuals may submit one copy. Comments are to be identified with the docket number found in brackets in the heading of this document. The draft guidance and received comments are available for public examination in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday through Friday.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of a draft guidance for industry entitled “Exercise-Induced Bronchospasm (EIB)—Development of Drugs to Prevent EIB.” The draft guidance is intended to assist sponsors in developing clinical trials for drugs that prevent EIB. The draft guidance addresses the types of trials that should be performed. It also discusses such issues as exercise testing, efficacy end points, and statistical analyses.
Submit written or electronic comments on the draft guidance by April 22, 2002. General comments on agency guidance documents are welcome at any time.
Submit written requests for single copies of the guidance to the Division of Drug Information (HFD-240), Center for Drug Evaluation and Research, Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857. Send one self-addressed adhesive label to assist that office in processing your requests. Submit written comments on the draft guidance to the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to
Sandra L. Barnes, Center for Drug Evaluation and Research (HFD-570), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-827-1050.
FDA is announcing the availability of a draft guidance for industry entitled “Exercise-Induced Bronchospasm (EIB)—Development of Drugs to Prevent EIB.” This draft guidance is intended to assist sponsors in designing clinical development programs to achieve an indication for the “prevention” of EIB. Drugs that are given chronically to control asthma may also lessen the propensity to develop EIB, as a general consequence of decreasing bronchial hyperreactivity. An important distinction is made, however, between such chronically administered drugs and shorter acting drugs that are given acutely to prevent or treat EIB. This guidance document is intended to provide trial design suggestions to help guide sponsors who are interested in developing drugs that are given acutely to prevent EIB.
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the agency's current thinking on EIB and the development of drugs to prevent EIB. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statutes and regulations.
Interested persons may submit to the Dockets Management Branch (address above) written or electronic comments on the draft guidance. Two copies of any comments are to be submitted, except that individuals may submit one copy. Comments are to be identified with the docket number found in brackets in the heading of this document. The draft guidance and received comments are available for public examination in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday through Friday.
Persons with access to the Internet may obtain the document at either
Substance Abuse and Mental Health Services Administration, HHS.
Notice of Funding Availability.
The Substance Abuse and Mental Health Services Administration (SAMHSA) Center for Mental Health Services (CMHS) announces the availability of FY 2002 funds for grants for the following activity. This notice is not a complete description of the activity; potential applicants must obtain a copy of the Guidance for Applicants (GFA), including Part I, Partnerships for Youth Transition, and Part II, General Policies and Procedures Applicable to all SAMHSA Applications for Discretionary Grants and Cooperative Agreements, before preparing and submitting an application.
The actual amount available for the award may vary, depending on unanticipated program requirements and the number and quality of applications received. FY 2002 funds for the activity discussed in this announcement were appropriated by Congress under Public Law No. 106-310. SAMHSA's policies and procedures for peer review and Advisory Council review of grant and cooperative agreement application were published in the
The PHS 5161-1 application form and the full text of the activity are also available electronically via SAMHSA's World Wide Web Home Page:
When requesting an application kit, the applicant must specify the particular activity for which detailed information is desired. All information necessary to apply, including where to submit applications and application deadline instructions, are included in the application kit.
For questions regarding grants management issues, contact: Stephen Hudak, Division of Grants Management, Substance Abuse and Mental Health Services Administration, 5515 Security Lane, Rm 630, Rockville, MD 20852, (301) 443-9666, E-mail:
Community-based nongovernmental service providers who are not transmitting their applications through the State must submit a PHSIS to the head(s) of the appropriate State and local health agencies in the area(s) to be affected not later than the pertinent receipt date for applications. This PHSIS consists of the following information:
a. A copy of the face page of the application (Standard form 424).
b. A summary of the project (PHSIS), not to exceed one page, which provides:
(1) A description of the population to be served.
(2) A summary of the services to be provided.
(3) A description of the coordination planned with the appropriate State or local health agencies.
State and local governments and Indian Tribal Authority applicants are not subject to the Public Health System Reporting Requirements. Application guidance materials will specify if a particular FY 2002 activity is subject to the Public Health System Reporting Requirements.
The due date for State review process recommendations is no later than 60 days after the specified deadline date for the receipt of applications. SAMHSA does not guarantee to accommodate or explain SPOC comments that are received after the 60-day cut-off.
Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.
Notice.
The proposed information collection requirement described below will be submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.
Comments Due Date: April 22, 2001.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Wayne Eddins, Reports Management Officer, Department of Housing and Urban Development, 451 7th Street, SW., L'Enfant Plaza Building, Room 8001, Washington, DC 20410.
Kimberly R. Sanford, Policy and Participation Standards Division, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, telephone (202) 708-3730 (this is not a toll free number) for copies of the proposed forms and other available information.
The Department is submitting the proposed information collection to OMB for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended).
This Notice is soliciting comments from members of the public and affected agencies concerning the proposed collection of information to: (1) Evaluate whether the proposed collection is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond; including the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
This Notice also lists the following information:
The Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, as amended.
Fish and Wildlife Service, Interior.
Notice of meeting.
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C. App. I), this notice announces a meeting of the Klamath Fishery Management Council, established under the authority of the Klamath River Basin Fishery Resources Restoration Act (16 U.S.C. 460ss
The Klamath Fishery Management Council will meet from 3:00 p.m. to 5:00 p.m. on Sunday, March 10, 2002.
The meeting will be held at the Red Lion Hotel, 1401 Arden Way, Sacramento, California.
Phil Detrich, Project Leader, 1829 South Oregon Street, Yreka, California 96097, telephone (530) 842-5763.
At the March 10, 2002 meeting, the Klamath Fishery Management Council may schedule short follow-up meetings to be held between March,11, 2002, and March 15, 2002, at the Red Lion Hotel, 1401 Arden Way, Sacramento, California, where the Pacific Fishery Management Council will be meeting.
For background information on the Klamath Council, please refer to the notice of their initial meeting that appeared in the
Bureau of Land Management, Interior.
Notice of meeting location and time for the Mojave Southern Great Basin Resource Advisory Council (Nevada).
In accordance with the Federal Land Policy and Management Act and the Federal Advisory Committee Act of 1972 (FACA), the U.S. Department of the Interior, Bureau of Land Management (BLM) Mojave Southern Great Basin Resource Advisory Council (RAC), Nevada, will be held as indicated below. Topics for discussion will include manager's reports of field office activities; an update on the Southern Nevada Public Land Management Act of 1998; and other topics the council may raise.
All meetings are open to the public. The public may present written and/or oral comments to the council at 2:30 p.m. on Thursday, March 7, 2002. Individuals who need special assistance such as sign language interpretation or other reasonable accommodations should contact Phillip Guerrero at (702) 498-6088 by March 1, 2002.
The RAC will meet on Thursday, March 7 and Friday March 8, 2002 at the Bureau of Land Management, Las Vegas Field Office, 4701 North Torrey Pines Drive, Las Vegas NV 89130-2301 from 8:30 a.m. to 4 p.m. daily
Phillip L. Guerrero, Public Affairs Officer, BLM Las Vegas Field Office, 4701 North Torrey Pines Drive, Las Vegas NV 89130-2301, or by phone at (702) 498-6088.
Bureau of Land Management, Interior.
Notice of Meetings.
Notice is hereby given that the next meeting of the Southwest Colorado Resource Advisory Council (RAC) will be held March 6, 2002 at the Ouray Community Center located at 320 6th Avenue in Ouray, Colorado. Notice is also given that the next meeting of the Northwest Colorado RAC will be held on March 14, 2002 at the Hotel Colorado, located at 516 Pine in Glenwood Springs, Colorado.
Southwest RAC meeting: March 6, 2002; Northwest RAC meeting: March 14, 2002.
Larry J. Porter, Bureau of Land Management, 2815 H Road, Grand Junction, Colorado 81506; Telephone (970) 244-3012.
The Southwest Colorado RAC will meet on Wednesday, March 6, 2002, in the Ouray Community Center located at 320 6th Avenue in Ouray, Colorado. The meeting will begin at 9:00 a.m., and will adjourn upon completion of the agenda, approximately 4:00 p.m. The purpose of the meeting is to elect new RAC officers and to consider several resource management topics including Gunnison Gorge National Conservation Area Resource Management Plan and Environmental Impact Statement update, weed management, wildlife conflicts, Uncompahgre Plateau Project update and BLM staff briefings.
The Northwest Colorado RAC will meet on Thursday, March 14, 2002, at the Hotel Colorado located at 516 Pine in Glenwood Springs, Colorardo. The meeting will begin at 9:00 a.m., and will adjourn upon completion of the agenda, approximately 4:00 p.m. The purpose of the meeting is to elect new RAC officers and to consider several resource management updates including RAC subcommittee reports, travel management, oil—gas—coal programs, cultural resources program, fire management, and BLM staff briefings.
These meetings are open to the public. Interested members of the public may present written or oral comments to either of the RACs at 9:20 a.m. or 3:40 p.m. on the respective meeting dates. Per-person time limits for oral statements may be set to allow all interested individuals an opportunity to speak. Subject to the time available, individuals may also be allowed to provide input to the councils during discussion of specific agenda topics.
Summary minutes of RAC meetings are maintained in the BLM Western Slope Center Office located at 2815 H Road, Grand Junction, CO 81506; Telephone (970) 244-3000. Minutes are available for public inspection and reproduction during regular business hours within thirty (30) days following the meeting.
Bureau of Reclamation, Interior.
Approval of new rate for Pick-Sloan Missouri Basin Program (P-SMBP), Eastern and Western Division Project Use Power.
The Bureau of Reclamation (Reclamation) determined, after public input, that the proposed P-SMBP project use power rate of 10.76 mils/kWh is approved and will become effective 30 days after this notice is published.
The P-SMBP project use power rate of 10.76 mils/kWh will become effective March 22, 2002.
All booklets, studies, comments/letters that were utilized to develop the rate for project use power are available for inspection and copying at the Great Plains Regional Office, located at 316 North 26th Street, Billings, Montana 59101.
Kent Heidt at (406) 247-7761.
Power rates for the P-SMBP are established pursuant to the Reclamation Act of 1902
The project use power rate will be reviewed by Reclamation each time Western Area Power Administration (Western) adjusts the P-SMBP Firm power rate. Western will conduct the necessary studies and will use the same Reclamation-established methodology that was used to develop the 10.76 mils/kWh rate to calculate any new rate. The P-SMBP project use rate will be adjusted by Reclamation when Western adjusts the P-SMBP Firm power rate.
Reclamation published a
The following comments were received during the public comment period. Reclamation paraphrased and combined comments when it did not affect the meaning. Reclamation's response follows each comment.
In compliance with the National Environmental Policy Act of 1969 (NEPA), 43 U.S.C. 4321
The existing rate schedule MRB-P10 placed into effect on November 1, 1986, will be replaced by rate schedule MRB-P11. Rate Schedule MRB-P11 is as follows:
For use in the operation of congressionally authorized irrigation and drainage pumping plants on irrigation projects for power service supplied through metering at specified points of delivery.
Alternating current, 60 hertz, three phase, delivered and metered at the point identified in the contract upon demand during the summer irrigation season.
Available at 60 hertz at the pumping plant upon demand during the summer irrigation season.
The Commissioner approved the rate of 10.76 mils/kWh by memorandum dated January 15, 2002.
Pursuant to section 1008 of the Controlled Substances Import and Export Act (21 U.S.C. 958(i)), the Attorney General shall, prior to issuing a registration under this Section to a bulk manufacturer of a controlled substance in Schedule I or II and prior to issuing a regulation under Section 1002(a) authorizing the importation of such a substance, provide manufacturers holding registrations for the bulk manufacture of the substance an opportunity for a hearing.
Therefore, in accordance with Section 1301.34 of Title 21, Code of Federal Regulations (CFR), notice is hereby given that on March 7, 2001, Cedarburg Pharmaceutical LLC, 870 Badger Circle, Grafton, Wisconsin 53024, made application to the Drug Enforcement Administration to be registered as an importer of the basic classes of controlled substances listed below:
The firm plans to import the listed controlled substances to repackage and sell as bulk controlled substances, and also use as starting materials to manufacture bulk active pharmaceuticals ingredients.
Any manufacturer holding, or applying for, registration as a bulk manufacturer of these basic classes of controlled substances may file written comments on or objections to the application described above and may, at the same time, file a written request for a hearing on such application in accordance with 21 CFR 1301.43 in such form as prescribed by 21 CFR 1316.47.
Any such comments, objections, or requests for a hearing may be addressed, in quintuplicate, to the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, United States Department of Justice, Washington, DC 20537, Attention: DEA Federal Register Representative (CCR), and must be filed no later than (30 Days from publication).
This procedure is to be conducted simultaneously with and independent of the procedures described in 21 CFR 1301.34(b), (c), (d), (e), and (f). As noted in a previous notice at 40 FR 43745-46 (September 23, 1975), all applicants for registration to import basic classes of any controlled substances in Schedule I or II are and will continue to be required to demonstrate to the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration that the requirements for such registration pursuant to 21 U.S.C. 958(a), 21 U.S.C. 823(a), and 21 CFR 1301.34(a), (b), (c), (d), (e), and (f) are satisfied.
By Notice dated August 9, 2001, and published in the
Roche Diagnostics Corporation plans to manufacture small quantities of the above listed controlled substances for incorporation in drug of abuse detection kits.
No comments or objections have been received. DEA has considered the factors in Title 21, United States Code, section 823(a) and determined that the registration of Roche Diagnostics Corporation to manufacture the listed controlled substances is consistent with the public interest at this time. DEA has investigated Roche Diagnostics Corporation to ensure that the company's continued registration is consistent with the public interest. These investigations have included inspection and testing of the company's physical security systems, audits of the company's records, verification of the company's compliance with state and local laws, and a review of the company's background and history. Therefore, pursuant to 21 U.S.C. section 823 and 28 CFR secs. 0.100 and 0.104, the Deputy Assistant Administrator, Office of Diversion Control, hereby orders that the application submitted by the above firm for registration as a bulk manufacturer of the basic classes of controlled substances listed above is granted.
Overseas Private Investment Corporation
Request for comments.
Under the provisions of the Paperwork Reduction Act (44 U.S.C. chapter 35), agencies are required to publish a Notice in the
This information collection submission has now been submitted to OMB for review. Comments are again being solicited on the need for the information, its practical utility, the accuracy of the Agency's burden estimate, and on ways to minimize the reporting burden, including automated collection techniques and uses of other forms of technology. The proposed form under review is summarized below.
Comments must be received on or before March 22, 2002.
Copies of the subject form and the request for review submitted to OMB may be obtained from the Agency Submitting Officer. Comments on the form should be submitted to the OMB Reviewer.
Carol Brock, Records Manager, Overseas Private Investment Corporation, 1100 New York Avenue, NW., Washington, DC 20527; 202/336-8563.
David Rostker, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Docket Library, Room 10102, 725 17th Street, NW., Washington, DC 20503, 202/395-3897.
In accordance with the requirement of section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 which provides opportunity for public comment on new or revised data collections, the Railroad Retirement Board will publish periodic summaries of proposed data collections.
The estimated annual respondent burden is as follows:
Securities and Exchange Commission (“Commission”).
Notice of Application for an Order Pursuant to section 11(a) of the Investment Company Act of 1940, as amended (the “Act”) approving the terms of an offer of exchange.
IDS Life Insurance Company (“IDS Life”), IDS Life Variable Account 10 (“Account 10”) and IDS Life Accounts F, G, H, IZ, JZ, KZ, LZ, MZ, N, PZ, QZ, RZ, SZ and TZ (the “Old Accounts,” collectively with Account 10, the “Accounts”) (collectively, the “Applicants”).
Applicants seek an order pursuant to section 11(a) of the Act approving the terms of a proposed offer of exchange of new American Express Retirement Advisor Advantage Variable Annuity contracts issued by IDS Life and made available through Account 10 (“RAVA Advantage”) for certain outstanding annuity contracts issued by IDS Life and made available through the Old Accounts (the “Old Contracts,” collectively with RAVA Advantage, the “Contracts”).
The Application was filed on December 28, 2000, and amended and restated on November 15, 2001, December 6, 2001, and February 8, 2002.
An order granting the Application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Secretary of the Commission's and serving Applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on March 11, 2002, and should be accompanied by proof of service on Applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Secretary of the Commission.
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Applicants, Mary Ellyn Minenko, Vice President and Group Counsel, American Express Financial Advisors Inc., 50607 AXP Financial Center, Minneapolis, MN 55474.
Zandra Y. Bailes, Senior Counsel, or Lorna MacLeod, Branch Chief, Office of Insurance Products, Division of Investment Management, at (202) 942-0670.
The following is a summary of the Application. The complete Application may be obtained for a fee from the Commission's Public Reference Branch, 450 Fifth Street, NW, Washington, DC 20549-0102 (telephone (202) 942-8090).
1. IDS Life is a stock life insurance company organized in 1957 under the laws of the State of Minnesota. IDS Life is registered with the Commission as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the National Association of Securities Dealers. IDS Life is a wholly owned subsidiary of American Express Financial Corporation. IDS Life is the issuer and principal underwriter of the Contracts funded through the Accounts.
2. Account 10 is a segregated asset account of IDS Life. Account 10 funds the variable benefits available under RAVA Advantage. Account 10 and its component subaccounts are registered together with the Commission as a single unit investment trust under the Act (File No. 811-07355).
3. The Old Accounts are segregated asset accounts of IDS Life. The Old Accounts fund the variable benefits available under the IDS Life Variable Retirement Annuity (“VRA”), the IDS Life Combination Retirement Annuity (“CRA”), the IDS Life Flexible Annuity (“Flex”) and the IDS Life Employee Benefit Annuity (“EBA”). The Old Accounts are registered together with the Commission as a single unit investment trust under the Act (File No. 811-3217).
4. Applicants assert that in recent years the variable annuity marketplace has become increasingly competitive. Many of the purchasers of variable annuity contracts in the 1980s and early 1990s are at, or close to, the expiration of their deferred sales charge period, and the contract values of many contracts are no longer subject to a deferred sales charge. Holders of such contracts have become prime targets for
5. Applicants state that IDS Life's competitors are permitted to make bonus offers to IDS Life's Old Contract owners because offers of exchange to contract owners of unaffiliated insurance companies are not prohibited by section 11 of the Act by virtue of a no-action position granted to Alexander Hamilton Funds (pub. avail. July 20, 1994) (“Alexander Hamilton”). Applicants state that Alexander Hamilton stands for the proposition that, except for limited exceptions, exchange offers between unaffiliated investment companies are not prohibited under section 11. Consistent with section 11(a), therefore, a fund may impose a contingent deferred sales charge (“CDSC”) on shares purchased by investors with proceeds of shares from an unaffiliated fund.
6. Applicants assert that, but for the existence of the affiliated nature of the exchange, IDS Life would be able to offer an exchange program to its existing Old Contract owners that is similar to its competitors' programs. However, unlike its competitors who may make bonus offers to Old Contract owners, IDS Life is constrained from making a similar offer without first obtaining Commission approval of the terms of the exchange.
7. Applicants state that in response to this competitive situation IDS Life has developed an exchange offer (“Exchange Offer”) that would give eligible owners of Old Contracts the opportunity to exchange their existing Old Contracts for RAVA Advantage, an enhanced Contract that offers a lower mortality and expense risk (“M&E”) charge than the Old Contracts, credits on certain Purchase Payments (“Purchase Payment Credits”), more investment options (including all investment options available under the Old Contracts) and optional enhanced death benefits. IDS Life would apply a credit to certain exchanges (“Exchange Credit”) that would be in addition to any Purchase Payment Credit for which the Contract owner would otherwise be eligible under the RAVA Advantage Contract. Applicants state that the terms of the Exchange Offer are designed to respond to IDS Life's competitive dilemma and to assure that persisting Contract owners who accept the Exchange Offer receive an immediate and enduring economic benefit.
8. RAVA Advantage is registered under the Securities Act of 1933 (the “1933 Act”) (File No. 333-79311). RAVA Advantage may be issued as a nonqualified annuity for after-tax contributions only, or as a qualified annuity under the following retirement plans: (i) Individual Retirement Annuities (“IRAs”); (ii) Simplified Employee Pension (“SEP”) plans; (iii) Section 401(k) plans; (iv) custodial and trusteed plans; or (v) Tax-Sheltered Annuities (“TSAs”). RAVA Advantage may be purchased: (i) with a minimum initial payment of $1,000 for qualified annuities or $2,000 for nonqualified annuities; or (ii) in minimum installments of $50 per month or $23.08 biweekly under a scheduled payment plan. An owner may make additional payments, which require a $50 minimum (unless payments are made by installments under a scheduled payment plan), subsequent to the initial payment (initial payments and subsequent additional payments are individually and collectively referred to herein as “Purchase Payments”). Maximum limitations on Purchase Payments are imposed for the first year and subsequent years, depending on the age of the owner or annuitant.
9. Owners of RAVA Advantage Contracts may allocate their Purchase Payments among 56 subaccounts of Account 10. The subaccounts invest in 56 corresponding funds or portfolios (collectively, “Investment Funds”). IDS Life, at a later date, may determine to create additional subaccounts to invest in any additional Investment Funds as may now or in the future be available. IDS Life, from time to time, also may combine or eliminate subaccounts, or transfer the assets to and from subaccounts. IDS Life also may substitute the Investment Funds in which the subaccounts invest under certain conditions. RAVA Advantage also offers a fixed account investment option with a guaranteed interest rate of at least 3% on an annual basis.
10. Owners of RAVA Advantage Contracts may transfer contract values among the RAVA Advantage subaccounts without charge, although IDS Life reserves the right to limit the number of transfers in a contract year. Transfers to and from the fixed account are permitted, subject to certain restrictions described in the prospectus for the RAVA Advantage Contracts.
