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Agricultural Marketing Service, USDA.
Interim final rule with request for comments.
This rule changes the reporting requirements specified under the administrative rules and regulations of the Federal marketing order for California dried prunes (order). The order regulates the handling of dried prunes produced in California and is administered locally by the Prune Marketing Committee (Committee). This rule allows California prune handlers to report their shipments less frequently and submit less detailed information than is currently required. Handlers will report shipments once every three months (quarterly), rather than monthly, and will no longer report export shipment destination countries. Also, the reporting of type of pack will be changed from “carton, visipak, and other” to “bulk and consumer pack” to reveal less marketing information. This action will reduce the information collection burden upon handlers, while still enabling the Committee to collect information necessary for program administration.
Effective June 25, 2003. Comments must be received by August 25, 2003 will be considered prior to issuance of a final rule.
Interested persons are invited to submit written comments concerning this rule. Comments must be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., Stop 0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or E-mail:
Richard P. Van Diest, Marketing Specialist, California Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721; telephone: (559) 487-5901, Fax: (559) 487-5906; or George Kelhart, Technical Advisor, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, or Fax: (202) 720-8938.
Small businesses may request information on complying with this regulation by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; telephone (202) 720-2491, Fax: (202) 720-8938, or E-mail:
This rule is issued under Marketing Agreement and Order No. 993 (7 CFR part 993), both as amended, regulating the handling of dried prunes produced in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”
The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.
The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.
This rule modifies language in the order's administrative rules and regulations to allow California prune handlers to report their shipments quarterly, rather than monthly. Also, handlers will only be required to report their export market shipments to the Committee by region, rather than by country. The amount of information disseminated by the Committee is also reduced. The Committee will no longer report the export shipments to the industry by country, and the regions that handlers ship into will only be reported once a year, when the marketing policy is prepared. Also, the reporting of type of pack is changed from “carton, visipak, and other” to “bulk and consumer pack”. These changes will reduce the information collection burden upon handlers and the Committee's administrative costs because of the switch to quarterly distribution. This action was unanimously recommended by the Committee at a meeting on April 3, 2003.
Section 993.72 of the order provides authority for the Committee to require handlers to file such reports of acquisitions, sales, uses, and shipments of prunes, as may be requested by the Committee. Also, pursuant to § 993.36(c), one the Committee's duties is to assemble data on the producing, handling, shipping, and marketing conditions relative to prunes in connection with the performance of its official duties. To prevent the release of proprietary business information, the
Section 993.172 requires handlers to report each month on their holdings, receipts, and shipments of prunes produced in California.
Paragraph (d) of § 993.172 requires handlers to report shipments of dried prunes produced in California. This information is reported on PMC Form 12.1, “Report of Shipments,” and an addendum to that form referred to as PMC Form 12.1A, “Cumulative Prune Export Shipments.”
Prior to the implementation of this rule, each handler was required to file with the Committee for each month, not later than the 5th working day of the next succeeding month, Forms PMC 12.1 and 12.1A, reporting shipments (including cumulative exports by country) of prunes during the crop year through the last day of the immediately preceding month. PMC Form 12.1 was required to contain at least the following information:
(1) The date, the name, and address of the handler, and the period covered by the report;
(2) The pounds of prunes shipped or otherwise disposed of, other than shipments to or for the account of other handlers as follows: (i) Domestic outlets segregated by uses (including Federal Government agencies); (ii) export markets segregated by countries; (iii) both domestic and export totals segregated by type of pack (carton, visipak, and other); and (iv) pitted prunes (pitted weight) segregated as to total to domestic outlets and total to export markets;
(3) The total pounds shipped to or for the account of other handlers, including interhandler transfers; and
(4) The total pounds of prunes not covered by, or excluded from, the definition of the term “prunes” (§ 993.5) shipped.
PMC Form 12.1A included a listing of the quantities of whole and pitted prunes exported together with the countries to which the exports were made.
Based upon competition concerns, the Committee unanimously recommended changing the frequency and amount of information that is required to be reported by handlers. While this rule would still allow the Committee to obtain the information it needs for program purposes, this rule allows California prune handlers to file their Shipment Reports on a quarterly, rather than monthly basis, as currently required.
Handlers will no longer be reporting their export shipment destination countries to the Committee. Instead handlers will only report the regions into which they ship. The amount of information disseminated by the Committee will also be reduced. The Committee will no longer report the countries to which the industry exports, but only the total export shipments (except that total export shipments into regions would be reported annually for marketing policy purposes). The reporting of type of pack would be changed from “carton, visipak, and other” to “bulk and consumer pack” to reveal less marketing information.
By distributing the Shipment Report quarterly, instead of monthly, and revising the report's format to provide less detailed information, the Committee is reducing the amount of marketing information it is releasing. However, this information still satisfies the Committee's need for information to prepare the marketing policy, verify compliance, monitor the accuracy of handler reports, justify government purchases or supply control recommendations, and to help the industry develop their marketing programs and evaluate USDA Market Access Program applications. At least once a year, export shipments by region will be reported for the entire crop year. During the remainder of the year, the Committee may only report total export shipments.
These recommendations by the Committee will reduce the reporting burden on California prune handlers as well as help address some of the marketing concerns of the industry and Committee. These changes will also reduce some of the Committee's administrative costs in disseminating this information quarterly, rather than monthly. Accordingly, appropriate changes are made to paragraph (d) of § 993.172.
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.
There are approximately 1,205 producers of dried prunes in the production area and approximately 21 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $750,000 and small agricultural service firms are defined as those having annual receipts of less than $5,000,000.
Currently 8 of the 21 handlers (38 percent) shipped over $5,000,000 worth of dried prunes and could be considered large handlers by the Small Business Administration. Thirteen of the 21 handlers (62 percent) shipped less than $5,000,000 worth of dried prunes and could be considered small handlers. An estimated 32 producers, or less than 3 percent of the 1,205 total producers, would be considered large growers with annual incomes over $750,000. The majority of handlers and producers of California dried prunes may be classified as small entities.
This rule changes the reporting requirements specified in § 993.172(d) of the administrative rules and regulations regarding the reporting of dried prune shipments by handlers. This rule allows the California prune handlers to file their Shipment Reports quarterly, rather than monthly, as required currently. Also handlers will no longer report their export market shipments to the Committee by country, but by region. The amount of information disseminated by the Committee will also be reduced. The Committee will no longer be reporting export shipments by country, but only in total (except that total export shipments into regions would be reported annually to enable the Committee to prepare its marketing policy). The reporting of type of pack also would be changed from “carton, visipak, and other” to “bulk and consumer pack”.
Regarding the impact of this rule on affected entities, this action would reduce the reporting and recordkeeping burden on California prune handlers and reduce the Committee's administrative costs. The Committee estimates that 21 California prune
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection burden reduction contained in this rule has been submitted to the Office of Management and Budget. This action reduces existing approved burden requirements which have been assigned OMB No. 0581-0178. As with other similar marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. Finally, the Department has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.
The Committee considered alternatives to this action at meetings on March 11, April 2, and April 3, 2003. The Executive Subcommittee and Committee discussed the possibility of eliminating all reporting, but determined that this was not viable because it needs certain information to prepare its marketing policy and for other decision-making. Some industry leaders also felt that the statistics are important for grower, handler, and bargaining association decisions that need to be made each year. Finally, the Executive Subcommittee and Committee discussed disseminating the information only to members and alternates of the Committee, its subcommittees, and to California prune handlers. Ultimately, the Executive Subcommittee and Committee decided to proceed with the changes in shipment reporting requirements to reduce the frequency of the reports, and to reduce the amount of information reported to and disseminated by the Committee.
The Executive Subcommittee's March 11 and April 2, 2003, meetings and the Committee's April 3, 2003, meeting where this issue was deliberated were public and widely publicized throughout the prune industry. All interested persons were invited to attend the meetings and participate in the industry's deliberations. Finally, interested persons are invited to submit information on the regulatory and informational impacts of these changes on small businesses.
A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at:
A 60-day comment period is provided to allow interested persons to respond to this rule. All written comments timely received will be considered before a final determination is made on this matter.
After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that this interim final rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the
Marketing agreements, Plums, Prunes, Reporting and recordkeeping requirements.
7 U.S.C. 601-674.
(d)
(1) The date, the name, and address of the handler, and the period covered by the report;
(2) The pounds of prunes shipped or otherwise disposed of, other than shipments to or for the account of other handlers as follows: Domestic outlets segregated by uses (including Federal Government agencies); export markets segregated by regions; both domestic and export totals segregated by type of pack (bulk and consumer pack); and pitted prunes (pitted weight) segregated as to total to domestic outlets and total to export markets segregated by regions;
(3) The total pounds shipped to or for the account of other handlers, including interhandler transfers; and
(4) The total pounds of prunes not covered by, or excluded from, the definition of the term “prunes” (§ 993.5) shipped.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD) that applies to all Pilatus Aircraft Ltd. (Pilatus) Model PC-6 airplanes. This AD requires you to inspect the integral fuel tank wing ribs for cracks and the top and bottom wing skins for distortion, repair any cracks or distortion before further flight, and accomplish a fuel tank ventilating system installation. This AD is the result of mandatory continuing airworthiness information (MCAI) issued by the airworthiness authority for Switzerland. The actions specified by this AD are intended to detect and correct cracks in the ribs of the inboard integral fuel tanks in the left and right wings, which could lead to wing failure during flight.
This AD becomes effective on August 15, 2003.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in the regulations as of August 15, 2003.
You may get the service information referenced in this AD from Pilatus Aircraft Ltd., Customer Liaison Manager, CH-6371 Stans, Switzerland; telephone: +41 41 619 63 19; facsimile: +41 41 619 6224; or from Pilatus Business Aircraft Ltd., Product Support Department, 11755 Airport Way, Broomfield, Colorado 80021; telephone: (303) 465-9099; facsimile: (303) 465-6040. You may view this information at the Federal Aviation Administration (FAA), Central Region, Office of the Regional Counsel, Attention: Rules Docket No. 2003-CE-12-AD, 901 Locust, Room 506, Kansas City, Missouri 64106; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Doug Rudolph, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4059; facsimile: (816) 329-4090.
The Federal Office for Civil Aviation (FOCA), which is the airworthiness authority for Switzerland, recently notified FAA that an unsafe condition may exist on all Pilatus Model PC-6 airplanes. The FOCA reports an incident where cracks have been found in the ribs of the inboard integral fuel tanks in the left and right wings of a Model PC-6 airplane. Investigation revealed that the cracks can occur when there are excessive pressure differentials between the ambient air pressure and that of the fuel tanks. The effect of this differential can be to compress the wing in the area of the fuel tank and cause distortion of the related structure. This distortion may result in fatigue cracks on ribs within the wing.
These fatigue cracks on the ribs within the wing could lead to wing failure during flight.
We issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to all Pilatus Model PC-6 airplanes. This proposal was published in the
The FAA encouraged interested persons to participate in the making of this amendment. We did not receive any comments on the proposed rule or on our determination of the cost to the public.
After careful review of all available information related to the subject presented above, we have determined that air safety and the public interest require the adoption of the rule as proposed except for minor editorial corrections. We have determined that these minor corrections:
On July 10, 2002, FAA published a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs FAA's AD system. This regulation now includes material that relates to special flight permits, alternative methods of compliance, and altered products. This material previously was included in each individual AD. Since this material is included in 14 CFR part 39, we will not include it in future AD actions.
We estimate that this AD affects 35 airplanes in the U.S. registry.
We estimate the following costs to accomplish the inspection:
We estimate the following costs for each rib to accomplish any necessary rib repair that will be required based on the results of this inspection. We have no way of determining the number of airplanes that may need such repair.
We estimate the following costs to install any inboard fuel tank vent system that will be required based on the results of this inspection. We have no way of determining the number of airplanes that may need such installation.
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 copy of the final evaluation prepared for this action 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.
(a)
(b)
(c)
(d)
(e)
(f)
The subject of this AD is addressed in Swiss AD Number HB 2003-092, dated February 17, 2003.
(g)
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD) that applies to certain Iniziative Industriali Italiane S.p.A. (3I) Models Sky Arrow 650 TC and 650 TCN airplanes. This AD requires you to modify the nose gear support bulkhead (STA600). This AD is the result of mandatory continuing airworthiness information (MCAI) issued by the airworthiness authority for Italy. The actions specified by this AD are intended to prevent failure of the nose gear support bulkhead (STA600). Such failure could lead to loss of control of the airplane during landing or take-off.
This AD becomes effective on August 11, 2003.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in the regulations as of August 11, 2003.
You may get the service information referenced in this AD from Iniziative Industriali Italiane S.p.A., Corso Trieste, n. 150, 00198 Rome, Italy; telephone: 06 84.15.821; facsimile: 06 855.71.62. You may view this information at the Federal Aviation Administration (FAA), Central Region, Office of the Regional Counsel, Attention: Rules Docket No. 2003-CE-11-AD, 901 Locust, Room 506, Kansas City, Missouri 64106; or at the Office of the Federal Register, 800 North Capitol Street, NW., Suite 700, Washington, DC.
Doug Rudolph, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4059; facsimile: (816) 329-4090.
The Ente Naźionale per l'Aviazione Civile (ENAC), which is the airworthiness authority for Italy, recently notified FAA that an unsafe condition may exist on certain Iniziative Industriali Italiane S.p.A. (3I) Models Sky Arrow 650 TC and 650 TCN airplanes. The ENAC reports that data collected on in-service airplanes show that cracks have been detected on the nose gear support bulkhead (STA600) of several airplanes with high operating time on grass airfields and at flight schools where activity of hard landings have occurred.
If not corrected, the nose gear support bulkhead (STA600) could fail. Such failure could lead to loss of control of the airplane during landing or take-off.
We issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to certain Iniziative Industriali Italiane S.p.A. (3I) Models Sky Arrow 650 TC and 650 TCN airplanes. This proposal was published in the
The FAA encouraged interested persons to participate in the making of this amendment. We did not receive any comments on the proposed rule or on our determination of the cost to the public.
After careful review of all available information related to the subject presented above, we have determined that air safety and the public interest require the adoption of the rule as proposed except for minor editorial corrections. We have determined that these minor corrections:
On July 10, 2002, FAA published a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs FAA's AD system. This regulation now includes material that relates to special flight permits, alternative methods of compliance, and altered products. This material previously was included in each individual AD. Since this material is included in 14 CFR part 39, we will not include it in future AD actions.
We estimate that this AD affects 10 airplanes in the U.S. registry.
We estimate the following costs to accomplish the modification:
The modification to the nose gear support bulkhead (STA600) requires 39 hours for cure and post cure time.
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 copy of the final evaluation prepared for this action 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.
(a)
(b)
(c)
(d)
(e)
(f)
The subject of this AD is addressed in Italian AD Number 2002-591, dated November 29, 2002.
(g)
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD) that applies to all Iniziative Industriali Italiane S.p.A. (3I) Models Sky Arrow 650 TC and 650 TCN airplanes. This AD requires you to repetitively inspect the engine mount for cracks and modify or replace the engine mount if cracks are
This AD becomes effective on August 11, 2003.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in the regulations as of August 11, 2003.
You may get the service information referenced in this AD from Iniziative Industriali Italiane S.p.A., Corso Trieste, n. 150, 00198 Rome, Italy; telephone: 06 84.15.821; facsimile: 06 855.71.62. You may view this information at the Federal Aviation Administration (FAA), Central Region, Office of the Regional Counsel, Attention: Rules Docket No. 2003-CE-10-AD, 901 Locust, Room 506, Kansas City, Missouri 64106; or at the Office of the Federal Register, 800 North Capitol Street, NW, suite 700, Washington, DC.
Doug Rudolph, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4059; facsimile: (816) 329-4090.
The Ente Nazionale per l'Aviazione Civile (ENAC), which is the airworthiness authority for Italy, recently notified FAA that an unsafe condition may exist on all Iniziative Industriali Italiane S.p.A. (3I) Models Sky Arrow 650 TC and 650 TCN airplanes. The ENAC reports that data collected on in-service airplanes shows that cracks have been detected on the engine mount of several airplanes with high operating time on grass airfields and at flight schools where activity of hard landings have occurred.
This condition, if not detected and corrected, could result in failure of the engine mount. Such failure could lead to separation of the engine from the airplane.
We issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to all Iniziative Industriali Italiane S.p.A. (3I) Models Sky Arrow 650 TC and 650 TCN airplanes. This proposal was published in the
The FAA encouraged interested persons to participate in the making of this amendment. We did not receive any comments on the proposed rule or on our determination of the cost to the public.
What Is FAA's Final Determination on This Issue?
After careful review of all available information related to the subject presented above, we have determined that air safety and the public interest require the adoption of the rule as proposed except for minor editorial corrections. We have determined that these minor corrections:
The ENAC AD and the service information requires (on Italian-registered airplanes) inspection within the next 10 hours time-in-service (TIS) after the effective date of the AD. We require that you inspect within the next 50 hours TIS after the effective date of this AD. We do not have justification to require this action within the next 10 hours TIS.
We use compliance times such as 10 hours TIS when we have identified an urgent safety of flight situation. We believe that 50 hours TIS will give the owners or operators of the affected airplanes enough time to have these actions accomplished without compromising the safety of the airplanes.
On July 10, 2002, FAA published a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs FAA's AD system. This regulation now includes material that relates to special flight permits, alternative methods of compliance, and altered products. This material previously was included in each individual AD. Since this material is included in 14 CFR part 39, we will not include it in future AD actions.
We estimate that this AD affects 10 airplanes in the U.S. registry.
We estimate the following costs to accomplish the inspection:
We estimate the following costs to accomplish the necessary modification:
We estimate the following costs to accomplish any necessary replacements that will be required based on the results of the inspection. We have no way of determining the number of airplanes that may need such replacement:
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 copy of the final evaluation prepared for this action 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.
(a)
(b)
(c)
(d)
(e)
(f)
The subject of this AD is addressed in Italian AD Number 2002-590, dated November 29, 2002.
(g)
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to certain Boeing Model 767-200 and 767-300 series airplanes, that requires modification of the installation of the aft pressure bulkhead-to-floor insulation blankets. The actions specified by this AD are intended to prevent interference with venting during a rapid decompression in the bulk cargo compartment; such interference could cause damage to the floor structure and damage to certain control cables leading to the empennage, which could result in reduced controllability of the airplane. This action is intended to address the identified unsafe condition.
Effective July 29, 2003.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of July 29, 2003.
The service information referenced in this AD may be obtained from Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington 98124-2207. This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Suzanne Masterson, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (425) 917-6441; fax (425) 917-6590.
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 Boeing Model 767-200 and 767-300 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 comments received.
Two commenters ask that the compliance time for the modification specified in the proposed AD be changed, as follows.
The first commenter asks that the compliance time be changed from 60 months to 84 months and states that the compliance times in the referenced service bulletin and the proposed AD are different. The commenter notes that the service bulletin specifies doing the modification during the next heavy maintenance check when the aft galleys are removed, and that such checks are done every 6 years. However, the proposed AD specifies doing the modification within 5 years after the effective date of the final rule. The commenter adds that the galleys on its airplanes are removed every 10 years for galley restoration and to facilitate structural inspections, per Maintenance Planning Document (MPD) Task #CP53-200-04I. This task requires an initial inspection of the floor support structure under the galleys at 10 years, and at 5-year intervals after the initial inspection. The commenter states that the galleys are not removed every 6 years as called out in the “Clarification of Compliance Time” paragraph in the proposed AD.
The second commenter asks that the compliance time be changed from 60 months to 72 months and states that it requires a 72-month compliance time for doing the modification. The commenter adds that the effectivity in the referenced service bulletin was specifically revised to read “* * * the next heavy maintenance check when aft galleys are removed.” The commenter notes that a 60-month compliance time will require it to schedule airplanes outside of regularly scheduled maintenance checks, or do the modification at an earlier check at considerable cost to the airline.
We agree with the commenters. We find that the commenters provided sufficient justification for extending the compliance time for modifying the installation of the aft pressure bulkhead-to-floor insulation blankets. The commenters also provided data to show that the majority of affected operators do the heavy maintenance check of the aft galleys at intervals that exceed the proposed 60-month compliance time. Thus, we have determined that the modification may be deferred until 7 years (84 months) after the effective date of this AD without jeopardizing the continued safety of the airplane fleet. The compliance time specified in paragraph (a) of this final rule has been changed accordingly.
One commenter asks that the section in the preamble of the proposed AD titled “Clarification of Compliance Time” be changed to state that the heavy maintenance checks are done every 10 years, and that the modification should be done within 7 years after the effective date of the AD.
Although we acknowledge and agree with the commenter's remarks on the section in the preamble of the proposed
Two commenters ask that the applicability in the proposed AD be changed to exclude Model 767 freighter airplanes, as follows.
The first commenter states that the effectivity in the referenced service bulletin applies only to Model 767 passenger airplanes, and notes that freighter airplanes are not affected. The commenter adds that the word “passenger” should be added to the Discussion section of the proposed AD. The commenter also asks that the Cost Impact section be changed to remove the freighter airplanes from the total number of U.S.-registered aircraft, which would reduce the cost impact for U.S. operators.
The second commenter states that the information in the applicability section of the proposed AD contradicts the effectivity specified in the referenced service bulletin, and should be clarified. The commenter notes that the applicability in the proposed AD specifies Model 767-200 and -300 series airplanes, certificated in any category; however, the effectivity in the service bulletin specifies Model 767-200 and -300 passenger airplanes only.
Both commenters state that the Model 767 freighter airplane has different venting and decompression characteristics than the passenger airplane. The commenters add that the difference is in the location of the aft galley in the passenger airplane, which causes the airflow between the floor and the aft bulkhead to be different from that in freighter airplanes.
We agree with the commenters that the applicability section should be clarified; however, not in the manner proposed. Per the Model 767 Type Certificate Data Sheet, which specifies Model 767-200, -300, and -300F series airplanes, the proposed AD clearly does not include Model 767-300F (freighter) airplanes in the applicability.
However, as the line numbers are listed and have confused some operators, we have clarified the applicability in this final rule to specify “Model 767-200 and -300 series airplanes as listed in Boeing Service Bulletin 767-25A0300, Revision 1, dated May 2, 2002. * * *” In addition, we have removed the freighter airplanes from the total number of U.S.-registered aircraft in the Cost Impact section. However, although we acknowledge and agree with the first commenter's remarks on the Discussion section of the proposed AD, that section is not restated in this final rule. Therefore, no change to the final rule is necessary in that regard.
One commenter states that the manufacturer has not created new part numbers for all of the affected insulation blankets and is still shipping parts in the old configuration that preceeded the new configuration specified in the referenced service bulletin.
Although we acknowledge the commenter's concern, we do not agree. Figure 1 (Insulation Blanket Modification) of Boeing Service Bulletin 767-25A0300, Revision 1, specifies that the insulation blankets are to be re-marked with new part numbers. No change to the final rule is necessary in this regard.
After careful review of the available data, including the comments noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the changes previously described. The FAA has determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.
There are approximately 739 airplanes of the affected design in the worldwide fleet. The FAA estimates that 296 airplanes of U.S. registry will be affected by this AD, that it will take approximately 3 work hours per airplane to accomplish the modification, and that the average labor rate is $60 per work hour. Required parts will cost approximately $397 per airplane. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $170,792, or $577 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.
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.
To prevent interference with venting during a rapid decompression in the bulk cargo compartment, which could cause damage to the floor structure as well as damage to certain control cables leading to the empennage, and could result in reduced controllability of the airplane, accomplish the following:
(a) Within 7 years after the effective date of this AD: Modify the installation of the aft pressure bulkhead-to-floor insulation blankets, in accordance with the Accomplishment Instructions of Boeing Service Bulletin 767-25A0300, Revision 1, dated May 2, 2002.
(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, Seattle 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, Seattle ACO.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the Seattle ACO.
(c) Special flight permits may be issued in accordance with §§ 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 Boeing Service Bulletin 767-25A0300, Revision 1, dated May 2, 2002. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington 98124-2207. Copies may be inspected at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(e) This amendment becomes effective on July 29, 2003.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to certain Boeing Model 767 series airplanes, that requires an inspection to detect cracks and fractures of the outboard hinge fitting assemblies on the trailing edge of the inboard main flap, and follow-on and corrective actions if necessary. For certain airplanes, this amendment also requires a one-time inspection to determine if a tool runout procedure has been performed in the area. The actions specified by this AD are intended to prevent the inboard aft flap from separating from the wing and potentially striking the airplane, which could result in damage to the surrounding structure and potential personal injury. This action is intended to address the identified unsafe condition.
Effective July 29, 2003.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of July 29, 2003.
The service information referenced in this AD may be obtained from Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington 98124-2207. This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Suzanne Masterson, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (425) 917-6441; fax (425) 917-6590.
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 Boeing Model 767 series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received. One commenter concurs with the contents of the proposed AD.
One commenter, the manufacturer, asks that the applicability specified in the proposed AD be changed. The commenter states that line number 870 is for a Model 767-300 airplane, and is outside the line number effectivity listed in Boeing Service Bulletin 767-57A0076, Revision 1, dated March 29, 2001 (which was referenced in the proposed AD and specified line numbers 1 through 825 inclusive).
The FAA agrees with the commenter. Line number 870 is for a Model 767-300ER airplane, and was inadvertently added to the applicability specified in the proposed AD. The applicability in this final rule has been changed accordingly.
One commenter states that a compliance time grace period of 90 days for the inspections specified in paragraph (a)(1) of the proposed AD would be extremely difficult. The commenter asks that the grace period be extended to 270 days. The commenter adds that this will allow sufficient time for affected operators to schedule and accomplish the inspections, and will provide time for Boeing to produce adequate spares.
We do not agree with the commenter, as insufficient supporting data were provided to us to substantiate the request. Boeing Service Bulletin 767-57A0076, Revision 1, was issued on March 29, 2001, and recommended a grace period of 90 days after release of the service bulletin. In addition, Boeing parts are not necessary unless discrepant parts are found during the inspections. The terminating action provided by paragraph (f) of this final
In developing an appropriate compliance time for this action, we considered not only the degree of urgency associated with addressing the subject unsafe condition, but the manufacturer's recommendation as to an appropriate compliance time, and the practical aspect of accomplishing the required inspections within an interval of time that parallels normal scheduled maintenance for the majority of affected operators. However, under the provisions of paragraph (i) of the final rule, we may approve requests for adjustments to the compliance time if data are submitted to substantiate that such an adjustment would provide an acceptable level of safety.
One commenter states a concern for the availability of improved fittings for replacement. The commenter notes that, due to warranty, it anticipates replacing any fittings that do not exhibit the tool runout option, regardless of the inspection results.
We have been assured by the parts manufacturer that a sufficient number of replacement parts is available. However, this may not cover all parts without the tool runout option, regardless of the condition of the parts. If the commenter expects to replace a large number of parts, ordering the parts in advance so the manufacturer has time to produce adequate replacement parts is recommended.
One commenter states that the proposed AD specifies that certain part numbers may not be installed on any aircraft unless the requirements of the proposed AD have been accomplished. The commenter notes that neither the proposed AD nor the referenced service bulletins provide instructions on how to identify fittings that have met the requirements of the proposed AD.
Although the commenter does not make a specific request, we infer that the commenter wants the FAA to provide instructions in the final rule for identification of the fittings that meet the AD requirements. We do not agree that such additional instructions are necessary because it is the operator's responsibility to show documented compliance to the requirements of the AD. If a spare part is installed on an airplane, and the previous inspection history of the part is not documented, the applicable inspection must be done and must be repeated at the intervals required by this AD. Paragraph (h) of the proposed AD identifies the part numbers for fittings that cannot be installed unless the applicable requirements of the AD have been accomplished for that fitting. Those requirements are specified in paragraphs (a) through (f) of the AD. No change is made to the final rule in this regard.
One commenter estimates that the detailed visual and eddy current inspections specified in the proposed AD take 15 work hours per airplane to do, at a cost of $117,000 for the operator's fleet.
Although the commenter does not make a specific request, we infer that the commenter wants the work hours and cost for the detailed visual and eddy current inspections specified in the Cost Impact section to be changed. We do not agree to change the number of estimated work hours for the inspections. The number of work hours necessary to accomplish the inspections, specified as 5 in the cost impact information, is consistent with the service bulletin. This number represents the time necessary to perform only the inspections actually required by this AD. Therefore, no change is made to the final rule in this regard.
One commenter would like to obtain clarification of the applicability specified in the proposed AD relative to airplanes in the Model 767-400 fleet having fuselage numbers 875 (variable number VQ085) and 877 (variable number VQ086), which are not listed in the applicability section. The commenter states that, according to the effectivity in the original issue of Boeing Alert Service Bulletin 767-57A0079, dated June 20, 2002, only an airplane having fuselage number 877 is not affected by the proposed AD.
The terminology “fuselage numbers” actually refers to airplane line numbers, rather than the terminology used by the commenter for tracking its airplanes. Boeing Airplane Information Report dated October 2, 2002, shows Model 767 line number 875 as having variable number VS701, line number 876 having variable number VQ085, line number 877 having variable number VS721, and line number 878 having variable number VQ086; these figures do not match the variable numbers provided by the commenter. Regardless, the line numbers specified in the proposed AD and the referenced service bulletin are correct. No change is made to the final rule in this regard.
One commenter asks that the last sentence in paragraph (c) of the proposed AD be changed for clarification from “This AD requires that the terminating action, if required, be accomplished before further flight” to “This AD requires that the terminating action, if required because cracks have been found, be accomplished before further flight.” The commenter states that it is not explicit in paragraph (c) that the terminating action is required only if cracks are found. The commenter adds that specifying the need to accomplish terminating action before further flight, without explicitly referencing cracks, may confuse the operator.
We do not agree with the commenter. Paragraph (c) of the proposed AD merely clarifies that, if the referenced service bulletins specify corrective action (i.e., if cracked or fractured fittings are found, do Part 3—Terminating Action), such action is required before further flight. No change is made to the final rule in this regard.
After careful review of the available data, including the comments noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the change previously described. 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 783 airplanes of the affected design in the worldwide fleet. The FAA estimates that 354 airplanes of U.S. registry will be affected by this AD.
It will take approximately 2 work hours per airplane to accomplish the detailed inspection, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this action is estimated to be $42,480, or $120 per airplane, per inspection cycle.
It will take approximately 5 work hours per airplane to accomplish the detailed visual and eddy current inspections, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of these actions is estimated to be $106,200, or $300 per airplane, per inspection cycle.
The cost impact figures discussed above are based on assumptions that no operator has yet accomplished any of
The terminating action, if accomplished, will take approximately 24 work hours per airplane, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this action is estimated to be $1,440 per airplane.
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 (i) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent the inboard aft flap from separating from the wing and potentially striking the airplane, which could result in damage to the surrounding structure and potential personal injury, accomplish the following:
(a) Perform either a detailed inspection, or a detailed inspection plus an eddy current inspection, of the outboard hinge fitting assemblies on the trailing edge of the inboard main flap to detect cracks and fractures and evidence of a tool runout procedure, as applicable.
(1) For Model 767-200, -300, and -300F series airplanes: Inspect before the airplane accumulates 2,700 total flight cycles, or within 90 days after the effective date of this AD, whichever occurs later, in accordance with Boeing Service Bulletin 767-57A0076, Revision 1, dated March 29, 2001.
(2) For Model 767-400ER series airplanes: Inspect before the airplane accumulates 12,000 total flight cycles, in accordance with Boeing Alert Service Bulletin 767-57A0079, dated June 20, 2002.
For the purposes of this AD, a detailed inspection is defined as: “An intensive visual examination of a specific structural area, system, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at intensity deemed appropriate by the inspector. Inspection aids such as mirror, magnifying lenses,
(b) Following the initial inspection(s) required by paragraph (a) of this AD: Perform applicable follow-on and corrective actions at the time(s) specified in Figure 1 of Boeing Service Bulletin 767-57A0076, Revision 1, dated March 29, 2001 (for Model 767-200, -300, and -300F series airplanes); or Boeing Alert Service Bulletin 767-57A0079, dated June 20, 2002 (for Model 767-400ER series airplanes). Do the follow-on and corrective actions (including repetitive inspections and replacement of the fittings with new fittings) in accordance with Part 1 or Part 2 of the service bulletin, as applicable, except as required by paragraph (d) of this AD. For Model 767-200, -300, and -300F series airplanes: If the fitting has the tool runout, and no cracking or fracture is found during the inspection, this AD requires no further action for that hinge fitting.
(c) Where the terminating action in Part 3 of the service bulletin is specified as corrective action in Boeing Service Bulletin 767-57A0076, Revision 1, dated March 29, 2001; and Boeing Alert Service Bulletin 767-57A0079, dated June 20, 2002: This AD requires that the terminating action, if required, be accomplished before further flight.
(d) Boeing Service Bulletin 767-57A0076, Revision 1, dated March 29, 2001, specifies to contact Boeing before the terminating action is done as corrective action for any cracking or fracture found on a Model 767-200, -300, or -300F series airplane with the tool runout. This AD requires that any such crack or fracture on those airplanes be reported to the FAA in accordance with paragraph (e) of this AD and repaired in accordance with Part 3 of the service bulletin.
(e) For any Model 767-200, -300, or -300F series airplane with the tool runout, on which any cracking or fracture is found during the inspection(s) required by paragraph (a) of this AD: Submit a report of the inspection findings to the Manager, Seattle Aircraft Certification Office (ACO), FAA, at the applicable time specified in paragraph (e)(1) or (e)(2) of this AD. The report must include the inspection results, a description of any discrepancies found, the airplane serial number, and the number of landings and flight hours on the airplane. 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
(1) For airplanes on which the initial inspection is done 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 initial inspection was done before the effective date of this AD: Submit the report within 30 days after the effective date of this AD.
(f) Unless required to do so by paragraph (b) of this AD: Operators may choose to accomplish the terminating action (including replacement of the fittings with new fittings,
(g) Accomplishment before the effective date of this AD of an inspection, associated follow-on and corrective actions, and terminating action in accordance with Boeing Alert Service Bulletin 767-57A0076, dated October 26, 2000, is acceptable for compliance with the corresponding requirements of this AD for applicable airplanes.
(h) As of the effective date of this AD, no person may install on any airplane a hinge fitting assembly that has any part number listed in Table 1 of this AD, unless the applicable requirements of this AD have been accomplished for that fitting. Table 1 follows:
(i) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, Seattle ACO. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, Seattle ACO.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the Seattle ACO.
(j) Special flight permits may be issued in accordance with §§ 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.
(k) Unless otherwise specified in this AD, the actions shall be done in accordance with Boeing Service Bulletin 767-57A0076, Revision 1, dated March 29, 2001; and Boeing Alert Service Bulletin 767-57A0079, dated June 20, 2002; 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 Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington 98124-2207. Copies may be inspected at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
(l) This amendment becomes effective on July 29, 2003.
Drug Enforcement Administration (DEA), Justice.
Final rule.
DEA is finalizing a Notice of Proposed Rulemaking (NPRM) defining central fill pharmacy activities and permitting central fill pharmacies to prepare controlled substances prescriptions on behalf of retail pharmacies with which the central fill pharmacies have a contractual agreement to provide such services or with which the pharmacies share a common owner. When one retail pharmacy receives a prescription and a second pharmacy prepares and subsequently delivers the controlled substance medication to the first retail pharmacy for dispensing to the patient, the second pharmacy is engaging in a “central fill activity”. Records must be maintained by both the central fill pharmacy and the retail pharmacy that completely and accurately reflect the disposition of all controlled substance prescriptions dispensed. With respect to security, central fill pharmacies would be required to comply with the same security requirements applicable to retail pharmacies including the general requirement to maintain effective controls and procedures to guard against theft and diversion of controlled substances. DEA is creating an allowance for retail pharmacies that also perform central fill activities to do so without separate DEA registration, separate inventories, or separate records. This rulemaking is sought by the regulated industry and will allow for more efficient delivery of controlled substance prescriptions to patients.
July 24, 2003.
Patricia M. Good, Chief, Liaison and Policy Section, Office of Diversion Control, Drug Enforcement Administration, Washington, DC 20537, Telephone (202) 307-7297.
On September 6, 2001, DEA published a Notice of Proposed Rulemaking (NPRM) in the
At present, there is no provision in DEA's regulations for central fill pharmacy operations. Retail pharmacies, including those which utilize the mail service and the Internet, are registered by DEA to dispense prescriptions for controlled substances directly to the patient. “Dispensing” is defined in the Controlled Substances Act as delivering a controlled substance “to an ultimate user” (21 U.S.C. 802(10)). DEA regulations do not currently provide for central fill pharmacy operations which fill prescriptions for delivery to a traditional retail pharmacy. Current DEA regulations do not permit a prescription for controlled substances to be brought to one pharmacy, filled at a second pharmacy, and then returned to the first pharmacy for dispensing to the patient. Allowing central fill pharmacies to fill prescriptions on behalf of retail pharmacies for subsequent dispensing to the ultimate user is a legitimate extension of current practice.
Therefore, the regulations are being amended to allow for central fill pharmacies to fill prescriptions on behalf of retail pharmacies and to allow retail pharmacies to perform central fill activities without separate DEA registration and separate inventories.
Regulations finalized in this rulemaking have been developed in conjunction with the regulated industry. Industry indicates that central fill pharmacy activities focus on removing the most time intensive, and, therefore, most costly administrative tasks, from a retail setting and centralizing them in an automated non-retail setting. Currently, many states permit central fill activities for noncontrolled substances, so long as they are otherwise permitted. This final rule is not requiring states to promulgate new regulations to permit central fill activities for controlled substances. The regulated industry has noted that it has realized cost savings from these activities, as the filling of prescriptions is a very labor intensive activity. Further, industry believes that permitting central fill pharmacy activities provides the following benefits:
• Reduces the potential for dispensing errors, resulting in improved patient safety and effective drug utilization.
• Improves pharmacist accessibility, pharmacists will have more time to spend on patient care.
• Patients encounter less “wait” time at pharmacy.
The NPRM proposed to allow central fill pharmacies to become registered as pharmacies under 21 CFR 1301.13(e)(1)(iii) so long as and to the extent that their activities are authorized by the state in which they are located. Central fill pharmacies would prepare prescriptions for controlled substances in Schedules II-V for dispensing to a patient by a registered retail pharmacy pursuant to a prescription issued by an authorized practitioner and communicated to the central fill pharmacy by the retail pharmacy. Central fill pharmacies would be permitted to prepare both initial and refill prescriptions, subject to all applicable state and federal regulations. The central fill pharmacy would be allowed to fill prescriptions on behalf of retail pharmacies with which it has a contractual agreement to provide such services or with which it shares a common owner. The NPRM proposed requiring central fill pharmacies to keep current copies of the DEA Certificates of Registration for each retail pharmacy for which it is authorized to fill prescriptions. Similarly, it was proposed that retail pharmacies would be required to keep a list of those central fill pharmacies, along with current copies of their DEA Certificates of Registration, permitted to prepare prescriptions on their behalf.
The NPRM did not allow for a retail pharmacy and a central fill pharmacy to be operated under the same DEA registration, therefore requiring separate inventories and separate records.
The NPRM proposed to permit retail pharmacies to transmit a written prescription via facsimile or communicate prescription information electronically to a central fill pharmacy. The prescription information would be required to be maintained by the retail pharmacy and the central fill pharmacy in a readily retrievable manner and comply with all applicable federal and state recordkeeping requirements.
The NPRM also recognized that pharmacists at central fill pharmacies would be preparing prescriptions for controlled substances and, therefore, must bear a corresponding responsibility, along with the pharmacist at the retail pharmacy, for the proper dispensing of the prescription.
Six comments were received in response to the NPRM: four from trade associations representing the affected industries, one from a DEA registrant and one from a pharmacy software provider. While the comments expressed general support for the changes, concerns were raised regarding specific facets of the proposed rule. Where possible, DEA has adopted changes suggested by the commenters to make the rule more flexible and less burdensome for DEA registrants.
Three commenters discussed DEA's provisions in the proposed rule that would require separate registration for each facility that performs central fill activities. Commenters stated that registered retail pharmacies should be allowed to perform central fill activities without separate registration. Commenters indicated that retail pharmacies currently perform all activities associated with dispensing controlled substances directly to the patient. Commenters argued that it is not necessary for a retail pharmacy to maintain a separate registration, separate inventory and separate recordkeeping when the same retail pharmacy engages in central fill activities on behalf of another retail pharmacy. By allowing retail pharmacies to perform central fill activities without separate registration, commenters argued, a single stock/inventory of controlled substances can be maintained.
DEA agrees that retail pharmacies may also act in the capacity of a central fill pharmacy as long as complete and accurate records are maintained to indicate which registrant prepared the prescription and which registrant dispensed the prescription. The records must include the name, address, and DEA number of the pharmacies involved. Shipping and receiving records regarding the “centrally filled” prescription must be maintained by each pharmacy involved in the transaction.
The original prescription record must be maintained at the pharmacy which dispenses the medication to the patient (end user). If records are maintained electronically, they must be readily retrievable and identifiable as to which records pertain to the retail pharmacy activities and which pertain to the central fill pharmacy activities.
When one retail pharmacy receives a prescription and a second pharmacy prepares and subsequently delivers the controlled substance medication to the first retail pharmacy for dispensing to the patient, the second pharmacy is engaging in a “central fill activity”. Pharmacies engaging in central fill activities must have a contractual agreement with the retail pharmacy to provide such services, or share a common owner.
One commenter suggested that not allowing a central fill pharmacy to deliver prescription medication directly to the patient would require that the prescription record be transferred. The commenter further stated that this potentially would disrupt patients' continuity of care and could prohibit patients from obtaining proper pharmaceutical care from the pharmacist of their choice. DEA acknowledges that if one retail pharmacy receives and dispenses an initial prescription and a second retail pharmacy prepares and subsequently dispenses/delivers any remaining refills of the controlled substance medication to the patient, this is a “transfer” of the prescription. The second retail pharmacy's records must indicate that the prescription record was obtained by transfer. It is not the intent of this rulemaking to change current regulations regarding the “transfer” of controlled substance prescriptions records. However, controlled substance prescriptions that are prepared by a
Three commenters stated that pharmacies participating in central fill activities should not be required to maintain copies of each pharmacy's DEA registration certificate. Commenters indicated that such a requirement would be burdensome, requiring them to maintain large quantities of paper. Commenters suggested that DEA permit registrants to verify the registration of the affiliated retail pharmacies, noting that such a requirement would be similar to what is required of suppliers when registrants are purchasing controlled substances.
Upon further review, DEA agrees that requiring retail pharmacies and central fill pharmacies to maintain copies of the DEA registration certificates for their partner pharmacies is unnecessary. However, DEA is requiring that the participating registrants verify that they are doing business with DEA registrants prior to sending and receiving controlled substances prescriptions. Therefore, DEA is amending this final rule to require that central fill pharmacies verify the registration of each affiliated retail pharmacy. Further, retail pharmacies contracting with other pharmacies performing central fill activities must verify the registration of each affiliated registrant. Such a requirement is less burdensome than the one initially proposed by DEA, but will still permit DEA, and registered pharmacies, to ensure that the persons they are conducting business with are, indeed, DEA registrants permitted to handle controlled substances.
One commenter requested that DEA allow controlled substance prescriptions that are prepared and packaged at a central fill pharmacy to be delivered through DEA registered distribution facilities. The filled prescriptions, placed in a sealed container, would be delivered from the central fill pharmacy to a DEA registered distribution facility. At the distribution facility the sealed containers would be sorted for subsequent delivery to the retail pharmacy. The commenter further stated that registered distribution facilities have much better security than common or contract carrier locations and the employees at the registered distribution facilities have experience in handling controlled substances. There are no provisions in the current regulations to allow for patient specific controlled substances prescriptions to be delivered from one registered pharmacy location, through a registered distribution facility, to another registered pharmacy location for dispensing to the patient. Therefore, no change is being made from the language of the proposed rule.
One commenter suggested that DEA allow for hospitals to engage in central fill activities. While DEA does not disagree that hospitals may benefit from “central fill activities,” the pharmacy activities of a hospital are significantly different than those of a retail pharmacy. Hospitals generally maintain stocks of non-patient specific controlled substances in a variety of locations throughout the hospital. The controlled substances are often dispensed and administered on an urgent and frequently changing basis. Controlled substances that are prepared by a central fill pharmacy, as defined in this rulemaking, are issued pursuant to a patient specific prescription and generally requested and subsequently delivered within 24 hours. When non-patient specific controlled substances are transferred from one DEA registrant to another DEA registrant, this constitutes distribution and not dispensing. With this rulemaking, DEA is allowing only retail pharmacies to utilize the services of a central fill pharmacy.
One commenter suggested that DEA's proposed requirement that both the retail pharmacist and central fill pharmacist have a corresponding liability regarding the manner of issuance of a prescription is considered a dual verification and, therefore, unnecessary. DEA is not suggesting that each centrally filled controlled substance prescription be independently verified by a retail pharmacist and a central fill pharmacist. Rather, the intent is to confirm that if either the retail pharmacist or the central fill pharmacist believes that the prescription is not issued in a manner that is in compliance with federal regulations, then the prescription should not be dispensed.
One commenter suggested that DEA indicate what course of action should be taken if a patient does not pick up a controlled substance prescription that has been “centrally filled.” The retail pharmacy's records should indicate that the prescription was “filled” at the central fill pharmacy and subsequently delivered to the retail pharmacy. Therefore, the retail pharmacy in possession of the controlled substance prescription is responsible for the proper disposition of the controlled substance if the patient fails to pick up the prescription, as would be the case with any prescription dispensed by the pharmacy.
One commenter suggested that DEA clarify section 1306.05(a), which was not proposed to be changed in the NPRM and states that written prescriptions must be written with ink or indelible pencil or by typewriter and shall be manually signed by the practitioner. While this amendment is not within the scope of this regulation, DEA wishes to clarify and reiterate that a prescription that is generated by a computer software application and subsequently printed is acceptable so long as it is manually signed by the practitioner and contains all required elements of a prescription.
One commenter suggested that DEA require pharmacies engaged in central fill activities to establish a mechanism to ensure that printed literature developed by the pharmaceutical manufacturer accompanies every prescription. While DEA does not have any objection to central fill pharmacies or retail pharmacies providing printed drug information to patients, requiring pharmacies to provide such information is not within the purview of the DEA's regulatory authority regarding controlled substance prescriptions.
In this final rule DEA has changed the titles of Sections 1306.15 and 1306.27 due to the perceived confusion with using the word “transfer” to describe the action of a retail pharmacy providing prescription information to a central fill pharmacy.
This final rule permits central fill pharmacies to become registered as pharmacies under 21 CFR 1301.13(e)(1)(iii) so long as and to the extent that their activities are authorized by the state in which they are located. At present, the business activities under 21 CFR 1301.13(e)(1)(iii) include practitioners, hospitals/clinics, retail pharmacies, and teaching institutions. DEA is creating a new business activity to be known as “central fill pharmacy.” This allows the central fill pharmacy to prepare prescriptions for controlled substances in Schedules II-V for dispensing to a patient by a registered traditional retail pharmacy pursuant to a prescription issued by an authorized practitioner and communicated to the central fill pharmacy by the retail pharmacy.
DEA has determined that central fill pharmacy activities are better characterized as “dispensing” activities as opposed to “distributing” activities.
Central fill pharmacies are permitted to prepare both initial and refill prescriptions, subject to all applicable state and federal regulations. Only a licensed pharmacist may fill such prescriptions (21 CFR 1306.06). By definition, the filled prescriptions must be transported to the retail pharmacy from which the prescription information was received for delivery to the patient. Both the pharmacist employed by the central fill pharmacy and the pharmacist who dispenses the prescription to the patient have a corresponding responsibility to ensure that the prescription was issued for a legitimate medical purpose by an individual practitioner acting in the usual course of professional practice and otherwise in the manner specified by DEA regulations (21 CFR 1306.04(a), 1306.05(a)).
DEA is creating an allowance for a central fill pharmacy to prepare prescriptions on behalf of retail pharmacies with which it has a contractual agreement to provide such services or with which it shares a common owner. The central fill pharmacy is required to keep a list of retail pharmacies for which it has agreed to provide such services. The central fill pharmacy is also required to verify the DEA registration of any retail pharmacy they are doing business with prior to sending or receiving controlled substance prescriptions. Similarly, retail pharmacies are required to keep a list of those central fill pharmacies permitted to prepare prescriptions on their behalf and verify that they are DEA registrants. This information must be made available for inspection upon request by DEA.
A central fill pharmacy will not be permitted to prepare prescriptions provided directly by a patient or individual practitioner or to mail or otherwise deliver a filled prescription directly to a patient or individual practitioner.
DEA regulations do not prohibit central fill pharmacies in one state which have a contractual relationship or common ownership with a retail pharmacy located in another state from filling prescriptions transmitted by the retail pharmacy to the central fill pharmacy. However, each state involved in the transaction must permit this cross-state activity.
If authorized by the state in which they are located, a retail pharmacy may engage in central fill pharmacy activities as a coincidental activity associated with their retail pharmacy DEA registration. Therefore, a retail pharmacy may operate as both a retail pharmacy and a central fill pharmacy at the same location without maintaining separate registration, inventories, or records.
Retail pharmacies are permitted to transmit prescription information to a central fill pharmacy in two ways. First, a facsimile of a prescription for a controlled substance in Schedule II, III, IV or V may be provided by the retail pharmacy to the central fill pharmacy. The retail pharmacy must maintain the original hard copy of the prescription and the central fill pharmacy must maintain the facsimile of the prescription. Alternatively, DEA is allowing for the prescription information to be communicated electronically by the retail pharmacy to the central fill pharmacy. Since there appears to be little risk that an outside party will divert such prescription information, DEA is not requiring specific security standards with respect to electronic transmission in this particular situation. When setting up the transmission system, the participating pharmacies must be mindful of all federal and state requirements regarding patient confidentiality, network security, and use of shared databases. Both pharmacies must maintain the prescription information in a readily retrievable manner and comply with all applicable federal and state recordkeeping requirements.
With respect to security, central fill pharmacies are required to comply with the same security requirements applicable to other pharmacies (21 CFR 1301.71, 1301.75, 1301.76). While not specifically required by DEA regulations, central fill pharmacies may choose to implement additional security measures based on the volume of controlled substances handled, number of employees in the facility, or other unique factors. Such additional security measures may be needed in order to comply with the general requirement to maintain effective controls and procedures to guard against theft and diversion of controlled substances (21 CFR 1301.71). As indicated above, since pharmacists at central fill pharmacies are preparing prescriptions for controlled substances, they shall bear a corresponding responsibility, along with the pharmacist at the retail pharmacy, for the proper dispensing of the prescription (21 CFR 1306.04(a)). Additionally, central fill pharmacies must be vigilant in their choice of carriers to transport filled prescriptions to retail pharmacies and be aware of their responsibilities for reporting in-transit losses (21 CFR 1301.74(e)).
As have been previously noted in this rulemaking, persons wishing to conduct central fill pharmacy activities must register with DEA to do so. To apply for registration, persons must complete a DEA Form 224, Application for Registration. As DEA has not yet issued updated forms specifically referencing the central file pharmacy business activity, persons wishing to register as central fill pharmacies must choose the retail pharmacy business activity on the form and then must attach a written statement signed by the person signing the registration application acknowledging that the pharmacy wishes to register as a central fill pharmacy.
The Deputy Assistant Administrator, Office of Diversion Control, hereby certifies that this rulemaking has been drafted in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation, and by approving it certifies that this regulation will not have a significant economic impact on a substantial number of small entities. In fact, it is anticipated that this rule, by affording additional flexibility to pharmacies in the dispensing of prescriptions, will help lower total health care costs.
As has been discussed elsewhere in this rulemaking, permitting controlled substance prescriptions to be processed through the use of central fill pharmacies will provide benefits to the regulated industry. The filling of prescriptions is a labor intensive process. There are significant cost reductions associated with the cost of filling a prescription through the use of central fill pharmacies. The regulated industry has indicated that labor costs are significantly reduced. For example, industry has indicated that, depending on the number of prescriptions
The Deputy Assistant Administrator, Office of Diversion Control, further certifies that this rulemaking has been drafted in accordance with the principles in Executive Order 12866 Section 1(b). DEA has determined that this is not a significant regulatory action. Therefore, this action has not been reviewed by the Office of Management and Budget. As previously noted, this rule will provide a number of benefits to the regulated industry as efficiencies are gained in the processing of controlled substance prescriptions.
This regulation meets the applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988.
This rulemaking does not preempt or modify any provision of state law; nor does it impose enforcement responsibilities on any state; nor does it diminish the power of any state to enforce its own laws. Accordingly, this rulemaking does not have federalism implications warranting the application of Executive Order 13132.
This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
This rule is not a major rule as defined by Section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.
Definitions, Drug traffic control.
Administrative practice and procedure, Drug traffic control, Security measures.
Drug traffic control, Reporting requirements.
Drug traffic control, Reporting requirements.
Drug traffic control, prescription drugs.
21 U.S.C. 802, 871(b), 951, 958(f).
(b) * * *
(43) The term
21 U.S.C. 821, 822, 823, 824, 871(b), 875, 877.
(e) * * *
(1) * * *
(d) Central fill pharmacies must comply with § 1301.74(e) when selecting private, common or contract carriers to transport filled prescriptions to a retail pharmacy for delivery to the ultimate user. When central fill pharmacies contract with private, common or contract carriers to transport filled prescriptions to a retail pharmacy, the central fill pharmacy is responsible for reporting in-transit losses upon discovery of such loss by use of a DEA Form 106. Retail pharmacies must comply with § 1301.74(e) when selecting private, common or contract carriers to retrieve filled prescriptions from a central fill pharmacy. When retail pharmacies contract with private,
21 U.S.C. 821, 827, 871(b), 958(e), 965, unless otherwise noted.
(a) Every retail pharmacy that utilizes the services of a central fill pharmacy must keep a record of all central fill pharmacies, including name, address and DEA number, that are authorized to fill prescriptions on its behalf. The retail pharmacy must also verify the registration for each central fill pharmacy authorized to fill prescriptions on its behalf. These records must be made available upon request for inspection by DEA.
(b) Every central fill pharmacy must keep a record of all retail pharmacies, including name, address and DEA number, for which it is authorized to fill prescriptions. The central fill pharmacy must also verify the registration for all retail pharmacies for which it is authorized to fill prescriptions. These records must be made available upon request for inspection by DEA.
21 U.S.C. 821, 828, 871(b), unless otherwise noted.
An order form (DEA Form 222) is required for each distribution of a Schedule I or II controlled substance except to persons exempted from registration under part 1301 of this chapter; which are exported from the United States in conformity with the Act; for delivery to a registered analytical laboratory, or its agent approved by DEA; or for delivery from a central fill pharmacy, as defined in § 1300.01(b)(43), to a retail pharmacy.
21 U.S.C. 821, 829, 871(b), unless otherwise noted.
(a) All prescriptions for controlled substances shall be dated as of, and signed on, the day when issued and shall bear the full name and address of the patient, the drug name, strength, dosage form, quantity prescribed, directions for use and the name, address and registration number of the practitioner. A practitioner may sign a prescription in the same manner as he would sign a check or legal document (
A prescription for a controlled substance may only be filled by a pharmacist, acting in the usual course of his professional practice and either registered individually or employed in a registered pharmacy, a registered central fill pharmacy, or registered institutional practitioner.
(d) * * *
(5) Central fill pharmacies shall not be authorized under this paragraph to prepare prescriptions for a controlled substance listed in Schedule II upon receiving an oral authorization from a retail pharmacist or an individual practitioner.
(b) If the prescription is filled at a central fill pharmacy, the central fill pharmacy shall affix to the package a label showing the retail pharmacy name and address and a unique identifier, (
Prescription information may be provided to an authorized central fill pharmacy by a retail pharmacy for dispensing purposes. The following requirements shall also apply:
(a) Prescriptions for controlled substances listed in Schedule II may be transmitted electronically from a retail pharmacy to a central fill pharmacy including via facsimile. The retail pharmacy transmitting the prescription information must:
(1) Write the word “CENTRAL FILL” on the face of the original prescription and record the name, address, and DEA registration number of the central fill pharmacy to which the prescription has been transmitted and, the name of the retail pharmacy pharmacist transmitting the prescription, and the date of transmittal;
(2) Ensure that all information required to be on a prescription pursuant to Section 1306.05 of this part is transmitted to the central fill pharmacy (either on the face of the prescription or in the electronic transmission of information);
(3) Maintain the original prescription for a period of two years from the date the prescription was filled;
(4) Keep a record of receipt of the filled prescription, including the date of receipt, the method of delivery (private, common or contract carrier) and the name of the retail pharmacy employee accepting delivery.
(b) The central fill pharmacy receiving the transmitted prescription must:
(1) Keep a copy of the prescription (if sent via facsimile) or an electronic record of all the information transmitted by the retail pharmacy, including the name, address, and DEA registration
(2) Keep a record of the date of receipt of the transmitted prescription, the name of the pharmacist filling the prescription, and the date of filling of the prescription;
(3) Keep a record of the date the filled prescription was delivered to the retail pharmacy and the method of delivery (
(b) If the prescription is filled at a central fill pharmacy, the central fill pharmacy shall affix to the package a label showing the retail pharmacy name and address and a unique identifier, (
(g) Central fill pharmacies may not dispense controlled substances to a purchaser at retail pursuant to this section.
Prescription information may be provided to an authorized central fill pharmacy by a retail pharmacy for dispensing purposes. The following requirements shall also apply:
(a) Prescriptions for controlled substances listed in Schedule III, IV or V may be transmitted electronically from a retail pharmacy to a central fill pharmacy including via facsimile. The retail pharmacy transmitting the prescription information must:
(1) Write the word “CENTRAL FILL” on the face of the original prescription and record the name, address, and DEA registration number of the central fill pharmacy to which the prescription has been transmitted and the name of the retail pharmacy pharmacist transmitting the prescription, and the date of transmittal;
(2) Ensure that all information required to be on a prescription pursuant to § 1306.05 of this part is transmitted to the central fill pharmacy (either on the face of the prescription or in the electronic transmission of information);
(3) Indicate in the information transmitted the number of refills already dispensed and the number of refills remaining;
(4) Maintain the original prescription for a period of two years from the date the prescription was last refilled;
(5) Keep a record of receipt of the filled prescription, including the date of receipt, the method of delivery (private, common or contract carrier) and the name of the retail pharmacy employee accepting delivery.
(b) The central fill pharmacy receiving the transmitted prescription must:
(1) Keep a copy of the prescription (if sent via facsimile) or an electronic record of all the information transmitted by the retail pharmacy, including the name, address, and DEA registration number of the retail pharmacy transmitting the prescription;
(2) Keep a record of the date of receipt of the transmitted prescription, the name of the licensed pharmacist filling the prescription, and dates of filling or refilling of the prescription;
(3) Keep a record of the date the filled prescription was delivered to the retail pharmacy and the method of delivery (
Drug Enforcement Administration (DEA), Justice.
Final rule.
On October 17, 2001, DEA published a Final Rulemaking (66 FR 52670) in which DEA added red phosphorus, white phosphorus (also known as yellow phosphorus) and hypophosphorous acid (and its salts) as List I chemicals. This action was taken because of the use and importance of these chemicals in the illicit manufacture of methamphetamine (a Schedule II controlled substance).
As List I chemicals, handlers of these materials became subject to Controlled Substances Act (CSA) chemical regulatory controls including registration, recordkeeping, reporting, and import/export requirements. DEA had determined that these controls are necessary to prevent the diversion of these chemicals to clandestine drug laboratories.
In order to provide flexibility for legitimate businesses, the October 17, 2001 rule established, on an interim basis, specific exclusions and waivers for chemical handlers engaged in certain activities. DEA has completed its review of comments pertaining to these interim provisions. This rulemaking finalizes these exclusions and waivers related to the handling of the listed chemicals red phosphorus, white phosphorus, and hypophosphorous acid (and its salts).
This final rule is effective June 24, 2003.
Frank L. Sapienza, Chief, Drug and Chemical Evaluation Section, Office of Diversion Control, Drug Enforcement Administration, Washington, DC 20537 at (202) 307-7183.
On September 25, 2000, DEA published a Notice of Proposed Rulemaking proposing that red phosphorus, white phosphorus, and hypophosphorous acid (and its salts) be made List I chemicals (65 FR 57577). On October 17, 2001, DEA published a Final Rulemaking (66 FR 52670) in which DEA added red phosphorus, white phosphorus (also known as yellow phosphorus) and hypophosphorous acid (and its salts) as List I chemicals. This action was taken because of the use and importance of these chemicals in the illicit manufacture of methamphetamine (a Schedule II controlled substance).
As List I chemicals, handlers of these materials became subject to CSA chemical regulatory controls including registration, recordkeeping, reporting, and import/export requirements. DEA had determined that these controls are necessary to prevent the diversion of these chemicals to clandestine drug laboratories.
In order to provide flexibility for legitimate businesses, the October 17, 2001 rule also established, on an interim basis, specific exclusions and waivers for chemical handlers engaged in certain activities. DEA has completed its review of comments pertaining to these interim provisions. This rulemaking finalizes these exclusions and waivers related to the handling of the listed chemicals red phosphorus, white phosphorus, and hypophosphorous acid (and its salts).
The October 17, 2001 rule established, on an interim basis, an exclusion from the definition of regulated transaction for domestic transactions involving red phosphorus and white phosphorus which are return shipments of residual quantities (from customer to producer) in rail cars and intermodal tank containers which conform to International Standards Organization specifications (with capacities greater than or equal to 2,500 gallons in a single container). The rule also established, on an interim basis, a waiver from the registration requirement for such activity. Additionally, this final rule established, on an interim basis, a waiver from the registration requirement for any person whose activities with respect to List I chemicals are limited to the distribution of red phosphorus, white phosphorus, or hypophosphorous acid (and its salts) to: Another location operated by the same firm solely for internal end-use; or an EPA or State licensed waste treatment or disposal firm for the purpose of waste treatment or disposal.
DEA became aware of the potential need for these provisions via comments received in response to the September 25, 2000 Notice of Proposed Rulemaking (65 FR 57577) which initially proposed the control of red phosphorus, white phosphorus and hypophosphorous acid as List I chemicals. Since that original NPRM did not propose the exclusion and waivers, the public did not have an opportunity to comment on these issues.
In addition to deciding that exclusion/waivers were warranted, the DEA determined that good cause existed under the Administrative Procedure Act (5 U.S.C. 553
The October 17, 2001 rule, therefore solicited comments only on those portions of the rule pertaining to the exclusion/waiver issues. DEA allowed 60 days for persons to comment on the exclusion and waivers. The rulemaking further indicated that after the close of this comment period, DEA would publish a final rule in the
In response to the September 25, 2000 NPRM, two commentors requested clarification regarding the potential applicability of the regulation to end-users that utilize red phosphorus in their production processes. These commentors expressed concerns that an end-user may become subject to regulatory requirements because of distribution of excess material off-site for disposal purposes or because of the transfer of stock from one company location to another.
Under the proposed regulations, distributions of red phosphorus, white phosphorus and/or hypophosphorous acid (and its salts) for the purpose of disposal would be considered regulated transactions subject to all CSA chemical regulatory requirements including registration, recordkeeping and reporting. Additionally, the transfer of stock from one company location to another would require the registration of each location.
The CSA, pursuant to 21 U.S.C. 822(d), provides that the Attorney General may, by regulation, waive the requirement of registration of certain manufacturers, distributors or dispensers, if consistent with the public health and safety. Therefore, in order to reduce any burden on end-users of these chemicals, DEA agreed to waive the registration requirement for any person whose activities with respect to List I chemicals are limited to the distribution of red phosphorus, white phosphorus, or hypophosphorous acid (and its salts) to: Another location operated by the same firm solely for internal end-use; or an EPA or State licensed waste treatment or disposal firm for the purpose of waste treatment or disposal.
This waiver of registration as it pertains to distributions for waste treatment or disposal applies only to the registration requirement, and all other CSA chemical regulatory controls such as recordkeeping and reporting will still apply.
Additionally, in response to the September 25, 2000 NPRM, two producers of elemental phosphorus requested that large transactions be exempted when shipped in reusable containers with capacities of 2500 or 2800 gallons. These commentors stated that these bulk containers are exclusively rail cars or large intermodal tank containers specially designed to enable safe transport. After unloading, the bulk containers are shipped back to the producers (filled with water for safety reasons due to the remaining phosphorus in the container) for reuse. Therefore, the commentors expressed concerns that their other sites and customers would possibly be subject to recordkeeping and registration requirements due to the return shipments. The commentors further stated that “safeguards already include recordkeeping, incident reporting, tamper-detection, sealed valves, and use of bulk reusable containers”. The commentors believe that “registering and tracking these types of shipments back and forth with DEA would provide no additional benefit and would impose an undue burden on DEA, our operations and our customers.”
DEA agreed that return shipments of residual quantities should not be impacted by this regulation. DEA also recognized the difficulty in quantifying the residual amounts of red and white phosphorus contained in these rail cars and intermodal tank containers which conform to International Standards Organization specifications (with capacities greater than or equal to 2500 gallons in a single container). The CSA authorizes DEA, pursuant to 21 U.S.C. 802(39)(A)(iii), to remove certain transactions in listed chemicals from the definition of regulated transaction. Therefore DEA issued an interim rule excluding from the definition of regulated transaction (21 CFR 1310.08(j)), domestic transactions involving red phosphorus and white phosphorus which are return shipments of residual quantities (from customer to producer) in rail cars and intermodal tank containers which conform to International Standards Organization specifications (with capacities greater than or equal to 2500 gallons in a single container). As such, these return shipment transactions will not require recordkeeping. Additionally, DEA issued an interim rule waiving the
The October 17, 2001 rulemaking made it clear that the exclusion and waiver pertain only to these return shipments. Manufacturers shall still be subject to registration, recordkeeping, reporting and other CSA chemical regulatory requirements pertaining to the production and distribution of listed chemicals to their customers. The customers will not be subject to registration or recordkeeping requirements for the return of residual quantities in reusable containers to the producer. However, should these customers re-distribute any of the received material (other than the return of reusable containers to the producer), they shall be subject to all CSA chemical regulatory requirements.
Two comments were received in response to the exclusion from the definition of regulated transaction of domestic transactions involving red phosphorus and white phosphorus which are return shipments of residual quantities (from customer to producer) in rail cars and intermodal tank containers which conform to International Standards Organization specifications (with capacities greater than or equal to 2500 gallons in a single container). These two comments requested that the exclusion and waiver from registration be expanded to include domestic and international shipments.
DEA does not believe that such international shipments pose a more substantial risk of diversion than domestic transactions. Therefore, in response to these comments, DEA is expanding the exclusion and waiver in 21 CFR 1309.24(g) and 21 CFR 1310.08(j) to include domestic and international transactions involving red phosphorus and white phosphorus which are return shipments of residual quantities (from customer to producer) in rail cars and intermodal tank containers which conform to International Standards Organization specifications (with capacities greater than or equal to 2500 gallons in a single container). The registration requirement for persons engaged in such activity will also be waived.
The proposed regulatory language in 21 CFR 1309.24(g) and 21 CFR 1310.08(j) utilized the term “isotainer.” It is DEA's understanding that an isotainer is an intermodal tank container which conforms to International Standards Organization specifications. Therefore DEA has chosen to modify 21 CFR 1309.24(g) and 21 CFR 1310.08(j) to clarify that the provisions pertain to “intermodal tank containers which conform to International Standards Organization specifications.” This change does not modify the intended meaning of these paragraphs.
Each of these two comments also requested clarification regarding the term “residual quantities.” In response to these comments, DEA understands that when a customer purchases rail cars and intermodal tank containers of red phosphorus and white phosphorus, it is not possible to remove 100 percent of the material during the unloading operation. Therefore, these “emptied” containers, in fact, contain residual quantities of phosphorus. The term “residual quantities” refers to those quantities of phosphorus routinely remaining in “emptied” rail cars and intermodal tank containers under normal industry unloading procedures and consistent with normal industry practice.
One commentor wanted to ensure that DEA understands that return shipments of “emptied” rail cars and intermodal tank containers holding “residual quantities” of phosphorus, also contain widely varying amounts of water and/or nitrogen which are added to these rail cars and intermodal tank containers as a safety precaution since the phosphorus is spontaneously combustible when exposed to air. In response to this comment, DEA acknowledges that it understands that this is normal industry practice.
One commentor also stated that the phrase “whose distribution of red and white phosphorus is limited solely to residual quantities of chemicals returned to the producer” could be misinterpreted to mean that the waiver does not apply if the person meets all the conditions but also is involved in other types of distributions which qualify for a waiver of registration (
As clarification, DEA wishes to make it clear that if the registration requirement has been waived for each and every activity in which a person is engaged, then that person is not required to register. 21 CFR 1309.24(f) waives the registration requirement for any person whose activities with respect to List I chemicals are limited to the distribution of red phosphorus, white phosphorus, or hypophosphorous acid (and its salts) to: Another location operated by the same firm solely for internal end-use; or an EPA or State licensed waste treatment or disposal firm for the purpose of waste treatment or disposal. 21 CFR 1309.24(g) waives the registration requirement for any person whose distribution of red phosphorus or white phosphorus is limited solely to residual quantities of chemical returned to the producer, in reusable rail cars and intermodal tank containers which conform to International Standards Organization specifications (with capacities greater than or equal to 2,500 gallons in a single container). In providing these waivers, DEA intended to waive the registration requirement for persons engaged in any of these waived activities, as long as they do not engage in other regulated activities which require registration. 21 CFR 1309.24(i) clarifies that “If any person exempted under paragraph (b), (c), (d), (e), (f) or (g) of this section also engages in the distribution, importation or exportation of a List I chemical, other than as described in such paragraph, the person shall obtain a registration for such activities, as required by Section 1309.21 of this part.”
One commentor also requested that DEA omit the term “residual quantities” completely and therefore provide an exclusion/waiver in the case that “a partial shipment be returned from the customer back to the producer.” DEA wishes to be clear on this point. The exclusion and waiver are not intended to exempt any partial shipments from customer back to producer. The undocumented transfer of such material poses a diversion risk. These transactions shall therefore be subject to all chemical regulatory control provisions of the CSA.
DEA did not receive any comments relating specifically to the interim waiver from the registration requirement (as specified in 21 CFR 1309.24(f)) for any person whose activities with respect to List I chemicals are limited to the distribution of red phosphorus, white phosphorus, or hypophosphorous acid (and its salts) to: Another location operated by the same firm solely for internal end-use; or an EPA or State licensed waste treatment or disposal firm for the purpose of waste treatment or disposal. Since no comments regarding this waiver were received, this waiver is being adopted as originally
DEA is therefore finalizing 21 CFR 1309.24(f) to provide that “The requirement of registration is waived for any person whose activities with respect to List I chemicals are limited to the distribution of red phosphorus, white phosphorus, or hypophosphorous acid (and its salts) to: Another location operated by the same firm solely for internal end-use; or an EPA or State licensed waste treatment or disposal firm for the purpose of waste treatment or disposal''.
The Administrator hereby certifies that this rulemaking has been drafted in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed it, and by approving it certifies that this rulemaking will not have a significant economic impact on a substantial number of small entities. This final rule finalizes an interim exclusion from the definition of regulated transaction for return shipments of residual quantities of red phosphorus and white phosphorus in rail cars and intermodal tank containers, as well as three waivers of the requirement of registration for certain persons handling the List I chemicals red phosphorus, white phosphorus, and hypophosphorous acid (and its salts). Finalization of the interim exclusion and waivers reduces the regulatory burden for those persons.
Under the Administrative Procedure Act (5 U.S.C. 553(d)(1)), an agency may make a rulemaking effective before the required 30 days if the rule “grants or recognizes an exemption or relieves a restriction.” DEA finds good cause to make this rule effective immediately upon publication. This rule provides an exclusion from the definition of regulated transaction and waives the requirement of registration for certain persons, thereby reducing the regulatory burden for those persons.
The Administrator further certifies that this rulemaking has been drafted in accordance with the principles in Executive Order 12866 Section 1(b). DEA has determined that this is not a significant rulemaking action. Therefore, this action has not been reviewed by the Office of Management and Budget.
This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.
This rulemaking does not preempt or modify any provision of state law; nor does it impose enforcement responsibilities on any state; nor does it diminish the power of any state to enforce its own laws. Accordingly, this rulemaking does not have federalism implications warranting the application of Executive Order 13132.
This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.
Administrative practice and procedure, Drug traffic control, List I and List II chemicals, Reporting and recordkeeping requirements.
Drug traffic control, Reporting and recordkeeping requirements.
21 U.S.C. 821, 822, 823, 824, 830, 871(b), 875, 877, 958.
(g) The requirement of registration is waived for any person whose distribution of red phosphorus or white phosphorus is limited solely to residual quantities of chemical returned to the producer, in reusable rail cars and intermodal tank containers which conform to International Standards Organization specifications (with capacities greater than or equal to 2,500 gallons in a single container).
21 U.S.C. 802, 830, 871(b).
(j) Domestic and international return shipments of reusable containers from customer to producer containing residual quantities of red phosphorus or white phosphorus in rail cars and intermodal tank containers which conform to International Standards Organization specifications (with capacities greater than or equal to 2,500 gallons in a single container).
Internal Revenue Service (IRS), Treasury.
Temporary regulations.
This document contains temporary regulations regarding a partnership's assumption of a partner's liabilities in a transaction occurring after October 18, 1999, and before June 24, 2003. These temporary regulations affect partners and partnerships and clarify the tax treatment of an assumption by a partnership of a partner's liability. The text of these
Horace Howells (202) 622-3050 (not a toll-free number).
With certain exceptions, no gain or loss is recognized if property is transferred to a corporation solely in exchange for stock of the corporation, and, immediately after the exchange, the transferors control the corporation. If, however, the transferee corporation assumes a liability of the transferor, then, under section 358(d), the transferor's basis in the stock received in the exchange is reduced by the amount of that liability. If the amount of the liability exceeds the transferor's basis in the property transferred to the corporation, then the transferor recognizes gain under section 357(c)(1). Under section 357(c)(3), a liability the payment of which would give rise to a deduction or that would be described in section 736(a) (regarding payments to a retiring partner) is not taken into account in applying section 357(c)(1), unless the incurrence of the liability resulted in the creation of, or an increase in, the basis of any property.