11. Each time IDS Life receives a Purchase Payment from an owner, it allocates to the owner's RAVA Advantage account a Purchase Payment Credit equal to: (i) 1% of each Purchase Payment received if the owner elected the ten-year CDSC period for RAVA Advantage, or if the owner elected the seven-year CDSC period and the initial Purchase Payment is at least $100,000; or (ii) 2% of each Purchase Payment received if the owner elected the ten-year CDSC period and the initial Purchase Payment is at least $100,000. IDS Life funds Purchase Payment Credits from its general account assets. IDS Life recaptures certain Purchase Payment Credits from an owner under the following circumstances: (i) any Purchase Payment Credit applied if the owner returns the RAVA Advantage Contract to IDS Life for a refund during the free look period; (ii) Purchase Payment Credits applied within twelve months preceding the date of death that results in a lump sum death benefit under the RAVA Advantage Contract; or (iii) Purchase Payment Credits applied within twelve months preceding a request for a surrender due to the owner or annuitant's confinement to a nursing home. The amount the owner receives in each of these circumstances always will equal and normally will exceed the surrender value of the RAVA Advantage Contract.
12. The owner of a RAVA Advantage Contract can access contract values at any time before annuity payouts begin by means of partial surrenders or a full surrender. In addition, RAVA Advantage permits the owner to withdraw certain amounts without incurring a CDSC (the “Free Withdrawal Amount”). Under RAVA Advantage, this Free Withdrawal Amount equals earnings or up to 10% of the prior anniversary contract value per contract year (if not already included in earnings).
A. The RAVA Advantage Contract standard death benefit is available at no extra charge. This standard death benefit provision states that, upon the earlier of the owner's or annuitant's death, before annuity payouts begin and while the Contract is in force, IDS Life will pay the following death benefits to the designated beneficiary: (i) if both the owner and annuitant are age 80 or younger on the date of death, the beneficiary will receive the greatest of (a) the contract value; (b) Purchase Payments, minus any adjusted partial surrenders; or (c) the contract value as of the most recent sixth contract anniversary, plus any Purchase Payments made, and minus any adjusted partial surrenders since that anniversary; or (ii) if either the owner or annuitant are age 81 or older on the date of death, the beneficiary receives the
14. The RAVA Advantage Contract also offers three optional death benefits. The Maximum Anniversary Value Death Benefit (the “MAV Death Benefit”) is an optional death benefit that is available at the election of the Contract owner for an extra cost of 0.15% deducted from the contract value on the contract anniversary at the end of each contract year. This MAV Death Benefit is available (in approved states) if both the owner and annuitant are age 75 or younger at Contract issue. The MAV Death Benefit states that, upon the earlier of the owner's or annuitant's death, before annuity payouts begin and while the Contract is in force, IDS Life will pay the designated beneficiary the Maximum Anniversary Value (the “MAV”). On the first contract anniversary, IDS Life sets the MAV equal to the highest of the (i) current contract value; or (ii) total Purchase Payments minus adjusted partial surrenders. Every contract anniversary after that, through the earlier of the owner's or annuitant's age 80, IDS Life compares the previous anniversary's MAV plus subsequent Purchase Payments less subsequent adjusted partial surrenders to the contract value and resets the MAV if the current contract value is higher. IDS Life stops resetting the MAV after the owner or annuitant reaches age 81. However, IDS Life continues to add subsequent Purchase Payments and subtract adjusted partial surrenders from the MAV.
15. The Enhanced Earnings Death Benefit (the “EEB”) is an optional death benefit that is available at the election of the Contract owner at an extra cost of 0.30% deducted from the contract value on the contract anniversary at the end of each contract year. This benefit is available (in approved states) if both the owner and annuitant are age 75 or younger at Contract issue. The EEB is only available under nonqualified annuities. The EEB states that, upon the earlier of the owner's or annuitant's death, after the first contract anniversary but before annuity payouts begin and while this Contract is in force, IDS Life will pay the designated beneficiary the standard death benefit or the MAV Death Benefit, if applicable plus: (i) 40% of earnings at death if the owner and the annuitant were under age 70 on the rider effective date, up to a maximum of 100% of Purchase Payments not previously surrendered that are one or more years old; or (ii) 15% of earnings at death if the owner or the annuitant were age 70 to 75 on the rider effective date, up to a maximum of 37.5% of Purchase Payments not previously surrendered that are one or more years old.
16. The Enhanced Earnings Benefit Plus (the “EEP”) is an optional death benefit that is available at the election of the Contract owner at an extra cost of 0.40% deducted from the contract value on the contract anniversary at the end of each contract year. This benefit is available (in approved states) if both the owner and annuitant are age 75 or younger at Contract issue. The EEP is only available under nonqualified annuities purchased through an exchange. The EEP states that, upon the earlier of the owner's or annuitant's death, after the first contract anniversary but before annuity payouts begin and while this Contract is in force, IDS Life will pay the designated beneficiary: (i) EEP Part I benefits, which equal the benefits payable under the EEB described above; plus (ii) EEP Part II benefits, which equal a percentage of exchanged Purchase Payments identified at issue and not previously surrendered ranging from 0% to 20%, depending on the contract year and the age of the owner and annuitant.
17. The RAVA Advantage Contract contains five annuity payout options: (i) Life annuity—no refund; (ii) life annuity with five, ten or 15 years certain; (iii) life annuity—installment refund; (iv) joint and last survivor life annuity—no refund; and (v) payouts for a specified period. IDS Life also may agree to other payout arrangements. Annuity payouts are available on a fixed or variable basis, or a combination of both.
18. A RAVA Advantage Contract owner can elect to have the variable subaccount portion of the contract value automatically rebalanced on either a quarterly, semi-annual or annual basis, based on the allocations chosen by the Contract owner. There is no additional cost for asset rebalancing.
19. Under RAVA Advantage, IDS Life assesses a CDSC against partial or full surrenders in excess of the Free Withdrawal Amount. IDS Life applies a CDSC on each Purchase Payment. The length of time from receipt of a Purchase Payment to the time of surrender determines the percentage of CDSC. Under the seven-year CDSC period, the CDSC ranges from 7% in year 1 to 0% in year 8 and after. Under the ten-year CDSC period, the CDSC ranges from 8% in year 1 to 0% in year 11 and after. The RAVA Advantage Contract provides for a waiver of the CDSC if the owner or annuitant is confined to a nursing home, and has been for the prior 90 days, and confinement began after the contract date. Additionally, IDS Life does not assess a CDSC on contract earnings; Free Withdrawal Amounts; required minimum distributions (for those amounts required to be distributed from the RAVA Advantage Contract); amounts refunded during the free look period; death benefits; or if payments are made under any annuity payout option.
20. During the life of the RAVA Advantage Contract, IDS Life deducts an M&E charge at an annual rate of 0.95% of the average daily subaccount value for nonqualified annuity Contracts and 0.75% of the average daily subaccount value for qualified annuity Contracts. IDS Life deducts a charge for administrative expenses annually from the contract value of each RAVA Advantage Contract. The annual contract administrative charge is $30 per contract year. IDS Life waives this charge when the contract value, or total Purchase Payments made less any Purchase Payments surrendered, is $50,000 or more on the current contract anniversary.
21. IDS Life deducts premium taxes of up to 3.5%, if applicable. Currently, IDS Life deducts any applicable premium tax when annuity payouts begin. However, IDS Life reserves the right to deduct this tax at other times such as when the Contract is surrendered.
22. Assets invested in the Investment Funds are charged with the annual operating expenses of those Funds.
23. VRA and CRA are registered together under the 1933 Act (File No. 2-73114). IDS Life no longer offers VRA Contracts. IDS Life offers CRA contracts only for limited purposes. VRA and CRA both were issued as nonqualified annuities for after-tax contributions only, or as qualified annuities under the following retirement plans: (i) IRAs; (ii) SEP plans; (iii) Section 401(k) plans; (iv) custodial and trusteed plans; (v) TSAs, or (vi) Section 457 plans. VRA was purchased with a single Purchase Payment between $5,000 and $500,000. No additional Purchase Payments are allowed for VRA. CRA may be purchased (i) with a minimum initial Purchase Payment of $600; or (ii) in minimum installments of $50 per month or $23.08 biweekly under a scheduled payment plan. An owner may make additional Purchase Payments to CRA, which require a $50 minimum (unless Purchase Payments are made by installments under a scheduled payment plan), subsequent to the initial Purchase Payment. Maximum limitations on Purchase Payments are imposed for the first year and subsequent years, depending on
24. Owners of VRA and CRA Contracts may allocate their Purchase Payments among 14 Old Accounts that invest in 14 corresponding Investment Funds (all of which currently are available under RAVA Advantage). IDS Life, at a later date, may determine to create additional Accounts to invest in any additional Investment Funds as may now or in the future be available. CRA also offers a fixed account investment option with a guaranteed interest rate of 3.5% to 4% on an annual basis depending on when the CRA Contract was issued. VRA does not have a fixed account investment option.
25. Owners of VRA and CRA Contracts may transfer contract values among the Old Accounts without charge. Transfers to and from CRA's fixed account are permitted, subject to certain restrictions described in the prospectus for the CRA Contracts.
26. The owner of a VRA or CRA Contract can access contract values at any time before annuity payouts begin by means of partial surrenders or a full surrender. In addition, VRA permits the owner a Free Withdrawal Amount of up to 10% of the initial Purchase Payment amount each year after the first without incurring a CDSC. CRA Select offers an annual Free Withdrawal Amount of 10% of the contract value at the beginning of each contract year. There are no other Free Withdrawal Amounts under CRA.
27. VRA and CRA Contracts death benefit provisions state that, upon the earlier of the owner's or annuitant's death before annuity payouts begin and while the Contract is in force, IDS Life will pay the following death benefits to the designated beneficiary: (i) if death occurs before the annuitant's 75th birthday, the beneficiary receives the greater of (a) the contract value; or (b) Purchase Payments, minus any surrenders, or (ii) if death occurs on or after the annuitant's 75th birthday, the beneficiary receives the contract value.
28. The VRA and CRA Contracts contain the same annuity payout options as the RAVA Advantage Contract. Annuity payouts are available on a fixed or variable basis, or a combination of both.
29. Under VRA, IDS Life assesses a CDSC against partial or full surrenders in excess of the Free Withdrawal Amount. The CDSC applies to surrenders in the first seven contract years. IDS Life assesses a CDSC as a percentage of the amount surrendered. The CDSC ranges from 7% in the first contract year to 0% after 7 contract years. Under CRA, IDS Life assesses a CDSC against partial or full surrenders (in excess of the Free Withdrawal Amount for CRA Select). The CDSC is a percentage of the amount surrendered. Three separate CDSC periods apply to three different versions of CRA. For the original CRA, which is no longer sold, the CDSC applies to surrenders in the first eleven contract years and ranges from 7% in the first contract year to 0% after 11 contract years. For CRA Select, which currently is sold to fund the University of Wisconsin TSA Plan, the CDSC applies to surrenders in the first eight contract years and ranges from 7% in the first contract year to 0% after 8 contract years. For the CRA version that currently is sold for conversions from American Express Retirement Services or other IDS Life retirement annuities under which conversion is available, the CDSC applies to surrenders in the first seven contract years and ranges from 6% in the first contract year to 0% after 7 contract years. Under all VRA and CRA Contracts, the CDSC is further limited so that it will never exceed 8.5% of aggregate Purchase Payments made to the Contract. IDS Life does not assess a CDSC on Free Withdrawal Amounts under any VRA or CRA Select Contract; required minimum distributions (for those amounts required to be distributed from the VRA or CRA Contract); amounts refunded during the free look period; death benefits; or if payments are made under any annuity payout option.
30. During the life of each VRA and CRA Contract, IDS Life deducts an M&E charge at an annual rate of 1% of the average daily variable account value. IDS Life deducts a charge for administrative expenses annually from the contract value of each VRA and CRA Contract. The annual contract administrative charge is $20 per contract year for VRA and $30 per contract year for CRA.
31. IDS Life deducts premium taxes of up to 3.5%, if applicable. However, IDS Life reserves the right to deduct this tax at other times such as when Purchase Payments are made or when the Contract is surrendered.
32. Assets invested in the Investment Funds are charged with the annual operating expenses of those Funds.
33. Flex is registered under the 1933 Act (File No. 33-4173). IDS Life no longer offers Flex Contracts. Flex was issued as a nonqualified annuity for after-tax contributions only, or as a qualified annuity under the following retirement plans: (i) IRAs; (ii) SEP plans; (iii) Section 401(k) plans; (iv) custodial and trusteed plans; (v) TSAs; or (vi) Section 457 plans. Flex was purchased (i) with a minimum initial Purchase Payment of $1,000 for qualified annuities or $2,000 for nonqualified annuities; or (ii) in minimum installments of $50 per month or $23.08 biweekly under a scheduled payment plan. An owner may make additional Purchase Payments, which require a $50 minimum (unless Purchase Payments are made by installments under a scheduled payment plan), subsequent to the initial Purchase Payment. Maximum limitations on Purchase Payments are imposed for the first year, depending on the age of the owner or annuitant, and for each subsequent year.
34. Owners of Flex Contracts may allocate their Purchase Payments among the 14 Old Accounts that invest in 14 corresponding Investment Funds (all of which currently are available under RAVA Advantage). IDS Life, at a later date, may determine to create additional Accounts to invest in any additional Investment Funds as may now or in the future be available. Flex also offers a fixed account investment option with guaranteed interest rates ranging from 3% to 4% on an annual basis, depending on when the Flex Contract was issued.
35. Owners of Flex Contracts may transfer contract values among the Old Accounts without charge. Transfers to and from the fixed account are permitted, subject to certain restrictions described in the prospectus for the Flex Contracts.
36. The owner of a Flex Contract can access contract values at any time before annuity payouts begin by means of partial surrenders or a full surrender. In addition, Flex permits the owner a Free Withdrawal Amount of contract earnings without incurring a CDSC.
37. The Flex Contract death benefit provision states that, upon the earlier of the owner's or annuitant's death before annuity payouts begin and while the Contract is in force, IDS Life will pay the following death benefits to the designated beneficiary: (i) if death occurs before the annuitant's 75th birthday, the beneficiary receives the greatest of (a) the contract value; or (b) the contract value as of the most recent sixth contract anniversary, minus any surrenders since that anniversary; or (c) Purchase Payments, minus any surrenders; or (ii) if death occurs on or after the annuitant's 75th birthday, the beneficiary receives the greater of (a) the contract value; or (b) the contract value as of the most recent sixth contract anniversary, minus any surrenders since that anniversary.
38. Flex contains the same five annuity payout options as the RAVA Advantage Contract. Annuity payouts are available on a fixed or variable basis, or a combination of both.
39. Under Flex, IDS Life assesses a CDSC against partial or full surrenders in excess of the Free Withdrawal Amount. IDS Life applies a CDSC of 7% on each Purchase Payment. IDS Life deducts this CDSC if the Contract owner requests a surrender within six years of making that Purchase Payment. The Flex Contract provides for a waiver of the CDSC for amounts surrendered after the later of the annuitant's attaining age 65 or the tenth contract anniversary. Additionally, IDS Life does not assess a CDSC on contract earnings; required minimum distributions (for those amounts required to be distributed from the Flex Contract); death benefits; or if payments are made under any annuity payout option.
40. During the life of the Flex Contract, IDS Life deducts an M&E charge at an annual rate of 1% of the average daily variable account value. IDS Life deducts a charge for administrative expenses at the end of each contract quarter from the contract value of the Flex Contract. The quarterly contract administrative charge is $6 (which equals an annual charge of $24 per contract year).
41. IDS Life deducts premium taxes of up to 3.5%, if applicable. Currently, IDS Life deducts any applicable premium tax when annuity payouts begin. However, IDS Life reserves the right to deduct this tax at other times such as when Purchase Payments are made or when the Contract is surrendered.
42. Assets invested in the Investment Funds are charged with the annual operating expenses of those Funds.
43. EBA is registered under the 1933 Act (File No. 33-52518). IDS Life no longer offers EBA Contracts. EBA was issued only as a group TSA. EBA was purchased (i) with a minimum initial Purchase Payment of $1,000; or (ii) in minimum installments of $25 per month or $300 annually under a scheduled payment plan. An owner may make additional Purchase Payments, which require a $50 minimum (unless Purchase Payments are made by installments under a scheduled payment plan), subsequent to the initial Purchase Payment. Maximum limitations on Purchase Payments are imposed for the first year, depending on the age of the Contract owner, and for each subsequent year.
44. Owners of EBA Contracts may allocate their Purchase Payments among the 14 Old Accounts that invest in 14 corresponding Investment Funds (all of which currently are available under RAVA Advantage). IDS Life, at a later date, may determine to create additional Accounts to invest in any additional Investment Funds as may now or in the future be available. EBA also offers a fixed account investment option with a guaranteed interest rate of 4% on an annual basis.
45. Owners of EBA Contracts may transfer contract values among the Old Accounts without charge. Transfers to and from the fixed account are permitted, subject to certain restrictions described in the prospectus for the EBA Contracts.
46. Subject to certain restrictions imposed by the Internal Revenue Code, the owner of an EBA Contract can access certificate values at any time before annuity payouts begin by means of partial surrenders or a full surrender.
47. The EBA Contract death benefit provision states that, upon the owner/annuitant's death before annuity payouts begin and while the Contract is in force, IDS Life will pay the following death benefits to the designated beneficiary: (i) if death occurs before the annuitant's 75th birthday, the beneficiary receives the greatest of (a) the certificate value; or (b) Purchase Payments, minus any surrenders; or (ii) if death occurs on or after the annuitant's 75th birthday, the beneficiary receives the certificate value.
48. EBA contains the same five annuity payout options as the RAVA Advantage Contract. Annuity payouts are available on a fixed or variable basis, or a combination of both.
49. Under EBA, IDS Life assess a CDSC against partial or full surrenders. The CDSC applies to surrenders in the first eleven certificate years. IDS Life assesses a CDSC as a percentage of the amount surrendered. The CDSC ranges from 8% in the first certificate year to 0% after 11 certificate years. The CDSC is further limited so that it will never exceed 8.5% of aggregate Purchase Payments made to the Contract. The EBA Contract provides for a waiver of the CDSC for amounts surrendered due to the owner's retirement under the TSA plan on or after age 55. Additionally, IDS Life does not assess a CDSC on required minimum distributions (for those amounts required to be distributed from the EBA Contract); amounts refunded during the free look period; death benefits; or if payments are made under any annuity payout option.
50. During the life of the EBA Contract, IDS Life deducts an M&E charge at an annual rate of 1% of the average daily variable account value. IDS Life deducts a charge for administrative expenses at the end of each certificate year from the certificate value of the EBA Contract. The annual administrative charge is $30 per certificate year.
51. IDS Life deducts premium taxes of up to 3.5%, if applicable. Currently, IDS Life deducts any applicable premium tax when annuity payouts begin. However, IDS Life reserves the right to deduct this tax at other times such as when Purchase Payments are made or when the Contract is surrendered.
52. Assets invested in the Investment Funds are charged with the annual operating expenses of those Funds.
53. Applicants represent that the features and benefits of RAVA Advantage will be no less favorable than under the Old Contracts, with some exceptions for differences in the guaranteed interest rate under the fixed account investment option, lower annuity settlement rates and lower initial death benefits. Applicants also represent that, with some exceptions for the CDSC, the charge for administrative expenses and optional charges for optional death benefits, the fees and charges of the RAVA Advantage Contract will be no higher than those of the Old Contracts.
54. Applicants propose to offer eligible owners of Old Contracts the opportunity to exchange their Old Contracts for RAVA Advantage by means of the Exchange Offer. Partial exchanges will not be permitted.
55. Initially, to be eligible for the Exchange Offer, an Old Contract owner must meet all of the following criteria: (i) Have completed ten or more contract or certificate years under the Old Contract; (ii) have not made Purchase Payments greater than $2,000 in any tax year under the Old Contract in the 36 months prior to accepting the Exchange Offer (except for installment payments made under a scheduled payment plan); (iii) have a contract or certificate value (“Exchange Value”) (plus any additional transfers or rollovers) that is at least equal to $100,000; (iv) have a remaining CDSC of 2% or less of the contract or certificate value of the Old Contract; and (v) own a qualified annuity Contract. IDS Life reserves the right to extend the Exchange Offer to owners of Contracts who have completed less than ten contract or certificate years under the Old Contract, to owners of nonqualified annuity Contracts and to owners of Old Contracts with Exchange Values of less than $100,000.
56. Due to market volatility, the Exchange Value (plus any additional transfers or rollovers for qualified
57. Under RAVA Advantage, if the initial Purchase Payment is at least $100,000, IDS Life will allocate a Purchase Payment Credit equal to 1% of the initial purchase payment and 1% of each subsequent Purchase Payment received. Due to market volatility, the Exchange Value (plus any Additional Amounts) may drop below this $100,000 initial Purchase Payment amount. To increase the likelihood of remaining eligible to receive the 1% Purchase Payment Credit, the Old Contract owner could transfer that contract or certificate value allocated to the Old Accounts to the Old Account investing in the AXP VP Cash Management Fund while the exchange is pending to help reduce the risk of market volatility. The Old Contract owner then would be eligible for the Purchase Payment Credit of 1% of each Purchase Payment received based on an initial Purchase Payment of $100,000. IDS Life also would allocate a Purchase Payment Credit of 1% of each Purchase Payment received if the owner elects the ten-year CDSC period.
58. If, due to market volatility, the initial Purchase Payment into RAVA Advantage drops below $100,000, IDS Life will provide, from its general account assets, a 1% Exchange Credit based on the Purchase Payment applied to RAVA Advantage on that day the exchange is effected (“Exchange Date”). This 1% Exchange Credit will not apply to subsequent Purchase Payments into RAVA Advantage. IDS would still allocate a Purchase Payment Credit of 1% of each Purchase Payment received if the owner elects the ten-year CDSC period.
59. IDS Life also reserves the right to extend the Exchange Offer to owners of Old Contracts with Exchange Values of less than $100,000. IDS Life will provide, from its general account assets, a 1% Exchange Credit based on the Exchange Value of the Old Contract. This 1% Exchange Credit will not apply to subsequent Purchase Payments into RAVA Advantage. IDS Life would still allocate a Purchase Payment Credit of 1% of each Purchase Payment received if the owner elects the ten-year CDSC period.
60. Upon the owner's acceptance of the Exchange Offer, IDS Life will issue a RAVA Advantage Contract with all applicable Purchase Payment Credits and Exchange Credits. No CDSC will be deducted upon the surrender of an Old Contract in connection with the exchange. The Exchange Value of each Old Contract, together with any applicable Additional Amounts, Purchase Payment Credits and Exchange Credits, will be applied to the new RAVA Advantage Contract as of the Exchange Date. The Exchange Date will be the contract date of the new RAVA Advantage Contract for purposes of determining contract years and anniversaries after the Exchange Date.
61. If the owner of the new RAVA Advantage Contract exercises the free-look option, IDS Life will recapture any Purchase Payment Credits and Exchange Credits. IDS Life will reverse either the RAVA Advantage contract value (less any Purchase payment Credits and Exchange Credits) or the Purchase Payment made to the RAVA Advantage Contract, depending on applicable law. IDS Life will apply this amount to restore the Old Contract to the extent possible. IDS Life will allocate this amount to the selected Old Contract investments in the proportions that existed just prior to the exchange. Any adjustments made due to investment experience will be allocated or deducted according to the selected investment percentage allocations under the Old Contract just prior to the exchange. Withdrawals made after the free look period under RAVA Advantage has expired will be governed by the terms of the RAVA Advantage Contract, including the application of the CDSC. To the extent a death benefit or surrender payment includes any Purchase Payment Credit and Exchange Credit amounts: (i) applied within twelve months preceding the date of death that results in a lump sum death benefit under RAVA Advantage; or (ii) applied within twelve months preceding a request for a CDSC waiver due to nursing home confinement, IDS Life will recapture the Purchase Payment Credits and Exchange Credits.
62. IDS Life will notify all owners of the Old Contracts of the Exchange Offer through normal client communications such as updated prospectuses or prospectus supplements (“Program Announcement”). This Program Announcement: (i) Will describe the terms and conditions of the Exchange Offer; (ii) suggest to owners who may qualify that they contact their registered representatives to learn more about the Exchange Offer and to discuss their individual situations (including tax, financial planning and Contract considerations); and (iii) notify owners that IDS Life reserves the right to cancel the Exchange Offer at any time. In addition, IDS Life may send the information in the Program Announcement to some or all Old Contract owners via additional communications that also may include that owner's specific Contract information (such as Exchange Value and applicable CDSC).
63. IDS Life, either directly or through its registered representatives, will provide eligible Old Contract owners who are interested in learning more about the Exchange Offer with an Offering Communication that includes information outlined in the Program Announcement and additional information describing the Exchange Offer. The Offering Communication will state, in clear and plain English, that the Exchange Offer is not designed for a Contract owner who: (i) intends to hold the RAVA Advantage Contract as a short-term investment vehicle; or (ii) anticipates surrendering all or part (
64. In addition, the Offering Communication will explain how the owner of an Old Contract contemplating an exchange may avoid the applicable CDSC on the RAVA Advantage Contract by not surrendering more than the annual Free Withdrawal Amount and by holding any subsequent Purchase Payments until expiration of the CDSC period. In this regard, IDS Life will state, in clear and plain English, that if the owner surrenders the RAVA
65. Furthermore, IDS Life will state, in clear and plain English, that guaranteed annuity settlement rates generally are lower under RAVA Advantage. Therefore, if the Old Contract owner contemplates annuitizing the RAVA Advantage Contract during the first few years, the lower settlement factors may more than offset the lower M&E charges and any applicable Purchase Payment Credits and Exchange Credits.
66. IDS Life will explain that due to market volatility, the Exchange Value (plus any Additional Amounts) may drop below $100,000 between the time the internal exchange form and application are completed and mailed and the time they are received by IDS Life. An Old Contract owner could transfer that contract or certificate value allocated to the Old Accounts to the Old Account investing in the AXP VP Cash Management Fund while the exchange is pending to help reduce the risk of market volatility and help preserve the $100,000 initial Purchase Payment into RAVA Advantage. In that case, the Old Contract owner would be eligible for the Purchase Payment Credit of 1% of each Purchase Payment received based on an initial Purchase Payment of $100,000. If, due to market volatility, the initial Purchase Payment into RAVA is less than $100,000, IDS Life will provide a 1% Exchange Credit based on the Purchase Payment applied to RAVA Advantage on the Exchange Date. Similarly, if IDS Life extends the Exchange Offer to owners of Old Contracts with Exchange Values of less than $100,000, IDS Life will explain in the Offering Communication that it will provide a 1% Exchange Credit based on the Exchange Value of the Old Contract. The 1% Exchange Credit will not apply to subsequent Purchase Payments. IDS Life will allocate a Purchase Payment Credit of 1% of each Purchase Payment received if the owner elects the ten-year CDSC period.
67. In addition, IDS Life will prominently disclose that the guaranteed interest rate on RAVA Advantage's fixed account investment option may be less than the guaranteed interest rate on the Old Contract's fixed account investment option. IDS Life also will disclose that the current death benefit on the Old Contract may be greater than the initial death benefit on RAVA Advantage. When applicable, IDS Life also will explain that owners of Old Contracts may lose some tax benefits. Finally, the Offering Communication will state that IDS Life may terminate the Exchange Offer at any time. The Offering Communication also will include a prospectus for the new RAVA Advantage Contract.
68. To accept the Exchange Offer, the owner of an Old Contract must complete an internal exchange form and application for the RAVA Advantage Contract. Applicants state that those Old Contract owners who accept the Exchange Offer will incur no current taxes and that the exchanges will constitute tax-free transfers, rollovers or exchanges pursuant to section 1035 of the Internal Revenue Code.
69. The Exchange Offer is meant to encourage existing Old Contract owners to remain with IDS Life rather than surrender their Contracts in exchange for a competitor's product. If the CDSC under RAVA Advantage did not apply to the Exchange Value, Applicants assert that IDS Life would have no assurance that an Old Contract owner who accepted the Exchange Offer would persist long enough for any applicable Purchase Payment Credits, Exchange Credits, payments to registered representatives and other relevant expenses to be recouped through standard fees from the ongoing operation of the RAVA Advantage Contract.
70. Applicants state that the commissions that IDS Life will pay its registered representatives for soliciting exchanges under the Exchange Offer are less than the normal commissions paid for soliciting sales of RAVA Advantage Contracts. Applicants assert that compensating IDS Life's registered representatives for these exchanges is necessary in order to provide sufficient incentive for them to compete with competitors' registered representatives.
71. IDS Life reserves the right to terminate the Exchange Offer at any time. If IDS Life terminates the Exchange Offer, it will send a notice to currently-eligible Old Contract owners (“Termination Notice”). The Termination Notice will state that Old Contract owners who wish to participate in the Exchange Offer must do so within two months from the date of the Termination Notice. The Termination Notice will contain all of the caveats described herein.
Applicants agree to the following conditions:
1. The Offering Communication and Termination Notice will contain concise, plain English statements that: (i) The Exchange Offer is suitable only for an Old Contract owner who expects to hold RAVA Advantage as a long-term investment; (ii) if the RAVA Advantage Contract is surrendered during the initial CDSC period or annuitized during the first few years, the lower M&E charges and any applicable Purchase Payment Credits and Exchange Credits may be more than offset by the CDSC or lower annuity settlement rates and an Old Contract owner may be worse off than if he or she had rejected the Exchange Offer; (iii) IDS Life will allocate an Exchange Credit of 1% on the initial Purchase Payment applied (but not on subsequent Purchase Payments received) if the initial Purchase Payment to the RAVA Advantage Contract is less than $100,000; (iv) the guaranteed interest rate on RAVA Advantage's fixed account option may be less than the guaranteed interest rate on the Old Contract's fixed account option; (v) the current death benefit on the Old Contract may be greater than the initial death benefit on RAVA Advantage; (vi) an Old Contract owner may lose some tax benefits (when applicable); and (vii) IDS Life reserves the right to terminate the Exchange Offer.
2. The Offering Communication will disclose in concise, plain English each aspect of the RAVA Advantage Contracts that could be less favorable than the Old Contracts.
3. IDS Life, either directly or through its registered representatives, will send an Offering Communication to eligible Old Contract owners who are interested in learning more about the Exchange Offer. An Old Contract owner choosing to exchange will then complete and sign an internal exchange form and RAVA Advantage application and return it to IDS Life. This internal exchange form will prominently restate in concise, plain English the caveats described above in Condition (1). If the internal exchange form is more than two pages long, IDS Life will use a separate document to obtain Contract owner acknowledgment of the caveats described in Condition (1).
4. IDS Life will maintain the following separately identifiable records in an easily accessible place for the time periods specified below in this Condition (4) for review by the Commission upon request: (i) Records showing the level of exchange activity and how it relates to the total number of Old Contract owners eligible to exchange (quarterly as a percentage of the number eligible); (ii) copies of any form of Program Announcements, Offering Communications, Termination
1. Section 11(a) of the Act makes it unlawful for any registered open-end company, or any principal underwriter for such a company, to make or cause to be made an offer to the holder of a security of such company, or of any other open-end investment company, to exchange his or her security for a security in the same or another such company on any basis other than the relative net asset values of the respective securities, unless the terms of the offer have first been submitted to and approved by the Commission or are in accordance with Commission rules adopted under Section 11.
2. Section 11(c) of the Act, in pertinent part, requires, in effect, that any offer of exchange of the securities of a registered unit investment trust for the securities of any other investment company be approved by the Commission or satisfy applicable rules adopted under Section 11, regardless of the basis of the exchange.
3. The purpose of section 11 of the Act is to prevent “switching,” the practice of inducing security holders of one investment company to exchange their securities for those of a different investment company solely for the purpose of exacting additional selling charges. That type of practice was found by Congress to be widespread in the 1930s prior to the adoption of the Act.
4. Section 11(c) of the Act requires Commission approval (by order or by rule) of any exchange, regardless of its basis, involving securities issued by a unit investment trust, because investors in unit investment trusts were found by Congress to be particularly vulnerable to switching operations.
5. Applicants assert that the potential for harm to investors perceived in switching was its use to extract additional sales charges from those investors. Applicants further assert that the terms of the proposed Exchange Offer do not present the abuses against which Section 11 was intended to protect. The Exchange Offer was designed to allow IDS Life to compete on a level playing field with its competitors who are making bonus offers to its current Old Contract owners. No additional sales load or other fee will be imposed at the time of exercise of the Exchange Offer.
6. Rule 11a-2, by its express terms, provides Commission approval of certain types of offers of exchange of one variable annuity contract for another. Applicants assert that other than the relative net asset value requirement (which is not satisfied because exchanging Old Contract owners could potentially be given Purchase Payment Credits and Exchange Credits), the only part of Rule 11a-2 that would not be satisfied by the proposed Exchange Offer is the requirement that payments under the Old Contract be treated as if they had been made under the new RAVA Advantage Contract on the dates actually made. This provision of Rule 11a-2 is often referred to as a “tacking” requirement because it has the effect of “tacking together” the CDSC expiration periods of the exchanged and acquired contracts.
7. Applicants assert that the absence of tacking does not mean that an exchange offer cannot be attractive and beneficial to investors. Applicants state that the proposed Exchange Offer would assure an immediate and enduring economic benefit to investors for the following reasons: (i) RAVA Advantage has a lower M&E charge than the Old Contracts; (ii) RAVA Advantage Contract owners receive applicable Purchase Payment Credits and Exchange Credits; (iii) RAVA Advantage has more Investment Funds, giving RAVA Advantage owners the opportunity for greater diversification and asset allocation; and (iv) RAVA Advantage offers optional Enhanced Death Benefits, for an additional cost, that may provide substantive value to beneficiaries. Applicants assert that an owner who expects to hold RAVA Advantage as a long-term investment will receive the economic benefits of the Exchange Offer. No sales charge will ever be paid on the amounts exchanged unless the RAVA Advantage Contract is surrendered before expiration of the CDSC period that owner has chosen.
8. Applicants assert that tacking should be viewed as a useful way to avoid the need to scrutinize the terms of an offer of exchange to make sure that there is no abuse. Tacking is not a requirement of Section 11. Rather, it is a creation of a rule designed to approve the terms of offers of exchange “sight unseen.” Tacking focuses on the closest thing to multiple deduction of sales loads that is possible in a CDSC context—multiple exposure to sales loads upon surrender or redemption. If tacking and other safeguards of Rule 11a-2 are present, there is no need for the Commission or its staff to evaluate the terms of the offer. The absence of tacking in this fully scrutinized Section 11 application will have no impact on offers made pursuant to the rule on a “sight unseen” basis.
9. Applicants assert that the terms of the Exchange Offer are better than those of IDS Life's competitors. Unlike the Exchange Offer, when Old Contract owners exchange into competitors' contracts, they must pay any remaining CDSC on the Old Contracts at the time of the exchange. No tacking is required when IDS Life's competitors offer their variable annuity contracts to owners of Old Contracts or when IDS Life makes such an offer to competitors' contract owners.
10. To the extent there are differences in the Contracts, those differences relate to enhanced contractual features and charges that are fully described in the
Applicants submit, for the reasons stated herein, that the Exchange Offer is consistent with the protections provided by Section 11 of the Act, and that approval of the Exchange Offer is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policies and provisions of the Act. Applicants submit that the requested order approving the terms of the proposed Exchange Offer therefore should be granted.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Securities and Exchange Commission (“SEC” or the “Commission”).
Notice of Application for Exemption under Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), for an exemption from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15), thereunder.
DFA Investment Dimensions Group Inc. (the “Fund”) and Dimensional Fund Advisors, Inc. (“DFA”) (the Fund together with DFA, are the “Applicants”).
Applicants and certain life insurance companies and their separate accounts that currently invest or may hereafter invest in the Fund (and, to the extent necessary, any investment adviser, principal underwriter and depositor of such an account) seek exemptive relief from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund and shares of any other investment company or portfolio that is designed to fund insurance products and for which DFA or any of its affiliates may serve in the future as investment adviser, manager, principal underwriter, sponsor, or administrator (“Future Funds”) (the Fund, together with Future Funds, are the “Funds”) to be sold to and held by: (i) separate accounts funding variable annuity and variable life insurance contracts (collectively referred to herein as “Variable Contracts”) issued by both affiliated and unaffiliated life insurance companies; (ii) qualified pension and retirement plans (“Qualified Plans”) outside of the separate account context; (iii) separate accounts that are not registered as investment companies under the 1940 Act pursuant to exemptions from registration under Section 3(c) of the 1940 Act; (iv) DFA or certain related corporations (collectively “DFA”); and (v) any other person permitted to hold shares of the Funds pursuant to Treasury Regulation 1.817-5 (“General Accounts”), including the general account of any life insurance company whose separate account holds, or will hold, shares of the Funds or certain related corporations.
The application was filed on January 18, 2002.
An order granting the Application will be issued unless the SEC orders a hearing. Interested persons may request a hearing by writing to the SEC's Secretary and serving Applicants with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on March 8, 2002, and should be accompanied by proof of service on Applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Secretary of the SEC.
Secretary, SEC, 450 5th Street, NW., Washington, DC, 20549-0609. Applicants, c/o Stradley, Ronon, Stevens & Young, LLP, 2600 One Commerce Square, Philadelphia, PA 19103-7098, Attention: Mark A. Sheehan, Esq.
Patrick Scott, Attorney, or Lorna MacLeod, Branch Chief, Office of Insurance Products, Division of Investment Management, at (202) 942-0670.
The following is a summary of the Application. The complete Application is available for a fee from the SEC's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 20549-0102 ((202) 942-8090).
1. The Fund is registered with the Commission as an open-end management investment company and is organized as a Maryland corporation. DFA is registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended, and serves as the investment adviser to the Fund. The Fund currently consists of thirty-eight investment portfolios, including six investment portfolios that are sold only to separate accounts of insurance companies in conjunction with variable life and variable annuity contracts: VA Small Value Portfolio, VA Large Value Portfolio, VA International Value Portfolio, VA International Small Portfolio, VA Short-Term Fixed Portfolio and VA Global Bond Portfolio (each, a “Portfolio,” and collectively, the “Portfolios”). The Fund or any Future Funds may offer one or more
2. Shares of the Portfolios will be offered to separate accounts of affiliated and unaffiliated insurance companies (each, a “Participating Insurance Company”) to serve as investment vehicles to fund Variable Contracts. These separate accounts either will be registered as investment companies under the 1940 Act or will be exempt from such registration pursuant to exemptions from registration under Section 3(c) of the 1940 Act (individually, a “Separate Account” and collectively, the “Separate Accounts”). Shares of the Portfolios may also be offered to Qualified Plans, DFA or certain related corporations (collectively “DFA”), and any other person permitted to hold shares of the Funds pursuant to Treasury Regulation 1.817-5 (“General Accounts”), including the general account of any life insurance company whose separate account holds, or will hold, shares of the Funds or certain related corporations.
3. The Participating Insurance Companies at the time of their investment in the Funds either have or will establish their own Separate Accounts and design their own Variable Contracts. Each Participating Insurance Company has or will have the legal obligation of satisfying all applicable requirements under both state and federal law. Each Participating Insurance Company, on behalf of its Separate Accounts, has or will enter into an agreement with the Funds concerning such Participating Insurance Company's participation in the Portfolios. The role of the Funds under this agreement, insofar as the federal securities laws are applicable, will consist of, among other things, offering shares of the Portfolios to the participating Separate Accounts and complying with any conditions that the Commission may impose upon granting the order requested herein.
4. On November 29, 1994, the Commission issued an order granting exemptive relief to permit shares of the Funds to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (Investment Company Act Release No. 20743, File No. 812-9154) (the “Original Order”). The Original Order allows the Fund to offer its shares to insurance companies as the investment vehicle for their separate accounts supporting Variable Contracts. The Original Order does not include the Future Funds as parties, nor expressly address the sale of shares of the Funds or any Future Funds to Qualified Plans, unregistered separate accounts, DFA or General Accounts. Applicants propose that the Future Funds be added as parties to the Original Order and the Funds and any Future Funds be permitted to offer and sell their shares to Qualified Plans, unregistered separate accounts, DFA and the General Accounts.
1. Applicants and certain life insurance companies and their Separate Accounts that currently invest or may hereafter invest in the Fund (and, to the extent necessary, any investment adviser, principal underwriter and depositor of such an account) seek exemptive relief from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Portfolios and shares of any Future Funds to be sold to and held by: (i) separate accounts funding Variable Contracts issued by both affiliated and unaffiliated life insurance companies; (ii) Qualified Plans outside of the separate account context; (iii) separate accounts that are not registered as investment companies under the 1940 Act pursuant to exemptions from registration under Section 3(c) of the 1940 Act; (iv) DFA or certain related corporations (collectively “DFA”); and (v) any General Accounts, including the general account of any life insurance company whose separate account holds, or will hold, shares of the Funds or certain related corporations.
2. In connection with the funding of scheduled premium variable life insurance contracts issued through a separate account registered as a unit investment trust (“UIT”) under the 1940 Act, Rule 6e-2(b)(15) provides partial exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act. The relief provided by Rule 6e-2 is also granted to the investment adviser, principal underwriter, and depositor of the separate account. Section 9(a)(2) of the 1940 Act makes it unlawful for any company to serve as an investment adviser or principal underwriter of any UIT, if an affiliated person of that company is subject to a disqualification enumerated in Sections 9(a)(1) or (2) of the 1940 Act. Sections 13(a), 15(a) and 15(b) of the 1940 Act have been deemed by the Commission to require “pass-through” voting with respect to an underlying investment company's shares. Rule 6e-2(b)(15) provides these exemptions apply only where all of the assets of the UIT are shares of management investment companies “which offer their shares exclusively to variable life insurance separate accounts of the life insurer or of any affiliated life insurance company.” Therefore, the relief granted by Rule 6e-2(b)(15) is not available with respect to a scheduled premium life insurance separate account that owns shares of an underlying fund that also offers its shares to a variable annuity separate account or flexible premium variable life insurance separate account of the same company or any other affiliated insurance company. The use of a common management investment company as the underlying investment vehicle for both variable annuity and variable life insurance separate accounts of the same life insurance company or of any affiliated life insurance company is referred to herein as “mixed funding.”
3. The relief granted by Rule 6e-2(b)(15) also is not available with respect to a scheduled premium variable life insurance separate account that owns shares of an underlying fund that also offers its shares to separate accounts funding Variable Contracts of one or more unaffiliated life insurance companies. The use of a common management investment company as the underlying investment vehicle for variable annuity and/or variable life insurance separate accounts of unaffiliated life insurance companies is referred to herein as “shared funding.”
4. The relief under Rule 6e-2(b)(15) is available only where shares are offered exclusively to variable life insurance separate accounts of a life insurer or any affiliated life insurance company, additional exemptive relief is necessary if the shares of the Portfolios are also to be sold to Qualified Plans or other eligible holders of shares, as described above. Applicants note that if shares of the Portfolios are sold only to Qualified Plans, exemptive relief under Rule 6e-2 would not be necessary. The relief provided for under this section does not relate to Qualified Plans or to a registered investment company's ability to sell its shares to Qualified Plans. The use of a common management investment company as the underlying investment vehicle for variable annuity and variable life separate accounts of affiliated and unaffiliated insurance companies, and for Qualified Plans, is referred to herein as “extended mixed and shared funding.”