Under section 752(a) and (b), similar rules apply where a partnership assumes a liability from a partner or a partner contributes property to a partnership subject to a liability. The difference between the amount of the liability and the partner's share of that liability after the partnership's assumption is treated as a distribution of money, which reduces the partner's basis in the partnership interest and may cause the partner to recognize gain. There is no statutory or regulatory definition of liabilities for purposes of section 752. Case law and revenue rulings, however, have established that, as under section 357(c)(3), the term
On December 21, 2000, as part of the Community Renewal Tax Relief Act of 2000 (Appendix G of H.R. 4577, Consolidated Appropriations Act, 2001) Public Law 106-554, 114 Stat. 2763, 2763A-638 (2001) (the Act), Congress enacted section 358(h) to address certain situations where property was transferred to a corporation in exchange for both stock and the corporation's assumption of certain obligations of the transferor. In these situations, transferors took the position that the obligations were not liabilities within the meaning of section 357(c) or that they were described in section 357(c)(3), and, therefore, the obligations did not reduce the basis of the transferor's stock. These assumed obligations, however, did reduce the value of the stock. The transferors then sold the stock and claimed a loss. In this way, taxpayers attempted to duplicate a loss in corporate stock and to accelerate deductions that typically are allowed only on the economic performance of these types of obligations.
Section 358(h) addresses these transactions by requiring that, after application of section 358(d), the basis in stock received in an exchange to which section 351, 354, 355, 356, or 361 applies be reduced (but not below the fair market value of the stock) by the amount of any liability assumed in the exchange. Exceptions to section 358(h) are provided where: (1) The trade or business with which the liability is associated is transferred to the person assuming the liability as part of the exchange; or (2) substantially all of the assets with which the liability is associated are transferred to the person assuming the liability as part of the exchange. The term
Congress recognized that taxpayers were attempting to use partnerships to carry out the same types of abuses that section 358(h) was designed to deter. Therefore, in section 309(c) and (d)(2) of the Act, Congress directed the Secretary to prescribe rules to provide “appropriate adjustments under subchapter K of chapter 1 of the Code to prevent the acceleration or duplication of losses through the assumption of (or transfer of assets subject to) liabilities described in section 358(h)(3) * * * in transactions involving partnerships.” This statutory provision does not specify whether the exceptions in section 358(h)(2) should apply. The only cross-reference to section 358(h) in this statutory provision is to section 358(h)(3), which defines the term
In response to this directive, these temporary regulations provide rules to prevent the duplication and acceleration of loss through the assumption by a partnership of a liability of a partner in a nonrecognition transaction. Section 1.752-6T adopts the approach of section 358(h), with some modifications, for transactions involving partnership assumptions of partners' liabilities occurring after October 18, 1999, and before June 24, 2003. The modifications made to the approach of section 358(h) were to provide rules to conform the application of section 358(h) to partnerships and, as discussed below, to prevent abuse.
Prior to the enactment of Code section 358(h) and section 309(c) and (d)(2) of the Act, the lack of specific rules addressing the treatment of liabilities upon the transfer of property to a corporation or a partnership led to interpretations of then existing law that failed to reflect the true economics of certain transactions. In some cases, taxpayers continued to assert these interpretations even after the enactment of these statutory provisions. For example, in a transaction addressed in Notice 2000-44 (2000-2 C.B. 255), a taxpayer purchases and writes economically offsetting options and then purports to create substantial positive basis by transferring those option positions to a partnership. On the disposition of the partnership interest, the liquidation of the partner's interest in the partnership, or the taxpayer's sale or depreciation of distributed partnership assets, the taxpayer claims a tax loss, even though the taxpayer has incurred no corresponding economic loss.
Treasury and the IRS believe that it is appropriate to prohibit partners and partnerships engaging in transactions described in, or transactions that are substantially similar to the transactions described in, Notice 2000-44 from relying on the exception in section 358(h)(2)(B). The exceptions to section 358(h) were intended to exclude from the application of section 358(h) ordinary business transactions. They were not intended to allow taxpayers to engage in transactions that create noneconomic tax losses.
The text of the temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in
Under these temporary regulations, if a partnership assumes a liability of a partner (other than a liability to which section 752(a) and (b) apply) in a transaction described in section 721(a), then, after application of section 752(a) and (b), the partner's basis in the partnership is reduced (but not below the adjusted value of such interest) by the amount (determined as of the date of the exchange) of the liability. For this purpose, the term
The exceptions under section 358(h) applicable to corporate assumptions of shareholder liabilities generally apply for purposes of these temporary regulations. Therefore, a reduction in a partner's basis generally is not required, under these regulations, after an assumption of a liability by a partnership from that partner if: (1) The trade or business with which the liability is associated is transferred to the partnership assuming the liability as part of the transaction, or (2) substantially all of the assets with which the liability is associated are contributed to the partnership assuming the liability.
However, in the case of a partnership transaction described in, or a partnership transaction that is substantially similar to the transactions described in, Notice 2000-44, the exception for contributions of “substantially all of the assets with which the liability is associated” does not apply.
In accordance with the directive in section 309(c) and (d)(2) of the Act, these temporary regulations apply to assumptions of liabilities occurring after October 18, 1999, and before June 24, 2003. Under section 7805(b)(6), the Secretary may provide that any regulation may take effect in accordance with a legislative grant from Congress authorizing the Secretary to prescribe the effective date for such regulation. In addition, under section 7805(b)(3), the Secretary may provide that any regulation may take effect or apply retroactively to prevent abuse. The Secretary has determined that a later effective date is inappropriate. Therefore, these regulations are being applied retroactively in accordance with the directive from Congress in section 309(d)(2) of the Act and to prevent abuse.
These temporary regulations are necessary to prevent abusive transactions of the type described in the Notice 2000-44. Accordingly, good cause is found for dispensing with notice and public procedure pursuant to 5 U.S.C. 553(b)(B) and for dispensing with a delayed effective date pursuant to 5 U.S.C. 553(d)(1) and (3).
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), refer to the Special Analyses section of the preamble to the notice of proposed rulemaking on this subject published in the Proposed Rules section of this issue of the
The principal author of these temporary regulations is Horace Howells, Office of the Associate Chief Counsel (Passthroughs and Special Industries), IRS. However, other personnel from the IRS and Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
26 U.S.C. 7805 * * *
(a)
(b)
(2)
(c)
In 1999, A and B form partnership PRS. A contributes property with a value and basis of $200, subject to a nonrecourse debt obligation of $50 and a fixed or contingent obligation of $100 that is not a liability to which section 752(a) and (b) applies, in exchange for a 50% interest in PRS. Assume that, after the contribution, A's share of partnership liabilities under §§ 1.752-1 through 1.752-5 is $25. Also assume that the $100 liability is not
(d)
(2)
Coast Guard, DHS.
Notice of temporary deviation from regulations.
The Commander, Fifth Coast Guard District, has approved a temporary deviation from the regulations governing the operation of the existing S168 (Great Bridge) swing-span bridge across the Albemarle and Chesapeake Canal, Atlantic Intracoastal Waterway (AICW) mile 12.0, at Chesapeake, Virginia to allow the bridge owner to conduct needed construction of the new S168 (Great Bridge) lift-span bridge. The work will be performed on four three-day closure periods to navigation.
This deviation is effective from 8 a.m. on July 22, 2003, to 8 a.m. on August 22, 2003.
Bill Brazier, Bridge Management Specialist, Fifth Coast Guard District, at (757) 398-6422.
Tidewater Skanska Corporation (TSC), on behalf of the bridge owner (U.S. Army Corps of Engineers), has requested a temporary deviation from the current operating regulation set out in 33 CFR 117.997(g) which requires the drawbridge to open on signal, except that, from 6 a.m. to 7 p.m., the draw need be opened only on the hour. If any vessel is approaching the bridge and cannot reach the draw exactly on the hour, the draw tender may delay the hourly opening up to 10 minutes past the hour for the passage of the approaching vessel and any other vessels that are waiting to pass. Vessels in an emergency condition, which presents danger to life or property, shall be passed at any time. TSC has requested the temporary deviation to close the existing S168 (Great Bridge) swing-span bridge to navigation to erect the new S168 (Great Bridge) lift-span bridge.
The work involves the installation of bascule spans, formation of gearing and operation of electrical controls for the new S168 (Great Bridge) lift-span bridge. To facilitate this construction, the existing S168 (Great Bridge) swing-span bridge will be locked in the closed position to vessels on four three-day closure periods from 8 a.m. to 8 a.m., from July 22-25 (closure 1); from August 5-8 (closure 2); from August 12-15 (closure 3); and from August 19-22, 2003 (closure 4). During this period, the work requires completely immobilizing the operation of the swing span in the closed position to vessels. At all other times, the bridge will operate in accordance with the current operating regulations outlined in 33 CFR 117.997(g). In the event of inclement weather, the alternate start dates are: July 28 (closure 1); August 11 (closure 2); August 14 (closure 3); and August 21, 2003 (closure 4). Calling the project superintendent at (757) 672-4829 will provide for emergency opening requests.
The Coast Guard has informed the known users of the waterway of the closure periods for the bridge so that these vessels can arrange their transits to minimize any impact caused by the temporary deviation.
The District Commander has granted temporary deviation from the operating requirements listed in 33 CFR 117.35 for the purpose of repair completion of the drawbridge. The temporary deviation allows the S168 (Great Bridge) swing-span bridge across the Albemarle and Chesapeake Canal, AICW, mile 12.0, at Chesapeake, Virginia, to remain closed to navigation on four three-day closure periods: from July 22-25 (closure 1); from August 5-8 (closure 2); August 12-15 (closure 3); and from August 19-22, 2003 (closure 4), from 8 a.m. to 8 a.m. In the event of inclement weather, the alternate start dates are: July 28 (closure 1); August 11 (closure 2); August 14 (closure 3); and August 21, 2003 (closure 4).
Coast Guard, DHS.
Notice of implementation of regulation.
The Coast Guard is implementing safety zones for annual fireworks displays in the Captain of the Port Detroit Zone during July 2003. This action is necessary to provide for the safety of life and property on navigable waters during these events. These zones will restrict vessel traffic from a portion of the Captain of the Port Detroit Zone.
Effective from 12:01 a.m. (eastern time) on July 1, 2003, to 11:59 p.m. (eastern time) on July 31, 2003.
Lieutenant Junior Grade Brandon Sullivan, U.S. Coast Guard Marine Safety Office Detroit, MI at (313) 568-9580.
The Coast Guard is implementing the permanent safety zones in 33 CFR 165.907 (66 FR 27868, May 21, 2001), for fireworks displays in the Captain of the Port
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In order to ensure the safety of spectators and transiting vessels, these safety zones will be in effect for the duration of the events. In cases where shipping is affected, commercial vessels may request permission from the Captain of the Port Detroit to transit the safety zone. Approval will be made on a case-by-case basis. Requests must be made in advance and approved by the Captain of the Port before transits will be authorized. The Captain of the Port may be contacted via U.S. Coast Guard Group Detroit on channel 16, VHF-FM.
Environmental Protection Agency (EPA).
Final rule.
EPA is approving a State Implementation Plan (SIP) revision submitted by the Commonwealth of Kentucky on February 28, 2003. This submittal revises the new source set-aside program by altering the methodology for distributing nitrogen oxides allowances. Rather than grant allowances, the Commonwealth of Kentucky will sell them. This revision also includes clarification language and changes to definitions.
This final rule is effective on July 24, 2003.
Copies of Kentucky's submittals and other information relevant to this action are available for
Environmental Protection Agency, Region 4, Air Planning Branch, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960.
Commonwealth of Kentucky, Division for Air Quality, 803 Schenkel Lane, Frankfort, Kentucky, 40601-1403.
Persons wanting to examine these documents should make an appointment at least 24 hours before the visiting day and reference files KY-142.
Sean Lakeman; Regulatory Development Section; Air Planning Branch; Air, Pesticides and Toxics Management Division; U.S. Environmental Protection Agency Region 4; 61 Forsyth Street, SW.; Atlanta, Georgia 30303-8960. Mr. Lakeman can also be reached by phone at (404) 562-9043 or by electronic mail at
On February 28, 2003, the Commonwealth of Kentucky's Natural Resources and Environmental Protection Cabinet submitted revisions to EPA that revises definitions and the new source set-aside program by altering the methodology for distributing nitrogen oxides (NO
EPA is approving the aforementioned changes to the SIP because the revisions are consistent with Clean Air Act and EPA regulatory requirements. A detailed description of this SIP revision and EPA's rationale for approving it was provided in the proposed notice and will not be restated here. No significant or adverse comments were received on EPA's proposal.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This rule also does not have tribal implications because it will 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, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children From Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.
In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 25, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements.
42 U.S.C. 7401
(c) * * *.
Environmental Protection Agency (EPA).
Interim final rule.
EPA is making an interim final determination that the State of California has corrected deficiencies for which a sanctions clock began on December 10, 2001, based on a proposed approval of revisions to the San Joaquin Valley ozone nonattainment area portion of the California State Implementation Plan (SIP) and an associated proposed finding published elsewhere in today's
This interim final determination is effective on June 24, 2003. However, comments will be accepted until July 24, 2003.
Mail comments to Doris Lo at
You can inspect copies of the submitted SIP revision at the following locations by appointment:
Doris Lo, EPA Region IX, (415) 972-3959.
Throughout this document, “we,” “us” and “our” refer to EPA.
On January 8, 1997 (62 FR 1149), EPA published a final approval of the San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD) portion of the 1994 California ozone SIP. This SIP included, among other things, a commitment to adopt and implement 19 local control measures. On November 8, 2001 (66 FR 56476), EPA found that the SJVUAPCD had failed to implement six of the 19 control measure commitments. This finding began a sanctions clock for imposition of 2:1 offset sanctions 18 months after December 11, 2001, and highway sanctions 6 months later, pursuant to section 179 of the Clean Air Act (CAA). The offset sanction was imposed on June 11, 2003.
On December 6, 2001, SJVUAPCD adopted a revised set of control measure commitments that was intended in part to address EPA's previous finding regarding non-implementation of the SIP. On June 11, 2002, the State submitted these revised commitments to EPA. In the Proposed Rules section of today's
Based on today's proposed approval and finding, we believe that it is more likely than not that the State has corrected the deficiencies that resulted in the non-implementation finding that started the offset and highway sanctions clocks. We are therefore taking final rulemaking action, effective on publication, to stay the offset sanctions and defer imposition of the highway sanctions that were triggered by our November 8, 2001 finding.
EPA is providing the public with an opportunity to comment on this final action. If comments are submitted that change our assessment described in this final determination and the proposed approval of the revised commitments and associated finding, we intend to take subsequent final action to reimpose sanctions pursuant to 40 CFR 51.31(d). If no comments are submitted that change our assessment, then all sanctions and sanction clocks will be permanently terminated on the effective date of a final rule approval and finding.
Because EPA has preliminarily determined that the State has corrected the deficiencies that resulted in EPA's finding of non-implementation, relief from sanctions should be provided as quickly as possible. Therefore, EPA is invoking the good cause exception under the Administrative Procedure Act (APA) in not providing an opportunity for comment before this action takes effect (5 U.S.C. 553(b)(3)). However, by this action EPA is providing the public with a chance to comment on EPA's determination after the effective date, and EPA will consider any comments received in determining whether to reverse such action.
EPA believes that notice-and-comment rulemaking before the effective date of this action is impracticable and contrary to the public interest. EPA has reviewed the State's submittal and, through its proposed action and associated finding, is indicating that it is more likely than not that the State has corrected the deficiencies that started the sanctions clocks. Therefore, it is not in the public interest to keep applied sanctions in place or to impose additional sanctions when the State has most likely done all it can to correct the deficiencies that triggered the sanctions clocks. Moreover, it would be impracticable to go through notice-and-comment rulemaking on a finding that the State has corrected the deficiencies prior to the rulemaking approving the State's submittal. Therefore, EPA believes that it is necessary to use the interim final rulemaking process to stay and defer sanctions while EPA completes its rulemaking process on the approvability of the State's submittal and associated finding. Moreover, with respect to the effective date of this action, EPA is invoking the good cause exception to the 30-day notice requirement of the APA because the purpose of this notice is to relieve a restriction (5 U.S.C. 553(d)(1)).
This action stays and defers federal sanctions and imposes no additional requirements.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget.
This action 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.
The administrator certifies that this action will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This rule does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4).
This rule does not have tribal implications because it will 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, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
This action does not have federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999).
This rule is not subject to Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.
The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272) do not apply to this rule because it imposes no standards.
This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 25, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purpose of judicial review nor does it extend the time within which petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (
Environmental protection, Air pollution control, Intergovernmental regulations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Environmental Protection Agency (EPA).
Direct final rule.
EPA is taking direct final action to approve the municipal solid waste (MSW) landfill section 111(d) plan (the plan) submitted by the Pennsylvania Department of Environmental Protection (PADEP). The plan establishes nonmethane organic compounds (NMOC) emissions limits for existing landfills in the Commonwealth of Pennsylvania, excluding the geographic areas of Allegheny County and the City of Philadelphia. The plan was submitted to fulfill requirements of the Clean Air Act (the Act).
This final rule is effective August 25, 2003 without further notice, unless EPA receives adverse written comment by July 24, 2003. If EPA receives such comments, it will publish a timely withdrawal of the direct final rule in the
Comments may be submitted either by mail or electronically. Written comments should be mailed to Walter Wilkie, Chief, Air Quality Analysis Branch, Mailcode 3AP22, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania
James B. Topsale at (215) 814-2190, or by e-mail at
The Act requires that States submit plans to EPA to implement and enforce the Emission Guidelines (EG) promulgated for MSW landfills pursuant to section 111(d) of the Act. Section 111(d) requires that the State submit its plan no later than nine months after EPA promulgates the EG. On March 12, 1996, EPA promulgated the MSW landfill EG at 40 CFR part 60, subpart Cc, and the related new source performance standard (NSPS), subpart WWW.
Under section 111(d) of the Act, the EPA established procedures whereby States submit plans to control existing sources of designated pollutants. A designated pollutant means any air pollutant, emissions of which are subject to a standard of performance for new sources but for which air quality criteria have not been issued, and which is not included on a list published under section 108(a) or section 112(b)(1)(A) of the Act. As required by section 111(d) of the Act, EPA established a process at 40 CFR part 60, subpart B, similar to the process required by section 110 of the Act (regarding State Implementation Plan (SIP) approval) which States must follow in adopting and submitting a section 111(d) plan. Whenever EPA promulgates a NSPS that controls a designated pollutant, EPA establishes EG in accordance with 40 CFR 60.22 which contain information pertinent to the control of the designated pollutant from that NSPS source category (
States were required to submit their MSW landfill 111(d) plans or negative declarations to EPA on December 12, 1996, pursuant to the provisions of section 111(d) of the Act and 40 CFR part 60, subpart B, and the March 12, 1996 promulgated MSW landfill EG, subpart Cc. Since that time, EPA has promulgated three separate landfill rule amendments, and has proposed a fourth. The promulgated amendments were published in the
The pollutants regulated by the NSPS and EG are MSW landfill emissions, which contain a mixture of volatile organic compounds (VOC), other organic compounds, methane, and hazardous air pollutants. To determine whether emissions control is required, the nonmethane organic compounds (NMOC) emission's rate is determined as a surrogate for the MSW landfill emissions rate. Thus, NMOC are considered collectively as the designated pollutant. The designated facility, which is subject to the EG, is each existing MSW landfill (as defined in 40 CFR 60.32c) for which construction, reconstruction or modification was commenced before May 30, 1991. For any landfill with a design capacity and emission rate that exceeds the EG applicability thresholds, the landfill owner/operator is required to install a landfill gas collection and control system. The system must be designed and operated to reduce collected NMOC concentrations by 98 weight-percent, or reduce the outlet NMOC concentration to 20 parts per million or less, as determined using the test methods specified under § 60.754(d).
On July 1, 1997, the Commonwealth of Pennsylvania submitted its 111(d) plan for MSW landfills for implementing the EG requirements. The following provides a brief discussion of the requirements for an approvable State plan for existing MSW landfills and EPA's review of the PADEP submittal with respect to those requirements. More detailed information on the requirements for an approvable plan and the Commonwealth's submittal can be found in the Technical Support Document (TSD) accompanying this notice, which is available upon request.
EPA has reviewed the Pennsylvania section 111(d) plan for existing MSW landfills in the context of applicable requirements of 40 CFR part 60, subparts B, Cc, and WWW; and 40 CFR part 62, subpart GGG, as follows:
The plan identifies a total of sixteen (16) designated landfills. In order to implement the requirements of the plan, the PADEP issued a Federally enforceable state operating permit (FESOP) to each of the sixteen landfills. Each FESOP permit incorporates by reference (IBR) all applicable EG and related NSPS requirements under the 111(d) plan. In addition, all designated landfills are required to complete a compliance test no later than 180 days of the final compliance date. Each submitted FESOP meets the requirements of 40 CFR 60.24(a) for an enforceable mechanism.
PADEP's Chief Counsel submitted an opinion that PADEP has the statutory and regulatory authority under its State operating permits programs to implement applicable requirements under section 111(d) of the Act. A copy of the Commonwealth's Air Pollution Control Act (35 P.S. 4001,
The PADEP inventory identifies twenty-four (24) existing landfills, excluding those in the geographical areas of Allegheny County and the City of Philadelphia. Of the twenty-four noted landfills, sixteen (16) are identified as designated landfills and eight (8) are identified as having a capacity of less than 2.5 million megagrams of design capacity. The submitted PADEP landfill inventory of sources meets the requirement of 40 CFR 60.25(a).
The Pennsylvania 111(d) plan contains information on estimated NMOC emission rates in tons per year (TPY) for each existing landfill. This meets the emission inventory requirements of 40 CFR 60.25(a).
Each submitted FESOP contains the emission limitations established in the EG. Existing landfills having design capacities equal to or greater than 2.5 million megagrams (Mg) by mass and 2.5 million cubic meters (m3) by volume, and a NMOC emissions rate of 50 Mg/year or greater, must install a gas collection and control system. This and other FESOP provisions meet the requirement of 40 CFR 60.24(c) that the State plan include emission standards that are no less stringent than the EG.
The submitted Pennsylvania 111(d) plan describes a process for the review and approval of site-specific design plans for gas collection and control systems. The process is described in detail in the plan narrative, section VI, Process for Review of Design Plans. The described process meets the requirements of 40 CFR 60.33c(b).
The final compliance dates and enforceable increments of progress of the plan are linked to the date when both the facility capacity and NMOC emission rate equal or exceed the EG applicability thresholds. A State section 111(d) plan must include an expeditious compliance schedule that owners and operators of designated MSW landfills must meet in order to comply with the requirements of the plan. The EG at 40 CFR 60.36c provide that planning, awarding of contracts, and installation of air emission collection and control equipment capable of meeting the EG requirements must be accomplished within 30 months after triggering the 50 Mg/yr NMOC emissions rate applicability threshold. Subpart B, 40 CFR 60.24(e)(1), provides that any compliance schedule extending more than 12 months from the date required for plan submittal shall include legally enforceable increments of progress as specified in 40 CFR 60.21(h), including deadlines for submittal of a final control plan, awarding of contracts for emission control systems, initiation of on-site construction or installation of emission control equipment, completion of on-site construction/installation of emission control equipment, and final compliance. Twelve (12) of the designated landfill FESOPs contain compliance schedules, including increments of progress, that requires final compliance within 30 months after permit issuance, or 30 months after the calculated annual NMOC emissions rate equals or exceeds 50 Mg/yr. The FESOPs for three (3) other designated landfills, with already installed gas collection and control systems, require final compliance on the date when the initial or first annual capacity and NMOC emissions rate reports both show an exceedance of the EG applicability thresholds. These three landfills are identified as: (1) Arden-East Valley, permit No. 63-322-001; (2) Valley, permit No. 65-322-001A; and (3) Arnoni, permit No. 63-322-003A. For a fourth landfill, Lycoming County, permit No. 41-322-01, with reported exceedances of both EG applicablility thresholds for capacity and NMOC emissions rate, final compliance is required on or before March 10, 1998. Each submitted FESOP establishes expeditious interim and/or final compliance dates, and meets the requirements of 40 CFR 60.24(e)(1), and 60.36c, and the Federal landfill plan.
Each FESOP contains provisions for testing, monitoring, reporting, and recordkeeping. Each FESOP meets the requirements of 40 CFR 60.34c, testing and monitoring, and 60.35c, reporting and recordkeeping requirements.
Owners/operators of affected landfills are subject to PADEP's Title V rule, section 127.505, Initial application submittal of Title V facilities. These requirements are consistent with the EG and the Federal landfill plan (64 FR 60689).
Public hearings for the Pennsylvania plan were held on June 6, 9, and 10, 1997 in Harrisburg, Conshohocken, and Pittsburgh, respectively. Each FESOP was subject to public notice and then an opportunity for a public hearing. The state provided evidence of complying with public notice and other hearing requirements, including a record of public comments received. The 40 CFR 60.23 requirement for a public hearing on the 111(d) plan has been met by the PADEP.
The PADEP will submit to EPA on an annual basis a report which details its progress in the enforcement of the 111(d) plan in accordance with 40 CFR 60.25. The first progress report will be submitted to EPA one year after the approval of the plan by EPA.
PADEP has submitted a 111(d) plan that conforms to the June 16, 1998 EG, as amended and the Federal plan. 25 Pa. Code section 127.463 requires designated landfill owners/operators with FESOPs to comply with promulgated requirements, including meeting the applicable Clean Air Act standards or regulations within the time frame required by those standards or regulations, regardless of whether the permit is revised. The PADEP confirmed this in a June 30, 1997 opinion from its Chief Counsel, and a subsequent September 5, 2002 letter to EPA.
When considering the plan's due date for submittal of the initial landfill design capacity and emissions rate reports and the related final compliance date, it is important to note that 40 CFR part 60, subpart B, § 60.24(g)(2) allows states to impose compliance schedules requiring final compliance at earlier times than those specified in the EG. Accordingly, the PADEP has the authority to impose earlier compliance times, and thus reporting requirements than those stipulated in the EG and Federal plan. Also, each FESOP contains a provision that states for purposes of meeting the section 111(d) Clean Air Act requirements, the terms and conditions of the permit, relating to 40 CFR part 60, subpart Cc, are nonexpiring with respect to the requirements of the EG and the section 111(d) plan. Therefore, expired FESOPs, which are part of the plan and include applicable section 111(d) requirements, including compliance schedules and reporting dates, are still valid and enforceable for purposes of the plan.
EPA is taking no action to approve permit terms and conditions that imply that a facility is actually in compliance with section 111(d) plan requirements, such as conditions 30 and 34 under the Lycoming County landfill permit, No. 41-322-01. Such terms and conditions are outside the scope of EPA's section 111(d) plan approval authority.
Based on the rationale discussed above, EPA is approving the Pennsylvania 111(d) plan for the control of MSW landfill gas emissions (
EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. This action simply reflects already existing Federal requirement for state air pollution control agencies and existing MSW landfills that are subject to the provisions of 40 CFR part 60, subparts B, Cc, WWW, as applicable; and 40 CFR part 62, subpart GGG. However, in the “Proposed Rules” section of today's
You may submit comments either electronically or by mail. To ensure proper receipt by EPA, identify the appropriate rulemaking identification number PA124-4079 in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments.
1.
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iii.
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Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
In reviewing 111(d) plan submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a 111(d) plan submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a 111(d) plan submission, to use VCS in place of a 111(d) plan submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 25, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action to approve the Pennsylvania section 111(d) landfill plan may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Administrative practice and procedure, Air pollution control, Aluminum, Fertilizers, Fluoride, Intergovernmental relations, Paper and paper products industry, Phosphate, Reporting and recordkeeping requirements, Sulfur oxides, Sulfur acid plants, Waste treatment and disposal.
42 U.S.C. 7401
Section 111(d) plan for municipal solid waste landfills, as submitted on July 1, 1997, and as amended through April 9, 2003 by the Pennsylvania Department of Environmental Protection. The plan excludes the geographical areas of Allegheny County and the City of Philadelphia.
The plan applies to existing Pennsylvania landfills for which construction, reconstruction, or modification was commenced before May 30, 1991, that accepted waste at any time since November 8, 1987, or that have additional capacity available for future waste deposition, as described in 40 CFR part 60, subpart Cc.
The effective date of the plan for municipal solid waste landfills is August 25, 2003.
Animal and Plant Health Inspection Service, USDA.
Proposed rule.
We are proposing to establish procedures that we will follow when a region that we recognize as free of a disease experiences an outbreak of that disease. The procedures include steps we would take to prevent the introduction of disease from that region and steps we would take to further assess the region's animal health status. The procedures would allow for timely reinstatement of the region's disease-free status if supported by the reassessment.
We will consider all comments that we receive on or before August 25, 2003.
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. 02-001-1, 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. 02-001-1. If you use e-mail, address your comment to
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. Gary Colgrove, Assistant Director, National Center for Import and Export, VS, APHIS, 4700 River Road Unit 38, Riverdale, MD 20737-1231; (301) 734-4356.
The regulations in 9 CFR part 92, “Importation of Animals and Animal Products; Procedures for Requesting Recognition of Regions” (referred to below as the regulations), set out the process by which a foreign government may request recognition of the animal health status of a region or approval to export animals or animal products to the United States from a region based on the disease risk associated with animals or animal products from that region. As provided in § 92.2, each request must include information about the region, including information on the authority, organization, and infrastructure of the veterinary services organization of the region; the extent to which movement of animals and animal products is controlled from regions of higher disease risk, and the level of biosecurity for such movements; livestock demographics and marketing practices in the region; diagnostic laboratory capabilities in the region; and the region's policies and infrastructure for animal disease control,
Recognition by the Animal and Plant Health Inspection Service (APHIS) of a region's animal health status makes exports of animals and animal products from that region subject to a certain set of import conditions, depending on that region's animal health status. These import conditions are intended to ensure that animals and animal products imported from the region will not introduce animal diseases into the United States.
Recently, we have been asked if the requirements in § 92.2 apply to regions that wish to have their previous disease-free status restored after they have experienced and eradicated an outbreak of the disease. As explained in a final rule published on November 5, 2001, regarding the status of France and Ireland for foot-and-mouth disease (66 FR 55872-55876, Docket No. 01-031-2), we do not intend for the regulations in § 92.2 to apply in these circumstances.
In this document, we propose to add to part 92 procedures that we will follow when a region recognized as free of a disease experiences an outbreak. The procedures include steps we will take to protect the United States from disease, as well as steps we will take to reassess the animal health status of the region and, when appropriate, to restore the region's previous disease-free status.
If a region that we recognize as free of a specified animal disease experiences an outbreak of that disease, we will take immediate action to prohibit or restrict imports of animals and animal products from that region to protect U.S. livestock. Such action may include publishing an interim rule prescribing the prohibitions or restrictions that may initially be announced administratively. The interim rule may be given an effective date earlier than the date of signature or publication to affirm our authority for issuing previous administrative orders. We believe such immediate actions are necessary to prevent the introduction of foreign animal diseases into the United States.
If the outbreak is confined to a limited area of the region we previously recognized as free of a disease, the interim rule we publish may impose prohibitions or restrictions on only a portion of the region. This is because we will already have information about the region, including information on the authority, organization, and infrastructure of the veterinary services organization of the region; the extent to which movements of animals and animal products are controlled from regions of higher risk, and the level of biosecurity for such movements; livestock demographics and marketing practices in the region; diagnostic laboratory capabilities in the region; and the region's policies and infrastructure
Following publication of an interim rule, we will reassess the disease status of the region in the context of the standards of the Office International des Epizooties (OIE) to determine whether it is necessary to continue the interim prohibitions or restrictions. As part of the reassessment process, we will consider all public comments we receive on the interim rule, as well as any additional information relevant to a decision to change the disease status of the region, including information collected by or submitted to us. Prior to taking any action to relieve or finalize prohibitions or restrictions imposed by the interim rule, we will make information regarding our reassessment of the region's disease status available to the public for comment. We will announce the availability of this information by publishing a notice in the
• A final rule that reinstates the disease-free status of the region, or a portion of the region covered by the interim rule;
• An affirmation of the interim rule that imposed prohibitions or restrictions on imports of animals and animal products from that region;
• Another document in the
The initial interim rule is intended solely to serve as a temporary measure to provide the United States immediate protection from the introduction of foreign animal diseases. Also, the interim rule gives us an opportunity to evaluate the effectiveness of the region's emergency response measures and to determine whether the outbreak is indeed a temporary situation or indicates a fundamental change in the region's disease status. If a region takes immediate and effective steps to control and stamp out the disease, we believe the region's disease-free status should be restored as quickly as possible once the region has met OIE requirements.
Previously, the procedures we followed to restore the disease-free status of a region were lengthier. We typically did not receive adverse comments regarding the interim rule that revoked a region's status, so following the close of the comment period, we would publish an affirmation of the interim rule. Then, in order to restore the region's previous disease-free status, we would begin a new rulemaking with the publication of a proposed rule. After considering any comments we received during the comment period for the proposed rule, we would publish a final rule.
We believe that we can improve the regulatory process for restoring a region's disease free status by using the procedures described above, while still providing opportunity for public participation. For example, we removed France, Northern Ireland, the Netherlands, and Ireland from the list of regions considered to be free of rinderpest and foot-and-mouth disease (FMD) in two interim rules published in the
Based on comments we received regarding those rulemakings, we decided in the future to make our findings available to the public for comment prior to taking any final action. Recently, following our reassessment of the FMD-status of Great Britain, we published a notice of availability of our findings in the
This proposed rule would codify in the regulations the procedures that we will follow to reassess the animal health status of regions that we recognize as free of disease, and that experience an outbreak of that disease. It would establish a transparent and more effective process for restoring the disease-free status of a region, or portion of that region, while acting to protect against the introduction of foreign animal diseases into the United States. It would also improve our current procedures by making information regarding our reassessment available for comment before taking final action.
This proposed 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.
Below is a summary of the economic analysis for this proposal. The economic analysis provides a cost-benefit analysis as required by Executive Order 12866 and an analysis of the potential economic effects on small entities as required by the Regulatory Flexibility Act. A copy of the full economic analysis is available for review at the location listed in the
We are proposing to establish procedures that we will follow when a region that we recognize as free of a disease experiences an outbreak of that disease. The procedures include steps we would take to prevent the introduction of disease from that region and steps we would take to further
As in the past, if a region that we recognize as free of a specified animal disease experiences an outbreak of that disease, we will take immediate action to prohibit or restrict imports of animals and animal products from that region to protect U.S. livestock. Restrictions and/or prohibitions may at first be announced administratively but are generally followed by an interim rule.
Previously, following the close of the comment period on the interim rule, we would publish an affirmation of the interim rule. Then, in order to restore the region's previous disease-free status, we would begin a new rulemaking with the publication of a proposed rule. After considering any comments we received during the comment period for the proposed rule, we would publish a final rule.
Under our new procedures, we will not proceed directly to an affirmation of the interim rule following the close of the comment period. Rather, we will reassess the disease status of the region in the context of the standards of the Office International des Epizooties (OIE) to determine whether it is necessary to continue the interim prohibitions or restrictions. As part of the reassessment process, we will consider all public comments we receive on the interim rule, as well as any additional information relevant to a decision to change the disease status of the region, including information collected by or submitted to us. Prior to taking any action to relieve or finalize prohibitions or restrictions imposed by the interim rule, we will make information regarding our reassessment of the region's disease status available to the public for comment. We will announce the availability of this information by publishing a notice in the
• A final rule that reinstates the disease-free status of the region, or a portion of the region covered by the interim rule;
• An affirmation of the interim rule that imposed prohibitions or restrictions on imports of animals and animal products from that region;
• Another document in the
The new procedures will improve the process for reinstating a region's disease-free status while still providing an effective opportunity for public participation.
U.S. entities potentially affected by these changes in procedures include importers, domestic producers, and consumers. In particular, importers and consumers could benefit because imports affected by the change in disease status could resume earlier than under previous procedures. Domestic producers of close substitutes, who may have benefitted during the period when imports were restricted or prohibited, could incur losses associated with a resumption of imports that could occur sooner than under past procedures. Because import levels of potentially regulated commodities from the majority of disease-free foreign regions are low relative to total imports and domestic availability of those commodities, the new procedures will likely not lead to significant benefits or losses. This projection is based on a review of economic analyses we prepared for recent rulemakings revoking and reinstating the disease-free status of foreign regions, as well as an analysis of the types and volumes of commodities currently imported from regions we currently recognize as free of specified diseases. We believe that the main benefits associated with the change in procedures will be improved trade relations between the U.S. and foreign governments.
Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action would not have a significant economic impact on a substantial number of small entities.
This proposed rule has been reviewed under Executive Order 13988, Civil Justice Reform. If this proposed rule is adopted: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings will not be required before parties may file suit in court challenging this rule.
This proposed rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Animal diseases, Imports, Livestock, Poultry and poultry products, Region, Reporting and recordkeeping requirements.
Accordingly, we propose to amend 9 CFR part 92 as follows:
1. The authority citation for part 92 would continue to read as follows:
7 U.S.C. 1622 and 8301-8317; 21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.
2. A new section 92.4 would be added to read as follows:
This section applies to regions that are designated in subchapter D of this chapter as free of a specific animal disease and then experience an outbreak of that disease.
(a)
(b)
(2) Prior to taking any action to relieve or finalize prohibitions or restrictions imposed by the interim rule, APHIS will make information regarding its reassessment of the region's disease
(c)
(1) Publish a final rule that reinstates the disease-free status of the region, or a portion of the region, covered by the interim rule;
(2) Publish an affirmation of the interim rule that imposed prohibitions or restrictions on the imports of animals and animal products from that region; or
(3) Publish another document in the
Nuclear Regulatory Commission.
Petition for rulemaking: denial; correction.
On February 27, 2003 (68 FR 9023), the U.S. Nuclear Regulatory Commission (NRC) published a notice of denial of a petition for rulemaking. The petition for rulemaking, dated July 12, 2002, had been filed with the Commission by the State of Nevada, and assigned Docket No. PRM-63-1. The petitioner had requested that the NRC amend its regulations governing the disposal of high-level radioactive waste in a proposed geologic repository at Yucca Mountain, Nevada. This action corrects a sentence in the notice of denial by restoring a word that was mistakenly omitted from the published document. This action also corrects an erroneous citation and a typographical error in the body of the notice.
Timothy McCartin, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone: 301-415-7285 or Toll Free: 1-800-368-5642, e-mail:
In FR Doc. 03-4625, published on February 27, 2003 (68 FR 9023), the following corrections are made.
1. On page 9025, in the third column, the second heading is corrected to read as follows:
a. 10 CFR part 63 Is in Accord With NWPA Requirements.
2. On page 9026, in the third column, the third sentence from the bottom of the column is corrected to read as follows:
The Commission decided to reexamine its implementation of a multiple barrier approach and propose a regulation which required a system of multiple barriers, but which did not set numerical goals for the performance of individual barriers.
3. On page 9032, in the fifth line, the words “Swedish Nuclear Power Inspectorate” are replaced by the words “Swedish Nuclear Fuel and Waste Management Company”.
For the Nuclear Regulatory Commission.
Drug Enforcement Administration (DEA), Justice.
Notice of proposed rulemaking.
DEA proposes to amend its regulations to allow qualified practitioners to dispense and prescribe to narcotic (opioid) dependent persons Schedule III, IV, and V narcotic (opioid) controlled drugs approved by the Food and Drug Administration specifically for use in maintenance or detoxification treatment. These practitioners would not need to obtain a separate DEA registration as a narcotic treatment program to legally dispense or prescribe these drugs. Such practitioners, however, must be deemed “qualifying physicians” by the Secretary, Department of Health and Human Services. This notice of proposed rulemaking is in response to the recent amendments to the Controlled Substances Act by the Drug Addiction Treatment Act of 2000 (DATA), title XXXV of the Children's Health Act of 2000 (Pub. L. 106-310), that are designed to expand and improve treatment of opioid addiction. The proposed regulations are intended to accomplish the goals of DATA while preventing the diversion of Schedule III, IV, and V narcotic (opioid) controlled drugs approved by the Food and Drug Administration specifically for maintenance/detoxification treatment.
Written comments must be postmarked on or before September 22, 2003.
Comments should be submitted to the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, Washington, DC 20537, Attention: DEA
Patricia M. Good, Chief, Liaison and Policy Section, Office of Diversion Control, Drug Enforcement Administration, Washington, DC 20537, Telephone (202) 307-7297.
With passage of the Drug Addiction Treatment Act of 2000 (DATA), title XXXV of the Children's Health Act of 2000 (Pub. L. 106-310; 116 Stat. 1222), this notice of proposed rulemaking proposes to amend the regulations affecting maintenance and detoxification treatment for narcotic (opioid) addiction. The Controlled Substances Act (CSA) and current regulations require that practitioners who want to conduct maintenance or detoxification treatment using narcotic (opioid) controlled drugs be registered with DEA as narcotic treatment programs (NTPs) in addition to the practitioners' personal registrations. The separate NTP registrations authorize the practitioners to dispense or administer, but not prescribe, narcotic (opioid) controlled drugs.
Proposed § 1301.27 would establish an exemption from the separate registration requirement for qualified
The proposed rule would:
(1) Permit qualifying physicians to dispense and prescribe Schedule III, IV, and V narcotic (opioid) controlled drugs approved by FDA specifically for use in maintenance or detoxification treatment;
(2) Permit opioid dependent patients to have one-on-one consultations with a practitioner in a private practice setting;
(3) Permit pharmacies to fill prescriptions for Schedule III, IV, and V narcotic (opioid) controlled drugs approved by FDA specifically for use in maintenance or detoxification treatment; and
(4) Permit practitioners to offer maintenance and detoxification treatment in their private practices without having a second registration as a NTP.
This proposed rule would apply to individual practitioners working in traditional NTPs or any other practice setting.
Congress passed the Harrison Narcotic Act of 1914 to fulfill U.S. obligations to uphold the international Opium Convention signed at the Hague in 1912. The Act was the first comprehensive federal legislation to place controls on licit pharmaceuticals and allowed practitioners to prescribe narcotics (opioids) only for legitimate medical purposes in the course of their professional practice. It did not permit the prescribing of narcotics (opioids) simply to support or maintain an addiction.
During the late 1960s and the early 1970s, drug substitution therapy for addiction treatment using methadone was introduced as a medical modality and was considered “research,” that is, still outside the scope of “medical treatment.” At that time, medical and legal standards governing the use of methadone in addiction treatment programs did not exist. In effect, there were no clear means for differentiating legitimate treatment efforts using the drug as part of a comprehensive program of treatment services from bogus clinics or unethical practitioners distributing methadone to addicts under the guise of treatment. As a result the diversion of methadone was occurring on a large-scale basis.
In 1970, Congress passed the Comprehensive Drug Abuse Prevention and Control Act (Pub. L. 91-513), which consolidated existing Federal drug control statutes, and created new laws regarding activities pertaining to controlled drugs. Title II of this legislation, also known as the Controlled Substances Act, regulates the manufacture and distribution of controlled drugs. However, the issues of maintenance treatment and detoxification treatment were not addressed.
In the mid-1970s, methadone maintenance treatment became the subject of intense policy debate, and Congress passed the Narcotic Addict Treatment Act of 1974. This amendment to the Controlled Substances Act required practitioners who wished to conduct maintenance/detoxification treatment to obtain separate registration as NTPs. To be registered as NTPs, practitioners must comply with DEA requirements for secure drug storage and record keeping; must be qualified under the treatment standards established by the Department of Health and Human Services (HHS); and must comply with standards established by HHS (after consultation with DEA) regarding quantities of narcotic (opioid) drugs for unsupervised take-home use by persons undergoing addiction treatment (21 U.S.C. 823(g)). Since the mid-1970s, products containing methadone and, by the 1990's products containing levo-alpha-acetyl-methadol (LAAM), which are Schedule II controlled substances, have been approved by FDA specifically for use in maintenance or detoxification treatment. (On October 8, 2002, FDA approved buprenorphine products, Schedule III controlled drugs, for use in maintenance and detoxification treatment.)
The Narcotic Addict Treatment Act allows practitioners to dispense narcotic (opioid) drugs for maintenance or detoxification treatment. Under this legislation the term dispense means to deliver a controlled drug to an ultimate user under a lawful order of a practitioner, including the prescribing and administering of a controlled drug. However, as drug replacement therapy was considered research at that time, and to ensure public health and safety, practitioners were restricted to administering and dispensing (other than by prescription) controlled drugs for maintenance or detoxification treatment. After passage of the Narcotic Addict Treatment Act, such drug replacement therapy was no longer considered research.
Today treatment experts view addiction as a medical condition, which should be treated as a chronic disease, and believe that drug replacement therapy is a viable form of medical treatment for opioid dependent individuals. On October 17, 2000, Congress passed DATA, amending the Controlled Substances Act to establish “waiver authority for physicians who dispense or prescribe certain narcotic (opioid) drugs for maintenance treatment or detoxification treatment” (Pub. L. 106-310, title XXXV; 116 Stat. 1222). When the DATA bill was introduced in the United States Senate, it was described as follows:
The goal of the DATA provisions is simple but it is important: The DATA bill attempts to make drug treatment more available and more effective to those who need it. This legislation focuses on increasing the availability and effectiveness of drug treatment. The purpose of the Drug Addiction Treatment Act is to allow qualified physicians, as determined by the Department of Health and Human Services, to prescribe schedule III, IV and V anti-addiction medications in physicians' offices without an additional Drug Enforcement Administration, DEA, registration if certain conditions are met.
There are two main sets of conditions involved in the proposed exemption: Conditions with respect to the practitioner and conditions with respect to the Schedule III, IV, or V narcotic (opioid) drugs approved by FDA specifically for use in maintenance or detoxification treatment. To qualify for the proposed exemption, a practitioner would have to submit notification to HHS stating his or her intent to dispense or prescribe narcotic (opioid) controlled drugs to opiate-dependent patients and certifying that all of following are true:
(1) The practitioner is a “qualifying physician.” A practitioner is a “qualifying physician” if he or she is licensed under State law and has specific medical certification, training or experience in maintenance or detoxification treatment. The Secretary of HHS will establish criteria to be used for determining whether a practitioner is a “qualifying physician.”
(2) The practitioner has the capacity to refer the patients, to whom the practitioner will provide specifically approved narcotic (opioid) drugs or combinations of narcotic (opioid) drugs, for appropriate counseling and other appropriate ancillary services.
(3) The total number of patients treated for opiate dependence by the practitioner who is not a member of a group practice will not exceed 30 at any one time, unless modified by regulation by the Secretary of HHS.
(4) If the practitioner is a member of a group practice, the total number of patients treated for opiate dependence by the group practice of which the practitioner is a member will not exceed 30 at any one time, unless modified by regulation by the Secretary of HHS.
Schedule III, IV and V narcotic (opioid) drugs to be dispensed or prescribed must meet the following two conditions:
(1) They must have been approved by FDA specifically for use in maintenance treatment or detoxification treatment.
(2) They cannot have been the subject of an adverse determination by HHS that their use requires additional standards respecting the qualifications of practitioners or the quantities of the drugs that may be provided for unsupervised use.
When HHS receives a notification of intent to dispense or prescribe narcotic (opioid) controlled drugs for maintenance or detoxification treatment it will forward a copy of the notification to DEA. From the date HHS receives the notification it will have up to 45 days to review the practitioner's qualifications and make a determination whether the practitioner meets all of the requirements for the exemption. While HHS is conducting its determination, DEA will conduct its own review to determine if the practitioner has the appropriate DEA registration in accordance with 21 U.S.C. 823(a) and if there are any adverse determinations.
Once HHS has made its determination, it will send the findings to DEA. If DEA determines that the practitioner has the appropriate DEA registration in accordance with 21 U.S.C. 823(a) and if there are no adverse determinations, then DEA will issue the practitioner an identification number as soon as either of the following conditions occurs: (1) DEA receives the positive determination from HHS before the conclusion of the 45 day review period, or (2) the 45 day review period has concluded and no determination by HHS has been received. If HHS refuses to certify a practitioner or withdraws such certification once it is issued, then DEA will not issue the practitioner an identification number, or will withdraw the identification number if one has been issued. Under proposed § 1301.27(d) the practitioner would be required to include the identification number on all records when dispensing and on all prescriptions when prescribing Schedule III, IV or V narcotic (opioid) controlled drugs for use in maintenance or detoxification treatment.
The practitioner would not have to wait if the practitioner was in compliance with proposed § 1301.27(e). As proposed, the practitioner could begin dispensing or prescribing during the 45-day review period if all of the following requirements are met:
(1) The practitioner has submitted, in good faith, a written notification under § 1301.27(b).
(2) The practitioner reasonably believes that the conditions specified in §§ 1301.27(b) and (c), regarding the practitioner and the narcotic (opioid) drugs, have been met.
(3) Prescribing or dispensing the narcotic (opioid) drugs would facilitate the treatment of an individual patient.
(4) The practitioner has notified both the Secretary of HHS and DEA of the intent to do so.
(5) The Secretary has not issued an order indicating that the registrant is not a qualified physician.
(6) The practitioner has the appropriate DEA registration under 21 CFR 1301.13.
The practitioner would be able to satisfy the fourth requirement by including within the notification required by proposed § 1301.27(b) a statement of his or her intent to immediately commence prescribing or dispensing. If HHS refuses to certify a practitioner or withdraws such certification once it is issued, then DEA will not issue the practitioner an identification number, or will withdraw the identification number if one has been issued.
If a practitioner dispenses or prescribes Schedule III, IV, or V narcotic (opioid) drugs in violation of any of the conditions specified in proposed § 1301.27(b), then DEA may revoke the practitioner's DEA registration in accordance with § 1301.36.
Due to the potential for diversion and in an effort to verify compliance with these regulations, DEA intends to conduct at least two regulatory investigations per field office per year of practitioners dispensing and prescribing to narcotic (opioid) dependent persons Schedule III, IV, and V narcotic (opioid) controlled drugs approved by the Food and Drug Administration (FDA) specifically for use in maintenance or detoxification treatment.
The proposed regulation would affect practitioners working in traditional NTPs the same as any other practitioners. If a “qualifying physician” working in a NTP wants to dispense or
Proposed changes to § 1306.05(a) require the practitioner to include on the prescription the identification number (issued under proposed § 1301.27(d)) or written notice that the practitioner is acting under the good faith exception of proposed § 1301.27(e). These prescriptions would be subject to all of the existing requirements of Part 1306 that apply to prescriptions for controlled drugs. To be valid, a prescription must be written for a legitimate medical purpose by a practitioner acting in the usual course of his or her professional practice (§ 1306.04(a)). The prescription must be dated and signed on the day issued, must contain the full name and address of the patient, the drug name, strength, dosage form, quantity prescribed, directions for use, and the name, address, and registration number of the practitioner (§ 1306.05(a)).
Under current law practitioners are not normally required to keep records of prescriptions issued. However, DEA regulations (§ 1304.03(c)) do require records to be kept by practitioners prescribing controlled drugs listed in any schedule for maintenance or detoxification treatment of an individual.
For conformity §§ 1306.04, Purpose of issue of prescription, and 1306.07, Administering or dispensing of narcotic (opioid) controlled drugs, would also be amended by this NPRM. Section 1306.04(c) currently prohibits the issuance of prescriptions for narcotic (opioid) drugs listed in any schedule for “detoxification treatment” or “maintenance treatment.” Under this NPRM, the prohibition against prescriptions in § 1306.04(c) would be amended to permit prescriptions for Schedule III, IV, and V narcotic (opioid) controlled drugs approved by FDA specifically for maintenance or detoxification treatment by practitioners who are in compliance with proposed § 1301.27.
Section 1306.07(a) currently permits the administering and dispensing (but not prescribing) of narcotic (opioid) drugs for detoxification or maintenance treatment only by practitioners who are separately registered as a Narcotic Treatment Program. This proposed rule would add paragraph (d) to § 1306.07 to permit a practitioner to administer or dispense (including prescribe) any Schedule III, IV, or V narcotic (opioid) controlled drug approved by FDA specifically for use in maintenance or detoxification treatment if the practitioner is in compliance with proposed § 1301.27. This NPRM would also revise § 1306.07(a) to improve the clarity of the language, but not to change the drug of the paragraph.
DEA regulations allow practitioners to authorize refills for Schedule III, IV, or V controlled drug prescriptions. Prescriptions for Schedule III, IV and V controlled drugs are subject to the requirements in §§ 1306.22 and 1306.23, regarding the refilling and partial filling of prescriptions. In addition, practitioners prescribing Schedule III, IV, or V narcotic (opioid) drugs for use in maintenance or detoxification treatment would be subject to all relevant state and federal requirements that apply to prescriptions for controlled drugs.
Practitioners who administer or dispense (other than by prescription) Schedule III, IV, or V narcotic (opioid) drugs approved by FDA specifically for maintenance or detoxification treatment must maintain records and provide security for the controlled drugs in their possession. Records required to be maintained include inventories, records of receipt, reports of theft or loss, destruction of controlled drugs, and records of dispensation. These records must be maintained for two years.
The regulations also require practitioners to safeguard controlled drugs (§ 1301.75(b)). The Schedule III, IV, or V narcotic (opioid) controlled drugs approved by FDA specifically for maintenance or detoxification treatment must be stored in a securely locked, substantially constructed cabinet.
Current regulations on prescribing permit the use of a written prescription signed by a practitioner. Current regulations also permit a practitioner, or the practitioner's agent, to transmit a facsimile of a written signed prescription to a pharmacy (§ 1306.21). In addition, a practitioner may telephone the pharmacy with an oral prescription. The pharmacist must immediately reduce the oral prescription to writing, including all information required in § 1306.05, except for the signature of the practitioner (§ 1306.21(a)).
The Deputy Assistant Administrator, Office of Diversion Control, has reviewed this proposed regulation and hereby certifies that it has been drafted in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)) and that it will not have a significant economic impact on a substantial number of small entities. This proposed rulemaking would permit practitioners to prescribe Schedule III, IV and V narcotic (opioid) controlled drugs approved by FDA specifically for use in maintenance or detoxification treatment without being separately registered with DEA as a NTP. Although virtually all entities affected would be small, the cost of determining eligibility and applying for a waiver is negligible.
The Deputy Assistant Administrator further certifies that this proposed rulemaking has been drafted in accordance with the principles in Executive Order 12866 Section 1(b). DEA has determined that this is not a significant rulemaking action. Therefore, this action has not been reviewed by the Office of Management and Budget. As noted above, this proposed rulemaking would permit practitioners to prescribe Schedule III, IV and V narcotic (opioid) controlled drugs approved by FDA specifically for use in maintenance or detoxification treatment without being separately registered with DEA as a NTP.
This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.
This rulemaking does not preempt or modify any provision of state law; nor does it impose enforcement responsibilities on any state; nor does it diminish the power of any state to enforce its own laws. Accordingly, this rulemaking does not have Federalism implications warranting the application of Executive Order 13132.
This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.
Administrative practice and procedure, Drug traffic control, Security measures.
Drug traffic control, Prescription drugs.
For the reasons set out above, 21 CFR Parts 1301 and 1306 are proposed to be amended as follows:
1. The authority citation for part 1301 continues to read as follows:
21 U.S.C. 821, 822, 823, 824, 871(b), 875, 877, 956.
2. Part 1301 is proposed to be amended by adding §1301.27 to read as follows:
(a) A practitioner may dispense or prescribe Schedule III, IV, or V narcotic (opioid) controlled drugs or combinations of narcotic (opioid) controlled drugs which have been approved by the Food and Drug Administration (FDA) specifically for use in maintenance or detoxification treatment without obtaining the separate registration required by § 1301.13(e) so long as all of the following conditions are met:
(1) The practitioner meets the conditions specified in paragraph (b) of this section.
(2) The narcotic (opioid) drugs or combination of narcotic (opioid) drugs meet the conditions specified in paragraph (c) of this section.
(3) The practitioner is in compliance with either paragraph (d) or paragraph (e) of this section.
(b)(1) The practitioner must submit notification to the Secretary of Health and Human Services stating the practitioner's intent to dispense or prescribe narcotic (opioid) drugs under paragraph (a) of this section. The notice must contain all of the following certifications:
(i) The practitioner is registered under § 1301.13 and is a “qualifying physician” as defined in section 303(g)(2)(G) of the Act (21 U.S.C. 823(g)(2)(G)).
(ii) The practitioner has the capacity to refer the patients to whom the practitioner will provide narcotic (opioid) drugs or combinations of narcotic (opioid) drugs for appropriate counseling and other appropriate ancillary services.
(iii) Where the practitioner is not a member of a group practice, the total number of such patients of the practitioner will not exceed 30 at any one time, unless regulations promulgated by the Secretary of Health and Human Services are modified.
(iv) Where the practitioner is a member of a group practice, the total number of such patients of the group practice will not exceed 30 at any one time, unless regulations promulgated by the Secretary of Health and Human Services are modified.
(2) In addition, if a practitioner wishes to prescribe or dispense narcotic (opioid) drugs pursuant to paragraph (e) of this section, the practitioner must provide the following:
(i) Notification as required under subparagraph (1) of this paragraph must be provided in writing, and must state the name of the practitioner and the registration number of the practitioner issued under § 1301.13.
(ii) If the practitioner is a member of a group practice, the names of the other practitioners in the group and the registration numbers issued to the other practitioners under § 1301.13 shall be provided.
(c) The narcotic (opioid) drugs or combination of narcotic (opioid) drugs to be dispensed or prescribed under this section must meet all of the following conditions:
(1) The drugs or combination of drugs have been approved for use in “detoxification treatment” or “maintenance treatment” under the Federal Food, Drug, and Cosmetic Act or section 351 of the Public Health Service Act.
(2) The drugs or combination of drugs have not been the subject of an adverse determination by the Secretary of Health and Human Services, after consultation with the Attorney General, that the use of the drugs or combination of drugs requires additional standards respecting the qualifications of practitioners or the quantities of the drugs that may be provided for unsupervised use.
(d) After receiving the notification submitted under paragraph (b) of this section, the Secretary of Health and Human Services will forward a copy of the notification to the Administrator. The Secretary of Health and Human Services will have 45 days from the date of receipt of the notification to make a determination of whether the practitioner involved meets all requirements for a waiver under § 823(g)(2)(B) of the Act (21 U.S.C. 823(g)(2)(B)). HHS will notify DEA of its determination regarding the practitioner. If the practitioner has the appropriate registration under § 1301.13 of this chapter, then the Administrator will issue the practitioner an identification number as soon as one of the following conditions occurs:
(1) The Administrator receives a positive determination from the Secretary of Health and Human Services before the conclusion of the 45-day review period, or
(2) The 45-day review period has concluded and no determination by the Secretary of Health and Human Services has been made. If HHS refuses to certify a practitioner or withdraws such certification once it is issued, then DEA will not issue the practitioner an identification number, or will withdraw the identification number if one has been issued. The practitioner must include the identification number on all records when dispensing and on all prescriptions when prescribing narcotic (opioid) drugs under this section.
(e) A practitioner may begin to prescribe or dispense narcotic (opioid) drugs under this section before receiving an identification number from the Administrator so long as the following conditions are met:
(1) The practitioner has submitted a notification under paragraph (b) of this section in good faith to the Secretary of Health and Human Services.
(2) The practitioner reasonably believes that the conditions specified in paragraphs (b) and (c) of this section have been met.
(3) The practitioner reasonably believes that prescribing or dispensing narcotic (opioid) drugs under this section before the sooner of:
(i) Receipt of an identification number from the Administrator, or
(ii) Expiration of the 45-day period would facilitate the treatment of an individual patient.
(4) The practitioner has notified both the Secretary of Health and Human Services and the Administrator of his or her intent to begin prescribing or dispensing the narcotic (opioid) drugs before expiration of the 45-day period.
(5) The Secretary has not issued an order indicating that the registrant is not qualified under paragraph (d) of this section.
(6) The practitioner has the appropriate registration under § 1301.13 of this chapter. If HHS refuses to certify a practitioner or withdraws such certification once it is issued, then DEA will not issue the practitioner an identification number, or will withdraw the identification number if one has been issued.
(f) If a practitioner dispenses or prescribes Schedule III, IV, or V narcotic (opioid) drugs approved by FDA specifically for maintenance or detoxification treatment in violation of any of the conditions specified in § 1301.27(b) or (c), the Administrator may revoke the practitioner's registration in accordance with § 1301.36.
3. The authority citation for Part 1306 continues to read as follows:
21 U.S.C. 821, 829, 871(b), unless otherwise noted.
4. Section 1306.04 is amended by revising paragraph (c) to read as follows:
(c) A prescription may not be issued for “detoxification treatment” or “maintenance treatment,” unless the prescription is for a Schedule III, IV, or V narcotic (opioid) drug approved by FDA specifically for use in maintenance or detoxification treatment and the practitioner is in compliance with requirements in § 1301.27 of this chapter.
5. Section 1306.05 is amended by revising paragraph (a) to read as follows:
(a) All prescriptions for controlled substances shall be dated as of, and signed on, the day when issued and shall bear the full name and address of the patient, the drug name, strength, dosage form, quantity prescribed, directions for use and the name, address and registration number of the practitioner. In addition, a prescription for a Schedule III, IV, or V narcotic (opioid) drug approved by FDA specifically for “detoxification treatment” or “maintenance treatment” must include the identification number issued by the Administration under § 1301.27(d) of this chapter or a written notice stating that the practitioner is acting under the good faith exception of § 1301.27(e). A practitioner may sign a prescription in the same manner as he would sign a check or legal document (
6. Section 1306.07 is amended by revising the section heading and paragraph (a) and adding paragraph (d) to read as follows:
(a) A practitioner may administer or dispense directly (but not prescribe) a narcotic (opioid) drug listed in Schedule II if the practitioner meets both of the following conditions:
(1) The practitioner is separately registered with DEA as a narcotic treatment program.
(2) The practitioner is a qualifying physician under §1301.27 of this chapter and in compliance with DEA regulations regarding security, and records.
(d) A practitioner may administer or dispense (including prescribe) any Schedule III, IV or V narcotic (opioid) drug specifically approved by the Food and Drug Administration for use in maintenance or detoxification treatment to a narcotic (opioid) dependent person if the practitioner complies with the requirements of § 1301.27 of this chapter.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking; notice of proposed rulemaking by cross-reference to temporary regulations; and notice of public hearing.
This document contains proposed regulations relating to the definition of liabilities under section 752 of the Internal Revenue Code. These regulations provide rules regarding a partnership's assumption of certain fixed and contingent obligations in exchange for a partnership interest and provide conforming changes to certain regulations. These regulations also provide rules under section 358(h) for assumptions of liabilities by corporations from partners and partnerships. In addition, this document provides notice that the IRS and Treasury intend to issue supplemental guidance that may apply certain of the rules outlined in these proposed regulations to transactions involving corporations. This document also provides notice of public hearing on the proposed regulations.
Written or electronic comments and requests to speak at the public hearing scheduled for Tuesday, October 14, 2003, must be received by September 22, 2003.
Send submissions to: CC:PA:RU (REG-106736-00), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:RU (REG-106736-00), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC or sent electronically, via the IRS Internet site at:
Horace Howells at (202) 622-3050; concerning submissions, the hearing, and/or placement on the building access list to attend the hearing, Sonya Cruse, (202) 622-7180 (not toll-free numbers).
The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:T:T:SP Washington, DC 20224. Comments on the collection of information should be received by August 25, 2003. Comments are specifically requested concerning:
Whether the proposed collection of information is necessary for the proper performance of the functions of the Internal Revenue Service, including whether the information will have practical utility; The accuracy of the estimated burden associated with the proposed collection of information (see below);
How the quality, utility, and clarity of the information to be collected may be enhanced;
How the burden of complying with the proposed collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and
Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
The collection of information in this proposed regulation is in § 1.752-7(e), (f), (g), and (h). This information is required for a former or current partner of a partnership to take deductions attributable to the economic performance of certain fixed or contingent obligations assumed from the partner by a partnership. This information will be used by the partner to permit the partner to take a deduction. An additional collection of information in this proposed regulation is in § 1.752-7(j)(2). This information is required to inform the IRS of partnerships making the designated election and to report income appropriately. The collection of information is required to obtain a benefit,
The estimated annual burden per respondent varies from 20 to 40 minutes, depending on individual circumstances, with an estimated average of 30 minutes.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.
Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
With certain exceptions, no gain or loss is recognized if property is transferred to a corporation solely in exchange for stock of the corporation, and, immediately after the exchange, the transferors control the corporation. If, however, the transferee corporation assumes a liability of the transferor, then, under section 358(d), the transferor's basis in the stock received in the exchange is reduced by the amount of that liability. If the amount of the liability exceeds the transferor's basis in the property transferred to the corporation, then the transferor recognizes gain under section 357(c)(1). Under section 357(c)(3), a liability the payment of which would give rise to a deduction or that would be described in section 736(a) (regarding payments to a retiring partner) is not taken into account in applying section 357(c)(1), unless the incurrence of the liability resulted in the creation of, or an increase in, the basis of any property.
Under section 752(a) and (b), similar rules apply where a partnership assumes a liability from a partner or a partner contributes property to a partnership subject to a liability. The difference between the amount of the liability and the partner's share of that liability after the partnership's assumption is treated as a distribution of money, which reduces the partner's basis in the partnership interest and may cause the partner to recognize gain. There is no statutory or regulatory definition of liabilities for purposes of section 752. Case law and revenue rulings, however, have established that, as under section 357(c)(3), the term
On December 21, 2000, as part of the Community Renewal Tax Relief Act of 2000 (Appendix G of H.R. 4577, Consolidated Appropriations Act, 2001) Public Law 106-554, 114 Stat. 2763, 2763A-638 (2001) (the Act), Congress enacted section 358(h) to address certain situations where property was transferred to a corporation in exchange for both stock and the corporation's assumption of certain obligations of the transferor. In these situations, transferors took the position that the obligations were not liabilities within the meaning of section 357(c) or that they were described in section 357(c)(3), and, therefore, the obligations did not reduce the basis of the transferor's stock. These assumed obligations, however, did reduce the value of the stock. The transferors then sold the stock and claimed a loss. In this way, taxpayers attempted to duplicate a loss in corporate stock and to accelerate deductions that typically are allowed only on the economic performance of these types of obligations.
Section 358(h) addresses these transactions by requiring that, after application of section 358(d), the basis in stock received in an exchange to which section 351, 354, 355, 356, or 361 applies be reduced (but not below the fair market value of the stock) by the amount of any liability assumed in the exchange. Exceptions to section 358(h) are provided where: (1) The trade or business with which the liability is associated is transferred to the person assuming the liability as part of the exchange; or (2) substantially all of the assets with which the liability is associated are transferred to the person assuming the liability as part of the exchange. The term
Congress recognized that taxpayers were attempting to use partnerships and S corporations to carry out the same types of abuses that section 358(h) was designed to deter. Therefore, in section 309(c) and (d)(2) of the Act, Congress directed the Secretary to prescribe rules to provide “appropriate adjustments under subchapter K of chapter 1 of the Code to prevent the acceleration or duplication of losses through the assumption of (or transfer of assets subject to) liabilities described in section 358(h)(3) * * * transactions involving partnerships” and to prescribe similar rules for S corporations. Under the statute, these rules are to “apply to assumptions of liability after October 18, 1999, or such later date as may be prescribed in such rules.”
In response to this directive, these proposed regulations provide rules to prevent the duplication and acceleration of loss through the assumption by a partnership of a § 1.752-7 liability from a partner. For this purpose, a partnership that takes property subject to a liability is generally treated as assuming the liability. A § 1.752-7 liability is any fixed or contingent obligation to make payment that is not described in § 1.752-1(a)(1), without regard to whether the obligation is otherwise taken into account for purposes of the Code.
The proposed regulations also provide that section 704(c) principles shall apply to a § 1.752-7 liability assumed by a partnership from a partner. Accordingly, the § 1.752-7 liability is treated under section 704(c) principles as having a built-in loss equal to the amount of such liability at the time of its assumption by the partnership. The amount of the § 1.752-7 liability is the amount that a willing assignor would pay to a willing assignee to assume the § 1.752-7 liability in an arm's-length transaction.
In addition, the proposed regulations make conforming amendments to §§ 1.704-1(b)(2)(iv)(
Moreover, the proposed regulations provide rules under section 358(h) for assumptions of liabilities by corporations from partners and partnerships. In addition, in the Explanation of Provisions section of this preamble, the IRS and Treasury are alerting taxpayers that they are considering adopting the definition of liability proposed in these regulations as an appropriate interpretation of the term
Section 358(h) applies to S corporations. The Act states that the Secretary may prescribe comparable rules which provide appropriate adjustments under subchapter S. These proposed regulations do not address the assumption of liabilities by S corporations; however, any rules applicable to assumptions of liabilities by corporations would, in the absence of provisions to the contrary, apply equally to S corporations. Comments regarding the assumption of liabilities by S corporations are requested.
The question of what constitutes a liability for purposes of section 752 was addressed in Rev. Rul. 88-77 (1988-2 C.B. 128). Rev. Rul. 88-77 holds that partnership liabilities include an obligation only if, and to the extent that, incurring the obligation creates or increases the basis to the partnership of any of the partnership's assets (including cash attributable to borrowings), gives rise to an immediate deduction to the partnership, or, under section 705(a)(2)(B) (relating to noncapital, nondeductible expenditures of a partnership) currently decreases a partner's basis in the partner's partnership interest. Section 1.752-1T(g) (1989-1 C.B. 180), included a definition of a liability for purposes of section 752 that reaffirmed the position of the IRS in Rev. Rul. 88-77. This definition was removed from the final version of those regulations in response to comments that the definition was redundant and therefore unnecessary. The Service continues to follow the definition of liability set forth in Rev. Rul. 88-77.
Because these proposed regulations define a § 1.752-7 liability as a fixed or contingent obligation to make payment to which section 752 does not apply, Treasury and the IRS believe that it is appropriate to describe in these regulations the liabilities to which section 752 does apply. Therefore, following the principles set forth in § 1.752-1T(g) and Rev. Rul. 88-77, the proposed regulations provide that an obligation is a liability if and to the extent that incurring the obligation: (A) Creates or increases the basis of any of the obligor's assets (including cash); (B) gives rise to an immediate deduction to the obligor; or (C) gives rise to an expense that is not deductible in computing the obligor's taxable income and is not properly chargeable to capital. An obligation for this purpose is any fixed or contingent obligation to make payment without regard to whether the obligation is otherwise taken into account for purposes of the Code. Obligations include, but are not limited to, debt obligations, environmental obligations, tort obligations, contract obligations, pension obligations, obligations under a short sale, and obligations under derivative financial instruments such as options, forward contracts, and futures contracts. The definition of a liability contained in these proposed regulations does not follow
Treasury and the IRS are considering adopting the definition of liability proposed in these regulations as an appropriate interpretation of the term
In the corporate context, section 358(h) prevents the duplication and acceleration of loss with respect to obligations not encompassed by section 358(d) by reducing the transferor shareholder's basis in corporate stock received in the exchange. Treasury and the IRS do not believe that this is the best approach for partnerships given their passthrough nature. Ultimately, the partners' shares of a partnership's deductions are limited by the partners' bases in their partnership interests (their outside bases). If, at the time of an assumption of a § 1.752-7 liability by a partnership from a partner (the § 1.752-7 liability partner), the partner's outside basis were reduced by the amount of the § 1.752-7 liability, then the partner would not have sufficient outside basis
For this reason, these proposed regulations do not reduce the outside basis of the § 1.752-7 liability partner upon the partnership's assumption of the § 1.752-7 liability. If the partnership satisfies the § 1.752-7 liability while the § 1.752-7 liability partner is a partner in the partnership, then the deduction with respect to the portion of the § 1.752-7 liability assumed by the partnership from the § 1.752-7 liability partner (the built-in loss associated with the § 1.752-7 liability) is allocated to the § 1.752-7 liability partner, reducing that partner's outside basis. If, instead, one of three events occur that separate the § 1.752-7 liability partner from the § 1.752-7 liability, then the § 1.752-7 liability partner's outside basis is reduced at that time. These events are: (1) A disposition (or partial disposition) of the partnership interest by the § 1.752-7 liability partner, (2) a liquidation of the § 1.752-7 liability partner's partnership interest, and (3) the assumption (or partial assumption) of the § 1.752-7 liability by a partner other than the § 1.752-7 liability partner. Immediately before the occurrence of one of these events, the § 1.752-7 liability partner's basis in the partnership interest generally is reduced by the lesser of: (1) The excess of the § 1.752-7 liability partner's basis in the partnership interest over the adjusted value of that interest, or (2) the remaining built-in loss associated with the § 1.752-7 liability (the § 1.752-7 liability reduction). For this purpose, the adjusted value of a partner's interest in a partnership is the fair market value of that interest increased by the partner's share of partnership liabilities under §§ 1.752-1 through 1.752-5. In the case of a partial disposition of the § 1.752-7 liability partner's partnership interest or a partial assumption of the § 1.752-7 liability by another partner, the § 1.752-7 liability reduction is pro rated based on the portion of the interest sold or the portion of the § 1.752-7 liability assumed.
After the occurrence of such an event, the partnership (or the assuming partner) is not entitled to any deduction or capital expense on the economic performance of the § 1.752-7 liability to the extent of the remaining built-in loss associated with the § 1.752-7 liability. If, however, the partnership (or the assuming partner) notifies the § 1.752-7 liability partner of the partial or complete economic performance of the § 1.752-7 liability, then the § 1.752-7 liability partner is entitled to a deduction or loss. The amount of that deduction or loss is, in the case of a partial satisfaction of the § 1.752-7 liability, the amount paid by the partnership in satisfaction of the § 1.752-7 liability (but not more than the § 1.752-7 liability reduction) or, in the case of a complete satisfaction of the § 1.752-7 liability, the remaining § 1.752-7 liability reduction. To the extent of the amount paid in satisfaction of the § 1.752-7 liability, the character of that deduction or loss is determined as if the § 1.752-7 liability partner had satisfied the § 1.752-7 liability. To the extent that the § 1.752-7 liability reduction exceeds the amount paid in satisfaction of the § 1.752-7 liability, the character of the § 1.752-7 liability partner's loss is capital.
The proposed regulations further provide that, solely for purposes of section 705 (adjustments to the basis of a partnership interest) and § 1.704-1(b)(2)(iv)(
If the § 1.752-7 liability is assumed by a partner other than the § 1.752-7 liability partner, then, on economic performance of the § 1.752-7 liability, the assuming partner is treated as contributing cash to the partnership in the amount of the lesser of: (1) The amount paid to satisfy the § 1.752-7 liability; or (2) the remaining built-in loss associated with the § 1.752-7 liability as of the time of the assumption. Adjustments as a result of this deemed cash contribution may include adjusting the basis of the partnership interest, any assets (other than cash, accounts receivable, or inventory) distributed by the partnership to the partner, or gain or loss on the disposition of the partnership interest or of property distributed by the partnership, as the case may be. However, the assuming partner cannot take into account any adjustments to depreciable basis, reduction in gain, or increase in loss until economic performance of the § 1.752-7 liability. Any adjustment to the basis of an asset under this provision is taken into account over the recovery period of that asset.
Certain exceptions apply to these rules. In the corporate context, section 358(h) does not apply in the following two situations: (1) Where the trade or business with which the liability is associated is transferred to the corporation assuming the liability; and (2) where substantially all of the assets with which the liability is associated are transferred to the corporation assuming the liability. Section 358(h)(2) authorizes the Secretary to limit the application of these exceptions.
The statutory provision relating to partnerships does not specify whether the exceptions in section 358(h)(2) should apply. The only cross-reference to section 358(h) in this statutory provision is to section 358(h)(3), which defines the term
The first exception applies where the partnership assumes the § 1.752-7 liability as part of the contribution of the trade or business with which the liability is associated and the partnership continues to conduct that trade or business after the contribution. For this purpose, a trade or business is a specific group of activities carried on by a person for the purpose of earning income or profit if the activities included in that group include every operation that forms a part of, or a step in, the process of earning income or profit.
The proposed regulations provide that the activity of acquiring, holding, or disposing of financial instruments constitutes a trade or business for this purpose if and only if the activity is conducted by an entity registered with the Securities and Exchange Commission as a management company under the Investment Company Act of 1940, as amended. Treasury and the IRS are concerned that certain activities involving acquiring, holding, or disposing of financial instruments could be structured to accomplish the types of transactions that section 309(c) of the Act was designed to prevent. Nonetheless, Treasury and the IRS recognize that many persons contribute such activities to partnerships for substantial business purposes. For example, mutual funds often contribute substantially all of their assets to a master partnership to save administrative costs. Under some circumstances, such a mutual fund may transfer portfolio positions (including hedge positions that could be
The proposed regulations do not include the section 358(h) exception for situations in which substantially all of the assets with which the liability is associated are transferred to the partnership assuming the liability. Treasury and the IRS are concerned that taxpayers would rely on that exception to facilitate transactions of the type that section 309(c) of the Act was designed to prevent.
An additional
Treasury and the IRS are considering exercising their regulatory authority under section 358(h)(2) to limit the exceptions to section 358(h)(1) to follow the exceptions set forth in these proposed regulations (other than the
Proposed § 1.752-7(e) and (i) provide rules to address a contribution of a partnership interest to another partnership. First, under § 1.752-7(e)(3), a transfer by a partner of an interest in a partnership (lower-tier partnership) to another partnership (upper-tier partnership) is not treated as a transfer of a partnership interest for purposes of applying these rules. Therefore, the partner does not have to reduce the basis of the partnership interest before such a transfer. However, look-through rules in § 1.752-7(i) apply to treat the transfer of the partnership interest as a transfer of the partner's share of the assets and § 1.752-7 liabilities of the partnership. Therefore, a transfer of a partnership interest to another partnership may be treated as an assumption of a § 1.752-7 liability by a partnership under these proposed regulations. Under proposed § 1.358-7(a), similar rules apply to a contribution of a partnership interest to a corporation.
Also, § 1.752-7(i)(2) provides a limitation on the trade or business exception where a partnership (upper-tier partnership) assumes a § 1.752-7 liability from a partner, and then another partnership (lower-tier partnership) assumes the § 1.752-7 liability from the upper-tier partnership. In such a case, the trade or business exception does not apply on the assumption of the § 1.752-7 liability by the lower-tier partnership from the upper-tier partnership unless it applied on the assumption of the § 1.752-7 liability by the upper-tier partnership from the § 1.752-7 liability partner. Section 1.358-7(c) of these proposed regulations provide for similar rules where a corporation assumes an obligation described in section 358(h)(3) from a partnership that the partnership had previously assumed from a partner. In addition, § 1.358-7(b) of these proposed regulations provide special rules for adjusting the partners' bases in a partnership when a corporation assumes a § 1.752-7 liability from the partnership.
Additional rules are provided for look-through treatment where a partnership is a § 1.752-7 liability partner in another partnership. The proposed regulations also provide special rules for situations in which the § 1.752-7 liability partner disposes of the partner's interest in the partnership and then another partnership (or a corporation) assumes the § 1.752-7 liability from the partnership.
The regulations described above are proposed to apply to assumptions of § 1.752-7 liabilities occurring on or after June 24, 2003. In the Rules and Regulations section of this issue of the
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 is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based upon the fact that few partnerships engage in the type of transactions that are subject to these regulations (assumptions of liabilities not described in section 752(a) and (b) from a partner). In addition, available data indicates that most partnerships that engage in the type of transactions that are subject to these regulations are large partnerships. Certain broad exceptions to the application of these regulations (including a
The principal author of these regulations is Horace Howells, Office of Associate Chief Counsel (Passthroughs and Special Industries), IRS. However, other personnel from the IRS and Treasury Department participated in their development.
Income taxes, Reporting and record keeping requirements.
Accordingly, 26 CFR part 1 continues to read in part as follows:
1. The authority citation for part 1 continues to read in part as follows:
26 U.S.C. 7805 * * *
Section 1.752-1(a) also issued under Public Law 106-554, 114 Stat. 2763, 2763A-638 (2001) * * *
Section 1.752-6 also issued under Public Law 106-554, 114 Stat. 2763, 2763A-638 (2001) * * *
Section 1.752-7 also issued under Public Law 106-554, 114 Stat. 2763, 2763A-638 (2001) * * *
2. Section 1.358-7 is added to read as follows:
(a)
(b)
(c)
(d)
(e)
In 2004, A contributes undeveloped land with a value and basis of $4,000,000 in exchange for a 50% interest in PRS and an assumption by PRS of $2,000,000 of pension liabilities from a separate business that A conducts. A's basis in the PRS interest immediately after the contribution is A's basis in the land, $4,000,000, unreduced by the amount of the pension liabilities. PRS develops the land as a landfill. Before PRS has economically performed with respect to the pension liabilities, A contributes A's interest in PRS to Corporation X, in an exchange to which section 351 applies. At the time of the exchange, the value of A's PRS interest is $2,000,000, A's basis in PRS is $4,000,000, and A has no share of partnership liabilities other than the pension liabilities. For purposes of applying section 358(h), the contribution of the PRS interest to Corporation X is treated as a contribution to Corporation X of A's share of PRS assets and of A's share of the pension liabilities of PRS ($2,000,000). Because the pension liabilities were not assumed by PRS from A in an exchange in which either the trade or business associated with the liability or substantially all of the assets associated with the liability were transferred to PRS, the contribution of the PRS interest to Corporation X is not excepted from section 358(h) under section 358(h)(2). Under section 358(h), A's basis in the Corporation X stock is reduced by the $2,000,000 of pension liabilities.
In 2004, in an exchange to which section 351(a) applies, PRS, a cash basis taxpayer, contributes $2,000,000 cash to Corporation X, also a cash basis taxpayer, in exchange for Corporation X shares and the assumption by Corporation X of $1,000,000 of accounts payable incurred by PRS. At the time of the exchange, PRS has two partners, A, a 90% partner, who has a $2,000,000 basis in the PRS interest, and B, a 10% partner, who has a $50,000 basis in the PRS interest. Assume that, under section 358(h)(1), PRS's basis in the Corporation X stock is reduced by the accounts payable assumed by Corporation X ($1,000,000). Under paragraph (b) of this section, A's and B's bases in PRS must be reduced, but not below zero, by their respective shares of the section 358(h)(1) basis reduction. If either partner's share of the section 358(h)(1) basis reduction exceeds the partner's basis in the partnership interest, then the partner recognizes gain equal to the excess. A's share of the section 358(h) basis reduction is $900,000 (90% of $1,000,000). Therefore, A's basis in the PRS interest is reduced to $1,100,000 ($2,000,000—$900,000). B's share of the section 358(h) basis reduction is $100,000 (10% of $1,000,000). Because B's share of the section 358(h) basis reduction ($100,000) exceeds B's basis in the PRS interest ($50,000), B's basis in the PRS interest is reduced to $0 and B recognizes $50,000 of gain. This gain is treated as gain from the sale of the PRS interest.
(f)
3. Section 1.704-1 is amended as follows:
1. Paragraph (b)(1)(ii) is amended by removing the language “The” at the beginning of the first sentence and adding “Except as otherwise provided in this section, the” in its place.
2. Paragraph (b)(2)(iv)(
3. Paragraph (b)(2)(iv)(
4. Paragraph (b)(2)(iv)(
5. Paragraph (b)(2)(iv)(
6. Paragraph (b)(2)(iv)(
The addition reads as follows:
(b) * * *
(2) * * *
(iv) * * *
(b) * * * For liabilities assumed before June 24, 2003, references to liabilities in this paragraph (b)(2)(iv)(
4. In § 1.704-2, paragraph (b)(3) is amended by adding the language “or a § 1.752-7 liability (as defined in § 1.752-7(b)(2)(i)) assumed by the partnership from a partner on or after June 24, 2003” at the end of the sentence.
5. Section 1.705-1 is amended by adding paragraph (a)(8) to read as follows:
(a) * * *
(8) For basis adjustments necessary to coordinate sections 705 and 358(h),
6. Section 1.752-0 is amended as follows:
1. The section heading and introductory text of § 1.752-0 are revised.
2. The entries for § 1.752-1(a)(1) through (a)(3) are redesignated as § 1.752-1(a)(2) through (a)(4).
3. A new entry for § 1.752-1(a)(1) is added.
4. The entries for § 1.752-1(a)(1)(i), (ii), (iii), and (iv) are added.
5. The entries for §§ 1.752-6 and 1.752-7 are added.
The revision and additions read as follows:
This section lists the major captions that appear in §§ 1.752-1 through 1.752-7.
7. In § 1.752-1, paragraphs (a)(1) through (a)(3) are redesignated as paragraphs (a)(2) through (a)(4) and a new paragraph (a)(1) is added to read as follows:
(a)
(A) Creates or increases the basis of any of the obligor's assets (including cash);
(B) Gives rise to an immediate deduction to the obligor; or
(C) Gives rise to an expense that is not deductible in computing the obligor's taxable income and is not properly chargeable to capital.
(ii)
(iii)
(iv)
8. Section 1.752-5 is amended as follows:
1. Paragraph 1.752-5(a) is amended by removing the language “Unless” at the beginning of the first sentence and adding “Except as otherwise provided in §§ 1.752-1 through 1.752-4, unless” in its place.
9. Section 1.752-6 is added to read as follows:
The text of proposed § 1.752-6 is the same as the text of § 1.752-6T published elsewhere in this issue of the
10. Section 1.752-7 is added to read as follows:
(a)
(2)
(b)
(1)
(2)
(ii)
(3)
(4)
(i) Partnership allocations of loss or deduction with respect to the § 1.752-7 liability on or prior to the testing date; and
(ii) Any assumption of all or part of the § 1.752-7 liability by the § 1.752-7 liability partner (including any assumption that occurs on the testing date).
(5)
(A) The excess of the § 1.752-7 liability partner's basis in the partner's partnership interest over the adjusted value of that interest (as defined in paragraph (b)(9) of this section); or
(B) The remaining built-in loss associated with the § 1.752-7 liability.
(ii)
(6)
(7)
(i) For purposes of paragraph (e) of this section, the date of the sale, exchange, or other disposition of part or all of the § 1.752-7 liability partner's partnership interest;
(ii) For purposes of paragraph (f) of this section, the date of the partnership's distribution in liquidation of the § 1.752-7 liability partner's partnership interest; and
(iii) For purposes of paragraph (g) of this section, the date of the assumption (or partial assumption) of the § 1.752-7 liability by a partner other than the § 1.752-7 liability partner.
(8)
(ii)
(B)
(iii)
Corporation Y owns, manages, and derives rental income from an office building and also owns vacant land that may be subject to environmental liabilities. Corporation Y contributes the land subject to the environmental liabilities to PRS in a transaction governed by section 721(a). PRS plans to develop the land as a landfill. The contribution of the vacant land does not constitute the contribution of a trade or business because Corporation Y did not conduct any significant business or development activities with respect to the land prior to the contribution.
For the past 5 years, Corporation X has owned and operated gas stations in City A, City B, and City C. Corporation X transfers all of the assets associated with the operation of the gas station in City A to PRS for interests in PRS and the assumption by PRS of the § 1.752-7 liabilities associated with that gas station. PRS continues to operate the gas station in City A after the contribution. The contribution of the gas station to PRS constitutes the contribution of a trade or business.
For the past 7 years, Corporation Z has engaged in the manufacture and sale of household products. Throughout this period, Corporation Z has maintained a research department for use in connection with its manufacturing activities. The research department has 10 employees actively engaged in the development of new products. Corporation Z contributes the research department to PRS in exchange for a PRS interest and the assumption by PRS of pension liabilities with respect to the employees of the research department. PRS continues the research operations on a contractual basis with several businesses, including Corporation Z. The contribution of the research operations to PRS constitutes a contribution of a trade or business.
(9)
(c)
(2)
—(i)
ii.
(d)
(2)
(A) If the partnership assumes the § 1.752-7 liability as part of a contribution to the partnership of the trade or business with which the liability is associated, and the partnership continues to carry on that trade or business after the contribution (for the definition of a trade or business
(B) If, immediately before the testing date, the amount of the remaining built-in loss with respect to all § 1.752-7 liabilities assumed by the partnership (other than § 1.752-7 liabilities assumed by the partnership with an associated trade or business) in one or more § 1.752-7 liability transfers is less than the lesser of 10% of the gross value of partnership assets or $1,000,000.
(ii)
For the past 5 years, Corporation X, a C corporation, has been engaged in Business A and Business B. In 2004, Corporation X contributes Business A, in a transaction governed by section 721(a), to PRS in exchange for a PRS interest and the assumption by PRS of pension liabilities with respect to the employees engaged in Business A. PRS plans to carry on Business A after the contribution. Because PRS has assumed the pension liabilities as part of a contribution to PRS of the trade or business with which the liabilities are associated, paragraphs (e), (f), and (g) of this section do not apply to any transaction occurring after the § 1.752-7 liability transfer.
—(i)
(ii)
(e)
(2)
—(i)
(ii)
(iii)
—The facts are the same as in
(3)
(ii)
(i)
(ii)
The facts are the same as in
(f)
(2)
—(i)
(ii)
(iii)
(g)
(2)
(3)
(4)
(5)
—(i)
(ii)
(iii)
(h)
(1) The amount paid in satisfaction of the § 1.752-7 liability, and whether the amounts paid were in partial or complete satisfaction of the § 1.752-7 liability;
(2) The name and address of the person satisfying the § 1.752-7 liability;
(3) The date of the payment on the § 1.752-7 liability; and
(4) The character of the loss with respect to the § 1.752-7 liability.
(i)
(2)
(3)
(4)
(A) The upper-tier partnership (or assuming partner) must reduce its basis in any corporate stock or partnership interest received by the remaining built-in loss associated with the § 1.752-7 liability (but the partners of the upper-tier partnership do not reduce their bases or capital accounts in the upper-tier partnership); and
(B) No deduction or capital expense is allowed to the assuming partnership or corporation on the economic performance of the § 1.752-7 liability to the extent of the remaining built-in loss associated with the § 1.752-7 liability.
(ii)
(5)
—(i)
In 2004, A, B, and C form partnership UTP. A contributes Property 1 with a fair market value and basis of $5,000,000 subject to a § 1.752-7 liability of $2,000,000 in exchange for a 25% interest in UTP. B contributes $3,000,000 cash in exchange for a 25% interest in UTP, and C contributes $6,000,000 cash in exchange for a 50% interest in UTP. UTP invests the $9,000,000 cash in Property 2. In 2006, A sells A's interest in UTP to D for $3,000,000. At the time of the sale, the basis of A's UTP interest is $5,000,000, the remaining built-in loss associated with the § 1.752-7 liability is $2,000,000, and UTP has no liabilities other than § 1.752-7 liabilities. Assume that none of the exceptions of paragraph (d)(2) of this section apply and that economic performance of the § 1.752-7 liability would give rise to a deductible expense to the payor. Under paragraph (e) of this section, immediately before the sale of the UTP interest to D, A's basis in UTP is reduced to $3,000,000 by the $2,000,000 § 1.752-7 liability reduction. Therefore, A recognizes no gain or loss on the sale of the UTP interest to D. D's basis in the UTP interest is $3,000,000.
(ii)
(iii)
(iv)
(j)
(2)
(ii)
(A) The name, address, and taxpayer identification number of the partner from whom the liability was assumed;
(B) The date on which the liability was assumed by the partnership;
(C) The amount of the liability as of the time of its assumption; and
(D) A description of the liability.
(iii)
(iv)
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing to approve a state implementation plan (SIP) revision submitted by the State of California regarding the San Joaquin Valley ozone nonattainment area (San Joaquin Valley). The submittal revises commitments for adoption of control measures for attaining the 1-hour ozone national ambient air quality standard (NAAQS). EPA is proposing to approve the SIP revision under provisions of the Clean Air Act (CAA or the Act) regarding EPA action on SIP submittals. EPA is also proposing to find that the adoption and implementation of the measures that are the subject of this SIP revision correct a previous finding regarding non-implementation of the SIP. If finalized, this finding would terminate the sanctions and FIP clocks associated with the previous finding.
Written comments on this proposal must be received by July 24, 2003.
Comments should be addressed to the EPA contact listed below. The rulemaking docket for this notice may be inspected by appointment at: EPA Region 9, Air Division Planning Office, 75 Hawthorne Street, San Francisco, CA.
Copies of the SIP materials are also available for inspection at the following locations: California Air Resources Board, 1001 I Street, Sacramento, CA. San Joaquin Valley Unified Air Pollution Control District, 1990 East Gettysburg, Fresno, CA.
Doris Lo at (415) 972-3959,
When the CAA was amended in 1990, each area of the Country that was designated nonattainment for the 1-hour ozone standard was classified by the severity of the area's air quality problem. See CAA sections 107(d)(1)(C) and 181(a). The San Joaquin Valley
On November 15, 1994, the California Air Resources Board (CARB) submitted an ozone SIP for the San Joaquin Valley (1994 SIP). On January 8, 1997 (62 FR 1149), EPA published a final approval of the 1994 SIP which included, among other things, a list of commitments to adopt and implement 19 local control measures for volatile organic compounds (VOC) and oxides of nitrogen (NO
On November 8, 2001 (66 FR 56476), EPA found that the San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD or District) had failed to implement six of the 19 control measure commitments in the 1994 SIP. On the effective date of this finding (December 10, 2001), an 18 month 2:1 offset sanction clock and a 2-year highway sanction and FIP clock were started pursuant to CAA sections 110(c) and 179. In order to terminate these clocks, EPA stated that the SJVUAPCD must adopt and implement the six control measures by November 15, 2002.
On June 11, 2002, CARB submitted the San Joaquin Valley 2001 Amendment to the 1994 ozone SIP (2001 Amendment). This submittal became complete by operation of law pursuant to CAA section 110(k)(1)(B) on December 11, 2002. The purpose of the 2001 Amendment was primarily to address EPA's non-implementation finding and to reflect more accurate information gathered during the rule development process. Table 1 summarizes the relevant commitments in the 1994 SIP and the commitments in the 2001 Amendment.
The District deleted the commitment for rule 4411 after evaluating an analogous but more stringent existing California requirement (
Some of the control measures that are the subject of commitments in the 2001 Amendment achieve more emission reductions than their analogues in the 1994 SIP, while others achieve fewer. The cumulative emission reductions achieved by the six measures in the 2001 Amendment (13.9 ton/day VOC
The SJVUAPCD has adopted rules 4601, 4662, 4692, 4623, 4663 and 4703. These rules, with minor exceptions,
Section 110(l) of the CAA prohibits EPA from approving SIP revisions that would “interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in section 171), or any other applicable requirement of this Act.” EPA believes that the 2001 Amendment, in conjunction with 14 CCR 1774 and 13 CCR 2450-2466, does not interfere with the statutory attainment date for the San Joaquin Valley area, no later than November 15, 2005, because it results in cumulative emission reductions of 5.8 tons/day VOC and 0.9 ton/day NO
As discussed above, EPA issued its November 8, 2001, non-implementation finding (66 FR 56476) because SJVUAPCD had failed to adopt and implement six control measures committed to in the 1994 SIP. The non-implementation finding stated that “* * * the SJVUAPCD is obliged by its existing SIP to meet the specific requirements of its commitments. However, CARB and the District have the opportunity to amend the SIP by showing that reasonable further progress and other requirements of the CAA can be met with a revised schedule of controls and associated emission reductions.” Based on the above evaluation, EPA believes that these requirements have been met and that the adoption and implementation of rules 4601, 4662, 4692, 4623, 4663 and 4703 in the 2001 Amendment and 14 CCR 1774 and 13 CCR 2450-2466 are tantamount to the adoption and implementation of the analogous rules in the 1994 SIP.
While our November 8, 2001, non-implementation finding specified that adoption and implementation of the six measures in the 1994 SIP would terminate sanctions, the measures in the 2001 Amendment should also be submitted to EPA for SIP approval. With the exception of rules 4411 and 4412, all measures in Table 1 have been submitted and found complete. While we concur with the SJVUAPCD that it is not necessary to duplicate 17 CCR 1774 and 13 CCR 2450-2466 requirements by adopting rules 4411 and 4412, we believe these state requirements should be submitted for incorporation into the federally enforceable SIP. Based on discussions with CARB, we believe these requirements will be submitted to EPA in the next few months.
We are proposing to fully approve the 2001 Amendment under CAA section 110(k)(3) because EPA believes that approval is consistent with section 110(l) of the CAA. We are also proposing to find that the deficiencies that resulted in our November 8, 2001, non-implementation finding have been corrected by the adoption and implementation of rules 4601, 4662, 4692, 4623, 4663 and 4703 in the 2001 Amendment and 14 CCR 1774 and 13 CCR 2450-2466.
The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 12866, entitled “Regulatory Planning and Review.”
This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements 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 not-for-profit enterprises, and small governmental jurisdictions.
This proposed rule will not have a significant impact on a substantial number of small entities because the SIP approval and associated finding under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing and terminate sanctions clocks. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.
Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds.
Under sections 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated costs to State, local, or tribal governments in the aggregate; or to the private sector, of $100 million or more. Under section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule.
EPA has determined that the proposed action does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action proposes to approve pre-existing requirements under State or local law and proposes to find that portions of the state implementation plan have been implemented and, as such, imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.
Federalism (64 FR 43255, August 10, 1999) revokes and replaces Executive Orders 12612 (Federalism) and 12875 (Enhancing the Intergovernmental Partnership). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under 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 will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely approves a state rule implementing a Federal standard and terminates sanction clocks, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.
Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This proposed rule does not have tribal implications, as specified in Executive Order 13175. 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. Thus, Executive Order 13175 does not apply to this rule.
EPA specifically solicits additional comment on this proposed rule from tribal officials.
This rule is not subject to Executive Order 13045 because it does not involve decisions intended to mitigate environmental health or safety risks.
This 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.
Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical.
The EPA believes that VCS are inapplicable to this action. Today's action does not require the public to perform activities conducive to the use of VCS.
Environmental protection, Air pollution control, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing to approve the municipal solid waste landfill (MSW) section 111(d) plan (the plan) submitted by the Pennsylvania Department of Environmental Protection (PADEP) for the purpose of controlling landfill gas emissions (
EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time.
Comments must be received in writing by July 24, 2003.
Comments may be submitted either by mail or electronically. Written comments should be mailed to Walter Wilkie, Chief, Air Quality Analysis Branch, Mailcode 3AP22, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. Electronic comments should be sent either to
James B. Topsale at (215) 814-2190, or by e-mail at
For further information, please see the information provided in the direct final action, with the same title, that is located in the “Rules and Regulations” section of this
You may submit comments either electronically or by mail. To ensure proper receipt by EPA, identify the appropriate rulemaking identification number PA124-4079 in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments.
1.
i.
ii.
iii.
2.
Please note that if EPA receives adverse comment or an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.
Forest Service, USDA.
Notice of intent to prepare an environmental impact statement.
The USDA Forest Service will prepare an environmental impact statement (EIS) for the Acker Fire Salvage within the Buckeye and Skillet/Emerson Facial 6th Field sub-watersheds on the Tiller Ranger District of the Umpqua National Forest. During 2002, the Acker Creek fire created about 1,600 acres of canopy mortality in both the Buckeye and Skillet/Emerson Facial 6th Field sub-watersheds. Of this total, about 600 acres of mature or late seral trees were killed or are dying. These trees represent a substantial economic value to nearby communities and ecological value to species that depend on large wood. The sub-watershed is about 120 miles south and east of Roseburg, and 120 miles north and east of Medford, Oregon. Proposed activities include the harvest of dead and dying trees through a commercial timber sale on about 350 acres in the matrix land allocation, and the planting of the harvested areas with a mixture of native conifers, hardwoods, shrubs and forbs. This proposal complies with the 1990 Umpqua National Forest Land and Resource Management Plan (Forest Plan), as amended. The Wildfire Effects Evaluation Project (2003) disclosed the effects of the Acker Fire on the Buckeye and Skillet/Emerson Facial 6th Field sub-watersheds. Forest Service plans to implement salvage portion of proposal by the fall of 2004 and post-sale activities, such as planting harvested areas, in the winter of 2005. The Forest Service gives notice of the full environmental analysis and decision-making process that will occur on the proposal so that interested and affected people may become aware of how they can participate in the process and contribute to the final decision.
Comments concerning the scope of the proposal should be received in writing by July 25, 2003.
Send written comments to James A. Caplan, Forest Supervisor, Umpqua National Forest, P.O. Box 1008, Roseburg, Oregon 97470.
Direct questions about the proposed action or EIS to Alan Baumann, Timber Management Assistant, Tiller Ranger District, 27812 Tiller Trail Hwy., Tiller, Oregon 97484; e-mail:
The Acker Fire Salvage planning area comprises about 14,200 acres of which about 300 acres (2 percent) are private lands. About 1,400 acres of plantations were burned in the Matrix portion of the fire complex and will need to be re-established. There are no planned activities within the inventoried roadless area or the Rogue-Umpqua Divide Wilderness. The Planning Area includes all or portions of sections 1, 11-16, and 22-24, T. 29S, R. 1E; and sections 6, 7, 18 or 19, T. 29S, R. 2E, Willamette Meridian, Douglas County, Oregon.
No new roads are being planned. Additionally, riparian reserves will not be included in salvage plans nor will green trees be cut except for safety purposes. The proposed harvest is in the matrix lands allocation of the Buckeye and Skillet/Emerson Facial 6th Field sub-watersheds. Upon completion of harvest activities, the area will be planted with a mixture of conifers and hardwoods including: Douglas-fir; Ponderosa pine, sugar and white pine; western red cedar and incense-cedar; willow and red alter; Pacific yew; and other native trees, hardwoods and shrubs.
This analysis will consider a range of alternatives that will address the purpose and need for the proposed project. The no-action alternative will be part of this range so that effects associated with not implementing any of the proposed activities can be evaluated. Preliminary issues identified include effects on: soil productivity, fuels reduction, water quality, diameter harvest limits and invasive weeds.
The forest Service will be seeking additional information, comments, and assistance from Federal, State and local agencies, tribal governments, and other individuals or organizations who may be interested or affected by the proposed project. Public meetings and field trips are scheduled. Dates and locations for these activities will be announced. The scoping process will include identifying: issues; alternatives to the proposed action; and potential environmental effects (that is, direct, indirect and, cumulative effects) of the proposed action and alternatives.
The Forest Service believes, at this early stage, it is important to give reviewers notice of several court rulings related to public participation in the environmental review process. First, reviewers of a draft EIS 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 considering issues and concerns on the proposed action, comments on the draft EIS 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 draft EIS 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 of 40 CFR 1503.3 in addressing these points. Comments received, including the names and addresses of those who comment, will be considered part of the public record on this proposal and will be available for public inspection.
In the final EIS, the Forest Service is required to respond to substantive comments and responses received during the comment period that pertain to the environmental consequences discussed in the draft EIS and applicable laws, regulations, and policies considered in making a decision regarding the Acker Fire Salvage. The Responsible Official is James A. Caplan, Forest Supervisor, Umpqua National Forest. The Responsible Official will document the decision and rationale for the Acker Fire Salvage decision in the Record of Decision. The decision will be subject to review under Forest Service Appeal Regulations (36 CFR Part 215).
Forest Service, USDA.
Notice of meeting.
The Ketchikan Resource Advisory Committee will meet in Ketchikan, Alaska, July 24, 2003 and August 21, 2003. The purpose of these meetings is to provide orientation to Advisory Committee members, and to discuss potential projects under the Secure Rural Schools and Community Self-Determination Act of 2000.
The meetings will be held July 24, 2003 and August 21, 2003.
The meetings will be held at the Southeast Alaska Discovery Center Learning Center (back entrance), 50 Main Street, Ketchikan, Alaska. Send written comments to Ketchikan Resource Advisory Committee, c/o District Ranger, USDA Forest Service, 3031 Tongass Ave., Ketchikan, AK 99901, or electronically to
Jerry Ingersoll, District Ranger, Ketchikan-Misty Fiords Ranger District, Tongass National Forest, (907) 228-4100.
The meetings are open to the public. Committee discussion is limited to Forest Service staff and Committee members. However, persons who wish to bring matters to the attention of the Committee may file written statements with the Committee staff before or after the meeting. Public input sessions will be provided and individuals who made written requests by July 23 and August 20, respectively, will have the opportunity to address the Committee at those sessions.
Forest Service, USDA.
Notice of meeting.
The Siskiyou County Resource Advisory Committee will meet in Yreka, California, June 30, 2003. The meeting will include routine business and discussion, review, and recommendation of submitted project proposals.
The meeting will be held June 30, 2003, from 4 p.m. until 7 p.m.
The meeting will be held at the Yreka High School Library, Preece Way, Yreka, California.
Don Hall, RAC Coordinator, Klamath National Forest, (530) 841-4468 or electronically at
The meeting is open to the public. Public comment opportunity will be provided and individuals will have the opportunity to address the Committee at that time.
Rural Housing Service, United States Department of Agriculture (USDA)
Notice of funding for the rural housing demonstration program.
The Rural Housing Service (RHS) announces the availability of housing loan funds for Fiscal Year (FY) 2003 for the Rural Housing Demonstration Program. For FY 2003, RHS has set aside $1 million for the Innovative Demonstration Initiatives. The Agency is soliciting proposals for a Housing Demonstration program under section 506(b) of title V of the Housing Act of 1949. Under section 506(b), RHS may provide loans to low income borrowers to purchase innovative housing units and systems that do not meet existing published standards, rules, regulations, or policies. The intended effect is to increase the availability of affordable Rural Housing (RH) for low-income families through innovative designs and systems.
June 24, 2003.
Gloria L. Denson, Senior Loan Specialist, Single Family Housing Direct Loan Division, RHS, U.S. Department of Agriculture, STOP 0783, 1400 Independence Ave. SW., Washington, DC 20250-0783, Telephone: (202) 720-1474. (This is not a toll free number.)
Under current standards, regulations, and policies, some low-income rural families lack sufficient income to qualify for loans to obtain adequate housing. Section 506(b) of title V of the Housing Act of 1949, 42 U.S.C. 1476, authorizes a housing demonstration program that could result in housing that these families can afford. Section 506(b) imposes two conditions: (1) That the health and safety of the population of the areas in which the demonstrations are carried out will not be adversely affected, and (2) that the aggregate expenditures for the demonstration may not exceed $10 million in any fiscal year. Grant funds for these proposals are not authorized.
Rural Development State Directors are authorized in FY 2003 to accept demonstration concept proposals from individuals.
The objective of the demonstration programs is to test new approaches to constructing housing under the statutory authority granted to the Secretary of Agriculture. Rural Development will review each application for completeness and accuracy. Some demonstration proposals may not be completely consistent with 7 CFR part 3550—Direct Single Family Housing Loans and Grants regulation. Under section 506(b) of the Housing Act of 1949, the Agency may provide loans for innovative housing design units and systems which do not meet existing published standards, rules, regulations, or policies. The innovative housing units and systems should be creative, affordable, durable, energy efficient, and include a diversity of housing types. Examples of eligible proposals include, but are not limited to: new or improved energy-savings houses, roofing that cools, building techniques that cut costs and improve the quality of rural housing
The Equal Credit Opportunity Act and Title VIII of the Civil Rights Act of 1968 provide that a program such as this be administered affirmatively so that individuals of similar low-income levels in the housing market area have housing choices available to them regardless of their race, color, religion, sex, national origin, familial status and disability. Under Section 504 of the Rehabilitation Act of 1973 Rural Development makes reasonable accommodations to permit persons with disabilities to apply for agency programs. Executive Order 12898 requires the Agency to conduct a Civil Rights Impact Analysis on each project prior to loan approval. Also, the requirements of Executive Order 11246 are applicable regarding equal employment opportunity when the proposed contract exceeds $10,000.
Completed applications that have been determined to carry out the objectives of the program will be considered on a first come, first served basis based on the date a completed application was submitted. An application is considered complete only if the “Application for Approval of Housing Innovation” is complete in content, contains information related to the criteria and all applicable additional information required by the application form has been provided. All application packages must be in accordance with the technical management requirements and address the criteria in the Proposal Content. The application, technical management requirements, Proposal Content and Criteria and further information may be obtained from the Rural Development State office in each state. (See the State Office address list at the end of this notice or access the Web site at
The following evaluation factors will not be weighted and are non-competitive. RHS, in its analysis of the proposals received, will consider whether the proposals will carry out the objectives of this demonstration effort in accordance with the following criteria:
1. A proposal must be well beyond the “idea” state. Sufficient testing must have been completed to demonstrate its feasibility. The proposal must be judged ready for full scale field testing in a rural setting.
2. Ability of the housing unit to provide for the protection of life, property, and for the safety and welfare of the consumer, general public and occupants through the design, construction, quality of materials, use, and maintenance of the housing unit.
3. Flexibility of the housing units in relation to varying types of housing and varying site considerations.
1. Flexibility of the housing unit concept, insofar as it provides the ability to adjust or modify unit size and arrangements, either during design or after construction.
1. Efficiency in the use of materials and labor, with respect to cost in place, conservation of materials, and the effective use of labor skills. Potential for use in the Mutual Self-Help Housing program will be considered.
6. Selection of materials for durability and ease of maintenance.
7. Concepts for the effective use of land and development.
1. The experience and “know-how” of the proposed organization or individual to implement construction of the housing unit concept in relation to the requirements of RHS's housing programs.
2. The management structure and organization of the proposer.
3. The quality and diversity of management and professional talent proposed as “key individuals.”
4. The management plan of how this effort will be conducted.
1. The level of costs which are proposed, as they may compare with other proposals and be considered realistic for the efforts planned. Also, the quantity and level of detail in the information supplied.
2. Projected cost of “housing in place,” with particular reference to housing for very low and low-income families.
The State Director will send an acceptable proposal to the National Office for concurrence by the RHS Administrator before the State Director may approve it. If the proposal is not selected, the State Director will so notify the applicant in writing, giving specific reasons why the proposal was not selected. The funds for the RH Demonstration program are available for section 502 single family housing applicants who wish to purchase an approved demonstration dwelling. Funds cannot be reserved or guaranteed under the demonstration housing concept. There is no guarantee that a market exists for demonstration dwellings, and this does not ensure that an eligible loan applicant will be available for such a section 502 RH dwelling. If there is no available RHS eligible loan applicant, the RH demonstration program applicant will have to advance funds to complete the construction of the demonstration housing, with the risk that there may be no RHS applicant or other purchaser from which the builder will recover his or her development and construction costs.
This program or activity is listed in the Catalog of Federal Domestic Assistance under No. 10.410. For the reasons contained in 7 CFR part 3015, subpart V and RD Instruction 1940-J, “Intergovernmental Review of Rural Development Programs and Activities,” this program or activity is excluded from the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials.
All interested parties must make a written request for a proposal package. The request must be made to the State Director in the State in which the proposal will be submitted; RHS will not be liable for any expenses incurred by respondents in the development and submission of applications.
The reporting requirements contained in this notice have been approved by the Office of Management and Budget (OMB) under Control Number 0575-0114.
Rural Housing Service (RHS), USDA.
Notice; correction.
The Rural Housing Service (RHS) corrects a notice published May 16, 2003 (68 FR 26941-26943). This action is taken to remove references to the application deadline of August 14, 2003.
Accordingly, the notice published May 16, 2003 (68 FR 26941-26943), is corrected as follows:
On page 26941, in the third column, in the 30th line of the SUMMARY, remove the sentence reading “This Notice changes the timeframe to submit applications for the Section 514 Farm Labor Housing Loans and Section 516 Farm Labor Housing Grants for Off-Farm Housing for Fiscal Year 2003 to be August 14, 2003.”.
On page 26942, in the third column, under “Application Process”, in the eighth line, remove the sentence reading “No application will be accepted after 5 p.m., local time, on August 14, 2003 unless date and time is extended by another Notice published in the
The Department of Commerce has submitted to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35).
The first collection involves a set of panels on commercial fishing operations, where commercial fishermen will be interviewed to assess financial performance and assess the impacts of Sanctuary regulations. Information on catch, effort, revenues, and operating and capital costs will be obtained to do financial performance analysis. Information on socioeconomic factors for developing profiles of the commercial fishermen such as age, sex, education level, household income, marital status, number of family members, race/ethnicity, percent of income derived from fishing, percent of income derived from study area, and years of experience in fishing will be gathered to compare panels with the general commercial fishing population. The data will be collected annually.
The second collection will monitor recreational for-hire operations through the use of dive logs for estimating use in the “no take areas” versus other areas for snorkeling, scuba diving, and glass-bottom boat rides. Volunteers will collect the logbooks monthly.
Copies of the above information collection proposal can be obtained by calling or writing Diana Hynek, Departmental Paperwork Clearance Officer, (202) 482-0266, Department of
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to David Rostker, OMB Desk Officer, Room 10202, New Executive Office Building, Washington, DC 20503.
The Department of Commerce has submitted to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the emergency provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35).
Copies of the above information collection proposal can be obtained by calling or writing Diana Hynek, Departmental Paperwork Clearance Officer, (202) 482-0266, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW, Washington, DC 20230 (or via the Internet at
Written comments and recommendations for the proposed information collection should be sent by June 27, 2003 to David Rostker, OMB Desk Officer, Room 10202, New Executive Office Building, Washington, DC 20503.
Import Administration, International Trade Administration, Department of Commerce.
Policy bulletin; request for comments.
The purpose of this policy bulletin is, consistent with the intent of U.S. law, to provide an incentive for Canadian provinces to move to market-based systems of timber sales that ensure that the provinces receive adequate remuneration for sales of standing timber. The proposed policies are intended to serve as the basis for a long-term, durable solution to the ongoing dispute between the United States and Canada over trade in softwood lumber and encourage the development of an integrated market for forest products consistent with the goals of the North American Free Trade Agreement and sustainable forestry.
To be assured of consideration, written comments must be received not later than July 25, 2003. Rebuttal comments must be received not later than August 8, 2003.
A signed original and six copies of each set of comments, including reasons for any recommendation, along with a cover letter identifying the commenter's name and address, should be submitted to Grant D. Aldonas, Under Secretary for International Trade, Central Records Unit, Room 1870, U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, NW., Washington, DC 20230; Attention: Softwood Lumber Policy Bulletin.
Jim Terpstra, Office of AD/CVD Enforcement, Import Administration, International Trade Administration, U.S. Department of Commerce, at (202) 482-3965.
The Department solicits comments pertaining to its proposed policies on softwood lumber from Canada. Initial comments should be received by the Under Secretary not later than July 25, 2003. Any rebuttals to the initial comments should be received by the Under Secretary not later than August 8, 2003. Commenters should file a signed original and six copies of each set of initial and rebuttal comments. All comments will be available for public inspection and photocopying in the Import Administration's Central Records Unit, Room B-099, between the hours of 8:30 a.m. and 5 p.m. on business days.
Each person submitting a comment should include the commenter's name and address, and give reasons for any recommendations. To facilitate their consideration by the Department, initial and rebuttal comments regarding these proposed policies should be submitted in the following format: (1) Number each comment in accordance with the paragraph numbering of the proposed policy being addressed; (2) begin each comment on a separate page; (3) provide a brief summary of the comment (a maximum of three sentences) and label this section “Summary of the Comment;” and (4) concisely state the issue identified and discussed in the comment and provide reasons for any recommendation.
In order to ensure timely and complete distribution of comments, the Department recommends the submission of initial and rebuttal comments in electronic form to accompany the required paper copies. Comments filed in electronic form should be submitted on a DOS formatted 3.5″ diskette, Iomega Zip disk, or Compact Disc (CD-R or CD-RW). Please submit each comment as a separate file on the electronic media and name each separate file using the paragraph numbering of the proposed policy being addressed in the comment.
Any questions concerning file formatting, document conversion, access on the Internet, or other electronic filing issues should be addressed to Andrew Lee Beller, Import Administration Webmaster, at (202) 482-0866, email address
A government may confer a benefit on an industry by virtue of the provision of goods or services for “less than adequate remuneration.” Section 771(5)(E)(iv) of the Tariff Act of 1930, as amended; 19 U.S.C. 1677(5)(E)(iv). The term “adequate remuneration” is not defined in the statute. The Department interprets the term “adequate remuneration,” as used in section 771(5)(E)(iv), to mean fair market value. The government provision of goods or services at or above fair market value, therefore, does not provide a countervailable subsidy.
Softwood lumber from Canada is, with certain exceptions, currently subject to countervailing duties, based on the Department's determination that the Canadian provinces provided their lumber producers with a subsidy by selling timber from provincial lands for less than “adequate remuneration,”
More broadly, the Department intends the policy guidance to serve as the basis for a long-term, durable solution to the ongoing dispute between the United States and Canada over trade in softwood lumber and encourage the development of an integrated market for forest products consistent with the goals of the North American Free Trade Agreement and sustainable forestry. The Department is publishing this policy bulletin with the goal that firms in Canada are free from government restraints that inhibit their ability to respond to changing conditions in the markets in which they operate and pay market prices for their timber.
The overriding objective is to create economic conditions under which lumber producers and timber markets throughout North America would face the same competitive pressures. The Department expects that reforms introduced by the Canadian provinces, consistent with the discussion below, will result in a North American market in which lumber producers and timber markets in Canada and the United States operate under similar competitive conditions and that timber valuations would equilibrate, subject to the normal qualifications based on geography, species, and other factors that normally apply in the case of timber markets in either country.
Upon submission of an application by a provincial government that satisfies the criteria for initiation, the Department will conduct a changed circumstances review of the countervailing duty order on certain softwood lumber from Canada (“countervailing duty order”)
To be considered “market-based,” a province must implement changes in its current timber sales programs that—(1) eliminate practices and policies that inhibit the ability of lumber producers to respond to changes in the market; and (2) ensure that the pricing of standing timber on provincial lands is set by reference to prices established in an open and competitive, independently functioning market for sales of standing timber or logs. Open and competitive, independently functioning markets, as discussed below, are based on buyers and sellers participating unencumbered by artificial constraints that are part of existing administered systems.
In order to move toward a market-based system of timber sales and ensure that a province receives adequate remuneration for its sales of standing timber, it is essential that the price for standing timber be set with reference to prices established in independently functioning markets. Just as important, however, are any government practices that limit the operation of market forces and interfere with an industry participant's ability to respond freely to changes in the marketplace. Functioning markets rely on industry participants to respond to market signals free of artificial constraint.
Accordingly, as part of any changed circumstances review, the Department will determine whether individual provinces have, in fact, eliminated or substantially reformed the policies and practices identified below in a way that removes the current constraints on a lumber producer's ability to respond to changes in the market and, thereby, reinforces the operation of market forces.
Appurtenancy and similar provisions mandate that the tenure holder process timber harvested under the tenures in
Perhaps the most extreme interference with market forces is in the operation of minimum cut requirements. These requirements, which can be either explicit or implicit, are currently imposed on or perceived by tenure holders to apply to provincial forest land and oblige tenure holders to cut a certain volume of timber during a set period regardless of conditions in downstream product markets that drive the actual demand for timber on the stump. These requirements can be explicitly provided for in provincial regulations or imposed implicitly through the means by which the province implements its policies with respect to the annual allowable cut under tenures and licenses. The result is either a requirement or an incentive to continue harvesting and producing lumber even when market conditions would dictate otherwise.
Mill closure restrictions generally dictate the number of days a mill must be in productive operation in order for the operator to maintain access to its tenure. As a result, a mill may be forced to continue to produce lumber even when market conditions would otherwise compel a cut in production or closure of the mill.
Minimum processing requirements require the tenure holder or timber buyer to undertake some minimum amount of processing of the timber harvested (or an equivalent volume) before it can be shipped from the province. These requirements have the effect of constraining the impact of market forces in public and private timber markets, as well as limiting the options available to the tenure holder to rationalize harvesting operations, log purchase and sale operations, and lumber production in response to changing market conditions. The elimination or reform of such requirements would reinforce the normal operation of supply and demand in any open and competitive, independently functioning market for timber sales. The Department will, as a consequence, take into account any minimum processing requirements in evaluating the market chosen by a province as a reference point for setting stumpage on provincial lands.
Long-term, non-transferable tenures create barriers to entry or exit from the market for provincial timber, which limit competition for the province's timber and the ability of individual firms to adjust to changing conditions in the marketplace.
An important aspect of long-term, non-transferable tenure is the degree to which the security of supply it affords also inhibits the responsiveness of tenure holders to changes in the market. Such inhibition would serve to undermine the overall operation of market forces in the province; which in turn interferes with the market's ability to set prices. The issues may, however, be most appropriately addressed as a factor affecting the use of reference points in independently functioning markets as a basis for setting stumpage rates on the administered portion of a province's harvest. Adjustments to the observed prices may be required to take into account the differences in the attributes of sales in the independently functioning market and long-term, non-transferable arrangements on provincial lands, including the security of supply associated with a long-term, non-transferable tenures on the administered portion of a province's harvest.
The Department will also examine any evidence that suggests that a province maintains or introduces other requirements or conditions on the sale of provincial timber that would inhibit or undercut the operation of the policy reforms discussed above. The Department will, for example, want to ensure that a province's decisions with respect to the annual allowable cut authorized on provincial lands is consistent with sound forest management and the full rotational economics of the forest, rather than a means of increasing supply and thereby artificially lowering the amount charged on provincial stumpage.
By “market-based pricing,” the Department means that a province sets its prices for sales of standing timber on provincial lands either through free and open competition, such as auctions of standing timber or log markets, or a system that ensures the equivalent result. In either instance, to qualify the system must ensure that a province receives adequate remuneration on all provincial timber.
For any portion of a provincial harvest that continues to be sold under prices set administratively the Department will, in general, focus on whether those prices are set by reference to a sufficient range of representative transactions in one or more independently functioning markets for sales of standing timber or logs. Examples of independently functioning markets would include open and competitive auctions of standing timber on provincial lands, competitive log markets, robust and competitive markets for the sale of standing timber or logs harvested from private lands within the province, and, where relevant, similar markets functioning in other jurisdictions.
In assessing whether any reference market is an open, competitive, and functioning independently, the Department will not employ a presumption that a market must represent a specific percentage of the a province's harvest before it could be used as a point of reference for setting prices on the administered portion of the harvest. The Department will, instead, employ a rule of reason—one that is designed to ensure that the market used as a point of reference affords a sufficient basis to establish fair market prices that would then apply to the administered portion of the timber sales system. As reflected in the discussion below with respect to the number of market participants, all other things being equal, the greater the number of market participants who must participate in the reference market for a sizeable share of the furnish for their mills, the stronger the evidence that the reference market is open, competitive and functioning independently of the administered portion of a province's harvest, and would, as a consequence, serve as an adequate reference point for assessing stumpage on provincial lands.
One reason for adopting that approach is the potentially significant interplay between a province's willingness to undertake the tenure reforms outlined above and the percentage of its harvest that could be used as a reference point for pricing on the administered portion of the province's harvest. To the extent a province has made the reforms outlined above and tenure holders are free to respond to changes in the market, it is easier to identify and evaluate the operation of independent market forces and the size of the reference market per se becomes less significant in ensuring an adequate range of reliable prices that could be used to set stumpage on the administered portion of a province's harvest.
In assessing whether the market-based reference prices provide an adequate basis for setting administered prices that constitute adequate remuneration, the Department will focus on (1) whether the market(s) a province chooses to use as a point of reference (“reference market”) actually functions as a market and (2) whether that reference market functions independently of the administered portion of that province's harvest. In determining whether the reference market in fact, “functions” as a truly competitive market, the Department will consider the number of participants, open access to the market, the volume of timber traded on the market (including imports and exports), the lack of restraints on buyers and sellers, access to market information, and other factors listed below. For the Department to determine that the market used as a reference point operates “independently,” the Department will want to assure itself, consistent with the discussion below about the direction of the causal link between the reference market and the administered portion of the harvest, that prices observed in the reference market are the result of the free operation of market forces unaffected by any distortions associated with provincial administered timber policies or the effect from stumpage rates charged on the administered portion of the harvest.
More specifically, the Department will examine, inter alia, the following characteristics of each reference market chosen by a province for setting the prices for standing timber on the administered portion of a province's harvest, regardless of whether the market chosen involves auctions of the province's own standing timber, auction sales in other jurisdictions, private sales within the province or in other jurisdictions, or any other set of market-based transactions.
a. Number of Participants in the Reference Market. The province must demonstrate that there are sufficient numbers of participants in the reference market to ensure that no individual or group of market participants
In addition, to the extent that many producers are able to source all, or virtually all, of their wood fiber needs from crown tenure, these parties would not be active participants in the private market. As noted above, all other things being equal, the greater the number of market participants who must participate in the reference market or other competitive markets for a sizeable share of the furnish for their mills, the stronger the evidence that the reference market is open, competitive and functioning independently of the administered portion of a province's harvest and would, as a consequence, serve as an adequate reference point for assessing stumpage on provincial lands.
b. Quality of Information. The province must demonstrate that similar full and transparent information is available to all participants in the reference market about alternative commercial opportunities, particularly with respect to price. This is especially important in those instances in which a province intends to rely for its reference prices on a private market that is made up largely of bilaterally negotiated sales of standing timber on private lands, but would be important to the Department's assessment of any auction-based system as well.
Thus, for example, it would be particularly important for any private owner of standing timber to have access to current information on prices others are receiving for similar stands in assessing the amount he or she intends to charge. This would help sellers (either public or private) develop a “reservation price,” a price below which the seller will not sell—one that is consistent with the fully allocated costs of the seller's investment in bringing the forest to a harvestable state. For small holders, this could ensure that they receive the “market price” even if only a limited number of buyers were making bids. This information flow could take the form of internet pages, trade publications, or other similar sources of public information.
In addition, a significant feature of any independently functioning market is the availability of sufficient information about the characteristics of timber being offered for sale in such markets to all buyers such that the seller and no individual buyer has an unfair advantage. The more significant the uncertainty about the quality of the timber, the higher risk that the uncertainty will result in lower prices for the timber in such markets. As a consequence, the Department will examine whether potential buyers in the reference market have the opportunity to survey the timber or there are commercial services available that will survey the timber in order to eliminate any potential advantages that preferential access to information about a given stand might otherwise confer.
c. Direction of the Causal Link. The province must demonstrate that the prices established in the reference market are determined independently (
Thus, for example, in the case of a province that chooses to rely on a market for private timber within the province as a reference point for establishing prices on the administered portion of its harvest, the province must demonstrate that its pricing model ensures that firms or individuals with significant long term tenures cannot artificially force down prices in the private market to lower stumpage charged on the administered portion of the harvest.
d. Barriers to Entry or Exit in the Market. The province must demonstrate that there are no significant barriers to entry or exit into the reference market for either sellers (private woodlot owners, log traders, and, potentially, tenure holders) or buyers (lumber, pulp and paper mills, or other processors). Thus, for example, the Department will want to examine whether there are participation constraints that limit competition such as nationality requirements, conditions requiring that a bidder own a sawmill, or barriers to inter-provincial or international trade in private sector logs that affect the market to be used as a reference point.
e. Safeguards Against Collusive Behavior. In addition to examining the structure of the reference market for establishing the stumpage on the administered portion of its harvest, the Department must be assured that the market is free of any collusive behavior and that the province has in place adequate safeguards against such behavior. Such safeguards are particularly important when considering the design of any auction system for sales of public timber, but that is not the only environment in which such safeguards are relevant. Beyond auction design lies the consideration whether the market a province uses as a reference point on prices is protected against collusive behavior. The question is both one of law and of the enforcement activities of authorities responsible for administering the relevant jurisdiction's laws designed to ensure competition.
Transparency is a key feature of both markets and sound administrative practice that the Department will examine with respect to any pricing system. The following discussion highlights three areas in which transparency will be factored into the Department's analysis of whether a timber sales system is market-based.
a. Transparency in the Functioning of the Market Used as a Reference Point for Market Prices. A factor in considering the adequacy of any reference market is the transparency with which that market operates. For example, in the case of the auction of public timber, one of the key features of the market for standing timber that such a system generates is the timely publication of the results of the auctions so that all participants in the market have adequate information on which to set expectations for succeeding bids. At the same time, publication of the results will assist in providing a verifiable set of prices in a sufficiently robust market to afford an adequate basis for setting stumpage prices on the administered portion of the province's harvest.
Similarly, in the case of log markets, adequate public information about the transactions on the market would be essential to the ability of participants in the market to rely on the results in setting expectations for future bidding on logs. The Department would need to see a similar degree of transparency in the reporting of prices on transactions in a log market to be able to assess whether the market could serve as an adequate reference point for setting stumpage rates on public lands or otherwise provide assurances of the adequacy of remuneration.
To serve as an adequate reference market, a log market must place the logs for sale on reasonable terms to any bidder and operate on price, as opposed to “swaps,” with sufficient volume moving through the market to ensure that it provides an adequate basis for setting stumpage. As reflected in the discussion above with respect to the number of market participants and entry and exit barriers, prices must result from a competitive process open to all interested buyers and sellers. In addition, the log markets must establish a way of ensuring that information about individual transactions is accurately reported and publicly available in order to inform market participants regarding the going rates for certain logs, as well as to serve as a useful reference point for setting stumpage on the public harvest.
Most private transactions for timber in Canada are conducted through a series of bilateral negotiations between buyers and sellers. While there is a good deal of information available on the going rates that certain market participants might offer or pay in the market, there is generally no systematic reporting of such transactions, through an active public exchange for example, that would ensure both a stronger market and a more reliable reference point for setting stumpage rates on the administered portion of a province's harvest. Demonstrating transparency in such markets would provide significant confidence in the results that the market produced and, therefore, in the market's reliability as a reference point. Transparency will also be critical in markets where previous transactions were not on a price basis,
b. Application of Prices Observed in Independently Functioning Markets to Stumpage Set on the Administered Portion of
In determining whether a system is transparent, the Department will consider the extent to which—(1) the province relies on publicly available information on market prices as a starting point for setting stumpage; (2) the province collects information from private market participants in a rigorous, systematic, and verifiable manner and regularly publishes this information; (3) information on adjustments and the basis for those adjustments is publicly available; (4) the calculation involved in adjusting market prices to apply to the harvest on public lands, while taking into account the appropriate adjustments, produces an observable result consistent with the reference point in the market and is based on objective verifiable information, including where possible market-determined costs; and (5) the results of the calculation (
Adjustments should be kept to the minimum necessary, and must be fully and economically justified, and transparent so as to maintain a close and accurate link between market-determined and administered prices and avoid adjustments that might lead to the over- or under-valuation of timber.
To the extent that prices and costs in the reference market are identified and translated using surveys of private transactions, great care must be exercised in survey design. Surveys should be representative, timely, and reflective of the commercial experience of buyers, sellers, and other commercial intermediaries to ensure there is no opportunity for reporting bias. Moreover, as discussed below, the tremendous information requirements needed for accurate transmission of stumpage prices raise the need for an extensive information collection and reporting function.
Given the significant variation in stumpage prices associated with the numerous characteristics of each plot, an accurate transmission from the reference market to the administered harvest requires a significant amount of information. The Department must be satisfied that all relevant characteristics of the administered portion of the harvest are adequately accounted for in the reference market. These factors could include, among others, the biophysical characteristics of the different plots of trees subject to stumpage transactions; different harvesting conditions, and different industry characteristics (
c. Comparability of Obligations Imposed on Purchaser. The terms and conditions that apply to sales of timber in reference markets are likely to be different from those that apply to the purchase of standing timber under a long-term tenure on provincial land. The use of reference markets will therefore necessarily require some adjustment for the differences in the terms and conditions applicable to the two forms of timber sales contract. Transparency in the calculation and application of those adjustments will be essential for the Department to determine that the administered pricing system properly translates the references prices to the provincial harvest in a manner that ensures that the provinces receive adequate remuneration.
As noted above, market reference prices may come from a single source (
One means of establishing a market price for standing timber as a reference price for setting stumpage would involve selling a substantial portion of a province's own timber at auction. That, combined with the elimination of the constraints currently in place on the ability of the tenure holders to respond to changing market conditions, could provide a sufficient basis for finding that the system was market-based, thereby ensuring that a province received adequate remuneration for its timber, and providing the legal basis for revocation of the outstanding order with respect to that province.
Province A eliminates existing constraints on tenure holders in the form of minimum cut requirements, appurtenancy clauses, and mill closure limitations. Province A also eliminates or reforms any minimum processing requirements in order to ensure that market forces are fully at play within the province and between the province and other jurisdictions. In addition, Province A makes its tenures freely divisible and transferable and fully subject to competition policy. In addition, Province A manages its harvest, particularly its annual allowable cut, on the basis of sound forestry and full rotational economics, rather than as a means of artificially expanding supply.
With respect to pricing, Province A implements an auction system for sales of provincial timber that ensures a sufficient volume of timber and a representative sample of transactions to permit the auction prices to serve as an open, competitive and independently functioning market and as an adequate (
To encourage participation by all market participants in the auction process, Province A ensures that there are no barriers to eligibility for bidding or the use of fiber other than those necessary to ensure that the bidder can fulfill the contract. Tenure reforms undertaken by Province A ensure that a sufficient portion is sold through competitive markets, either as timber or logs, to provide the number and range of transactions necessary to extrapolate accurately from the auction sales to prices charged for stumpage on the administered portion of the harvest. Tenure reforms undertaken by Province A result in the need for all, or virtually all, market participants to, obtain a significant share of their fiber from the reference market or competitive log markets on an ongoing basis.
In terms of auction design, Province A constructs the auction on the basis of sealed bids. Province A also adopts adequate procedures to ensure against collusive bidding. Prices for all auction sales are published regularly for the benefit of all market participants. Auction winners should be required to harvest the timber within a specified period.
Province A can demonstrate that it ties its stumpage rates, accounting for any necessary adjustments, directly and accurately to the prices observed in auctions for similar stands of timber. Province A publishes stumpage charged so that the information is broadly available to all market participants.
In addition, in an effort to expand the competition for fiber throughout the province generally, Province A reinforces the operation of log markets within the province on the basis of price, rather than fiber swaps. Province A ensures that increasing amounts of fiber will flow through such log markets by virtue of eliminating the constraints on tenure that would currently prevent sales on log markets, rather than swaps. Province A ensures that information on log market transactions are broadly available to all interested market participants by establishing the means for all transactions to be recorded with the province and then made available to the public. Administered timber volumes that flow through fully open and competitive log markets, unrestricted in market participants or by minimum processing requirements, would count towards the overall portion of crown timber subject to competitive pressure and help ensure that Province A receives adequate remuneration on all timber sales.
If all the conditions outlined above and those discussed elsewhere in the Policy Bulletin were met, the Department would revoke the current countervailing duty order with respect to that province. Province A would have to demonstrate that it had the
More specifically, by eliminating the minimum cut requirements, mill closure limitations and appurtenancy clauses, as well as making its tenures freely divisible and transferable, Province A has ensured not only that firms are not compelled to produce when markets would otherwise dictate against it, but also removed barriers to the increased flow of fiber from tenure holders onto competitive markets, whether in the form of transfers of tenure, sales of standing timber, or sales of logs. The ability to move timber through those various forms of competitive market will also have the effect of increasing the value of those markets as indications of stronger competition for fiber within the province. As a result of these and other changes, the typical manufacturer will participate in competitive timber and log markets for a sizeable portion of their fiber requirements on an ongoing basis under all market conditions.
In addition, by eliminating any minimum processing requirements within the province, and potentially between the province and other jurisdictions, Province A has increased the ability of markets within the province to transmit information about prices and sales opportunities that the minimum processing requirements previously foreclosed. A subsidiary benefit of eliminating the minimum processing requirements and permitting purchases of the province's logs by buyers from outside the province, Province A would expand the opportunities for arbitrage between markets in different jurisdictions and thereby preclude the ability of producers in Province A to benefit from changes in provincial policies without the competitive benefit of those changes in policy flowing to competitors in other jurisdictions.
With respect to pricing, Province A will have ensured that it has a reliable point of reference in a range of market transactions that is representative of the harvest within the province. By ensuring that there are only the minimum necessary requirements to be eligible to bid on the province's timber, Province A will have eliminated one of the main barriers created by the long-term tenure system—the barrier to new entrants into the market for Province A's timber. Similarly, by introducing tenure reforms that have the effect of ensuring that virtually all market participants have to participate in the auction system or competitive log markets for a sizeable portion of their fiber, Province A will ensure that firms within the province face competitive pressures akin to those faced elsewhere in the North American market. To the extent that the tenure reforms, over time, also yield a reduction in the percentage of the harvest that is subject to long-term tenures relative to that portion of the harvest that is sold at auction or through open and competitive log markets, Province A will reinforce the competition for timber on private and Crown land as well.
By ensuring that the information on prices established at auction is broadly available to all market participants, Province A will have increased the quality of information available on alternative commercial opportunities. It will have ensured that the maximum amount of information about transactions in the market place is flowing back to market participants to inform their decision not only about future auctions, but about prices reflected in other competitive markets within the jurisdiction.
Province A will also have ensured, in the process, that the adjustments needed to translate the prices observed at auction into stumpage charged on the administered portion of the harvest accurately and solely reflect the different terms and conditions between auction sales and the administered portion of the harvest. In doing so, Province A will ensure that the stumpage charges on the administered portion of the harvest ultimately reflect the value of the fiber in an open, competitive market, which is necessary to demonstrate that the province is receiving adequate remuneration for its timber.
By reinforcing the operation of log markets within the province, even though they would not be used as a reference point for setting stumpage, Province A would have helped create an effective outlet for fiber that will become increasingly available on the market as a result of the elimination of the constraints currently imposed on tenure holders. In addition, by providing a means by which log market transactions are made publicly available to market participants, Province A has fostered a more competitive market within the province for fiber, which would tend to reinforce the utility of the auctions as a reference point for the pricing of stumpage on the administered portion of Province A's harvest. That result would flow directly from the ability of the log markets to improve the range of alternative commercial opportunities available to market participants. To the extent that Province A improves the ability of the log markets to function by shifting licenses or tenures toward new market participants in the future, it will have the effect of expanding the competitive forces at work in the market by easing the entry of new competitors.
Another alternative mechanism a province might use to ensure that it received adequate remuneration within the meaning of the statute would be to use prices generated in a market outside its jurisdiction. While taking into account the need for adjustments in order to ensure a fair comparison between standing timber sold in the two jurisdictions, prices generated in auctions from public lands or private markets, for example, could serve as an adequate reference point for setting stumpage on the administered portion of a province's harvest, if combined with adequate policy reforms in other areas of the province's timber sales program.
Province B eliminates any existing minimum cut, mill closure, appurtenancy, and minimum processing requirements. Province B also provides for the divisibility and free transfer of tenure. Province B manages its harvest, particularly its annual allowable cut, on the basis of sustainable forestry, rather than as a means of artificially expanding supply.
Province B relies on prices from the sale of standing timber in open, competitive markets in an adjacent jurisdiction, or jurisdictions, to establish the reference point for setting stumpage on the administered portion of its harvest. The independently functioning markets for standing timber in the other jurisdiction, or jurisdictions, have no barriers to entry or exit, provide for the publication of price information to all market participants, include appropriate safeguards against collusive bidding, and provide a representative range of prices for standing timber comparable to that sold in Province B.
In addition, Province B reinforces the operation of the private market for standing timber within the province through the changes in conditions applicable to tenures on provincial lands. Province B also develops a mechanism for gathering and publishing the information on pricing in that private market, which is currently characterized by a series of bilateral negotiations between buyers and sellers. Province B commits not to reduce the share of competitive sales and should increase the share of competitive sales progressively over time.
Province B ensures that it adopts a transparent means, with the appropriate adjustments, to translate the prices established by open, competitive, and independently functioning markets in the adjacent jurisdiction into stumpage charged on the administered portion of Province B's harvest.
By eliminating those conditions that prevent companies from adjusting to changes in the market, in the form of minimum cut, mill closure limitations, appurtenancy clauses, and minimum processing requirements, Province B ensures that firms participating in its market can respond appropriately to market signals from downstream product markets. Firms would be free to adjust their production accordingly.
Similarly, by providing for the divisibility and transferability of tenure, Province B encourages competition for timber within the province. In effect, Province B has eliminated the principal barrier to entry or exit from the market for standing timber within the province. It also ensures that a greater volume of timber or logs will enter the private market for fiber within the province.
By linking its stumpage system to open and competitive markets in an adjacent jurisdiction that satisfies the criteria outlined in the example, Province B also ensures that
The province's efforts to strengthen its private market are intended to address the reference points it might use to set stumpage at a later date. In the interim, Province B's efforts in that regard will also serve to improve the functioning of the market within the province by lowering barriers to entry into the market by new market participants. It also ensures a more competitive market for additional fiber that may flow through the private market as a result of changes in the conditions applicable to tenures on provincial land by providing all market participants with information regarding alternative commercial opportunities. While not directly relevant to the question of whether Province B has made those changes necessary to pursue a changed circumstances review, the effort to strengthen the private market does serve to increase the confidence the Department may have in the operation of the province's stumpage system and its ability to ensure that Province B receives Adequate remuneration for its timber.
The key issue for Province B under the facts set out in the example is likely to be the transparency it can introduce into the means by which it translates prices from auctions of standing timber in the adjacent jurisdiction to stumpage charged for comparable sales of timber on the administered portion of the province's harvest. It will be essential for Province B to establish the validity of the mechanism or calculation it uses in translating the prices from the adjacent jurisdiction to Province B's harvest—it must be transparent in the sense that it is publicly available and that the potential adjustments are known and appropriate to the task.
Equally important, it will be essential that the province make the results of both its methodology and the stumpage charged on sales of standing timber available to all market participants. Market price signals are the key means for distilling information about market conditions and the province must ensure that, consistent with the other changes it has made to eliminate constraints on the ability of firms to adjust to market conditions, the province has made available the key information that should guide firms in making those adjustments.
Under the circumstances outlined above, the Department would revoke the countervailing duty order with respect to imports of softwood lumber manufactured from the timber harvested in Province B.
The Department acknowledges that there may be market circumstances unique to a province such that the provincially administered portion of the harvest constitutes the vast majority of available supply and the provincial forest industry is dominated by a single integrated forestry firm. In such circumstances it would be difficult to establish an independently functioning market, either in the form of auction of crown timber or reliance in private sales, in the province. Moreover, the bio-physical characteristics of the forest resource, and its remote location, render the use of independently functioning markets in other jurisdictions highly problematic due to the magnitude of necessary adjustments.
Where such unique circumstances exist, the Department will examine whether the province's means of setting stumpage on the administered portion of its harvest achieves the equivalent economic effects of the alternatives set out above and ensures that the province receives adequate remuneration. Such an alternative would have to be independently evaluated based on its merits. Where, however, a province eliminated the conditions imposed on tenures as outlined in the discuss in Part I above, and implemented a method of timber valuation that afforded the province adequate remuneration with in the meaning of the statute, the Department would, consistent with the conditions outlined above and discussed elsewhere in the Policy Bulletin, revoke the current countervailing duty order with respect to that province.
A Province may submit a request for a changed circumstances review at any time. Prior to filing such a request, at the request of a province, the Department will consult with the province over the contents of such a request.
The Department will initiate a changed circumstances review upon receipt of an application containing the following information:
1. Appropriate documentation (
2. A detailed explanation of the design and operation of the market-based provincial timber pricing system with supporting documentation and data showing that system meets the standards set forth in this policy bulletin.
3. Consistent with the examples set out above, evidence that provinces submit in support of their request for review should include, as appropriate—
• Evidence that the conditions a province currently imposes on tenures set out in Part I have been eliminated or reformed, as a matter of law, and that such changes in the conditions have been fully implemented in the timber sales program;
• Evidence that demonstrates that the reference markets a province chooses to use for purposes of setting stumpage on the administered portion of its harvest operates in a manner that is open and competitive, particularly with respect to the number of market participants, the volume of timber sold through the reference market, ease of entry and exit by market participants, the quality of information available to market participants, barriers to individuals or firms artificially lowering prices in the reference market as a means of lowering stumpage charged on the administered portion of the harvest, and the transparency of the operation of the market;
• Evidence that demonstrates how the prices observed in the reference market are accurately and transparently translated to the stumpage charged on the administered portion of the harvest consistent with the examples set out above, particularly with respect to any adjustments made between the timber sold in the reference market and that sold on the administered portion of provincial lands; and
• Evidence regarding stumpage charges on the administered portion of the harvest before and after the provincial reforms are implemented that reflects the impact of the changes on stumpage prices and evidence that demonstrates that stumpage charged on the administered portion of the harvest is consistent with the range of prices observed in other open and competitive markets for timber sales of similar species, quality, and market conditions.
• Any other relevant evidence concerning the operation of the provincial timber sales system.
Although the Department may issue supplemental requests for information, the application should, to the fullest extent possible, contain all of the information necessary to determine whether the provincial timber sales system is market-based so that the Department may determine whether there is evidence of changed circumstances sufficient to warrant a review.
The Department has made a final determination that the Canadian provinces provide a subsidy to lumber producers by selling timber for less than adequate remuneration. In a changed circumstances review, the burden is on the province to establish that those circumstances have changed such that revocation of the order with respect to that province is warranted. Specifically, the province must establish the basis for revocation through substantial, verifiable evidence demonstrating, in accordance with this Policy Bulletin and as required by U.S. law, that the provincial timber sales system has been revised and is operating so as to ensure that the province receives adequate remuneration within the meaning of the U.S. countervailing duty law.
The Department will conduct the Changed Circumstances Review in accordance with sections 351.216 and 351.221 of the Department's regulations. Pursuant to those regulations, the Department will, within 270 days, issue a final results of review. The Department may issue requests for information and will verify information submitted in the application and any responses to requests for additional information. The Department will, upon request by an interested party, hold a public hearing, pursuant to 19 CFR 351.310.
As reflected in section III.B, the Department anticipates that, on the date the application for the changed circumstance review is filed (“application date”), the reforms of the provincial timber sales system will be in place and operating so as to ensure that the province receives adequate remuneration. Accordingly, if the Department determines, as a result of the review, that revocation of the order with respect to the province is warranted, the Department will normally order revocation of the countervailing duty order with respect to all unliquidated entries of the subject merchandise produced in the province from timber harvested in the province that is entered, or withdrawn from warehouse, on or after the application date. If, however, reforms necessary to demonstrate a market-based timber sales program are not in effect or operational at the time of a province's application date, the Department may alter the effective date of the revocation to reflect the date on which such reforms took effect during the period of the changed circumstance review.
National Institute of Standards and Technology Commerce.
Notice of government owned inventions available for licensing.
The invention listed below is owned in whole by the U.S. Government, as represented by the Department of Commerce. The invention will be available for licensing beginning July 1, 2003, in accordance with 35 U.S.C. 207 and 37 CFR part 404 to achieve expeditious commercialization of results of federally funded research and development.
Technical and licensing information on this invention may be obtained by writing to: National Institute of Standards and Technology, Office of Technology Partnerships, Attn: Mary Clague, Building 820, Room 213, Gaithersburg, MD 20899. Information is also available via telephone: 301-975-4188, fax 301-869-2751, or e-mail:
NIST may enter into a Cooperative Research and Development Agreement (“CRADA”) with the licensee to perform further research on the inventions for purposes of commercialization. The invention available for licensing beginning July 1, 2003 is:
Notice is hereby given that the annual meeting of the National Conference on Weights and Measures will be held July 13 through July 17, 2003, at the John Ascuaga's Nugget Hotel, Sparks, Nevada. This meeting is open to the public. The National Conference on Weights and Measures is an organization of weights and measures enforcement officials of the States, counties, and cities of the United States, and private sector representatives. The annual meeting of the Conference brings together enforcement officials, other government officials, and representatives of business, industry, trade associations, and consumer organizations to discuss subjects that related to the field of weights and measures technology and administration. Pursuant to (15 U.S.C. 272 (b) (6)), the National Institute of Standards and Technology supports the National Conference on Weights and Measures in order to promote uniformity among the States in the complexity of laws, regulations, methods, and testing equipment that comprises regulatory control by the States of commercial weighing and measuring.
July 13-17, 2003.
John Ascuaga's Nugget Hotel, Sparks, Nevada.
Henry V. Oppermann, Chief, NIST, Weights and Measures Division, 100 Bureau Drive, Stop 2600, Gaithersburg, MD 20899-2600. Telephone (301) 975-4004, or email:
National Oceanic and Atmospheric Administration (NOAA).
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)).
Written comments must be submitted on or before August 25, 2003.
Direct all written comments to Diana Hynek, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW, Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Robert Sadler, (727)570-5326 or
Participants in federally regulated fisheries are required to obtain Federal fishing permits. Certain permit actions may be appealed. Permitted vessels are also required to provide certain
NOAA needs information from the applications for the identification of fishing vessels and dealers and the management of the fisheries. Use of permits also aids in enforcement of fishery regulations.
Notifications are made by telephone. Applications and other documentation must be submitted in paper form.
Comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Oceanic and Atmospheric Administration (NOAA).
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)).
Written comments must be submitted on or before August 25, 2003.
Direct all written comments to Diana Hynek, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW, Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to John Poffenberger at 305-361-4263, ext. 263, or at
Participants in most Federally-managed fisheries in the Southeast Region are currently required to keep and submit catch and effort logbooks from their fishing trips. A subset of these vessels also provide information on the species and quantities of fish, shellfish, marine turtles, and marine mammals that are caught and discarded or have interacted with the vessel's fishing gear. Participants in the Atlantic snapper-grouper and mackerel fisheries are required to submit information about dockside prices, trip operating costs, and annual fixed costs.