5. In connection with flexible premium variable life insurance contracts issued through a separate account registered under the 1940 Act as a UIT, Rule 6e-3(T)(b)(15) provides partial exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act. The exemptions granted by Rule 6e-
6. The relief under Rule 6e-3(T) is available only where shares are offered exclusively to variable life insurance separate accounts of a life insurer or any affiliated life insurance company, and additional exemptive relief is necessary if the shares of the Portfolios are also to be sold to Qualified Plans or other eligible holders of shares as described above. Applicants note that if shares of the Portfolios were sold only to Qualified Plans, exemptive relief under Rule 6e-3(T)(b)(15) would not be necessary. The relief provided for under this section does not relate to Qualified Plans or to a registered investment company's ability to sell its shares to Qualified Plans.
7. Applicants maintain, as discussed below, that there is no policy reason for the sale of the Portfolios' shares to Qualified Plans, to DFA, or General Accounts to result in a prohibition against, or otherwise limit, a Participating Insurance Company from relying on the relief provided by Rules 6e-2(b)(15) and 6e-3(T)(b)(15). However, because the relief under Rules 6e-2(b)(15) and 6e-3(T)(b)(15) is available only when shares are offered exclusively to separate accounts, additional exemptive relief may be necessary if the shares of the Portfolios are also to be sold to Qualified Plans, DFA or General Accounts. Applicants therefore request relief in order to have the participating insurance companies enjoy the benefits of the relief granted in Rules 6e-2(b)(15) and 6e-3(T)(b)(15). Applicants note that if the Portfolios' shares were to be sold only to Qualified Plans, DFA, General Accounts and/or separate accounts funding variable annuity contracts, exemptive relief under Rule 6e-2 and Rule 6e-3(T) would be unnecessary. The relief provided for under Rules 6e-2(b)(15) and 6e-3(T)(b)(15) does not relate to Qualified Plans, DFA, or General Accounts, or to a registered investment company's ability to sell its shares to such purchasers.
8. Applicants also note that the promulgation of Rules 6e-2(b)(15) and 6e-3(T)(b)(15) preceded the issuance of the regulations issued by the Treasury Department (“Regulations”) that made it possible for shares of an investment company portfolio to be held by the trustee of a Qualified Plan without adversely affecting the ability of shares in the same investment company portfolio also to be held by the separate accounts of insurance companies in connection with their Variable Contracts. Thus, the sale of shares of the same portfolio to both separate accounts and Qualified Plans was not contemplated at the time of the adoption of Rules 6e-2(b)(15) and 6e-3(T)(b)(15).
9. Consistent with the Commission's authority under Section 6(c) of the 1940 Act to grant exemptive orders to a class or classes of persons and transactions, this Application requests relief for the class consisting of insurers and Separate Accounts that will invest in the Portfolios, and to the extent necessary, Qualified Plans, other eligible holders of shares and investment advisers, principal underwriters and depositors of such accounts.
10. Section 9(a)(3) of the 1940 Act provides that it is unlawful for any company to serve as investment adviser or principal underwriter of any registered open-end investment company if an affiliated person of that company is subject to a disqualification enumerated in Sections 9(a)(1) or (2). Rules 6e-2(b)(15)(i) and (ii) and Rules 6e-3(T)(b)(15)(i) and (ii) under the 1940 Act provide exemptions from Section 9(a) under certain circumstances, subject to the limitations discussed above on mixed and shared funding. These exemptions limit the application of the eligibility restrictions to affiliated individuals or companies that directly participate in management of the underlying management company.
11. The partial relief granted in Rules 6e-2(b)(15) and 6e-3(T)(b)(15) under the 1940 Act from the requirements of Section 9 of the 1940 Act, in effect, limits the amount of monitoring necessary to ensure compliance with Section 9 to that which is appropriate in light of the policy and purposes of Section 9. Those 1940 Act rules recognize that it is not necessary for the protection of investors or the purposes fairly intended by the policy and provisions of the 1940 Act to apply the provisions of Section 9(a) to individuals in a large insurance company complex, most of whom will have no involvement in matters pertaining to investment companies in that organization. The Participating Insurance Companies and Qualified Plans are not expected to play any role in the management of the Funds. Those individuals who participate in the management of the Funds will remain the same regardless of which Separate Accounts or Qualified Plans invests in the Funds. Applying the monitoring requirements of Section 9(a) of the 1940 Act because of investment by separate accounts of other insurers or Qualified Plans would be unjustified and would not serve any regulatory purpose. Furthermore, the increased monitoring costs could reduce the net rates of return realized by contract owners.
12. Moreover, since the Qualified Plans, DFA and General Accounts are not themselves investment companies, and therefore are not subject to Section 9 of the 1940 Act and will not be deemed affiliates solely by virtue of their shareholdings, no additional relief is necessary.
13. Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii) under the 1940 Act provide exemptions from the pass-through voting requirement with respect to several significant matters, assuming the limitations on mixed and shared funding are observed. Rules 6e-2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A) provide that the insurance company may disregard the voting instructions of its contract owners with respect to the investments of an underlying fund, or any contract between such a fund and its investment adviser, when required to do so by an insurance regulatory authority (subject to the provisions of paragraphs (b)(5)(i) and (b)(7)(ii)(A) of Rules 6e-2 and 6e-3(T), respectively, under the 1940 Act). Rules 6e-2(b)(15)(iii)(B) and 6e-3 (T)(b)(15)(iii)(A)(
14. Rule 6e-2 under the 1940 Act recognizes that a variable life insurance contract, as an insurance contract, has important elements unique to insurance contracts and is subject to extensive
15. Applicants state that the sale of Portfolio shares to Qualified Plans, DFA and General Accounts will not have any impact on the relief requested herein. With respect to the Qualified Plans, which are not registered as investment companies under the 1940 Act, there is no requirement to pass through voting rights to Qualified Plan participants. Indeed, to the contrary, applicable law expressly reserves voting rights associated with Qualified Plan assets to certain specified persons. Under Section 403(a) of the Employee Retirement Income Security Act, as amended (“ERISA”), shares of a portfolio of a fund sold to a Qualified Plan must be held by the trustees of the Qualified Plan. Section 403(a) also provides that the trustee(s) must have exclusive authority and discretion to manage and control the Qualified Plan with two exceptions: (i) when the Qualified Plan expressly provides that the trustee(s) are subject to the direction of a named fiduciary who is not a trustee, in which case the trustees are subject to proper directions made in accordance with the terms of the Qualified Plan and not contrary to ERISA, and (ii) when the authority to manage, acquire, or dispose of assets of the Qualified Plan is delegated to one or more investment managers pursuant to Section 402(c)(3) of ERISA. Unless one of the above two exceptions stated in Section 403(a) applies, Qualified Plan trustees have the exclusive authority and responsibility for voting proxies.
16. Where a named fiduciary to a Qualified Plan appoints an investment manager, the investment manager has the responsibility to vote the shares held unless the right to vote such shares is reserved to the trustees or the named fiduciary. The Qualified Plans may have their trustee(s) or other fiduciaries exercise voting rights attributable to investment securities held by the Qualified Plans in their discretion. Some of the Qualified Plans, however, may provide for the trustee(s), an investment adviser (or advisers), or another named fiduciary to exercise voting rights in accordance with instructions from participants. Similarly, DFA and General Accounts are not subject to any pass-through voting requirements. Accordingly, unlike the case with insurance company separate accounts, the issue of resolution of material irreconcilable conflicts with respect to voting is not present with Qualified Plans, DFA or General Accounts.
17. Where a Qualified Plan does not provide participants with the right to give voting instructions, the trustee or named fiduciary has responsibility to vote the shares held by the Qualified Plan. In this circumstance, the trustee has a fiduciary duty to vote the shares in the best interest of the Qualified Plan participants. Accordingly, even if DFA or an affiliate of DFA were to serve in the capacity of trustee or named fiduciary with voting responsibilities, DFA or the affiliates would have a fiduciary duty to vote those shares in the best interest of the Qualified Plan participants.
18. In addition, even if a Qualified Plan were to hold a controlling interest in a Portfolio, Applicants do not believe that such control would disadvantage other investors in such Portfolio to any greater extent than is the case when any institutional shareholder holds a majority of the voting securities of any open-end management investment company. In this regard, Applicants submit that investment in a Portfolio by a Qualified Plan will not create any of the voting complications occasioned by mixed funding or shared funding. Unlike mixed funding or shared funding, Qualified Plan investor voting rights cannot be frustrated by veto rights of insurers or state regulators.
19. Where a Qualified Plan provides participants with the right to give voting instructions, Applicants see no reason to believe that participants in Qualified Plans generally or those in a particular Qualified Plan, either as a single group or in combination with participants in other Qualified Plans, would vote in a manner that would disadvantage Variable Contract holders. Thus, Applicants submit, the purchase of shares of Portfolios by Qualified Plans that provide voting rights does not present any complications not otherwise occasioned by mixed or shared funding.
20. The prohibitions on mixed and shared funding might reflect concern regarding possible different investment motivations among investors. When Rule 6e-2 under the 1940 Act was adopted, variable annuity separate accounts could invest in mutual funds whose shares also were offered to the general public. Therefore, the Commission staff contemplated underlying funds with public shareholders, as well as with variable life insurance separate account shareholders. The Commission staff may have been concerned with the potentially different investment motivations of public shareholders and variable life insurance contract owners. There also may have been some concern with respect to the problems of permitting a state insurance regulatory authority to affect the operations of a publicly available mutual fund and to affect the investment decisions of public shareholders.
21. For reasons unrelated to the 1940 Act, however, Internal Revenue Service Revenue Ruling 81-225 (Sept. 25, 1981) effectively deprived variable annuities funded by publicly available mutual funds of their tax-benefited status. The Tax Reform Act of 1984 codified the prohibition against the use of publicly available mutual funds as an investment vehicle for Variable Contracts (including variable life contracts). Section 817(h) of the Internal Revenue Code of 1986, as amended (the “Code”), in effect requires that the investments made by variable annuity and variable life insurance separate accounts be “adequately diversified” if a separate account is organized as a UIT that invests in a single fund or series, the diversification test will be applied at the underlying fund level, rather than at the separate account level, but only if “all of the beneficial interests” in the underlying fund “are held by one or more insurance companies (or affiliated companies) in their general account or in segregated asset accounts * * *”. Accordingly, a UIT separate account that invests solely in a publicly available mutual fund will not be adequately diversified. In addition, any underlying mutual fund, including any Portfolio, that sells shares to separate accounts, in effect, would be precluded from also selling its shares to
22. Shared funding by unaffiliated insurance companies does not present any issues that do not already exist where a single insurance company is licensed to do business in several or all states. A particular state insurance regulatory body could require action that is inconsistent with the requirements of other states in which the insurance company offers its policies. The fact that different insurers may be domiciled in different states does not create a significantly different or enlarged problem.
23. Shared funding by unaffiliated insurers, in this respect, is no different than the use of the same investment company as the funding vehicle for affiliated insurers, which Rules 6e-2(b)(15) and 6e-3(T)(b)(15) under the 1940 Act permit. Affiliated insurers may be domiciled in different states and be subject to differing state law requirements. Affiliation does not reduce the potential, if any exists, for differences in state regulatory requirements. In any event, the conditions set forth below are designed to safeguard against, and provide procedures for resolving, any adverse effects that differences among state regulatory requirements may produce. If a particular state insurance regulator's decision conflicts with the majority of other state regulators, then the affected insurer will be required to withdraw its Separate Account's investment in the affected Fund. This requirement will be provided for in agreements that will be entered into by Participating Insurance Companies with respect to their participation in the relevant Portfolio.
24. Rules 6e-2(b)(15) and 6e-3(T)(b)(15) under the 1940 Act give the insurance company the right to disregard the voting instructions of the contract owners. This right does not raise any issues different from those raised by the authority of state insurance administrators over separate accounts. Under Rules 6e-2(b)(15) and 6e-3(T)(b)(15), an insurer can disregard contract owner voting instructions only with respect to certain specified items. Affiliation does not eliminate the potential, if any exists, for divergent judgments as to the advisability or legality of a change in investment policies, principal underwriter, or investment adviser initiated by contract owners. The potential for disagreement is limited by the requirements in Rules 6e-2 and 6e-3(T) under the 1940 Act that the insurance company's disregard of voting instructions be reasonable and based on specific good-faith determinations.
25. A particular insurer's disregard of voting instructions, nevertheless, could conflict with the majority of contract owners' voting instructions. The insurer's action possibly could be different than the determination of all or some of the other insurers (including affiliated insurers) that the voting instructions of contract owners should prevail, and either could preclude a majority vote approving the change or could represent a minority view. If the insurer's judgment represents a minority position or would preclude a majority vote, then the insurer may be required, at the affected Fund's election, to withdraw its Separate Account's investment in such Portfolio. No charge or penalty will be imposed as a result of such withdrawal. This requirement will be provided for in the agreements entered into with respect to participation by the Participating Insurance Companies in each Portfolio.
26. Each Portfolio will be managed to attempt to achieve the investment objective or objectives of such Portfolio, and not to favor or disfavor any particular Participating Insurance Company or type of insurance product. There is no reason to believe that different features of various types of contracts, including the “minimum death benefit” guarantee under certain variable life insurance contracts, will lead to different investment policies for different types of Variable Contracts. To the extent that the degree of risk may differ as between variable annuity contracts and variable life insurance policies, the different insurance charges imposed, in effect, adjust any such differences and equalize the insurers' exposure in either case.
27. Applicants do not believe that the sale of the shares of the Portfolios to Qualified Plans will increase the potential for material irreconcilable conflicts of interest between or among different types of investors. In particular, Applicants see very little potential for such conflicts beyond those which would otherwise exist between variable annuity and variable life insurance contract owners. Moreover, in considering the appropriateness of the requested relief, Applicants have analyzed the following issues to assure themselves that there were either no conflicts of interest or that there existed the ability by the affected parties to resolve the issues without harm to the contract owners in the Separate Accounts or to the participants under the Qualified Plans.
28. Applicants considered whether there are any issues raised under the Code, regulations issued by the Treasury Department (“Regulations”), or Internal Revenue Service Revenue Rulings thereunder, if Qualified Plans, variable annuity separate accounts, and variable life insurance separate accounts all invest in the same underlying fund. As noted above, Section 817(h) of the Code imposes certain diversification standards on the underlying assets of Variable Contracts held in an underlying mutual fund. The Code provides that a Variable Contract shall not be treated as an annuity contract or life insurance, as applicable, for any period (and any subsequent period) for which the investments are not, in accordance with regulations prescribed by the Treasury Department, adequately diversified.
29. Regulations issued under Section 817(h) of the Code provide that, in order to meet the statutory diversification requirements, all of the beneficial interests in the investment company must be held by the segregated asset accounts of one or more insurance companies. However, the Regulations contain certain exceptions to this requirement, one of which allows shares in an underlying mutual fund to be held by the trustees of a qualified pension or retirement plan without adversely affecting the ability of such shares also to be held by separate accounts of insurance companies in connection with their Variable Contracts. (Treas. Reg. 1.817-5(f)(3)(iii)) Thus, the Regulations specifically permit “qualified pension or retirement plans” and separate accounts to invest in the same underlying fund. For this reason, Applicants have concluded that neither the Code, nor Regulations, nor Internal Revenue Service Revenue Rulings thereunder, present any inherent conflicts of interest if the Qualified Plans and Separate Accounts all invest in the same Portfolio.
30. Applicants note that while there are differences in the manner in which distributions from Variable Contracts and Qualified Plans are taxed, these differences will have no impact on the Funds. When distributions are to be made, and a Separate Account or Qualified Plan is unable to net purchase payments to make the distributions, the Separate Account and Qualified Plan will redeem shares of the relevant Portfolio at their respective net asset value in conformity with Rule 22c-1 under the 1940 Act (without the imposition of any sales charge) to provide proceeds to meet distribution needs. A Participating Insurance Company then will make distributions in accordance with the terms of its Variable Contract, and a Qualified Plan then will make distributions in
31. Applicants state that, there is analogous precedent for a situation in which the same funding vehicle was used for contract owners subject to different tax rules, without any apparent conflicts. Prior to the Tax Reform Act of 1984, a number of insurance companies offered variable annuity contracts on both a qualified and non-qualified basis through the same separate account. Underlying reserves of both qualified and non-qualified contracts therefore were commingled in the same separate account. However, long-term capital gains incurred in such separate accounts were taxed on a different basis than short-term gains and other income with respect to the reserves underlying non-qualified contracts. A tax reserve at the estimated tax rate was established in the separate account affecting only the non-qualified reserves. To the best of Applicants' knowledge, that practice was never found to have violated any fiduciary standards. Accordingly, Applicants have concluded that the tax consequences of distributions with respect to Participating Insurance Companies and Qualified Plans do not raise any conflicts of interest with respect to the use of the Portfolios.
32. In connection with any meeting of shareholders, the soliciting Fund will inform each shareholder, including each Separate Account, Qualified Plan, DFA and General Account, of information necessary for the meeting, including their respective share of ownership in the relevant Portfolio. Each Participating Insurance Company then will solicit voting instructions in accordance with Rules 6e-2 and 6e-3(T), as applicable, and its agreement with the Funds concerning participation in the relevant Portfolio. Shares of a Portfolio that are held by DFA and any General Account will be voted in the same proportion as all variable contract owners having voting rights with respect to that Portfolio. However, DFA and any General Account will vote their shares in such other manner as the Commission may require. Shares held by Qualified Plans will be voted in accordance with applicable law. The voting rights provided to Qualified Plans with respect to shares of a Portfolio would be no different from the voting rights that are provided to Qualified Plans with respect to shares of funds sold to the general public. Furthermore, if a material irreconcilable conflict arises because of a Qualified Plan's decision to disregard Qualified Plan participant voting instructions, if applicable, and that decision represents a minority position or would preclude a majority vote, the Qualified Plan may be required, at the election of the affected Fund, to withdraw its investment in such Portfolio, and no charge or penalty will be imposed as a result of such withdrawal.
33. Applicants reviewed whether a “senior security,” as such term is defined under Section 18(g) of the 1940 Act, is created with respect to any Variable Contract owner as opposed to a participant under a Qualified Plan, DFA or a General Account. Applicants concluded that the ability of the Funds to sell shares of their Portfolios directly to Qualified Plans, DFA or a General Account does not create a senior security. “Senior security” is defined under Section 18(g) of the 1940 Act to include “any stock of a class having priority over any other class as to distribution of assets or payment of dividends.” As noted above, regardless of the rights and benefits of participants under Qualified Plans, or contract owners under Variable Contracts, the Qualified Plans, DFA, General Accounts and the Separate Accounts only have rights with respect to their respective shares of the Portfolio. They only can redeem such shares at net asset value. No shareholder of a Portfolio has any preference over any other shareholder with respect to distribution of assets or payment of dividends.
Applicants agree that the order granting the requested relief shall be subject to the following conditions:
1. A majority of the Board of Directors (the “Board”) of the Fund will consist of persons who are not “interested persons” of the Fund, as defined by Section 2(a)(19) of the 1940 Act, and the rules thereunder, and as modified by any applicable orders of the Commission, except that if this condition is not met by reason of the death, disqualification, or bona-fide resignation of any Director or Directors, then the operation of this condition will be suspended: (i) for a period of 45 days if the vacancy or vacancies may be filled by the Board; (ii) for a period of 60 days if a vote of shareholders is required to fill the vacancy or vacancies; or (iii) for such longer period as the Commission may prescribe by order upon application.
2. The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all Separate Accounts and participants of all Qualified Plans investing in such Fund, and determine what action, if any should be taken in response to such conflicts. A material irreconcilable conflict may arise for a variety of reasons, including: (i) an action by any state insurance regulatory authority; (ii) a change in applicable federal or state insurance tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (iii) an administrative or judicial decision in any relevant proceeding; (iv) the manner in which the investments of such Fund are being managed; (v) a difference in voting instructions given by variable annuity contract owners, variable life insurance contract owners, and trustees of the Qualified Plans; (vi) a decision by a Participating Insurance Company to disregard the voting instructions of contract owners; or (vii) if applicable, a decision by a Qualified Plan to disregard the voting instructions of Qualified Plan participants.
3. Participating Insurance Companies (on their own behalf, as well as by virtue of any investment of general account assets in a Portfolio), DFA, and any Qualified Plan that executes a participation agreement upon becoming an owner of 10 percent or more of the assets of any Portfolio (collectively, “Participants”) will report any potential or existing conflicts to the Board. Participants will be responsible for assisting the Board in carrying out the Board's responsibilities under these conditions by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This responsibility includes, but is not limited to, an obligation by each Participating Insurance Company to inform the Board whenever contract owner voting instructions are disregarded, and, if pass-through voting is applicable, an obligation by each Qualified Plan to inform the Board whenever it has determined to disregard Qualified Plan participant voting instructions. The responsibility to report such information and conflicts, and to assist the Board, will be a contractual obligation of all Participating Insurance Companies under their participation agreements with the Fund, and these responsibilities will be carried out with a view only to the interests of the contract owners. The responsibility to report such information and conflicts, and to assist the Board, also will be contractual obligations of all Qualified Plans with participation agreements, and such agreements will provide that these responsibilities will be carried out with a view only to the interests of Qualified Plan participants.
4. If it is determined by a majority of the Board, or a majority of the
For purposes of this Condition 4, a majority of the disinterested members of the Board will determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but, in no event will the Fund, DFA or an affiliate of DFA, as relevant, be required to establish a new funding vehicle for any Variable Contract. No Participating Insurance Company will be required by this Condition 4 to establish a new funding vehicle for any Variable Contract if any offer to do so has been declined by vote of a majority of the contract owners materially and adversely affected by the material irreconcilable conflict. Further, no Qualified Plan will be required by this Condition 4 to establish a new funding vehicle for the Qualified Plan if: (i) A majority of the Qualified Plan participants materially and adversely affected by the irreconcilable material conflict vote to decline such offer, or (ii) pursuant to documents governing the Qualified Plan, the Qualified Plan makes such decision without a Qualified Plan participant vote.
5. The Board's determination of the existence of a material irreconcilable conflict and its implications will be made known in writing promptly to all Participants.
6. As to Variable Contracts issued by Separate Accounts registered under the 1940 Act, Participating Insurance Companies will provide pass-through voting privileges to all Variable Contract owners as required by the 1940 Act as interpreted by the Commission. However, as to Variable Contracts issued by unregistered Separate Accounts, pass-through voting privileges will be extended to contract owners to the extent granted by the issuing insurance company. Accordingly, such Participants, where applicable, will vote shares of the applicable Portfolio held in their Separate Accounts in a manner consistent with voting instructions timely received from Variable Contract owners. Participating Insurance Companies will be responsible for assuring that each Separate Account investing in a Portfolio calculates voting privileges in a manner consistent with other Participants.
The obligation to calculate voting privileges as provided in this Application will be a contractual obligation of all Participating Insurance Companies under their agreement with the Funds governing participation in a Portfolio. Each Participating Insurance Company will vote shares for which it has not received timely voting instructions, as well as shares it owns through its Separate Accounts, in the same proportion as it votes those shares for which it has received voting instructions. Each Qualified Plan will vote as required by applicable law and governing Qualified Plan documents.
7. As long as the 1940 Act requires pass-through voting privileges to be provided to variable contract owners, DFA or any of its affiliates, and any General Account will vote its shares of any Portfolio in the same proportion of all variable contract owners having voting rights with respect to that Portfolio; provided, however, that DFA, any of its affiliates or any insurance company General Account shall vote its shares in such other manner as may be required by the Commission or its staff.
8. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, which for these purposes, shall be the persons having a voting interest in the shares of the respective Portfolio, and, in particular, the Fund will either provide for annual meetings (except to the extent that the Commission may interpret Section 16 of the 1940 Act not to require such meetings) or comply with Section 16(c) of the 1940 Act (although the Fund is not one of the funds of the type described in Section 16(c) of the 1940 Act), as well as with Section 16(a) of the 1940 Act and, if and when applicable, Section 16(b) of the 1940 Act. Further, the Fund will act in accordance with the Commission's interpretation of the requirements of Section 16(a) of the 1940 Act with respect to periodic elections of trustees and with whatever rules the Commission may promulgate with respect thereto.
9. The Fund will notify all Participants that Separate Account prospectus disclosure or Qualified Plan prospectuses or other Qualified Plan disclosure documents regarding potential risks of mixed and shared funding may be appropriate. The Fund will disclose in its prospectus that (i) shares of the Fund may be offered to Separate Accounts of Variable Contracts and, if applicable, to Qualified Plans; (ii) due to differences in tax treatment and other considerations, the interests of various contract owners participating in the Fund and the interests of Qualified Plans investing in the Fund, if applicable, may conflict; and (iii) the Fund's Board will monitor events in order to identify the existence of any material irreconcilable conflicts and to determine what action, if any, should be taken in response to any such conflict.
10. If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are amended, or proposed Rule 6e-3 under the 1940 Act is adopted, to provide exemptive relief from any provision of the 1940 Act, or the rules promulgated thereunder, with respect to mixed or shared funding, on terms and
11. The Participants, at least annually, will submit to the Board such reports, materials, or data as a Board reasonably may request so that the trustees of the Board may fully carry out the obligations imposed upon the Board by the conditions contained in this Application. Such reports, materials, and data will be submitted more frequently if deemed appropriate by the Board. The obligations of the Participants to provide these reports, materials, and data to the Board, when it so reasonably requests, will be a contractual obligation of all Participants under their agreements governing participation in the Portfolios.
12. All reports of potential or existing conflicts received by the Board, and all Board action with regard to determining the existence of a conflict, notifying Participants of a conflict, and determining whether any proposed action adequately remedies a conflict, will be properly recorded in the minutes of the Board or other appropriate records, and such minutes or other records shall be made available to the Commission upon request.
13. The Fund will not accept a purchase order from a Qualified Plan if such purchase would make the Qualified Plan shareholder an owner of 10 percent or more of the assets of such Portfolio unless such Qualified Plan executes an agreement with the Fund governing participation in such Portfolio that includes the conditions set forth herein to the extent applicable. A Qualified Plan or Qualified Plan participant will execute an application containing an acknowledgment of this condition at the time of its initial purchase of shares of any Portfolio.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Eagle Building Technologies, Inc. (“Eagle Building”), because of questions regarding the accuracy of assertions by Eagle Building, and by others, in documents sent to and statements made to market makers of the stock of Eagle Building, other broker-dealers, and investors concerning, among other things: (1) The company's foreign operations and (2) post-September 11 security measures marketed by Eagle Building, including an airport baggage security system, mail sterilization technology, and money laundering detection software.
The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed company.
Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the above-listed company is suspended for the period from 9:30 a.m. EST, February 15, 2002, through 11:59 p.m. EST, on March 1, 2002.
By the Commission.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The proposed rule change provides (i) an interpretation of a rule relating to Dutch issues in the Profile Modification System (“Profile”) feature of the Direct Registration System (“DRS”) facility and (ii) increases the limits of the surety bond that is part of the Profile Surety Program (“PSP”).
In its filing with the Commission, DTC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. DTC has prepared summaries, set forth in sections (A), (B) and (C) below, of the most significant aspects of these statements.
The purpose of the proposed rule change is to (i) provide an interpretation with respect to Dutch issues in DRS and (ii) increase the limits of the surety bond that is part of PSP.
DTC established a deadline of December 14, 2001, as the date by which all securities issues eligible for DRS would have to be eligible for processing through Profile.
In order to ensure Dutch law is complied with, the transfer agent would put a flag on each account of a registered holder of a DRS position in a Dutch issue. Such registered holders would be sent a “Notice” describing Profile and informing them that in order to avail themselves of Profile and have any future transfer of the Dutch securities under Profile be in compliance with Dutch law, such registered holders would be required to complete and deliver to the transfer agent a signed deed in the form provided by the transfer agent. At such time as the transfer agent receives a properly executed deed from a holder, the flag will be removed from the holder's account. If a Profile transaction or any other attempted movement of a position through DRS is proposed on a flagged account, it will be rejected until the deed has been properly received.
For the two Dutch issues currently in DRS, the Notice would initially be mailed to affected holders by January 15, 2002. A follow-up reminder Notice would be mailed to such holders by February 20, 2002. The last day for such holders to submit their deeds to the issuer would be March 29, 2002. Any such holders that have not submitted a deed by March 29, 2002, would be certificated beginning on April 1, 2002. After January 15, 2002, and continuing in the future, any new holders of a DRS position in a Dutch issue would have seventy-five days from the date such position is created to deliver a deed. If a deed is not received within seventy-five days, the position would be certificated.
Such a procedure will serve to facilitate the movement of Dutch issuers' securities issues that are already in DRS into Profile and should help ensure that holders of DRS positions are kept in DRS. For any new Dutch issues going into DRS, registered holders of DRS positions will have seventy-five days from the time of becoming a DRS holder to submit a deed or else have their position certificated. DTC interprets its current rules relating to the administration of the DRS facility and Profile as being satisfied by the above-described mechanism.
In a previous rule filing with the Commission, DTC set forth certain requirements for the surety bond to be issued in connection with PSP.
The proposed rule change is consistent with the requirements section 17A of the Act and the rules and regulations thereunder applicable to DTC because it clarifies DTC's interpretation of its rule thereby eliminating confusion in the industry relating to the implementation of the Profile feature, providing for more expeditious implementation of Profile, and strengthening a risk management feature of Profile. The proposed rule change will be implemented consistently with the safeguarding of securities and funds in DTC's custody or control or for which it is responsible because the operation of DRS, as modified by the proposed rule change, will be similar to the current operation of DRS.
DTC perceives no adverse impact on competition by reason of the proposed rule change.
Written comments from DTC participants or others have not been solicited or received on the proposed rule change.
The foregoing rule change has become effective pursuant to section 19(b)(3)(A)(i)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW, Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of DTC. All submissions should refer to File No. SR-DTC-2002-01 and should be submitted by March 13, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
The Phlx proposes to adopt Phlx Rule 1080(c)(iv) to codify that an options order otherwise eligible for the Exchange's Automated Execution System (“AUT-X”) will instead be manually handled by the specialist in certain circumstances. Specifically, an options order entered through the Exchange's Automated Options Market (“AUTOM”) System,
(a)-(b) No change.
(c) AUTO-X—AUTO-X is a feature of AUTOM that automatically executes
The Options Committee may for any period restrict the use of AUTO-X on the Exchange in any option or series. Currently, orders up to 100 contracts, subject to the approval of the Options Committee, are eligible for AUTO-X.
The Options Committee may, in its discretion, increase the size of orders in one or more classes of multiply-traded equity options eligible for AUTO-X to the extent necessary to match the size of orders in the same options eligible for entry into the automated execution system of any other options exchange, provided that the effectiveness of any such increase shall be conditioned upon its having been filed with the Securities and Exchange Commission pursuant to section 19(b)(3)(A) of the Securities Exchange Act of 1934.
(i) AUTO-X on the NBBO (NBBO Feature). AUTO-X on the NBBO (the “NBBO Feature”) is a feature of AUTOM that automatically executes at the National Best Bid or Offer (“NBBO”). NBBO Feature will execute AUTO-X eligible orders at the NBBO for certain options designated by the Options Committee as eligible for the NBBO Feature (“automatic step-up options”), provided that the NBBO does not differ from the specialist's best bid or offer by more than the “step up parameter.”
(A)-(C) No change.
(D)-(E) Reserved.
(ii) No change.
(iii) Reserved.
(d)-(j) No Change.
Commentary: No change.
In its filing with the Commission, the Phlx included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to codify the situations in which an otherwise eligible AUTO-X order is handled manually by the specialist. The Phlx believes that the proposal also clarifies that the manual handling of such orders reflects the normal operation of AUTOM and AUTO-X.
According to the Phlx, AUTO-X automatically executes eligible orders using the Exchange disseminated quotation and then automatically routes execution reports to the originating member organization.
According to the Exchange, Phlx Rule 1080 currently enumerates some of the situations where an order may not be automatically executed. For example, manual execution may occur when AUTO-X is not engaged.
The Phlx is proposing to codify nine additional situations in which an order would not automatically execute. First, if the Exchange's disseminated market is crossed (
Second, the following order types do not automatically execute: stop, stop limit, market on closing, and market on opening, because these orders consist of contingencies, such as pricing (stop at a certain price) or timing (execute only on the opening) that the AUTOM System cannot address.
Third, AUTOM orders received when the AUTOM System is not open for trading (known as pre-market orders) are not eligible for automatic execution because they are entitled to the opening price.
Fourth, when the disseminated market is produced during an opening or other rotation, an incoming order is not automatically executed, similar to pre-market orders, because there must be an established price against which an automatic execution can occur.
Fifth, an incoming AUTOM order will not automatically execute when the specialist posts a bid or offer that is better than the specialist's own bid or offer. The bid or offer could represent a customer order or a price-improving bid or offer by a Registered Options Trader (“ROT”). Currently, these can be displayed manually by the specialist using a certain indicator, which causes AUTO-X (and its trade allocation feature, the Wheel)
Sixth, certain options are subject to the NBBO Feature, described in Phlx Rule 1080(c)(i), which automatically executes eligible orders at the National Best Bid or Offer (“NBBO”) provided that the NBBO does not differ from the specialist's best bid or offer by more than the “step-up parameter,” which is determined by the Options Committee. According to the Phlx, participation on an option-by-option basis in the NBBO Feature is voluntary, such that if the specialist elects not to engage the NBBO Feature, or disengages it pursuant to the Exchange rule, and the Exchange's disseminated bid or offer is inferior to the NBBO, an incoming AUTOM order would not automatically execute. Thus, in order to prevent AUTO-X from creating a trade-through, such an order would be handled manually.
Seventh, when the price of an order is not expressed in the appropriate minimum trading increment pursuant to Phlx Rule 1034, the order would not be automatically executed because the price is presumed to be invalid. Nevertheless, in lieu of rejecting such an order, the order would be handled manually by the specialist, which may result in an execution at a better price and in the correct increment. For example, where the market is 2.00-2.25, an incoming buy order for 2.21 would not automatically execute; while manually handled by the specialist, it may be executed at 2.20, a better price.
Eighth, where the bid price for a particular option series is zero, an incoming AUTOM sell order would not automatically execute, because the “zero” price is not a valid execution price. According to the Phlx, a “zero” bid price is typically calculated by Auto-Quote, the Exchange's automatic pricing system, when an option that is well out-of-the-money approaches expiration, and thus has neither intrinsic value nor time value. In such circumstance, as stated above, an incoming order to sell would not be AUTO-X eligible, since an automatic execution is not possible at a “zero” bid.
Lastly, the Phlx represents that certain options are subject to a pilot program under which when the number of contracts automatically executed within a 15 second period exceeds the AUTO-X guarantee, a 30 second period ensues during which subsequent orders are handled manually.
In any of these situations, the Phlx would disseminate a message to its quotation vendors that indicates to users on a series-by-series basis, whether or not such series is AUTO-X eligible. Internally, the Phlx represents that it maintains an electronic audit trail, called an AUTO-X Disengagement Log, that electronically monitors and records every situation in which AUTO-X is disengaged. According to the Phlx, the AUTO-X Disengagement Log indicates whether the disengagement was done automatically by AUTOM for any of the nine aforementioned reasons, or pursuant to a request by the specialist. In the latter situation, the Phlx represents that approval of two Floor Officials is required to disengage AUTO-X. The Market Surveillance Department of the Phlx maintains a record of each such situation.
Additionally, Phlx Rule 1080 provides that the Options Committee may for any period restrict the use of AUTO-X on the Exchange in any option or series.
The Phlx believes that its proposal is consistent with section 6(b) of the Act in general,
The Phlx believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Phlx has neither solicited nor received any written comments on the proposed rule change.
Within 35 days of the publication of this notice in the
(A) By order approve such proposed rule change or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Phlx.
All submissions should refer to File No. SR-Phlx-2001-24 and should be submitted by March 13, 2002.
For the Commission by the Division of Market Regulation, pursuant to delegated authority.
The Small Business Administration Region VI Regulatory Fairness Board and the SBA Office of the National Ombudsman, will hold a Public Roundtable on Wednesday, February 20, 2002 at 1 p.m. at the Arkansas State Chamber of Commerce /AIA, 410 South Cross Street, Little Rock, Arkansas 72201, to provide small business owners and representatives of trade associations with an opportunity to share information concerning the federal regulatory enforcement and compliance environment.
Anyone wishing to attend or to make a presentation must contact Deb Mathis in writing or by fax, in order to be put on the agenda. Deb Mathis, Arkansas State Chamber of Commerce /AIA, 410 South Cross Street, Little Rock, Arkansas 72201, Phone (501) 374-9225, fax (501) 372-2722, e-mail
For more information see our website at
Tennessee Valley Authority.
Notice of intent.
The Tennessee Valley Authority (TVA) is providing this notice pursuant to the Council on Environmental Quality's regulations (40 CFR 1500-1508), TVA's procedures implementing the National Environmental Policy Act, and section 106 of the National Historic Preservation Act and its implementing regulations (36 CFR part 800).
TVA will prepare an environmental impact statement (EIS) to assess the impact of a proposal made by Pickwick Power, LLC (PPLLC) to build and operate a coal-fired generating plant in Tennessee. The plant would supply intermediate or baseload capacity to the TVA electric generation system to meet growing power demands. PPLLC has proposed a site in Hardin County near Savannah, Tennessee, near the west shore of the Tennessee River at mile 203.
The following Federal actions are proposed at this time so that PPLLC can undertake the project:
• TVA's entering into a contract with PPLLC for buying electricity from the facility, interconnecting the facility with the TVA transmission system, and supplying the fuel and limestone for the facility.
• TVA's approval under section 26a of the TVA Act for PPLLC's construction of barge unloading facilities, water intakes, and discharge outfalls associated with the facility. Approvals may also have to be obtained from the U.S. Army Corps of Engineers under section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act of 1899 for construction of the unloading facilities, water intakes, and discharge outfalls.
TVA will use the EIS process to obtain public comments on this proposal. This notice invites public comment concerning scope of the EIS, alternatives and environmental issues that should be addressed as a part of this EIS, and potential for impacts to historic properties such as archaeological resources and historic sites and structures.
Comments must be postmarked or e-mailed no later than March 21, 2002, to ensure their consideration in determining the scope of issues to be addressed and for identifying the significant issues relating to the proposed action.
Written comments and requests for further information should be sent to Peter K. Scheffler, Specialist, National Environmental Policy Act, Tennessee Valley Authority, mail stop WT 8C, 400 West Summit Hill Drive, Knoxville, Tennessee 37902-1499. Comments may be e-mailed to
PPLLC has presented TVA with a proposal to supply baseload or intermediate power generated by a 100 Megawatt (MW) electric power plant. TVA would provide the fuel for the facility and pay a fee to convert the fuel to energy. PPLLC has proposed to build and operate the proposed facility at a site in Hardin County. The facility would begin generating power in 2004.
The proposed plant would consist of one coal-fired circulating fluidized bed combustion (CFBC) boiler, a steam turbine, and an electric generator. These components would be manufactured at existing facilities in China and transported to an existing shipyard in China for installation on two barges. The barges would also be manufactured, and the complete barge-mounted power generation module would be tested, in China before transport to the United States.
The barges would be loaded on a ship for dry transport to Mobile, Alabama, where they would then be placed into the water and towed up the Tennessee-Tombigbee Waterway to the proposed plant site. At the site, the barges would be removed from the Tennessee River by heavy lift, moved with the help of multi-wheeled transporters to a site probably several thousand feet west of the river, and placed on a foundation designed to fit the bottom of the barges. Final assembly would then take place, including connecting to the TVA power system.
The facility would also include other major balance-of-plant components such as barge unloading facilities, fuel handling and storage facilities, water intake and discharge structures, and electrical interconnection facilities. Barge unloading facilities would be constructed capable of unloading the facility barges (as noted above) and 1800-ton coal and limestone barges. Because the barge unloading facilities would require alteration of the shoreline and possibly dredging of the reservoir bottom, they would need approval from TVA under section 26a of the TVA Act and probably permits from the United States Army Corps of Engineers under section 10 of the Rivers and Harbors Act and section 404 of the Clean Water Act. Facilities such as conveyors would be needed to transport fuel and limestone to storage facilities and to the boiler. Areas would be identified on-site for coal and limestone storage. Facilities would also be built to store No.2 diesel that would be delivered to the boilers as fuel for standby and start-up. An ash disposal landfill of sufficient size to store ash generated from the process would be located adjacent to the facility. Section 26a approvals from TVA and sections 10 and 404 permits from the U.S. Army Corps of Engineers may also be required for process and potable water intakes and for wastewater discharge outfalls. To contain these various components, the proposed site could be as large as several hundred acres.
This EIS will tier from TVA's
Each year TVA provides updated projections of supply and demand to the TVA sub-region of the Southeastern Electric Reliability Council (SERC) for the U.S. Department of Energy's annual report EIA-411. The 1999 projection (latest available) shows expected baseload demands growing at 2.2 percent from 1999 to 2004. The net capacity needed to meet the growth in demand is expected to increase by 3,400 megawatts by year 2003. (See line item 13 on Table—Item 2.1 Projected Capacity and Demand—Summer of the EIA-411 report.) The addition of the 100 MW Pickwick Power plant is needed by TVA to meet this projected regional power demand for baseload capacity.
Because
TVA contemplates that the EIS would describe the existing environmental and socioeconomic resources affected by transportation of the barges to the site, construction of the balance-of-plant components on site, and operation of the power plant. TVA's evaluation of environmental impacts to these resources would include, but not necessarily be limited to, the potential impacts on air quality, water quality, aquatic and terrestrial ecology, endangered and threatened species, wetlands, floodplains, aesthetics and visual resources, noise, land use, historic and archaeological resources, and socioeconomic resources.
At this time, the alternatives TVA has identified for detailed evaluation include no action and the proposed plant at the Hardin County site. During the scoping process, TVA will investigate the feasibility of other alternatives, including technologies and sites, which meet PPLLC's purposes and needs and the basic requirements of TVA's electricity needs, are reasonably capable of being connected to TVA's transmission system, and otherwise fall within the reasonable range of alternatives to be evaluated in an EIS.
Scoping, which is integral to the NEPA process, is a procedure that solicits public input to the EIS process to ensure that: (1) Issues are identified early and properly studied; (2) issues of little significance do not consume substantial time and effort; (3) the draft EIS is thorough and balanced; and (4) delays caused by an inadequate EIS are avoided. TVA's NEPA procedures require that the scoping process commence soon after a decision has been reached to prepare an EIS in order to provide an early and open process for determining the scope and for identifying the significant issues related to a proposed action. The scope of alternatives and issues to be addressed in the draft EIS will be determined, in part, from written comments submitted by mail or e-mail, and comments presented orally or in writing at public meetings. The preliminary identification in this notice of reasonable alternatives and environmental issues is not meant to be exhaustive or final.