The data are used for scientific analyses that support critical conservation and management decisions made by national and international fishery management organizations. Interaction reports are needed for fishery management planning and to help protect endangered species and marine mammals. Price and cost data will be used in analyses of the economic effects of proposed regulations.
The information is submitted on paper forms. Logbooks are completed daily and submitted on either a by trip or monthly basis, depending on the fishery. Fixed costs are submitted on an annual basis. Other information is submitted on a trip basis.
Comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Oceanic and Atmospheric Administration (NOAA).
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)).
Written comments must be submitted on or before August 25, 2003.
Direct all written comments to Diana Hynek, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW, Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Rita Curtis, Department of Commerce, NOAA, National Marine Fisheries Service, 1315 East West Highway, #12752, Silver Spring, MD 20910 (301-713-2328).
Economic data for selected U.S. commercial fisheries will be collected for each of the following groups of operations: (1) processors, including onshore plants, mothership vessels, and at-sea catcher/processor vessels; (2) catcher vessels; and (3) charter vessels. Companies associated with these groups will be surveyed for expenditure, earnings, and employment data; and for basic demographic data on fishing and processing crews.
In general, questions will be asked concerning ex-vessel and wholesale prices and revenue, variable and fixed costs, expenditures, dependence on the fisheries, and fishery employment. The data collection efforts will be coordinated to reduce the additional burden for those who participate in multiple fisheries. Participation in these data collections will be voluntary.
The data will be used for the following three purposes: (1) to monitor the economic performance of these fisheries through primary processing; (2) to analyze the economic performance effects of current management measures; and (3) to analyze the economic performance effects of alternative management measures. The measures of economic performance to be supported by this data collection program include the following: (1) contribution to net national benefit; (2) contribution to income of groups of participants in the fisheries (i.e., fishermen, vessel owners, processing plant employees, and processing plant owners); (3) employment; (4) regional economic impacts (income and employment); and (5) factor utilizations rates. As required by law, the confidentiality of the data will be protected.
A two-prong approach to data collection will be adopted. In the majority of fisheries, data collections will focus each year on a different component of the U.S. commercial fisheries, with only limited data collected in previously-surveyed components of these fisheries. The latter will be done to update the models that will be used to track economic performance and to evaluate the economic effects of alternative management actions. This cycle of data collection will result in economic performance data being available and updated for all the components of the U.S. commercial fisheries identified above.
In a limited number of fisheries, the approach adopted will result in an ongoing economic data collection program. Economic data collection programs will only be initiated in a) high-profile fisheries with significant seasonal variation; and b) fisheries with an existing data collection program to which economic questions can be appended. Examples of the latter include appending trip-specific economic questions to observer and logbook programs survey vehicles. The number of questions asked under an economic data collection program will be far more limited than those asked in a one-time survey, which have estimated average response times of approximately 10 minutes and two hours, respectively.
Contingent upon OMB approval of this proposed data collection, voluntary surveys currently being conducted under “Economic Performance Data for the West Coast (California-Alaska) Commercial Fisheries” (OMB Number 0648-0369) will be covered under this national umbrella.
Data will be collected from a sample of the owners and operators of catcher vessels, catcher/processors, on-shore processing plants, motherships, and charter vessels that participate in these fisheries. In the majority of fisheries, data collection will involve mailing questionnaires to the selected members of each of the different survey groups. In many cases, individuals may receive the questionnaire in advance to allow them to prepare their response but may be interviewed to ensure the clarity of their responses. In those fisheries in which economic questions are appended to an existing program, respondents will be requested to return the completed form along with their regular submission, as appropriate. To the extent practicable, the data collected will consist of data that the respondents maintain for their own business purposes. Therefore, the collection burden will consist principally of transcribing data from their internal records to the survey instrument and participating in personal interviews. In addition, current data reporting requirements will be evaluated to determine if they can be modified to provide improved economic data at a lower cost to the Agency and with reduced burden on potential respondents. Similarly, it will be determined if some of these data can be collected more effectively and efficiently from the firms that provide bookkeeping and accounting services to potential respondents. This data collection method would be used only after obtaining permission to do so from participants in the fisheries.
Comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Receipt of application.
Notice is hereby given that Fred Sharpe, Ph.D., Alaska Whale Foundation, 4739 University Way NE, #1239, Seattle Washington 98105, has applied in due form for a permit to take humpback whales (
Written or telefaxed comments must be received on or before July 24, 2003.
The application and related documents are available for review upon written request or by appointment in the following offices:
Permits, Conservation and Education Division, Office of Protected Resources, NMFS, 1315 East-West Highway, Room 13705, Silver Spring, MD 20910; phone (301)713-2289; fax (301)713-0376; and
Alaska Region, NMFS, P.O. Box 21668, Juneau, AK 99802-1668; phone (907)586-7221; fax (907)586-7249.
Jill Lewandowski or Gene Nitta, (301)713-2289.
The subject permit is requested under the authority of the Marine Mammal Protection Act of 1972, as amended (MMPA; 16 U.S.C. 1361
The proposed activities involve research on North Pacific humpback whales and killer whales and are a continuation of studies previously authorized under Permit Nos. 866 and 716-1456. Studies on Pacific herring will also be conducted in order to test various aspects of humpback foraging ecology and social biology. In order to examine the behavior, social structure and foraging ecology of North Pacific humpback whales, the applicant is requesting authorization for 350 annual takes by close approach for photo-identification and behavioral observation, 280 annual takes by acoustic recordings and playbacks of conspecific sound and 18 annual takes by suction cup tagging with Crittercam/TDR dive tags. The researcher also proposes to continue opportunistic photo-identification and behavioral observation of killer whales and is requesting 300 annual takes for these purposes. All research activities will be conducted over a five year period in the waters of southeastern Alaska including Chatham Strait, Dixon Entrance, Cross Sound, and Icy Strait and the waters of Washington state.
In compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Written comments or requests for a public hearing on this application should be mailed to the Chief, Permits, Conservation and Education Division, F/PR1, Office of Protected Resources, NMFS, 1315 East-West Highway, Room 13705, Silver Spring, MD 20910. Those individuals requesting a hearing should set forth the specific reasons why a hearing on this particular request would be appropriate.
Comments may also be submitted by facsimile at (301)713-0376, provided the facsimile is confirmed by hard copy submitted by mail and postmarked no later than the closing date of the comment period. Please note that comments will not be accepted by e-mail or by other electronic media.
Concurrent with the publication of this notice in the
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for public comments regarding an extension to an existing OMB clearance (9000-0132).
Under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Federal Acquisition Regulation (FAR) Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a currently approved information collection requirement concerning contractors' purchasing systems reviews (CPSRs). This OMB clearance expires on September 30, 2003.
Comments may be submitted on or before August 25, 2003.
Submit comments, including suggestions for reducing this burden to the General Services Administration, FAR Secretariat (MVA), 1800 F Street, NW., Room 4035, Washington, DC 20405.
Linda Klein, Acquisition Policy Division, GSA, (202) 501-3755.
The objective of a CPSR, as discussed in Part 44 of the FAR, is to evaluate the efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting. The review provides the administrative contracting officer a basis for granting, withholding, or withdrawing approval of the contractor's purchasing system.
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for public comments regarding an extension to an existing OMB clearance (9000-0075).
Under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Federal Acquisition Regulation (FAR) Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a currently approved information collection requirement concerning Government Property. This OMB clearance expires on September 30, 2003.
Submit comments on or before August 25, 2003.
Submit comments, including suggestions for reducing this burden to the General Services Administration, FAR Secretariat (MVA), 1800 F Street, NW., Room 4035, Washington, DC 20405.
Linda Klein, Acquisition Policy Division, GSA (202) 501-3775.
“Property,” as used in Part 45, means all property, both real and personal. It includes facilities, material, special tooling, special test equipment, and agency-peculiar property. Government property includes both Government-furnished property and contractor-acquired property.
Contractors are required to establish and maintain a property system that will control, protect, preserve, and maintain all Government property because the contractor is responsible and accountable for all Government property under the provisions of the contract including property located with subcontractors.
The contractor's property control records shall constitute the Government's official property records and shall be used to:
(a) Provide financial accounts for Government-owned property in the contractor's possession or control;
(b) Identify all Government property (to include a complete, current, auditable record of all transactions);
(c) Locate any item of Government property within a reasonable period of time.
(a) FAR 45.307-2(b) requires a contractor to notify the contracting officer if it intends to acquire or fabricate special test equipment.
(b) FAR 45.502-1 requires a contractor to furnish written receipts for Government property.
(c) FAR 45.502-2 requires a contractor to submit a discrepancy report upon receipt of Government property when overages, shortages, or damages are discovered.
(d) FAR 45.504 requires a contractor to investigate and report all instances of loss, damage, or destruction of Government property.
(e) FAR 45.505-1 requires that basic information be placed on the contractor's property control records.
(f) FAR 45.505-3 requires a contractor to maintain records for Government material.
(g) FAR 45.505-4 requires a contractor to maintain records of special tooling and special test equipment.
(h) FAR 45.505-5 requires a contractor to maintain records of plant equipment.
(i) FAR 45.505-7 requires a contractor to maintain records of real property.
(j) FAR 45.505-8 requires a contractor to maintain scrap and salvage records.
(k) FAR 45.505-9 requires a contractor to maintain records of related data and information.
(l) FAR 45.505-10 requires a contractor to maintain records for completed products.
(m) FAR 45.505-11 requires a contractor to maintain records of transportation and installation costs of plant equipment.
(n) FAR 45.505-12 requires a contractor to maintain records of misdirected shipments.
(o) FAR 45.505-13 requires a contractor to maintain records of property returned for rework.
(p) FAR 45.505-14 requires a contractor to submit an annual report of Government property accountable to each agency contract.
(q) FAR 45.508-2 requires a contractor to report the results of physical inventories.
(r) FAR 45.509-1(a)(3) requires a contractor to record work accomplished in maintaining Government property.
(s) FAR 45.509-1(c) requires a contractor to report the need for major repair, replacement and other rehabilitation work.
(t) FAR 45.509-2(b)(2) requires a contractor to maintain utilization records.
(u) FAR 45.606-1 requires a contractor to submit inventory schedules.
(v) FAR 45.606-3(a) requires a contractor to correct and resubmit inventory schedules as necessary.
(w) FAR 52.245-2(a)(3) requires a contractor to notify the contracting officer when Government-furnished property is received and is not suitable for use.
(x) FAR 52.245-2(a)(4) requires a contractor to notify the contracting officer when government-furnished property is not timely delivered and the contracting officer will make a determination of the delay, if any, caused the contractor.
(y) FAR 52.245-2(b) requires a contractor to submit a written request for an equitable adjustment if Government-furnished property is decreased, substituted, or withdrawn by the Government.
(z) FAR 52.245-4 requires a contractor to submit a timely written request for an equitable adjustment when Government-furnished property is not furnished in a timely manner.
(aa) FAR 52.245-5(a)(4) requires a contractor to notify the contracting officer when Government-furnished property is received that is not suitable for use.
(bb) FAR 52.245-5(a)(5) requires a contractor to notify the contracting officer when Government-furnished property is not received in a timely manner.
(cc) FAR 52.245-5(b)(2) requests a contractor to submit a written request for an equitable adjustment if Government-furnished property is decreased, substituted, or withdrawn by the Government.
(dd) FAR 52.245-7(f) requires a contractor to notify the contracting officer when use of all facilities falls below 75% of total use.
(ee) FAR 52.245-7(l)(2) requires a contractor to alert the contracting officer within 30 days of receiving facilities that are not suitable for use.
(ff) FAR 52.245-9(f) requires a contractor to submit a facilities use statement to the contracting officer within 90 days after the close of each rental period.
(gg) FAR 52.245-10(h)(2) requires a contractor to notify the contracting officer if facilities are received that are not suitable for the intended use.
(hh) FAR 52.245-11(e) requires a contractor to notify the contracting officer when use of all facilities falls below 75% of total use.
(ii) FAR 52.245-11(j)(2) requires a contractor to notify the contracting officer within 30 days of receiving facilities not suitable for intended use.
(jj) FAR 52.245-17 requires a contractor to maintain special tooling records.
(kk) FAR 52.245-18(b) requires a contractor to notify the contracting officer 30 days in advance of the contractor's intention to acquire or fabricate special test equipment (STE).
(ll) FAR 52.245-18(d) & (e) requires a contractor to furnish the names of subcontractors who acquire or fabricate special test equipment (STE) or components and comply with paragraph (d) of this clause, and contractors must comply with the (b) paragraph of this clause if an engineering change requires acquisition or modification of STE. In so complying, the contractor shall identify the change order which requires the proposed acquisition, fabrication, or modification.
(mm) FAR 52.245-19 requires a contractor to notify the contracting officer if there is any change in the condition of property furnished “as is” from the time of inspection until time of receipt.
(nn) FAR 49.602-2(a)-(e) refers to the inventory schedule forms, SF's 1426 through 1434.
This information is used to facilitate the management of Government property in the possession of the contractor.
The total burden hours have changed under this OMB clearance 9000-0075 to reflect the incorporation of hours currently associated with OMB clearance 9000-0151 (FAR Case 1995-013) which is due to expire in June 2000 and will not be renewed. The OMB collection burden associated with Government property nonetheless remains unchanged.
Department of Defense (DOD), General Services Administration (GSA),
Notice of request for public comments regarding an extension of an existing OMB clearance (9000-0007).
Under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Federal Acquisition Regulation (FAR) Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a currently approved information collection requirement concerning summary subcontract report. This OMB Clearance expires on September 30, 2003.
Submit comments on or before August 25, 2003.
Submit comments including suggestions for reducing this burden to the General Services Administration, FAR Secretariat (MVA), Room 4035 1800 F Street, NW., Washington, DC 20405.
Rhonda Cundiff, Acquisition Policy Division, GSA (202) 501-0044.
In accordance with the Small Business Act (15 U.S.C. 631,
Office of Postsecondary Education, Department of Education
Notice of proposed priority.
Using fiscal year (FY) 2003 funds, the Secretary of Education proposes to establish an absolute priority to provide supplemental funds of up to $100,000 to selected Upward Bound Program projects. Those eligible to receive funds under this absolute priority must have received supplemental funds in FY 2000 and serve at least one target high school in which at least 50 percent of the students were eligible for free lunch under the National School Lunch Act during the 2001-2002 school year. Applicants not eligible for the absolute priority are invited to apply and will be funded, subject to availability of funds, as described in the funding order below. The selected projects must use the supplemental funds to provide services to eligible project participants with the greatest need for those services.
The Secretary further proposes that projects that receive supplemental funds under this priority are required to select otherwise eligible participants who attend a target high school in which at least 50 percent of the students were eligible for free lunch under the National School Lunch Act during the 2001-2002 school year and who have the greatest need for Upward Bound services. Otherwise, eligible students having the greatest need for Upward Bound services are those who:
1. Have not met the State academic achievement standard for grade eight in reading/language arts;
2. Have not met the State academic achievement standard for grade eight in math; or
3. Have a grade point average of 2.5 or less (on a 4.0 scale) for the most recent school year for which grade point averages are available.
By using State academic achievement assessments to determine student eligibility for services, schools can align this initiative with the requirements and activities supported by the No Child Left Behind Act of 2001.
We must receive your comments on or before July 24, 2003.
Address all comments about this proposed priority to Larry Oxendine, U.S. Department of Education, 1990 K Street, NW., Room 7044, Washington, DC 20006-8510. If you prefer to send your comments through the Internet, use the following address:
Margarita Benitez, Sheryl Wilson, or Gaby Watts, U.S. Department of Education, 1990 K Street, NW., Room 7020, Washington, DC 20006-8510. Telephone (202) 502-7600.
If you use a telecommunications device for the deaf (TDD), you may call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an alternative format (
We invite you to submit comments regarding this proposed priority. During and after the comment period, you may inspect all public comments about this priority in room 7039, 1990 K Street, NW., Washington, DC, between the hours of 8:30 a.m. and 4 p.m. Eastern time, Monday through Friday of each week except Federal holidays.
On request, we will supply an appropriate aid, such as a reader or print magnifier, to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for this proposed priority. If you want to schedule an appointment for
In FY 2003, the Congress appropriated more funds than the Administration requested for the Federal TRIO Programs. In examining the options available to the Secretary for allocating these additional funds, the Secretary determined that a portion of the funds should be used to increase support to the Upward Bound Program. The Upward Bound Program, authorized under section 402C of the Higher Education Act of 1965 as amended (HEA), 20 U.S.C. 1070a-13, helps low-income, potential first-generation, college students acquire the skills and motivation necessary for success in education beyond secondary school.
The purpose of this proposed supplement is to help the Upward Bound Program achieve one of its key performance goals: increasing the college enrollment rate of low-income, first generation college students. A recent evaluation of the Upward Bound Program found it has not been effective in increasing college preparation and enrollment of its program participants. The evaluation did find that the program has significant effects on higher risk students, but that the program was inadequately targeted to these students.
Under the absolute priority, the Upward Bound Program will increase the number of eligible students with the greatest need who are served by the Upward Bound Program. The students with the greatest need are generally those from the lowest income levels who have potential for college but are not performing successfully in high school. The Secretary believes that limiting supplemental funds to projects that serve the above described target schools is a good way to ensure that projects serve the lowest income students because the free lunch is limited to students from families with the lowest family income. An estimated 150 current Upward Bound projects could receive supplemental funds to serve at least twenty (20) additional students.
Under 34 CFR 75.105(c), the Secretary proposes to give an absolute preference to applications that meet the following absolute priority.
The Secretary will provide supplemental funds of up to $100,000 to regular Upward Bound Program projects that:
1. Are selected for funding under the FY 2003 Upward Bound Program funding competition;
2. Serve a target high school in which at least 50 percent of the students were eligible to receive free lunch under the National School Lunch Act during the 2001-2002 school year;
3. Received supplemental funds in FY 2000 under the Notice of Final Priority dated July 24, 2000 (65 FR 45698-45699); and
4. Agree to select at least 20 students who attend a target high school in which at least 50 percent of the students were eligible to receive free lunches under the National School Lunch Act during the 2001-2002 school year and have the greatest need for project services. Students who have the greatest need for project services are those students who:
a. Have not met the State academic achievement standard for grade eight in reading/language arts;
b. Have not met the State academic achievement standard for grade eight in math; or
c. Have a grade point average of 2.5 or less (on a 4.0 scale) for the most recent school year for which grade point averages are available.
Veteran Upward Bound projects and Upward Bound Math/Science projects are not eligible to participate in this initiative.
The Secretary proposes to fund applications in the following order:
1. Applications that meet the absolute priority.
2. All other applications.
If funds are available after funding all applications that meet the absolute priority, the Secretary will select from among the remaining applicants based upon the highest scores received (including prior experience points) in the Upward Bound FY 2003 Funding Competition.
Upward Bound projects that wish to receive supplemental funds will be required to submit:
• The identity of the target schools to be served by the project.
• The number of students who were eligible for free lunch under the National School Lunch Act at each of the target high schools to be served by the project in the 2001-2002 school year and the total number of students enrolled at those target schools in that year,
• The number of additional students, not less than 20, that the project plans to serve,
• A revised budget; and
• A narrative describing how the supplemental funds will be used to address each participant's greatest need.
This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.
This document provides early notification of our specific plans and action for this program.
You may view this document, as well as all other Department of Education documents published in the
To use PDF, you must have the Adobe Acrobat Reader which is available free at this site. If you have questions about using PDF, call the U.S. Government Printing Office (GPO), toll free at 1-888-293-6498; or in the Washington, DC area at (202) 512-1530.
The official version of this document is the document published in the
20 U.S.C. 1070.
Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Oak Ridge. The Federal Advisory Committee Act (Pub. L. 92-463, 86 Stat. 770) requires that public notice of these meeting be announced in the
Wednesday, July 9, 2003, 6 p.m.
DOE Information Center, 475 Oak Ridge Turnpike, Oak Ridge, TN.
Pat Halsey, Federal Coordinator, Department of Energy Oak Ridge Operations Office, PO Box 2001, EM-90, Oak Ridge, TN 37831. Phone (865) 576-4025; Fax (865) 576-5333 or e-mail:
• The meeting will feature a discussion with the U.S. Department of Energy, the U.S. Environmental Protection Agency and the Tennessee Department for Environment and Conservation. The agencies have been invited to provide prioritized lists of projects for the Oak Ridge Site-Specific Advisory Board to use in formulating a work plan for fiscal year 2004.
• Each agency will list a set of priorities and provide justification for their placement on the list.
Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Nevada Test Site. The Federal Advisory Committee Act (Pub. L. No. 92-463, 86 Stat. 770) requires that public notice of these meetings be announced in the
Wednesday, July 9, 2003, 6 p.m.-8 p.m.
Pahrump Nugget Hotel and Casino Convention Center, 650 South Highway 160, Pahrump, Nevada 89048.
Kelly Kozeliski, U.S. Department of Energy, Office of Environmental Management, P.O. Box 98518, Las Vegas, Nevada 89193-8513, phone: 702-295-2836, fax: 702-295-5300, e-mail
Speakers from the Department of Energy's Nevada Test Site and Waste Isolation Pilot Plant will present up to date information on shipments of radioactive waste from Nevada to New Mexico.
Copies of the final agenda will be available at the meeting.
Energy Information Administration (EIA), Department of Energy (DOE).
Agency information collection activities: proposed collection; comment request.
The EIA is soliciting comments concerning proposed revisions to three of the existing electric power surveys that expire November 30, 2004. The surveys are: Form EIA-826, “Monthly Electric Sales and Revenue with State Distributions Report,” Form EIA-861, “Annual Electric Power Industry Report,” and Form EIA-906, “Power Plant Report.”
Written comments must be filed on or before August 25, 2003. If you anticipate difficulty in submitting comments within that period, contact the person listed below as soon as possible.
Send comments to Stan Kaplan. To ensure receipt of the comments by the due date, submission by e-mail (
Requests for additional information or copies of the proposed revised Forms EIA-826, “Monthly Electric Sales and Revenue with State Distributions Report,” with instructions, EIA-861, “Annual Electric Power Industry Report,” with instructions, and EIA-906, “Power Plant Report,” with instructions should be directed to Stan Kaplan at the address listed above. The revised Schedule I, Part A through Part C of the Form EIA-826, “Monthly Electric Sales and Revenue with State Distributions Report,” the revised Schedule IV, Part A through Part C of the Form EIA-861, “Annual Electric Power Industry Report,” and the revised Form EIA-906, “Power Plant Report,” are also available on EIA's Web site at
The Federal Energy Administration Act of 1974 (Pub. L. 93-275, 15 U.S.C. 761
The EIA, as part of its effort to comply with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35), provides the general public and other Federal agencies with opportunities to comment on collections of energy information conducted by or in conjunction with the EIA. Any comments received help the EIA to prepare data requests that maximize the utility of the information collected, and to assess the impact of collection requirements on the public. Also, the EIA will later seek approval of survey changes by the Office of Management and Budget (OMB) under section 3507(a) of the Paperwork Reduction Act of 1995.
The EIA collects information about the electric power industry for use by government and private sector analysts. The survey information is disseminated in a variety of publications, electronic products, and electronic data files. For details on EIA's electric power information program, please visit EIA's Web site at
The EIA will request OMB approval of modifications to Schedule I, Part A through Part C of the Form EIA-826, to Schedule IV, Part A through Part C of the Form EIA-861, and to the Form EIA-906.
The proposed changes to the Form EIA-826 and Form EIA-861 reflect the need to revise the definition of the commercial and industrial sectors to include data previously reported in the “other” sector and to add two new sector categories, transportation and irrigation. Electricity used for public street and highway lighting, interdepartmental or intra-company sales (sales to other departments within the entity), and sales to public authorities has been reported in the “other” sector but would now be reported in the commercial sector. Electricity sales for agriculture, excluding irrigation, has been reported in the “other” sector but would now be reported in the industrial sector.
Data on revenues, megawatthours, and number of customers for electric energy supplied for transportation, such as electrified rails, would now be reported in the transportation sector and energy supplied for irrigation would now be reported in the irrigation sector.
The proposed changes to the Form EIA-906 reflect the need to collect information on fuel used to generate electric power at the facility level. In addition, data on electricity generation and fuel used to generate electricity are needed at the prime mover, the motive force that drives an electric generator (
As a means of improving the three electric power surveys, EIA proposes the following specific changes:
Form EIA-826,“Monthly Electric utility Sales and Revenue with State Distributions Report,” will eliminate reporting in the “other” sector and have that information reported in the appropriate commercial and industrial sectors on Schedule I, Parts A through C. In addition, two new sector categories, transportation and irrigation, will be added on Schedule I, Part A through Part C.
Form EIA-861,“Annual Electric Power Industry Report,” will eliminate reporting in the “other” sector and have that information reported in the appropriate commercial and industrial sectors on Schedule IV, Parts A through C. In addition, two new sector categories, transportation and irrigation, will be added on Schedule IV, Part A through Part C.
Form EIA-906, “Power Plant Report,” will collect information on total fuel used and fuel used to generate electric power, rather than the production of heat and/or steam that is used in industrial processes. In addition, the form will collect some data elements at the prime mover level, while continuing to collect other data at the facility level.
Those elements that are proposed to be collected at the prime mover level include electricity generation and the fuel(s) used to generate electricity.
Prospective respondents and other interested parties should comment on the actions discussed in item II. The following guidelines are provided to assist in the preparation of comments. Please indicate to which form(s) your comments apply.
A. Is the proposed collection of information necessary for the proper performance of the functions of the agency and does the information have practical utility? Practical utility is defined as the actual usefulness of information to or for an agency, taking into account its accuracy, adequacy, reliability, timeliness, and the agency's ability to process the information it collects.
B. What enhancements can be made to the quality, utility, and clarity of the information to be collected?
A. What actions could be taken to help ensure and maximize the quality, objectivity, utility, and integrity of the information to be collected?
B. Are the instructions and definitions clear and sufficient? If not, which instructions need clarification?
C. Can the information be submitted by the due date?
D. The estimated reporting burdens for these three forms are not expected to change with the proposed revisions. The reporting burdens are: 1.50 hours per monthly response for Form EIA-826, “Monthly Electric Sales and Revenue With State Distributions Report,” 7.30 hours per annual response for Form EIA-861, “Annual Electric Power Industry Report,” and 1.40 hours per response on the Form EIA-906, “Power Plant Report.” These estimated burdens
E. The agency's estimate in the above paragraph is only the cost to a respondent for the time it will take to complete each form. Due to the proposed changes, will a respondent incur any start-up costs for reporting, or any recurring annual costs for operation, maintenance, and purchase of services associated with these forms?
F. What additional actions could be taken to minimize the burden of these forms? Such actions may involve the use of automated, electronic, mechanical, or other technological collection techniques or other types of information technology.
G. To your knowledge, does any other Federal, State, or local agency collect similar information? If so, specify the agency, the data element(s), and the methods of collection.
A. What actions could be taken to help ensure and maximize the quality, objectivity, utility, and integrity of the information disseminated?
B. Is the information useful at the levels of detail to be collected?
C. For what purpose(s) would the information be used? Be specific.
D. Are there alternate sources for the information and are they useful? If so, what are their weaknesses and/or strengths?
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of the form. They also will become a matter of public record.
Section 3507(h)(1) of the Paperwork Reduction Act of 1995 (Pub. L. No. 104-13, 44 U.S.C. Chapter 35).
Take notice that on June 16, 2003, CenterPoint Energy Gas Transmission Company (CEGT) tendered for filing as part of its FERC Gas Tariff, Sixth Revised Volume No. 1, the following tariff sheet to be effective May 16, 2003:
Substitute Second Revised Sheet No. 862
CEGT states that the purpose of this filing is to correct an Activity Rate reported inaccurately in the May 16, 2003, filing.
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 385.211 of the Commission's rules and regulations. All such protests must be filed in accordance with 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. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that on June 16, 2003, Enbridge Pipelines (Louisiana Intrastate) L.L.C., (Louisiana Intrastate) filed an offer of settlement relative to Louisiana Intrastate's filings in Docket Nos. PR03-11-000 and PR03-11-001. The settlement is uncontested and no parties have intervened in these proceedings and the Commission staff supports the Settlement.
Louisiana Intrastate requests that the Commission establish a shortened comment period for comments on the settlement.
Take notice that initial comments are due on or before June 23, 2003, and reply comments are due on or before June 26, 2003.
On June 6, 2003, Gulf South Pipeline Company LP (Gulf South), 20 East Greenway, Houston, Texas 77046, filed an application pursuant to Section 7(c) of the Natural Gas Act (NGA), as amended, and the Federal Energy Regulatory Commission's (Commission) Rules and Regulations, for authorization to construct, own and operate two horizontal replacement injection/withdrawal wells in the Bistineau Storage Facility, located in Bienville Parish, Louisiana, all as more fully set forth in the application which is on file with the Commission and open to public inspection. This filing is available for review at the Commission or may be viewed on the Commission's Web site at
Gulf South proposes to construct, own and operate two new horizontal injection/withdrawal wells, approximately 440 feet of associated 8-inch diameter gathering lines and appurtenant facilities. Gulf South states these wells will be operated within Gulf South's current certificated limits, and will not exceed its certificated storage capacity or deliverability.
Any questions concerning this application may be directed J. Kyle Stephens, Director of Certificates, Gulf South Pipeline Company, LP, 20 East Greenway Plaza, Houston, Texas 77046, phone (713) 544-7309, fax (713) 544-
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should file with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's rules of practice and procedure (18 CFR 385.214 or 385.211) and the regulations under the NGA (18 CFR 157.10) by the comment date, below. A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. If filng by paper, a party must submit 14 copies of filings made with the Commission and must mail a copy to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding. Protests and interventions may be filed electronically via the Internet in lieu of paper;
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.
Take notice that on June 11, 2003, Gulfstream Natural Gas System, L.L.C. (Gulfstream) tendered for filing as part of its FERC Gas Tariff, Original Volume No. 1, the following tariff sheet, reflecting an effective date of June 1, 2003.
Gulfstream states that this filing is being made to implement a Park negotiated rate transaction under Rate Schedule PALS pursuant to Section 31 of the General Terms and Conditions (GT&C) of Gulfstream's FERC Gas Tariff. Gulfstream also states that the tariff sheet identifies and describes the negotiated rate agreement, including the exact legal name of the relevant shipper, the negotiated rate, the rate schedule, the contract terms, and the Maximum Park Quantity. Gulfstream explains that the proposed tariff sheet includes footnotes where necessary to provide further detail on the agreement.
Gulfstream states that copies of its filing have been mailed to all affected customers and interested state commissions.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with sections 385.214 or 385.211 of the Commission's rules and regulations. All such motions or protests must be filed in accordance with § 154.210 of the Commission's regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that an informal settlement conference will be convened in this proceeding commencing at 9 a.m. on June 25, 2003, at the offices of the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, for the purpose of exploring the possible settlement of the above-referenced dockets.
Any party as defined by 18 CFR 385.102(c), or any participant as defined by 18 CFR 385.102(b), is invited to attend. Persons wishing to become a party must move to intervene and receive intervenor status pursuant to the Commission's regulations (18 CFR 385.214).
For additional information, please contact Donald Heydt at (202) 502-8740,
Take notice that on June 11, 2003, Kern River Gas Transmission Company (Kern River) tendered for filing as part of its FERC Gas Tariff, Second Revised Volume No. 1, Seventh Revised Sheet No. 495, to be effective June 5, 2003.
Kern River states that the purpose of this filing is to reflect the assignment of
Kern River states that it has served a copy of this filing upon its customers and interested state regulatory commissions.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with sections 385.214 or 385.211 of the Commission's rules and regulations. All such motions or protests must be filed in accordance with § 154.210 of the Commission's regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that on June 13, 2003, Natural Gas Pipeline Company of America (Natural) tendered for filing to become part of its FERC Gas Tariff, Sixth Revised Volume No. 1, the tariff sheets listed on Appendix A to the filing, to be effective December 1, 2003.
Natural states that the purpose of this filing is to comply with the Commission's Order on Rehearing and Compliance Filing (Order) issued in Docket Nos. RP00-409-000 and RP00-631-000,
Natural states that copies of the filing are being mailed to all parties set out on the Commission's official service list in Docket Nos. RP00-409 and RP00-631.
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 § 385.211 of the Commission's rules and regulations. All such protests must be filed in accordance with § 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. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that on June 5, 2003, Northern Illinois Gas Company (Nicor) filed a revised copy of its Operating Statement, with an effective date of May 1, 2002.
Nicor states that this filing is being made pursuant to its October 17, 2002, Stipulation and Agreement (Settlement), which was approved by order of the Commission issued April 10, 2003 (103 FERC ¶ 61,031 (2003)) (April 10 Order).
Nicor states that the Settlement approved by the April 10 Order requires Nicor to file, within 30 days of the effective date of the Settlement, a revised Operating Statement to (i) eliminate the $50 minimum daily charge; (ii) remove section 5.14 of the Operating Statement; and (iii) revise section 2.15A to reflect that a shipper will not be charged for confirmed service not actually used, if service is interrupted or curtailed by Nicor.
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 § 385.211 of the Commission's rules and regulations. All such protests must be filed on or before the protest date as shown below. 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. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
The Commission in its order issued on May 28, 2003,
Take notice that a technical conference will be held on Thursday, June 26, 2003, at 11 a.m., in a room to be designated at the offices of the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426.
All interested parties and Staff are permitted to attend.
Take notice that on June 11, 2003, Transcontinental Gas Pipe Line Corporation (Transco) tendered for filing as part of its FERC Gas Tariff, Third Revised Volume No. 1, Forty-Eighth Revised Sheet No. 50, with an effective date of June 1, 2003.
Transco states that the purpose of the instant filing is to track rate changes attributable to transportation service purchased from Texas Gas Transmission Corporation (Texas Gas) under its Rate Schedule FT the costs of which are included in the rates and charges payable under Transco's Rate Schedule FT-NT. This filing is being made pursuant to tracking provisions under section 4 of the Transco's Rate Schedule FT-NT.
Transco states that included in Appendix B attached to the filing is the explanation of the rate changes and details regarding the computation of the revised FT-NT rates.
Transco states that copies of the filing are being mailed to each of its FT-NT customers and interested State Commissions.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with sections 385.214 or 385.211 of the Commission's rules and regulations. All such motions or protests must be filed in accordance with § 154.210 of the Commission's regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that on June 13, 2003, Transwestern Pipeline Company (Transwestern) tendered for filing as part of its FERC Gas Tariff, Second Revised Volume No. 1, to become effective June 1, 2003:
Transwestern states that its Stipulation and Agreement filed on May 2, 1995, in Docket Nos. RP95-271,
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with Sections 385.214 or 385.211 of the Commission's rules and regulations. All such motions or protests must be filed in accordance with § 154.210 of the Commission's regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Take notice that on June 12, 2003, Western Gas Interstate Company (WGI), tendered for filing as part of its FERC Gas Tariff, Fourth Revised Volume No. 1, the following tariff sheets, with an effective date of July 1, 2003:
WGI states that the purpose of the filing is to comply with Order No. 587-R and the applicable Version 1.6 standards adopted by the North American Energy Standards Board and recommendations of the Wholesale Gas Quadrant approved by the Commission.
WGI states that copies of this filing were served on its customers and interested state commissions.
Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with sections 385.214 or 385.211 of the Commission's rules and regulations. All such motions or protests must be filed in accordance with § 154.210 of the Commission's regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
The following filings have been made with the Commission. The filings are listed in ascending order within each docket classification.
Take notice that on June 12, 2003, Katahdin Transmission, LLC (KT LLC) filed with the Federal Energy Regulatory Commission (Commission) an Amendment to its Application for Determination of Exempt Wholesale Generator Status pursuant to section 365.5 of the Commission's regulations.
KT LLC states that it is a Delaware limited liability company that will own and simultaneously lease to Great Lakes Hydro America, LLC (GLHA), a company with exempt wholesale generator status, certain interests in equipment that will comprise a discrete portion of a new 115 kV interconnection project, which will, operationally, become part of an existing “eligible facility” owned and operated by GLHA in Millinocket and East Millinocket, Maine.
Take notice that on June 12, 2003, in compliance with PJM Interconnection, L.L.C., 103 FERC § 61,167 (2003), PJM Interconnection, L.L.C. (PJM) submitted a compliance filing in which it redesignated sheets of the PJM Open Access Transmission Tariff and the Amended and Restated Operating Agreement of PJM Interconnection, L.L.C. to comply with Designation of Electric Rate Schedule Sheets, Order No. 614, 1996-2000 Stats. & Regs., Regs. Preambles § 31,096 (2002).
Copies of this filing have been served on all parties listed on the official service list compiled by the Secretary in this proceeding.
Take notice that on June 11, 2003, Rayo Energy LLC (REL) tendered for filing with the Federal Energy Regulatory Commission (Commission) revisions to its application filed on April 29, 2003. REL states that revisions have been made to Attachment A, Original Rate Schedule FERC No. 1, Original Sheet No. 1, under the headings of Availability and Applicability. REL requests a shortened comment period for the revised filing.
Take notice that on June 11, 2003, Commonwealth Edison Company (ComEd) tendered for filing with the Federal Energy Regulatory Commission (Commission) an executed Service Agreement and executed Dynamic Scheduling Agreement entered into between ComEd and Alliant Energy under ComEd's Open Access Transmission Tariff (OATT). ComEd requests an effective date of April 1, 2003.
ComEd states that copies of the filing were served upon Alliant Energy, the Illinois Commerce Commission and Wisconsin Public Service Commission.
Take notice that on June 12, 2003, Southern California Edison Company (SCE) tendered for filing a Letter Agreement between SCE and The City of Azusa (Azusa).
SCE states that the purpose of the Letter Agreement is to provide an interim arrangement pursuant to which SCE will commence performance of the engineering, design, obtaining CPUC approval, procurement of equipment and material and construction of interconnection facilities capable of servicing 28 MW of wholesale Distribution Load.
SCE further states that copies of this filing were served upon the Public Utilities Commission of the State of California and Azusa.
Take notice that on June 12, 2003, Moraine Wind LLC (Moraine Wind) filed with the Federal Energy Regulatory Commission (Commission ), pursuant to section 205 of the Federal Power Act, an Application for Order Accepting Initial Rate Schedule, which would allow
Take notice that on June 12, 2003, Maine Electric Power Company (MEPCO) tendered for filing a Notice of Termination of the Interconnection Support Agreement between MEPCO, Central Maine Power Company, and Bangor Hydro-Electric Company. MEPCO states that this interconnection support agreement is currently designated as FERC Rate Schedule No. 18. MEPCO further states that it seeks an effective termination date of January 1, 2003.
Any person desiring to intervene or to protest this filing should file 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). 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. All such motions or protests should be filed on or before the comment date, and, to the extent applicable, must be served on the applicant and on any other person designated on the official service list. This filing is available for review at the Commission or may be viewed on the Commission's Web site at
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
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The Commission's rules of practice and procedure require all interveners filing documents with the Commission to serve a copy of that document on each person in the official service list for the project. Further, if an intervener 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.
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l. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
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Comments, protests and interventions may be filed electronically via the Internet in lieu of paper;
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Take notice that the following plan has been filed with the Commission and is available for public inspection:
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The Commission's rules of practice and procedure require all interveners filing documents with the Commission to serve a copy of that document on each person in the official service list for the project. Further, if an intervener 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.
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l. The filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
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The Federal Energy Regulatory Commission hereby gives notice that members of its staff will attend two conferences sponsored by the Midwest Independent Transmission System Operator, Inc. (MISO) on its Midwest Market Initiative Protocols (MMI Protocols) and Open Access Transmission and Energy Markets Tariff. The staff's attendance is part of the Commission's ongoing outreach efforts. The first conference will be held on June 23 (10 a.m. to 4 p.m.) and June 24, 2003 (8 a.m. to noon), to discuss the MMI Protocols. The second conference will be held on July 1, 2003 (10 a.m. to 4 p.m.), to discuss the Open Access Transmission and Energy Markets Tariff. The conferences will be held at the Lakeside Corporate Center (directly across from MISO's headquarters), 701 City Center Drive, Carmel, IN 46032. These meetings are open to the public. The meetings may discuss matters at issue in Docket No. RM01-12-000, Remedying Undue Discrimination Through Open Access Transmission Service and Standard Electricity Market Design; in Docket No. EL02-65-000,
For more information, contact Patrick Clarey, Office of Markets, Tariffs and Rates, Federal Energy Regulatory Commission at (317) 249-5937 or
Take notice that a technical conference will be held on September 15, 2003, from approximately 9:30 a.m. to 3:30 p.m. at the Florida Public Service Commission, 2540 Shumard Oak Boulevard, Gerald Gunter Building, Tallahassee, Florida. Members of the Commission will attend and participate in the discussion. An agenda will be issued at a later time.
This conference is one in a series of regional technical conferences announced in the White Paper issued in Docket No. RM01-12-000 on April 28, 2003. The purpose of the conference is to discuss wholesale market platform and RTO issues related to the proposed GridFlorida RTO/ISO. The Commission intends to use these conferences to discuss with states and market participants in each region reasonable timetables for addressing wholesale market design issues and to explore ways to provide the flexibility the region may need to meet the requirements of the final rule in this proceeding. In particular, the meeting will focus on issues related to the proposed GridFlorida RTO/ISO.
The conference is open for the public to attend, and registration is not required; however, in-person attendees are asked to register for the conference on-line at
The following notice of meeting is published pursuant to section 3(A) of the Government in the Sunshine Act (Pub. L. 94-409), 5 U.S.C 552B:
Federal Energy Regulatory Commission.
June 25, 2003, 10 a.m.
Room 2C, 888 First Street, NE., Washington, DC 20426.
Open.
Agenda.
Items listed on the agenda may be deleted without further notice.
Magalie R. Salas, Secretary, Telephone (202) 502-8400. For a recording listing items stricken from or added to the meeting, call (202) 502-8627.
This is a list of matters to be considered by the Commission. It does not include a listing of all papers relevant to the items on the agenda; however, all public documents may be examined in the Reference and Information Center.
Southwestern Power Administration, DOE.
Notice of public review and comment.
The Administrator, Southwestern Power Administration (Southwestern), has prepared Current and Revised 2003 Power Repayment Studies that show the need for an increase in annual revenues to meet cost recovery criteria. Such increased revenues are required primarily due to increased operations and maintenance expenses at the project. The Administrator has developed a proposed Robert D. Willis rate schedule, which is supported by a power repayment study, to recover the required revenues. Beginning October 1, 2003, the proposed rates would increase annual revenues approximately 35.0 percent from $353,700 to $477,612.
The consultation and comment period will begin on the date of publication of this
1. Public Information Forum—July 15, 2003, 9 a.m. central time, Tulsa, OK
2. Public Comment Forum—July 31, 2003, 9 a.m. central time, Tulsa, OK
The forums will be held in Southwestern's offices, Room 1402, Williams Center Tower I, One West Third Street, Tulsa, Oklahoma 74103. Five copies of the written comments, together with a diskette in MS Word or Corel Word Perfect, regarding the proposed rate change should be submitted to the Administrator, Southwestern Power Administration, U.S. Department of Energy, One West Third Street, Tulsa, Oklahoma, 74103.
Mr. Forrest E. Reeves, Assistant Administrator, Office of Corporate Operations, Southwestern Power Administration, U.S. Department of Energy, One West Third Street, Tulsa, Oklahoma 74103, (918) 595-6696.
The U.S. Department of Energy was created by an Act of the U.S. Congress, Department of
Southwestern markets power from 24 multi-purpose reservoir projects, with hydroelectric power facilities constructed and operated by the U.S. Army Corps of Engineers. These projects are located in the states of Arkansas, Missouri, Oklahoma, and Texas. Southwestern's marketing area includes these States plus Kansas and Louisiana. The costs associated with the hydropower facilities of 22 of the 24 projects are repaid via revenues received under the Integrated System rates, as are Southwestern's transmission facilities that consist of 1,380 miles of high-voltage transmission lines, 24 substations, and 46 microwave and VHF radio sites. Costs associated with the Robert D. Willis and Sam Rayburn Dams, two projects that are isolated hydraulically, electrically, and financially from the Integrated System are repaid by separate rate schedules.
Following Department of Energy guidelines, the Administrator, Southwestern, prepared a Current Power Repayment study using the existing Robert D. Willis rate. The Study indicates that Southwestern's legal requirement to repay the investment in the power generating facilitiy for power and energy marketed by Southwestern will be under-collected without an increase in revenues. The need for increased revenues is primarily due to increased costs for Corps of Engineers' operations and maintenance expenses. The Revised Power Repayment Study shows that an increase in annual revenue of $123,912 (a 35.0 percent increase), beginning October 1, 2003, is needed to satisfy repayment criteria.
Opportunity is presented for Southwestern customers and other interested parties to receive copies of the Robert D. Willis Power Repayment Studies and the proposed rate schedule. If you desire a copy of the Robert D. Willis Power Repayment Data Package with the proposed Rate Schedule, submit your request to Mr. Forrest E. Reeves, Assistant Administrator, Office of Corporate Operations, Southwestern Power Administration, One West Third Street, Tulsa, OK 74103, (918) 595-6696 or via email to
A Public Information Forum is scheduled to be held on July 15, 2003, to explain to customers and the public the proposed rate and supporting studies. The Forum will be conducted by a chairman who will be responsible for orderly procedure. Questions concerning the rate, studies, and information presented at the Forum will be answered, to the extent possible, at the Forum. Questions not answered at the Forum will be answered in writing, except that questions involving voluminous data contained in Southwestern's records may best be answered by consultation and review of pertinent records at Southwestern's offices.
Persons interested in attending the Public Information Forum should indicate in writing by letter or facsimile transmission (918-595-6656) by July 8, 2003, their intent to appear at such Forum. If no one so indicates their intent to attend, no such Forum will be held.
A Public Comment Forum is scheduled to be held on July 31, 2003, at which interested persons may submit written comments or make oral presentations of their views and comments related to the rate proposal. The Forum will be conducted by a chairman who will be responsible for orderly procedure. Southwestern's representatives will be present, and they and the chairman may ask questions of the speakers.
Persons interested in attending the Public Comment Forum should indicate in writing by letter or facsimile transmission (918-595-6656) by July 25, 2003, their intent to appear at such Forum. If no one so indicates their intent to attend, no such Forum will be held. Persons interested in speaking at the Forum should submit a request to the Administrator, Southwestern, in writing by July 25, 2003, their intent to appear at such Forum, so that a list of speakers can be developed. The chairman may allow others to speak if time permits.
A transcript of each Forum will be made. Copies of the transcripts may be obtained directly from the transcribing service for a fee.
Written comments on the proposed Robert D. Willis Rate are due on or before August 25, 2003. Five copies of the written comments, together with a diskette in MS Word or Corel Word Perfect, should be submitted to the Administrator, Southwestern, at the above-mentioned address for Southwestern's offices.
Following review of the oral and written comments and the information gathered during the course of the proceedings, the Administrator will submit the amended Robert D. Willis Rate Proposal, and Power Repayment Studies in support of the proposed rate to the Secretary of Energy for confirmation and approval on an interim basis, and subsequently to the Federal Energy Regulatory Commission (FERC) for confirmation and approval on a final basis. The FERC will allow the public an opportunity to provide written comments on the proposed rate increase before making a final decision.
Western Area Power Administration, DOE.
Notice of intent.
The Western Area Power Administration (Western), is a Federal power marketing administration within the Department of Energy (DOE) and markets Federal power from the Central Valley and Washoe Projects through the Sierra Nevada Region (SNR). SNR is implementing a new Marketing Plan on January 1, 2005. On December 31, 2004, three existing long-term contracts with the Pacific Gas and Electric Company (PG&E) expire. To cost effectively implement its new Marketing Plan, SNR identified a number of alternative post-2004 operating scenarios. Western must select and implement one of these alternatives in a timely manner so that customers of SNR will avoid substantial business risk and uncertainty and not be subject to increased costs.
Written comments from entities interested in commenting must be received no later than 4 p.m., PDT, August 8, 2003. Western will accept written comments received via regular mail through the U.S. Postal Service if they are postmarked at least 3 days before August 8, 2003, and received no later than August 13, 2003. Entities are encouraged to hand deliver or use certified or electronic mail for delivery of comments. Western will not consider comments received after the prescribed
The Public Information Forum and Public Comment Forum will be held at the Lake Natoma Inn, 702 Gold Lake Drive, Folsom, California. Written comments should be sent to Tom Carter, Power Operations Manager, Western Area Power Administration, Sierra Nevada Customer Service Region, 114 Parkshore Drive, Folsom, CA 95630-4710, or by electronic mail to
Tom Carter, Power Operations Manager, (916) 353-4427, or by electronic mail at
The Marketing Plan for marketing power by the SNR after 2004, published in the
Western is a Federal power marketing administration within DOE and published its 2004 Power Marketing Plan (Marketing Plan) for SNR in the
Under legislation authorizing the construction of the Federal CVP, the Federal Government had originally planned to construct Federal generation and transmission facilities to serve specific Project Use facilities and Preference Power allottees. PG&E proposed an alternative solution, which integrated the transmission and generation resources of both organizations. PG&E stated that its approach would be more economic and would be less costly than if the Federal Government undertook construction. This synergistic approach became the basis of the relationship between Western and PG&E for more than 50 years. In 1967, Western and PG&E executed Contracts 2947A, 2948A, and 2949A. Contract 2947A provides Western up to 400 MW of priority transmission capacity on the PACI transmission system. Under Contract 2948A, PG&E integrates the hydro-generation resources of the CVP and Western's purchased energy with its resource portfolio to meet the combined PG&E and SNR loads. Under this arrangement, PG&E provides firming energy, as needed, to support the Project Use loads and SNR's power allocations. Contract 2949A interconnects PG&E's transmission system with Western's at PG&E's Round Mountain Substation.
As part of PG&E's overall operational responsibilities under Contract 2948A, PG&E provides control area services to support SNR's loads. When California restructured its electric utility industry in 1996 with the passage of Assembly Bill 1890, the California Independent System Operator (CAISO) was created and took over operational control of the transmission lines of the three investor-owned utilities (PG&E, SCE, and SDG&E). The CAISO also assumed control area operator responsibilities for the geographic service territory of the three investor-owned utilities. Under existing arrangements, PG&E secures control area services from the CAISO to meet PG&E's contractual obligations for Contract 2948A deliveries.
PG&E has indicated that after the contracts expire, it will no longer provide the services identified in these contracts under the same terms and conditions in support of SNR's power marketing program. When these three long-term contracts expire on December 31, 2004, PG&E has informed Western that SNR must either obtain or self-provide many of the control area services currently provided by Contract 2948A for Project Use loads and its customers directly connected to the Federal transmission system. In addition, SNR will need to initiate new scheduling arrangements for Project Use loads, CVP generation, and customer allocations served through, or attached to, the CAISO controlled-grid. To ensure non-interrupted cost-effective deliveries of Federal power, Western is preparing to assume responsibility for providing many of these services.
Beginning January 1, 2005, SNR is assuming that it has the responsibility for providing many of the services currently provided by PG&E under existing contracts for the delivery of Federal power to Project Use loads on both the Federal and PG&E transmission systems. Nothing in this notice should be taken as a waiver of Western's rights or ability to take other actions to secure service.
To maintain operational flexibility for the CVP and the Washoe Project, as well as to implement the Marketing Plan in a cost-effective manner in the post-2004 environment, SNR is considering several alternative operating scenarios. One of the alternatives identified by SNR is the option of forming a new control area. Other alternatives include becoming a CAISO Participating Transmission Owner (TO) or operating within the CAISO control area as a sub-control area in a manner similar to a Metered Sub-System (MSS). The purpose of this notice is to advise interested stakeholders of SNR's potential activities and to solicit comments on the alternatives.
The Marketing Plan describes how SNR will market CVP, the Washoe Project, and purchased power resources during the period January 1, 2005, through December 31, 2024. CVP power facilities include 11 powerplants with a maximum operating capacity of about 2,044 MW and an estimated average annual generation of 4.6 million megawatt hours (MWh). The Washoe Project's Stampede Powerplant has a maximum operating capacity of 3.65 MW with an estimated annual generation of 10,000 MWh. The Sierra Pacific Power Company owns and operates the only transmission system available for access to the Stampede Powerplant.
Each of the alternatives under consideration will expose SNR and its customers to a different set of financial and operational risks and will require the development of different operating protocols and procedures.
Depending upon the alternative selected, Western may be required to
SNR has identified the following alternative post-2004 operating scenarios:
1. The no-action alternative;
2. Executing a Transmission Control Agreement (TCA) and becoming a CAISO Participating TO;
3. Executing a sub-control agreement with CAISO similar to its MSS concept; or
4. Forming a Western Electricity Coordinating Council (WECC)/North American Electric Reliability Council (NERC) certified control area with the U.S. Department of the Interior, Bureau of Reclamation (Reclamation) generation and load, and certain other generation and load within the proposed control area boundary.
In making a decision as to which post-2004 operational scenario to implement, SNR has identified factors that it will use in its decision-making process. These factors include, but are not limited to:
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FERC is actively encouraging the formation of RTOs. An RTO is an independent transmission system operator, governed by an independent board of directors. The RTO is responsible for operating a geographically discrete and interconnected regional transmission system consistent with prudent utility practices as defined by NERC and WECC. The selected alternative must have sufficient flexibility to allow SNR to accommodate the possibility of joining an RTO as well as modifying its operations to implement other changes in the electric utility industry. Although Western is not required to undertake a formal public process to select an operating configuration for post-2004 operations, Western has determined that it serves the public interest to allow interested stakeholders an opportunity to provide comments as Western goes through its decision-making process. In arriving at its final decision, SNR will accept and evaluate all comments received from interested stakeholders and ensure that its decision-making process is consistent with all applicable Federal laws, regulations, and procedures.
If this alternative is selected, SNR and Reclamation would not execute successor transmission arrangements with PG&E or the CAISO. Since a basis for transactions or business relationships necessary to carry out deliveries of power to customers does not exist, substantial business uncertainty would result. One or more of the parties could pursue litigation to determine the respective positions of Western and its individual customers, Reclamation, CAISO, and PG&E. This alternative creates business uncertainty and operational impediments which would result from not having successor agreements in place with PG&E and the CAISO.
Under this alternative, SNR, at a minimum, would need to execute a TCA, thus transferring operational control of the Federal transmission system to the CAISO. SNR would, however, retain responsibility for continuing to maintain all of its transmission facilities. Execution of the TCA would obligate SNR to conform its maintenance, operations, business, and administrative practices to all applicable CAISO protocols and procedures provided they do not conflict with existing Federal law.
Transmission revenue requirements associated with annual maintenance and capital repayment obligations for the Federal transmission system on behalf of SNR would be recovered through the CAISO Transmission Access Charge (TAC). In lieu of utility-specific cost-of-service rates, Federal transmission system beneficiaries would transition to a statewide rate, which represents the melded cost of all statewide Participating TO transmission revenue requirements.
To participate in the CAISO markets, and as the owner of the Federal generation assets, Reclamation would have to execute a Participating Generator Agreement (PGA). Execution of the PGA would allow the CVP to contribute energy and/or ancillary services in excess of SNR's existing contractual obligations into the market, if available.
Scheduling power across the Federal system would be done by the CAISO under terms governed by the CAISO tariffs. These tariffs are intended to afford equal opportunity use of all the existing transmission under CAISO control to all market participants. Under the existing CAISO Tariff, transmission of CVP generation to Project Use loads and SNR's customers will not be afforded any preference. In addition, if transmission is constrained;
From an operational perspective, CVP generation would be scheduled into the CAISO control area and the CAISO-controlled grid, including Federal
From an organizational perspective, this alternative appears to be the easiest to implement. SNR would not need a real-time transmission scheduling or an automatic generation control (AGC) desk; however, to retain its status as an SC, a 24-hour merchant desk would still need to be established. A real-time transmission switching desk to monitor the Federal system, perform outage coordination and switching for maintenance activities, and coordinate system restoration activities would be needed. SNR would also have to maintain a settlements organization to account for and bill various charges associated with purchases and deliveries for customers for which SNR is designated as the SC and to reconcile and account for revenues associated with generation sales into the CAISO markets.
The impact of implementing this alternative would effectively increase the cost of transmission to all SNR customers. The differential would be most pronounced for those entities directly connected to the Federal transmission system. Integrating the Federal transmission system into the CAISO-controlled grid would result in an integrated TAC. However, since many of the direct-connected transmission users' transactions do not involve the use of the CAISO-controlled grid, direct-connected customers could end up paying for service that they would not necessarily need under other alternatives. Non-direct-connected customers would pay the non-discriminatory rate associated with the use of the CAISO-controlled grid. The net effect is that the overall average cost of transmission service could decrease for the rest of the existing CAISO market participants.
In lieu of becoming a Participating TO, the CAISO has offered SNR the option of becoming an MSS. The CAISO defines an MSS as the system of a transmission owner bounded by CAISO-certified revenue quality meters at each interface point and generating units internal to that metered system. Under this alternative, SNR and Reclamation will need to define the physical boundaries of the MSS, ensure the appropriate revenue quality meters are present at each interface point and the generators, and ensure the appropriate communications and telemetry are in place. Since the MSS concept recognizes internal generation, Reclamation will not need to execute a PGA. To minimize the cost of receiving services from the CAISO markets, SNR will need to balance its energy and ancillary services obligations on a continuous basis. This function will require a 24-hour per day balancing authority or an AGC desk. To minimize costs associated with deviations between actual loads and resources, a 24-hour merchant desk is required. To become an MSS, SNR would need to negotiate and execute an MSS agreement with the CAISO.
The MSS and the control area alternatives are very similar from an operational perspective. Both a control area and an MSS must define their boundaries at interconnections with others and both must have the ability to use the physical electrical path across these boundaries. The proposed transmission system boundaries for both the control area and the MSS can be viewed at the following Web site location:
The northern boundary for the MSS alternative could change. Under the MSS alternative, Western would propose to put its Malin-Round Mountain transmission line in the CAISO control area and put its northern boundary at the 230-kV at the Round Mountain Substation on the Round Mountain-Cottonwood transmission line. Transmission scheduling between Malin and Round Mountain under the MSS alternative could be done by the CAISO while scheduling of transmission between Captain Jack and Tracy could be done by SNR. Western would still retain its existing capacity rights under a successor arrangement. The CAISO would remain the path operator for Path 66, the interface between the California-Oregon Border and Northern California, with the ability to curtail schedules on these paths if reliability is jeopardized.
An MSS is responsible for matching its internal loads and exports with generation and imports on an interval defined in the MSS agreement with the CAISO (not necessarily second-by-second). The MSS must maintain reserves in an amount that the MSS load bears to the entire load of the CAISO control area as defined in the MSS Agreement with the CAISO multiplied by the CAISO control area largest hazard (not necessarily the MSS largest hazard). The MSS does not have any responsibility to maintain the frequency of interconnection. This responsibility rests with the CAISO as the control area operator. The technical requirements for MSS performance are defined by the MSS Agreement with the CAISO. These requirements may change due to the CAISO Tariff revisions.
The CAISO's April 8, 2003, MSS proposal to SNR included the following key principles:
1. The MSS methodology would model SNR's service territory to include the entities directly connected to its transmission system unless these entities did not want to be included for scheduling and settlement purposes. The California-Oregon Transmission Project (COTP) line would also be included in SNR's MSS. An accommodation would have to be made for CAISO's share of COTP capacity rights currently owned by PG&E.
2. The CAISO would provide “Net” Settlements treatment for various CAISO market charges, as appropriate, based on cost causation principles.
3. No PG&E Unaccounted-for Energy (UFE) charge would be applied to load within SNR's territory.
4. SNR has the option of choosing to follow MSS load with MSS generation to minimize uninstructed energy deviation costs. Penalties would apply to all uninstructed deviations. The CAISO has also suggested that SNR could include entities not directly connected to its transmission system within the MSS and follow those loads with CVP generation.
5. SNR and Reclamation would have the ability to schedule customized combinations of MSS resources on a System Unit basis (aggregating resources for scheduling and settlements) to provide Reclamation with flexibility in dispatching individual generating resources.
6. Reclamation would not have to file a PGA, and Reclamation and SNR would have full access to all CAISO markets and associated services.
7. SNR would have the option of using multiple individual scheduling identifiers, as required, to facilitate and simplify CAISO settlements for SNR SC customers located on the CAISO grid but which are external to, and scheduled separately from, the Western MSS.
8. Ancillary services obligations would be based on a load ratio share of the CAISO ancillary services requirement.
9. Control area services would be provided by the CAISO.
Under the CAISO MSS proposal, SNR would, in essence, be a sub-control area operating within the CAISO control area with the AGC system operating in the flat tie-line mode. This means that the AGC algorithms would not contain a component to assist in the frequency support of the interconnection. SNR would regulate generation internal to the MSS so that the net actual interchange (net power flows to the CAISO and interconnected control areas) matches the net scheduled interchange.
From a transmission scheduling perspective, the MSS option requires SNR to schedule deliveries across the COTP line but not the Malin-Round Mountain line. Currently, these schedules are done between the CAISO and the Bonneville Power Administration (BPA). Implementation of the MSS option, including scheduling the use of transmission from the Pacific Northwest, will require coordination between SNR, CAISO, and BPA.
A control area is a specifically defined geographic region where responsibility for continuously matching generation and load is in accordance with NERC and WECC planning and operating criteria. A control area operator is responsible for continuously monitoring and balancing its resources against its load obligations and providing frequency support to the interconnected system. The control area operator must meet scheduled interchange requirements with other control areas, assist in maintaining the frequency of the electric power system, and provide sufficient generating capacity to maintain operating reserves. The control area operator must also ensure that it operates its transmission system in concert with other transmission providers in the area to maintain the reliability of the interconnected electric system.
Under this alternative, SNR would establish boundary and interface points with neighboring control areas;
A control area is responsible for matching its internal load and exports with generation and imports on a second-by-second basis, for maintaining adequate reserves to cover its largest hazard, and to assist in maintaining the frequency of the interconnection. The technical requirements of the control area are contained in various NERC and WECC guidelines and standards; as such, these guidelines and standards may change due to industry consensus.
The control area alternative requires SNR to apply to NERC and WECC to become a certified control area. This requires SNR to demonstrate that it can meet all of the NERC and WECC planning and operational standards and requirements. The control area alternative has, as key principles, the following:
1. The proposed transmission system boundaries for the control area are shown at:
2. Customers located within the control area will receive their allocation through internal control area schedules and will not experience any of the CAISO charges associated with those deliveries. Customers located on the CAISO grid will be assessed charges for delivery of their allocations associated with the use of the CAISO-controlled grid, ancillary services charges, transmission distribution charges, and other CAISO charges.
3. No PG&E UFE charges will apply to deliveries of Federal power to entities within the control area.
4. SNR will only follow the load for entities located within the control area. After becoming more experienced with control area operations, SNR will dynamically schedule generation through the CAISO system for interested entities to provide load following for customers that are not directly connected. This will minimize the CAISO imbalance energy charges for the off-system customers. Entities for which SNR provides load following services should not experience significant imbalance energy charges from the CAISO. These entities will, however, be charged for load following services.
5. Reclamation will have the flexibility to move water releases around their system as needed and will provide the generation levels scheduled for delivery internal to the control area and to the CAISO control area based on preschedules. There will be no uninstructed deviation charges associated with the control area alternative.
6. SNR expects to be the SC for Reclamation generation and for the loads of some of its customers and, therefore, would still participate in the CAISO markets under the control area alternative.
7. Schedules to customers located within the CAISO control area will be performed as SC-to-SC trades no differently than many of the deliveries of Federal power are made today.
8. SNR's reserve obligations will be shared by entities directly connected to the Federal transmission system in proportion to the load of each of these entities within the control area. This is the same approach (the load ratio share) as proposed by the CAISO in the MSS option. Regulation will be provided to the control area by CVP generation with the energy to be returned by those receiving such services.
9. All of the control area services outlined by the CAISO in the MSS alternative proposal will be provided by SNR under the control area alternative to entities within the control area.
SNR would regulate internal generation so that the net actual interchange matches the net scheduled interchange. Under the control area alternative, scheduling over the Malin-Round Mountain and the Captain Jack-Tracy paths would be done by SNR. SNR would begin load following for its internal customers when control area operations begin (January 1, 2005), and would request dynamic scheduling capability for off-system customers through the CAISO approximately 6 months later.
Transmission scheduling for deliveries across the COTP line and for
In determining which alternative to implement, a major consideration for SNR and its customers is the cost of each alternative. Under the Participating TO alternative, customers would be subject to CAISO charges associated with deliveries of Federal power. Under the MSS alternative, certain CAISO charges would be avoided if a customer is included in the MSS. Under the control area alternative, certain CAISO charges would be avoided by customers within the control area and possibly imbalance charges can be avoided through the use of dynamic scheduling for off-system customers. The costs and benefits of each option are being assessed through a study being performed by a consultant for Reclamation. The results of this study are expected to be available by the time the Public Information Forum announced in this notice is held.
Implementing the MSS alternative would result in different cost-of-service rates for transmission service for entities directly connected to the Federal transmission system and those entities served from the CAISO-controlled grid. In some instances, the expected increase in costs, especially for Federal end use loads served on the CAISO-controlled grid, could be substantial. Since the CAISO levies charges based on the net load in its MSS option, there may be certain opportunities to use Federal hydropower resources of the CVP to meet load requirements of the MSS participants and, thus, mitigate any cost increases associated with the use of the CAISO-controlled grid. From the standpoint of the CAISO, implementation of this option would keep most of its existing operating procedures intact and would ensure that its costs are recovered from CVP users.
If the control area formation option is selected, there still could be impacts to others even though mitigation efforts are undertaken. Scheduling and operational complexity associated with management of the three-line COI system could result. SNR recommends that the CAISO continue to serve as the single Path Operator for the COI for operational continuity and to assure that impacts are minimized to the maximum extent possible.
Under the control area formation proposal, differential transmission rates could still accrue between customers directly connected to the Federal transmission system and those who are served by the CAISO-controlled grid. If cost-of-service rates to CAISO-controlled grid users are mitigated, this would result in cost shifts to others. Cost shifts could result to other users connected directly to the Federal transmission system or to entities seeking transmission service either on or through Western's transmission system to the CAISO-controlled grid. Finally, to the extent that a new control area is formed, fixed expenses associated with operation of the CAISO would have to be recovered from a smaller base and, consequently, average unit costs for the remaining participants in the CAISO could increase.
Representatives from SNR will describe the above alternatives and the results of the cost/benefit study at the Public Information Forum. Western will accept public comments on the alternatives presented at the Public Comment Forum. SNR will accept additional written comments until the end of the comment period.
Western will evaluate how Federal law will impact each of the alternatives. Western is governed by numerous Federal laws such as the Federal Reclamation Law. The Federal Reclamation Law requires the sale of Federal power be sold to Preference customers. Western implements such sales through a Federal marketing plan under the Administrative Procedure Act. The sale of Federal power must not impair the primary purposes of the CVP. The marketing plans have the full force and effect of law. The alternatives must be consistent with Western's obligations under Federal law including Western's Marketing Plan. For instance, if Western were to become a Participating TO, it is conceivable that situations could arise where Western would be unable to deliver Federal Preference Power to Federal customers even where adequate Federal transmission capability was available to serve the Federal customer. While the CAISO Tariff provides a waiver for Federal entities if a provision of the Tariff conflicts with the Federal law, Western must still work out the specific details on a case-by-case basis whenever such conflicts arise.
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601,
Under the National Environmental Policy Act (NEPA) (42 U.S.C. 4321,
Western also completed the 2004 Power Marketing Program EIS (2004 EIS), and the Record of Decision was published in the
Western has an exemption from centralized regulatory review under Executive Order 12866; accordingly, no clearance of this notice by the Office of Management and Budget is required.
Western has determined that this rule is exempt from congressional notification requirements under 5 U.S.C.
Environmental Protection Agency.
Notice of document availability.
EPA is announcing the availability of a guidance memorandum entitled “Supplemental Allocation of Fiscal Year 2003 Operator Training Grants.” This memorandum provides national guidance for the allocation of funds used under section 104(g)(l) of the Clean Water Act. By providing additional funding to the 104(g) environmental training centers throughout the United States, the program will provide on-site security assistance and classroom training security activities to operators at small community wastewater treatment facilities in order to help the facility to become more secure.
United States Environmental Protection Agency, EPA East, Municipal Assistance Branch, 1200 Pennsylvania Avenue, NW., (Mail Code 4204-M), Washington, DC 20460.
Curt Baranowski at (202) 564-0636, or email:
The subject memorandum may be viewed and downloaded from EPA's homepage,
Environmental Protection Agency (EPA).
Notice of meeting.
Pursuant to the provisions of the Federal Advisory Committee Act, Public Law 92-463, notice is hereby given that the next meeting of the Children's Health Protection Advisory Committee (CHPAC) will be held July 15-17, 2003 at the Hotel Washington, Washington, DC. The CHPAC was created to advise the Environmental Protection Agency on science, regulations, and other issues relating to children's environmental health.
Tuesday, July 15 the Science/Regulatory Work Group will meet; plenary sessions will take place Wednesday, July 16 and Thursday, July 17.
Hotel Washington, 515 15th Street, NW., Washington, DC.
Contact Joanne Rodman, Office of Children's Health Protection, USEPA, MC 1107A, 1200 Pennsylvania Avenue, NW., Washington, DC 20460, (202) 564-2188,
The meetings of the CHPAC are open to the public. The Science/Regulatory Work Group will meet Tuesday, July 15 from 9 a.m. to 5 p.m. The plenary CHPAC will meet on Wednesday, July 16 from 9 a.m. to 5 p.m., with a public comment period at 4:45 p.m., and on Thursday, July 17 from 9 a.m. to 12 p.m.
The plenary session will open with introductions and a review of the agenda and objectives for the meeting. Agenda items include highlights of the Office of Children's Health Protection (OCHP) activities and reports from the Science and Regulatory Work Group. Other potential agenda items include strategic review of the progress on children's environmental health issues since the CHPAC was formed in 1997, and a panel presentation on the Voluntary Children's Chemical Evaluation Program (VCCEP).
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) Science Advisory Board (SAB) Executive Committee (EC), a Federal Advisory Committee, will hold a public meeting on the date and time given below to obtain briefings on EPA Regional science issues, and to discuss the SAB Operating Plan for FY2004.
The meeting will take place on Wednesday and Thursday, July 16-17, 2003 beginning 9 a.m. on July 16 and adjourning no later than 12 noon on July 17 (Central Time). Requests for oral comments, as well as submission of written comments must be received by July 8, 2003. Please see further details below.
The meeting will be held in the Lake Michigan Conference Room, U.S. EPA Region 5 Headquarters, Metcalfe Federal Building, 77 West Jackson Boulevard, Chicago, Illinois. For meeting location, building access, and visitor information, please see the Region 5 Web site at:
Any member of the public wishing further information concerning this meeting or wishing to present oral comments must contact Mr. A. Robert Flaak, Designated Federal Officer, EPA Science Advisory Board (1400A), U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460; telephone (202) 564-4546; Fax (202) 501-0582; or via e-mail at
(a)
(b)
A meeting agenda will be posted on the SAB Web site (see below) approximately 10 days prior to the meeting. Any additional topics developed for this meeting will be reflected in the agenda.
The SAB was established by 42 U.S.C. 4365 to provide independent scientific and technical advice, consultation, and recommendations to the EPA Administrator on the technical basis for Agency positions and regulations. General information about the EPA Science Advisory Board, may be found on the SAB Web site (
Federal Trade Commission (FTC).
Proposed notice of Privacy Act system amendments.
The FTC is establishing a Privacy Act system of records that will include telephone numbers and other information of individuals who do not wish to receive telemarketing calls from telemarketers, sellers or agents covered by the FTC's Telemarketing Sales Rule. This notice proposes amendments that describe how the system will apply to personal information, if any, collected from or compiled on telemarketers, sellers, or their agents in order to access the system.
Comments, if any, must be received July 24, 2003. Unless revisions are made, this system notice shall become final and effective August 8, 2003.
Mail comments, if any, to the Office of the Secretary, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580, “Telemarketing Rulemaking—Comment, FTC File No. R411011.” Please indicate that your comment pertains to “Privacy Act System Amendments, National Do Not Call Registry—FTC.” (Alternatively, you may submit your comment by electronic mail to
For information about this Privacy Act notice, contact Alex Tang, Attorney, Office of the General Counsel, FTC, 600 Pennsylvania Avenue, NW, Washington, DC 20580, (202) 326-2447,
Elsewhere in today's
The new system will collect and maintain the telephone numbers of individuals who do not wish to receive telemarketing calls from telemarketers, sellers, and agents, pursuant to the Commission's Telemarketing Sales Rule, 16 CFR Part 310, as amended.
The Privacy Act notice that the FTC is publishing for this system addresses the privacy of information that is submitted by or generated on individuals who choose to place their telephone numbers in the system so as not to receive telemarketing calls. Telemarketers, sellers, and their agents
The information they submit may include, for example, the name of a contact person, that person's telephone number and e-mail address, a credit card or bank account number that, in certain cases, may be assigned to an individual, etc.
Although the information submitted by, or that the system otherwise compiles on, telemarketers, sellers, and their agents may include information about, or could be otherwise associated with, certain individuals, as described above, the information pertains to such individuals only in a non-personal capacity (
Nonetheless, to the extent, if any, the Privacy Act applies to this information, the Commission proposes to amend its Privacy Act notice to address the collection, maintenance and use of personal information, if any, compiled from telemarketers, sellers, or agents when they pay for and access the Registry. The proposed amendments are incorporated into the text of the notice below.
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National Do Not Call Registry System-FTC (FTC-IV-3)
Not applicable.
Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580. System records may be maintained, in whole or part, off-site by contractors.
Individuals who notify the Commission that they do not wish to receive telemarketing calls. Individuals whose names or other identifiers (
Telephone numbers of individuals who do not wish to receive telemarketing calls; information automatically generated by the system, including date and/or time that the telephone number was placed on or removed from the Registry; and other information that the individual may be asked to provide voluntarily (such as e-mail address, if the individual registers through the National Do Not Call Registry Web site). Telemarketers, sellers, and their agents are separately required to submit information to pay for and obtain authorized access to the system, including the names of, or other identifiers that may be associated with, individuals (
Federal Trade Commission Act, 15 U.S.C. 41 et seq., Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 6101-6108; Do-Not-Call Implementation Act, Pub. L. No. 108-10 (2003).
To maintain records of the telephone numbers of individuals who do not wish to receive telemarketing calls; to disclose such records to telemarketers, sellers, and their agents in order for them to reconcile their do-not-call lists with the Registry and comply with the do-not-call provisions of the Commission's Telemarketing Sales Rule, 16 CFR Part 310; to enable the Commission and other law enforcement officials to determine whether a
Records from this system may be disclosed as permitted by 5 U.S.C. 552a(b), and, as authorized by 5 U.S.C. 552a(b)(3), in accordance with the routine uses announced by the Commission in Appendix I of its system notice applicable to all other agency Privacy Act systems of records (57 FR 45678), as may be revised and updated from time to time. Additional routine uses for records in this system are as follows, provided that no routine use specified either herein or in Appendix I shall be construed to limit or waive any other routine use published for this system: a. Telephone numbers, but not any e-mail addresses, submitted by individuals may be made available or referred on an automatic or other basis to telemarketers, sellers, and their agents for the purpose of determining or verifying that an individual does not wish to receive telemarketing calls;
b. Records may be made available or referred on an automatic or other basis to other federal, state, or local government authorities for regulatory, compliance, or law enforcement purposes.
c. Information submitted by or compiled on telemarketers, sellers, and their agents may be used as described in paragraph b. above, and, to the extent not covered by that paragraph, for payment or billing purposes, including referral to debt collection agencies or other governmental entities for collection, tax reporting, or other related purposes, consistent with the Privacy Act. Information that is submitted by or compiled on telemarketers, sellers, and their agents and that is incorporated into the PAY.GOV system shall also be subject to routine uses, if any, that may be separately published for that system.
Not applicable, except for information submitted by or otherwise compiled on telemarketers, sellers, and their agents, which may be disclosed as described above.
Stored in a computer database maintained on magnetic disks and tape, or other electronic systems determined by the Commission in consultation with staff or contractors.
Indexed by area code and phone number of individuals who have informed the Commission that they do not wish to receive telemarketing calls. May also be retrieved by other data, if any, compiled or otherwise maintained with the record. For information submitted by or compiled on telemarketers, sellers, or their agents, records may be indexed and retrieved by any category of data that is submitted by or compiled on such telemarketers, sellers, or agents.
Access to computerized records by electronic security precautions. Access generally restricted to those agency personnel and contractors whose responsibilities require access, or to approved telemarketers, sellers, and their agents. (See also “Purposes” and “Routine Uses” above to learn how information may be used or disclosed.)
Automated information retained indefinitely, until deleted pursuant to request by the subject individual, or deleted automatically after certain period of time, to be determined by the Commission.
National Do Not Call Registry Program Manager, Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.
To obtain notification of whether the system contains a record pertaining to that individual (
To the extent, if any, that the Privacy Act applies to information submitted by or compiled on telemarketers, sellers, or their agents, the system provides notice (
See notification procedures above. To request access to any information maintained with your registration that is not available to you through the automated dial-in system or the designated Web site, you must submit your request in writing under the Commission's Rules to: “Privacy Act Request, Office of the General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.” See 16 CFR 4.13. The same access procedure applies to the extent, if any, that the Privacy Act applies to information submitted by or compiled on telemarketers, sellers, or their agents, where that information is not made available for review or amendments when the telemarketer, seller, or agent accesses the system.
See notification procedures above. Where an individual believes the system has erroneously recorded or omitted information that is collected and maintained by the system, the individual will be afforded the opportunity to register, change, or delete that information after the automated system identifies and verifies the telephone number from which the individual is calling, or provides other requested identifying information if the individual is using the designated Web site. To contest the accuracy of any other information maintained on you that is not accessible to you through the automated dial-in system or Web site, you must submit your request in writing under the Commission's Rules to: “Privacy Act Request, Office of the General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.”
To the extent, if any, that the Privacy Act applies to information submitted by or compiled on telemarketers, sellers, or their agents, individuals are required to send any request to amend or correct records pertaining to them, if any, to the General Counsel at the above address.
Individuals who inform the Commission through the procedures established by the Commission that they do not wish to receive telemarketing
None.
By direction of the Commission.
Federal Trade Commission (FTC).
Final notice of new Privacy Act system of records.
The FTC is establishing a new system of records under the Privacy Act of 1974, as amended. This system will include telephone numbers and other information of individuals who do not wish to receive telemarketing calls from telemarketers, sellers, and agents. These telephone numbers will be disclosed to companies to ensure compliance with the Commission's Telemarketing Sales Rule.
This system is final and effective as of June 24, 2003.
For information about this Privacy Act notice, you may contact Alex Tang, Attorney, Office of the General Counsel, FTC, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 326-2447,
As required by the Privacy Act of 1974, as amended, the FTC previously published a notice of its proposal to establish a new agency system of records pertaining to individuals, to be called the “National Do Not Call Registry System-FTC” (FTC-IV-3). The FTC published its proposal in the February 27, 2002, edition of the
The proposal outlined what personal information the system would collect from individuals, and how we would use, disclose and maintain that information. As explained in the proposal, the new records system is intended to help the FTC implement and enforce the do-not-call requirements of our Telemarketing Sales Rule, 16 CFR Part 310, as recently amended.
Below, in final form, is the system notice that the Privacy Act requires us to publish for the system. Although we received no public comments in response to our proposal, we have taken this opportunity to make a few minor clarifications, which we summarize below.
If, however, you use the National Do Not Call Registry Web site to register, the Web site will instead ask you for an e-mail address to validate and confirm your registration, since ANI cannot be used in that case to verify your telephone number. Likewise, the Web site will ask you to supply an e-mail address if you use the Web site to verify that your telephone number is in the Registry, or to delete your number from it. (Of course, you may avoid giving us an e-mail address by using the dial-in method described above.) Thus, in this final system notice, we have clarified that “other information that the individual may be asked to provide voluntarily” means we will ask you to provide an e-mail address if you use the Web site to register, or to obtain access to the system to verify or delete your telephone number from the system.
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National Do Not Call Registry System-FTC (FTC-IV-3).
Not applicable.
Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580. System records may be maintained, in whole or part, off-site by contractors.
Individuals who notify the Commission that they do not wish to receive telemarketing calls.
Telephone numbers of individuals who do not wish to receive telemarketing calls; information automatically generated by the system, including date and/or time that the telephone number was placed on or removed from the Registry; and other information that the individual may be asked to provide voluntarily (such as e-mail address, if the individual registers through the National Do Not Call Registry Web site).
Federal Trade Commission Act, 15 U.S.C. 41
To maintain records of the telephone numbers of individuals who do not wish to receive telemarketing calls; to disclose such records to telemarketers, sellers, and their agents in order for them to reconcile their do-not-call lists with the Registry and comply with the do-not-call provisions of the Commission's Telemarketing Sales Rule, 16 CFR Part 310; to enable the Commission and other law enforcement officials to determine whether a company is complying with the Rule; to provide statistical data that may lead to or be incorporated into law enforcement investigations and litigation; or for other
Records from this system may be disclosed as permitted by 5 U.S.C. 552a(b), and, as authorized by 5 U.S.C. 552a(b)(3), in accordance with the routine uses announced by the Commission in Appendix I of its system notice applicable to all other agency Privacy Act systems of records (57 FR 45678), as may be revised and updated from time to time. Additional routine uses for records in this system are as follows, provided that no routine use specified either herein or in Appendix I shall be construed to limit or waive any other routine use published for this system:
a. Telephone numbers, but not any e-mail addresses, submitted by individuals may be made available or referred on an automatic or other basis to telemarketers, sellers, and their agents for the purpose of determining or verifying that an individual does not wish to receive telemarketing calls;
b. Records may be made available or referred on an automatic or other basis to other federal, state, or local government authorities for regulatory, compliance, or law enforcement purposes.
Not applicable.
Stored in a computer database maintained on magnetic disks and tape, or other electronic systems determined by the Commission in consultation with staff or contractors.
Indexed by area code and phone number of individuals who have informed the Commission that they do not wish to receive telemarketing calls. May also be retrieved by other data, if any, compiled or otherwise maintained with the record.
Access to computerized records by electronic security precautions. Access is generally restricted to those agency personnel and contractors whose responsibilities require access, or to approved telemarketers, sellers, and their agents. (See also “Purposes” and “Routine Uses” above to learn how information may be used or disclosed.)
Automated information retained indefinitely, until deleted pursuant to request by the subject individual, or deleted automatically after certain period of time, to be determined by the Commission.
National Do Not Call Registry Program Manager, Division of Planning and Information, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.
To obtain notification of whether the system contains a record pertaining to that individual (
See notification procedures above. To request access to any information maintained with your registration that is not available to you through the automated dial-in system or the designated Web site, you must submit your request in writing under the Commission's Rules to: “Privacy Act Request, Office of the General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.”
See notification procedures above. Where an individual believes the system has erroneously recorded or omitted information that is collected and maintained by the system, the individual will be afforded the opportunity to register, change, or delete that information after the automated system identifies and verifies the telephone number from which the individual is calling, or the individual provides other requested identifying information if the individual is using the designated Web site. To contest the accuracy of any other information maintained on you that is not accessible to you through the automated dial-in system or Web site, you must submit your request in writing under the Commission's Rules to: “Privacy Act Request, Office of the General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.”
Individuals who inform the Commission through the procedures established by the Commission that they do not wish to receive telemarketing calls. Some records may come from do-not-call lists that some states or other organizations separately maintain.
None.
By direction of the Commission.
Federal Trade Commission.
Proposed Consent Agreement.
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint that accompanies the consent agreement and the terms of the consent order—embodied in the consent agreement—that would settle these allegations.
Comments must be received on or before July 18, 2003.
Comments filed in paper form should be directed to: FTC/Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., Washington, DC 20580. Comments filed in electronic form should be directed to:
Joel Winston, FTC, Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 326-3153.
Pursuant to Section 6(f) of the Federal Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Section 2.34 of the Commission's Rules of Practice, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30)
Public comments are invited, and may be filed with the Commission in either paper or electronic form. Comments filed in paper form should be directed to: FTC/Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., Washington, DC 20580. If a comment contains nonpublic information, it must be filed in paper form, and the first page of the document must be clearly labeled “confidential.” Comments that do not contain any nonpublic information may instead be filed in electronic form (in ASCII format, WordPerfect, or Microsoft Word) as part of or as an attachment to e-mail messages directed to the following e-mail box:
The Federal Trade Commission has accepted, subject to final approval, a consent agreement from Guess?, Inc. and Guess.com, inc. (“Guess”).
The consent agreement has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement and take appropriate action or make final the agreement's proposed order.
Guess is an international company that designs and produces men's, women's, and children's clothing and accessory products. The company's products are marketed, distributed, and sold under various Guess brand names through its own stores, a limited number of independent retailers, and, its online store at
The Commission's proposed complaint alleges that Guess misrepresented that the personal information it obtained from consumers through
The proposed complaint also alleges that Guess represented that it implemented reasonable and appropriate measures to protect the personal information it obtained from consumers through
The proposed order applies to Guess' collection and storage of personal information from or about consumers in connection with its online business. It contains provisions designed to prevent Guess from engaging in practices similar to those alleged in the complaint in the future.
Specifically, Part I of the proposed order prohibits Guess, in connection with the online advertising, marketing, promotion, offering for sale, or sale of any product or service, from misrepresenting the extent to which it maintains and protects the security, confidentiality, or integrity of any personal information collected from or about consumers.
Part II of the proposed order requires Guess to establish and maintain a comprehensive information security program in writing that is reasonably designed to protect the security, confidentiality, and integrity of personal information collected from or about consumers. The security program must contain administrative, technical, and physical safeguards appropriate to Guess's size and complexity, the nature and scope of its activities, and the sensitivity of the personal information collected from or about consumers. Specifically, the order requires Guess to:
• Designate an employee or employees to coordinate and be accountable for the information security program;
• Identify material internal and external risks to the security, confidentiality, and integrity of customer information that could result in the unauthorized disclosure, misuse, loss, alteration, destruction, or other compromise of such information, and assess the sufficiency of any safeguards in place to control these risks. At a minimum, this risk assessment must include consideration of risks in each area of relevant operation.
• Design and implement reasonable safeguards to control the risks identified through risk assessment, and regularly test or monitor the effectiveness of the safeguards' key controls, systems, and procedures.
• Evaluate and adjust its information security program in light of the results of testing and monitoring, any material changes to its operations or business arrangements, or any other circumstances that Guess knows or has reason to know may have a material impact on its information security program.
Part III of the proposed order requires that Guess obtain within one year, and on a biannual basis thereafter, an assessment and report from a qualified, objective, independent third-party professional, certifying that: (1) Guess has in place a security program that provides protections that meet or exceed the protections required by Part II of this order; and (2) Guess's security program is operating with sufficient effectiveness to provide reasonable assurance that the security, confidentiality, and integrity of consumer's personal information has been protected.
Parts IV through VII of the proposed order are reporting and compliance provisions. Part IV requires Guess's to retain documents relating to compliance. For most records, the order requires that the documents be retained for a five-year period. For the assessments and supporting documents, Guess must retain the documents for three years after the date that each assessment is prepared. Part V requires dissemination of the order now and in the future to persons with responsibilities relating to the subject matter of the order. Part VI ensures notification to the FTC of changes in corporate status. Part VII mandates that Guess submit compliance reports to the FTC. Part VIII is a provision “sunsetting” the order after twenty (20) years, with certain exceptions.
The purpose of this analysis is to facilitate public comment on the proposed order. It is not intended to constitute an official interpretation of the proposed order or to modify their terms in any way.
By direction of the Commission.
Office of the Secretary, HHS.
In compliance with the requirement of section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Office of the Secretary, Department of Health and Human Services, is publishing the following summary of proposed collections for public comment. Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
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To obtain copies of the supporting statement and any related forms for the proposed paperwork collections referenced above, or E-mail your request, including your address, phone number, OS document identifier, to
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 meeting:
The Director, Management Analysis and Services Office, has been delegated the authority to sign Federal Register notices pertaining to announcements of meetings and other committee management activities, for both CDC and the Agency for Toxic Substances and Disease Registry.
Part C (Centers for Disease Control and Prevention) of the Statement of Organization, Functions, and Delegations of Authority of the Department of Health and Human Services (45 FR 67772-76, dated October 14, 1980, and corrected at 45 FR 69296, October 20, 1980, as amended most recently at 68 FR 7118-7123, dated February 12, 2003) is amended to reorganize the National Center for HIV, STD, and TB Prevention.
Section C-B, Organization and Functions, is hereby amended as follows:
Delete in its entirety the functional statement for the Resource Management Office and insert the following:
Delete in its entirety the functional statement for the Prevention Support Office (CK16).
After the Planning and Evaluation Office (CK15), insert the following:
Part C (Centers for Disease Control and Prevention) of the Statement of Organization, Functions, and Delegations of Authority of the Department of Health and Human Services (45 FR 67772-76, dated October 14, 1980, and corrected at 45 FR 69296, October 20, 1980, as amended most recently at 68 FR 7118-7123, dated February 12, 2003) is amended to reorganize the National Center for HIV, STD, and TB Prevention.
Section C-B, Organization and Functions, is hereby amended as follows:
Delete in its entirety the functional statement for the Division of Tuberculosis Elimination and insert the following:
(1) Provides technical assistance to health departments and other health care providers in assessing and meeting their TB training, education, and communication needs and in assessing the impact of their training and education activities; (2) provides technical assistance to health departments and other TB health care providers regarding behavioral studies research and intervention development; (3) collaborates with the World Health Organization (WHO), the World Bank, the International Union Against Tuberculosis and Lung Diseases (IUATLD), and the United States Agency for International Development (USAID), and others, in assessing and meeting TB training, education, and communication needs in other countries; (4) provides consultation and assistance in coordinating TB training, education, behavioral studies and interventions, and communication activities carried out by other CDC programs, Model TB Centers, and NCET members; (5) develops, markets, and maintains a list serve of persons with TB-related education, training, and communication responsibilities; (6) assists in planning and coordinating agendas necessary to conduct tuberculosis conferences and workshops sponsored by the Division; (7) provides coordination and oversight for duty officer functions; (8) organizes and maintains a library of scientific and non-scientific information related to TB; (9) conducts formative research and evaluation on approaches to patient, provider, and public education; (10) conducts research on individuals and social factors affecting health-care seeking and treatment outcomes related to tuberculosis; (11) based on research conducted, develops behavioral interventions targeted to health care providers, persons with or at risk for TB, and other high risk populations; (12) provides consultation to national and international organizations on behavioral research needs and study designs, and on the technical transfer of behavioral research findings into TB program practice and TB training and educational strategies; (13) provides consultation, technical assistance, and coordination to other branches within the division regarding development and implementation of behavioral interventions and training for branch specific activities such as TIMS, ARPE, and surveillance activities; (14) provides consultation and assistance in coordinating the writing of studies for publication of manuscripts in scientific journals; (15) presents findings at national and scientific meetings; (16) develops, produces, disseminates, and evaluates training and educational materials and courses providing tuberculosis information to the scientific and public health communities, as well as the general population; (17) conducts training and education needs assessments and identifies resources available for health department TB control officers and senior managers, TB nurse consultants, TB training and education directors and for senior staff carrying out TB activities in other programs or facilities serving persons at high risk for TB; (18) develops, conducts, and coordinates training courses on tuberculosis for state and big city TB program managers and nurse consultants; (19) based on needs assessments, develops and conducts or coordinates training courses and materials for staff who train and/or supervise front-line TB program staff; (20) plans, coordinates, and maintains the Division's Internet and Intranet Web sites; (21) conducts and/or coordinates communications programs designed to build public support and sustain public
(1) Directs national surveillance of tuberculosis to provide accurate and timely national data and to monitor progress toward the elimination of tuberculosis in the United States; (2) conducts analyses of national TB surveillance data to monitor national trends in TB in order to assist in program planning, evaluation, and policy development and to identify areas for further study to guide elimination efforts; (3) conducts surveillance related studies that evaluate current TB surveillance systems and develops new surveillance methods and systems in order to better monitor and accelerate TB elimination efforts; (4) provides technical surveillance expertise to state, local, and international tuberculosis control programs, other federal agencies, and other organizations involved in TB prevention and control; (5) conducts epidemiologic research to assess the characteristics of persons with
All delegations and redelegations of authority remain in effect until otherwise modified, superseded, or cancelled.
Delete in its entirety Section C-C, Order of Succession, and insert the following:
During the absence or disability of the Director, CDC, or in the event of a vacancy in that office, the first official listed below who is available shall act as Director, except that during a planned period of absence, the Director may specify a different order of succession:
1. Director of CDC
2. Deputy Director for Public Health Science
3. Deputy Director for Public Health Service
4. Chief Operating Officer
5. NCCDPHP Director
In compliance with the requirement of section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Centers for Medicare and Medicaid Services (CMS) (formerly known as the Health Care Financing Administration (HCFA)), Department of Health and Human Services, is publishing the following summary of proposed collections for public comment. Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
To obtain copies of the supporting statement and any related forms for the proposed paperwork collections referenced above, access CMS Web site address at
In compliance with the requirement of section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Centers for Medicare and Medicaid Services (CMS) (formerly known as the Health Care Financing Administration (CMS)), Department of Health and Human Services, is publishing the following summary of proposed collections for public comment. Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
To obtain copies of the supporting statement and any related forms for the proposed paperwork collections referenced above, access CMS's Web site address at
Food and Drug Administration, HHS.
Notice.
This notice announces a forthcoming meeting of a public advisory committee of the Food and Drug Administration (FDA). The meeting will be open to the public.
Those desiring to make formal oral presentations should notify the contact person before August 13, 2003, and submit a brief statement of the general nature of the evidence or arguments they wish to present, the names and addresses of proposed participants, and an indication of the approximate time requested to make their presentation. Persons attending FDA's advisory committee meetings are advised that the agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with physical disabilities or special needs. If you require special accommodations due to a disability, please contact Tara Turner at least 7 days in advance of the meeting.
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of a draft guidance for industry entitled “Providing Regulatory Submissions in Electronic Format—Postmarketing Periodic Adverse Drug Experience Reports.” This is one in a series of guidance documents on providing regulatory submissions to FDA in electronic format. This specific guidance discusses issues related to the electronic submission of postmarketing periodic adverse drug experience reports for drug products marketed for human use with new drug applications (NDAs) and abbreviated new drug applications (ANDAs), and therapeutic and blood products marketed for human use with biologics license applications (BLAs). This guidance does not apply to vaccines, whole blood or components of whole blood. The submission of these reports in electronic format will significantly improve the agency's efficiency in processing, archiving, and reviewing the reports.
Submit written or electronic comments on the draft guidance by August 25, 2003. General comments on agency guidance documents are welcome at any time.
Submit written requests for single copies of the draft 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, or the Office of Communication, Training and Manufacturers Assistance (HFM-40), Center for Biologics Evaluation and Research, Food and Drug Administration, 1401 Rockville Pike, Rockville, MD 20852-1448. Send one self-addressed adhesive label to assist that office in processing your requests. Submit written comments on the draft guidance to the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to
Randy Levin, Center for Drug Evaluation and Research (HFD-001), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-594-5411, Levinr@cder.fda.gov; or Michael Fauntleroy, Center for Biologics Evaluation and Research (HFM-588), Food and Drug Administration, 1401 Rockville Pike, Rockville, MD 20852, (301)827-5132,
FDA is announcing the availability of a draft guidance for industry entitled “Providing Regulatory Submissions in Electronic Format—Postmarketing Periodic Adverse Drug Experience Reports.” A postmarketing periodic adverse drug experience report includes individual case safety reports (ICSRs), attachments to ICSRs (ICSR attachments), if applicable, and descriptive information. The descriptive information includes the narrative summary and analysis of the information in the report, an analysis of the 15-day alert reports submitted during the reporting interval, and the history of actions taken since the last report because of adverse drug experiences (e.g., labeling changes, studies initiated).
This draft guidance discusses general issues related to the electronic submission of postmarketing periodic adverse drug experience reports. It provides guidance on the submission of periodic ICSRs, ICSR attachments, and descriptive information in electronic format. Applicants are referred to the draft guidance for industry “Providing Regulatory Submissions in Electronic Format—Postmarketing Expedited Safety Reports” (May 2001) for details on submitting periodic ICSRs and ICSR attachments to FDA.
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 providing postmarketing periodic adverse drug experience reports in electronic format. 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 Division of Dockets Management (see
This notice contains no new collections of information. The information requested for marketed human drug and biological products is already covered by the collection of
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), OMB approved the information collection for MedWatch—The FDA Medical Products Reporting Program (Forms FDA 3500 and FDA 3500A) and assigned it OMB control number 0910-0291. The approval for 0910-0291 expires on June 30, 2003; an extension of the approval is pending at OMB. OMB also approved the information collection for adverse experience reporting for marketed drugs and licensed biological products and assigned them OMB control numbers 0910-0230 and 0910-0308, respectively. The approval for 0910-0230 expires on September 30, 2005, and the approval for 0910-0308 expires on May 31, 2005.
Persons with access to the Internet may obtain the document at either
Periodically, the Health Resources and Services Administration (HRSA) publishes abstracts of information collection requests under review by the Office of Management and Budget, in compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). To request a copy of the clearance requests submitted to OMB for review, call the HRSA Reports Clearance Office on (301)-443-1129.
The following request has been submitted to the Office of Management and Budget for review under the Paperwork Reduction Act of 1995:
Written comments and recommendations concerning the proposed information collection should be sent within 30 days of this notice to: Allison Eyte, Human Resources and Housing Branch, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503, Fax Number 202-395-4650.
Periodically, the Health Resources and Services Administration (HRSA) publishes abstracts of information collection requests under review by the Office of Management and Budget, in compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). To request a copy of the clearance requests submitted to OMB for review, call the HRSA Reports Clearance Office on (301) 443-1129.
The following request has been submitted to the Office of Management and Budget for review under the Paperwork Reduction Act of 1995:
The National Sample Survey of Registered Nurses (NSSRN) is carried out to assist in fulfilling two Congressional mandates. Section 792 of the Public Health Service Act (42 U.S.C. 295k), calls for the collection and analysis of data on health professions. Section 806 (f) of the Public Health Service Act (42 U.S.C. 296e) requires that discipline specific workforce information and analytical activities are carried out as part of the advanced nursing education, workforce diversity, and basic nursing education and practice programs.
Government agencies, legislative bodies and health professionals used data from previous national sample surveys of registered nurses to inform workforce policies. The information from this survey will continue to serve policy makers, and other consumers. Furthermore data collected in this survey will assist in determining the impact that changes in the health care system are having on employment status of registered nurses (RNs), the setting in which they are employed and the proportion of RNs who are employed full time and part time in nursing. The data will also indicate the number of RNs who are employed in jobs unrelated to nursing.
The proposed survey design for the 2004 NSSRN follows that of the previous seven surveys. A probability sample is selected from a sampling frame compiled from files provided by the State Boards of Nursing in the 50 States and the District of Columbia. These files constitute a multiple sampling frame of all RNs licensed in the 50 States and the District of Columbia. Sampling rates are set for each State based on considerations of statistical precision of the estimates and the costs involved in obtaining reliable national and State level estimates.
Each sampled nurse will be asked to complete a self-administered questionnaire, which includes items on educational background, duties, employment status and setting, geographic mobility, and income.
Estimated burden is as follows:
Written comments and recommendations concerning the proposed information collection should be sent within 30 days of this notice to: Allison Eyte, Human Resources and Housing Branch, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503, Fax Number (202) 395-4650.
Periodically, the Health Resources and Services Administration (HRSA) publishes abstracts of information collection requests under review by the Office of Management and Budget, in compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). To request a copy of the clearance requests submitted to OMB for review, call the HRSA Reports Clearance Office on (301) 443-1129.
The following request has been submitted to the Office of Management and Budget for review under the Paperwork Reduction Act of 1995:
The CDP was originally established in 1994 to collect information from grantees and their subcontracted service providers funded under Titles I and II of the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act of 1990, as amended by the Ryan White CARE Act Amendments of 1996 (codified under Title XXVI of the Public Health Service (PHS) Act). This new effort will collect client level data from a sample of Ryan White CARE Act Title III Grantees. The HRSA's HIV/AIDS Bureau administers funds for all titles of the CARE Act. The Title III program is authorized by section 2651 of the PHS Act.
The PHS Act specifies that HRSA is responsible for the administration of grant funds, the allocation of funds, the evaluation of programs for the population served, and the improvement of the quantity and quality of care. Accurate records on the grantees receiving CARE Act funding, the services provided, and the clients served are critical to the implementation of the legislation and thus are necessary for HRSA to fulfill its responsibilities. The information requested is the minimum necessary to perform the evaluation and oversight function.
Client level information will be collected from a sample of Title III CARE Act funded grantees regarding the number of clients served, services provided, demographic information about clients served, and health status of clients served. In addition, client level information will be collected that measures mortality status and additional indicators of health status and whether standards of care are being followed by providers.
The primary purposes of the CDP are to examine client level demographic and service data on HIV/AIDS infected/affected clients being served by the Ryan White CARE Act and demonstrate the usefulness of these data for planning and evaluation purposes at both the local and national levels. Through this system, HRSA seeks to supplement the information collected in the CARE Act Data Report (CADR). Because there is no nationwide acceptance of client level reporting for HIV/AIDS services, the CADR collects data aggregated at the grantee level and contains duplicated counts of clients who have received services from more than one provider during a given reporting period.
Based on data from eligible grantees, the number of clients that a grantee serves would average about 250. About 2 hours is required annually to respond to these questions.
The burden estimate for this project is as follows:
Written comments and recommendations concerning the proposed information collection should be sent within 30 days of this notice to: Allison Eyte, Human Resources and Housing Branch, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503, Fax Number, (202) 395-6974.
In compliance with the requirement for opportunity for public comment on proposed data collection projects (section 3506(c)(2)(A) of Title 44, United States Code, as amended by the Paperwork Reduction Act of 1995, Public Law 104-13), the Health Resources and Services Administration (HRSA) publishes periodic summaries of proposed projects being developed for submission to OMB under the Paperwork Reduction Act of 1995. To request more information on the proposed project or to obtain a copy of the data collection plans and draft instruments, call the HRSA Reports Clearance Officer on (301) 443-1129.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
The Scholarships for Disadvantaged Students (SDS) Program has as its purpose the provision of funds to eligible schools to provide scholarships to full-time, financially needy students from disadvantaged backgrounds enrolled in health professions and nursing programs.
To qualify for participation in the SDS program, a school must be carrying out a program for recruiting and retaining students from disadvantaged backgrounds, including students who are members of racial and ethnic minority groups (section 737(d)(1)(B) of the PHS Act). A school must meet the eligibility criteria to demonstrate that the program has achieved success based on the number and/or percentage of disadvantaged students who are enrolled and graduate from the school. In awarding SDS funds to eligible schools, funding priorities must be given to schools based on the proportion of graduating students going into primary care, the proportion of underrepresented minority students, and the proportion of graduates working in medically underserved communities (section 737(c) of the PHS Act).
The estimated response burden is as follows:
Send comments to Susan G. Queen, Ph.D., HRSA Reports Clearance Officer, Room 16C-17, Parklawn Building, 5600 Fishers Lane, Rockville, MD 20857. Written comments should be received within 60 days of this notice.
Pursuant to Public Law 92-463, notice is hereby given of the meeting of the SAMHSA Center for Substance Abuse Prevention (CSAP) National Advisory Council in June 2003.
The agenda will include the review, discussion, and evaluation of individual grant applications. Therefore a portion of the meeting will be closed to the public as determined by the Administrator, SAMHSA, in accordance with Title 5 U.S.C. 552b(c)(6) and 5 U.S.C. App.2, 10(d).
The agenda for the open portion of the meeting will include presentations on SAMHSA's Strategic Vision and SAMHSA's Science to Services Initiative, Standard Funding Mechanism and Outsourcing and Changes for the Agency, Building the components of a Prevention Framework, the Faith Initiative, and an update on the National Registry of Effective Programs. Public comments are welcome. Please communicate with the individual listed as contact below for guidance. If anyone needs special accommodations for persons with disabilities, please notify the contact listed below.
A summary of this meeting, a roster of committee members and substantive program information may be obtained from Carol Watkins, Executive Secretary, Rockwall II Building, Suite 900, 5600 Fishers Lane, Rockville, Maryland 20857, Telephone: (301) 443-9542.
This notice is being published less than 15 days prior to the meeting due to the urgent need to meet timing
Bureau of Citizenship and Immigration Services, Department of Homeland Security.
Notice.
On January 29, 2003, the former Immigration and Naturalization Service published a notice of the
The notice is effective June 24, 2003.
Robert Raymond, Office of the General Counsel, Bureau of Citizenship and Immigration Services, 4251 I Street NW., Room 6109, Washington, DC 20536, telephone (202) 514-2895.
The appendix to this notice provides the FOIA Request Form that may be used in the
The appendix to this notice contains the FOIA request form provided for in the Proyecto judgment.
Transportation Security Administration (TSA), DHS.
Notice.
TSA invites public comment on three new information collection requirements abstracted below that will be submitted to OMB in compliance with the Paperwork Reduction Act.
Send your comments by August 25, 2003.
Comments may be mailed or delivered to Elaine Charney, TWIC Program Office, TSA Headquarters, West Tower, Floor 9, TSA-8, 601 South 12th Street, Arlington, VA 22202-4220.
Conrad Huygen, Office of Information Management Programs, TSA Headquarters, West Tower, Floor 4, TSA-17, 601 South 12th Street, Arlington, VA 22202-4220; telephone (571) 227-1954; facsimile (571) 227-2912.
In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. 3501
(1) Evaluate whether the proposed information requirement 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;
(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 through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology where appropriate.
The information collected for the TWIC program will be used as a means to enhance access control for individuals requiring unescorted access to secure areas of the national transportation system. TSA intends to evaluate and test certain technologies and business processes in the Technology Evaluation and Prototype Phases of TSA's pilot project to fully develop the program, measure credential performance and effectiveness, collect user feedback, and provide data analysis prior to proceeding to full-scale deployment.
TSA, through a contractor, will issue credentials to a select group of transportation workers and then administer two instruments to collect data on the effectiveness of the TWIC program as well as the satisfaction of the transportation workers who will be using these credentials. TSA intends to collect data via the following instruments:
(1)
(2)
Participation by workers in the survey will be voluntary. The TSA contractor will administer the survey independent of TSA. The survey will include up to 30 questions about the workers' experience as well as the effectiveness of the TWIC.
Dates, times, and locations will be selected within each site to provide a representation of worker satisfaction and credential effectiveness over the survey period. TSA intends to conduct one survey at each site during each phase of the program, with a target of 5 percent of card population measured at each site during Technology Evaluation and 2 percent during Prototype, and no fewer than 10 workers tested at any given site or card population. We estimate a total of 750 respondents and, based on an estimate of a fifteen-minute burden per respondent, estimate a maximum total burden program-wide of approximately 187.5 hours. There will not be a burden on workers who choose not to respond.
(3)
TSA Headquarters will use the results to evaluate the performance and effectiveness of the TWIC. The results will also be analyzed to support future implementation and program decisions. TSA will further use this data to evaluate the impact of policy or process changes on customer satisfaction, public confidence, and overall security.
Office of the Assistant Secretary for Fair Housing and Equal Opportunity.
Notice of proposed information collection.
The proposed information collection requirement described below has been submitted to the Office of Management and Budget (OMB) for review and approval, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name/or OMB approval number) and should be sent to: Surrell S. Silverman, Reports Liaison Officer, Office of Fair Housing and Equal Opportunity (FHEO), 451 7th Street, SW., Room 5124, Washington, DC 20410; e-mail
Melody Taylor-Blancher, FHIP/FHAP Support Division, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410; e-mail
This Notice informs the public that the U.S. Department of Housing and Urban Development (HUD) has submitted to OMB, revisions to the currently approved information collection for selecting applicants for the Fair Housing Initiatives Program (FHIP) grants. These forms were approved under emergency request and are being resubmitted for public comment for extension of approval period.
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 of information 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 through the use of appropriate automated collection techniques or other forms of information technology,
The Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, as amended.
Bureau of Indian Affairs, Interior.
Notice of methodology for distribution and use of FY 2003 Contract Support Funds and Indian Self-Determination Funds.
The Bureau of Indian Affairs (BIA) is publishing this notice to inform the public, the tribes, and Federal staff of the methodology that we will use in distributing Contract Support Funds (CSF) and Indian Self-Determination Funds (ISDF) for FY 2003. We distribute these funds as authorized by the Indian Self-Determination and Education Assistance Act of 1975, and financed by funds appropriated by the Snyder Act. We are publishing the methodology to ensure that eligible recipients and responsible federal employees are aware of program operations for this fiscal year. We are not establishing regulations.
The “FY 2003 CSF Needs Report” is due July 15, 2003. Final distribution of Contract Support Funds will occur on or about July 31, 2003. We will distribute ISDF on a first-come first-serve basis until funds are depleted.
Submit the “FY 2003 CSF Needs Report” to: Harry Rainbolt, Bureau of Indian Affairs, Office of Tribal Services, 1951 Constitution Avenue NW., MS 320-SIB, Washington, DC 20240.
Harry Rainbolt, (202) 513-7030.
Title I and Title IV of Pub. L. 93-638, the Indian Self-Determination and Education Assistance Act of 1975, authorizes BIA to distribute annually CSF and ISDF. In making these distributions for FY 2003,
The FY 2003 ISDF requirements for new and expanded contracts and self-governance funding agreements may be submitted to BIA throughout the year as the need arises.
BIA provides CSF to meet the indirect cost need identified for ongoing/existing self-determination contracts and self-governance compacts that are financed with funds appropriated to us under the Snyder Act.
An ongoing/existing contract or annual funding agreement is a BIA program operated under a self-determination contract or self-governance compact on an ongoing basis, which was entered into before the current fiscal year.
(1) All contracted or compacted programs, functions, services or activities included in annual funding agreements in the previous fiscal year and continued in the current fiscal year that are financed with funds appropriated to BIA;
(2) Direct funding increases because of inflation adjustments and general budget increases for programs financed with funds appropriated to BIA;
(3) Programs, functions, services, or activities started or expanded in the current fiscal year that are a result of a change in priorities from other already contracted, annual funding agreement programs, functions, services, or activities financed with funds appropriated to BIA;
(4) CSF differentials associated with tribally-operated schools that receive indirect costs through the application of the administrative cost grant formula. These differentials must be calculated under the criteria prescribed in the “Choctaw” decision dated September 18, 1992, issued by the contracting officer, Eastern Area Office. Copies of this decision can be obtained by calling the telephone number provided in the
(5) Funds available for Indian Child Welfare Act (ICWA) programs or reprogrammed from ICWA programs to other programs will be considered ongoing for purposes of payment of contract support costs; and
(6) Programs, functions, services, or activities funded from sources other than those listed above that were contracted in the previous year and are to be continued under contract in the current year are considered ongoing.
No.
All self-determination contractors and self-governance tribes/consortia with either an approved indirect cost rate, current indirect cost rate proposal, or an approved current lump sum agreement are eligible to receive CSF.
No. The use of current CSF to pay prior year indirect cost shortfalls is not authorized.
Yes. The following conditions must be met before BIA distributes CSF to pay indirect costs:
(1) Programs, functions, services, activities, or portions thereof, must be financed with funds appropriated to BIA under the Snyder Act; and
(2) Programs, functions, services, activities, or portions thereof, must be included in a self-determination contract or a self-governance funding agreement with BIA.
Yes. Self-determination contracts or self-governance agreements that receive appropriated funds from other Federal agencies, the Department of the Interior bureaus, offices, or other sources are not eligible to receive CSF.
Those programs that are not eligible to receive CSF or IDSF to cover indirect cost needs must use program-appropriated funds to cover their indirect cost needs. For example, funding for Indian Reservation Roads construction is transferred to BIA from the Federal Highway Trust Fund by the Department of Transportation. Therefore, this program is excluded from receiving CSF and must use allowable program funds to cover indirect cost needs.
BIA determines the amount of CSF a tribe or tribal organization is eligible to receive by taking the tribe's or tribal organization's direct cost base (DCB) and multiplying it by the indirect cost rate (ICR).
BIA uses the following procedures to determine the direct cost base:
When calculating the amount of CSF that eligible tribes or tribal organizations will receive, BIA uses the following procedures:
The CSF distribution will be made on a pro rata basis so that all eligible tribes and tribal organizations receive the same percentage of their reported need. For example, if the pro rata amount is 92 percent, each tribe or tribal organization will receive 92 percent of its identified indirect cost need.
BIA uses one of the following formulas when determining a tribe's or tribal organization's CSF need:
(1) Total direct cost × indirect cost rate = Indirect cost need.
(2) Total salaries and wages × indirect cost rate = Indirect cost need.
(3) Direct cost base × lump sum rate = Indirect cost need.
No additional CSF funds are authorized to meet these costs. All administrative or indirect costs must come from the total funding provided for the construction project.
Each regional office and the Office of Self-Governance must submit a “CSF Needs Report” for ongoing/existing contracts and annual funding agreements.
(1) In the initial distribution of CSF, BIA will distribute to each regional office and the Office of Self-Governance 85 percent of the total amount of CSF provided in the previous fiscal year. From this 85 percent, the regional office will award 75 percent of the CSF need identified for each contract or annual funding agreement that meets the established criteria.
(2) In the second or final allotment of CSF, all tribal contractors and self-governance tribes/consortia will receive a pro-rated share of the CSF, based on the program funds in the contract or annual funding agreement at that time.
If your CSF funds are insufficient, you may reprogram funds to make up deficiencies to recover your full indirect cost need. This reprogramming authority is limited to funds in the Tribal Priority Allocation (TPA) portion of the BIA budget or annual funding agreement.
No. Congressional appropriation language does not provide authority for BIA to reprogram funds from other Bureau programs to meet any CSF shortfall. However, appropriation language provides individual tribes authority to reprogram funds from within its total TPA base to meet any CSF shortfalls.
The ISDF are funds that pay the CSF and start-up costs for new or expanded contracts or annual funding agreements.
(a) A new contract or annual funding agreement is defined as the initial transfer of a program, function, service, or activity previously operated by BIA to a tribe, tribal organization or consortium.
(b) An expanded contract or annual funding agreement is defined as a contract or annual funding agreement which has become enlarged, during the current fiscal year, through the assumption of additional programs, functions, services, or activities (or portion thereof) previously operated by BIA.
BIA provides ISDF on a “first-come, first-served” basis. BIA funds requests at 100 percent of the “identified need” until the ISDF are depleted.
Each regional office or the Office of Self-Governance must submit an “ISDF Needs Report” to the Office of Tribal Services when a new contract or annual funding agreement is awarded, or when existing contracts or annual funding agreements are expanded.
A complete request package for a new/expanded annual funding agreement must contain:
(1) Indirect cost needs; and
(2) Startup cost needs.
The ISDF request will not be funded for the fiscal year. However, requests received after the ISDF have been depleted will be considered first for ISDF funding in the following fiscal year.
We compute the indirect cost need following the indirect cost base computation methodology provided in this announcement.
When calculating the amount of ISDF that eligible tribes or tribal organizations will receive, BIA uses the following procedures:
Startup costs are direct costs for items that are identified in the program operational budget for the new or expanded contract/annual funding agreements. These costs must be allowable costs, allocable to the new or expanded program, reasonable, and a one-time cost only within the context of the operational budget.
The request must contain:
(1) A copy of the program operational budget for the new or expanded contract/annual funding agreement activity, with the startup cost items identified;
(2) A copy of the program operational budget narrative; and
(3) Documentation of the provision of technical assistance and negotiation in regard to the startup cost items.
No. BIA will not consider funding ISDF requests that do not contain the items in section 2.10 of this notice.
Yes. Self-determination contracts or self-governance agreements that receive appropriated funds from Department of the Interior bureaus, offices, or other sources other than BIA are not eligible to receive ISDF.
Yes. Use the “Guidance for Contract Support Costs” handbook to assist in negotiating and providing technical assistance for startup costs.
OTS will return the request to the office of origin for proper completion and re-submission.
The Bureau of Land Management (BLM) has sent a request to extend the current approved collection to the Office of Management and Budget (OMB) under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
The OMB must respond to this request within 60 days but may respond after 30 days. For maximum consideration your comments and suggestions on the requirement should be directed to the Office of Management and Budget, Interior Department Desk Officer (1004-0121), at OMB-OIRA via facsimile to (202) 395-5806 or e-mail to
1. Whether the collection of information is necessary for the proper functioning of the agency, including whether the information will have practical utility;
2. The accuracy of our estimates of the information collection burden, including the validity of the methodology and assumptions we use;
3. Ways to enhance the quality, utility and clarity of the information collected; and
4. Ways to minimize the information collection burden on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other forms of information technology.
Minerals Management Service (MMS), Interior.
Notice of an extension of a currently approved information collection (OMB Control Number 1010-0129).
To comply with the Paperwork Reduction Act of 1995 (PRA), we are notifying the public that we have submitted to OMB an information collection request (ICR) to renew approval of this paperwork requirement. This notice also provides the public a second opportunity to comment on the paperwork burden of these regulatory requirements. The ICR is titled “Royalty-in-Kind Pilot Program—Offers, Financial Statements, and Surety Instruments for Sales of Royalty Oil and Gas.”
Submit written comments on or before July 24, 2003.
Submit written comments either by fax (202) 395-5806 or email (
Sharron L. Gebhardt, telephone (303) 231-3211, FAX (303) 231-3781, email
Taking and selling of the Government's royalty share in the form of production or “in kind” (RIK) is authorized by the MLA, 30 U.S.C. 192, for onshore leases and the OCS Lands Act, 43 U.S.C. 1353, for offshore leases. Recommendations in an MMS 1997 Feasibility Study concluded that, under the right conditions, RIK could be workable, revenue positive, and administratively more efficient for Government and industry. Pursuant to the 1997 study's recommendations, MMS is conducting the following pilots:
• For oil from Federal leases in Wyoming which began October 1, 1998;
• For gas from Federal leases offshore the State of Texas (Texas 8(g)) which began December 1, 1998;
• For gas from Federal offshore leases in the Gulf of Mexico (GOM) Region which began in October 1999. This involves the largest production volumes; and
• For oil from Federal offshore leases in the GOM Region which began in October 2000.
In addition to the above pilots, on November 6, 2001, President Bush announced an initiative to refill the Strategic Petroleum Reserve (SPR). MMS, in coordination with the Department of Energy (DOE), entered into a joint, 3-year initiative to fill the remaining capacity of the SPR. Operators of Federal leases in the GOM will deliver royalty oil to MMS's exchange partner at or near the lease. MMS's exchange partner will then deliver similar quantities of crude oil to MMS or its designated agent at Gulf Coast market centers. MMS's designated agent will be either DOE or its exchange contractor. DOE will then contract for exchange or direct movement of exchange oil to the SPR.
The feasibility and cost-effectiveness of MMS providing RIK production direct to other Federal agencies for their consumption is also being investigated in conjunction with the pilots.
MMS, as the responsible steward of Federal mineral revenues, is conducting the pilot programs of oil and gas RIK sales and investigation of direct Federal consumption to show conclusively whether or not RIK is viable for the Federal Government, and, if so, how, when, and where it makes sense to exercise the RIK option.
The collections of information addressed in this ICR are necessary because the Secretary of the Interior is obligated to hold competition when selling to the public to protect actual RIK production before, during, and after any sale, and obtain a fair return on royalty production sold. MMS must fulfill those obligations for the Secretary. The reporting requirements are as follows:
a. The actual offers that potential purchasers will submit when MMS offers production for competitive sales;
b. Offerors' statements of financial qualification; and
c. Surety Instruments, such as a Letter of Credit (LOC), bond, prepayment, or Parent Guaranty.
MMS has also re-evaluated the need for two reporting requirements that were approved by OMB in the last ICR submission and has decided that this information is no longer needed. These reporting requirements are (1) Form MMS-4440, Summary of Receipt and Delivery Volumes, and (2) Report of Gas Analysis. Also, the subject heading “LOC” has been changed to the more generic heading “Surety Instruments” to capture the broader field of financial instruments that may be collected under this ICR, such as Bonds, prepayments, and Parent Guarantees. That is, an LOC is just one of the many types of surety instruments used by MMS that provide a safeguard against non-payment by a respondent under an RIK contract.
MMS is requesting OMB's approval to continue to collect this information. Not collecting this information would limit the Secretary's ability to discharge his/her duties and may also result in loss of royalty payments. Proprietary information submitted is protected, and there are no questions of a sensitive nature included in this information collection.
We have also changed the title of this ICR from “Bids and Financial Statements for Sale of Royalty Oil and Gas” (RIK Pilots) (Form MMS-4440) to “Royalty-in-Kind Pilot Program—Offers, Financial Statements, and Surety Instruments for Sales of Royalty Oil and Gas” to clarify the regulatory language.
The following chart details the individual components and estimated hour burdens. In calculating the burdens, we assumed that respondents perform certain requirements in the normal course of their activities. Therefore, we consider these to be usual and customary and took that into account in estimating the burden.
To comply with the public consultation process, we published a notice in the
If you wish to comment in response to this notice, you may send your comments to the offices listed under the
National Institute of Corrections, Department of Justice.
Solicitation for a cooperative agreement.
The Department of Justice (DOJ), National Institute of Corrections (NIC) announces the availability of funds in FY2003 for a cooperative agreement to develop and implement an evaluation design to assess the effectiveness of the National Institute of Corrections Institutional Culture Initiative (ICI). The ICI includes a prison culture assessment instrument as well as a protocol for assessing prison culture. The ICI also includes the following projects: Strategic Planning, Management and Response; and Leading and Sustaining Change as well as a wide spectrum of additional interventions which will be provided through NIC under the heading of Intensive Technical Assistance.
A Cooperative Agreement is a form of assistance relationship where the National Institute of Corrections is substantially involved during the performance of the award. An award will be made to an organization that will, in collaboration with the Institute, design and implement an evaluation process to determine if the projects in NIC's ICI have positively impacted the culture of the prisons in the project.
Application must be received by 4 p.m. on Wednesday, July 23, 2003.
Mailed applications must be sent to: Director, National Institute of Corrections, 320 First Street, NW., Room 5007, Washington, DC 20534. Applicants are encouraged to use Federal Express, UPS, or similar service to ensure delivery by the due date as mail at NIC is still being delayed due to decontamination procedures.
Hand delivered applications should be brought to 500 First Street, NW., Washington, DC 20534. At the front desk, call (202)307-3106, extension 0 for pickup. Faxes or e-mailed applications will not be accepted.
A copy of this announcement and the required application forms can be downloaded from the NIC Web site at
All technical or programmatic questions concerning this announcement should be directed to Randy Corcoran, Correctional Program Specialist, National Institute of Corrections. He can be reached by calling 1-800-995-6423, extension 40058 or by e-mail at
Through a cooperative agreement, NIC developed an instrument and protocol for assessing organizational culture in prisons. The assessment instrument originated from the works of Kim S. Cameron and Robert E. Quinn in their book Diagnosing and Changing Organizational Culture which they based on the competing values framework. The instrument resulting from their work published in 1999 is called the Organizational Culture Assessment Instrument (OCAI). The OCAI was modified, with their approval, to be applied in prisons and is called the Organizational Culture Assessment Instrument-Prisons (OCAI-P). The protocol and instrument have been applied in 12 prisons. NIC has concurrently been working on the development of intervention strategies intended to assist prisons in changing their cultures following the application of OCAI-P and Institutional Culture Assessment Protocol under the direction of NIC's existing Cooperative Agreement vendor.
The three main intervention strategies being planned for utilization are: Strategic Planning, Management and Response; Leading and Sustaining Change and Intensive Technical Assistance which will provide a wide spectrum of additional interventions. The interventions strategies are being developed and are generally described below.
1.
2.
3.
2. Identify or develop all criteria, materials and instruments which will be utilized in the evaluation of each project.
3. Discuss and defend the final decision regarding whether individual projects will need individual evaluation tools or whether common evaluation criteria/tools will be used on all the projects. Regardless of the decision, address how all of the projects will relate to the final outcome.
4. Discuss the feasibility of determining the impact individual projects have on any institutional culture changes (for example, does having the warden and executive staff trained in Change Leadership contribute most significantly to changing the culture or are all interventions too integrated to isolate individual project contributions to the change in prison culture).
5. Implement all aspects of the evaluation design on all projects and prison sites in the Institutional Culture initiative. Address how to implement the evaluation design in the projects which have been in progress for one or more years.
6. Document the research design and data/information which is obtained in order to evaluate whether there has been a positive impact on the prison culture. Provide a Final Report and Executive Summary of the work completed in this phase of the evaluation project.
Specific Requirements: 1. The awardee is required to become familiar with the materials, history, goals and results to date of NIC's work in the entire Institutional Culture Initiative to include all assessment and intervention efforts.
2. An assessment of the prison culture in eight (8) correctional facilities was completed in 2002-2003, using the Organizational Culture Assessment Instrument—Prisons (OCAI-P). Four (4) additional prisons will receive assessments within the next few months. A professional Change Advisor/consultant will begin working with the wardens of these prisons to change the prison culture in September 2003. The awardee of this evaluation cooperative agreement will need to be prepared to identify and collect any baseline information which will be necessary for the successful evaluation of these projects and prisons.
3. The Institutional Culture Assessment information (collected by a separate vendor) for each prison in the Institutional Culture Initiative will be made available to the awardee for the purposes of evaluating the impact of the projects. The applicant is encouraged to use this extensive information in the evaluation design. A modified version of the Assessment Protocol may be proposed as a means of measuring the impact of all the work done to change the culture or another means of measuring the impact may be proposed.
4. The successful applicant will propose a project approach that will ensure accomplishment of each of the stated objectives of this project. The applicant will ensure that the project team is comprised of persons with technical expertise in the area of research and evaluation methods as well as persons with familiarity with the correctional environment.
5. With satisfactory performance, it is assumed that there will be some additional funds each year for the awardee to collect information which will be necessary for the final impact evaluation. At that point in time, the awardee will be asked to provide a Final Report with an Executive Summary. They will also be asked to produce a camera-ready monograph on Lessons Learned about changing prison culture. Funds will be provided in subsequent years and should not be requested in the current application. The purpose of adding this information is to inform the applicant regarding the expected outputs to assure the research design addresses all requirements.
6. Since the goal of the Institutional Culture initiative is to change the culture (not the climate) of a prison, there is the expectation that various interventions (strategic planing, intensive TA, etc.) may be utilized and may extend over a period of several years. The applicant should reflect the possibly longer time frame which will be required to measure the impact of the interventions in the evaluation design.
7. The selected applicant will be required to attend a preliminary meeting for the purpose of getting an overview of the current NIC work in the Institutional Culture Initiative as well as a refinement of the project work plan. The applicant is also required to attend two (2) coordinating meetings each year with all the other project staff from the ICI.
8. Coordinate with the NIC project manager extensively and routinely throughout the length of the project. The person designated as project director is required to be the person who will manage the project on a day-to-day basis and who has full decision-making authority to work with the NIC project manager. This person must have enough time dedicated to the project to assure they are available to direct day to day activities of the project and to be available for collaboration with the NIC project manager. Applicants may use whatever position titles they wish with other project staff, but the position of project director must be as described in this paragraph.
9. Applicants should identify in the proposal specific strategies for assuring a collaborative effort between their project team and NIC.
Submit an original and five copies. The original should have the applicant's signature in blue ink. A cover letter must identify the responsible audit agency for the applicant's financial accounts.
The narrative portion of this cooperative agreement application should include, at a minimum.
1. A brief paragraph that indicates the applicant's understanding of the purpose of this cooperative agreement;
2. One or more paragraphs to detail the applicants understanding of Impact Evaluation;
3. A brief paragraph that summarizes the project goals and objectives;
4. A clear description of the methodology that will be used to complete the project and achieve its goals;
5. A clearly developed and detailed Project Plan which demonstrates how the various goals and objectives of the project will be achieved through its various activities so as to produce the required results;
6. A chart of measurable project milestones and time lines for the completion of each milestone;
7. A description of the staffing plan for the project, including the role of each project staff, the time commitment for each, the relationship among the staff (who reports to whom), and a signed statement from individual staff that they will be available to work on this project;
8. A description of the qualifications of the applicant organization and documentation of each project staff's knowledge, skills and abilities to carry out their assigned project responsibilities;
9. A budget that details all costs for the project, shows consideration for all contingencies for this project, and notes a commitment to work within the budget proposed (budget should be divided into object class categories as shown on application Standard Form 424A). A budget narrative must be included which explains how all costs were determined.
The project must be completed within one year of its award date.
This project will be a collaborative venture with the NIC Prisons Divisions.
This announcement is expected to be awarded by August 27, 2003.
Employee Benefits Security Administration, Labor.
Grant of Individual Exemptions.
This document contains exemptions issued by the Department of Labor (the Department) from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (the Act) and/or the Internal Revenue Code of 1986 (the Code).
A notice was published in the
The notice of proposed exemption was issued and the exemption is being granted solely by the Department because, effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the Secretary of the Treasury to issue exemptions of the type proposed to the Secretary of Labor.
In accordance with section 408(a) of the Act and/or section 4975(c)(2) of the Code and the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon the entire record, the Department makes the following findings:
(a) The exemption is administratively feasible;
(b) The exemption is in the interests of the plan and its participants and beneficiaries; and
(c) The exemption is protective of the rights of the participants and beneficiaries of the plan.
The restrictions of section 406(a) of the Act and the sanctions resulting from the application of section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply to the past extension of credit from the DuPont Pension and
(a) The purchase of the Bonds by the Plans was a one-time transaction for cash;
(b) The Plans paid no more than the current fair market value for the Bonds at the time of the transaction, as determined by a reputable, independent, third party market source;
(c) The Bonds were sold on July 10, 2001 for $2,101,900 at a profit of $126,580 for the Plans;
(d) The purchase of the Bonds was not part of an agreement, arrangement or understanding designed to benefit Dow or any other party in interest with respect to the Plans; and
(e) The transaction represented less than .02% of each Plan's total assets.
The exemption is effective for the period from October 25, 2000 (the date of the acquisition of the Bonds by the Plans) until July 10, 2001 (the date the Bonds were sold).
For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the notice of proposed exemption published on January 22, 2003, at 68 FR 3047.
Written Comments: The applicant (
The applicant noted that in the operative language section of the Proposal, paragraph (c), it was erroneously indicated that the Bonds were sold for $1,975,320 (rather than for $2,101,900, as correctly stated in Item 5 of the Summary of Facts and Representations in the Proposal). Therefore, the Department has modified the language in paragraph (c) of the exemption to state that the Bonds were sold for $2,101,900.
The Department also received over one hundred telephone calls from interested persons concerning the Proposal. In addition, the Department received seven written inquiries from interested persons. All of the telephone calls and written inquiries requested additional information regarding the transactions and their possible affect on benefits payable to the appropriate Plan participants. The Department responded to each inquiry by telephone and attempted to address the concerns that were raised. None of the additional comments made to the Department offered any suggestions for changes to the Proposal.
No other comments were received by the Department. Accordingly, the Department has determined to grant the exemption, as clarified above.
Brian Buyniski of the Department at (202) 693-8545. (This is not a toll-free number).
The restrictions of section 406(a) of the Act and the sanctions resulting from the application of section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply to the past extension of credit from the DuPont Pension and Retirement Plan, the DuPont Dow Elastomers Pension and Retirement Plan, the Pioneer Hi-Bred International, Inc. Retirement Plan, the Protein Technologies International Retirement Plan, and the DuPont Savings and Investment Plan (collectively, the Plans) to ConAgra Foods, Inc. (ConAgra), a party in interest with respect to the Plans, as a result of the holding by the Plans of certain corporate debt securities (the Bonds) issued by ConAgra, for the period from September 5, 2001 until October 17, 2001; provided the following conditions were satisfied:
(a) The purchase of the Bonds by the Plans was a one-time transaction for cash;
(b) The Plans paid no more than the current fair market value for the Bonds at the time of the transaction, as determined by reputable, independent, third party market sources;
(c) The Bonds were sold on October 17, 2001 for $4,234,531 at a profit of $185,638 for the Plans;
(d) The purchase of the Bonds was not part of an agreement, arrangement or understanding designed to benefit ConAgra or any other party in interest with respect to the Plans; and
(e) The transaction represented less than 1% of each Plan's total assets.
The exemption is effective for the period from September 5, 2001 (the date of the acquisition of the Bonds by the Plans) until October 17, 2001 (the date the Bonds were sold).
For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the notice of proposed exemption published on January 22, 2003, at 68 FR 3048.
The applicant states that the DuPont Dow Elastomers Pension and Retirement Plan was not included in the list of “Plans” in the Proposal.
Based on this comment, the Department has revised the appropriate language in the Proposal to include the DuPont Dow Elastomers Pension and Retirement Plan.
In addition, the applicant states that the information concerning the plan sponsor of, and number of participants covered under, the DuPont Dow Elastomers Pension and Retirement Plan was not included in Item 2 of the Summary of Facts and Representations contained in the Proposal (the Summary).
The applicant also noted that footnote 12 in the Proposal indicates that “the Plans are funded through the same trust” and should have indicated that the Dupont Savings and Investment Plan is funded through a separate trust. The Department acknowledges the applicant's clarifications to the information contained in the Summary.
The Department received seven written inquiries and over one hundred telephone calls concerning the Proposal from interested persons. All of the telephone calls and written inquiries requested additional information regarding the transactions and their possible affect on benefits payable to the appropriate Plan participants. The Department responded to each inquiry by telephone and attempted to address the concerns that were raised. None of the additional comments made to the Department offered specific suggestions for changes to the Proposal.
No other comments were received by the Department. Accordingly, the Department has determined to grant the exemption, as modified herein.
Brian Buyniski of the Department at
The restrictions of section 406(a) of the Act and the sanctions resulting from the application of section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply to the past extension of credit from the CONSOL Inc. Employee Retirement Plan and the CONSOL Inc. Investment Plan for Salaried Plans (collectively, the Plans)
(a) The purchase of the Bonds by the Plans was a one-time transaction for cash;
(b) The Plans paid no more than the current fair market value for the Bonds at the time of the transaction, as determined by reputable, independent, third party market sources;
(c) The Bonds were sold on August 16, 2001 for $816,641 at a profit of $61,858 for the Plans;
(d) The purchase of the Bonds was not part of an agreement, arrangement or understanding designed to benefit Conoco or any other party in interest with respect to the Plans; and
(e) The transaction represented less than 1% of each Plan's total assets.
The exemption is effective for the period from December 29, 1999 (the date of the acquisition of the Bonds by the Plans) until August 16, 2001 (the date the Bonds were sold).
For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the notice of proposed exemption published on January 22, 2003, at 68 FR 3050.
First, the applicant states that in Item 1 of the Summary of Facts and Representations (the Summary), a reference was made to the DuPont Pension Trust Fund (the DuPont Trust). In this regard, the applicant notes that CONSOL, Inc., (CONSOL) was a member of a controlled group of corporations that were subsidiaries of the E.I. duPont de Nemours and Company (the DuPont Group) prior to November 1998. However, after such date, CONSOL was no longer a member of the DuPont Group. Therefore, the applicant wishes to clarify that the assets of the Plans are no longer held in the DuPont Trust. In addition, the applicant notes that DCMC's investment management services to employee benefit plans that are sponsored by corporations that are part of the DuPont Group is not relevant to CONSOL and the subject transactions described in the proposal.
Second, the applicant notes that footnote 14 in the Summary, reference is made to PTE 2001-05, 66 FR 7789 (January 25, 2001). The information therein states that PTE 2001-05 was not effective at the time of the subject transactions. The applicant represents that if PTE 2001-05 had been in effect at the time of the subject transactions the exemption would not have provided relief. In this regard, the applicant notes that PTE 2001-05 only provides relief for prohibited transactions where the counterparty's party in interest status results solely from being a service provider to the Plan. In the present case, the counterparty's status as a party in interest results from an ownership affiliation with an employer whose employees are covered by the Plan.
The Department acknowledges all of the applicant's comments and clarifications to the information contained in the Summary.
Finally, the Department also received seven written inquiries and over one hundred telephone calls from interested persons concerning the Proposal. All of the telephone calls and written inquiries requested additional information regarding the transactions and their possible affect on benefits payable to the appropriate Plan participants. The Department responded to each inquiry by telephone and attempted to address the concerns that were raised. None of the additional comments made to the Department offered any specific suggestions for changes to the Proposal.
No other comments were received by the Department. Accordingly, the Department has determined to grant the exemption, as clarified herein.
Brian Buyniski of the Department at (202) 693-8545. (This is not a toll-free number).
The restrictions of section 406(a)(1)(A) through (D) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A) through (D) of the Code,
This exemption is subject to the conditions contained below in Sections II, III, and IV.
(a) Neither the Borrower nor any of its affiliates shall have discretionary authority or control with respect to the investment of Plan assets involved in the transaction, or renders investment advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to such assets.
(b) Each Plan receives from the Borrower, either by physical delivery or by book entry in a securities depository located in the United States, by the close of business on the day on which the securities lent are delivered to the Borrower, collateral consisting of U.S. currency, securities issued or guaranteed by the United States
(c) Each loan is made pursuant to a written loan agreement (the Loan Agreement), which may be in the form of a master agreement covering a series of securities lending transactions, and which contains terms at least as favorable to the Plan as those the Plan could obtain in an arm's length transaction with an unrelated party.
(d) In return for lending securities, each Plan either (1) receives a reasonable fee which is related to the value of the borrowed securities and the duration of the loan, or (2) has the opportunity to derive compensation through the investment of cash collateral. In the latter case, the Plan may pay a loan rebate or similar fee to the Borrower, if such fee is not greater than the Plan would pay an unrelated party in a comparable arm's length transaction with an unrelated party.
(e) Each Plan receives at least the equivalent of all distributions made to holders of the borrowed securities during the term of the loan, including, but not limited to, cash dividends, interest payments, shares of stock as a result of stock splits and rights to purchase additional securities that the Plan would have received (net of tax withholdings)
(f) If the market value of the collateral on the close of trading on a business day falls below 100 percent of the market value of the borrowed securities at the close of trading on that day, the Borrower delivers additional collateral, by the close of business on the following business day to bring the level of the collateral back to at least 100 percent of the market value of all the borrowed securities as of such preceding day. Notwithstanding the foregoing, part of the collateral may be returned to the Borrower if the market value of the collateral exceeds 100 percent of the market value of the borrowed securities, as long as the market value of the remaining collateral equals at least 100 percent of the market value of the borrowed securities.
(g) Prior to entering into a Loan Agreement, the Borrower furnishes to the independent fiduciary for the Plan who is making decisions on behalf of the Plan with respect to the lending of securities: (1) the most recently available audited and unaudited statements of its financial condition; (2) the most recent available unaudited statement of the Borrower's financial condition; and (3) a representation by the Borrower that, as of each time it borrows securities, there has been no material adverse change in its financial condition since the date of the most recently furnished financial statement that has not been disclosed to the Plan fiduciary.
Such representation may be made by the Borrowers' agreeing that each loan shall constitute a representation by the Borrower that there has been no material adverse change in its financial condition since the date of the most recently furnished statements of financial condition.
(h) Each Loan Agreement and any securities loan outstanding may be terminated by the applicable Plan at any time, whereupon the Borrower delivers securities identical to the borrowed securities (or the equivalent thereof in the event of reorganization, recapitalization, or merger of the issuer of the borrowed securities) to the Plan within (1) the customary delivery period for such securities; (2) five business days; or (3) the time negotiated for such delivery by the Plan and the Borrower, whichever is lesser, or, alternatively such period as permitted by Prohibited Transaction Class Exemption (PTE) 81-6 (43 FR 7527, January 23, 1981), as it may be amended or superseded.
(i) In the event that a loan is terminated and the Borrower fails to return the borrowed securities or the equivalent thereof within the time described in paragraph (h) above, then the Plan may purchase securities identical to the borrowed securities (or their equivalent as described above) and may apply the collateral to the payment of the purchase price, any other obligations of the Borrower under the Loan Agreement, and any expenses associated with any such sale and/or purchase. The Borrower indemnifies the Plan with respect to the difference, if any, between the replacement cost of the borrowed securities and the market value of the collateral on the date the loan is declared in default, together with expenses not covered by the collateral plus applicable interest at a reasonable rate. Notwithstanding the foregoing, the Borrower, may, in the event it fails to return borrowed securities ad described above, replace non-cash collateral with an amount of cash not less than the then-current market value of the collateral, provided that such replacement is approved by the independent plan fiduciary.
(j) Each Plan maintains the situs of any Loan Agreement in accordance with the indicia of ownership requirements under section 404(b) of the Act and the regulations promulgated under 29 CFR 2550.404(b)-1. However, the Borrower shall not be subject to the civil penalty, which may be assessed pursuant to section 502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the Code, if the Plan fails to comply with the requirements of 29 CFR 2550.404(b)-1.
If the Borrower fails to comply with any condition of this exemption in the course of engaging in a securities lending transaction, the Plan fiduciary which caused the Plan to engage in such transaction shall not be deemed to have caused the Plan to engage in a transaction prohibited by section 406(a)(1)(A) through (D) of the Act solely by reason of the failure on the part of the Borrower to comply with the conditions of the exemption.
(k) Prior to any Plan's approval of any transaction with the Borrower, the Plan is provided copies of the proposed and final exemptions covering the exemptive relief described herein.
(a) For each Plan, neither the Borrower nor any affiliate has or exercises discretionary authority or control over the Plan's investment in the securities available for loan, nor do they render investment advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to those assets.
(b) The Borrower is a party in interest with respect to each Plan (including a fiduciary) solely by reason of providing services to the Plan, or solely by reason of a relationship to a service provider described in section 3(14)(F), (G), (H), or (I) of the Act.
(c) The Borrower directly negotiates an exclusive borrowing agreement (the Borrowing Agreement) with a Plan fiduciary which is independent of the Borrower and its affiliates.
(d) The terms of each loan of securities by a Plan to the Borrower are at least as favorable to such Plan as those of a comparable arm's length transaction between unrelated parties, taking into account the exclusive arrangement.
(e) In exchange for granting the Borrower the exclusive right to borrow certain securities, each Plan will receive from the Borrower either (1) a flat fee (which may be equal to a percentage of the value of the total securities subject to the Borrowing Agreement from time to time); (2) a periodic payment that is equal to a percentage of the value of the total balance of outstanding borrowed securities; or (3) any combination of (1) and (2) (collectively, the Exclusive Fee). If the Borrower deposits cash collateral, all the earnings generated by such cash collateral shall be returned to the Borrower; provided that the Borrower may, but shall not be obligated to, agree with the independent fiduciary of the applicable Plan that a percentage of the earnings on the collateral may be retained by the Plan or the Plan may agree to pay the Borrower a rebate fee and retain the earnings on the collateral (the Shared Earnings Compensation). If the Borrower deposits non-cash collateral, all earnings on the non-cash collateral shall be returned to the Borrower; provided that the Borrower may, but shall not be obligated to, agree to pay the applicable Plan a lending fee (the Lending Fee, together with the Shared Earnings Compensation, the Transaction Lending Fee). The Transaction Lending Fee, if any, shall be either in addition to the Exclusive Fee or an offset against such Exclusive Fee. The Exclusive Fee and the Transaction Lending Fee may be determined in advance or pursuant to an objective formula, and may be different for different securities or different groups of securities subject to the Borrowing Agreement. Any change in the Exclusive Fee or the Transaction Lending Fee that the Borrower pays to the Plan with respect to any securities loan requires the prior written consent of the independent fiduciary of the Plan, except that consent is presumed where the Exclusive Fee or the Transaction Lending Fee changes pursuant to an objective formula. Where the Exclusive Fee or the Transaction Lending Fee changes pursuant to an objective formula, the independent fiduciary of the Plan must be notified at least 24 hours in advance of such change and such independent Plan fiduciary must not object in writing to such change, prior to the effective time of such change.
(f) The Borrower may, but shall not be required to, agree to maintain a minimum balance of borrowed securities subject to each Borrowing Agreement. Such minimum balance may be a fixed U.S. dollar amount, a flat percentage or other percentage determined pursuant to an objective formula.
(g) By the close of business on or before the day the loaned securities are delivered to the Borrower, each Plan shall receive from the Borrower (by physical delivery, book entry in a securities depository located in the United States, wire transfer, or similar means) collateral consisting of U.S. currency, securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, irrevocable bank letters of credit issued by a U.S. bank other than SEB or any affiliate thereof, or any combination thereof, or other collateral permitted under Prohibited Transaction Exemption 81-6, as amended or superseded. Such collateral will be deposited and maintained in an account which is separate from the Borrower's accounts and will be maintained with an institution other than the Borrower. For this purpose, the collateral may be held on behalf of a Plan by an affiliate of the Borrower that is the trustee or custodian of such Plan.
(h) The market value (or in the case of a letter of credit, the stated amount) of the collateral initially equals at least 102 percent of the market value of the loaned securities on the close of business on the day preceding the day of the loan, and, if the market value of the collateral at any time falls below 100 percent (or such higher percentage as the Borrower and the independent fiduciary of a Plan may agree upon) of the market value of the loaned securities, the Borrower delivers additional collateral on the following day to bring the level of the collateral back to at least 102 percent. The level of the collateral is monitored daily by each Plan or its designee, which may be SEB or any of its affiliates which provides custodial or directed trustee services in respect of the securities covered by the applicable Borrowing Agreement. Such Borrowing Agreement shall give the applicable Plan title to the collateral until such collateral is redelivered to SEB pursuant to the terms of the Borrowing Agreement.
(i) Before entering into any Borrowing Agreement, the Borrower furnishes to the applicable Plan the most recent publicly available audited and unaudited statements of its financial condition, as well as any publicly available information which it believes is necessary for the independent fiduciary to determine whether the Plan should enter into or renew the Borrowing Agreement.
(j) Each Borrowing Agreement contains a representation by the Borrower that as of each time it borrows securities, there has been no material adverse change in its financial condition since the date of the most recently furnished statements of financial condition.
(k) Each Plan receives at least the equivalent of all distributions made during the applicable loan period, including, but not limited to, cash dividends, interest payments, shares of stock as a result of stock splits, and rights to purchase additional securities, that the Plan would have received (net of tax withholdings)
(l) Each Borrowing Agreement and any outstanding securities loans with respect thereto may be terminated by either party at any time without penalty (except for, if a Plan has terminated its Borrowing Agreement, the return to the Borrower of a pro rata portion of the Exclusive Fee paid by the Borrower to the Plan), whereupon the Borrower returns any borrowed securities (or the equivalent thereof in the event of reorganization, recapitalization, or merger of the issuer of the borrowed securities) to the applicable Plan within the lesser of five business days of written notice of termination or the customary settlement period for such securities.
(m) In the event that the Borrower fails to return securities in accordance with a Borrowing Agreement, the applicable Plan will have the right under the Borrowing Agreement to purchase securities identical to the borrowed securities and apply the collateral to payment of the purchase price. If the collateral is insufficient to satisfy the Borrower's obligation to return the Plan's securities, the Borrower will indemnify the Plan in the U.S. with respect to the difference between the replacement cost of the securities and the market value of the collateral on the date the loan is declared in default, together with expenses incurred by the Plan plus applicable interest at a reasonable rate, including reasonable attorneys' fees incurred by the Plan for legal action arising out of default on the loans, or failure by the Borrower to properly
(n) Except as otherwise provided herein, all procedures regarding the securities lending activities, at a minimum, conform to the applicable provisions of PTE 81-6 (as amended or superseded), as well as to applicable securities laws of the United States and Sweden, as appropriate.
(o) Only Plans with total assets having an aggregate market value of at least $50 million are permitted to lend securities to the Borrower; provided, however, that—
(1) In the case of two or more Plans which are maintained by the same employer, controlled group of corporations or employee organization, whose assets are commingled for investment purposes in a single master trust or any other entity the assets of which are “plan assets” under 29 CFR 2510.3-101 (the Plan Asset Regulation), which entity is engaged in securities lending arrangements with the Borrower, the foregoing $50 million requirement shall be deemed satisfied if such trust or other entity has aggregate assets which are in excess of $50 million; provided that, if the fiduciary responsible for making the investment decision on behalf of such master trust or other entity is not the employer or an affiliate of the employer, such fiduciary has total assets under its management and control, exclusive of the $50 million threshold amount attributable to plan investment in the commingled entity, which are in excess of $100 million.
(2) In the case of two or more Plans which are not maintained by the same employer, controlled group of corporations or employee organization, whose assets are commingled for investment purposes in a group trust or any other form of entity the assets of which are “plan assets” under the Plan Asset Regulation, which entity is engaged in securities lending arrangements with the Borrower, the foregoing $50 million requirement is satisfied if such trust or other entity has aggregate assets which are in excess of $50 million (excluding the assets of any Plan with respect to which the fiduciary responsible for making the investment decision on behalf of such group trust or other entity or any member of the controlled group of corporations including such fiduciary is the employer maintaining such Plan or an employee organization whose members are covered by such Plan). However, the fiduciary responsible for making the investment decision on behalf of such group trust or other entity—
(i) Has full investment responsibility with respect to plan assets invested therein; and
(ii) Has total assets under its management and control, exclusive of the $50 million threshold amount attributable to plan investment in the commingled entity, which are in excess of $100 million. (In addition, none of the entities described above are formed for the sole purpose of making loans of securities.)