The scoping process will include both interagency and public scoping. The public is invited to submit written comments or e-mail comments on the scope of this EIS no later than the date given under the
TVA will conduct a public scoping meeting at the Pickwick Landing State Park Inn and Conference Center on March 5, 2002. At the meeting, TVA management and project staff will present overviews of the EIS process, PPLLC staff will present an overview of the proposed power plant project, and TVA will answer questions and solicit comments on the issues that the public would like addressed in the EIS. This meeting will be publicized through notices in local newspapers, TVA press releases, information on TVA's Web site at
The federal agencies identified at this time for inclusion in the interagency scoping are the U.S. Environmental Protection Agency, U.S. Army Corps of Engineers (which has agreed to be a Cooperating Agency in preparation of the EIS), and the U.S. Fish and Wildlife Service. State agencies include the Tennessee Department of Economic and Community Development, Tennessee Department of Environment and Conservation, Tennessee Wildlife Resources Agency, and the Tennessee State Historic Preservation Officer. Regional and local agencies include the Southwest Tennessee Development District, Hardin County government, and the Hardin County Historian. Indian tribes include the Eastern Band of the Cherokee Indians, the United Keetoowah Band of the Cherokee Indians, the Cherokee Nation of Oklahoma, the Chickasaw Nation, the Muscogee (Creek) Nation of Oklahoma, the Poarch Band of Creek Indians, the Kialegee Tribal Town, the Alabama-Quassarte Tribal Town, the Thlopthlocco Tribal Town, and the Alabama-Coushatta Tribe. Other agencies, as appropriate and identified, will also be included.
After consideration of the scoping comments, TVA will establish alternatives and environmental issues to be addressed in the EIS. Following analysis of the environmental consequences of each alternative, TVA will prepare a draft EIS for public review and comment. Notice of availability of the draft EIS will be published by the Environmental Protection Agency in the
Office of the United States Trade Representative.
Notice.
The United States Trade Representative has determined that Mozambique has adopted an effective visa system and related procedures to prevent unlawful transshipment and the use of counterfeit documents in connection with shipments of textile and apparel articles and has implemented and follows, or is making substantial progress toward implementing and following, the customs procedures required by the African Growth and Opportunity Act. Therefore, imports of eligible products from Mozambique qualify for the textile and apparel benefits provided under the AGOA.
February 6, 2002.
Chris Moore, Director for Africa Trade Policy, Office of the United States Trade Representative, (202) 395-9514.
The African Growth and Opportunity Act (Title I of the Trade and Development Act of 2000, Pub. L. 106-200) (AGOA) provides preferential tariff treatment for imports of certain textile and apparel products of beneficiary sub-Saharan African countries. The textile and apparel trade benefits under the AGOA are available to imports of eligible products from countries that the President designates as “beneficiary sub-Saharan African countries,” provided that these countries (1) have adopted an effective visa system and related procedures to prevent unlawful transshipment and the use of counterfeit documents, and (2) have implemented and follow, or are making substantial progress toward implementing and following, certain customs procedures that assist the Customs Service in verifying the origin of the products.
In Proclamation 7350 (Oct. 2, 2000), the President designated Mozambique as a “beneficiary sub-Saharan African country.” Proclamation 7350 delegated to the United States Trade Representative (USTR) the authority to determine whether designated countries have met the two requirements described above. The President directed the USTR to announce any such determinations in the
Accordingly, pursuant to the authority vested in the USTR by Proclamation 7350, U.S. note 7(a) to subchapter II of chapter 98 of the HTS and U.S. note 1 to subchapter XIX of chapter 98 of the HTS are each modified by inserting “Mozambique” in alphabetical sequence in the list of countries. The foregoing modifications to the HTS are effective with respect to articles entered, or withdrawn from warehouse, for consumption on or after the effective date of this notice. Importers claiming preferential tariff treatment under the AGOA for entries of textile and apparel articles should ensure that those entries meet the applicable visa requirements.
Coast Guard, DOT.
Request for comments.
In compliance with the Paperwork Reduction Act of 1995, this request for comments announces that the Coast Guard has forwarded four Information Collection Reports (ICRs) abstracted below to the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB) for review and comment. Our ICRs describe the information we seek to collect from the public. Review and comment by OIRA ensures that we impose only paperwork burdens commensurate with our performance of duties.
Please submit comments on or before March 22, 2002.
To make sure that your comments and related material do not enter the docket [USCG 2001-11106] more than once, please submit them by only one of the following means:
(1)(a) By mail to the Docket Management Facility, U.S. Department of Transportation, room PL-401, 400 Seventh Street SW., Washington, DC 20590-0001. (b) OIRA, 725 17th Street NW, Washington, DC 20503, to the attention of the Desk Officer for the Coast Guard. Caution: Because of recent delays in the delivery of mail, your comments may reach the Facility more quickly if you choose one of the other means described below.
(2)(a) By delivery to room PL-401 at the address given in paragraph (1)(a) above, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The telephone number is 202-366-9329. (b) OIRA, at the address given in paragraph (1)(b) above, to the attention of the Desk Officer for the Coast Guard.
(3) By fax to (a) the Docket Management Facility at 202-493-2251 or (b) OIRA 202-395-7285, attention: Desk Officer for the Coast Guard.
(4)(a) Electronically through the Web site for the Docket Management System at
The Docket Management Facility maintains the public docket for this notice. Comments and material received from the public, as well as documents mentioned in this notice as being available in the docket, will become part of this docket and will be available for inspection or copying at room PL-401 (Plaza level), 400 Seventh Street SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the Internet at
Copies of the complete ICRs are available for inspection and copying in public dockets. Copies are available in docket USCG 2001-11106 of the Docket Management Facility between 10 a.m. and 5 p.m., Monday through Friday, except Federal holidays; for inspection and printing on the Internet at
Barbara Davis, Office of Information Management, 202-267-2326, for questions on this document; Dorothy Beard, Chief, Documentary Services Division, U.S. Department of Transportation, 202-366-5149, for questions on the docket.
This request constitutes the 30-day notice required by OIRA. The Coast Guard has already published (66 FR 64336 (December 12, 2001)) the 60-day notice required by OIRA. That notice elicited no comments.
The Coast Guard invites comments on the proposed collection of information to determine whether the collection is necessary for the proper performance of the functions of the Department. In particular, the Coast Guard would appreciate comments addressing: (1) The practical utility of the collection; (2) the accuracy of the Department's estimated burden of the collection; (3) ways to enhance the quality, utility, and clarity of the information that is the subject of the collection; and (4) ways to minimize the burden of collection on respondents, including the use of automated collection techniques or other forms of information technology.
Comments, to DMS or OIRA, must contain the OMB Control Number of the ICR addressed. Comments to DMS must contain the docket number of this request, USCG 2001-11106. Comments to OIRA are best assured of having their full effect if OIRA receives them 30 or fewer days after the publication of this request.
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Coast Guard, DOT.
Notice of meetings.
The Towing Safety Advisory Committee (TSAC) and its working groups will meet as required to discuss various issues relating to shallow-draft inland and coastal waterway navigation and towing safety. All meetings will be open to the public.
TSAC will meet on Thursday, March 14, 2002, from 8 a.m. to 12:30 p.m. The working groups will meet on Wednesday, March 13, 2002, from 9 a.m. to 3:30 p.m. These meetings may close early if all business is finished. Written material and requests to make oral presentations should reach the Coast Guard on or before February 25, 2002. Requests to have a copy of your material distributed to each member of the Committee or working groups should reach the Coast Guard on or before February 25, 2002.
TSAC will meet in the Commission Room, Port of San Francisco, Pier One, Embarcadero, San Francisco, CA. The working groups will begin in the same room and may move to separate spaces designated at that time. Send written material and requests to make oral presentations to Mr. Gerald P. Miante, Commandant (G-MSO-1), U.S. Coast Guard Headquarters, 2100 Second Street SW., Washington, DC 20593-0001. This notice is available on the Internet at
Mr. Gerald P. Miante, Assistant Executive Director, telephone 202-267-0229, or LCDR Lance Lindsay, telephone 202-267-0218, fax for both is 202-267-4570, or e-mail at:
Notice of these meetings is given under the Federal Advisory Committee Act, 5 U.S.C. App. 2.
The agenda tentatively includes the following:
(1) Status Report of the Crew Alertness Working Group,
(2) Status Report of the Gulf Coast Mariners Association (GCMA) Report Working Group,
(3) Status Report Licensing Implementation Working Group,
(4) Status Report of the rulemaking on Fire-Suppression Systems and Voyage Planning for Towing Vessels, and
(5) Status Report of the Maritime Security Working Group.
(6) Committee consideration of a draft task statement from the Towing Vessel Regulatory Review Work Group.
All meetings are open to the public. Please note that the meetings may close early if all business is finished. Members of the public may make oral presentations during the meetings. If you would like to make an oral presentation at a meeting, please notify the Assistant Executive Director no later than February 25, 2002. Written material for distribution at a meeting should reach the Coast Guard no later than February 25, 2002. If you would like a copy of your material distributed to each member of the committee or subcommittee in advance of a meeting, please submit 25 copies to the Assistant Executive Director no later than February 25, 2002.
For information on facilities or services for individuals with disabilities or to request special assistance at the meetings, contact the Assistant Executive Director as soon as possible.
Financial Crimes Enforcement Network (“FinCEN”), Treasury.
Notice and request for comments.
FinCEN, a bureau of the U.S. Department of the Treasury (“Treasury”), invites all interested parties to comment on its continuing collection of information through its “Designation of Exempt Person” form that is used by banks and other depository institutions to designate their eligible customers as exempt from the requirement to report transactions in currency over $10,000.
Written comments should be received on or before April 22, 2002.
Direct all written comments to: Office of Chief Counsel, Financial Crimes Enforcement Network, U.S. Department of the Treasury, P.O. Box 1618, Vienna, VA 22183-1618,
Requests for additional information or for a copy of the form should be directed to Dawn Adams, Regulatory Programs Specialist, Office of Compliance and Regulatory Enforcement, (202) 354-6015, or Albert R. Zarate, Senior Regulatory Counsel, Office of Chief Counsel, FinCEN, (703) 905-3590.
Pursuant to the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)), FinCEN is soliciting comments on the collection of information described below.
The reporting by financial institutions of transactions in currency in excess of $10,000 has long been a major component of the Treasury's implementation of the Bank Secrecy Act. The reporting requirement is imposed by 31 CFR 103.22, a rule issued under the broad authority granted to the Secretary of the Treasury by 31 U.S.C. 5313(a) to require reports of domestic coins and currency transactions.
The Money Laundering Suppression Act of 1994, Title IV of the Riegle Community Development and Regulatory Improvement Act (Public Law 103-325) amended 31 U.S.C. 5313. The statutory amendments mandate exemptions from currency transaction reporting in the case of customers that are other banks, certain governmental entities, or businesses for which reporting would serve little or no law enforcement purpose. The amendments also authorize Treasury to exempt certain other businesses.
On September 8, 1997, and September 31, 1998, Treasury issued final rules regarding these statutory amendments (62 FR 47141 and 63 FR 50147, respectively). The final rules reform and simplify the process by which banks may exempt eligible customers. The final rules, as further amended by 65 FR 46356, are set forth at 31 CFR 103.22(d).
Under the simplified exemption rules, a key requirement is a “designation” sent to the Treasury indicating that a customer will be treated by the bank as an exempt person, so that no further currency transaction reports will be filed on the customer's cash transactions exceeding $10,000. As part of the simplification process, Treasury previously issued a form specifically for making that designation.
The information collected on the form, Designation of Exempt Person, TD F 90-22.53, is required to exempt bank customers from currency transaction reporting. The information is used to help determine whether a bank has properly exempted its customers. The collection of information is mandatory.
Notice.
An open meeting of the Florida Citizen Advocacy Panel will be held in Sunrise, Florida.
The meeting will be held Saturday, February 23, 2002.
Nancy Ferree at 1-888-912-1227, or 954-423-7973.
Notice is hereby given pursuant to section
The agenda will include the following: Various IRS issue updates and reports by the CAP sub-groups.
Last minute changes to the agenda are possible and could prevent effective advance notice.
Notice is hereby given that on, February 12, 2002, the Director, Examination Policy, Office of Thrift Supervision (“OTS”), or her designee, acting pursuant to delegated authority, approved the application of Mt. Troy Savings Bank, FSB, Pittsburgh, Pennsylvania, to convert to the stock form of organization. Copies of the application are available for inspection by appointment (phone number: 202-906-5922 or e-mail:
By the Office of Thrift Supervision.
Notice is hereby given that on, February 11, 2002, the Director, Examination Policy, Office of Thrift Supervision (“OTS”), or her designee, acting pursuant to delegated authority, approved the application of Willow Grove Bancorp, Inc., Maple Glen, Pennsylvania, to convert to the stock form of organization. Copies of the application are available for inspection by appointment (phone number: 202-906-5922 or e-mail:
By the Office of Thrift Supervision.
Health Resources and Services Administration, HHS.
Notice.
This notice provides lists of all areas, population groups, and facilities designated as primary medical care, mental health, and dental health professional shortage areas (HPSAs) as of May 23, 2001. HPSAs are designated or withdrawn by the Secretary of Health and Human Services (HHS) under the authority of section 332 of the Public Health Service (PHS) Act.
Requests for further information on the HPSA designations listed below and requests for additional designations, withdrawals, or reinstatement of a withdrawn designation should be submitted to Jerilyn A. Thornburg, R.N., M.P.H., Director, Division of Shortage Designation, Bureau of Health Professions, Health Resources and Services Administration, 4350 East-West Highway, Bethesda, Maryland 20814 (301-594-0816).
Section 332 of the PHS Act, 42 U.S.C. 254e, provides that the Secretary of HHS shall designate HPSAs based on criteria established by regulation. HPSAs are defined in section 332 to include (1) urban and rural geographic areas with shortages of health professionals, (2) population groups with such shortages, and (3) facilities with such shortages. Section 332 further requires that the Secretary annually publish a list of the designated geographic areas, population groups, and facilities. The list of HPSAs is to be reviewed at least annually and revised as necessary. The Health Resources and Services Administration's (HRSA) Bureau of Health Professions (BHPr) has the responsibility for designating and updating HPSAs.
Public or private nonprofit entities are eligible to apply for assignment of National Health Service Corps (NHSC) personnel to provide primary health services in or to these HPSAs. NHSC health professionals with a service obligation may serve only in federally designated HPSAs. Programs with clinical training sites located in HPSAs are eligible to receive priority for certain residency training program grants administered by BHPr.
Several programs administered by the Center for Medicare and Medicaid Services (formerly the Health Care Financing Administration) also use the HPSA designation. Certain qualified providers in HPSAs are eligible for increased levels of Medicare and Medicaid reimbursement.
Criteria for designating HPSAs were published as final regulations (42 CFR part 5) in 1980. Criteria were then defined for each of seven health professional types (primary medical care, dental, psychiatric, vision care, podiatric, pharmacy, and veterinary care). The criteria for correctional facility HPSAs were revised at 54 FR 8738 in 1989, and the criteria for psychiatric HPSAs were expanded to mental health HPSAs at 57 FR 2477 in 1992. The currently-funded PHS programs which use the HPSA designations involve only the primary medical care, mental health, or dental HPSAs.
Individual requests for designation or withdrawal of a particular area, population group, or a facility as a HPSA are received and reviewed continuously by BHPr. The review process includes routine submission of such requests to the appropriate State Health Planning and Development Agency (SHPDA) and/or a unit of the State Health Department, the Governor, and other interested organizations and individuals for their comments and recommendations. Requests regarding primary medical care and mental health HPSAs are also submitted to the appropriate State medical society for comment, and dental HPSA requests are submitted to the appropriate State dental society.
Annually, lists of designated HPSAs are provided to all SHPDAs and/or State health departments, State medical and dental societies and others, together with a request to review and update the data on which the designations are based. Emphasis is placed on updating those designations which are more than three years old or where significant changes relevant to the designation criteria have occurred.
Recommendations for possible additions, continuations, revisions or withdrawals from the HPSA list are reviewed by BHPr, and the review findings are provided by letter to the agency or individual requesting action or providing data, with copies to other interested organizations and individuals. These letters constitute the official notice of designation as a HPSA, rejection of recommendations for HPSA designation, revision of a HPSA designation, and/or advance notice of pending withdrawals from the HPSA list. Designations (or revisions of designations) are effective as of the date of the notification letter from BHPr. Proposed withdrawals become effective only after interested parties in the area affected have been afforded the opportunity to submit additional information to BHPr in support of its continued or revised designation. If no new data are submitted or if the BHPr review confirms the proposed withdrawal, the withdrawal becomes effective upon publication in the
This notice contains three lists of designated HPSAs. Each list (primary medical care, mental health, and dental) includes all those areas, population groups, and facilities which were designated HPSAs as of May 23, 2001. This notice incorporates the most recent annual review of designated HPSAs and supersedes the HPSA list published in the
Each list of designated HPSAs (primary medical care, mental health, and dental) is arranged by State. Within each State, the list is first presented by county. If only a portion (or portions) of a county is (are) designated, or if the county is part of a larger designated service area, or if a population group residing in the county or a facility located in the county has been designated, the name of the service area, population group, or facility involved is listed under the county name. Counties which have a geographic HPSA designation in addition to one or more facility designations within the county are indicated by a “(g)” following the county name.
Following the county listing, a list of any designated service areas is presented, identifying their component parts—counties, towns, townships, census tracts (CTs), minor civil divisions (MCDs), census county divisions (CCDs), block numbering areas (BNAs), or magisterial districts, as defined by the Bureau of the Census. Those counties (or parts of counties included in service areas) which are classified as nonmetropolitan are indicated by an asterisk (*). “Nonmetropolitan” refers to those
Following the service area listing, a list of designated population groups (if any) is presented identifying each group and the geographic area wherein it resides. Following the population group listing, a list by name and location of any separately designated facilities (including prisons, correctional institutions, health centers, or hospitals) is presented.
In addition to the specific listings included in this notice, all Indian tribes which meet the definition of such tribes in the Indian Health Care Improvement Act of 1976, 25 U.S.C. 1603(d), are automatically designated as population groups with primary medical care and dental health professional shortages.
The lists of HPSAs below consist of all those which were designated as of May 23, 2001. It should be noted that additional HPSAs may have been designated by letter since May 23. The appropriate agencies and individuals have been or will be notified of these actions by letter.
Any designated HPSA listed below is subject to withdrawal from designation if new information received and confirmed by HPSAs indicates that the relevant data for the area involved have significantly changed since its designation or that incorrect or incomplete data were used in making the original designation.
All requests for new designations, updates, or withdrawals should be based on the relevant criteria in regulations published at 42 CFR part 5 (1997).
42 U.S.C. 254e)
Information on HPSAs is also available at http://www.bphc.hrsa.gov/dsd.
Office of the Assistant Secretary for Community Planning and Development, HUD.
Notice of funding for fiscal year 2001.
The fiscal year 2001 HUD Appropriations Act provided $32,450,000 in Fiscal Year 2001 funds for activities authorized in section 4 of the HUD Demonstration Act of 1993. Twenty-five million dollars of these funds is appropriated to the Enterprise Foundation (Enterprise) and the Local Initiatives Support Corporation (LISC) for activities authorized by section 4, as in effect immediately before June 12, 1997. The funds are to be used for capacity building for community development and affordable housing—provided that at least $5,000,000 of the funding is used in rural areas, including tribal areas. These funds are affected by the Consolidated Appropriations Act, 2001 (Pub. L. 106-554, 114 Stat. 2763A-214, approved December 21, 2000), which rescinds an amount equal to 0.22 percent of the Department's discretionary budget authority provided for FY 2001. Therefore, the total amount available for section 4 activities is $32,378,610 with $24,945,000 authorized for Enterprise and LISC of which $4,989,000 will be used in rural areas.
Section 4 authorizes the Secretary to establish by notice such requirements as may be necessary to carry out its provisions. This notice, which takes effect upon issuance, indicates that HUD will equally divide $24,945,000 appropriated for this capacity building initiative between Enterprise and LISC. In addition, $3,450,000 ($3,442,410 after rescission) is appropriated to Habitat for Humanity and $4,000,000 ($3,991,200 after rescission) to Youthbuild USA for section 4 activities. Each organization will match the HUD assistance provided with resources from private sources in an amount equal to three times its share, as required by section 4. Enterprise and LISC will each use at least $2,494,500 of their $12,472,500 share for activities in rural areas, including tribal areas. This notice also provides details regarding administrative and other requirements which shall apply to this program.
Karen Daly, Office of Community Planning and Development, Department of Housing and Urban Development, 451 Seventh Street, SW, Room 7216, Washington DC 20410. Telephone Number (202) 708-3176 Ext. 5552. Persons with hearing or speech impediments may access this number via TTY by calling the Federal Information Relay Service at 1-800-877-8339, or they may call: (202) 708-2565. Except for the “800” number, these are not toll-free telephone numbers.
The Departments of Veterans Affairs and Housing and Urban Development, Independent Agencies Appropriations Act (Pub. L. 106-377, 114 Stat. 1441, approved October 27, 2000) (VA/HUD FY 2001 Appropriations Act) makes $32,450,000 available from the Community Development Grants program for capacity building for community development and affordable housing as authorized by section 4 of the HUD Demonstration Act of 1993 (Pub. L. 103-120, 107 Stat. 1148, approved October 27, 1993) (42 U.S.C. 9816 note.) This amount was reduced to $32,378,610 by the Consolidated Appropriations Act, 2001 (Pub. L. 106-554, 114 Stat. 2763A-214, approved December 21, 2000), which rescinds an amount equal to 0.22 percent of the Department's discretionary budget authority provided for FY 2001. HUD will provide this assistance through Enterprise, LISC, Habitat for Humanity and Youthbuild USA “to develop the capacity and ability of community development corporations and community housing development organizations to undertake community development and affordable housing projects and programs.”