(p) Prior to any Plan's approval of the lending of its securities to the Borrower, a copy of this exemption and the notice of pendency is provided to the Plan, and the Borrower informs the independent fiduciary that the Borrower is not acting as a fiduciary of the Plan in connection with its borrowing securities from the Plan.
(q) The independent fiduciary of each Plan shall receive monthly reports with respect to the securities lending transactions, including but not limited to the information set forth in the following sentence, so that an independent Plan fiduciary may monitor such transactions with the relevant Borrower. The monthly report will list for a specified period all outstanding or closed securities lending transactions. The report will identify for each open loan position, the securities involved, the value of the security for collateralization purposes, the current value of the collateral, the rebate or premium (if applicable) at which the security is loaned, and the number of days the security has been on loan. At the request of a Plan, such a report will be provided on a daily or weekly basis, rather than a monthly basis. Also, upon request of a Plan, the relevant Borrower will provide the Plan with daily confirmations of securities lending transactions. SECTION IV.
(a) In addition to the above conditions, all loans involving the Borrower must satisfy the following supplemental requirements:
(1) The Borrower is a bank which is subject to regulation by the Swedish Financial Supervisory Authority (Finansin-spektionen).
(2) The Borrower is in compliance with all applicable provisions of Rule 15a-6 (17 CFR 240.15a-6) under the Securities Exchange Act of 1934, as amended which provides foreign broker-dealers a limited exception from United States registration requirements.
(3) All collateral is maintained in United States dollars or in U.S. dollar-denominated securities or letters of credit, or other collateral permitted under PTE 81-6 (as amended or superseded).
(4) All collateral is held in the United States and the situs of the applicable Borrowing Agreement is maintained in the United States under an arrangement that complies with the indicia of ownership requirements under section 404(b) of the Act and the regulations promulgated under 29 CFR 2550.404(b)-1.
(5) Prior to entering into a transaction involving the Borrower, the Borrower must:
(i) Agree to submit to the jurisdiction of the United States;
(ii) Agree to appoint an agent for service of process in the United States, which may be an affiliate (the Process Agent);
(iii) Consent to the service of process on the Process Agent; and
(iv) Agree that enforcement by a Plan of the indemnity provided by the Borrower will occur in the United States courts.
(b) The Borrower maintains, or causes to be maintained, within the United States for a period of six years from the date of such transaction, in a manner that is convenient and accessible for audit and examination, such records are necessary to enable the persons described in paragraph (c)(1) to determine whether the conditions of the exemption have been met, except that—
(1) A prohibited transaction will not be considered to have occurred if, due to circumstances beyond the control of SEB and/or its affiliates, the records are lost or destroyed prior to the end of the six year period; and
(2) No party in interest other than the Borrower shall be subject to the civil penalty that may be assessed under section 502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the Code, if the records are not maintained, or are not available for examination as required below by paragraph (c)(1).
(c)(1) Except as provided in subparagraph (c)(2) of this paragraph and not withstanding any provisions of subsections (a)(2) and (b) of section 504 of the Act, the records referred to in paragraph (b) are unconditionally available at their customary location or
(i) Any duly authorized employee or representative of the Department, the Internal Revenue Service or the Securities and Exchange Commission;
(ii) Any fiduciary of a participating Plan or any duly authorized representative of such fiduciary;
(iii) Any contributing employer to any participating Plan or any duly authorized employee representative of such employer; and
(iv) Any participant or beneficiary of participating Plan, or any duly authorized representative of such participant or beneficiary.
(2) None of the persons described above in paragraphs (c)(1)(ii)-(t)(1)(iv) of this paragraph (c)(1) are authorized to examine the trade secrets of SEB or its affiliates or commercial or financial information which is privileged or confidential.
(a) An “affiliate” of a person means:
(1) Any person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the person. (For purposes of this paragraph, the term “control” means the power to exercise a controlling influence over the management or policies of a person other than an individual);
(2) Any officer, director, employee or relative (as defined in section 3(15) of the Act) of any such other person or any partner in any such person; and
(3) Any corporation or partnership of which such person is an officer, director or employee, or in which such person is a partner.
(b) The term “borrower” includes SEB and any other affiliate of SEB that now or in the future, is a U.S. registered broker-dealer or a government securities broker or dealer or U.S. bank.
For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the notice of proposed exemption (the Notice) published on May 5, 2003 at 68 FR 23768.
The Department received one written comment with respect to the Notice. The comment letter, which was submitted on behalf of SEB by its outside legal counsel, is intended to modify the Summary of Facts and Representations (the Summary) of the Notice, as discussed below.
1.
2.
3.
* * * Thus, the Applicant concludes that the Plan can bring an enforcement action, often under an expedited procedure, on a foreign money judgment in New York to attach the assets of SEB's New York branch located in New York.
The Department concurs with SEB's comments and suggested changes, and it takes note of the foregoing revisions to the Notice. In addition, the Department has revised Footnote 4 of the operative language to reflect the correct footnote reference.
Accordingly, after giving full consideration to the entire record, including SEB's written comment, the Department has decided to grant the exemption, as modified herein.
For further information regarding the comment and other matters discussed herein, interested persons are encouraged to obtain copies of the exemption application file (Exemption Application No. D-11133) the Department is maintaining in this case. The complete application file, as well as all supplemental submissions received by the Department, are made available for public inspection in the Public Documents Room of the Employee Benefits Security Administration, Room N-1513, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210.
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption under section 408(a) of the Act and/or section 4975(c)(2) of the Code does not relieve a fiduciary or other party in interest or disqualified person from certain other provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of the Act, which among other things require a fiduciary to discharge his duties respecting the plan solely in the interest of the participants and beneficiaries of the plan and in a prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it affect the requirement of section 401(a) of the Code that the plan must operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries;
(2) This exemption is supplemental to and not in derogation of, any other provisions of the Act and/or the Code, including statutory or administrative exemptions and transactional rules. Furthermore, the fact that a transaction is subject to an administrative or statutory exemption is not dispositive of whether the transaction is in fact a prohibited transaction; and
(3) The availability of this exemption is subject to the express condition that the material facts and representations contained in the application accurately describes all material terms of the transaction which is the subject of the exemption.
Employee Benefits Security Administration, Department of Labor.
Grant of individual exemption to replace PTE 97-63.
This document contains a final exemption before the Department of Labor (the Department) which replaces PTE 97-63 (62 FR 66689, December 19, 1997). This exemption permits securities lending transactions between State Street, its United States (U.S.) domiciled affiliates, and certain employee benefit plans (the Client Plan(s)) and/or commingled investment funds holding plan assets (CIF(s)); provided State Street, through any division or U.S. affiliate of State Street or of its parent acts as securities lending agent (or sub-agent). This exemption also permits receipt of compensation by a U.S. registered introducing broker affiliated with State Street (the Introducing Broker) in connection with an arrangement whereby securities are lent to an unrelated U.S. registered broker-dealer (the Clearing Broker) who in turn lends such securities to clients of the Introducing Broker; provided that certain conditions are satisfied.
In addition, this exemption incorporates various modifications to specific terms and conditions of PTE 97-63. The replacement of PTE 97-63 affects the participants and beneficiaries of the Client Plans participating in securities lending transactions and the fiduciaries with respect to such Client Plans.
This exemption is effective as of February 6, 2003, the date when the Notice of Proposed Exemption (the Notice) was published in the
Ms. Angelena C. Le Blanc, Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor, telephone number (202) 693-8540. (This is not a toll-free number.)
On February 6, 2003, the Department published in the
PTE 97-63 provides an exemption from certain prohibited transaction restrictions of section 406 of the Act and from the sanctions resulting from the application of section 4975 of the Code, as amended, by reason of section 4975(c)(1) of the Code. Specifically, PTE 97-63 provides relief from the restrictions of sections 406(a)(1)(A) through (D), 406(b)(1), and 406(b)(2) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, for:
(1) The lending of securities to State Street, acting through its Financial Markets Group (FMG) (formerly the Money Market Division of the Capital Markets Area) or acting through any other division or U.S. affiliate of State Street that is a successor to the activities of FMG; and for the lending of securities to any U.S. registered broker-dealer affiliated with State Street (the Affiliated Broker Dealer(s)) by certain Client Plans (the Client Plans or the Client Plan), including commingled investment funds holding plan assets, for which State Street, through its Master Trust Services Division, acts as directed trustee or custodian, and for which State Street, through its Global Securities Lending Division or any other similar division of State Street or U.S. affiliate of State Street or of its parent (collectively, GSL) acts as securities lending agent (or sub-agent), and (2) the receipt of compensation by GSL in connection with such securities lending transactions; provided that certain conditions are satisfied.
The exemption was requested in an application filed on behalf of State Street and its U.S. affiliates (the Applicants), pursuant to section 408(a) of the Employee Retirement Income Security Act of 1974 (the Act) and section 4975(c)(2) of the Internal Revenue Code of 1986 (the Code), and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990). Effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (5 U.S.C. App. 1, 1995) transferred the authority of the Secretary of the Treasury to issue exemptions of the type requested to the Secretary of Labor. Accordingly, this final exemption is issued solely by the Department.
In the notice, the Department invited all interested persons to submit written comments and/or requests for hearing on the proposed replacement of PTE 97-63 within forty-five (45) days of the date of the publication of the Notice in the
By letter dated April 30, 2003, the Applicants confirmed that a copy of a cover letter, a copy of the Notice, and a copy of the Supplemental Statement (the Supplemental Statement), as described at 29 CFR 2570.43(b)(2) of the Department's regulations, were delivered by first class mail on or before February 21, 2003, to each known sponsor of a Client Plan that on that date was a direct client of GSL, informing the sponsors of such Client Plans of the right to comment and/or request a hearing by March 24, 2003. Such Client Plans are interested persons with respect to the transactions which are the subject of this exemption.
In a telephone conversation on February 20, 2003, the Applicants identified other interested persons with respect to the transactions which are the subject of this exemption. In this regard, the Applicants informed the Department that a Client Plan which participates in an index fund (the Index Fund(s)) or a model-driven fund (the Model-Driven Fund(s)) managed by State Street or any division or U.S. affiliate of State Street would also be an interested person. The Applicants further indicated that notification to Client Plans that participate in Index Funds or Model-Driven Funds, including a copy of the cover letter, a copy of the Notice, and a copy of the Supplemental Statement, would not be mailed until March 6, 2003. In light of the fact that the notification to the Client Plans that participate in Index Funds or Model-Driven Funds managed by State Street or any division or U.S. affiliate of State Street would not be provided until March 6, 2003, and in order to give all interested persons the benefit of the full thirty (30) day comment period the Department required, and the Applicants agreed to, an extension until April 10, 2003, of the deadline when comments and/or requests for hearing would be due on the proposed exemption.
In a telephone conversation on April 3, 2003, the Applicants informed the Department that: (1) The notification to some Client Plans that participate in Index Funds or Model-Driven Funds managed by State Street or any division or U.S. affiliate of State Street was mailed on March 7, 2003, rather than on March 6, 2003; (2) the notification indicated that the comment period would close on April 7, 2003, rather than April 10, 2003, as agreed to by the Applicants; and (3) a cover letter attached to the notification included a few sentences that deviated from the form of the cover letter that had been previously approved by the Department.
In light of the above, and in order to give all interested persons an opportunity to comment and/or request
In order to give all interested persons the benefit of the full thirty (30) day comment period the Department required, and the Applicants agreed to, an extension until May 15, 2003, of the deadline when comments and/or requests for hearing would be due on the proposed exemption.
The Applicants confirmed by letter dated April 30, 2003, that a copy of the cover letter and a copy of the Supplemental Statement were delivered by first class mail on or before April 15, 2003, to each known sponsor of a Client Plan that on that date was invested in an Index Fund or Model-Driven Fund that was authorized to engage in securities lending activities and was managed by State Street or any division or U.S. affiliate of State Street. The sponsors of such Client Plans were informed of the right to comment and/or request a hearing by May 15, 2003.
During the comment period the Department received no requests for a hearing. However, the Department did receive several comment letters from the Applicants. In this regard, in a letter dated March 7, 2003, the Applicants requested certain changes to the operant language of the exemption, as published in the Notice. Subsequently, in letters dated April 1, April 30, and May 21, 2003, the Applicants clarified the position taken in their March 7, 2003, comment letter.
A discussion of the points raised in the Applicants' comment letters, as clarified, and the Department's response, thereto are set forth in the numbered paragraphs below.
1. The Applicants requested an amendment to the language of section II(e) of the exemption. In this regard, the Applicants asked that the words, “on the following day,” as set forth in the Notice, on page 6202, column 3, line 20, be revised to read “on the following business day.” The Applicants maintain that this change would be consistent with both the corresponding references to “business day,” in section II(e) of the Notice, on page 6202, column 3, on lines 8 and 13, and consistent with the practical realities of operating a securities lending program.
The Department concurs and in the final exemption has amended the language of section II(e), accordingly.
2. The Applicants requested that the exemption be modified to permit the indemnification required by section II(g) of the exemption to be provided by State Street's parent corporation. In this regard, the Applicants asked that the phrase, “State Street will agree to indemnify,” as set forth in section II(g) of the notice, on page 6202, column 3, line 41, be revised to read “State Street or its parent corporation will agree to indemnify.” Subsequently, in a letter, dated April 1, 2003, State Street withdrew the request.
The Department concurs with the withdrawal of the Applicants' request.
3. The Applicants requested a change in the language of section II(j)(1) and section II(j)(2), as set forth in the notice, in the following locations:
(a) In section II(j)(1) on page 6203, column 1, lines 39-40;
(b) in section II(j)(2) on page 6203, column 1, lines 64-66; and
(c) in section II(j)(2) on page 6203, column 2, lines 4-6. In this regard, the Applicants, asked that in each of these locations the phrase, “the fiduciary responsible for making the investment decision,” be revised in the final exemption to read, “the fiduciary responsible for making the decision to authorize the Client Plan to engage in securities lending.” In the opinion of the Applicants, this change would more accurately describe the appropriate fiduciary contemplated in these sections and would also cause the fiduciary referred to in these provisions to be the same as the fiduciary referred to in other sections of the exemption (
In a letter dated, April 30, 2003, the Applicants submitted a revision of their requested wording of section II(j)(1) and (j)(2). In this regard, the Applicants believe that in the context of securities lending the revised wording would be consistent with the actual operation of entities (the Entities), as described in section II(j), including a master trust, a group trust, or other entity the assets of which are “plan assets” under 29 CFR 2510.3-101 of the Department's regulations. In particular, the Applicants believe that the language of section II(j) of the notice, as drafted, incorrectly focuses on the fiduciary who is responsible for making investment decisions on behalf of such Entities. In the opinion of the Applicants, the focus should be on the fiduciary who is making the decision to authorize such Entities to engage in securities lending, to retain GSL as the lending agent, and to authorize the loans made pursuant to the subject exemption, whether or not such fiduciary makes “investment decisions” with respect to the assets involved in the securities lending program. Accordingly, the Applicants propose that the language of section II(j), as set forth in the notice on page 6203, column 1, lines 40, 44, 47, 65-66; and on page 6203, column 2, lines 4-6, 8-11, and 14-15, be revised as set forth below. Words that have been stricken from the text of the notice appear in closed brackets, and additions to the text of the notice appear in bold italics.
(j) Only Client Plans with total assets having an aggregate market value of at least $50 million will be permitted to lend securities to the SSB Group or to the Clearing Broker, as applicable; provided, however that—
(1) In the case of two or more Client Plans which are maintained by the same employer, controlled group of corporations or employee organization, whose assets are commingled for investment purposes in a single master trust or any other entity the assets of which are “plan assets” under 29 CFR 2510.3-101 (the Plan Asset Regulation), which entity is engaged in a securities lending arrangement with GSL, the foregoing $50 million requirement shall be deemed satisfied, if such trust or other entity has aggregate assets which are in excess of $50 million; provided that if the fiduciary responsible for [making the investment decision]
(2) In the case of two or more Client Plans which are not maintained by the same
[(A) Has full investment responsibility with respect to plan assets invested therein; and
(B) Has]
The Department continues to believe that the appropriate focus in section II(j) is the investment manager of the Entities described therein, including a master trust, a group trust, or other entity the assets of which are “plan assets” under 29 CFR 2510.3-101 of the Department's regulations. Accordingly, the Department has not changed the language, section II(j), as set forth in the final exemption, with the exception that throughout section II(j), the terms, “Client Plan(s),” “employee benefit plan(s)” or “plan(s),” have been used where appropriate.
4. The Applicants have requested an amendment of the language of section II(p). Section II(p), as set forth in the notice, on page 6204, column 1, lines 8-28, reads as follows:
If an independent fiduciary of a Client Plan has given the initial affirmative authorization and approval for such plan to engage in securities lending transactions, pursuant to the terms of PTE 97-63, or pursuant to section II(b), above, of this exemption, then any subsequent authorization or approval contemplated under this exemption shall be deemed to have been given, if such independent fiduciary has not objected in writing to GSL within 30 days following disclosure to the independent fiduciary of all material information required in connection with said authorization or approval, a statement apprizing the independent fiduciary that PTE 97-63 has been replaced by this exemption, and a copy of this Notice, and a copy of the final exemption, if granted.
In this regard, the Applicants wish to clarify what information must be provided to independent fiduciaries in connection with any subsequent authorization or approval, pursuant to section II(p) of the subject exemption. It is the Applicants' view that only in the case of an independent fiduciary whose initial authorization was obtained pursuant to PTE 97-63 that the provision of the statement apprizing the independent fiduciary that PTE 97-63 has been replaced by the subject exemption and the disclosure of the additional information (
Accordingly, the Applicants requested that the language of section II(p), as set forth in the Notice, on page 6204, column 1, lines 23-28 be amended: (1) To insert a period between the word, “approval,” and the words, “a statement;” (2) to delete the phrase:
A statement apprizing the independent fiduciary that PTE 97-63 has been replaced by this exemption, and a copy of this Notice, and a copy of the final exemption, if granted;
In the case of an independent fiduciary whose initial authorization was pursuant to PTE 97-63, the independent fiduciary should, in connection with its initial authorization to lend securities pursuant to this exemption, be provided a statement indicating that PTE 97-63 has been replaced by this exemption, a copy of this notice, and a copy of the final exemption, if granted.
Subsequently, based upon a conversation with the Department, the Applicants in a letter dated April 1, 2003, substituted the following revised wording for the language quoted in item (3), above:
In addition, before an independent fiduciary, whose initial authorization was given pursuant to PTE 97-63, may give its first subsequent authorization or approval under this exemption in accordance with the procedures contained in this section II(p), such independent fiduciary must be provided with a statement indicating that PTE 97-63 has been replaced by this exemption, a copy of this Notice, and a copy of the final exemption, if granted.
In order to maintain consistent language throughout the exemption, the Department has determined in the final exemption to adopt the following wording for section II(p):
In addition, before an independent fiduciary of a Client Plan (and/or the independent fiduciary of a CIF, as applicable), whose initial authorization was given pursuant to PTE 97-63, may give its first subsequent authorization or approval under this exemption in accordance with the procedures contained in this section II(p), such independent fiduciary must be provided with a statement indicating that PTE 97-63 has been replaced by this exemption, and a copy of the Notice, and a copy of the final exemption.
5. The Applicants requested amendment of the language of section II(a), section III(d), and section III(e), as set forth in the Notice, in the following locations:
(a) In section II(a) on page 6202, column 1, line 9;
(b) In section III(d) on page 6205, column 2, line 11; and
(c) In section III(e) on page 6205, column 2, line 43.
Specifically, the Applicants requested that the phrase, “managed by,” in section II(a) be revised to read “trusteed, managed, or advised by.” Further, in section III(d) and in section III(e), the Applicants requested the phrase, “trusteed, or managed by” should be revised (in both instances) to read, “trusteed, managed, or advised by.” As support for the requested changes, the Applicants point out that State Street would have even less discretionary authority with respect to an Index Fund or a Model-Driven Fund that is “advised by” State Street, as compared to the minimal degree of discretionary authority that State Street has with respect to such a fund that is “managed by” State Street.
Subsequently, in a letter dated, May 21, 2003, the Applicants withdrew their previous request and proposed that the language of section II(a), as set forth in the Notice on page 6201, column 3, lines 57-59 and on page 6202, column 1, lines 1-11, be revised as set forth below. Words that have been stricken from the text of the Notice appear in closed brackets, and additions to the text of the notice appear in bold italics.
Section II(a) of this exemption will be deemed satisfied notwithstanding the fact that State Street or any division or affiliate of State Street has or exercises discretionary authority or control [or renders investment advice] in connection with an index fund (the Index Fund(s)), as defined, below, in section III(d) of this exemption, or a model-driven fund (the Model-Driven Fund(s)), as defined, below, in section III(e) of this exemption, [managed by]
The Department concurs and in the final exemption has amended the language of section II(a), as requested in the May 21, 2003, letter from the Applicants. In addition, in order to maintain consistent language throughout the exemption, the Department has determined to make a conforming changes to the definition of the term, “Index Fund(s),” as set forth in the notice in section III(d) on page 6205, column 2, line 11; and in the definition of the term, “Model-Driven Fund(s),” as set forth in the notice in section III(e) on page 6205, column 2, line 43. Accordingly, in the final exemption, the Department has adopted the following language for section III(d) and section III(e). Words that have been stricken from the text of the notice appear in closed brackets, and additions to the text of the notice appear in bold italics.
II(d) The term, “Index Fund(s),” refers to any investment fund, account or portfolio [sponsored, maintained, trusteed, or managed by]
(1) which is designed to track the rate of return, risk profile, and other characteristics of an Index, as defined, below, in section III(f) of this exemption, by either:
(A) replicating the same combination of securities which compose such Index, or
(B) sampling the securities which compose such Index based on objective criteria and data;
(2) for which State Street or its affiliate does not use its discretion, or data within its control, to affect the identity or amount of securities to be purchased or sold;
(3) that contains “plan assets” subject to the Act, pursuant to the Plan Asset Regulation; and
(4) that involves no agreement, arrangement, or understanding regarding the design or operation of the fund which is intended to benefit State Street or its affiliate or any party in which State Street or its affiliate may have an interest;
II(e) The term, “Model-Driven Fund(s),” refers to any investment fund, account, or portfolio [sponsored, maintained, trusteed, or managed by]
(1) which is composed of securities the identity of which and the amount of which are selected by a computer model that is based on prescribed objective criteria using independent third-party data, not within the control of State Street or an affiliate, to transform an Index;
(2) which contains “plan assets” subject to the Act, pursuant to the Plan Asset Regulation; and
(3) that involves no agreement, arrangement, or understanding regarding the design or operation of the fund or the utilization of any specific objective criteria which is intended to benefit State Street, any affiliate of State Street, or any party in which State Street or any affiliate may have an interest;
6. The Department notes that the subject exemption provides relief for the lending of securities by a Client Plan or Client Plans (and/or by a CIF or CIFs, as applicable); provided State Street, through GSL, acts as securities lending agent. In order to describe the subject transaction with more clarity, the Department has decided to change the language of section I, as set forth in the notice at the following locations: (a) In section I(a)(2) on page 6201, column 2, line 58; (b) in section I(a)(2) on page 6201, column 3, line 2; and (c) in section I(c) on page 6201, column 3, lines 31-32. Accordingly, in the final exemption, the Department has adopted the following language for section I(a)(2)) and section I(c). Words that have been stricken from the text of the notice appear in closed brackets, and additions to the text of the notice appear in bold italics.
I(a)(2) to any U.S. registered broker-dealers affiliated with State Street (the Affiliated Broker Dealer(s)); by an employee benefit plan (the Client Plan(s)),[including any]
I(c) the restrictions of section 406 of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of 4975(c)(1) of the Code shall not apply to an arrangement whereby a U.S. registered broker-dealer affiliated with State Street (the Introducing Broker) receives compensation from
Further, throughout the notice, many references are made to the term, “Client Plan(s).” For some such references, the Department intended the term to include both a Client Plan and a CIF. For other such references, the Department intended the term only to refer to a Client Plan and not to a CIF. To eliminate ambiguity, the Department has determined to change the language, as set forth in the notice. Accordingly, throughout the final exemption, the Department has used the phrase, “a Client Plan (and/or a CIF, as applicable).”
For further information regarding the matters discussed herein, interested persons are encouraged to obtain copies of the exemption application file (Exemption Application No. D-11122) that the Department is maintaining in this case. The complete application file, as well as all supplemental submissions received from the Applicants by the Department are made available for public inspection in the Public Disclosure Room of the Employee Benefit Security Administration, Room N-1513, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210.
Accordingly, after giving full consideration to the entire record, the Department has decided to grant the exemption to replace PTE 97-63, as amended.
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption under section 408(a) of the Act and section 4975(c)(2) of the Code does not relieve a fiduciary or other party in interest or disqualified person from certain other provisions of the Act and the Code, including any prohibited transaction provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of the Act, which require, among other things, a fiduciary to discharge his or her duties respecting the plan solely in the interest of the participants and beneficiaries of the plan and in a prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it affect the requirements of section 401(a) of the Code that the plan operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries;
(2) In accordance with section 408(a) of the Act and section 4975(c)(2) of the Code, and the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990), and based upon the entire record, the Department finds that the exemption is administratively feasible, in the interest of the plan and of its participants and beneficiaries, and protective of the rights of participants and beneficiaries of the plan;
(3) This exemption is supplemental to, and not in derogation of, any other provisions of the Act and the Code, including statutory or administrative exemptions. Furthermore, the fact that a transaction is subject to an
(4) This exemption is subject to the express condition that the Summary of Facts and Representations, as set forth in the notice, and the Summary of Facts and Representations, as set forth in the notice of Proposed Exemption relating to PTE 97-63, accurately describe the material terms of the transactions to be consummated pursuant to this exemption.
Based on the facts and representations set forth in the application, under the authority of section 408(a) of the Employee Retirement Income Security Act of 1974 (the Act) and section 4975(c)(2) of the Internal Revenue Code of 1986 (the Code) and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990), the Department of Labor (the Department) hereby replaces Prohibited Transaction Exemption 97-63 (PTE 97-63), as set forth below.
(a) The restrictions of sections 406(a)(1)(A) through (D), 406(b)(1), and 406(b)(2) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of 4975(c)(1)(A) through (E) of the Code,
(1) to State Street Bank and Trust Company (State Street), acting through its Financial Markets Group (FMG) (formerly the Money Market Division of the Capital Markets Area) or acting through any other division or United States (U.S.) domiciled affiliate, as defined in this exemption in section III(a)(1), below, of State Street that is a successor to the activities of FMG; or
(2) to any U.S. registered broker-dealers affiliated with State Street (the Affiliated Broker Dealer(s));
(b) the restrictions of sections 406(a)(1)(A) through (D), 406(b)(1), and 406(b)(2) of the Act and the sanctions resulting from the application of section of 4975 of the Code, by reason of 4975(c)(1)(A) through (E) of the Code, shall not apply to the receipt of compensation by GSL in connection with any securities lending transaction, as described, above, in section I(a) of this exemption; and
(c) the restrictions of section 406 of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of 4975(c)(1) of the Code shall not apply to an arrangement whereby a U.S. registered broker-dealer affiliated with State Street (the Introducing Broker) receives compensation from a clearing broker (the Clearing Broker), as defined in section III(g), in connection with, or as a direct or indirect result of, the lending of securities to the Clearing Broker by a Client Plan (and/or a CIF, as applicable), for which GSL acts as securities lending agent; provided that the conditions, set forth in section II, below, are satisfied.
Section I of this exemption applies only if the conditions of Section II of this exemption are satisfied.
(a) Neither State Street, the SSB Group, GSL, the Clearing Broker, nor any other division or U.S. affiliate of State Street or of the Clearing Broker has or exercises discretionary authority or control with respect to the investment of the assets of a Client Plan (and/or a CIF, as applicable), involved in the transactions which are the subject of this exemption (other than with respect to the investment of cash collateral after securities have been loaned and collateral received), nor renders investment advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to such assets, including decisions concerning the acquisition or disposition of securities available for loan by a Client Plan (and/or a CIF, as applicable).
Section II(a) of this exemption will be deemed satisfied notwithstanding the fact that State Street or any division or affiliate of State Street has or exercises discretionary authority or control in connection with an index fund (the Index Fund(s)), as defined, below, in section III(d) of this exemption, or a model-driven fund (the Model-Driven Fund(s)), as defined, below, in section III(e) of this exemption, as to which State Street or any division or U.S. affiliate of State Street serves as discretionary trustee or manager and in which Client Plans (and/or CIFs, as applicable) invest. An Index Fund or a Model-Driven Fund with multiple Client Plan (and/or CIF, as applicable) investors is referred to herein as a commingled Index Fund or a commingled Model-Driven Fund (the Commingled Index Fund(s) or the Commingled Model-Driven Fund(s));
(b) Except as otherwise provided, below, in section II(q) of this exemption with respect to Commingled Index Funds or Commingled Model-Driven Funds, before a Client Plan (and/or a CIF, as applicable) participates in a securities lending program, and before any loan of securities to the SSB Group or the Clearing Broker is effected, pursuant to this exemption, the fiduciary of the Client Plan (and/or the fiduciary of the CIF, as applicable) who is independent of State Street, GSL, the SSB Group, the Clearing Broker, and any other division or affiliate of State Street or the Clearing Broker must have:
(1) Authorized and approved the securities lending authorization agreement with GSL (the Agency Agreement), where GSL is acting as the direct securities lending agent; or
(2) Authorized and approved the primary securities lending authorization agreement (the Primary Lending Agreement) with the primary lending agent, where GSL is lending securities under a sub-agency arrangement with the primary lending agent;
(3) Approved the general terms of the securities loan agreement (the Loan Agreement) between the Client Plan (and/or CIF, as applicable) and the SSB Group or the Clearing Broker, as applicable, the specific terms of which are negotiated and entered into by GSL;
(c)(1) Each Client Plan (and/or CIF, as applicable) may terminate the Agency Agreement or the Primary Lending Agreement at any time, without penalty to such Client Plan (and/or CIF, as applicable), on five (5) business days notice, whereupon the borrower shall deliver certificates for securities
(2) If any event of default occurs (
(d) Each Client Plan (and/or CIF, as applicable), including a Commingled Index Fund or Commingled Model-Driven Fund in which a Client Plan (and/or CIF, as applicable) invests will receive from the SSB Group or the Clearing Broker, as applicable, (either by physical delivery, or by book entry in a securities depository, wire transfer or similar means) by the close of business on or before the day the loaned securities are delivered to the SSB Group or the Clearing Broker, as applicable, collateral consisting of U.S. currency, securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, an irrevocable bank letter of credit issued by a person other than State Street, the Clearing Broker, or an affiliate thereof, or any combination thereof, or other collateral permitted under PTE 81-6 (as amended from time to time or, alternatively, any superseding class exemption that may be issued to cover securities lending by employee benefit plans). The collateral will be held on behalf of such Client Plan (and/or CIF, as applicable) in a manner that causes such collateral to be (i) segregated from and not commingled with the general assets of State Street, the Clearing Broker, or any of their affiliates, and (ii) identifiable and reachable by such Client Plan (and/or CIF, as applicable);
(e) The market value of the collateral (or in the case of a letter of credit the stated amount) must, as of the close of business on the preceding business day, initially equal at least 102 percent (102%) of the market value of the loaned securities. If the market value of the collateral, on the close of trading on a business day, is less than 100 percent (100%) (or such greater percentage as agreed to by the parties) of the market value of the loaned securities at the close of business on that day, the SSB Group or the Clearing Broker, as applicable, is required to deliver by the close of business on the following business day sufficient additional collateral such that the market value of the collateral will again equal at least 102 percent (102%). The applicable Loan Agreement will give Client Plans (and/or CIFs, as applicable), including a Commingled Index Fund or Commingled Model-Driven Fund in which a Client Plan (and/or CIF, as applicable) invests, a continuing security interest in, title to, or the rights of a secured creditor with respect to the collateral and a lien on the collateral. GSL will monitor the level of the collateral daily;
(f) All GSL's procedures regarding securities lending activities will at a minimum conform to PTE 81-6 and PTE 82-63 (as amended from time to time or, alternatively, any superseding class exemption that may be issued to cover securities lending by employee benefit plans);
(g) State Street will agree to indemnify and hold harmless each lending Client Plan (and/or CIF, as applicable) (including the sponsor and fiduciaries of each such Client Plan (and/or CIF, as applicable), and any Client Plan (and/or CIF, as applicable) invested in a Commingled Index Fund or Commingled Model-Driven Fund) against any and all damages, losses, liabilities, costs, and expenses (including attorneys' fees) which such Client Plan (and/or CIF, as applicable) may incur or suffer directly arising out of the lending of the securities to the SSB Group or the Clearing Broker, as applicable; provided that this condition does not require State Street to indemnify a Client Plan (and/or CIF, as applicable) against any potential investment losses associated with the investment of cash collateral received by such Client Plan (and/or CIF, as applicable) in connection with such securities lending transactions;
(h) Each Client Plan (and/or CIF, as applicable), including a Commingled Index Fund or Commingled Model-Driven Fund in which a Client Plan (and/or CIF, as applicable) invests, will receive the equivalent of all distributions made to holders of the borrowed securities during the term of any loan, including, but not limited to, cash dividends, interest payments, shares of stock as a result of stock splits and rights to purchase additional securities, or other distributions;
(i) Each Client Plan (and/or CIF, as applicable), including a Client Plan (and/or CIF, as applicable) invested in a Commingled Index Fund or Commingled Model-Driven Fund, will receive prior to any approval of the lending of securities to the SSB Group or the Clearing Broker, as applicable, a copy of the Notice of Proposed Exemption (the Notice), a copy of the final exemption, a copy of PTE 97-63, and a copy of the Notice of Proposed Exemption related to PTE 97-63 (the Previous Notice);
(j) Only Client Plans with total assets having an aggregate market value of at least $50 million will be permitted to lend securities to the SSB Group or to the Clearing Broker, as applicable; provided, however that—
(1) In the case of two or more Client Plans which are maintained by the same employer, controlled group of corporations or employee organization, whose assets are commingled for investment purposes in a single master trust or any other entity the assets of which are “plan assets” under 29 CFR 2510.3-101 (the Plan Asset Regulation), which entity is engaged in a securities lending arrangement with GSL, the foregoing $50 million requirement shall be deemed satisfied, if such trust or other entity has aggregate assets which are in excess of $50 million; provided that if the fiduciary responsible for making the investment decision on behalf of such master trust or other entity is not the employer or an affiliate of the employer, such fiduciary has total assets under its management and control, exclusive of the $50 million threshold amount attributable to Client
(2) In the case of two or more Client Plans which are not maintained by the same employer, controlled group of corporations or employee organization, whose assets are commingled for investment purposes in a group trust or any other form of entity the assets of which are “plan assets” under the Plan Asset Regulation, which entity is engaged in a securities lending arrangement with GSL, the foregoing $50 million requirement is satisfied, if such trust or other entity has aggregate assets which are in excess of $50 million (excluding the assets of any employee benefit plan with respect to which the fiduciary responsible for making the investment decision on behalf of such group trust or other entity or any member of the controlled group of corporations including such fiduciary is the employer maintaining such plan or an employee organization whose members are covered by such plan). However, the fiduciary responsible for making the investment decision on behalf of such group trust or other entity—
(A) Has full investment responsibility with respect to plan assets invested therein; and
(B) Has total assets under its management and control, exclusive of the $50 million threshold amount attributable to Client Plan investment in the commingled entity, which are in excess of $100 million.
(3) In the case of two or more Client Plans whose assets are commingled for investment purposes in an entity, whether or not through an entity described, above, in section II(j)(1) or (j)(2) of this exemption, the $50 million requirement shall be deemed satisfied if 50 percent (50%) or more of the units of beneficial interest in such entity are held by investors each having total net assets of at least $50 million. Such investors may include employee benefit plans, entities described, above, in section II(j)(1) or (j)(2) of this exemption, or other investors that are not employee benefit plans covered by section 406 of the Act, or section 4975 of the Code.
In addition, none of the entities described above are formed for the sole purpose of making loans of securities;
(k) The terms of each loan of securities by a Client Plan (and/or by a CIF, as applicable), including by a Commingled Index Fund or Commingled Model-Driven Fund in which a Client Plan (and/or CIF, as applicable) invests, to the SSB Group or the Clearing Broker, as applicable, will be at least as favorable to such Client Plan (and/or CIF, as applicable) or to the Commingled Index Fund or Commingled Model-Driven Fund in which a Client Plan (and/or CIF, as applicable) invests, as those of a comparable arm's-length transaction between unrelated parties;
(l) Each Client Plan (and/or CIF, as applicable), including a Client Plan (and/or CIF, as applicable) invested in a Commingled Index Fund or Commingled Model-Driven Fund, will receive quarterly reports with respect to the securities lending transactions which are the subject of this exemption, including but not limited to the information described in paragraph 26 of the Previous Notice, so that an independent fiduciary of the Client Plan (and/or CIF, as applicable) may monitor the securities lending transactions with the SSB Group and, if applicable, the Clearing Broker. In the event the identity of the Clearing Broker has changed since the issuance of the report for the immediately preceding calendar quarter, the report for the current calendar quarter must contain the name of the new Clearing Broker and the most recently available audited and unaudited financial statements of such Clearing Broker;
(m) Except in the case of a Commingled Index Fund or Commingled Model-Driven Fund subject to the requirements, as set forth, below, in section II(q) of this exemption, before entering into the Loan Agreement and before a Client Plan (and/or a CIF, as applicable) lends any securities to the SSB Group or to the Clearing Broker, as applicable, an independent fiduciary of the Client Plan (and/or the independent fiduciary of the CIF, as applicable) will receive sufficient information, concerning the financial condition of State Street and, if applicable, the Clearing Broker, including but not limited to the most recently available audited and unaudited financial statements of State Street's parent corporation and, if applicable, the Clearing Broker. In the event of a change in the identity of the Clearing Broker, the name of such Clearing Broker and the information required by this section (m) with respect to the new Clearing Broker must be provided to the independent fiduciary of the Client Plan (and/or the independent fiduciary of the CIF, as applicable) before such Client Plan (and/or CIF, as applicable) lends any securities to the new Clearing Broker;
(n) Except in the case of a Commingled Index Fund or Commingled Model-Driven Fund subject to the requirements, as set forth, below, in section II(q) of this exemption, the SSB Group and, if applicable, the Clearing Broker, will provide to a Client Plan (and/or to a CIF, as applicable) prompt notice at the time of each loan by such Client Plan (and/or CIF, as applicable) of any material adverse changes in State Street's and, if applicable, the Clearing Broker's financial condition, since the date of the most recently furnished financial statements.
If any such material adverse changes have taken place, GSL will not make any further loans to the Affiliated Broker Dealers and, if applicable, the Clearing Broker, unless an independent fiduciary of the Client Plan (and/or the independent fiduciary of the CIF, as applicable) is provided notice of the material change and approves the continuation of the lending arrangement in view of the changed financial condition.
In the case of a Client Plan (and/or CIF, as applicable) which is not invested in a Commingled Index Fund or Commingled Model-Driven Fund, if the independent fiduciary of the Client Plan (and/or the independent fiduciary of the CIF, as applicable), objects to any material adverse change, as disclosed pursuant to section II(n) of this exemption, such Client Plan (and/or CIF, as applicable) may terminate its participation in the Agency Agreement or the Primary Lending Agreement, without penalty to such Client Plan (and/or CIF, as applicable), pursuant to section II(c), above, of this exemption. In the case of a Client Plan (and/or CIF, as applicable) invested in a Commingled Index Fund or Commingled Model-Driven Fund, termination is pursuant to the procedure described, below, in section II(q)(2), of this exemption;
(o) With respect to any calendar quarter, at least 50 percent (50%) or more of the outstanding dollar value of securities loans negotiated on behalf of all securities lending clients of GSL will be to borrowers unrelated to both State Street and the Clearing Broker;
(p) If an independent fiduciary of a Client Plan (and/or an independent fiduciary of a CIF, as applicable) has given the initial affirmative authorization and approval for such Client Plan (and/or CIF, as applicable) to engage in securities lending transactions, pursuant to the terms of PTE 97-63, or pursuant to section II(b), above, of this exemption, then any subsequent authorization or approval contemplated under this exemption shall be deemed to have been given, if such independent fiduciary has not objected in writing to GSL within 30 days following disclosure to such independent fiduciary of all material
(q) In the case of a Commingled Index Fund or Commingled Model-Driven Fund in which a Client Plan (and/or a CIF, as applicable) invests:
(1) The requirement, as set forth, above, in section II(b) of this exemption, shall not apply, provided that the information described in sections II(b), II(i), and II(m), above, of this exemption, including a description of the proposed securities lending arrangement, shall be furnished by GSL to a fiduciary who is independent of State Street, GSL, the SSB Group, the Clearing Broker, and any other division or affiliate of State Street or the Clearing Broker with respect to each Client Plan (and/or each CIF, as applicable) whose assets are invested in the Commingled Index Fund or Commingled Model-Driven Fund, not less than 30 days prior to implementation of any such securities lending arrangement, or any material changes thereto, and, thereafter, upon the reasonable request of the independent fiduciary of the Client Plan (and/or the independent fiduciary of the CIF, as applicable) whose assets are invested in the Commingled Index Fund or Commingled Model-Driven Fund.
In the event of a material adverse change in the financial condition of the SSB Group, or the Clearing Broker, as applicable, GSL will make a decision, using the same standards of credit analysis GSL would use in evaluating unrelated borrowers, whether to terminate existing loans and whether to continue making additional loans to the SSB Group, or the Clearing Broker, as applicable.
For purposes of section II(q) of this exemption, any requirement that the fiduciary be independent of State Street and its affiliates shall not apply in the case of an employee benefit plan sponsored and maintained by State Street and/or an affiliate for its own employees (the State Street Plan(s)), as defined, below, in section III(c) of this exemption; provided such State Street Plan is invested in a Commingled Index Fund or Commingled Model-Driven Fund, and provided further that at all times the value of the aggregate holdings of all State Street Plans in such fund comprises less than 10% of the value of the total assets of such fund;
(2) In the event that the independent fiduciary of a Client Plan (and/or the independent fiduciary of a CIF, as applicable) whose assets are invested in a Commingled Index Fund or Commingled Model-Driven Fund submits a notice in writing within 30 days after receipt of notification of implementation of any such securities lending arrangement, or any material changes thereto, to GSL, as securities lending agent to the Commingled Index Fund or Commingled Model-Driven Fund, objecting to the implementation of, material change in, or continuation of the securities lending arrangement, the Client Plan (and/or CIF, as applicable) on whose behalf the objection was tended is given the opportunity to terminate its investment in the Commingled Index Fund or Commingled Model-Driven Fund, without penalty to such Client Plan (and/or CIF, as applicable), no later than 35 days after the notice of withdrawal is received.
In the case of a Client Plan (and/or CIF, as applicable) that elects to withdraw pursuant to the foregoing, such withdrawal shall be effected prior to the implementation of, or material change in, the securities lending arrangement; but an existing securities lending arrangement need not be discontinued by reason of such Client Plan (and/or CIF, as applicable) electing to withdraw. If a Client Plan's (and/or CIF's, as applicable) withdrawal necessitates a return of securities to the Commingled Index Fund or Commingled Model-Driven Fund, the SSB Group or the Clearing Broker, as applicable, will transfer securities identical to the borrowed securities (or the equivalent thereof in the event of reorganization, or merger of the issuer of the borrowed securities) to the Commingled Index Fund or Commingled Model-Driven Fund within:
(A) The customary delivery period for such securities;
(B) five (5) business days; or
(C) the time negotiated for such delivery by GSL, as lending agent to the Commingled Index Fund or Commingled Model-Driven Fund, and the SSB Group or Clearing Broker, as applicable, whichever is least; and
(3) In the case of a Client Plan (and/or CIF, as applicable) whose assets are proposed to be invested in a Commingled Index Fund or Commingled Model-Driven Fund subsequent to the implementation of the securities lending arrangement, the Client Plan's (and/or CIF's, as applicable) investment in the Commingled Index Fund or Commingled Model-Driven Fund shall be authorized in the manner described, above, in section II(b) of this exemption;
(4) The provisions of section II(q) of this exemption shall not apply to a Commingled Index Fund or Commingled Model-Driven Fund, if more than ten percent (10%) of the ownership interests in such fund are held by State Street Plans;
(5) In the case of a Commingled Index Fund or Commingled Model-Driven Fund subject to the requirements of section II(q) of this exemption, GSL will furnish upon reasonable request to the independent fiduciary of any Client Plan (and/or to the independent fiduciary of any CIF, as applicable) invested in such fund,
(r) In return for lending securities, a Client Plan (and/or CIF, as applicable), including a Commingled Index Fund or Commingled Model-Driven Fund in which a Client Plan (and/or CIF, as applicable) invests, either—
(1) receives a reasonable fee, which is related to the value of the borrowed securities and the duration of the loan; or
(2) Has the opportunity to derive compensation through the investment of cash collateral. (Under such circumstances, such Client Plan (and/or CIF, as applicable) may pay a loan rebate or similar fee to the SSB Group or the Clearing Broker, as applicable, if such fee is not greater than the fee such Client Plan (and/or CIF, as applicable), would pay in a comparable arm's length transaction with an unrelated party);
(s) State Street and/or its affiliates maintain, or cause to be maintained, within the United States for a period of six (6) years from the date of each transaction which is subject to this exemption, in a manner that is convenient and accessible for audit and
(1) This record-keeping condition shall not be violated if, due to circumstances beyond the control of State Street and/or its affiliates, the records are lost or destroyed prior to the end of the six-year period; and
(2) No party in interest other than State Street and its affiliates shall be subject to the civil penalty that may be assessed under section 502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the Code, if the records are not maintained, or are not available for examination as required by section II(t)(1) of this exemption; and
(t)(1) Except as provided in section II(t)(2), below, of this exemption and notwithstanding any provisions of sections (a)(2) and (b) of section 504 of the Act, the records referred to in section II(s) of this exemption are unconditionally available at their customary location for examination during normal business hours by:
(A) Any duly authorized employee or representative of the Department, the Internal Revenue Service, or the Securities and Exchange Commission;
(B) Any fiduciary of a participating Client Plan, (and/or a CIF, as applicable), or a State Street Plan, or any duly authorized representative of such fiduciary;
(C) Any contributing employer to any participating Client Plan, State Street Plan, or any duly authorized employee or representative of such employer; and
(D) Any participant or beneficiary of any participating Client Plan, State Street Plan, or any duly authorized representative of such participant or beneficiary.
(2) None of the persons described above in section II(t)(1)(B)-(t)(1)(D) are authorized to examine the trade secrets of State Street or its affiliates or commercial or financial information which is privileged or confidential.
For purposes of this exemption, the following definitions shall apply:
(a) The term, “affiliate” or “affiliates,” means:
(1) Any person directly or indirectly through one or more intermediaries, controlling, controlled by, or under common control with the person;
(2) Any officer, director, employee, or partner in any such person; and
(3) Any corporation or partnership of which such person is an officer, director, partner, or employee;
(b) The term, “control,” means the power to exercise a controlling influence over the management or policies of a person other than an individual;
(c) The term, “State Street Plan(s),” refer to employee benefit plans covered by the Act sponsored and maintained by State Street and/or an affiliate for its own employees;
(d) The term, “Index Fund(s),” refers to any investment fund, account or portfolio as to which State Street or a U.S. affiliate serves as discretionary trustee or manager and in which one or more investors invest, and
(1) which is designed to track the rate of return, risk profile, and other characteristics of an Index, as defined, below, in section III(f) of this exemption, by either:
(A) Replicating the same combination of securities which compose such Index, or
(B) sampling the securities which compose such Index based on objective criteria and data;
(2) for which State Street or its affiliate does not use its discretion, or data within its control, to affect the identity or amount of securities to be purchased or sold;
(3) that contains “plan assets” subject to the Act, pursuant to the Plan Asset Regulation; and
(4) that involves no agreement, arrangement, or understanding regarding the design or operation of the fund which is intended to benefit State Street or its affiliate or any party in which State Street or its affiliate may have an interest;
(e) The term, “Model-Driven Fund(s),” refers to any investment fund, account, or portfolio as to which State Street or a U.S. affiliate serves as discretionary trustee or manager and in which one or more investors invest, and
(1) which is composed of securities the identity of which and the amount of which are selected by a computer model that is based on prescribed objective criteria using independent third-party data, not within the control of State Street or an affiliate, to transform an Index;
(2) which contains “plan assets” subject to the Act, pursuant to the Plan Asset Regulation; and
(3) that involves no agreement, arrangement, or understanding regarding the design or operation of the fund or the utilization of any specific objective criteria which is intended to benefit State Street, any affiliate of State Street, or any party in which State Street or any affiliate may have an interest;
(f) The term, “Index,” refers to a securities index that represents the investment performance of a specific segment of the public market for equity or debt securities in the United States and/or foreign countries, but only if—
(1) The organization creating and maintaining the index is—
(A) engaged in the business of providing financial information, evaluation, advice, or securities brokerage services to institutional clients,
(B) a publisher of financial news or information, or
(C) a public stock exchange or association of securities dealers;
(2) the index is created and maintained by an organization independent of State Street; and
(3) the index is a generally accepted standardized index of securities which is not specifically tailored for the use of State Street; and
(g) The term, “Clearing Broker,” means a U.S. broker-dealer registered under the Securities Exchange Act of 1934 that is unrelated to State Street or its affiliates, that has net capital equal to at least $10 million and that regularly serves as a clearing broker for introducing brokers in the ordinary course of its business, but only in the context, and to the extent, of its service as a clearing broker for an Affiliated Broker Dealer that is acting as introducing broker.
For a complete statement of the facts and representations supporting the Department's decision to grant PTE 97-63, refer to the proposed exemption (62 FR 51684, October 2, 1997) and the final exemption (62 FR 66689, December 19, 1997). For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption replacing PTE 97-63, refer to the notice (68 FR 6197, February 6, 2003).
Employee Benefits Security Administration, Labor.
Notice of proposed exemptions.
This document contains notices of pendency before the Department of Labor (the Department) of proposed exemptions from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (the Act) and/or the Internal Revenue Code of 1986 (the Code).
All interested persons are invited to submit written comments or requests for a hearing on the pending exemptions, unless otherwise stated in the Notice of Proposed Exemption, within 45 days from the date of publication of this
All written comments and requests for a hearing (at least three copies) should be sent to the Employee Benefits Security Administration (EBSA), Office of Exemption Determinations, Room N-5649, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210. Attention: Application No. __, stated in each Notice of Proposed Exemption. Interested persons are also invited to submit comments and/or hearing requests to EBSA via e-mail or FAX. Any such comments or requests should be sent either by e-mail to: “
Notice of the proposed exemptions will be provided to all interested persons in the manner agreed upon by the applicant and the Department within 15 days of the date of publication in the
The proposed exemptions were requested in applications filed pursuant to section 408(a) of the Act and/or section 4975(c)(2) of the Code, and in accordance with procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990). Effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the Secretary of the Treasury to issue exemptions of the type requested to the Secretary of Labor. Therefore, these notices of proposed exemption are issued solely by the Department.
The applications contain representations with regard to the proposed exemptions which are summarized below. Interested persons are referred to the applications on file with the Department for a complete statement of the facts and representations.
The Department is considering the grant of the following exemption under the authority of section 408(a) of the Act and section 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990).
If the proposed exemption is granted, the restrictions of sections 406(a)(1)(E), 407(a)(2), 406(b)(1), and 406(b)(2) of the Act shall not apply to: (1) The acquisition of publicly traded Employer Stock by the Trusts through the voluntary in-kind contribution (the Contribution) of such Stock by the Employer for the purpose of pre-funding welfare benefits provided by the Plans; and (2) the holding by the Trusts of Employer Stock acquired pursuant to a Contribution, provided that:
(a) Each Contribution is authorized pursuant to, and made in conformity with, all relevant provisions of each affected Plan;
(b) The Plans and/or Trusts do not pay any amount or type of consideration whether in cash or other property (including the diminution of any Employer obligation to fund a Plan) for Employer Stock contributed in-kind by the Employer;
(c) Each Contribution is voluntary and unrelated to any Employer obligation to fund a Plan;
(d) The Plans do not cede any right to receive a cash contribution from the Employer as a result of any Contribution made to any Plan;
(e) The Plans and/or Trusts do not pay any fees or commissions in connection with any Contribution; and
(f) Each condition set forth below in Section II is satisfied.
The exemption is conditioned upon the adherence by the Employer to the material facts and representations described in this notice of proposed exemption and upon the satisfaction of the following requirements:
(a) Only Employer Stock that constitutes “qualifying employer securities” (QES), as such term is set forth in section 407(d)(5) of the Act, will be transferred by the Employer to a Trust pursuant to a Contribution;
(b) Employer Stock transferred by the Employer on behalf of a Plan will thereafter be held by the Trust (or Trusts) for the purpose of funding welfare benefits for the participants and beneficiaries of such Plan;
(c) Employer Stock contributed to, or otherwise acquired by, a Trust will be held in a separate account (an Account) under such Trust;
(d) The appropriate fair market value of any Employer Stock contributed by the Employer to a Trust will be established by an Independent Fiduciary, as such term is defined in section III(c) of this proposed exemption;
(e) The Independent Fiduciary will represent the interests of the Plans for all purposes related to each Contribution for the duration of the Trust's holding of such Employer Stock, and will authorize the trustee of each Trust to accept Employer Stock pursuant to a Contribution only after such Independent Fiduciary determines, at the time of the transaction, that such transaction is feasible, in the interest of the affected Plans, and protective of the participants and beneficiaries of such Plans;
(f) The Independent Fiduciary will: (1) Verify that the price of Employer Stock contributed by the Employer is appropriate and, thereafter, monitor the Employer Stock and have sole responsibility for the ongoing management of the Accounts; and (2) take whatever action is necessary to protect the rights of the Plans funded by the Trusts, including, but not limited to, the making of all decisions regarding the acceptance and acquisition of Employer Stock contributed by the Employer, the retention and any disposition of such Stock, and the exercise of any voting rights associated with such Stock;
(g) With certain exceptions described in paragraphs (h) and (i) below, the total amount of: (1) Employer Stock; (2) qualifying employer real property (QERP), as defined by section 407(d)(4) of the Act; and (3) QES other than the Employer Stock (collectively, the Limited Assets) held by each Plan shall not comprise more than twenty-five percent (25%) of the fair market value of the assets held by such Plan as determined on the date of each such transaction;
(h) For purposes of calculating the percentage limitation described in paragraph (g) of this section, and to the extent the conditions of Prohibited Transaction Exemption (PTE) 91-38 have been met,
(1) Is held by an unrelated common or collective trust fund maintained by an independent bank in which any of the Plans through the Trusts may invest; and
(2) Has a total fair market value that does not exceed five percent (5%) of the fair market value of each such common or collective trust fund;
(i) Notwithstanding the requirement set forth in paragraph (g) above, the amount of Limited Assets held by a Plan may exceed 25% of the total assets held by such Plan solely by reason of:
(1) The Limited Assets appreciate in value at a rate that is greater than the rate attributable to the Plan's non-Limited Assets, and such difference in rates causes the value of the Limited Assets to exceed 25% of the Plan's total asset value; or
(2) The non-Limited Assets have declined in value at a rate that is greater than the rate attributable to the Plan's Limited Assets, and such difference in rates causes the value of the Limited Assets to exceed 25% of the Plan's total asset value; and
(j) At no time will any of the assets of the Trusts revert to the use or benefit of the Employer.
(a) The term “Employer” means Kinder Morgan, Inc., any successor to Kinder Morgan, Inc., and/or any affiliates of Kinder Morgan, Inc.;
(b) The term “Employer Stock” means shares of publicly traded common stock of the Employer and includes any replacement publicly traded shares of such stock;
(c) The term “Independent Fiduciary” means a fiduciary with respect to a Plan who is: (1) Qualified as an investment manager; (2) independent of and unrelated to the Employer; and (3) appointed to act on behalf of the Plans with respect to each Contribution. For purposes of this exemption, if granted, a fiduciary will not be deemed to be independent of and unrelated to the Employer if (i) such fiduciary directly or indirectly controls, is controlled by or is under common control with the Employer; or (ii) the Employer pays such fiduciary an amount of income during the fiduciary's current tax year that exceeds one percent (1%) of such fiduciary's gross income (for federal income tax purposes) over its prior tax year;
(d) The term “Plan” means an employee welfare benefit plan maintained by the Employer; and
(e) The term “Trust” means a trust which is qualified under Section 501(c)(9) of the Code, and established for the purpose of funding life, sickness, accident, and other welfare benefits for the participants and beneficiaries of the Plans.
1. Kinder Morgan, Inc. (hereinafter, either the Employer or the Applicant) is an energy company that operates more than 30,000 miles of natural gas and products pipelines in various states. The Employer is the sole owner of Natural Gas Pipeline Company of America (NGPL), KN Energy Retail Division, Kinder Morgan Power Company, and KM International Services, Inc. The Employer also owns Kinder Morgan G.P., Inc., the general partner of Kinder Morgan Energy Partners, L.P. (KMP). The Employer had annual operating revenues of $1,054,918,000 in 2001 and the book value of the Employer's assets as of December 31, 2001 was $9,533,085,000.
The Employer Stock is common stock issued by the Employer. The Applicant represents that the Employer Stock is widely held, publicly traded, and may be freely exchanged on the New York Stock Exchange (NYSE symbol: KMI). The applicant states further that the Employer Stock qualifies as a “qualifying employer security”, as defined by section 407(d)(5) of the Act, and also satisfies the requirements of section 407(f)(1) of the Act.
2. The Employer sponsors the Plans. The Plans provide various types of welfare benefits to current and/or former employees of the Employer.
According to the Applicant, the assets of the Retiree Plan are not invested in loans to any party in interest involved in the transactions described herein. However, the Applicant notes that less than one-half of one percent of the Retiree Plan's assets held in the Trusts
3. The Trusts are voluntary employees' beneficiary association trusts (VEBAs). The following Trusts are used to fund the Retiree Plan (the Retiree Plan Trusts): (1) The KMI Post-Retirement VEBA Trust (Bargained VEBA); (2) the KMI Post-Retirement Non-Bargaining VEBA Trust (Nonbargained Medical VEBA); (3) the KMI Retiree Life Insurance VEBA Trust (Life Insurance VEBA); and (4) the KMI Retiree Contributions VEBA Trust (Retiree Contribution Funding VEBA). The Applicant states that each Trust is intended to meet the requirements of section 501(c)(9) of the Code. As such, the trust agreement with respect to each Retiree Plan Trust or any other Trust prohibits the reversion to the Employer of the assets held by such Trust.
The Applicant states that the assets held by the Bargained VEBA are used to provide benefits to participants in the Retiree Plan that are covered under collective bargaining agreements. The assets held by the Nonbargained Medical VEBA, meanwhile, are used to provide benefits to participants in the Retiree Plan that are not covered under a collective bargaining agreement. The assets held by the Life Insurance VEBA are used to provide death benefits to both bargained and nonbargained Retiree Plan participants. The assets held by the Retiree Contribution Funding VEBA are used to provide certain benefits to former bargained and nonbargained employees of the Employer and their dependents.
4. The transactions described in this proposed exemption involve the pre-funding of the Retiree Plan by the Employer.
The Applicant believes that the Retiree Plan, and any other affected Plan, will benefit from the proposed Contributions. In this regard, the Applicant represents that certain opportunities for expansion, acquisition, and debt reduction in the energy industry has re-prioritized the use of cash available to the employer. At no time in the foreseeable future does the Employer anticipate the future funding of retiree welfare benefits through the making of substantial cash contributions to its Retiree Plan (other than those amounts as required under the Rate Agreements). Rather, the Applicant states that the Contributions offer a practical means of pre-funding the Retiree Plan and will make the benefits offered by such Plan more secure.
Initially, the Contributions will involve the transfer of specific amounts of Employer Stock to the Retiree Plan Trusts. With respect to the Bargained VEBA, the Employer seeks to contribute approximately $3,882,358 in Employer Stock and $3,430,041 in cash. To the extent this proposed exemption is granted, approximately 50% of the total assets held by the Bargained VEBA will be in the form of Employer Stock. Additionally, with respect to the Nonbargained Medical VEBA, the Employer intends to contribute approximately $11,920,891 in Employer Stock and approximately $767,457 in cash. To the extent this proposed exemption is granted, approximately 15.8% of the total assets held by the Nonbargained Medical VEBA will be in the form of Employer Stock. Further, with respect to the Life Insurance VEBA, the Employer intends to contribute approximately $4,480,667 in Employer Stock and approximately $2,037,024 in cash. To the extent this proposed exemption is granted, approximately 50% of the total assets held by the Life Insurance VEBA will be in the form of Employer Stock.
Thereafter, if granted, the proposed exemption could affect other Plans that provide welfare benefits. In this regard, the Applicant states that Plans other than the Retiree Plan may prospectively hold Employer Stock contributed by the Employer. The Applicant notes that any Contribution to a Plan other than the Retiree Plan and/or any holding of Employer Stock by such Plan will be subject to the same conditions as those applicable to the Retiree Plan.
5. The Applicant states that each Contribution will be voluntary. In this regard, the Applicant represents that the receipt by a Plan of Employer Stock pursuant to a Contribution will not affect the right of such Plan to receive cash contributions from the Employer. The Applicant notes that the Employer is currently subject to two rate agreements (the Rate Agreements) entered into between the Federal Energy Regulatory Commission and NGPL and Kinder Morgan Interstate Gas Transmission LLC. Both Rate Agreements require the Employer to contribute a specified amount annually to a Trust for an indefinite period of time. The Applicant states that all of the contributions made by the Employer to satisfy the funding requirements under the Rate Agreements will be accounted for separately, and only cash contributions by the Employer will be used to satisfy the funding requirements under the Rate Agreements.
The Applicant notes that subsequent to the contribution of cash to the Retiree Plan pursuant to any Rate Agreement, such cash is not thereafter segregated from any of the assets held under the Retiree Plan. Therefore, the collective assets of the Retiree Plan are used to pay all Retiree Plan participant benefits as they become due. The Applicant represents that to the extent the Retiree Plan is not sufficiently funded at the time a participant's benefits are due, regardless of the reason for the insufficient funding, the Employer will pay from its general assets the benefits owed to such participant.
6. Each Contribution will be subject to several conditions designed to protect the Retiree Plan and any other affected Plans (hereinafter, either, a Plan). In this regard, Employer Stock transferred to a Trust will be held in the Accounts, which are separate accounts under such Trust, for the sole purpose of funding benefits provided by the Plan. Accordingly, at no time will such Employer Stock revert to the use or benefit of the Employer. In addition, each Contribution must be authorized by the appropriate Plan and made in conformity with the terms of such Plan. Further, no Plan will pay any
The Applicant notes that the transactions described herein require the oversight of an Independent Fiduciary. In this regard, a Plan fiduciary who is independent of the Employer and qualified as an investment manager must authorize each contribution of Employer Stock only after such Independent Fiduciary determines at the time of the transaction that such transaction is feasible, in the interest of the affected Plans, and protective of the participants and beneficiaries of such Plans. The Applicant represents that, to date, no Independent Fiduciary has been chosen. However, the Applicant states that the Employer may not pay any Independent Fiduciary that is chosen, or any successor thereto, an amount of income during the fiduciary's current tax year that exceeds one percent (1%) of such fiduciary's gross income (for federal income tax purposes) over its prior tax year. In addition, any Independent Fiduciary chosen by the Employer will acknowledge, in writing, that it: (1) Will act prudently and in the interest of the Plan's participants and beneficiaries with respect to the proposed transactions; and (2) fully understands that risks and benefits associated with the transactions discussed herein. The Applicant represents that any fees or costs associated with the Independent Fiduciary will be borne, either directly or indirectly, by the Trusts.
The Applicant represents that the Independent Fiduciary will establish the appropriate fair market value for the Employer Stock. In this regard, the Independent Fiduciary will: (1) Determine the recorded New York Stock Exchange closing price (the Closing Price) for the Employer Stock for the day on which such Employer Stock is contributed to a Trust; and (2) determine whether to discount the Closing Price by analyzing the percentage of issued and outstanding Employer Stock represented by the Contribution.
Prior to approving any Contribution, the Independent Fiduciary will evaluate the appropriateness of the Trust(s)' acceptance of such Contribution given the investment needs of the affected Plan, the nature of the Contribution, and the impact of the Contribution on the risk and return characteristics of such Plan's portfolio.
The Applicant represents that the Independent Fiduciary will also have full discretion to accept or reject any Contribution, and to otherwise manage the Accounts subject to the specific investment allocation policies and guidelines of the Plan (the Investment Guidelines) as mutually agreed between the Employer and the Independent Fiduciary. These Guidelines will be re-evaluated at least annually by the Independent Fiduciary and the Employer. The Investment Guidelines may prohibit investment of assets in certain types of investments. Notwithstanding the Investment Guidelines mutually agreed to by the parties, the Independent Fiduciary and any successor Independent Fiduciary will remain subject to the fiduciary responsibility provisions of Section 404 of ERISA.
The Applicant represents that the Independent Fiduciary will analyze the impact of the Contribution on the risk and return characteristics of the affected Plan's portfolio. In analyzing such impact, the Independent Fiduciary will review: The expected return of the portfolio; the overall volatility of the portfolio; and the beta risk level or market risk of the portfolio. The Independent Fiduciary will compare the performance of modeled portfolios that include the Employer Stock with the performance of comparable portfolios that do not include the Employer Stock. Based on the results of the Independent Fiduciary's analysis, the Independent Fiduciary must determine, prior to its authorization of a Contribution, that the risk/return tradeoff of accepting the Contribution would be at least as favorable, if not more favorable, to the affected Plan(s) than without such Contribution.
The Applicant notes that subsequent to a Contribution, the Independent Fiduciary will periodically monitor, and have the ability to so monitor, the Employer Stock. Accordingly, the ongoing management of the Employer Stock will be subject to the sole discretion of the Independent Fiduciary. Finally, the Independent Fiduciary will make all of the decisions regarding the retention and any disposition of the Employer Stock, and the exercise of any voting rights associated with such Stock.
7. The amount of Employer Stock contributed to the Trusts will be limited. In this regard, with limited exceptions, the aggregate fair market value of the Employer Stock will not exceed 25% of the fair market value of the assets of an affected Plan.
The Applicant states that the Contributions will benefit the Retiree Plan, and any other Plan so affected. In this regard, the Applicant states that, subsequent to a Contribution, the Employer Stock will not be subject to any restrictions with respect to its marketability. Accordingly, the Employer Stock will be fully transferable at the discretion of the Independent Fiduciary. Further, the
9. In summary, the Applicant represents that with respect to the transactions described herein, the requirements of section 408(a) of the Act have been met since, among other things:
(a) Each Contribution will be authorized pursuant to, and made in conformity with, all relevant provisions of each affected Plan;
(b) The Plans and/or Trusts will not pay any amount or type of consideration whether in cash or other property (including the diminution of any Plan funding obligation of the Employer) for Employer Stock contributed in-kind by the Employer;
(c) Each Contribution will be voluntary and unrelated to any current or future Employer obligation to fund a Plan;
(d) The Plans will not cede any right to receive a cash contribution from the Employer in connection with any Contribution made to any Plan;
(e) The Plans and/or Trusts do not pay any fees or commissions in connection with any Contribution;
(f) Only Employer Stock that constitutes QES will be transferred by the Employer to a Trust pursuant to a Contribution;
(g) The appropriate fair market value of any Employer Stock contributed by the Employer to a Trust will be established by an Independent Fiduciary;
(h) An Independent Fiduciary will represent the interests of the Plans for all purposes related to each Contribution for the duration of the Trust's holding of such Employer Stock and will authorize the trustee of each Trust to accept Employer Stock pursuant to a Contribution only after such Independent Fiduciary determines, at the time of the transaction, that such transaction is feasible, in the interest of the affected Plans, and protective of the participants and beneficiaries of such Plans;
(i) The Independent Fiduciary will: (1) Monitor the Employer Stock and have sole responsibility for the ongoing management of the Accounts; and (2) take whatever action is necessary to protect the rights of the Plans funded by the Trusts, including, but not limited to, the making of all decisions regarding the acceptance and acquisition of Employer Stock contributed by the Employer, the retention and any disposition of such Stock, and the exercise of any voting rights associated with such Stock;
(j) With certain exceptions, the total amount of the Limited Assets held by each Plan shall not comprise more than 25% of the fair market value of the assets held by such Plan; and
(k) At no time will any of the assets of the Trusts revert to the use or benefit of the Employer.
Christopher Motta of the Department, telephone (202) 693-8544. (This is not a toll-free number.)
The Department is considering granting an exemption under the authority of section 408(a) of the Employee Retirement Income Security Act of 1974 (ERISA or the Act) and section 4975(c)(2) of the Internal Revenue Code of 1986 (the Code) and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990). Old Kent Bank and Trust Company and its affiliates previously received the approval of the Department to engage in similar transactions (October 15, 1999) (FAN 99-25E) pursuant to PTE 96-62 (61 FR 39988, July 31, 1996) (EXPRO).
If the proposed exemption is granted, the restrictions of sections 406(a) and 406(b) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A) through (F) of the Code, shall not apply effective on or after April 2, 2001, to: the receipt of fees by Fifth Third Bank, a Michigan banking corporation, and its affiliates (Fifth Third), from the Kent Funds prior to October 26, 2001 or from the Fifth Third Funds on or after October 26, 2001 (the Funds), open-end investment companies registered under the Investment Company Act of 1940 (the 1940 Act), for acting as an investment adviser for the Funds, as well as for acting as administrator, custodian, accountant, transfer agent, and provider of other services to the Funds (including brokerage services in the future) which are not advisory services (collectively referred to as “Secondary Services” as defined in Section III(h) below), in connection with the purchase and sale of shares of the Funds by certain employee benefit plans and individual retirement accounts (the Plans) for which Fifth Third serves as fiduciary with investment discretion; provided that the conditions set forth in Section II are met.
(a) No sales commissions, redemption fees, or other fees are paid by the Plans in connection with the purchase or sale of shares of the Funds.
(b) The price paid or received by a Plan for shares in the Funds is the net asset value per share, as defined in Section III(e), at the time of the transaction, and is the same price that would have been paid or received for the shares by any other investor at that time.
(c) Fifth Third, including any officer or director of Fifth Third, does not purchase or sell shares of the Funds from or to any Plan.
(d) Each Plan receives a credit, through a cash rebate that will be accrued daily and, if the Plan so elects, will be automatically invested in shares of the money market funds selected by the Plan, of such Plan's proportionate share of all fees charged to the Funds by
(e) The combined total of all fees received by Fifth Third for the provision of services to a Plan, and in connection with the provision of services to the Funds in which the Plan may invest, is not in excess of “reasonable compensation” within the meaning of section 408(b)(2) of ERISA.
(f) Fifth Third does not receive any fees payable pursuant to Rule 12b-1 under the 1940 Act in connection with the transactions.
(g) The Plans are not employee benefit plans sponsored or maintained by Fifth Third.
(h) A second fiduciary acting for the Plan, who is independent of and unrelated to Fifth Third (the Second Fiduciary), receives, in advance of any initial investment by the Plan in a Fund, full and detailed written disclosure of information concerning the Fund, including, but not limited to:
(1) A current prospectus for each Fund in which a Plan is considering investing;
(2) A statement describing the fees for investment advisory or similar services and any Secondary Services and all other fees to be charged to or paid by the Plan and by the Fund, including the nature and extent of any differential between the rates of such fees;
(3) The reasons why Fifth Third may consider such investment to be appropriate for the Plan;
(4) A statement describing whether there are any limitations applicable to Fifth Third with respect to which assets of the Plan may be invested in the Fund, and, if so, the nature of such limitations; and
(5) Upon the request of the Second Fiduciary, a copy of the proposed exemption and/or a copy of the final exemption, if granted, once such documents are published in the
(i) After consideration of the information described in paragraph (h) above, the Second Fiduciary authorizes in writing the investment of assets of the Plan in each particular Fund, the fees to be paid by such Fund to Fifth Third (including fees for investment advisory services), and the cash rebate to the Plan of fees received by Fifth Third from the Fund for investment advisory services.
(j) All authorizations made by a Second Fiduciary regarding investments in a Fund and the fees paid to Fifth Third (including fees for investment advisory services) are subject to an annual reauthorization wherein any such prior authorization referred to in paragraph (i) above shall be terminable at will by the Plan, without penalty to the Plan, upon receipt by Fifth Third of written notice of termination. A form expressly providing an election to terminate the authorization described in paragraph (i) above (the “Termination Form”) with instructions on the use of the form must be provided to the Second Fiduciary at least annually. However, if the Termination Form has been provided to the Second Fiduciary pursuant to paragraph (k) or paragraph (1) below, then the Termination Form need not be provided again for an annual reauthorization pursuant to this paragraph unless at least six months have elapsed since the form was provided in connection with the additional service or fee increase. The instructions for the Termination Form must include the following information:
(1) The authorization is terminable at will by the Plan, without penalty to the Plan, upon receipt by Fifth Third's investment services group of written notice from the Second Fiduciary; and
(2) Failure to return the Termination Form will result in continued authorization of Fifth Third to engage in the transactions described above on behalf of the Plan.
(k) The Second Fiduciary of each Plan invested in a particular Fund receives full written disclosure, in a statement separate from the Fund prospectus, of any proposed increases in the rates of fees charged by Fifth Third to the Fund for Secondary Services at least 30 days prior to the implementation of such increase in fees. The disclosure will be accompanied by a copy of the Termination Form, with instructions as described in paragraph (j) above. The Second Fiduciary will also receive full written disclosure, prior to the effective date, in a Fund prospectus or otherwise, of any increases in the rates of fees charged by Fifth Third to the Fund for investment advisory services even though such fees will be rebated as required by paragraph (d) above.
(l) In the event that Fifth Third provides an additional Secondary Service to a Fund for which a fee is charged or there is an increase in the amount of fees paid by the Fund to Fifth Third for any Secondary Services resulting from a decrease in the number of services performed by Fifth Third for such fees in connection with a previously authorized Secondary Service, Fifth Third will, at least 30 days in advance of the implementation of such additional service or effective fee increase, provide written notice to the Second Fiduciary explaining the nature and the amount of such services or of the effective increase in fees of the affected Fund. Such notice shall be accompanied by the Termination Form.
(m) On an annual basis, Fifth Third provides the Second Fiduciary of a Plan investing in the Fund with:
(1) A copy of the current prospectus for the Fund and, upon such Second Fiduciary's request, a copy of the Statement of Additional Information for such Fund which contains a description of all fees paid by the Fund to Fifth Third (including fees for investment advisory services);
(2) A copy of the annual financial disclosure report of the Fund in which such Plan is invested, which includes information about the Fund portfolios as well as audit findings of an independent auditor, within 60 days of the preparation of the report;
(3) Oral or written responses to inquiries of the Second Fiduciary as they arise; and
(4) With respect to each of the Funds in which a Plan invests, in the event such Fund places brokerage transactions with Fifth Third, a statement specifying:
(i) The total (expressed in dollars) of brokerage commissions of each Fund's investment portfolio that are paid to Fifth Third by such Fund;
(ii) The total (expressed in dollars) of brokerage commissions of each Fund's investment portfolio that are paid by such Fund to brokerage firms unrelated to Fifth Third;
(iii) The average brokerage commissions per share (expressed as cents per share) paid to Fifth Third by each investment portfolio of a Fund; and
(iv) The average brokerage commissions per share (expressed as cents per share) paid by each investment portfolio of a Fund to brokerage firms unrelated to Fifth Third.
(o) All dealings between the Plans and the Fund are on a basis no less favorable to the Plans than dealings with other shareholders of the Fund.
(p) Fifth Third maintains for a period of six years the records necessary to enable the persons described in paragraph (q) below to determine whether the conditions of this exemption have been met, except that: (i) A prohibited transaction will not be considered to have occurred if, due to circumstances beyond the control of Fifth Third, the records are lost or
(q)(1) Except as provided in paragraph (p) above and notwithstanding any provisions of section 504(a)(2) and (b) of ERISA, the records referred to in paragraph (p) above are unconditionally available at their customary location for examination during normal business hours by:
(i) Any duly authorized employee or representative of the Department of Labor or the Internal Revenue Service;
(ii) Any fiduciary of a Plan who has authority to acquire or dispose of shares of the Funds owned by the Plans, or any duly authorized employee or representative of such fiduciary; and
(iii) Any participant or beneficiary of a Plan or duly authorized employee or representative of such participant or beneficiary.
(2) None of the persons described in subparagraph (1)(ii) and (iii) above shall be authorized to examine trade secrets of Fifth Third, commercial or financial information which is privileged or confidential, or records that are unrelated to the Plan(s) that the fiduciary serves or under which the participant or beneficiary is entitled to receive benefits.
(r) Within sixty (60) days of June 24, 2003, Fifth Third will file Form 5330 with the Internal Revenue Service and pay the excise taxes applicable under section 4975(a) of the Code in connection with the error in processing rebates of investment advisory fees during the period beginning October 26, 2001 and ending on March 1, 2003.
For purposes of this exemption:
(a) “Fifth Third” means Fifth Third Bank, a Michigan banking corporation, and any affiliate thereof (as affiliate is defined below in paragraph (b) of this section).
(b) An affiliate of a person includes:
(1) Any person directly or indirectly through one or more intermediaries, controlling, controlled by, or under common control with the person;
(2) Any officer, director, employee, relative, or partner in any such person; and
(3) Any corporation or partnership of which such person is an officer, director, partner, or employee.
(c) “Control” means the power to exercise a controlling influence over the management or policies of a person other than an individual.
(d) “Fund” or “Funds” means the Kent Funds prior to October 26, 2001, the Fifth Third Funds on and after October 26, 2001, and each separate investment portfolio thereof, or any other diversified open-end investment company registered under the 1940 Act for which Fifth Third serves as investment advisor and may also serve (or may in the future serve) as administrator, custodian, accountant, or transfer agent, or provide some other Secondary Service (as defined in paragraph (h) below) which has been approved by the Funds.
(e) “Net asset value” means the amount for purposes of pricing all purchases and sales, calculated by dividing the value of all securities, determined by a method as set forth in a Fund's prospectus and statement of additional information, and other assets belonging to the Fund or portfolio of the Fund, less the liabilities charged to each such portfolio or Fund, by the number of outstanding shares.
(f) “Relative” means a relative as that term is defined in section 3(15) of ERISA (or a “member of the family” as that term is defined in section 4975(e)(6) of the Code), or a brother, a sister, or a spouse of a brother or a sister.
(g) “Second Fiduciary” means a fiduciary of a Plan who is independent of and unrelated to Fifth Third. For purposes of this exemption, the Second Fiduciary will not be deemed to be independent of and unrelated to Fifth Third if:
(1) Such fiduciary directly or indirectly controls, is controlled by, or is under common control with Fifth Third;
(2) Such fiduciary, or any officer, director, partner, employee, or relative of the fiduciary is an officer, director, partner, or employee of Fifth Third (or is a relative of such persons); or
(3) Such fiduciary directly or indirectly receives any compensation or other consideration for his or her own personal account in connection with any transaction described in this exemption.
If an officer, director, partner, or employee of Fifth Third (or relative of such persons), is a director of such Second Fiduciary, and if he or she abstains from participation in (i) the choice of the Plan's investment advisor, (ii) the approval of such purchase or sale between the Plan and a Fund, and (iii) the approval of any change in fees charged to or paid by the Plan in connection with any of the transactions described in Section II above, then subparagraph (2) above shall not apply.
(h) “Secondary Service” means a service other than an investment management, investment advisory, or similar service that is (or will in the future be) provided by Fifth Third to a Fund, including (but not limited to) brokerage services, custodian services, transfer and dividend disbursing agent services, administrator or sub-administrator services, accounting services, and shareholder servicing agent services.
(i) “Termination Form” means the form supplied to the Second Fiduciary that expressly provides an election to the Second Fiduciary to terminate on behalf of a Plan the authorization described in paragraph (i) of Section II above. Such Termination Form may be used at will by the Second Fiduciary to terminate an authorization without penalty to the Plan and to notify Fifth Third in writing to effect a termination by selling the shares of the Fund held by the Plan requesting such termination within one business day following receipt by Fifth Third of the form; provided that if, due to circumstances beyond the control of Fifth Third, the sale cannot be executed within one business day, Fifth Third shall have one additional business day to complete such sale.
1. Fifth Third (formerly Old Kent Bank and Trust Company), a state-chartered Michigan banking corporation (Fifth Third or the Applicant) with its principal offices in Grand Rapids, Michigan, is a subsidiary of Fifth Third Financial Corporation (FTFC) which is itself a wholly-owned subsidiary of Fifth Third Bancorp (FT Bancorp), a regional bank holding company headquartered in Cincinnati, Ohio. As of December 31, 2002, the total assets of Fifth Third were approximately $81 billion. Fifth Third serves as a fiduciary with investment discretion to various employee benefit plans.
Fifth Third Bank, an Ohio banking corporation (FTB (Ohio)), a wholly-owned subsidiary of FT Bancorp, provides Secondary Services to the Funds, and provided investment advisory services to the Kent Funds from April 2, 2001, through April 30,
2. The Funds include the Kent Funds and the Fifth Third Funds (the Funds).
The Fifth Third Funds had combined assets as of December 31, 2002 of $11,714,062,533.77. This proposed exemption relates to all of the Portfolios of the Funds in existence on or after April 2, 2001, including future Portfolios, and to any other investment company for which Fifth Third may provide investment advisory services and/or Secondary Services and which may be made available for investment to the Plans. The Plans involved in the proposed transactions are employee benefit plans (as defined in section 3(3) of ERISA) for which Fifth Third serves as fiduciary with discretionary authority over the investment of their assets, as well as individual retirement accounts with respect to which Fifth Third exercises investment discretion. The Plans include pension, profit sharing, and stock bonus plans of various sizes, as well as thrift and section 401(k) plans. However, Fifth Third's records are kept in terms of retirement accounts rather than plans. (There are typically multiple retirement accounts set up for a single plan.)
As of December 31, 2002, Fifth Third served as fiduciary for 17,336 retirement accounts, with assets ranging from approximately $30,000 to $1 billion. Of these, 1,271 were defined benefit and 16,065 were defined contribution retirement accounts. Of the defined contribution retirement accounts, 12,850 were related to cash or deferred arrangements (
3. Fifth Third seeks retroactive and prospective relief to permit the Applicant and its affiliates, as fiduciaries exercising investment discretion over the assets of the Plans, to cause the Plans to purchase and sell shares of the Kent Funds (prior to October 26, 2001) or the Fifth Third Funds (on and after October 26, 2001), open-end, registered investment companies from which Fifth Third receives fees for the provision of investment advisory services and certain Secondary Services. Fifth Third, formerly known as Old Kent Bank and Trust Co. (Old Kent Bank), sought and received PTE 92-67, 57 FR 38859 (Aug. 27, 1992) on behalf of itself, affiliates, and subsidiaries. PTE 92-67 related to the cash rebate to the Plans of investment advisory fees paid to Old Kent Bank by the Funds. PTE 77-4 provides a class exemption from section 406 of the Act and section 4975 of the Code for a plan's purchases or sales of mutual fund shares, subject to certain conditions, where the fund's investment advisor is a plan fiduciary or affiliated with a plan fiduciary and not an employer of employees covered by the plan. Prior to April 2, 2001, Lyon Street Asset Management (“LSAM”), a subsidiary of the Applicant, served as investment advisor to the Kent Funds. Old Kent Bank subsequently obtained relief under EXPRO for transactions substantially similar to those which are the subject of this application, the receipt of fees by Old Kent Bank and its affiliates from the Funds for investment advisory services and for Secondary Services (provided to the Kent Funds by Old Kent Bank and its affiliates, as well as by BISYS, an unrelated party to such Funds). This relief under FAN 99-25E replaced the exemptive relief under PTE 92-67.
4. The Applicant states that effective April 2, 2001, Old Kent Financial Corporation (OKFC), the holding company of the Applicant, merged with and into FTFC, a newly formed wholly-owned subsidiary of FT Bancorp, the holding company of FTB (Ohio), and other entities. OKFC was acquired by FT Bancorp in a stock transaction and as a result of the merger, Old Kent Bank became and remains a wholly owned subsidiary of FTFC.
5. In FAN 99-25E, LSAM, a subsidiary of Old Kent Bank (now Fifth Third Bank), was described as the investment advisor to the Kent Funds, an open-end, registered investment company. Following the merger, the Applicant states that FTB(Ohio) created a new asset management subsidiary, FTAM. FTAM began advising the Kent Funds as of April 30, 2001.
LSAM ceased to serve as investment advisor to the Kent Funds effective April 2, 2001. From April 2, 2001, through April 30, 2001, the Kent Funds were advised directly by FTB (Ohio) pursuant to an Interim Advisory Agreement. Effective April 30, 2001, the Interim Advisory Agreement was assumed by FTAM, a subsidiary of FTB (Ohio), which provided investment advisory services to the Kent Funds from April 30, 2001, through October 26, 2001. Secondary Services were provided to the Kent Funds between April 2, 2001, and October 26, 2001, by affiliates of the Applicant, including FTB (Ohio), and by BISYS. Effective October 26, 2001, the Kent Funds were merged with and into the Fifth Third Funds. All of the assets in each of the portfolios of the Kent Funds were transferred to newly created shell portfolios under the Fifth Third Funds, and shareholders of the Kent Funds became shareholders of the Fifth Third Funds. FTAM serves as investment advisor to the Fifth Third Funds, with the exception of the Fifth Third Pinnacle Funds, which is advised by Heartland. Secondary Services are provided to the Fifth Third Funds by FTB (Ohio) and by BISYS. Other Fifth Third affiliates may in the future also provide investment advisory services and Secondary Services to the Fifth Third Funds.
The Kent Funds themselves continued until October 26, 2001. On that date, all of the assets in each of the portfolios of the Kent Funds were transferred to newly created shell portfolios under the Fifth Third Funds, an open-end, registered investment company. The Applicant represents that (1) the roles of all service providers, including FTAM, FTB(Ohio), and BISYS, are the same with respect to the Fifth Third Funds as they had been with respect to the Kent Funds prior to October 26, 2001; (2) the fees paid by the new portfolios of the Fifth Third Funds to FTAM and to FTB(Ohio), BISYS, and any other secondary service providers are identical to the fees previously paid by the Kent Funds; (3) FTB(Ohio) has formally committed itself to maintaining total fund operating expenses (as a percentage of total assets), until at least April 2, 2003, at a level less than or equal to the level of such expenses for each corresponding Kent Fund as of April 2, 2001 (the date of the merger, as described above); and (4) the operation of the cash rebates to plan accounts, as described in FAN 99-25E, remains unchanged.
6. Fifth Third requests that FAN 99-25E be replaced by this proposed exemption effective as of April 2, 2001 and requests that the proposed exemption contain one prospective modification to the described transactions.
Fifth Third requests relief for the following transactions:
(a) The payment of investment advisory fees by the Plans to Fifth Third with respect to assets of the Plans invested in the Funds. Each Plan will receive a rebate of its proportionate share of investment advisory fees charged to the Funds by Fifth Third. The Plans will receive such rebate in the form of cash or, if an election has been made by a Plan, in the form of a cash rebate applied to the purchase of additional money market funds shares, in either case within two business days of the receipt of the fees by Fifth Third. If a Plan elects to have its cash rebate applied toward the purchase of additional shares, the fair market value of such shares on the date of purchase equals the amount of the cash rebate.
(b) The receipt and the retention of fees paid by the Funds to Fifth Third for certain Secondary Services provided to the Funds. Fifth Third currently acts as administrator, transfer agent, and fund accountant for the Funds, and may in the future provide additional Secondary Services to the Funds. The fees for such services are based on a percentage of the Funds' average daily net assets. Such fees are accrued daily and paid monthly.
In addition to the changes to the parties, there is one difference in the above transactions from those described in FAN 99-25E. The Applicant requests that, with respect to the transactions occurring on and after the date of publication in the
Fifth Third asserts that the request for up to two business days to effect the rebate is primarily because of the potentially larger number of accounts that may require rebating due to the merger of the OKFC group of companies and the FT Bancorp group of companies. Specifically, the Applicant represents that the number of accounts that currently receive rebates is 662; the number that potentially could participate in the rebating program is 6,355. Although Fifth Third expects to be able to effect the rebate in one business day after receipt of the fees in most cases, the Applicant believes the two business days would give Fifth Third more time to deal with any unexpected glitch in the processing of a large number of rebates without having to be concerned about violating the terms of the exemption and thus possibly engaging in a prohibited transaction.
7. The Applicant represents that the procedures set forth in FAN 99-25E have been followed to date, even though the relevant parties have changed due to the merger of OKFC, the holding company of Old Kent Bank (the prior name of Fifth Third Michigan), with and into FTFC, a newly formed wholly-owned subsidiary of FT Bancorp, effective April 2, 2001. The appropriate officers of Fifth Third Bank acknowledge that the procedures set forth in FAN 99-25E have been
8. The Applicant represents that, prior to investing a Plan's assets in a Fund, Fifth Third will obtain the advance approval of an independent second fiduciary of the Plan, who will generally be the Plan's named fiduciary, trustee, or sponsoring employer (the Second Fiduciary). Fifth Third will provide the Second Fiduciary with a current prospectus for the Funds, a statement describing the fees to be charged to or paid by the Plan and by the Funds (including fees for investment advisory or similar services and any Secondary Services), a statement of the reasons why Fifth Third considers the investment to be appropriate for the Plan, and a statement describing any applicable limitation with respect to which assets of the Plan may be invested in the Funds.
9. Under section 408(a) of ERISA, the Department may not grant an exemption unless a determination is made that such exemption is (i) administratively feasible; (ii) in the interests of the plan and of its participants and beneficiaries, and (iii) protective of the rights of the plan's participants and beneficiaries.
Fifth Third asserts that the exemption would be administratively feasible because it is substantially similar to FAN 99-25E, except for changes to the parties and limited additional relief provided on a prospective basis to allow the maximum permitted time for rebating Funds-level fees to Plans to increase to two business days. The Applicant does not believe that these changes will significantly affect the protective nature of the exemption. The exemption establishes objective criteria for its application, and compliance with such criteria can be readily determined and audited. Fifth Third states that the proposed exemption is in the interests of investing plans and their participants and beneficiaries since investing assets of a Plan in mutual funds such as the Funds provides the Plans, and their participants and beneficiaries, with certain advantages which are not available through investment in commingled investment trusts (CITs), the alternative collective investment vehicle in which Fifth Third invests assets of employee benefit plans. Fifth Third notes that, because mutual funds share prices are published in daily newspapers, individuals are able to track the performance of their accounts on a daily basis. The daily deposit and redemption features of mutual funds allow for investment of new monies without delay and allow assets of the Plan to realize investment returns up to the date of redemption. Additionally, the various Portfolios offered by the Funds allow the investment managers or participants to transfer their investments between Portfolios with different investment objectives more promptly than could be done using CITs. Distributions can also be made in Funds shares, which eliminates any cost that might be associated with reinvesting cash distributions into new forms of investments. In sum, the Funds are an efficient alternative for the collective investment of assets, and the Plans will benefit from these efficiencies.
If the exemption is not granted, Plans for which Fifth Third serves as a fiduciary with investment discretion will be precluded from investing their assets in the Funds using the rebate mechanism. Fifth Third believes that the Funds represent appropriate investment vehicles that should be made available to the Plans.
10. On February 25, 2003, Fifth Third informed the Department that the Applicant recently discovered that an inadvertent error was made in processing rebates of investment advisory fees to certain retirement accounts. The system Fifth Third has installed for processing rebates involves assigning a code to each asset (
Fifth Third states that this error appears to have initially occurred at the time of the merger of the Kent Funds into the Fifth Third Funds effective October 26, 2001. Thus, the rebate of the fees paid for October 2001 was the first rebate affected by the error. Both the number of plans and IRAs affected and the dollar amounts involved are relatively small. Fifth Third has determined that 44 tax-qualified plans and 32 IRAs are involved. The amounts that should have been rebated and were not are $39,736.08 for tax-qualified plans and $8,120.09 for IRAs.
Fifth Third provides that it is correcting this error by returning the principal amount of the rebates to the applicable plans and IRAs plus earnings to the date of correction. The earnings will be calculated using the method set forth in the Department of Labor's Voluntary Fiduciary Correction (“VFC”) Program. Thus, the earnings added to each rebated amount will be the greater of “Lost Earnings” or the “Restoration of Profits,” both as defined in the VFC Program.
Fifth Third represents that within sixty (60) days of the date of publication in the
11. In summary, First Third represents that the transactions described herein will satisfy the statutory criteria of section 408(a) of ERISA and section 4975(c)(2) of the Code for the following reasons: (a) The transactions will allow the Plans to continue to enjoy the advantages of investment in mutual Funds, including more ready access to information regarding performance, thus enabling Plan fiduciaries and participants to make more informed decisions regarding their investments; (b) prior to the initial investment of Plan assets in the Funds, a second, independent fiduciary of each Plan will receive full disclosure regarding the proposed investment and the fees to be received by Fifth Third, and has the opportunity to approve or disapprove the investment; (c) no sales commissions or redemption fees will be paid by the Plans in connection with the acquisition or sale of shares of the Funds; and (d) all dealings among the Plans, the Funds, and Fifth Third will be on a basis no less favorable to the Plans than such dealings with the other shareholders of the Funds.
Ms. Wendy McColough of the Department, telephone (202) 693-8561. This is not a toll-free number.
The Department of Labor is considering granting an exemption under the authority of section 408(a) of the Act (or ERISA) and section 4975(c)(2) of the Code and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption is granted, the restrictions of sections 406(a), 406(b)(1) and (b)(2) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,
This proposed exemption is subject to the following conditions:
(a) The exchange of the Pine Knoll Shores Lot between the Account and Dr. and Mrs. Edwards for Parcel One is a one-time transaction.
(b) The fair market value of the Pine Knoll Shores Lot and Parcel One is determined by qualified, independent appraisers, who will update their appraisal reports at the time the exchange is consummated.
(c) For purposes of the exchange, Parcel One has a fair market value that is no less than the fair market value of the Pine Knoll Shores Lot at the time the transaction is consummated.
(d) The terms and conditions of the exchange are at least as favorable to the Account as those obtainable in an arm's length transactions with an unrelated party.
(e) The exchange does not involve more than 25 percent of the Account's assets.
(f) The exchange allows the Account to divest itself of property that is susceptible to hurricane damage and high maintenance costs, and it permits the Account to acquire virtually maintenance-proof property having increased liquidity.
(g) Dr. Edwards is the only participant in the Plan whose Account is affected by the transaction and he desires that such transaction be consummated.
1. Raleigh Pathology Laboratory Associates, P.A. (the Employer) of Raleigh, North Carolina, is a professional corporation. Through duly licensed physicians and other employees, the Employer provides professional pathology services to patients of Wake Medical Center, patients of health maintenance organizations and others.
2. The Plan is a defined contribution plan which was established by the Employer, effective January 1, 2002, as a result of the merger of the Raleigh Pathology Laboratory Associates, P.A. Money Purchase Pension Plan (the Pension Plan), also sponsored by the Employer, into the Plan. As of December 31, 2001, which is the most recent date that financial information is available, the Plan had 20 participants and assets with an approximate aggregate fair market value of $13,885,737.83.
3. The Plan is administered by 8 trustees (the Trustees). The Plan's current Trustees are James R. Edwards, M.D., Gordon B. LeGrand, M.D., Dana D. Copeland, M.D., D. Emerson Scarborough, M.D., Dennis E. Ose, M.D., Cheryl A. Szpak, M.D., George H. Clarke, M.D., and Shrinivas Rajagopalan.
Pursuant to provisions of the Plan, each participant has the right to direct investments under such Plan for his or her own account. In such instances, the investments are earmarked for the account of the participants directing such investments.
4. Dr. Edwards, a stockholder, director and an employee of the Employer, as well as a Trustee, has an individually-directed account in the Plan. As of May 5, 2002, the assets in Dr. Edwards's Account were valued at $2,143,643.53.
5. Among the assets in Dr. Edward's Account is the Pine Knoll Shores Lot. This unimproved parcel of waterfront property is located at 122 Arborvitae Court, Pine Knoll Shores, Carteret County, North Carolina. The Pine Knoll Shores Lot is also legally described as “Lot 11, Block TT, Section 5, Pine Knoll Shores Extension” and it consists of approximately 9/10 of an acre of land. The property is not located in close proximity to any other property that is owned by Dr. Edwards.
The Account acquired the Pine Knoll Shores Lot as a real estate investment for $65,000 from Romaine and Kathryn Howard, who were unrelated parties, on September 30, 1981. Because the Account paid the Howards cash consideration for the Pine Knoll Shores Lot, the property was not encumbered by a mortgage. Currently, there is no mortgage or other encumbrances existing on the property and it represents approximately 19 percent of the assets of Dr. Edward's Account.
The Pine Knoll Shores Lot is located at the point where the Hoffman Inlet meets Bogue Sound. The lot has open water frontage on two full sides (approximately 202 feet on one side and 135 feet on the other). Although sea walls have been constructed on both sides of the property, they have required frequent maintenance since the North Carolina coastline is prone to hurricane damage.
Since the Pine Knoll Shores Lot has been allocated to the Account, it has not been used by or leased to anyone, including parties in interest. However, the Account has incurred $36,307 in maintaining the sea wall, $14,853 in real estate taxes,
6. The Pine Knoll Shores Lot has been most recently appraised by Edward Michael Lupton, a North Carolina Certified Real Estate Appraiser, who is affiliated with the appraisal firm of Putnam Real Estate of Morehead, North Carolina. In an appraisal report dated December 17, 2002, Mr. Lupton, a qualified, independent real estate appraiser, placed the fair market value of a fee simple interest in the Pine Knoll Shores Lot at $408,000 as of the same date as his report. In valuing the Pine Knoll Shores Lot, Mr. Lupton utilized the sales comparison approach because he believed this method would provide the most reliable indication of market value since other valuation methods were not applicable to vacant lots in the subject neighborhood.
7. Because of ongoing expenses and the risk of further significant hurricane damage has left the Pine Knoll Shores Lot exposed to possible significant future losses, it is proposed that the Account divest itself of this property. Therefore, an administrative exemption is requested from the Department to
8. Currently, boundary lines have been established to form Parcel One by Mr. Ronald Thomas, an independent appraiser who is affiliated with the real estate appraisal firm of Worthy & Wachtel Inc. of Raleigh, North Carolina. In an appraisal report dated December 29, 2002, Mr. Thomas, using the sales comparison approach to valuation, placed the fair market value of Parcel One at $408,000 as of December 17, 2002. Mr. Thomas also determined that the “highest and best use” of Parcel One is for single family residential development as four building lots, each consisting of one acre.
9. Once formed and duly recorded with the Wake County Register of Deeds, Parcel One will be transferred by Dr. Edwards to his Account. Simultaneously with the exchange, the Plan trustees will transfer the Pine Knoll Shores Lot to Dr. Edwards. The Account will not pay any real estate fees or commissions in connection with the transaction. In addition, the Account will receive real property having an independently appraised fair market value that is equal to the fair market value of the Pine Knoll Shores Lot on the day of the exchange. For this purpose, the appraisers will update their appraisals just prior to or on the date of the transaction.
10. In summary, it is represented that the proposed transaction will satisfy the statutory criteria for an exemption under section 408(a) of the Act because:
(a) The exchange of the Pine Knoll Shores Lot by the Account to Dr. and Mrs. Edwards for Parcel One will be a one-time transaction.
(b) The fair market values of the Pine Knoll Shores Lot and Parcel One will be determined by qualified, independent appraisers.
(c) For purposes of the exchange, Parcel One will have a fair market value that will be no less than the fair market value of the Pine Knoll Shores Lot at the time the transaction is consummated.
(d) The terms and conditions of the exchange will be at least as favorable to the Account as those obtainable in an arm's length transaction with an unrelated party.
(e) The exchange will not involve more than 25 percent of the Account's assets.
(f) The exchange will allow the Account to divest itself of property that is susceptible to hurricane damage and high maintenance costs, and it will permit the Account to acquire virtually maintenance-proof property having increased liquidity.
(g) Dr. Edwards is the only participant in the Plan whose Account will be affected by the transaction and he desires that such transaction be consummated.
Because Dr. Edwards is the only participant in the Plan whose Account will be affected by the proposed transaction, it has been determined that there is no need to distribute the notice of proposed exemption to interested persons. Therefore, comments and requests for a hearing are due 30 days after publication of the notice of pendency in the
Ms. Blessed Chuksorji, telephone (202) 693-8567. (This is not a toll-free number.)
The Department is considering granting an exemption under the authority of section 408(a) of the Act and section 4975(c)(2) of the Code and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption is granted, the restrictions of sections 406(a), 406(b)(1) and (b)(2) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall not apply to the proposed loan of $550,000 by the Plan to Valley OB-GYN Realty Company (the Company), a party in interest with respect to the Plan; provided that the following conditions are satisfied:
a. The Loan does not exceed 25% of the total assets of the Plan at any time;
b. The terms of the Loan are at least as favorable to the Plan as those terms which would exist in an arm's-length transaction with an unrelated party;
c. The Loan is secured by a building which has a fair market value, as determined by an independent, qualified appraiser, of at least 150% of the outstanding principal balance of the Loan (plus accrued but unpaid interest) throughout its duration (unless other property is pledged as collateral, as noted below in condition f.);
d. An independent, qualified fiduciary (the Independent Fiduciary) reviews the proposed terms and conditions of the Loan, and determines that the Loan is in the best interest and protective of the Plan and its participants and beneficiaries;
e. The Independent Fiduciary monitors the Loan throughout its duration and takes whatever actions are necessary to safeguard the interests of the Plan and its participants and beneficiaries; and
f. The Plan has the right, under the terms of the Loan and mortgage note related thereto, to require the Company to pledge additional property as collateral for the Loan, in the event such property is needed to maintain full collateralization at the amount specified herein.
1. The Plan is a qualified retirement plan sponsored by Valley OB-GYN Clinic, P.C (the Employer). The trustees of the Plan are Ronald C. Hazen, M.D., James R. Hines, M.D., and Duane B. Heilbronn, Jr., M.D. (the Trustees). Duane B. Heilbronn acts as the Plan's administrator. As of December 31, 2001, the Plan had approximately 42 participants and $7,702,976 in total assets.
2. The sponsor of the Plan is the Employer, a Michigan professional services corporation owned in equal shares by Ronald C. Hazen, M.D., James R. Hines, M.D., Duane B. Heilbronn, Jr., M.D., John Llewelyn, M.D. and Kenneth Su, M.D. The Employer is a medical practice.
3. The Loan will have a principal amount of $550,000, and a ten (10) year duration. The Loan will bear an interest rate of 9% per annum. The promissory note evidencing the Loan (the Note) requires monthly payments of principal and interest in the amount of $6,967 (or more) to be made on or before the 1st of each month. The Note requires monthly payments of principal and interest amortized over the entire ten (10) year duration of the Loan. The Note further provides that if any default should be made in the payment of any installment of principal and interest due thereunder, and should the Company fail to cure such default within thirty (30) days after delivery of written notice
The applicant represents that the Loan will represent no more than 25% of the Plan's total assets at any time.
4. The Loan will be secured at all times by a mortgage (the Mortgage) on a medical office building (the Building) owned by the Company that is currently leased to the Employer. The Building is located at 926 North Michigan Avenue, Saginaw, Michigan. The Mortgage will be duly recorded under the laws of the State of Michigan.
The Building was appraised (the Appraisal) on October 11, 2002 by Roland M. Adams, SRA, a certified independent real estate appraiser (Mr. Adams) with Adams Appraisal Services, located in Freeland, Michigan. In the Appraisal, Mr. Adams relied primarily on the cost and income approaches to value the Building.
Mr. Adams states that the cost approach is based on the idea that an informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. Under the cost approach, the fair market value of the Building was determined to be approximately $926,000.
Mr. Adams also considered the income approach, where such analysis converts anticipated benefits (dollar income or amenities) to be derived from the ownership of property into a value estimate. The income approach is widely applied in appraising income-producing properties. Anticipated future income and/or reversions are discounted to a present-worth figure through the capitalization process. Mr. Adams stated that under the income approach, the fair market value of the Building was approximately $922,000.
Mr. Adams states that due to the Building's overall good condition, he gave equal consideration to the cost and income approaches. In conclusion, Mr. Adams determined that the fair market value of the Building was $925,000, as of October 11, 2002.
5. Citizens Bank in Saginaw, Michigan (the Bank) has examined the terms of the Loan. By letter dated April 21, 2003, Kimberly E. Johnson, a vice president of the Bank, represents that the Bank would provide a similar loan under the same terms for the same amount, payable in equal monthly installments of principal and interest over a ten (10) year period at an interest rate of 9% per annum.
6. The Loan will be monitored by Ronald Krawczyk, CPA (Mr. K), who will serve as the independent fiduciary (the I/F) on behalf of the Plan for purposes of the Loan. Mr. K has submitted a statement dated April 17, 2003, in which he discusses his role as the I/F. Mr. K believes that the Loan would be in the best interest of the Plan's participants and beneficiaries. Mr. K has reviewed the terms and conditions of the Loan in consideration of the Plan's overall investment portfolio, and found the Loan to be consistent with the Plan's overall investment objectives and liquidity needs. In this regard, Mr. K represents that the terms and conditions of the Loan are comparable with, and as favorable to, the Plan as the terms and conditions of a similar loan between unrelated parties. Mr. K believes that the Loan will be a stable investment opportunity that will provide consistent returns for the Plan at a steady rate of interest commensurate with market rates. The Loan will be adequately collateralized by property (
As the I/F, Mr. K will have an affirmative duty to monitor the Loan to ensure that monthly payments are timely made by the Company. Mr. K will consult with counsel for the Plan on a regular basis to determine that no default occurred under the terms of the Loan. In the event of default, Mr. K will act for the Plan and promptly transmit notice of default to the Company and the Trustees. Mr. K will then monitor, on behalf of the Plan, the progress for any cure of such default. Mr. K will have the authority and ability to act unilaterally to protect the interests of the Plan with respect to all options for recovery on the Note, under applicable Michigan law, including foreclosure on the Building with the right to sell the Building, or other property that is securing the Loan to third parties. Such action may be taken by Mr. K without the prior approval of the Trustees, if necessary. Mr. K will also periodically review the condition of the Building.
With respect to Mr. K's qualifications to act as the I/F for the Plan for purposes of the Loan, Mr. K represents that he is a licensed CPA and has been in practice for 33 years. Mr. K maintains that he has had extensive auditing experience, having served as a trained auditor and audit manager. Mr. K states that he has performed audits and other financial services for various industries, including banks, hospitals, manufacturing firms and other businesses. Mr. K states that he is a member of the American Institute of CPA's (
Mr. K represents that he is, and will remain, independent of the Employer and the Company, for purposes of his proposed duties and responsibilities as the I/F for the Plan.
7. With respect to the possibility of the need to appoint an individual or entity to succeed Mr. K as the I/F for the Plan, the applicant states that it will notify the Department at least sixty (60) days in advance of such appointment. The person or entity so appointed will have the same responsibilities as Mr. K, and will have experience that is similar or comparable to that of Mr. K. Finally, the individual or entity that may be selected as the new I/F will be independent of the Employer and the Company.
8. In summary, the applicant represents that the proposed transaction satisfies the statutory criteria of section 408(a) of the Act and section 4975(c)(2) of the Code because:
a. The Loan will not exceed 25% of the total assets of the Plan at any time;
b. The terms of the Loan are at least as favorable to the Plan as those terms
c. The Loan will be secured by the Building, which has a fair market value, as determined by an independent, qualified appraiser, of at least 150% of the outstanding principal balance of the Loan (plus accrued but unpaid interest);
d. Mr. K., as the I/F for the Plan, has reviewed the proposed terms and conditions of the Loan, and determined that the Loan would be in the best interest and protective of the Plan and its participants and beneficiaries;
e. Mr. K, as the I/F for the Plan, will monitor the Loan throughout its duration and take whatever actions are necessary to safeguard the interests of the Plan and its participants and beneficiaries; and
f. The Plan has the right to require the Company to pledge additional property as collateral for the Loan in the event such property is needed to maintain full collateralization at an amount which is at least 150% of the outstanding principal balance of the Loan (plus accrued but unpaid interest).
Ekaterina A. Uzlyan of the Department at (202) 693-8540. (This is not a toll-free number.)
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption under section 408(a) of the Act and/or section 4975(c)(2) of the Code does not relieve a fiduciary or other party in interest or disqualified person from certain other provisions of the Act and/or the Code, including any prohibited transaction provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of the Act, which, among other things, require a fiduciary to discharge his duties respecting the plan solely in the interest of the participants and beneficiaries of the plan and in a prudent fashion in accordance with section 404(a)(1)(b) of the Act; nor does it affect the requirement of section 401(a) of the Code that the plan must operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries;
(2) Before an exemption may be granted under section 408(a) of the Act and/or section 4975(c)(2) of the Code, the Department must find that the exemption is administratively feasible, in the interests of the plan and of its participants and beneficiaries, and protective of the rights of participants and beneficiaries of the plan;
(3) The proposed exemptions, if granted, will be supplemental to, and not in derogation of, any other provisions of the Act and/or the Code, including statutory or administrative exemptions and transitional rules. Furthermore, the fact that a transaction is subject to an administrative or statutory exemption is not dispositive of whether the transaction is in fact a prohibited transaction; and
(4) The proposed exemptions, if granted, will be subject to the express condition that the material facts and representations contained in each application are true and complete, and that each application accurately describes all material terms of the transaction which is the subject of the exemption.
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on April 14, 2003, applicable to workers of Crown Pacific, Gilchrist, Oregon. The notice was published in the
At the request of the State agency, the Department reviewed the certification for workers of the subject firm. Information provided by the company shows that temporary workers of Express Personnel were employed at Crown Pacific to produce dimensional lumber at the Gilchrist, Oregon location of the subject firm.
Based on these findings, the Department is amending this certification to include temporary workers of Express Personnel employed at Crown Pacific, Gilchrist, Oregon.
The intent of the Department's certification is to include all workers at the Gilchrist location of Crown Pacific who were adversely affected by increased imports.
The amended notice applicable to TA-W-50,560 is hereby issued as follows:
All workers of Crown Pacific, Gilchrist, Oregon, and temporary workers of Express Personnel, producing dimensional lumber at Crown Pacific, Gilchrist, Oregon, who became totally or partially separated from employment on or after October 11, 2002, through April 14, 2005, are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974.
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on March 24, 2003, applicable to workers of Delco Remy America, Inc., Anderson, North Carolina. The notice was published in the
At the request of the company, the Department reviewed the certification for workers of the subject firm. The workers were engaged in the production of light and heavy duty starters and alternators.
Information shows that worker separations occurred at Remy Logistic, a division of Delco Remy America, Inc., Anderson, Indiana. Workers at Remy Logistic (a warehouse) ship, store and inspect products made by Delco Remy.
Accordingly, the Department is amending the certification to include workers of Delco Remy America, Inc., d/b/a Remy Logistic, Anderson, Indiana.
The intent of the Department's certification is to include all workers of Delco Remy America, Inc. who were adversely affected by increased imports.
The amended notice applicable to TA-W-50,728 is hereby issued as follows:
All workers of Delco Remy America, Inc., Anderson, Indiana (TA-W-50,728) and Delco Remy America, Inc. d/b/a/ Remy Logistic, Anderson, Indiana (TA-W-50,728A) who became totally or partially separated from employment on or after October 17, 2002, through March 24, 2005, are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974.
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Notice of Certification Regarding Eligibility to Apply for Worker Adjustment Assistance on February 25, 2002, applicable to workers of FCI USA, Incorporated, Emigsville, Pennsylvania. The notice was published in the
At the request of the company, the Department reviewed the certification for workers of the subject firm. The workers are engaged in the production of electrical connectors.
New information provided by the company shows that worker separations will occur at the Willow Springs Distribution Center, of FCI USA, Incorporated in York, Pennsylvania. The York, Pennsylvania location provides warehousing and distribution services for the Emigsville, Pennsylvania production facility of FCI USA, Incorporated.
Accordingly, the Department is amending the certification to cover the workers of the Willow Springs Distribution Center, York, Pennsylvania.
The intent of the Department's certification is to include all workers of FCI USA, Incorporated who were adversely affected by increased imports.
The amended notice applicable to TA-W-40,841 is hereby issued as follows:
All workers of FCI USA, Incorporated, Emigsville, Pennsylvania (TA-W-40,841) and Willow Springs Distribution Center, York, Pennsylvania (TA-W-40,841A), who became totally or partially separated from employment on or after January 7, 2001, through February 25, 2004, are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974.
Petitions have been filed with the Secretary of Labor under section 221(a) of the Trade Act of 1974 (“the Act”) and are identified in the Appendix to this notice. Upon receipt of these petitions, the Director of the Division of Trade Adjustment Assistance, Employment and Training Administration, has instituted investigations pursuant to section 221(a) of the Act.
The purpose of each of the investigations is to determine whether the workers are eligible to apply for adjustment assistance under Title II, Chapter 2, of the Act. The investigations will further relate, as appropriate, to the determination of the date on which total or partial separations began or threatened to begin and the subdivision of the firm involved.
The petitioners or any other persons showing a substantial interest in the subject matter of the investigations may request a public hearing, provided such request is filed in writing with the Director, Division of Trade Adjustment Assistance, at the address shown below, not later than July 7, 2003.
Interested persons are invited to submit written comments regarding the subject matter of the investigations to the Director, Division of Trade Adjustment Assistance, at the address shown below, not later than July 7, 2003.
The petition filed in this case are available for inspection at the Office of the Director, Division of Trade Adjustment Assistance, Employment and Training Administration, U.S. Department of Labor, Room C-5311, 200 Constitution Avenue, NW., Washington, DC 20210.
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Notice of Certification Regarding Eligibility to Apply for Worker Adjustment Assistance on April 24, 2003, applicable to workers of Lexington Home Brands, Plants 1, 2, 4, 5 & 12, Lexington, North Carolina. The notice was published in the
At the request of the company, the Department reviewed the certification for workers of the subject firm. The workers are engaged in the production of wooden household furniture.
The company reports that worker separations occurred at the Plant 98 (Main Office), Lexington, North Carolina location of the subject firm. Workers at Plant 98 (Main Office) provide administrative, sales, and technical services for the subject firm's production plants located throughout North Carolina.
Based on these findings, the Department is amending the certification to include workers of Lexington Home Brands, Plant 98 (Main Office), Lexington, North Carolina.
The intent of the Department's certification is to include all workers of Lexington Home Brands who were adversely affected by increased imports.
The amended notice applicable to TA-W-51,395 is hereby issued as follows:
All workers of Lexington Home Brands, Plants 1, 2, 4, 5 & 12, Lexington, North Carolina (TA-W-51,395), and Lexington Home Brands, Plant 98 (Main Office), Lexington, North Carolina (TA-W-51,395A) who became totally or partially separated from employment on or after March 31, 2002, through April 24, 2005, are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974.
In accordance with Section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Notice of Certification Regarding Eligibility to Apply for Worker Adjustment Assistance on May 14, 2003, applicable to workers of Marion County Shirt Company located in Springfield, Missouri. The notice will soon be published in the
At the request of the State agency, the Department reviewed the certification for workers of the subject firm. The workers produce men's woven dress shirts. The Department inadvertently omitted the parent company's name, Capital Mercury Apparel, in the certification. Accordingly, the Department is amending the certification to properly identify the company name.
The amended notice applicable to TA-W-51,702 is hereby issued as follows:
All workers of Marion County Shirt Company, Capital Mercury Apparel, Springfield, Missouri, who became totally or partially separated from employment on or after May 5, 2002 through May 14, 2005, are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974.
In accordance with Section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on November 24, 1997, applicable to all workers of Motorola, Broadband Communications Sector, Tewksbury, Massachusetts. The notice was published in the
At the request of the company, the Department reviewed the certification for workers of the subject firm. New findings show that the Department incorrectly issued certification coverage to all workers of the subject firm. The intent of the Department's certification is to cover only workers manufacturing carrier class edge router for cable television systems at Motorola, Broadband Communications Sector, Tewksbury, Massachusetts who were adversely affected by the shift in production to Mexico.
Accordingly, the Department is amending the certification determination to properly reflect this matter.
The amended notice applicable to TA-W-33,966 is hereby issued as follows:
In accordance with section 223 of the Trade Act of 1974 (19 U.S.C. 2273) the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance on July 23, 2001, applicable to workers of Motorola, Inc., iDEN Subscriber Div., Plantation, Florida. The notice was published in the
At the request of the petitioners, the Department reviewed the certification for workers of the subject firm. Information provided by the company shows that leased workers of Manpower International were employed at Motorola, Inc., iDEN Subscriber Div. to produce radios and printed circuit boards (for iDEN Radio units) at the Plantation, Florida location of the subject firm.
Based on these findings, the Department is amending this certification to include leased workers of Manpower International, employed at Motorola, Inc., iDEN Subscriber Div. Corporation, Plantation, Florida.
The intent of the Department's certification is to include all workers of Motorola, Inc., iDEN Subscriber Div. who were adversely affected by increased imports.
The amended notice applicable to TA-W-39,588 is hereby issued as follows:
All workers of Motorola, Inc., iDEN Subscriber Div., Plantation, Florida, including leased workers of Manpower International, who were engaged in production of radios and printed circuit boards (for iDEN Radio units) at Motorola, Inc., iDEN Subscriber Div., Plantation, Florida, who became totally or partially separated from employment on or after June 27, 2000, through July 23, 2003, are eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974.
Pursuant to Section 221 of the Trade Act of 1974, as amended, an investigation was initiated on May 7, 2003 in response to a petition filed by a company official on behalf of workers at Rayovac Corporation, Fennimore, Wisconsin.
The petitioner has requested that the petition be withdrawn. Consequently, the investigation has been terminated.
Petitions have been filed with the Secretary of Labor under section 221(a) of the Trade Act of 1974 (“the Act”) and are identified in the Appendix to this notice. Upon receipt of these petitions, the Director of the Division of Trade Adjustment Assistance, Employment and Training Administration, has instituted investigations pursuant to section 221(a) of the Act.
The purpose of each of the investigations is to determine whether the workers are eligible to apply for adjustment assistance under Title II, Chapter 2, of the Act. The investigations will further relate, as appropriate, to the determination of the date on which total or partial separations began or threatened to begin and the subdivision of the firm involved.
The petitioners or any other persons showing a substantial interest in the subject matter of the investigations may request a public hearing, provided such request is filed in writing with the Director, Division of Trade Adjustment Assistance, at the address shown below, not later than July 7, 2003.
Interested persons are invited to submit written comments regarding the subject matter of the investigations to the Director, Division of Trade Adjustment Assistance, at the address shown below, not later than July 7, 2003.
The petitions filed in this case are available for inspection at the Office of the Director, Division of Trade Adjustment Assistance, Employment and Training Administration, U.S. Department of Labor, Room C-5311, 200 Constitution Avenue, NW., Washington, DC 20210.
Employment and Training Administration.
The Employment and Training Administration (ETA), U.S. Department of Labor (DOL), announces the availability of approximately $50 million in grant funds for technical skills training programs.
Technical skills training grants were authorized under the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA), as amended. Fees paid by employers who bring foreign workers into the United States to work in high skill or specialty occupations on a temporary basis under H-1B nonimmigrant visas finance these grants. Twenty-five percent of the grants are to be awarded to business partnerships and seventy-five percent are to be awarded to local workforce investment boards established under the Workforce Investment Act (WIA).
This notice applies to the 25 percent of the total funds available for technical skills training grants that are required by ACWIA to be awarded to business partnerships that consist of at least two businesses or a business-related nonprofit organization that represents more than one business. The partnership may also include any educational, labor, faith-based or community organization, or workforce investment board.
H-1B Technical Skills Training Grants are focused on addressing the high skill technology shortages of American businesses and are a long-term solution to domestic skill shortages in high skill and high technology occupations. H-1B Technical Skills Training Grants are aimed at raising the technical skills levels of American workers so they can take advantage of the new technology-related employment opportunities. Raising the skill level of American workers will, in turn, help businesses reduce their dependence on skilled foreign professionals permitted to work in the United States using H-1B visas. H-1B Technical Skills Training Grants are not intended to address labor shortages due to reasons other than technical skills shortages.
At least eighty percent of the grants are to be awarded to projects that train workers in high technology, information technology, and biotechnology skills, including skills needed for software and communications services, telecommunications, systems installation and integration, computers and communications hardware, advanced manufacturing, health care technology, biotechnology and biomedical research and manufacturing, and innovation services.
Grant funds awarded under the 25 percent provision may be used only to carry out a strategy that would otherwise not be eligible for funds provided through workforce investment boards under the 75 percent provision. Applicants must explain the barriers that prevent them from meeting the 75 percent eligibility criteria. An announcement of the solicitation for grant applications (SGA/DFA 03-100) for the 75 percent of grants to be awarded to local boards was published in the
In awarding H-1B Technical Skills Training Grants, every effort will be made to fairly distribute grants across rural and urban areas and across the different geographic regions of the United States. It is anticipated that individual awards will not exceed $3 million.
This solicitation provides background information and describes the application submission requirements, the process that eligible entities must use to apply for funds covered by this solicitation, and how grantees will be selected.
The closing date for receipt of applications under this announcement is September 22, 2003. Applications must be received at the address below no later than 4 pm EST (Eastern Standard Time). Grant applications received after this date will not be considered.
Mailed applications must be addressed to the U.S. Department of Labor, Employment and Training Administration, Division of Federal Assistance, Attention: Mamie D. Williams, SGA/DFA 03-114, 200 Constitution Avenue, NW., Room S-4203, Washington, DC 20210. Telefacsimile (FAX) applications will not be accepted. Applicants are advised that mail delivery in the Washington area may be delayed due to mail
Mamie D. Williams, Grants Management Specialist, Division of Federal Assistance, Telephone (202) 693-3301. (This is not a toll free number.) You must specifically ask for Mamie D. Williams. This announcement is also being made available on the ETA Web site at
The announcement consists of four parts:
• Part I provides background information on the H-1B grant program, the principles of H-1B Technical Skills Training Grants, and DOL's policies and emphases.
• Part II describes specific program, administrative and reporting requirements that will apply to all grant awards.
• Part III describes the application process.
• Part IV describes the review process and rating criteria that will be used to evaluate applications for funding.
This section provides a summary overview of the intent and nature of the solicitation for grant award. Elements mentioned in this background summary may be covered in greater detail later in the document.
ACWIA 1998 increased the annual limit on H-1B visas temporarily to 115,000 in fiscal years 1999 and 2000, and to 107,500 in 2001. In addition, a $500 user fee was imposed on employers for each H-1B application. ACWIA 1998 authorized the use of 56.3% of the fee to finance the H-1B Technical Skills Training Grant Program. Grants funded under ACWIA 1998 had the long-term goal of raising the technical skill levels of American workers in order to fill specialty occupations presently being filled by temporary workers admitted to the United States under the provisions of the H-1B visa. Eligible grant applicants were local Private Industry Councils (PICs) and Workforce Investment Boards (local boards) established under Section 117 of the Workforce Investment Act (WIA) or a consortium of local boards.
ACWIA 1998 was amended by the American Competitiveness in the Twenty-first Century Act of 2000 (ACWIA 2000) Public Law 106-313, enacted on October 17, 2000. This law increased the temporary cap of H-1B visas to 195,000 annually until the end of fiscal year 2003. Separate legislation raised the employer H-1B application fee from $500 to $1,000. ACWIA 2000 authorized the use of 55% of the funds generated by H-1B visa fees to continue the Department of Labor's H-1B Technical Skills Training Grant Program through September 30, 2003. ACWIA 2000 H-1B Technical Skills Training Grant Program statutory provisions are codified at 29 U.S.C. 2916 a.
Applications submitted by Business-Led partnerships require a 100 percent match in cash or in kind. Partners cooperating in the proposed project may divide the responsibility for the match among themselves in any way they choose to do so, provided that at least 50 percent of the match comes from the business partners (see Part II, section E, Matching Funds). ACWIA 2000 also specified that consideration be given to applicants that provide a specific commitment from other public or private sources, or both, to demonstrate the long-term sustainability of the training program or project after the grant expires.
The technical skills training portion of ACWIA 2000 (Section 111) is designed to help both employed and unemployed American workers acquire the requisite technical capabilities in high skill occupations that have shortages. Training generally is aimed at occupations at the H-1B skill levels, which are defined as a bachelor's degree or comparable experience. Under ACWIA 2000, training is not limited to skill levels commensurate with 4-year undergraduate degrees, but can include the preparation of workers for a broad range of positions along a career ladder leading to an H-1B skill level job.
ACWIA 2000 also specified that consideration in awarding H-1B grants be given to the use of grant funds to demonstrate a significant ability to expand a training program or project through such means as training more workers or offering more courses or projects resulting from collaborations, especially with more than one small business or with a labor management training program or project, or for a partnership that involves and directly benefits more than one small business.
H-1B grants under earlier SGAs were funded for up to a 24-month period, with the possibility of a no-cost extension for one additional year. Grants awarded under this solicitation will have a 36-month performance period, with the possibility of a no-cost extension for one additional year.
Additional details on the background of the H-1B Technical Skills Training Grants program can be found at the H-1B Web site
Development, implementation and operation of H-1B Technical Skills Training Grants as envisioned under the authorizing legislation (see Background above) are based on the following principles:
Successful H-1B training programs are those in which business is seriously invested in the program and has translated this investment into material support at all levels, including: defining program strategy and goals; designing the training program and curricula; implementing the program, and contributing financial support to the program.
For the purpose of these grants, it is desirable that businesses represented in the group applying for this grant include those with current high technology skills shortages. Some of these businesses may have in the past utilized foreign workers under the H-1B visa program. Now, they intend to hire, retain, or promote graduates of the H-1B Technical Skills Training Program.
The matching requirement is an important, but not the only, indicator of the strength of the applicant's partnerships. The requirement that at least one-half of the matching funds must come from the business sector partners is designed to encourage the direct and active participation of employers whose high technology skills needs can be filled by this program. It may also demonstrate that business contributions could be made available in the future to operate technical skills training programs after Federal funds are exhausted.
H-1B training projects may consider utilizing either innovative or proven tools or approaches to close particular skill gaps and provide strategies for training that promote regional development. These may include, but are not limited to, on-the-job training, distance learning, or combinations of training and educational techniques. H-1B grantees should tailor training to the specific needs of the selected incumbent and unemployed workers, both in content and delivery.
Employees at the H-1B skill level are generally characterized as having a Bachelor's degree or comparable work experience. H-1B technical skills training is not limited to skill levels commensurate with a four-year degree and may be used to prepare workers for a broad range of positions along a specified career ladder. “Career ladder” may generally be defined as a system of career and skill level “steps” directly leading to a high skill level job within a reasonable period of time. Thus, potential trainees are not required to enter training with a four-year degree and trainees do not necessarily have to acquire a four-year degree to be successful. Many will have a four-year degree and others will possess two-year degrees. Career ladders create opportunities for individuals who may vary in experience and education levels (such as specialty training and Associate's degrees) to advance along a defined career ladder and qualify through additional training and education for H-1B level related occupations.
Well-defined skills standards can be useful tools in matching training goals to targeted occupational areas. Work in the area of skills standards has been performed by private industry and trade associations, registered apprenticeship training systems, and public and private partnerships. Applicants are encouraged to survey the progress to date in developing occupational skills standards and incorporate appropriate ones into their H-1B Technical Skills Training Project.
As alluded to earlier (In Part IA—Background), the definition of the minimum proficiency level required to be considered an H-1B occupation, contained in section 214(i), 8 U.S.C. 1184(i) of the Immigration and Nationality Act (INA), speaks to a very high skill level for these “specialty occupations.” These are occupations that require “theoretical and practical application of a body of highly specialized knowledge,” and full state licensure, if required for the occupation, to practice in the occupation. The standard for these occupations is either completion of at least a Bachelor's degree or experience in the specialty equivalent to the completion of such a degree and recognition of expertise in the specialty through progressively responsible positions relating to the specialty. In addition to academic degrees, specialized and professionally recognized certificates may also be characteristic of a high level of technical skill.
Applicants are strongly encouraged to utilize all available data sources to demonstrate the high technology skills shortages and training needs in their local or regional areas. Sources of data may include: area businesses and business associations, state labor and local market information systems, the Bureau of Labor Statistics (BLS), local employer surveys, academic sources, and the U.S. Census Bureau.
In addition, current data on approved H-1B visa petitions should be utilized to the extent feasible to describe skill shortages in specific occupations. Appendix B to this solicitation is a listing of occupations for which H-1B visa petitions have been recently approved. Requests for H-1B visas for the applicant's region may reflect a skills shortage for those occupations. Applicants should use data from the business partners involved in submitting the H-1B grant proposal, and may consider surveying other local and regional employers to ascertain the extent of employer use of H-1B visas to obtain foreign workers and to obtain information on the specific occupations and skills imported in the regions.
To implement the preceding principles and to meet the legislative intent of ACWIA 2000, DOL has established certain policies and emphases for awarding H-1B Technical Skills Training Grants under this solicitation. Applicants are encouraged to develop proposals based on the principles described above and the policies and emphases identified below.
By building linkages to the One-Stop Career Center network, applicants can reach out, inform, and recruit individuals to participate in H-1B technical skills training and access a range of services for H-1B participants. ETA believes that co-enrollment in WIA and H-1B technical skills training allows for a much broader and comprehensive service provision for H-1B Program participants. For example, some H-1B participants may need supportive services, such as childcare and transportation, to enable them to be successful in both the learning environment and labor market. Supportive services are not allowable activities under the H-1B grant and by co-enrolling these H-1B participants in WIA, some H-1B participants may have access to a full range of supportive services available through their local One-Stop Career System, if determined necessary. Applicants may also consider working with community and faith-based organizations to access supportive services for H-1B participants.
Coordination and consultation activities with the applicable state workforce agency and/or Governor's office or State Workforce Investment Board are also highly encouraged in order to connect to other relevant skills shortages projects that may be operating in the state as well as for sustainability purposes. Although Federal resources may not be counted towards the match requirement, leveraging WIA resources will help make the technical skills training more effective.
To train at high levels, applicants should ensure that eligible participants have a fairly advanced education and skill sets and be capable of pursing training at the college level. In addition, the applicant should determine how these individuals will possess the capacity after completion of the training to perform in jobs that were previously filled via the H-1B visa process, or could be filled at the H-1B level.
If career ladder training is proposed, applicants most demonstrate that the majority of participants will complete the highest rungs of the H-1B level training under the grant within a reasonable period of time. Proposals to fund training in non-H-1B level occupations and preparatory or introductory level information technology areas will receive low selection priority under this SGA.
Grantee organizations will be subject to: ACWIA 2000; these guidelines; the terms and conditions of the grant and any subsequent modifications; applicable Federal laws (including provisions in appropriations law), and any applicable requirements listed below:
a. Workforce Investment Boards—20 Code of Federal Regulations (CFR) Part 667.220, published in the
b. Non-Profit Organizations—Office of Management and Budget (OMB) Circulars A-122 (Cost Principles) and 29 CFR Part 95 (Administrative Requirements).
c. Educational Institutions—OMB Circulars A-21 (Cost Principles) and 29 CFR Part 95 (Administrative Requirements).
d. State and Local Governments—OMB Circulars A-87 (Cost Principles)
e. Profit Making Commercial Firms—Federal Acquisition Regulation (FAR)—48 CFR Part 31 (Cost Principles), and 29 CFR Part 95 (Administrative Requirements). In addition, the audit requirements at 20 CFR 627.480 applies to commercial recipients.
f. All entities must comply with 29 CFR Parts 93 and 98, and, where applicable, 29 CFR Parts 96 and 99.
ACWIA 2000 Section 111(c)(6) provides that an entity that receives a grant to carry out a program or project under section 414(c)(1)(A) of ACWIA may not use more than 10 percent of the amount of the grant to pay administrative costs associated with the program or project. Administrative costs are defined at 20 CFR 667.220. In general, however, this grant does not contemplate or permit the purchase of capital equipment.
ACWIA 2000 Section 111(c)(3) limits the amount of start-up costs of partnerships or new training projects, which may be charged to these grants. Except for partnerships of small businesses, the limit is the lesser of five (5) percent of any single grant or costs not to exceed $75,000. For partnerships consisting primarily of small businesses, the limit is the lesser of ten (10) percent of the cost allocable for a single grant or a maximum of $150,000.
The grantee is required to provide the reports and documents listed below:
DOL may require additional data elements,
A narrative section is also required for each quarterly report, including:
As required by ACWIA 2000, applications must include an agreement that the program or project shall be subject to evaluation by the Secretary of Labor to measure its effectiveness. To measure the impact of these skill training grants, ETA will arrange for or conduct an independent evaluation of the outcomes and benefits of the projects. Grantees must agree to make records on participants, employers and funding available and to provide access to program operating personnel and to participants, as specified by the evaluator(s) under the direction of ETA, including after the expiration date of the grant.
Applicants must demonstrate the ability to provide resources equivalent to at least 100 percent of the grant award amount as a match. This statutory match may be provided in cash or in-kind, and Federal resources may not be counted against the matching requirement. At least one-half of the non-Federal matching funds must be from the business or businesses or business-related nonprofit organizations involved. The match requirement applies to the entire Federal grant funding level. The application must clearly describe the size, nature, and quality of the non-Federal match and how the match will be used to further the goals of the project.
Applicants should describe the nature of the match to ensure that activities counted as match are permitted under the H-1B program. To be allowable as part of the match, a cost must be an allowable training cost that could conceivably be charged to Federal grant funds. If the cost cannot be charged to the grant funds, then it cannot be charged to match either.
For the purposes of the H-1B Grant Program, there is one exception to the allowable cost rule for matching funds. Grantees may include as training costs the salaries and wages employers pay for their employees while the employees are participating in skills training. These costs are allowable as match provided that: (a) The trainees are bona-fide employees; (b) the employer pays only regular salary and wages, but not overtime, benefits, or other costs, for each trainee for time spent attending classes during working hours; and (c) the trainee remains employed with the employer for sixty days after the completion of training.
ACWIA 2000, Section 111(c)(2)(A)(ii) [29 U.S.C. 2916 a (c)(2)(A)(ii)] specifies that the Secretary shall, in consultation with the Secretary of Commerce, subject to the availability of funds in the H-1B Nonimmigrant Petitioner Account, award 25 percent of the grants to partnerships that consist of at least two businesses or a business-related nonprofit organization that represents more than one business, and that may include any educational, labor, community and faith-based organization, or workforce investment board.
Grant funds awarded under the 25 percent provision may be used only to carry out a strategy that would otherwise not be eligible for funds
The application must clearly identify the applicant as well as the fiscal agent, the grant recipient (and/or fiscal agent), and describe its capacity to administer this project. Applicants are encouraged to collaborate with entities that possess a sound grasp of the job market in the region and are in a position to address the issue of skill shortage occupations. These entities include organizations such as private, for-profit businesses—including small and medium-size businesses; business, trade, or industry associations such as local Chambers of Commerce and small business federations; and labor unions.
According to Section 18 of the Lobbying Disclosure Act of 1995, an organization described in Section 501(c)(4) of the Internal Revenue Code of 1986 that engages in lobbying activities will not be eligible for the receipt of Federal funds constituting an award, grant, or loan.
Except as specifically provided in this Notice, DOL/ETA's acceptance of a proposal and an award of Federal funds to sponsor any program(s) does not provide a waiver of any grant requirements and/or procedures. For example, the OMB Circulars require and an entity's procurement procedures must require that all procurement transactions are conducted, as much as practical, to provide open and free competition. If a proposal identifies a specific entity to provide services, the DOL/ETA's award does not provide the justification or basis to sole-source the procurement,
Applicants must submit an original signed application and two copies. The proposal must consist of two (2) separate and distinct parts, Parts I and II. Failure to adhere to the instructions in this section will be considered as non-responsive.
Part I of the proposal must contain the Standard Form (SF) 424, “Application for Federal Assistance” (Appendix C), the Budget Information Form (Appendix D) and the Project Profile Information form (Appendix E). Upon confirmation of an award, the individual signing the SF 424 on behalf of the applicant shall represent the responsible financial and administrative entity.
In preparing the Budget Information form, the applicant must provide a concise narrative explanation to support the request. The statutory language of ACWIA 2000 is specific in stating that grant resources are to be expended for programs or projects to provide technical skills training. An illustrative, but not exclusive, list of allowable and allocable types of administrative costs is provided in the WIA regulations at 20 CFR 667.220. The budget narrative should discuss precisely how the administrative costs support the project goals.
Part II of the application must contain a technical proposal that demonstrates the applicant's capabilities to plan and implement an H-1B Technical Skills Training Grant Program in accordance with the provisions of this solicitation. Part II of the grant application is limited to twenty-five (25) double-spaced, single-sided, 8.5 inch x 11 inch pages with one-inch margins. In addition, the applicant may provide resumes, a staffing pattern, statistical information and related material in attachments, which may not exceed fifteen (15) pages. Although not required, letters of commitment from partners or from those providing matching resources may be submitted as attachments. Such letters will not count against the allowable maximum page total. The applicant must briefly itemize those participating entities in the text of the proposal. Text type shall be 12 point or larger. Applications that do not meet these requirements will not be considered. Each application must include a Time Line outlining project activities
It is anticipated that individual awards will not exceed $3 million. The initial period of performance will be up to 36 months from the date of execution of the grant documents. ETA may elect to exercise its option to award no-cost extensions to these grants for an additional period not to exceed 12 months, based on the success of the program and other relevant factors.
Applications for the H-1B Technical Skills Training Grants will be accepted after the publication of this announcement until the closing date. A technical review panel will make careful evaluation of applications against the criteria below which include the policy goals, principles, priorities and emphases set forth in this SGA. Final funding decisions will be based on the rating of applications as a result of the review process, and other factors such as regulatory and statutory requirements and considerations. These factors may include urban/rural and geographic balance, the requirement that at least 80 percent of funds be awarded for high technology, information technology, and biotechnology occupational training, the availability of funds, and what is most advantageous to the Government. The panel results are advisory in nature and not binding on the Grant Officer. The Government may elect to award the grant(s) with or without discussions with the applicants. In situations without discussions, an award will be based on the applicant's signature on the SF 424, which constitutes a binding offer.
This section identifies and describes the criteria that will be used to evaluate H-1B Technical Skills Grant proposals. These criteria and point values are:
A general description of the local area or region should provide information such as urban or rural and socioeconomic data, with a particular focus on general education and skills levels prevalent in the area. In addition, a description of the characteristics of the political, economic and administrative jurisdictions (local workforce boards, labor market areas, special district authorities) that led them to partner for the purpose of this application should be incorporated. Information on transportation patterns, demographics and other factors, as they affect the high skill shortage situation, may be useful in explaining the training needs.
• What is the general business environment?
• What industries and occupations are growing and declining?
• What types of skills are being sought in the geographic area or region by the major employers in general, and this grant application's member companies, in particular?
• How many H-1B visa petitions were filed by area employers and in this grant application's member companies, in particular? For which occupations? Which specific skills did H-1B visa workers have that were not available in the area?
• What high skills needs are expected to be met through the H-1B grant project?
• The range and identity of potential training providers, including identifying whether they are on the eligible training provider list as described in WIA, section 122, the types of skills training that will be offered, how the training will meet the local area or regional skills needs, and how the training will be provided.
• The targeted occupations and skill level and how the skill upgrading will be measured. If degrees and/or certificates are contemplated, the type and recognition authority should be described as well as an estimate of the number and type to be attained.
• What steps will be taken to reach out to the community(ies) to provide information about the project and planned training activities.
• How will the types of training planned for project participants be determined.
Applicants must clearly describe how and why members of the target population will be selected as well as their technical skills training needs in such a way as to verify that H-1B level training is actually required, especially in the case of incumbent workers. Applicants should also describe the partners' involvement, particularly business, in the selection process as well as that of any involved community and faith-based organizations.
• How many employed workers and unemployed workers will be targeted for services and why?
• What are the technical skills training needs of those workers to fulfill skill shortage occupations at the H-1B level? Note that employers' needs should be addressed in the Statement of Need section.
• What criteria will be utilized to select employed and unemployed workers?
• What assessment tools will be used to ensure trainees will be able to complete this high level of training?
• What is the business partners' involvement in the selection of candidates?
• What is the targeted education and skill level of trainees as they enter the program?
• How will individuals eligible for priority of service under the Job for Veterans Act be identified and provided services?
This criterion includes three areas: (a) Program and training outcomes, (b) project and grant management, and (c) cost effectiveness. Applicants must describe fully the predicted outcomes resulting from the technical skills training. As stated previously, applicants should indicate how they plan to achieve the following outcome goals, if appropriate, upon successful completion of a training program:
In addition, applicants should indicate if any additional goals or outcomes are anticipated and how these are expected to be achieved.
Legislation
29 U.S.C. 2916a.
Section II 2916a. Demonstration programs and projects to provide technical skills training for workers
(1) In general—
(A) Funding.
The Secretary of Labor shall use funds available under section 1356(s)(2) of Title 8 to establish demonstration programs or projects to provide technical skills training for workers, including both employed and unemployed workers.
(B) Training provided.
Training funded by a program or project described in subparagraph (A) shall be for persons who are currently employed and who wish to obtain and upgrade skills as well as for persons who are unemployed. Such training is not limited to skill levels commensurate with a four-year undergraduate degree, but should include the preparation of workers for a broad range of positions along a career ladder. Consideration shall be given to the use of grant funds to demonstrate a significant ability to expand a training program or project through such means as training more workers or offering more courses, and training programs or projects resulting from collaborations, especially with more than one small business or with a labor-management training program or project. The need for the training shall be justified through reliable regional, State, or local data.
(2) Grants.
(A) Eligibility.
To carry out the programs and projects described in paragraph (1)(A), the Secretary of Labor shall, in consultation with the Secretary of Commerce, subject to the availability of funds in the H-1B Nonimmigrant Petitioner Account, award—
(i) 75 percent of the grants to a local workforce investment board established under section 2831(b) or section 2832 of this title or consortia of such boards in a region. Each workforce investment board or consortia of boards receiving grant funds shall represent a local or regional public-private partnership consisting of at least—
(I) one workforce investment board;
(II) one community-based organization or higher education institution or labor union; and
(III) one business or business-related nonprofit organization such as a trade associated:
(ii) 25 percent of the grants under the Secretary of Labor's authority to award grants for demonstration projects or program sunder section 171 of the Workforce Investment Act [FN1] [29 U.S.C.A. § 2916] to partnership that shall consist of at least 2 businesses or a business-related nonprofit organization that represents more than one business, and that may include any educational, labor, community organization, or workforce investment board, except that such grant funds may be used only to carry out a strategy that would otherwise not be eligible for funds provided under clause (i), due to barriers in meeting those partnership eligibility criteria, on a national, multistate, regional, or rural area (such as rural telework programs) basis.
(B) Designation of responsible fiscal grants.
Each partnership formed under subparagraph (A) shall designate a responsible fiscal agent to receive and disburse grant funds under this subsection.
(C) Partnership considerations.
Consideration in the awarding of grants shall be given to any partnership that involves and directly benefits more than one small business (each consisting of 100 employees or less).
(D) Allocation of grants.
In making grants under this paragraph, the Secretary shall make every effort to fairly distribute grants across rural and urban areas, and across the different geographic regions of the United States. The total amount of grants awarded to carry out program and projects described in paragraph (1)(A) shall be allocated as follows:
(i) At least 80 percent of the grants shall be awarded to programs and projects that train employed and unemployed workers in skills in high technology, information technology, and biotechnology, including skills needed for software and communications services, telecommunications, systems installation and integration, computers and communications hardware, advanced manufacturing, health care technology, biotechnology and biomedical research and manufacturing, and innovation services.
(ii) No more than 20 percent of the grants shall be available to programs and projects that train employed and unemployed workers for skills related to any single specialty occupation, as define din section 1184(i) of Title 8.
(3) Start-up funds.
(A) In general.
Except as provided in subparagraph (B), not more than 5 percent of any single grant, or not to exceed $75,000, whichever is less, may be used toward the start-up costs of partnerships or new training programs and projects.
(B) Exception.
In the case of partnerships consisting primarily of small businesses, not more than 10 percent of any single grant, or $150,000, whichever is less, may be used toward the start-up costs of partnerships or new training programs and projects.
(C) Duration of start-up period.
For purposes of this subsection, a start-up period consists of a period of not more than 2 months after the grant period begins, at which time training shall immediately begin and no further Federal funds maybe used for start-up purposes.
(4) Training outcomes.
(A) Consideration for certain programs and projects.
Consideration in the awarding of grants shall be given to applicants that provide a specific, measurable commitment upon successful completion of a training course, to—
(i) hire or effectuate the hiring of unemployed trainees (where applicable);
(ii) increase the wages or salary of incumbent workers (where applicable); and
(iii) provide skill certifications to trainees or link the training to industry-accepted occupational skill standards, certificates, or licensing requirements.
(B) Requirements for grant applications,
Applications for grants shall—
(i) articulate the level of skills that workers will be trained for and the manner by which attainment of those skills will be measured;
(ii) include an agreement that the program or project shall be subject to evaluation by the Secretary of Labor to measure its effectiveness; and
(iii) in the case of an application for a grant under paragraph (2)(A)(ii), explain what barriers prevent the strategy from being implemented through a grant made under paragraph (2)(A)(i).
(5) Matching funds.
Each application for a grant to carry out a program or project described in paragraph (1)(1) shall state the manner by which the partnership will provide non-Federal matching resources (cash, or in-kind contributions, or both) equal to at least 50 percent of the total grant a mount awarded under paragraph (2)(A)(i), and at least 100 percent of the total grant amount awarded under paragraph (2)(A)(ii). At least one-half of the non-Federal matching funds shall be from the business or businesses or business-related nonprofit organizations involved. Consideration in the award of grants shall be given to applicants that provide a specific commitment or commitments of resources from other public or private source, or both, so as to demonstrate the long-term sustainability of the training program or project after the grant expires.
(6) Administrative costs.
An entity that receives a grant to carry out a program or project described in paragraph (1)(A) may not use more than 10 percent of the amount of the grant to pay for administrative costs associated with the program or project.
The Immigration and Nationality Act (INA) (section 101(a)(15)(h)(i)(b)) (8 U.S.C. 1101(a)(15)(H)(i)(B)) defines the H-1B alien as one who is coming temporarily to the United States to perform services in a specialty occupation * * * or as a fashion model. * * *”
The INA (Section 214(i)) sets criteria to define the term “speciality occupation:”
(1) For purposes of section 1101(a)(15)(H)(i)(b) and paragraph 1, a “specialty occupation” means an occupation that requires—(A) theoretical and practical application of a body of highly specialized knowledge and,
(B) attainment of a bachelor's higher degree in the specific speciality (or its equivalent) as a minimum for entry into the occupation in the United States.
(2) For purposes of section 1101(a)(15)(H)(i)(b)), the requirements of this paragraph with respect to a specialty occupation are—(A) full state licensure to practice in the occupation, if such licensure is required to practice in the occupation.
(B) completion of the degree described in paragraph (1)(B) for the occupation, or (C)(i) experience in the specialty equivalent to the completion of such degree, and (ii) recognition of expertise in the specialty through progressively responsible positions relating to the specialty.
The Board of Directors of the Legal Services Corporation will meet June 27, 2003 from 9 a.m. until 10:30 a.m. and continue on June 28, 2003 at 10 a.m. until conclusion of the Board's agenda.
The Latham Hotel, 3000 M Street, NW., Washington, DC.
Open, except that a portion of the meeting may be closed pursuant to a vote of the Board of Directors to hold an executive session. At the closed session, the Corporation's General Counsel will report to the Board on litigation to which the Corporation is or may become a party, and the Board may act on the matters reported. The closing is authorized by the relevant provisions of the Government in the Sunshine Act [5 U.S.C. 552b(c) (10)] and the corresponding provisions of the Legal Services Corporation's
1. Approval of agenda.
2. Chair's report on suggested procedures to guide the search for a new President and a new Inspector General.
3. Consider and act on the establishment of a Search Committee for LSC President and Inspector General.
4. Consider and act on whether to authorize a June 28, 2003 executive session of the Search Committee for LSC President and Inspector General to consider and act on search firm options.
5. Consider and act on the establishment of an Annual Performance Reviews Committee.
6. Consider and act on assignment of Directors to the Board's Search Committee for LSC President and Inspector General, Annual Performance Reviews Committee, Finance Committee, Operations & Regulations Committee, and the Provision for the Delivery of Legal Services Committee.