In Fiscal Year 1994, HUD provided $20 million to Enterprise and LISC through the National Community Development Initiative (NCDI), as authorized by section 4 of the HUD Demonstration Act of 1993. In FY 1996, $10 million for NCDI was authorized by section 12(b)(3) of the Housing Opportunity Program Extension Act of 1996 (Pub. L. 104-120, 110 Stat. 845, approved March 28, 1996). In accordance with these statutes, HUD divided both appropriations equally between Enterprise and LISC. HUD published a notice in the
In FY 1997, $30.2 million was authorized by the FY 1997 Emergency Supplemental Appropriations Act (Pub. L. 105-18, 111 Stat. 198 and 201, approved June 12, 1997). HUD published a notice in the
The FY 1998 VA/HUD Appropriations Act (Pub. L. 105-65, 111 Stat. 1334, approved October 27, 1997) and the FY 1999 VA/HUD Appropriations Act (Pub. L. 105-276, 112 Stat. 246, approved October 21, 1998) each provided $15 million for activities authorized by section 4. On September 11, 1998 (63 FR 48984) and November 8, 1999 (64 FR 60824), HUD published notices which contained requirements for the funds that were made available to LISC and Enterprise.
In FY 2000, $26,250,000 was authorized by the FY 2000 HUD Appropriations Act (Pub. L. 106-74, 113 Stat. 1047, approved October 20, 1999). HUD published a notice in the
Today's notice contains requirements for the newly appropriated $32,378,610. These funds may be used for new activities or, in the case of Enterprise and LISC, to continue NCDI activities that received funding under the notice dated March 30, 1994 (59 FR 14988). New grant agreements will be executed to govern these NCDI activities.
After rescission, the VA/HUD FY 2001 Appropriations Act provides $32,378,610 for activities authorized by section 4. In accordance with congressional intent, Enterprise and LISC each will be awarded $12,472,500. Each of the two organizations will use $2,494,500 of its share for activities in rural areas, including tribal areas. Habitat for Humanity will be awarded
Eligible activities under this award include:
(a) Training, education, support, and advice to enhance the technical and administrative capabilities of community development corporations (CDCs) and community housing development organizations (CHDOs), including the capacity to participate in consolidated planning as well as in fair housing planning and continuum of care homeless assistance efforts that help ensure community-wide participation in assessing area needs; consulting broadly within the community; cooperatively planning for the use of available resources in a comprehensive and holistic manner; and assisting in evaluating performance under these community efforts and in linking plans with neighboring communities in order to foster regional planning;
(b) Loans, grants, development assistance, predevelopment assistance, or other financial assistance to CDCs/CHDOs to carry out community development and affordable housing activities that benefit low-income families and persons, including the acquisition, construction, or rehabilitation of housing for low-income families and persons, and community and economic development activities which create jobs for low-income persons; and
(c) Such other activities as may be determined by Enterprise, LISC, Habitat for Humanity or Youthbuild USA in consultation with the Secretary or his designee.
As required by section 4 of the 1993 Act, the $32,378,610 appropriation is subject to each award dollar being matched by three dollars in cash or in-kind contributions to be obtained from private sources. Each of the organizations receiving these funds will document its proportionate share of matching resources, including resources committed directly or by a third party to a grantee or subgrantee after October 27, 2000 to conduct activities.
In-kind contributions shall conform to the requirements of 24 CFR 84.23.
The award will be governed by 24 CFR part 84 (Uniform Administrative Requirements), OMB Circular A-122 (Cost Principles for Nonprofit Organizations), and OMB Circular A-133 (Audits of States, Local Governments, and Non-Profit Organizations).
Other requirements will be detailed in the terms and conditions of the grant agreement provided to grantees, including the following:
(a) Each grantee will submit to HUD a specific work and funding plan for each community showing when and how the federal funds will be used. The work plan must be sufficiently detailed for monitoring purposes and must identify the performance goals and objectives to be achieved. Within 30 days after submission of a specific work plan, HUD will approve the work plan or notify the grantee of matters that need to be addressed prior to approval, or the work plan shall be construed to be approved. Work plans may be developed for less than the full dollar amount and term of the award, but no HUD-funded costs may be incurred for any activity until the work plan is approved by HUD. All activities are also subject to the environmental requirements in paragraph 6(f) of this notice.
(b) Each grantee shall submit to HUD an annual performance report due 90 days after the end of each calendar year, with the first report due on March 31, 2003. Performance reports shall include reports on both performance and financial progress under work plans and shall include reports on the commitment and expenditure of private matching resources utilized through the end of the reporting period. Reports shall conform to the reporting requirements of 24 CFR part 84. Additional information or increased frequency of reporting, not to exceed twice a year, may be required by HUD any time during the grant agreement if HUD finds such reporting to be necessary for monitoring purposes.
To further the consultation process and share the results of progress to date, the Secretary may require grantees to present and discuss their performance reports at annual meetings in Washington, DC during the life of the award.
(c) The performance reports must contain the information required under 24 CFR part 84, including a comparison of actual accomplishments with the objectives and performance goals of the work plans. In the work plans each grantee will identify performance goals and objectives established for each community in which it proposes to work and appropriate measurements under the work plan such as: The number of housing units and facilities each CDC/CHDO produces annually during the grant period and the average cost of these units. Provided, however, that when the activity described in a work plan is not to be undertaken in a single community that a report indicating the areas in which the activity will be undertaken, along with appropriate goals and objectives, will be provided when that information is available. The performance reports will also include a discussion of the reasonableness of the unit costs; the reasons for slippage if established objectives and goals are not met; and additional pertinent information.
(d) A final performance report, in the form described in paragraph (c) above, shall be provided to HUD by each grantee within 90 days after the completion date of the award.
(e) Financial status reports (SF-269A) shall be submitted semiannually.
(f) Environmental review. Individual projects to be funded by these grants may not be known at the time the overall grants are awarded and also may not be known when some of the individual subgrants are made. Therefore, in accordance with 24 CFR 50.3(h), the application and the grant agreement must provide that no commitment or expenditure of HUD or local funds to a HUD-assisted project may be made until HUD has completed an environmental review to the extent required under applicable regulations and has given notification of its approval in accordance with 24 CFR 50.3(h).
Grantees will be required to file an application containing the following:
(a) Application for Federal Assistance (OMB Standard Form 424), Non-construction Assurances (SF-424B), Certification Regarding Drug-Free Workplace Requirements, Certification Regarding Lobbying, and the Fair Housing and Equal Opportunity certification described in section 8(f) of this notice;
(b) A Summary Budget for the amount of funds being requested as described in section VI(H) of the Notice with respect to “Funding Availability for Community Development Technical Assistance (CD-TA) Programs—CHDO, HOME, McKinney Act Homeless Assistance and HOPWA” published in the
(a)
(b)
(c)
(d)
(e)
The Byrd Amendment, which is implemented in regulations at 24 CFR part 87, prohibits applicants for Federal contracts and grants from using appropriated funds to attempt to influence Federal executive or legislative officers or employees in connection with obtaining such assistance, or with its extension, continuation, renewal, amendment or modification. The Byrd Amendment applies to the funds that are the subject of this notice. Therefore, applicants must file with their application a certification stating that they have not made and will not make any prohibited payments and, if any payments or agreement to make payments of nonappropriated funds for these purposes has been made, a form SF-LLL disclosing such payments must be submitted.
The Lobbying Disclosure Act of 1995 (Pub.L. 104-65, approved December 19, 1995), which repealed section 112 of the HUD Reform Act and resulted in the elimination of the regulations at 24 CFR part 86, requires all persons and entities who lobby covered Executive or Legislative Branch officials to register with the Secretary of the Senate and the Clerk of the House of Representatives and file reports concerning their lobbying activities.
(f)
If an entity that receives funding under this notice :
(a) Has been charged with a systemic violation of the Fair Housing Act by the Secretary alleging ongoing discrimination;
(b) Is a defendant in a Fair Housing Act lawsuit filed by the Department of Justice alleging an ongoing pattern or practice of discrimination; or
(c) Has received a letter of noncompliance findings under Title VI, Section 504, or Section 109,—
HUD will determine whether the charge, lawsuit, or letter of findings has been resolved to the satisfaction of the Department and, if not, take appropriate action. HUD's decision regarding whether a charge, lawsuit, or a letter of findings has been satisfactorily resolved will be based upon whether appropriate actions have been taken to address allegations of ongoing discrimination in the policies or practices involved in the charge, lawsuit, or letter of findings.
(ii)
(iii)
(g)
(h)
Section 4 of the HUD Demonstration Act of 1993 (Pub. L. 103-120, 42 U.S.C. 9816 note), as amended, Pub. L. 106-377, 114 Stat. 1441 and Pub. L. 106-554, 114 Stat. 2763A-213.
Transportation Security Administration, DOT.
Interim final rule.
The Transportation Security Administration (TSA) announces a fee that will be imposed on air carriers and foreign air carriers engaged in air transportation, foreign air transportation, and intrastate air transportation effective February 18, 2002. For purposes of this rule, the fee is described as the Aviation Security Infrastructure Fee. The Aviation Security Infrastructure Fee is imposed pursuant to the provisions of the Aviation and Transportation Security Act and is in addition to the September 11th Security Fee imposed on passengers pursuant to an interim final rule published in the
This interim final rule is effective on February 18, 2002. Although the imposition of the Aviation Security Infrastructure Fee is statutorily exempted from the rulemaking notice and comment procedures set forth in the Administrative Procedure Act, 5 U.S.C. 553, comments received on or before March 18, 2002 will be reviewed and considered.
Submit written, signed comments to TSA Docket No. 2002-11334 , the Docket Clerk, U.S. DOT Dockets, Room PL-401, 400 Seventh Street, SW., Washington, DC 20590-0001. All comments received will be available for examination at the above address between 9 a.m. and 5 p.m., e.t., Monday through Friday, except Federal holidays. Those desiring notification of receipt of comments must include a self-addressed, stamped envelope or postcard on which the following statement is made: “Comments to Docket No. TSA-2002-11334.” The post card will be date stamped and mailed to the sender. Comments also may be sent electronically to the Dockets Management System (DMS) at:
For guidance involving technical matters: Randall Fiertz, Deputy Director, Cost and Performance Management, Federal Aviation Administration, c/o Department of Transportation (DOT), Office of the Secretary, Office of the Assistant Secretary for Budget and Programs, 400 Seventh St., SW., Room 10101, Washington, DC 20590; telephone (202) 366-9192. For other matters: Rita M. Maristch, Department of Transportation, Office of the General Counsel, Office of Environmental, Civil Rights and General Law, 400 Seventh St., SW., Room 10102, Washington, DC 20590; telephone (202) 366-9161. Office hours are from 9:00 a.m. to 5:30 p.m., e.t. Monday through Friday, except Federal holidays.
An electronic copy of this document may be downloaded using a modem and suitable communications software from the Government Printing Office's Electronic Bulletin Boards Service at (202) 512-1661. Internet users may reach the
Internet users can access this document and all comments received by TSA through DOT's docket management system web site,
The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires TSA to comply with small entity requests for information and advice about compliance with statutes and regulations within TSA's jurisdiction. However, because TSA was just established on November 19, 2001, pursuant to Aviation and Transportation Security Act, Pub. L. 107-71, it does not yet have the infrastructure or personnel to provide such information and guidance. Until such time that it does, the Office of the Secretary of Transportation will handle all SBREFA inquiries. Accordingly, any small entity that has a question regarding this document may contact the individuals listed under the caption
The September 11, 2001 terrorist attacks and the potential for future attacks led Congress to enact the Aviation and Transportation Security Act, Pub. L. 107-71 (ATSA), November 19, 2001, which established TSA as an administration within DOT. TSA is headed by the Under Secretary of Transportation for Security (Under Secretary).
Section 118 of ATSA added § 44940 to Title 49, U.S.C. Section 44940 requires that within 60 days of ATSA's enactment, or as soon as possible thereafter, (1) TSA impose security service fees on passengers of air carriers and foreign air carriers in air transportation, foreign air transportation, and intrastate air transportation (air transportation) who are enplaning aircraft on flights originating at airports in the United States; and (2) to the extent the passenger fees are insufficient to cover TSA's costs of providing civil aviation security services, TSA may impose additional fees on air carriers and foreign air carriers in air transportation. The fees are to help pay the costs of providing U.S. civil aviation security services, which are described in § 44940(a)(1) as:
(1) The salary, benefits, overtime, retirement and other costs of screening personnel, their supervisors and managers, and Federal law enforcement personnel deployed at airport security screening locations;
(2) The costs of training such personnel and the acquisition, operation, and maintenance of equipment used by these personnel;
(3) The costs of performing background investigations of personnel;
(4) The costs of the Federal air marshals program;
(5) The costs of performing civil aviation security research and development under Title 49, U.S.C.;
(6) The costs of Federal Security Directors; and
(7) The costs of deploying Federal law enforcement personnel.
According to § 44940(a)(1), the Under Secretary must determine the amount of the costs of providing these civil aviation security services. His determination is conclusive and not subject to judicial review.
Section 44940(c) provides that the security service fee imposed on passengers may not exceed $2.50 per enplanement or $5.00 per one-way trip. On December 31, 2001, TSA published an interim final rule “Imposition and Collection of Passenger Civil Aviation Security Service Fees” (September 11th Security Fees) in the
The September 11th Security Fee is set at the maximum amount permitted by ATSA because the costs of providing civil aviation security services, as determined by the Under Secretary, are greater than the amount that would be recovered by the collection of fees at that level. Based on collections beginning on February 1, 2002, the September 11th Security Fees collected at the statutory maximum would yield less than $1 billion in fiscal year 2002. The yield would be slightly more in future fiscal years, but will still be insufficient to cover TSA's costs in providing security services identified in 49 U.S.C. 44940.
Section 44940(a)(2)(A) expressly states that if revenues from the September 11th Security Fee are expected to fall short of the amount required to cover civil aviation security service costs, TSA may impose a fee on air carriers and foreign air carriers in air transportation to cover that shortfall. Pursuant to the terms of ATSA, the amount of that fee collected each fiscal year by TSA may not exceed the aggregate amount air carriers and foreign air carriers paid for screening passengers and property in calendar year 2000, as determined by the Under Secretary. For fiscal years 2002 through 2004, the fee imposed on each air carrier and foreign air carrier is limited to the amount that carrier paid for screening passengers and property in calendar year 2000, as determined by the Under Secretary. In addition, the fee collected in fiscal year 2002 may not exceed the amount each carrier paid for screening passengers and property for the period of time in calendar year 2000 proportionate to the period of time in fiscal year 2002 during which the fees are collected. Beginning in fiscal year 2005, the Under Secretary may determine the per-carrier limitation on the basis of market share or any other appropriate measurement, rather than on the carrier's actual screening costs in calendar year 2000.
ATSA requires that the air carrier fee is to be imposed through publication of a notice in the
Section 44940(e)(4) permits the Under Secretary to require an air carrier or foreign air carrier to provide any information necessary to verify that the amount of the fee imposed on the carrier is correct and that the fees are remitted in accordance with law and regulation. According to § 44940(e)(5), the air carrier fee is not considered to be part of the amount paid for taxable transportation under 26 U.S.C. 4261. In addition, § 44940(e)(6) prohibits an air carrier and foreign air carrier from retaining any portion of the fee to cover the carrier's costs of remitting the fee.
Effective February 18, 2001, the Under Secretary is imposing a fee on air carriers and foreign air carriers engaged in air transportation to pay for the costs of providing U.S. civil aviation security service. For purposes of this rule, the fee will be described as the Aviation Security Infrastructure Fee. The applicability of this part is currently limited to air carriers and foreign air carriers operating passenger aircraft in air transportation. In accordance with 49 U.S.C. 44901(f), TSA is currently considering the screening system necessary to ensure the security of cargo that is transported by all-cargo aircraft in air transportation.
Section 1511.3 provides definitions for various terms used in this part. If a term is not specifically defined in this section, the definitions provided in 49 U.S.C. 40102 apply. TSA anticipates issuing additional general definitions, which will provide further guidance.
According to § 1511.5 of this part, TSA may not collect Aviation Security Infrastructure Fees in an amount that would exceed the aggregate amount air carriers and foreign air carriers paid for screening passengers and property in calendar year 2000, as determined by the Under Secretary. For fiscal years 2002 through 2004, this limitation is constrained by a “per-carrier” limitation. More specifically, TSA may not collect Aviation Security Infrastructure Fees from an air carrier or foreign air carrier in an amount that exceeds the amount that carrier paid for screening passengers and property in calendar year 2000, as determined by the Under Secretary. For fiscal years 2005 and beyond, the Under Secretary will redetermine the “per-carrier” limitation and such redeterminations may be based on the carrier's respective market share or any other appropriate measure in lieu of its actual screening costs in calendar year 2000. Because the “per-carrier” limit through fiscal year 2004 must be based on each carrier's screening costs in 2000, air carriers and foreign air carriers that were not engaged in air transportation as defined in this part in calendar year 2000 will not be subject to the imposition of the Aviation Security Infrastructure Fee until 2005.
Accordingly, TSA must determine the aggregate amount carriers paid for passenger and property screening in calendar year 2000 and the amount each individual carrier paid for screening during that same year. Therefore, all air carriers and foreign air carriers engaged in air transportation in 2000 must fully complete the form set forth in Appendix A to this part, “Calendar Year 2000 Costs for Passenger and Property Screening” and submit the form to TSA pursuant to the instructions provided therein by May 18, 2002. In the case of a merger, acquisition, corporate restructuring, reorganization, or name change involving an air carrier or foreign air carrier that paid for the screening of passengers and property transported by passenger aircraft in the United States during calendar year 2000, the successor entity must include those costs on Appendix A of this part and submit those costs together with its own costs to TSA on one form by May 18, 2002. Any other air carrier or foreign air carrier that is no longer providing air transportation, but was doing so in calendar year 2000, must also complete the form set forth in Appendix A and submit the form to TSA by May 18, 2002. Broad applicability of this requirement is necessary because the
We specifically invite comments with respect to Appendix A. Other than comments placed in the public docket, information submitted pursuant to 49 U.S.C. 44940(a)(2)(B) or this part, including that contained in Appendix A, will be deemed Sensitive Security Information and subject to the non-disclosure requirements of 49 U.S.C. 40119(b). In addition, confidential business information provided in Appendix A will be protected from public disclosure, as appropriate, under 5 U.S.C. 552, 18 U.S.C. 1905, and 14 CFR 302.12. Requests for confidentiality for purposes of confidential business information must be filed with the Office of the General Counsel (C-10), Department of Transportation, at the address indicated in Appendix A.
Section 1511.7 of the interim final rule mandates that by May 31, 2002, each air carrier and foreign air carrier engaged in air transportation remit to TSA 3.273 percent of the total amount the carrier has indicated in Appendix A of this part, or an amount as otherwise determined by the Under Secretary. Payment in this amount will represent the Aviation Security Infrastructure Fee due for the period running from February 18 through February 28, 2002. Also by May 31, 2002, these air carriers and foreign air carriers must remit 16.666 percent of the total amount the carrier has indicated in Appendix A, or an amount as otherwise determined by the Under Secretary. Payment in this amount will represent the Aviation Security Infrastructure Fee due for the period running March 1 through April 30, 2002. By the last calendar day of each month following May 2002 through September 2004, each air carrier and foreign air carrier must remit to TSA 8.333 percent of the total amount the carrier has indicated in Appendix A, or an amount as otherwise determined by the Under Secretary. By the last calendar day of each month following September 2004, each air carrier and foreign air carrier must remit to TSA 8.333 percent of the total amount as determined by the Under Secretary.
Aviation Security Infrastructure Fees are payable to the “Transportation Security Administration” in U.S. currency and must be drawn on a U.S. bank. A monthly payment totaling $1,000 or more must be remitted by electronic funds transfer. Although TSA strongly encourages that payment less than $1,000 also be remitted by electronic funds transfer, such payment may be remitted by check, money order, wire transfer or draft. Carriers will be responsible for paying any bank processing charges on fees remitted pursuant to this part when such charges are assessed on the U.S. government. Specific instructions concerning remittance will be provided directly to air carriers and foreign air carriers and will be posted on the DOT web site at
Section 1511.9 of this interim final rule requires an air carrier or foreign air carrier to retain any and all documents, records, or information related to the amount of the Aviation Security Infrastructure Fees imposed on that carrier, including all information applicable to the costs submitted in Appendix A, and information that is reasonably necessary to complete an audit. No later than July 1, 2002, each air carrier and foreign air carrier must submit to TSA an audit performed by an independent certified public accountant of the information the carrier provided pursuant to this part. The accountant must express an opinion as to the fairness and reasonableness of the air carrier's or foreign air carrier's procedures for accounting for and remitting the fees. The accountant's working papers with respect to the audit must be included with this submission. Specific instructions concerning the submission of the audit and working papers will be provided directly to the air carriers and foreign air carriers and will be posted on the DOT web site at
This rule requires air carriers and foreign air carriers to allow certain authorized Federal representatives to review and audit any of the carrier's books and records and to provide other information necessary to verify that submissions pursuant to 49 U.S.C. 44940(a)(2)(B) and this part, including that contained in Appendix A, are true and correct and that the aviation security infrastructure fees were remitted consistent with law and regulation.
The rule's enforcement provision states that in addition to any other remedies allowed by law, falsification by any party, directly or indirectly, of information provided by an air carrier or foreign air carrier pursuant to this part, including information submitted in Appendix A, may be prosecuted criminally resulting in a fine and/or imprisonment under 18 U.S.C 1001. An air carrier's or foreign air carrier's failure to comply with the requirements 49 U.S.C. 44940 or the provisions of this part may result in a claim due the United States by the carrier, which shall be collectable pursuant to Federal Claims Collection Act and implementing DOT regulations at 49 CFR part 89.
Section 44940(d)(1) of title 49, U.S.C., explicitly exempts the imposition of the civil aviation security service fees authorized in § 44940 from the procedural rulemaking notice and comment procedures set forth in 5 U.S.C. 553. In addition, it would be impractical and contrary to the public interest to provide for notice and an opportunity for comment before issuing this rule. Immediate action is expressly contemplated by ATSA and necessary to begin collecting the security service fees provided for by the statute. However, TSA will consider all comments received on or before the closing date for comment, including comments received before the issuance of this rule. We will also consider comments filed late to the extent practicable. We may amend this rule in light of the comments we receive.
TSA has determined that this interim final rule will impose new collection of information burdens within the meaning of the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. chapter 35) (PRA). TSA is required to submit this proposed collection of information to the Office of Management and Budget (OMB) for review and approval and, accordingly, seeks public comments. Pursuant to 5 CFR 1320.13,
This rulemaking has been reviewed under the provisions of § 6(a)(3)(D) of Executive Order 12866, Regulatory Planning and Review, as well as under DOT's regulatory policies and procedures because it may impose significant costs on air carriers and foreign air carriers. An assessment in accordance with the Executive Order will be conducted in the future. No additional regulatory analysis or evaluation accompanies this rule. TSA has not assessed whether this rule will have a significant economic impact on a substantial number of small entities as defined in the Regulatory Flexibility Act of 1980. When no notice of proposed rulemaking has first been published, the Regulatory Flexibility Act does not apply.
The TSA has analyzed this rule under the principles and criteria of Executive Order 13132, Federalism. We determined that this action will not have a substantial direct effect on the States, or the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, we have determined that this final rule does not have federalism implications.
The Unfunded Mandates Reform Act of 1995 (the Act), enacted as Pub. L. 104-4 on March 22, 1995, is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. Title II of the Act requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in a $100 million or more expenditure (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector.
The requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply when rulemaking actions are taken without the issuance of a notice of proposed rulemaking. Accordingly, the TSA has not prepared a statement under the Act.
TSA has reviewed this action for purposes of the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4347) and has determined that this action will not have a significant effect on the human environment.
The energy impact of this rule has been assessed in accordance with the Energy Policy and Conservation Act (EPCA) Pub. L. 94-163, as amended. (42 U.S.C. 6362). It has been determined that this rule is not a major regulatory action under the provisions of the EPCA.
Accounting, Auditing, Air carriers, Air transportation, Enforcement, Federal oversight, Fees, Foreign air carriers, Recordkeeping and reporting requirements, Security measures.
For the reasons set forth in the preamble, the Transportation Security Administration adds a new part 1511 in Title 49 in Chapter XII, Subchapter A, of the Code of Federal Regulations to read as follows:
49 U.S.C. 44901 and 44940.
(a) This part prescribes the imposition of a fee on air carriers and foreign air carriers in air transportation to pay for the costs of providing U.S. civil aviation security services as described in 49 U.S.C. 44940.
(b) For purposes of this part, the fee will be described as the “Aviation Security Infrastructure Fee.”
The following definitions apply for purposes of this part. For other definitions that may be applicable to this part refer to 49 U.S.C. 40102.
(a) Effective February 18, 2002, an Aviation Security Infrastructure Fee will be imposed on air carriers and foreign air carriers engaged in air transportation.
(b) The amount of the Aviation Security Infrastructure Fee for each fiscal year will not exceed, in the aggregate, the amounts paid in calendar year 2000 by air carriers and foreign air carriers for the screening of passengers and property transported by passenger aircraft in the United States, as determined by the Under Secretary.
(c) For fiscal years 2002, 2003 and 2004, the amount of the Aviation Security Infrastructure Fee imposed on each air carrier and foreign air carrier will not exceed the amount each such carrier paid for the screening of passengers and property transported by passenger aircraft in the United States during calendar year 2000, as determined by the Under Secretary.
(d) Each air carrier and foreign air carrier that paid for the screening of passengers and property in calendar year 2000 must fully complete the form set forth in Appendix A to this part titled, “Calendar Year 2000 Costs Paid for Passenger and Property Screening,” and submit the completed form to the Transportation Security Administration by May 18, 2002.
(e) In the case of a merger, acquisition, corporate restructuring, reorganization, or name change involving an air carrier or foreign air carrier that paid for the screening of passengers and property transported by passenger aircraft in the United States during calendar year 2000, the successor entity must include those screening costs in Appendix A of this part and submit those costs together with its own costs on one form in accordance with paragraph (d) of this section. Any other air carrier or foreign air carrier that paid for the screening of passengers and property transported by passenger aircraft in the United States during calendar year 2000 but is no longer providing air transportation must also complete the form set forth in Appendix A and submit the form in accordance with paragraph (d) of this section.
(f) The Under Secretary has determined that the information submitted pursuant to this part and 49 U.S.C. 44940(a)(2)(B) is Sensitive Security Information and is subject to the non-disclosure requirements of 49 U.S.C. 40119(b).
(g) The amount of the Aviation Security Infrastructure Fee imposed on each air carrier and foreign air carrier will be redetermined for fiscal years 2005 and beyond, and such redeterminations may be based on the carrier's respective market share or any other appropriate measure in lieu of the measure provided in paragraph (c) of this section.
(a) No later than May 31, 2002, each air carrier and foreign air carrier engaged in air transportation must remit to TSA.
(1) 3.273 percent of the total amount the carrier has indicated in Appendix A of this part, or an amount as otherwise determined by the Under Secretary, which will represent the Aviation Security Infrastructure Fee due for the period running from February 18 through February 28, 2002; and,
(2) 16.666 percent of the total amount the carrier has indicated in Appendix A of this part, or an amount as otherwise determined by the Under Secretary, which will represent the Aviation Security Infrastructure Fee due for period running from March 1 through April 30, 2002.
(b) Each air carrier and foreign air carrier engaged in air transportation must remit to TSA 8.333 percent of the total amount the carrier has indicated in Appendix A of this part, or an amount as otherwise determined by the Under Secretary, by the last calendar day of each month following May 2002 up to and including September 2004.
(a) Each air carrier and foreign air carrier engaged in air transportation must remit to TSA 8.333 percent of the total amount as determined by the Under Secretary pursuant to section 1511.5(g) of this part by the last calendar day of each month following September 2004.
(b) Aviation Security Infrastructure Fees must be payable to the “Transportation Security Administration” in U.S. currency and drawn on a U.S. bank.
(1) Aviation Security Infrastructure Fees of $1,000 or more must be remitted by electronic funds transfer.
(2) Aviation Security Infrastructure Fees under $1,000 may be remitted by electronic funds transfer, check, money order, wire transfer, or draft.
(a) Air carriers and foreign air carriers are responsible for paying any bank processing charges on Aviation Security Infrastructure Fees remitted under this part when such charges are assessed on the U.S. government.
(a) Each air carrier and foreign air carrier must submit an audit performed by an independent certified public accountant of the information provided pursuant to this part to the Transportation Security Administration by July 1, 2002. The cost of the audit will be borne by the carrier. The accountant must express an opinion as to the fairness and reasonableness of the air carrier's and foreign air carrier's procedures used for accounting and remitting the fees. The accountant's working papers with respect to the audit must accompany this submission.
(b) Each air carrier and foreign air carrier must maintain and retain any and all documents, records, or information related to the amount of the Aviation Security Infrastructure Fees imposed on the carrier pursuant to this
(a) Upon request, air carriers and foreign air carriers must allow any authorized representative of the Secretary of Transportation, the Under Secretary of Transportation for Security, the Inspector General of the Department of Transportation, or the Comptroller General of the United States to audit or review any of the books and records and provide any other information necessary to verify that:
(1) The information submitted pursuant to 49 U.S.C. 44940(a)(2)(B) and this part, including that provided in Appendix A, is true and correct; or
(2) The Aviation Security Infrastructure Fees were remitted consistent with this part.
(a) In addition to any other remedies allowed by law, willful falsification by any party, directly or indirectly, of information provided by an air carrier or foreign air carrier pursuant to this part, including information submitted in Appendix A as required by section 1511.5 of this part, may be prosecuted criminally resulting in a fine and/or imprisonment under 18 U.S.C 1001.
(b) An air carrier's or foreign air carrier's failure to comply with the requirements of 49 U.S.C. 44940 or the provisions of this part may result in a claim due the United States by the carrier, which claim shall be collectable pursuant to 31 U.S.C. Chapter 37 and the Department of Transportation's implementing regulations at 49 CFR part 89.
When filling out this form, the responding air carrier or foreign air carrier shall include all costs incurred in calendar year 2000 by that air carrier for the screening of passengers and property. Costs are those attributed to the screening of passengers and property in the United States for both flights within the United States and flights from the United States to foreign destinations. Reported costs must be consistent with the air carrier's financial accounting information reported in accordance with generally accepted accounting principles.
Where actual costs of screening passengers and property cannot be directly identified through an air carrier's accounting system, the air carrier shall use an appropriate alternate cost assignment methodology. Documentation that explains and supports the assignment methodology used, the applicable pool and the allocation basis must be made available upon request. For costs related to capitalized property, please report the associated depreciation expense incurred during calendar year 2000. Capitalization policy must also be made available upon request.
To the extent necessary, the reporting air carrier may aggregate those specific costs that have been incurred but cannot be stated in the detailed cost categories requested by this form. However, all of the costs identified by this form must be included in the total calculations. In addition, explanations regarding costs that have been aggregated need to be provided. Costs reported in Appendix A do not need to include costs that may have been incurred for a position higher than those of the air carrier's director of security (or equivalent). Costs incurred for higher positions, such as those of the air carrier's chief executive officer, do not need to be included.
When including cost information on acquired and/or merged air carriers, the successor air carrier must specify the names of all of such entities whose calendar year 2000 passenger and property screening costs are included in that air carrier's submission as Appendix A.
The costs listed below are to be in US dollars, rounded to the nearest dollar. Place a zero in the appropriate box to indicate cost categories in which the air carrier did not incur costs for passenger and property screening in calendar year 2000.
Examples of cost types that appear in the supporting notes below are for illustrative purposes only and are not intended to set forth all relevant costs that must be reported by air carriers and foreign air carriers. In submitting information to TSA, air carriers and foreign air carriers must submit all of their relevant costs, regardless of whether those costs have been specifically illustrated in the notes.
This form will be available electronically from the Department of Transportation's website at
Consistent with 49 CFR § 1511.5(f), information submitted in Appendix A is deemed to be Sensitive Security Information and will be so protected from public disclosure under 49 U.S.C. 40119(b). In addition, confidential business information and economic information provided in Appendix A will be protected from public disclosure, as appropriate, under 5 U.S.C. § 552 (the Freedom of Information Act), 14 CFR § 302.12, and 18 U.S.C. § 1905. Requests for confidentiality must be filed with the Office of the General Counsel, Department of Transportation (C-10), 400 Seventh Street, SW, Room 10102, Washington, DC 20590
a. These are costs that the air carrier incurred directly. Includes costs incurred for air carrier personnel salaries and benefits, equipment owned, leased or rented directly by that air carrier and any other costs directly incurred.
b. These are costs that the air carrier incurred through contracts with security firms. Includes personnel, equipment and other costs incurred through contracts with third party security companies.
c. These are costs that the air carrier incurred through other means. Includes costs incurred through air carrier security consortiums.
1. Salary, benefits, overtime, retirement and other costs of checkpoint screening personnel.
2. Salary, benefits, overtime, retirement and other costs of exit lane monitors.
3. Salary, benefits, overtime, retirement and other costs of cargo screeners.
4. Salary, benefits, overtime, retirement and other costs of checked baggage screeners.
5. Salary, benefits, overtime, retirement and other costs of all baggage runners who move property such as baggage to and from screening areas.
6. Salary, benefits, overtime, retirement and other costs of all supervisory personnel, including Checkpoint Screening Supervisors.
7. All associated expensed non-labor costs including computers, communications equipment, time management systems, supplies, parking, identification badging, furniture, fixtures, and travel.
8. All costs of performing required background investigations on all screening personnel and supervisors. Screening personnel and supervisors includes checkpoint screening personnel, exit lane monitors, cargo screeners, checked baggage screeners, baggage runners, and their supervisors.
9. All costs incurred for the training and testing of all screening personnel and supervisors, including initial, recurrent and remedial training. Includes any computer-based training and the development of training programs for the screening of persons and property as well as any travel, room and board, and all other such expenses related to training.
10. The costs of implementing and maintaining training records for all screening personnel and supervisors.
11. The costs of completing evaluations for all screening personnel and supervisors.
12. All costs for drug and alcohol testing as well as any associated counseling and/or treatment for all screening personnel and supervisors.
13. All costs of renting, purchasing, maintaining, and/or cleaning of uniforms and any related equipment such as flashlights and batons for all screening personnel and supervisors.
14. All costs incurred by air carriers for the use of canines and their handlers used for the screening of persons and property.
15. All costs associated with obtaining security clearances for personnel relating to the screening of persons and property.
16. All costs associated with the purchase, installation, and testing of all screening equipment. In instances where the equipment is capitalized, provide the depreciation expense in lieu of costs associated with purchase, installation, and final acceptance testing. This includes such equipment as Metal Detection Devices, Hand Wands, X-ray screening machines, Explosives Trace Detection Devices, Explosives Detection Systems, or any other such similar technologies. Includes any costs incurred or depreciation costs recognized in calendar year 2000 for the modification and/or construction of any facility needed to accommodate screening, including architecture and engineering. Also includes the costs of any refurbishment and/or modernization of the equipment.
17. Costs of operating, maintaining, and calibrating installed screening equipment. This includes such equipment as Metal Detection Devices, Hand Wands, X-ray screening machines, Explosives Trace Detection Devices, Explosives Detection Systems, or any other such similar technologies. Includes such costs as test objects and X-ray radiation surveys, electricity costs and maintenance contract costs incurred for the operations of such equipment.
18. Costs of maintaining integrity of sterile areas. Includes costs of opening sterile areas, emergency evacuations of sterile areas, and re-screenings not included elsewhere.
19. The cost of purchase or rent, installation, testing, and maintenance of checkpoint signs, barriers, lane markers, and exit lane doors.
20. Any additional costs for special screening such as for disabled passengers, VIP passengers, classified and/or high value items.
21. All security company contract costs for the screening of persons and property that cannot be detailed into any other cost category.
22. All direct costs for the real estate utilized for the screening of persons and property. Includes space at airports for the performance of these functions, as well as such space used for break rooms, private screening rooms, storages space, training rooms, and office space. Also includes appropriate space for the oversight of the screening functions outside of airports such as in headquarters or regional offices.
23. All costs for utilities used for screening. Includes electricity, heating/ventilation/cooling, and telecommunications costs not elsewhere specified.
24. All costs incurred for the Ground Security Coordinator's oversight of the screening functions. Includes personnel salaries, benefits, retirement, training, and non-labor costs.
25. All air carrier head office, regional, or airport specific costs associated with the administration and oversight of screening not elsewhere specified. Includes personnel salaries, benefits, retirement, training, and non-labor costs.
26. All costs associated with the administration and oversight of screening contracts. Includes personnel, benefits, retirement, training, and non-labor costs.
27. All costs not elsewhere specified for background audit checks for all screeners and supervisors.
28. All legal support costs incurred during calendar year 2000 relating to aviation security screening. Includes legal assistance for the implementation and execution of security screening contracts.
29. All costs for accounting and financial services incurred for the support of the screening functions.
30. Includes all labor and non-labor costs for such items as human resource administration, clerical assistance, information technology, and other support functions related to screening.
31. All insurance costs relating to screening. Includes worker's compensation and general liability insurance.
32. All costs incurred by the air carriers for law enforcement personnel costs that were reimbursed by the air carriers for services performed in connection with the screening of persons and property.
33. All costs associated with the recruitment of screening personnel and supervisors. Includes signing bonuses, travel, and other recruitment expenses.
34. Any costs incurred for fees charged by other organizations for the management of contracts for the screening of persons and property.
35. Any costs incurred not elsewhere specified during calendar year 2000 for the screening of passengers and property. These costs should be itemized on a separate sheet. Includes any fines or monetary penalties incurred for screening as well as any profit/bonuses paid to contractors for screening services not included elsewhere on the form.
Transportation Security Administration, DOT.
Notice.
The Transportation Security Administration (TSA) announces its assumption of civil aviation security functions and responsibilities, as provided by the Aviation and Transportation Security Act. Effective February 17, 2002, civil aviation security functions and responsibilities currently performed by the Federal Aviation Administration are transferred to the TSA. As required by the Aviation and Transportation Security Act, TSA will federalize all airport security screeners, under a schedule described in this notice.
Robert Klothe or Steven Cohen, Office of the General Counsel, Department of Transportation, 400 Seventh Street, SW., Washington, DC 20590, (202) 366-9307 (voice), (202) 366-9318 (fax).
An electronic copy of this document may be downloaded using a modem and suitable communications software from the Government Printing Office Electronic Bulletin Board Service at (202) 512-1661. Internet users may reach the Office of the Federal Register's home page at
Internet users can access this document through the docket management system web site,
In light of the September 11, 2001, terrorist attacks in the United States and the potential for future attacks in this country, Congress enacted the Aviation and Transportation Security Act (ATSA), Public Law 107-71, 115 Stat. 597 (November 19, 2001), which establishes the Transportation Security Administration (TSA) as an operating administration within the Department of Transportation (DOT), headed by the Under Secretary of Transportation for Security (Under Secretary). The Under Secretary took office on January 7, 2002.
Pursuant to ATSA, the TSA is responsible for security in all modes of transportation, including civil aviation under Chapter 449 of title 49, United States Code, related research and development activities, and other transportation security functions exercised by DOT. The TSA is specifically responsible for the day-to-day security screening operations for passenger air transportation and intrastate air transportation under 49 U.S.C. 44901 and 44935. This responsibility includes hiring, training, testing, and deploying or arranging for Federal security screeners, Federal security personnel, Federal law enforcement officers, and Federal Security Managers at U.S. airports. The TSA must also research, develop and deploy security equipment and programs at U.S. airports, coordinate transportation security intelligence information, coordinate transportation security efforts with Federal and State agencies, and deal with threats to transportation.
Section 101(g) of ATSA, which added section 114 to chapter 1 of title 49, United States Code, requires the Under Secretary to assume civil aviation security functions and responsibilities under chapter 449 of title 49, United States Code, by February 17, 2002, in accordance with a schedule developed by the Secretary, upon consulting with air carriers, foreign air carriers, and the Administrator of the Federal Aviation Administration (FAA). The ATSA also requires the Under Secretary to publish notice of the transfer of such security functions and responsibilities before assuming them from the FAA. This notice announces that the required consultations have taken place and that the transfer of civil aviation security functions is effective February 17, 2002. The following table contains a summary of major completed and planned activities. Additional information is provided in the text following the table.
The agency's assumption of civil aviation security functions includes the following elements:
• TSA will enter into contracts with private security screening companies for U.S. airports and directly supervise the companies' performance of screening services. Currently, air carriers and foreign air carriers contract with private security screening companies to perform these services. TSA will also enter into agreements with air carriers to pay the costs deemed necessary by the TSA of screening services where they currently perform their own security screening of passengers and property. These agreements with air carriers will also reimburse them for their costs in
• As noted above, functions related to aviation security will be transferred from FAA to TSA. Personnel, property, records, unexpended fund balances, and related authority will also be transferred to TSA. Existing FAA orders, rules, regulations, grants, and proceedings remain in effect until modified, terminated, superseded, set aside, or revoked.
In consultation with airport and law enforcement authorities, TSA will deploy security personnel at airport secure areas, and shall consider the physical security needs of air traffic control facilities, parked aircraft, servicing equipment, fuel and supplies, adjacent automobile parking and other ground or water transportation mode access areas.
• TSA will provide to Congress its plan to screen all checked bags at U.S. airports, including installation and operational dates and schedules, by May 18, 2002.
• TSA will report to Congress, by May 18, 2002, on ATSA's optional enhanced security measures, which include providing for 911 emergency call capability on passenger aircraft and trains; providing for a uniform ID system for State and local law enforcement officers carrying weapons on aircraft or in secure areas; issuing requirements for a trusted passenger program; establishing alternative security procedures for medical products with the Food and Drug Administration; using technology for secure plane to ground threat communication; including photo and biometric imprint on all pilot licenses; using voice stress biometric technology for screening potential threats; and using instant air-ground communications. As required by statute, the performance plan, with measurable goals and objectives, will be updated annually thereafter.
• TSA may, in consultation with Congress, establish acceptable performance levels for aviation security, including screening and access control, and provide Congress with an action plan containing measurable goals and milestones by May 18, 2002.
• TSA will assess and recommend to airport operators commercially available means to prevent unauthorized access to secure areas, reviewing effectiveness of biometrics, increased access point surveillance, card/key based access systems, emergency exit monitoring, and elimination of “piggybacking” into secure areas by unauthorized persons by May 18, 2002.
• This six-month assessment will include a 12-month deployment strategy for available technology at Category X airports.
TSA will replace contract security screeners with its own Federally hired, trained, and tested employees on a graduated basis until TSA has deployed sufficient Federal security screeners, as well as Federal Security Managers and Federal law enforcement officers, to screen all passengers and property at required U.S. airports by November 19, 2002. TSA will provide for alcohol and controlled substance testing, as well as background and criminal history checks, for contract security screeners and TSA employees.
• TSA will assess the existence of dual use items that seem harmless, but may be used as a weapon, maintain a list of such items, and include it in screener training.
• TSA will establish a pilot program for private airport security screening companies by November 19, 2002.
• TSA will deploy sufficient Explosive Detection Systems to screen all checked baggage at U.S. airports, or will screen all checked baggage by alternative means, by December 31, 2002.
• TSA will work with airport operators to strengthen area access control points and consider biometrics/technology deployment to identify individuals.
To offset the costs of providing civil aviation security services TSA has imposed a uniform fee, the September 11th Security Fee, on certain passenger enplanements, beginning February 1, 2002. ATSA authorizes a corresponding fee on air carriers and foreign air carriers based on their calendar year 2000 costs for screening passengers and property.
Pub. L. 107-71, 115 Stat. 597 (2001); and 49 CFR 1.4.