7. Approval of the minutes of the Board's meeting of April 25 & 26, 2003.
8. Approval of the minutes of the Executive Session of the Board's meeting of April 26, 2003.
9. Approval of the minutes of the Board's telephonic meeting of May 19, 2003.
10. Chairman's Report.
11. Members' Reports.
12. Acting Inspector General's Report.
13. President's Report.
14. Consider and act on the report of the Board's Annual Performance Reviews Committee.
15. Consider and act on the report of the Board's Finance Committee.
16. Consider and act on the report of the Board's Operations & Regulations Committee.
17. Consider and act on the report of the Board's Provision for the Delivery of Legal Services Committee.
18. Consider and act on the report of the Board's Search Committee for LSC President and Inspector General.
19. Consider and act on resolutions thanking former members of the LSC Board of Directors for their service.
20. Consider and act on other business.
21. Public comment.
22. Consider and act on whether to authorize an executive session of the Board to receive a briefing by the Acting Inspector General on the activities of the Office of the Inspector General and to consider and act on the Office of Legal Affairs' report on potential and pending litigation involving LSC.
23. Briefing
24. Consider and act on the Office of Legal Affairs' report on potential and pending litigation involving LSC.
25. Consider and act on adjournment of meeting.
Victor M. Fortuno, Vice President for Legal Affairs, General Counsel & Corporate Secretary, at (202) 295-1500.
Upon request, meeting notices will be made available in alternate formats to accommodate visual and hearing impairments. Individuals who have a disability and need an accommodation to attend the meeting may notify Elizabeth S. Cushing, at (202) 295-1500.
The Annual Performance Reviews Committee of the Legal Services Corporation's Board of Directors will meet on June 27, 2003. The meeting will begin at 1:30 p.m. and continue until conclusion of the Committee's agenda.
The Latham Hotel, 3000 M Street, NW., Washington, DC.
Open.
Victor M. Fortuno, Vice President for Legal Affairs, General Counsel and Corporate Secretary, at (202) 295-1500.
Upon request, meeting notices will be made available in alternate formats to accommodate visual and hearing impairments. Individuals who have a disability and need an accommodation to attend the meeting may notify Elizabeth S. Cushing at (202) 295-1500.
The Finance Committee of the Legal Services Corporation Board of Directors will meet on June 27, 2003. The meeting will begin at 2:30 p.m. and continue until the Committee concludes its agenda.
The Latham Hotel, 3000 M Street, NW., Washington, DC.
Open.
Victor M. Fortuno, Vice President for Legal Affairs, General Counsel & Corporate Secretary, at (202) 295-1500.
Upon request, meeting notices will be made available in alternate formats to accommodate visual and hearing impairments. Individuals who have a disability and need an accommodation to attend the meeting may notify Elizabeth S. Cushing, at (202) 295-1500.
The Operations & Regulations Committee of the Legal Services Corporation Board of Directors will meet on June 27, 2003. The meeting will begin at 3:30 p.m. and continue until the Committee concludes its agenda.
The Latham Hotel, 3000 M Street, NW., Washington, DC.
Open.
Victor M. Fortuno, Vice President for Legal Affairs, General Counsel & Corporate Secretary, at (202) 295-1500.
Upon request, meeting notices will be made available in alternate formats to accommodate visual and hearing impairments. Individuals who have a disability and need an accommodation to attend the meeting may notify Elizabeth S. Cushing, at (202) 295-1500.
The Committee on Provision for the Delivery of Legal Services of the Legal Services Corporation Board of Directors will meet on June 27, 2003. The meeting will begin at 4:30 p.m. and continue until the Committee concludes its agenda.
The Latham Hotel, 3000 M Street, NW, Washington, DC.
Open.
Victor M. Fortuno, Vice President for Legal Affairs, General Counsel & Corporate Secretary, at (202) 295-1500.
Upon request, meeting notices will be made available in alternate formats to accommodate visual and hearing impairments. Individuals who have a disability and need an accommodation to attend the meeting may notify Elizabeth S. Cushing, at (202) 295-1500.
The Search Committee for LSC President and Inspector General of the Legal Services Corporation's Board of Directors will meet on June 28, 2003. The meeting will begin at 9:00 a.m. and continue until conclusion of the Committee's agenda.
The Latham Hotel, 3000 M Street, NW, Washington, DC
Open, except that a portion of the meeting may be closed pursuant to a vote of the Board of Directors to hold an executive session. The closing is authorized by the relevant provisions of the Government in the Sunshine Act [5 U.S.C. 552b(c)(2), (4) & (6)] and the corresponding provisions of the Legal Services Corporation's implementing regulation [45 CFR § 1622.5(a), (c) & (e)]. A copy of the General Counsel's Certification that the closing is authorized by law will be available upon request.
Victor M. Fortuno, Vice President for Legal Affairs, General Counsel and Corporate Secretary, at (202) 295-1500.
Upon request, meeting notices will be made available in alternate formats to accommodate visual and hearing impairments. Individuals who have a disability and need an accommodation to attend the meeting may notify Elizabeth S. Cushing at (202) 295-1500.
10 a.m., Tuesday, June 24, 2003.
Hearing Room, 9th Floor, 601 New Jersey Avenue, NW., Washington, DC.
Open.
The Commission will consider and act upon the following in open session:
Any person attending this meeting who requires special accessibility features and/or auxiliary aids, such as sign language interpreters, must inform the Commission in advance of those needs. Subject to 29 CFR 2706.150(a)(3) and 2706.160(d).
Jean Ellen, (202) 434-9950/(202) 708-9300 for TDD Relay/1-800-877-8339 for toll free.
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), as amended, notice is hereby given that a meeting of the National Council on the Arts will be held on July 10, 2003 from 2 p.m. to 5:30 p.m. in Room 527 and on July 11, 2003 from 9 a.m. to 12:15 p.m. in Room M-09 at the Nancy Hanks Center, 1100 Pennsylvania Avenue, NW., Washington, DC 20506.
The Council will meet in closed session on July 10th, from 2 to 5:30 p.m. for discussion of National Medal of Arts nominations. In accordance with the determination of the Chairman of April 30, 2003, this session will be closed to the public pursuant to subsection (c)(4),(6) and (9)(B) of section 552b of Title 5, United States Code. The remainder of the meeting, from 9 a.m. to 12:15 p.m. on July 11th, will be open to the public on a space available basis. Following opening remarks and announcements, there will be a presentation on Shakespeare in American Communities. This will be followed by Congressional, White House, and budget updates. A presentation on the American Jazz Masters program will feature NEA staff members A. B. Spellman and Wayne Brown (on the history of the program), International Association of Jazz Educators (IAJE) Executive Director Bill McFarlin (excerpts from the IAJE website), musician Jimmy Heath (Jazz Masters Fellowship recipient) and Jeb Patton of the Heath Brothers (jazz piano performance) and will include a discussion of the Chairman's new initiative and FY 05 guidelines. After a break, there will be a presentation on The Arts in Healthcare Symposium by Naj Wikoff (Director, Healing & the Arts Project, Dartmouth College) and Paula Terry (Director, NEA Office of AccessAbility). Other topics will include application review for American Jazz Masters Fellowships, Literature Fellowships/Translation, Resources for Change: Technology, and Leadership Initiatives and general discussion.
If, in the course of the open session discussion, it becomes necessary for the Council to discuss non-public commercial or financial information of intrinsic value, the Council will go into closed session pursuant to subsection (c)(4) of the Government in the Sunshine Act, 5 U.S.C. 552b. Additionally, discussion concerning purely personal information about individuals, submitted with grant applications, such as personal biographical and salary data or medical information, may be conducted by the Council in closed session in accordance with subsection (c)(6) of 5 U.S.C. 552b.
Any interested persons may attend, as observers, Council discussions and reviews that are open to the public. If you need special accommodations due to a disability, please contact the Office of AccessAbility, National Endowment for the Arts, 1100 Pennsylvania Avenue, NW., Washington, DC 20506, (202) 682-5532, TTY-TDD (202) 682-5429, at least seven (7) days prior to the meeting.
Further information with reference to this meeting can be obtained from the Office of Communications, National Endowment for the Arts, Washington, DC 20506, at (202) 682-5570.
Pursuant to Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), as amended, notice is hereby given that four meetings of the Combined Arts Advisory Panel to the National Council on the Arts will be held at the Nancy Hanks Center, 1100 Pennsylvania Avenue, NW., Washington, DC, 20506 as follows:
The closed meetings and portions of meetings are for the purpose of Panel review, discussion, evaluation, and recommendation on applications for financial assistance under the National Foundation on the Arts and the Humanities Act of 1965, as amended, including information given in confidence to the agency by grant applicants. In accordance with the determination of the Chairman of April 30, 2003, these sessions will be closed to the public pursuant to (c)(4)(6) and (9)(B) of section 552b of Title 5, United States Code.
Any person may observe meetings, or portions thereof, of advisory panels that are open to the public, and, if time allows, may be permitted to participate in the panel's discussions at the discretion of the panel chairman and with the approval of the full-time Federal employee in attendance.
If you need special accommodations due to a disability, please contact the Office of AccessAbility, National Endowment for the Arts, 1100 Pennsylvania Avenue, NW., Washington, DC 20506, 202/682-5532, TDY-TDD 202/682-5496, at least seven (7) days prior to the meeting.
Further information with reference to this meeting can be obtained from Ms. Kathy Plowitz-Worden, Office of Guidelines & Panel Operations, National Endowment for the Arts, Washington, DC 20506, or call 202/682-5691.
The National Endowment for the Humanities.
Notice of meetings.
Pursuant to the provisions of the Federal Advisory Committee Act (Pub. L. 92-463, as amended), notice is hereby given that the following meetings of the Humanities Panel will be held at the Old Post Office, 1100 Pennsylvania Avenue, NW., Washington, DC 20506.
Heather Gottry, Acting Advisory Committee Management Officer, National Endowment for the Humanities, Washington, DC 20506; telephone (202) 606-8322. Hearing-impaired individuals are advised that information on this matter may be obtained by contacting the Endowment's TDD terminal on (202) 606-8282.
The proposed meetings are for the purpose of panel review, discussion, evaluation and recommendation on applications for financial assistance under the National Foundation on the Arts and the Humanities Act of 1965, as amended, including discussion of information given in confidence to the agency by the grant applicants. Because the proposed meetings will consider information that is likely to disclose trade secrets and commercial or financial information obtained from a person and privileged or confidential and/or information of a personal nature the disclosure of which would constitute a clearly unwarranted invasion of personal privacy, pursuant to authority granted me by the Chairman's Delegation of Authority to Close Advisory Committee meetings, dated July 19, 1993, I have determined that these meetings will be closed to the public pursuant to subsections (c) (4), and (6) of section 552b of title 5, United States Code.
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Nuclear Regulatory Commission (NRC).
Notice of the OMB review of information collection and solicitation of public comment.
The NRC has recently submitted to OMB for review the following proposal for the collection of information under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35). The NRC hereby informs potential respondents that an agency may not conduct or sponsor, and that a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
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A copy of the final supporting statement may be viewed free of charge at the NRC Public Document Room, One White Flint North, 11555 Rockville Pike, Poom O-1 F21, Rockville, MD 20852. OMB clearance requests are available at the NRC worldwide Web site (
Comments and questions should be directed to the OMB reviewer listed below by July 24, 2003. Comments received after this date will be considered if it is practical to do so, but assurance of consideration cannot be given to comments received after this date.
Comments can also be submitted by telephone at (202) 395-3087.
The NRC Clearance Officer is Brenda Jo. Shelton, 301-415-7233.
For the Nuclear Regulatory Commission.
The U.S. Nuclear Regulatory Commission (NRC) is considering issuance of a license amendment to Materials License 49-21194-01, issued to Enviro-Test Laboratories (the licensee), to authorize decommissioning of its facility in Casper, Wyoming.
The licensee is currently authorized to possess a variety of radioactive isotopes for environmental and bioassay sampling; for use as laboratory standards and calibration sources; and for evaluation of leak tests as a customer service. On October 1, 2002, the licensee submitted a decommissioning plan (DP) to the NRC for review and approval. By letter dated January 28, 2003, the NRC requested additional information to supplement the DP. Supplemental information was provided to the NRC by letter dated June 2, 2003. An NRC administrative review, documented in a letter to Enviro-Test Laboratories dated June 11, 2003, found the DP acceptable to begin a technical review. In addition, the licensee submitted an NRC Form 314, “Certificate of Disposition of Materials,” dated January 31, 2003, requesting termination of its materials license.
If the NRC approves the DP, the approval will be documented in an amendment to NRC License No. 49-21194-01. However, before approving the proposed amendment, the NRC will need to make the findings required by the Atomic Energy Act of 1954, as amended, and NRC's regulations. These findings will be documented in a Safety Evaluation Report and an Environmental Assessment.
In accordance with 10 CFR 20.1405, the NRC is providing notice to individuals in the vicinity of the site that the NRC is in receipt of a DP and will accept comments concerning this decommissioning proposal and its associated environmental impacts. Comments with respect to this action should be provided in writing within 30 days of this notice and addressed to D. Blair Spitzberg, Ph.D., Chief, Fuel Cycle and Decommissioning Branch, Division of Nuclear Materials Safety, Region IV, U.S. Nuclear Regulatory Commission, 611 Ryan Plaza Drive, Suite 400, Arlington, Texas 76011-4005. Telephone: (817) 860-8191, fax (817) 860-8188, e-mail:
NRC also provides notice that this is a proceeding on an application for an amendment of a license falling within the scope of subpart L, “Informal Hearing Procedures for Adjudications in Materials and Operator Licensing Proceedings,” of NRC's rules and practice for domestic licensing proceedings in 10 CFR part 2. Whether or not a person has or intends to provide comments as set out in section II above, pursuant to § 2.1205(a), any person whose interest may be affected by this proceeding may file a request for a hearing in accordance with § 2.1205(d). A request for a hearing must be filed within thirty (30) days of the date of publication of this
1. By delivery to Secretary, U.S. Nuclear Regulatory Commission, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852-2738; between 7:45 a.m. and 4:15 p.m., Federal workdays; or
2. By mail, telegram, or facsimile (301-415-1101) addressed to the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. Attention: Rulemakings and Adjudications Staff.
In accordance with 10 CFR § 2.1205(f), each request for a hearing must also be served, by delivering it personally or by mail, to:
1. The applicant; Mr. Erv Callin, Director, Environmental Services, Enviro-Test Laboratories, 9936 67th Ave., Edmonton, AB T6EOP5, and;
2. The NRC staff; by delivery to the General Counsel, U.S. Nuclear Regulatory Commission, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852-2738, between 7:45 a.m. and 4:15 p.m., Federal workdays, or by mail, addressed to
In addition to meeting other applicable requirements of 10 CFR part 2 of the NRC's regulations, a request for a hearing filed by a person other than an applicant must describe in detail:
1. The interest of the requester in the proceeding;
2. How that interest may be affected by the results of the proceeding, including the reasons why the requester should be permitted a hearing, with particular reference to the factors set out in § 2.1205(h);
3. The requester's areas of concern about the licensing activity that is the subject matter of the proceeding; and
4. The circumstances establishing that the request for a hearing is timely in accordance with § 2.1205(d).
There are no public meetings scheduled for this proceeding.
The application for the license amendment and supporting documentation are available for inspection at NRC's Public Electronic Reading Room at
For the Nuclear Regulatory Commission.
The U.S. Nuclear Regulatory Commission (NRC) is considering the issuance of a license amendment to Nextran for Materials License No. 29-23754-01, to authorize release of its facility in Princeton, New Jersey for unrestricted use and has prepared an Environmental Assessment (EA) in support of this action in accordance with the requirements of 10 CFR part 51. Based on the EA, the NRC has concluded that a Finding of No Significant Impact (FONSI) is appropriate.
The purpose of the proposed action is to allow for the release of the licensee's Princeton, New Jersey facility for unrestricted use. Nextran (previously known as DNX) has been authorized by NRC since September 12, 1989, to use radioactive materials for research and development purposes at the site. On May 1, 2003, Nextran requested that NRC release the facility for unrestricted use. Nextran has conducted surveys of the facility and determined that the facility meets the license termination criteria in subpart E of 10 CFR part 20.
The NRC staff has evaluated Nextran's request and the results of the surveys and has concluded that the completed action complies with 10 CFR part 20. The staff has prepared the EA (summarized above) in support of the proposed license amendment to terminate the license and release the facility for unrestricted use. On the basis of the EA, the NRC has concluded that the environmental impacts from the proposed action are expected to be insignificant and has determined not to prepare an environmental impact statement for the proposed action.
The EA and the documents related to this proposed action, including the application for the license amendment and supporting documentation, are available for inspection at NRC's Public Electronic Reading Room at
For the Nuclear Regulatory Commission.
The U.S. Nuclear Regulatory Commission (NRC) is considering the issuance of a license amendment to Praelux Incorporated (Praelux) for Materials License No. 29-30422-01, to authorize release of its facility in Lawrenceville, New Jersey for unrestricted use and has prepared an Environmental Assessment (EA) in support of this action in accordance with the requirements of 10 CFR part 51. Based on the EA, the NRC has concluded that a Finding of No Significant Impact (FONSI) is appropriate.
The purpose of the proposed action is to allow for the release of the licensee's Lawrenceville, New Jersey facility for unrestricted use. Praelux (previously known as seQ, Ltd.) was authorized by NRC from January 16, 1998, to use radioactive materials for research and development purposes at the site. On May 14, 2003, Praelux requested that NRC release the facility for unrestricted use. Praelux has conducted surveys of the facility and determined that the
The NRC staff has evaluated Praelux's request and the results of the surveys and has concluded that the completed action complies with 10 CFR part 20. The staff has prepared the EA (summarized above) in support of the proposed license amendment to terminate the license and release the facility for unrestricted use. On the basis of the EA, the NRC has concluded that the environmental impacts from the proposed action are expected to be insignificant and has determined not to prepare an environmental impact statement for the proposed action.
The EA and the documents related to this proposed action, including the application for the license amendment and supporting documentation, are available for inspection at NRC's Public Electronic Reading Room at
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Weeks of June 23, 30, July 7, 14, 21, 28, 2003.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and closed.
emsp;
There are no meetings scheduled for the Week of June 23, 2003.
There are no meetings scheduled for the Week of July 7, 2003.
There are no meetings scheduled for the Week of July 14, 2003.
There are no meetings scheduled for the Week of July 21, 2003.
There are no meetings scheduled for the Week of July 28, 2003.
* The schedule for Commission meetings is subject to change on short notice. To verify the status of meetings call (recording)—(301) 415-1292. Contact persons for more information: David Louis Gamberoni (301) 415-1651.
The NRC Commission Meeting Schedule can be found on the Internet at:
This notice is distributed by mail to several hundred subscribers; if you no longer wish to receive it, or would like to added to the distribution, please contact the Office of the Secretary, Washington, DC 20555 (301-415-1969). In addition, distribution of this meeting notice over the Internet system is available. If you are interested in receiving this Commission meeting schedule electronically, please send an electronic message to dkw@nrc.gov.
Pursuant to Public Law 97-415, the U.S. Nuclear Regulatory Commission (the Commission or NRC staff) is publishing this regular biweekly notice. Public Law 97-415 revised section 189 of the Atomic Energy Act of 1954, as amended (the Act), to require the Commission to publish notice of any amendments issued, or proposed to be issued, under a new provision of section 189 of the Act. This provision grants the Commission the authority to issue and make immediately effective any amendment to an operating license upon a determination by the Commission that such amendment involves no significant hazards consideration, notwithstanding the pendency before the Commission of a request for a hearing from any person.
This biweekly notice includes all notices of amendments issued, or proposed to be issued from, May 30, 2003, through June 12, 2003. The last biweekly notice was published on June 10, 2003 (68 FR 28844).
The Commission has made a proposed determination that the following amendment requests involve no significant hazards consideration. Under the Commission's regulations in 10 CFR 50.92, this means that operation of the facility in accordance with the proposed amendment would not (1) involve a significant increase in the probability or consequences of an accident previously evaluated; or (2) create the possibility of a new or different kind of accident from any accident previously evaluated; or (3) involve a significant reduction in a margin of safety. The basis for this proposed determination for each amendment request is shown below.
The Commission is seeking public comments on this proposed determination. Any comments received within 30 days after the date of publication of this notice will be considered in making any final determination.
Normally, the Commission will not issue the amendment until the expiration of the 30-day notice period. However, should circumstances change during the notice period such that failure to act in a timely way would result, for example, in derating or shutdown of the facility, the Commission may issue the license amendment before the expiration of the 30-day notice period, provided that its final determination is that the amendment involves no significant hazards consideration. The final determination will consider all public and State comments received before action is taken. Should the Commission take this action, it will publish in the
Written comments may be submitted by mail to the Chief, Rules and Directives Branch, Division of Administrative Services, Office of Administration, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, and should cite the publication date and page number of this
By July 24, 2003, the licensee may file a request for a hearing with respect to issuance of the amendment to the subject facility operating license and any person whose interest may be affected by this proceeding and who wishes to participate as a party in the proceeding must file a written request for a hearing and a petition for leave to intervene. Requests for a hearing and a petition for leave to intervene shall be filed in accordance with the Commission's “Rules of Practice for Domestic Licensing Proceedings” in 10 CFR part 2. Interested persons should consult a current copy of 10 CFR 2.714, which is available at the Commission's PDR, located at One White Flint North, Public File Area 01F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible from the Agencywide Documents Access and Management System's (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site,
As required by 10 CFR 2.714, a petition for leave to intervene shall set forth with particularity the interest of the petitioner in the proceeding, and how that interest may be affected by the results of the proceeding. The petition should specifically explain the reasons why intervention should be permitted with particular reference to the following factors: (1) The nature of the petitioner's right under the Act to be made a party to the proceeding; (2) the nature and extent of the petitioner's property, financial, or other interest in the proceeding; and (3) the possible effect of any order which may be entered in the proceeding on the petitioner's interest. The petition should also identify the specific aspect(s) of the subject matter of the proceeding as to which petitioner wishes to intervene. Any person who has filed a petition for leave to intervene or who has been admitted as a party may amend the petition without requesting leave of the Board up to 15 days prior to the first prehearing conference scheduled in the proceeding, but such an amended petition must satisfy the specificity requirements described above.
Not later than 15 days prior to the first prehearing conference scheduled in the proceeding, a petitioner shall file a supplement to the petition to intervene which must include a list of the contentions which are sought to be litigated in the matter. Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the petitioner shall provide a brief explanation of the bases of the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the petitioner intends to rely in proving the contention at the hearing. The petitioner must also provide references to those specific sources and documents of which the petitioner is aware and on which the petitioner intends to rely to establish those facts or expert opinion. Petitioner must provide sufficient information to show that a genuine dispute exists with the applicant on a material issue of law or fact. Contentions shall be limited to matters within the scope of the amendment under consideration. The contention must be one which, if proven, would entitle the petitioner to relief. A petitioner who fails to file such a supplement which satisfies these requirements with respect to at least one contention will not be permitted to participate as a party.
Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene, and have the opportunity to participate fully in the conduct of the hearing, including the opportunity to present evidence and cross-examine witnesses.
If a hearing is requested, the Commission will make a final determination on the issue of no significant hazards consideration. The final determination will serve to decide when the hearing is held.
If the final determination is that the amendment request involves no significant hazards consideration, the Commission may issue the amendment and make it immediately effective, notwithstanding the request for a hearing. Any hearing held would take place after issuance of the amendment.
If the final determination is that the amendment request involves a significant hazards consideration, any hearing held would take place before the issuance of any amendment.
A request for a hearing or a petition for leave to intervene must be filed with the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff, or may be delivered to the Commission's PDR, located at One White Flint North, Public File Area 01F21, 11555 Rockville Pike (first floor), Rockville, Maryland, by the above date. Because of continuing disruptions in delivery of mail to United States Government offices, it is requested that petitions for leave to intervene and requests for hearing be transmitted to the Secretary of the Commission either by means of facsimile transmission to (301) 415-1101 or by e-mail to
Nontimely filings of petitions for leave to intervene, amended petitions, supplemental petitions and/or requests for a hearing will not be entertained absent a determination by the Commission, the presiding officer or the Atomic Safety and Licensing Board that the petition and/or request should be granted based upon a balancing of factors specified in 10 CFR 2.714(a)(1)(i)-(v) and 2.714(d).
For further details with respect to this action, see the application for amendment which is available for public inspection at the Commission's
1. Would not involve a significant increase in the probability or consequences of an accident previously evaluated.
The proposed Technical Specification changes do not affect the design, operational characteristics, function or reliability of the DGs. The DGs are not accident initiators, and extending the DG Required Action Completion Times will not impact the frequency of any previously evaluated accidents. The design basis accidents will remain the same postulated events described in the Updated Final Safety Analysis Report. In addition, extending the DG Required Action Completion Times will not impact the consequences of an accident previously evaluated. The consequences of previously evaluated accidents will remain the same during the proposed extended Required Action Completion Times as during the current Required Action Completion Times. The ability of the remaining DGs to mitigate the consequences of an accident will not be affected since no additional failures are postulated while equipment is inoperable within the Technical Specification Required Action Completion Times. Therefore, the proposed changes will not increase the probability or consequences of an accident previously evaluated.
The duration of a Technical Specification Required Action Completion Time is determined considering that there is a minimal possibility that an accident will occur while a component is removed from service. A risk informed assessment was performed that concluded that the plant risk is acceptable and consistent with the guidance contained in Regulatory Guide 1.177.
The additional proposed changes to renumber action requirements and the correction of a misspelled word will not result in any technical changes to the current requirements. Therefore, these additional proposed changes will not increase the probability or consequences of an accident previously evaluated.
2. Would not create the possibility of a new or different [kind] of accident from any accident previously evaluated.
The proposed changes to the Technical Specifications do not impact any system or component in a manner that could cause an accident. The proposed changes will not alter the plant configuration or require any unusual operator actions. The proposed changes will not alter the way any structure, system, or component functions, and will not significantly alter the manner in which the plant is operated. There will be no adverse effect on plant operation or accident mitigation equipment. The response of the plant and the operator following an accident will not be significantly different. In addition, the proposed changes do not introduce any new failure modes. Therefore, the proposed changes will not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. Would not involve a significant reduction in a margin of safety.
The margin of safety provided by the DGs is to provide emergency back-up power supply to systems required to mitigate the consequences of postulated accidents. The engineered safety features systems on either of the two trains for each unit provide for the minimum safety functions necessary to shutdown the units and maintain it in a safe shutdown condition. Each of the two trains can be powered from one of the offsite power sources or its associated DG. In addition, the 0C DG (Station Blackout DG) is available to provide power to any of the trains. This design provides adequate defense in-depth to ensure that diverse power sources are available to accomplish the required safety functions. Thus, with a safety-related DG out-of-service, there is sufficient means to accomplish the safety functions and prevent the release of radioactive material in the event of an accident.
The proposed change does not affect any of the assumptions or inputs to the Updated Final Safety Analysis Report and does not reduce the decrease in severe accident risk achieved with the issuance of the Station Blackout Rule, 10 CFR 50.63, “Loss of All Alternating Current Power.”
Therefore, the proposed change does not involve [a] significant reduction in the margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendments request involves no significant hazards consideration.
Attorney for licensee: Jay E. Silberg, Esquire, Shaw, Pittman, Potts and Trowbridge, 2300 N Street, NW., Washington, DC 20037.
1. The proposed changes do not involve a significant increase in the probability or consequences of an accident previously evaluated.
The proposed change will allow use of a load drop analysis performed for handling the reactor cavity shield blocks weighing greater than 110 tons with the reactor building crane during power operation. The load drop analysis demonstrates that dropping a reactor cavity shield block within the designated safe load path from the heights assumed in the analysis will not affect the capability of safety-related equipment to perform its function.
Therefore, the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. The proposed changes do not create the possibility of a new or different kind of accident from any accident previously evaluated.
The proposed change will allow use of a load drop analysis performed for handling the reactor cavity shield blocks weighing greater than 110 tons with the reactor building crane during power operation. The load drop analysis demonstrates that dropping a reactor cavity shield block within the designated safe load path from the heights assumed in the analysis will not affect the capability of safety-related equipment to perform its function. Therefore, the proposed change will not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. The proposed changes do not involve a significant reduction in a margin of safety.
The proposed change will allow use of a load drop analysis performed for handling the reactor cavity shield blocks weighing
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the requested amendments involve no significant hazards consideration.
The 7-day frequency associated with SR 3.7.7.1 was established in the LaSalle County Station (LSCS) TS during conversion to Improved Technical Specifications (ITS) format due to the testing frequency contained in the LSCS custom TS and the difficulties experienced with other Electro-Hydraulic Control (EHC) system valves to consistently pass their surveillance tests. LSCS has recently re-evaluated the performance of these valves and has determined that the current performance of these valves supports decreasing the testing frequency of the BPVs from 7 to 31 days.
1. The proposed change does not involve a significant increase in probability or consequences of an accident previously evaluated.
The proposed change will decrease the frequency associated with Surveillance Requirement (SR) 3.7.7.1 for turbine bypass valve (BPV) testing from 7 to 31 days. The proposed change is consistent with the testing frequency contained in NUREG-1434, “Standard Technical Specifications General Electric Plants, BWR/6,” Revision 2, dated June 2001, for BPV testing. The performance of BPV surveillance testing is not a precursor to any accident previously evaluated.
Thus, the proposed change does not have any effect on the probability of an accident previously evaluated.
The Main Turbine Bypass System is required to be operable to limit peak pressure in the main steam lines and maintain reactor pressure within acceptable limits during events that cause rapid pressurization, such that the Safety Limit Minimum Critical Power Ratio (MCPR) is not exceeded. An operable Main Turbine Bypass System requires the BPVs to open in response to increasing main steam line pressure. The performance of BPVs surveillance testing provides assurance that the valves will operate as assumed in accidents previously evaluated. Thus, the radiological consequences of any accident previously evaluated are not increased.
Therefore, the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. The proposed change does not create the possibility of a new or different kind of accident from any accident previously evaluated.
The proposed change does not affect the control parameters governing unit operation and does not introduce any new equipment, modes of system operation or failure mechanisms. Therefore, the proposed change does not create the possibility of a new or different kind of accident from any previously evaluated.
3. The proposed changes do not involve a significant reduction in a margin of safety.
The proposed change will decrease the frequency associated with SR 3.7.7.1 for BPV testing from 7 to 31 days. The proposed change is consistent with the BPV testing frequency contained in NUREG-1433, Revision 2, and does not affect the design parameters or the setpoints associated with BPV operation. Therefore, the proposed changes do not involve a significant reduction in a margin of safety.
Based upon the above, Exelon Generation Company concludes that the proposed amendment presents no significant hazards consideration under the standards set forth in 10 CFR 50.92(c), and, accordingly, a finding of “no significant hazards consideration” is justified.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the requested amendments involve no significant hazards consideration.
The NRC staff issued a notice of opportunity for comment in the
As required by 10 CFR 50.91(a), the licensee has provided its analysis of the issue of no significant hazards consideration, which is presented below:
1. Does the proposed change involve a significant increase in the probability or consequences of an accident previously evaluated?
The proposed changes involve rewording of the existing Technical Specifications to be
2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated?
The proposed changes involve rewording of the existing Technical Specifications to be consistent with NUREG-1431, Revision 2. The change does not involve a physical alteration of the plant (no new or different type of equipment will be installed) or changes in methods governing normal plant operation. The changes will not impose any new or different requirements or eliminate any existing requirements. Therefore, the proposed changes will not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. Does the proposed change involve a significant reduction in a margin of safety?
The proposed changes involve rewording of the existing Technical Specifications to be consistent with NUREG-1431, Revision 2. The changes are administrative in nature and will not involve any technical changes. The changes will not reduce a margin of safety because they have no impact on any safety analysis assumptions. Also, since these changes are administrative in nature, no question of safety is involved. Therefore, there will be no reduction in a margin of safety.
As required by 10 CFR 50.91(a), an analysis of the issue of no significant hazards on consideration is presented below:
Criterion 1—The Proposed Change Does Not Involve a Significant Increase in the Probability or Consequences of an Accident Previously Evaluated
The proposed change relaxes the time allowed to perform a missed surveillance. The time between surveillances is not an initiator of any accident previously evaluated. Consequently, the probability of an accident previously evaluated is not significantly increased. The equipment being tested is still required to be operable and capable of performing the accident mitigation functions assumed in the accident analysis. As a result, the consequences of any accident previously evaluated are not significantly affected. Any reduction in confidence that a standby system might fail to perform its safety function due to a missed surveillance is small and would not, in the absence of other unrelated failures, lead to an increase in consequences beyond those estimated by existing analyses. The addition of a requirement to assess and manage the risk introduced by the missed surveillance will further minimize possible concerns. Therefore, this change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
Criterion 2—The Proposed Change Does Not Create the Possibility of a New or Different Kind of Accident From Any Previously Evaluated The proposed change does not involve a physical alteration of the plant (no new or different type of equipment will be installed) or a change in the methods governing normal plant operation. A missed surveillance will not, in and of itself, introduce new failure modes or effects and any increased chance that a standby system might fail to perform its safety function due to a missed surveillance would not, in the absence of other unrelated failures, lead to an accident beyond those previously evaluated. The addition of a requirement to assess and manage the risk introduced by the missed surveillance will further minimize possible concerns. Thus, this change does not create the possibility of a new or different kind of accident from any accident previously evaluated.
Criterion 3—The Proposed Change Does Not Involve a Significant Reduction in the Margin of Safety
The extended time allowed to perform a missed surveillance does not result in a significant reduction in the margin of safety. As supported by the historical data, the likely outcome of any surveillance is verification that the LCO [Limiting Condition for Operation] is met. Failure to perform a surveillance within the prescribed frequency does not cause equipment to become inoperable. The only effect of the additional time allowed to perform a missed surveillance on the margin of safety is the extension of the time until inoperable equipment is discovered to be inoperable by the missed surveillance. However, given the rare occurrence of inoperable equipment, and the rare occurrence of a missed surveillance, a missed surveillance on inoperable equipment would be very unlikely. This must be balanced against the real risk of manipulating the plant equipment or condition to perform the missed surveillance. In addition, parallel trains and alternate equipment are typically available to perform the safety function of the equipment not tested. Thus, there is confidence that the equipment can perform its assumed safety function.
Therefore, this change does not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis of Item 1 and the licensee's reference to the analysis included in the consolidated line-item improvement process
1. Does the proposed change involve a significant increase in the probability or consequences of an accident previously evaluated?
The new pressurizer high level limit is more restrictive than the existing limit, and accident initial conditions, probability, and assumptions remain as previously analyzed. The proposed change to the pressurizer allowed outage time will have no significant effect on accident initiation frequency. The proposed changes do not invalidate the assumptions used in evaluating the radiological consequences of any accident. Therefore, the proposed changes do not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated?
The proposed changes do not introduce any new or different accident initiators. Therefore, the proposed changes do not create the possibility of a new or different kind of accident from any previously evaluated.
3. Does the proposed change involve a significant reduction in a margin of safety?
The proposed change to the pressurizer high level limit will ensure an adequate margin of safety is maintained. The proposed change to the pressurizer allowed outage time is minimal and will not have a significant effect on any margin of safety. Therefore, the proposed changes do not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. The proposed changes do not involve a significant increase in the probability or consequences of an accident previously evaluated.
The proposed changes will not increase the probability or consequence of any accident for the following reasons:
(1) The proposed changes relocate the Pressure—Temperature (P-T) limit curves and low temperature over pressure protection (LTOP) system setpoints to the Pressure and Temperature Limits Report (PTLR). Compliance with these curves and limits continues to be required by the Technical Specifications (TSs). Changes to the curves will be controlled by TS 5.9.6, which contains the NRC approved methodologies used in the development of the PTLR. The change to the P-T limit curve as shown on Figure 5-1 of the PTLR is in compliance with Reference 10.11 [of the licensee's October 8, 2002, submittal], Westinghouse Electric Company/Combustion Engineering's (W/CE's) methodology and ASME Code Case N-640 for performing P-T limit curves.
(2) Revisions to the LTOP system limits can only be made in accordance with the approved methodologies stated in TS 5.9.6 with any resulting setpoint changes controlled by the 10 CFR 50.59 process. The PTLR in combination with the limitations imposed by the TSs will ensure the integrity of the reactor vessel pressure boundary.
(3) The conservative, but lower minimum boltup temperature and LTOP enable temperature are in compliance with Reference 10.12 [of the licensee's October 8, 2002, submittal]. Since the P-T limit curves and LTOP analysis are analyzed to the same temperatures as these proposed temperature values, there is no reduction to the margin of safety.
(4) Restricting the RCS temperature at which the reactor can be made critical is more conservative than the minimum temperature requirements for core critical operations based on fracture mechanics considerations as required by Reference 10.11 [of the licensee's October 8, 2002, submittal] during physics testing.
(5) Addition of a maximum pressure to the safety injection tanks (SITs) ensures compliance with Criterion 2 of 10 CFR 50.36(c)(2)(ii).
Therefore, the probability or consequence of any accident is not increased.
2. The proposed changes do not create the possibility of a new or different kind of accident from any accident previously evaluated.
The proposed revision does not change any equipment required to mitigate the consequences of an accident. The continued use of the same TS administrative controls prevents the possibility of a new or different kind of accident. Since the proposed changes do not involve the addition or modification of equipment nor alter the design of plant systems, the proposed changes do not create the possibility of a new or different kind of accident from any accident previously evaluated. The changes proposed do not change how design basis accident events are postulated nor do the changes themselves initiate a new kind of accident or failure mode with a unique set of conditions (proposed administrative controls). Therefore, the proposed change does not create the possibility of a new or different kind of accident from any previously evaluated.
3. The proposed changes do not involve a significant reduction in a margin of safety.
Relocating the P-T limit curves and LTOP system setpoints to the PTLR is in compliance with Reference 10.7 [of the licensee's October 8, 2002, submittal]. Future updates of the PTLR will be conducted under the 10 CFR 50.59 process utilizing NRC approved methodologies. Updating the P-T limit curve is in accordance with Reference 10.11 [of the licensee's October 8, 2002, submittal], W/CE's methodology and ASME Code Case N-640. Reduction of the minimum boltup temperature and LTOP enable temperature is in compliance with Reference 10.12 [of the licensee's October 8, 2002, submittal]. Restricting the reactor coolant system (RCS) temperature at which the reactor can be made critical is more conservative than the minimum temperature requirements for core critical operations based on fracture mechanics considerations as required by Reference 10.11 [of the licensee's October 8, 2002, submittal], during physics testing. Addition of a maximum pressure to the SITs is in accordance with Criterion 2 of 10 CFR 50.36(c)(2)(ii). Additionally, the LTOP methodology and analysis conforms to Reference 10.10 [of the licensee's October 8, 2002, submittal]. Therefore, the proposed changes do not involve a significant reduction to the margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. The proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
The proposed changes revise the frequency (from 18 months to 24 months), and acceptance criteria for laboratory testing of the charcoal adsorbers in the engineered safety feature (ESF) ventilation systems. The testing is performed offsite on charcoal samples taken from the ventilation systems, and would have no impact on any accident initiator, or change the consequences of any previously analyzed accident. Continued compliance with industry standards and Diablo Canyon Power Plant test data ensure that the revised requirements would continue to ensure the charcoal adsorbers are capable of performing their intended safety function; therefore, the changes would not affect the accident mitigation capabilities of the ESF ventilation systems.
The preheaters in the control room ventilation system (CRVS) and auxiliary building ventilation system (ABVS) are not initiators of analyzed events, are no longer credited in mitigating design basis accidents or transients, and are therefore not required for system operability. The deletion of the requirement to demonstrate the capability of the preheaters every 24 months, and the changes to the action requirements and surveillance requirements for the CRVS and ABVS would not affect the assumed accident mitigation capabilities of these ESF ventilation systems.
The proposed changes also provide for two trains of the CRVS to be inoperable for up to 24 hours as a result of the CRVS boundary being inoperable. This allowance is contingent on providing and implementing proceduralized compensatory measures to restore the boundary during that time period. Although this change does provide for an increase in the allowed time for continued plant operation in the applicable modes, its acceptability is based on the low probability of any design basis accident during that time period and the protection provided by the compensatory measures that would be established. In addition, this change has no impact on any accident initiator, and does not change the consequences of any previously analyzed accident, because the administrative controls will restore the boundary before it is required to protect control room personnel.
The proposed changes also provide for limiting the applicability of surveillance requirement (SR) 3.7.12.3, which verifies the operability of the ABVS on a safety injection (SI) signal. The limitation is imposed only when the ABVS is aligned and operating in its safety function configuration. Since the ABVS is already performing its safety function when it is in that condition, verifying the automatic capability to transfer to that configuration is unnecessary. Since this limitation is only during periods where the ABVS is in its safety function configuration it has no impact on any accident initiator, or change the consequences of any previously analyzed accident. In addition, this surveillance is still required to be current whenever the ABVS is returned to automatic.
The proposed changes also provide for limiting the required operability of the fuel handling building ventilation system (FHBVS) based on a minimum time period that all fuel assemblies in the fuel pool have not been part of a critical core. This change does reduce the current operability requirements for the FHBVS and increases the consequences of a fuel handling accident with the FHBVS inoperable. However, limiting the FHBVS operability requirements does not increase the probability of any accident, and as determined in the new fuel handling accident (FHA) analysis, the potential release levels are still well within acceptable limits and do not significantly increase the consequences of a FHA.
Therefore, the proposed changes do not involve a significant increase in the probability or consequences of any accident previously evaluated.
2. The proposed change does not create the possibility of a new or different kind of accident from any accident previously evaluated.
The ABVS, FHBVS and CRVS are accident response systems and as such cannot create accidents. The changes to the charcoal sample test requirements will not affect the method of operation of the systems. The proposed changes only affect the laboratory test acceptance criteria for the charcoal samples, and how the charcoal preheaters are credited for meeting technical specification (TS) requirements. These changes result in a more conservative testing methodology. Deletion of the preheater requirements from the TS is based on the heaters not being credited for mitigation of any accident condition and does not affect the operation of these systems. The design and operation of the CRVS, ABVS, and FHBVS are not affected by these changes. No new or different accident scenarios, transient precursors, failure mechanisms, or limiting single failures will be introduced as a result of these changes.
The proposed changes also provide for two trains of the CRVS to be inoperable for up to 24 hours as a result of the CRVS boundary being inoperable. This allowance requires proceduralized compensatory measures to protect the operators during that time period. Although this change does provide for an increase in the allowed time for continued plant operation, its acceptability is based on the low probability of any design basis accident during that time period and the protection provided by the compensatory measures that would be established. The design and operation of the control room ventilation system is not affected by this change.
The proposed changes also provide for limiting the applicability of SR 3.7.12.3, which verifies the operability of the ABVS on an SI signal. The limitation is imposed only when the ABVS is aligned and operating in its safety function configuration. Since the ABVS is already performing its safety function when it is in this condition, verifying the automatic capability to transfer to this configuration is unnecessary. Since this limitation is only during periods where the ABVS is in its safety function configuration, it does not create the possibility of a new or different kind of accident from any accident previously evaluated.
The proposed changes also provide for limiting the required operability of the FHBVS based on a minimum time period that all fuel assemblies in the fuel pool have not been part of a critical core. This change does reduce the current operability requirements for the FHBVS by limiting these requirements to the period when the system would be required to mitigate the radiological consequences of an accident to acceptable limits. However, the design and operation of the FHBVS is not affected by this change.
Therefore, the proposed changes do not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. The proposed change does not involve a significant reduction in a margin of safety.
The charcoal adsorber sample laboratory testing protocol accurately demonstrates the required performance of the adsorbers in the CRVS and ABVS following a design basis accident or in the FHBVS following a fuel handling accident outside containment. The changes in charcoal testing acceptance criteria and frequency will not affect system performance or operation. They will continue to ensure that the charcoal will perform its safety function. The decontamination efficiencies used in the offsite and control room dose analyses are not affected by this change. Therefore the offsite and control room dose analyses are not affected by this change, and offsite and control room doses will remain within the limits of 10 CFR 100 and 10 CFR 50, Appendix A, GDC [General Design Criterion] 19. Although there is a reduction in the safety factor provided by the previous testing protocol, the revised testing protocol follows current industry standards. These standards ensure adequate margin exists and that the charcoal will perform its design basis function. As a result, there is no significant reduction is [in] a margin of safety.
The proposed changes also provide for two trains of the CRVS to be inoperable for up to
The proposed changes also provide for limiting the applicability of SR 3.7.12.3, which verifies the operability of the ABVS on a SI signal. The limitation is imposed only when the ABVS is aligned and operating in its safety function configuration. Since the ABVS is already performing its safety function when it is in this condition, verifying the automatic capability to transfer to this configuration is unnecessary. Since this limitation is only during periods where the ABVS is already in its safety function configuration, the margin of safety is actually increased because the ABVS does not have to change configuration as a result of an accident to perform its safety function.
The proposed changes also provide for limiting the required operability of the FHBVS based on a minimum time period (“recently irradiated fuel”) that all fuel assemblies in the fuel pool have not been part of a critical core. This change does reduce the current operability requirements for the FHBVS by limiting operability to the period when the system would be required to mitigate the radiological consequences of an accident to acceptable limits. This proposed change creates the potential for increased dose in the control room and at the site boundary due to a FHA outside containment. However, the new analysis demonstrates that the resultant doses are well within the Regulatory Guide (RG) 1.183 limits and within the GDC 19 limits. In the case of the offsite dose values, they remain within the RG 1.183 limits, which is considered acceptable. Based on this, the margin of safety is not significantly reduced.
In the new FHA analysis, the offsite and control room doses due to a FHA outside containment have been evaluated using conservative assumptions, such as no credit being taken for the functionality of either FHBVS train's activated charcoal adsorber sections, the control room ventilation system remains in normal mode with no charcoal filtration available, and all airborne activity caused by the FHA is released at a linear rate over two hours. These conservative assumptions ensure the results of the calculation bounds the expected dose. The normal availability of the fuel handling building and control room filtration systems will reduce the potential control room and offsite doses in the event of a FHA, and provides additional margin to the calculated doses.
Therefore, the proposed changes do not involve a significant reduction in any margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment requests involve no significant hazards consideration.
1. The proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
The proposed changes revise the Technical Specification (TS) 3.8.1 completion times for Required Actions A.2 and B.4 associated with the diesel generators (DGs). The proposed changes allow an extension of the current TS completion time from 7 days to 14 days for an inoperable DG.
The proposed changes do not affect the design of the DGs, the operational characteristics or function of the DGs, the interfaces between the DGs and other plant systems, or the reliability of the DGs. Required Actions and the associated completion times are not initiating conditions for any accident previously evaluated, and the DGs are not initiators of any previously evaluated accidents. The DGs mitigate the consequences of previously evaluated accidents including loss of offsite power. The consequences of a previously analyzed event will not be significantly affected by the extended DG completion time since the DGs will continue to be capable of performing their accident mitigation function as assumed in the accident analysis. Thus the consequences of accidents previously analyzed are unchanged between the existing TS requirements and the proposed changes. The consequences of an accident are independent of the time the DGs are out of service as long as adequate DG availability is assured. The proposed changes will not result in a significant decrease in DG availability so that the assumptions regarding DG availability are not impacted.
To fully evaluate the effect of the proposed DG completion time extension, probabilistic risk assessment methods and a deterministic analysis were utilized. The results of the analysis show no significant increase in core damage frequency and large early release frequency.
Therefore, the proposed changes do not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. The proposed change does not create the possibility of a new or different accident from any accident previously evaluated.
The proposed changes do not involve a change in the design, configuration, or method of operation of the plant. The proposed changes will not alter the manner in which equipment operation is initiated, nor will the function demands on credited equipment be changed. No alteration in the procedures which ensure that the plant remains within analyzed limits is being proposed, and no change is being made to the procedures relied upon to respond to an off-normal event. As such, no new failure modes are being introduced.
Therefore, the proposed changes do not create the possibility of a new or different accident from any accident previously evaluated.
3. The proposed change does not involve a significant reduction in a margin of safety.
The proposed 14 day DG completion time is based upon both a deterministic evaluation and a risk-informed assessment. The availability of offsite power coupled with the availability of the other DGs in the affected unit, the unit auxiliary feedwater pumps, and all auxiliary saltwater trains (including the cross-tie) and utilization of the Online Risk Management Program while a DG is inoperable, provide adequate compensation for the potential small incremental increase in plant risk of the extended DG completion time. In addition, the increased availability of the DGs during refueling outages provides a reduction in plant risk during shutdown periods.
The risk assessment performed to support this license amendment request concluded that the increase in plant risk is small and consistent with the NRC's Safety Goal Policy Statement, “Use of Probabilistic Risk Assessment Methods in Nuclear Activities: Final Policy Statement,”
Therefore, the proposed change does not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment requests involve no significant hazards consideration.
1. Does the proposed change involve a significant increase in the probability of occurrence or consequences of an accident previously evaluated?
The OPRM system is not an initiator to any accident sequence analyzed in the Final Safety Analysis Report (FSAR). The changes do not involve a physical change to structures, systems, or components (SSCs) since the RPS [reactor protection system] trip function has not been installed and does not alter the method of operation or control of SSCs since the OPRM system has not been declared OPERABLE. The current assumptions in the safety analysis regarding accident initiators and mitigation of accidents (including assumed protection of fuel design limits) are unaffected by these changes. No additional failure modes or mechanisms are being introduced and the likelihood of previously analyzed failures remains unchanged.
Operation in accordance with the proposed Technical Specification (TS) ensures that the protection from thermal hydraulic instabilities remains as previously evaluated and the protection for fuel design limits remain as described in the FSAR. Therefore, the mitigative functions will continue to provide the protection assumed by the existing analysis.
Therefore, this change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated?
The proposed change does not involve a physical alteration of the plant. No new equipment is being introduced, and installed equipment is not being operated in a new or different manner. There are no setpoints affected by this change at which protective or mitigative actions are initiated. This change will not alter the manner in which equipment operation is initiated, nor will the functional demands on credited equipment be changed. No alterations in the procedures that ensure the plant remains within analyzed limits are being proposed, and no changes are being made to the procedures relied upon to respond to an off-normal event as described in the FSAR. As such, no new failure modes are being introduced. The change does not alter assumptions made in the safety analysis and licensing basis.
3. Does the proposed change involve a significant reduction in a margin of safety?
The margin of safety is established through equipment design, operating parameters, and the setpoints at which automatic actions are initiated. The proposed change is acceptable because the required protection from thermal hydraulic instabilities remains as previously evaluated and the protection for fuel design limits remain as described in the FSAR. Operation in accordance with the proposed TS ensures that the margin of safety is maintained. Therefore, the change does not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. Does the proposed license amendment involve a significant increase in the probability or consequences of an accident previously evaluated?
The Containment Spray System is not considered an initiator of any analyzed event. The proposed change does not have a detrimental impact on the integrity of any plant structure, system, or component that may initiate an analyzed event. The proposed change will not alter the operation or otherwise increase the failure probability of any plant equipment that can initiate an analyzed accident.
This change does not affect the plant design. There is no increase in the likelihood of formation of significant corrosion products. Due to their location at the top of the containment, introduction of foreign material into the spray headers is unlikely. Foreign material introduced during maintenance activities would be the most likely source for obstruction, and verification following such maintenance would confirm the nozzles remain unobstructed.
Consequently, there is no significant increase in the probability of an accident previously evaluated.
The Containment Spray System is designed to address the consequences of a LOCA [loss
Therefore, the consequences of an accident previously evaluated are not significantly affected by the proposed change.
2. Does the proposed license amendment create the possibility of a new or different kind of accident from any accident previously evaluated? The proposed change will not physically alter the plant (no new or different type of equipment will be installed) or change the methods governing normal plant operation. Therefore, this change will not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. Does the proposed amendment involve a significant reduction in a margin of safety?
The system is not susceptible to corrosion-induced obstruction or obstruction from sources external to the system. Maintenance activities that could introduce foreign material into the system would require subsequent verification to ensure there is no nozzle blockage. The spray header nozzles are expected to remain unblocked and available in the event that the safety function is required. Therefore, the capacity of the system would remain unaffected. Hence, this change does not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the request for amendments involves no significant hazards consideration.
1. Does the proposed change involve a significant increase in the probability or consequences of an accident previously evaluated?
The proposed TS change takes credit for the assumptions made in the reanalysis of the rod withdrawal from power event already evaluated in the UFSAR [Updated Final Safety Analysis Report]. Therefore, the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated?
The proposed TS change takes credit for the assumptions made in the reanalysis of the rod withdrawal from [the] power event already evaluated in the UFSAR. Therefore, the change does not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. Does the proposed change involve a significant reduction in a margin of safety?
Margin of safety is associated with confidence in the ability of the fission product barriers (
Based on the above, STPNOC concludes that the proposed amendment involves no significant hazards consideration under the standards set forth in 10 CFR 50.92 and, accordingly, a finding of “no significant hazards consideration” is justified.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the request for amendments involves no significant hazards consideration.
1. Does the proposed change involve a significant increase in the probability or consequences of an accident previously evaluated?
No. The proposed revision does not affect plant equipment, test methods or operating practices. The modification to SQN TSs is consistent 10 CFR 50, Appendix G in conjunction with alternative methods provided in American Society of Mechanical Engineers (ASME) Code Case N-640, “Alternative Requirement Fracture Toughness for Development of P-T Limit Curves for ASME Section XI, Division 1.” The proposed change continues to provide controls for safe operation within the required limits. The proposed changes do not contribute to events or assumptions associated with postulated design basis accidents (DBA). The proposed revisions continue to maintain the required safety functions. Accordingly, the probability of an accident or the consequences of an accident previously evaluated is not increased.
2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated?
No. The proposed revision is not the result of changes to plant equipment, test methods, or operating practices. The proposed revision to the SQN Unit 2 P-T limits continues to ensure that conservative fracture toughness margins are maintained to protect against reactor pressure vessel failure. In addition, SQN's current setpoints for low-temperature overpressure protection were evaluated and are bounding for the proposed 32 EFPY P-T limits. The updated P-T limits are based on NRC approved methodology in conjunction with alternative methods provided in American Society of Mechanical Engineers (ASME) Code Case N-640, “Alternative Requirement Fracture Toughness for Development of P-T Limit Curves for ASME Section XI, Division 1.”
The reactor vessel P-T limits are operational limits and are not considered to be contributors to the generation of postulated accidents. The safety functions of the associated systems remain unchanged and do not affect the assumptions of DBAs. The operational limits continue to be governed within the TSs. Accordingly, the proposed change does not create the possibility of a new or different kind of accident.
3. Does the proposed change involve a significant reduction in a margin of safety?
No. TVA's proposed TS amendment provides revised reactor pressure vessel P-T limits that are within the design capabilities of the pressure control systems for protection of the RCS. The limits are based on conservative design margins that ensure that plant operation is within the design capacity of the reactor vessel materials. Accordingly, the function of the RCS to provide a fission product barrier is not compromised.
TVA's proposed change to revise P-T limits does not result in a change to system design features. The proposed change does not affect plant conditions that result in precursors to accidents or cause degradation of accident mitigation systems. The plant system safety functions are not altered by the proposed change.
The proposed changes allow plant operation with different P-T limits while continuing to retain conservative margins for assuring integrity of the reactor vessel and the RCS. Consequently, the proposed TS revisions do not significantly reduce the margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. Does the proposed change involve a significant increase in the probability or consequences of an accident previously evaluated.
No. The procedure changes/additions being implemented to mitigate a SCSA [station control and service air] leak in containment will only be used following a HELB in containment, a consequential rupture of an SCSA line and a failure of the outboard CIV [containment isolation valve] on the SCSA containment supply.
Operators isolate the SCSA leak on the accident unit by either manually closing a valve upstream of the stuck-open CIV or by shutting down the station air compressors. If the station air compressors are shut down prior to performing an emergency shut down of the non-accident unit or if an operator error results in an isolation of the control air supply to the non-accident unit, then at-worst, a UFSAR Condition II event is induced on the non-accident unit. For example a reactor trip from full power or a loss of normal feedwater—loss of control air to the feedwater regulator valves resulting in a loss of normal feedwater to the non-accident unit.
A UFSAR Condition II event has a frequency of one per year. Therefore, the proposed procedure changes/additions, including the potential for operator error do not result in more than a minimal increase in a previously evaluated Condition II event (1+1/40 = 1.025 less than 10 percent increase).
The operator actions being implemented to mitigate a SCSA leak in containment are performed after the occurrence of an accident on primarily non-safety-related systems, structures or components [SSCs] so they do not increase the likelihood of the occurrence of a malfunction of equipment previously evaluated in the UFSAR.
The air operated containment isolation valve is assumed to fail open due to single failure criteria and, containment isolation/integrity is maintained by the inboard check valve. The containment boundary is unaffected by the operator actions being implemented to mitigate a SCSA leak in containment. Therefore, the consequences of all accidents previously evaluated in the UFSAR remain unchanged.
2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated.
No. This change implements new manual actions for accident failure modes not previously evaluated in the UFSAR. The manual actions are required to ensure containment design pressure is not exceeded.
Operators isolate the SCSA leak on the accident unit by either manually closing an upstream isolation valve on the accident unit's SCSA containment supply or by shutting down the station air compressors. The operator actions being implemented have been determined to meet the criteria for safety-related operator actions in NRC Information Notice (IN) 97-78/ANS-58.8 and; therefore, there are no credible operator actions which would prevent isolation of a SCSA leak prior to containment design pressure being exceeded. If the station air compressors are shut down prior to performing an emergency shutdown of the non-accident unit or if an operator error results in an isolation of the SCSA supply to the non-accident unit, then at-worst, a UFSAR Condition II event occurs. Because UFSAR Condition II events have been previously identified, the operator actions being added under this change do not create the possibility of an accident of a different type than previously evaluated.
The operator actions being implemented to mitigate a SCSA leak in containment are performed after the occurrence of an accident on primarily non-safety-related SSCs so they do not create a possibility for a malfunction of an SSC important to safety with a different result than previously evaluated in the UFSAR.
3. Does the proposed change involve a significant reduction in a margin of safety.
No. The established limits for the fuel, reactor vessel or containment are not affected by the addition of operator actions to isolate a SCSA leak inside containment. Isolation of the air leak within two hours of a large break loss-of-coolant accident (LBLOCA) prevents containment pressure exceeding the peak calculated pressure. Consequently, this change does not represent a reduction in the margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. Does the proposed change involve a significant increase in the probability or consequences of an accident previously evaluated?
No. TVA's evaluation for WBN Unit 1 determined that the probability of an accident will not increase since adequate RCS flow will still be assured. Sufficient margin exists to account for all reasonable instrument uncertainties; therefore, no changes to installed equipment or hardware in the plant are required, thus the probability of an accident occurring remains unchanged. The initial conditions for all accident
Therefore, since the actual plant configuration, performance of systems, and initiating event mechanisms are not being changed, TVA has concluded that the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated?
No. There are no changes in operation of the plant that could introduce a new failure mode. No new accident scenarios have been identified. Operation of the plant will be consistent with that previously modeled,
Therefore, TVA concludes that this proposed change does not create the possibility of a new or different kind of accident from any previously evaluated.
3. Does the proposed change involve a significant reduction in a margin of safety?
No. The proposed change reflects changes due to the method used to verify RCS flow at the beginning of each cycle. However, no changes to the Safety Analysis assumptions were required; therefore, the margin of safety will remain the same. Therefore, TVA concludes that the proposed change does not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
During the period since publication of the last biweekly notice, the Commission has issued the following amendments. The Commission has determined for each of these amendments that the application complies with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the Commission's rules and regulations. The Commission has made appropriate findings as required by the Act and the Commission's rules and regulations in 10 CFR Chapter I, which are set forth in the license amendment.
Notice of Consideration of Issuance of Amendment to Facility Operating License, Proposed No Significant Hazards Consideration Determination, and Opportunity for A Hearing in connection with these actions was published in the
Unless otherwise indicated, the Commission has determined that these amendments satisfy the criteria for categorical exclusion in accordance with 10 CFR 51.22. Therefore, pursuant to 10 CFR 51.22(b), no environmental impact statement or environmental assessment need be prepared for these amendments. If the Commission has prepared an environmental assessment under the special circumstances provision in 10 CFR 51.12(b) and has made a determination based on that assessment, it is so indicated.
For further details with respect to the action
The April 1, 2003, letter provided clarifying information within the scope of the original application and did not change the staff's initial proposed no significant hazards consideration determination.
The Commission's related evaluation of this amendment is contained in a Safety Evaluation dated June 5, 2003.
The supplement dated April 14, 2003, provided clarifying information that did not change the scope of the December 2, 2002, application nor the initial proposed no significant hazards consideration determination.
The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated June 6, 2003.
The April 28, 2003, supplemental letter provided additional clarifying information, did not change the scope of the application as originally noticed, and did not change the staff's original proposed no significant hazards consideration determination.
The Commission's related evaluation of the amendment is contained in a Safety Evaluation dated June 2, 2003.
The Commission's related evaluation of this amendment is contained in a Safety Evaluation dated June 2, 2003.
The April 21, 2003, letter provided clarifying information that did not change the initial proposed no significant hazards consideration determination or expanded the application beyond the scope of the original
The Commission's related evaluation of the amendment is contained in a Safety Evaluation dated June 6, 2003.
The supplement dated April 16, 2003, provided additional information that clarified the application, did not expand the scope of the application as originally noticed, and did not change the staff's original proposed no significant hazards consideration determination.
The Commission's related evaluation of the amendment is contained in a Safety Evaluation dated June 5, 2003.
The supplement expanded the scope of the application, and was addressed by the second notice. The Commission's related evaluation of the amendment is contained in a Safety Evaluation dated June 3, 2003.
The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated June 3, 2003.
The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated June 2, 2003.
The proposed license amendment would revise Technical Specification (TS) 5.5.9, “Steam Generator Tube Surveillance Program,” and TS 5.6.10, “Steam Generator Tube Inspection Report,” for Diablo Canyon Power Plant (DCPP) Unit 2, to apply a probability of detection (POD) of 1.0 to the bobbin indication in the steam generator (SG) 4 tube at row 44, column 45 at the second tube support plate (TSP) on the hot leg side (R44C45-2H) for the beginning of cycle (BOC) voltage distribution for the DCPP Unit 2 BOC Cycle 12 operational assessment.
The change from a TS to an FSAR revision resulted from the March 5, 2003, supplement and is not substantial in that the technical issues and no significant hazards consideration determination remain the same.
The March 5, 2003, supplemental letter provided additional clarifying information, did not expand the scope of the application as originally noticed, and did not change the NRC staff's original proposed no significant hazards consideration determination. The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated June 3, 2003.
The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated May 29, 2003.
The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated May 29, 2003.
The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated June 3, 2003.
The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated June 5, 2003.
The supplements dated November 26, 2002, and April 10, 2003, provided clarifying information that did not change the scope of the May 8, 2002, application nor the initial proposed no significant hazards consideration determination. The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated June 4, 2003.
The February 19, and May 19, 2003, letters provided clarifying information that did not change the initial proposed no significant hazards consideration determination or expand the scope of the application.
The Commission's related evaluation of the amendment is contained in a Safety Evaluation dated May 29, 2003.
The supplemental letters provided clarifying information that did not change the scope of the original
The Commission's related evaluation of the amendments is contained in a Safety Evaluation dated May 29, 2003.
The Commission's related evaluation of the amendment is contained in a Safety Evaluation dated June 3, 2003.
During the period since publication of the last biweekly notice, the Commission has issued the following amendments. The Commission has determined for each of these amendments that the application for the amendment complies with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the Commission's rules and regulations. The Commission has made appropriate findings as required by the Act and the Commission's rules and regulations in 10 CFR Chapter I, which are set forth in the license amendment.
Because of exigent or emergency circumstances associated with the date the amendment was needed, there was not time for the Commission to publish, for public comment before issuance, its usual 30-day Notice of Consideration of Issuance of Amendment, Proposed No Significant Hazards Consideration Determination, and Opportunity for a Hearing.
For exigent circumstances, the Commission has either issued a
In circumstances where failure to act in a timely way would have resulted, for example, in derating or shutdown of a nuclear power plant or in prevention of either resumption of operation or of increase in power output up to the plant's licensed power level, the Commission may not have had an opportunity to provide for public comment on its no significant hazards consideration determination. In such case, the license amendment has been issued without opportunity for comment. If there has been some time for public comment but less than 30 days, the Commission may provide an opportunity for public comment. If comments have been requested, it is so stated. In either event, the State has been consulted by telephone whenever possible.
Under its regulations, the Commission may issue and make an amendment immediately effective, notwithstanding the pendency before it of a request for a hearing from any person, in advance of the holding and completion of any required hearing, where it has determined that no significant hazards consideration is involved.
The Commission has applied the standards of 10 CFR 50.92 and has made a final determination that the amendment involves no significant hazards consideration. The basis for this determination is contained in the documents related to this action. Accordingly, the amendments have been issued and made effective as indicated.
Unless otherwise indicated, the Commission has determined that these amendments satisfy the criteria for categorical exclusion in accordance with 10 CFR 51.22. Therefore, pursuant to 10 CFR 51.22(b), no environmental impact statement or environmental assessment need be prepared for these amendments. If the Commission has prepared an environmental assessment under the special circumstances provision in 10 CFR 51.12(b) and has made a determination based on that assessment, it is so indicated.
For further details with respect to the action see (1) the application for amendment, (2) the amendment to Facility Operating License, and (3) the Commission's related letter, Safety Evaluation and/or Environmental Assessment, as indicated. All of these items are available for public inspection at the Commission's Public Document Room, located at One White Flint North, Public File Area 01F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible from the Agencywide Documents Assess and Management System's (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site,
The Commission is also offering an opportunity for a hearing with respect to the issuance of the amendment. By July 24, 2003, the licensee may file a request for a hearing with respect to issuance of the amendment to the subject facility operating license and any person whose interest may be affected by this proceeding and who wishes to participate as a party in the proceeding must file a written request for a hearing and a petition for leave to intervene. Requests for a hearing and a petition for leave to intervene shall be filed in accordance with the Commission's “Rules of Practice for Domestic Licensing Proceedings” in 10 CFR Part 2. Interested persons should consult a current copy of 10 CFR 2.714, which is available at the Commission's PDR, located at One White Flint North, Public File Area 01F21, 11555 Rockville Pike (first floor), Rockville, Maryland, and electronically on the Internet at the NRC Web site,
As required by 10 CFR 2.714, a petition for leave to intervene shall set forth with particularity the interest of the petitioner in the proceeding, and how that interest may be affected by the
Not later than 15 days prior to the first prehearing conference scheduled in the proceeding, a petitioner shall file a supplement to the petition to intervene which must include a list of the contentions which are sought to be litigated in the matter. Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the petitioner shall provide a brief explanation of the bases of the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the petitioner intends to rely in proving the contention at the hearing. The petitioner must also provide references to those specific sources and documents of which the petitioner is aware and on which the petitioner intends to rely to establish those facts or expert opinion. Petitioner must provide sufficient information to show that a genuine dispute exists with the applicant on a material issue of law or fact. Contentions shall be limited to matters within the scope of the amendment under consideration. The contention must be one which, if proven, would entitle the petitioner to relief. A petitioner who fails to file such a supplement which satisfies these requirements with respect to at least one contention will not be permitted to participate as a party.
Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene, and have the opportunity to participate fully in the conduct of the hearing, including the opportunity to present evidence and cross-examine witnesses. Since the Commission has made a final determination that the amendment involves no significant hazards consideration, if a hearing is requested, it will not stay the effectiveness of the amendment. Any hearing held would take place while the amendment is in effect.
A request for a hearing or a petition for leave to intervene must be filed with the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemakings and Adjudications Staff, or may be delivered to the Commission's PDR, located at One White Flint North, Public File Area 01F21, 11555 Rockville Pike (first floor), Rockville, Maryland, by the above date. Because of the continuing disruptions in delivery of mail to United States Government offices, it is requested that petitions for leave to intervene and requests for hearing be transmitted to the Secretary of the Commission either by means of facsimile transmission to (301) 415-1101 or by e-mail to
Nontimely filings of petitions for leave to intervene, amended petitions, supplemental petitions and/or requests for a hearing will not be entertained absent a determination by the Commission, the presiding officer or the Atomic Safety and Licensing Board that the petition and/or request should be granted based upon a balancing of the factors specified in 10 CFR 2.714(a)(1)(i)-(v) and 2.714(d).
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Request for comment.
Notice is hereby given that the staff of the Nuclear Regulatory Commission (NRC) has prepared a model safety evaluation (SE) relating to a change in the technical specification
The comment period expires July 24, 2003. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
Comments may be submitted either electronically or via U.S. mail.
Submit written comments to: Chief, Rules and Directives Branch, Division of Administrative Services, Office of Administration, Mail Stop: T-6 D59, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001.
Hand deliver comments to: 11545 Rockville Pike, Rockville, Maryland, between 7:45 a.m. and 4:15 p.m. on Federal workdays.
Copies of comments received may be examined at the NRC's Public Document Room, 11555 Rockville Pike (Room O-1F21), Rockville, Maryland.
Comments may be submitted by electronic mail to
William Reckley, Mail Stop: O-7D1, Division of Licensing Project Management, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone 301-415-1323.
Regulatory Issue Summary 2000-06, “Consolidated Line Item Improvement Process for Adopting Standard Technical Specification Changes for Power Reactors,” was issued on March 20, 2000. The consolidated line item improvement process (CLIIP) is intended to improve the efficiency of NRC licensing processes. This is accomplished by processing proposed changes to the STS in a manner that supports subsequent license amendment applications. The CLIIP includes an opportunity for the public to comment on proposed changes to the STS following a preliminary assessment by the NRC staff and finding that the change will likely be offered for adoption by licensees. This notice is soliciting comment on a proposed change to the STS that extends the inspection interval for RCP flywheels from 10 years to 20 years. The CLIIP directs the NRC staff to evaluate any comments received for a proposed change to the STS and to either reconsider the change or to proceed with announcing the availability of the change for proposed adoption by licensees. Those licensees opting to apply for the subject change to TSs are responsible for reviewing the staff's evaluation, referencing the applicable technical justifications, and providing any necessary plant-specific information. Each amendment application made in response to the notice of availability would be processed and noticed in accordance with applicable rules and NRC procedures.
This notice involves changes to extend the inspection interval for RCP flywheels for those plants with Westinghouse designs. This proposed change was proposed for incorporation into the STS by the WOG as TSTF-421, Revision 0. Much of the technical support for TSTF-421, Revision 0, was provided in topical report WCAP-15666, Revision 0, “Extension of Reactor Coolant Pump Motor Flywheel Examination,” submitted on August 24, 2001. The NRC staff's acceptance of the topical report is documented in an SE dated May 5, 2003, which is accessible electronically from the Agencywide Documents Access and Management System's (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site,
This proposed change to the inspection interval for RCP motor flywheels is applicable to plants with Westinghouse-designed nuclear steam supply systems. The CLIIP does not prevent licensees from requesting an alternative approach or proposing changes other than those proposed in TSTF-421. Variations from the approach recommended in this notice may, however, require additional review by the NRC staff and may increase the time and resources needed for the review.
This notice requests comments from interested members of the public within 30 days of the date of publication in the
By application dated [ ], [Licensee] (the licensee) requested changes to the Technical Specifications (TSs) for [facility]. The proposed changes would extend the reactor coolant pump (RCP)
The function of the RCP in the reactor coolant system (RCS) of a pressurized water reactor plant is to maintain an adequate cooling flow rate by circulating a large volume of primary coolant water at high temperature and pressure through the RCS. Following an assumed loss of power to the RCP motor, the flywheel, in conjunction with the impeller and motor assembly, provides sufficient rotational inertia to assure adequate primary coolant flow during RCP coastdown, thus resulting in adequate core cooling. A concern regarding the overspeed of the RCP and its potential for failure led to the issuance of Regulatory Guide (RG) 1.14, “Reactor Coolant Pump Flywheel Integrity,” Revision 1, dated August 1975. RG 1.14 describes a method acceptable to the NRC staff of addressing concerns related to RCP vibration and the possible effects of missiles that might result from the failure of the RCP flywheel. The need to protect components important to safety from such missiles are included in General Design Criterion 4, “Environmental and Dynamic Effects Design Basis,” of Appendix A, “General Design Criteria for Nuclear Power Plants,” to 10 CFR Part 50, “Licensing of Production and Utilization Facilities,” which is applicable to plants that obtained their construction permits after May 21, 1971.
Specific requirements to have an RCP Flywheel Inspection Program consistent with RG 1.14 or previously issued relaxations from the RG are included in the Administrative Controls Section of the TSs. The purpose of the testing and inspection programs defined in the TSs is to ensure that the probability of a flywheel failure is sufficiently small such that additional safety features are not needed to protect against a flywheel failure. The RG provides criteria in terms of critical speeds that could result in the failure of a RCP flywheel during normal or accident conditions. In addition to the guidance in RG 1.14, the NRC has more recently issued RG 1.174, “An Approach for Using Probabilistic Risk Assessment in Risk-Informed Decisions on Plant-Specific Changes to the Licensing Basis,” which provides guidance and criteria for evaluating proposed changes that use risk-informed justifications.
A proposed justification for extending the RCP flywheel inspections from a 10-year inspection interval to an interval not to exceed 20 years was provided by the Westinghouse Owners Group (WOG) in topical report WCAP-15666, “Extension of Reactor Coolant Pump Motor Flywheel Examination,” transmitted by letter dated August 24, 2001. The topical report addressed the proposed extension for all domestic WOG plants. The NRC accepted the topical report for referencing in license applications in a letter and safety evaluation dated May 5, 2003 (ADAMS Accession No. ML031250595).
TS [5.5.7], Reactor Coolant Pump Flywheel Inspection Program, reflects the licensee's previous adoption of a TS change that defined the allowable alternative to the inspections described in RG 1.14. The inspections are defined as in-place ultrasonic examination over the volume from the inner bore of the flywheel to the circle of one-half the outer radius or an alternative surface examination (magnetic particle testing [MT] and/or liquid penetrant testing [PT]) of exposed surfaces defined by the volume of the disassembled flywheel. The allowable interval for these inspections was extended in the previous amendment to “approximately 10 year intervals coinciding with the Inservice Inspection schedule as required by ASME [American Society of Mechanical Engineers, Boiler and Pressure Vessel Code,] Section XI.” The change proposed in this amendment application would revise the allowable inspection interval to “20 year intervals.”
The justification for the proposed change was provided in WCAP-15666, which the staff accepted for referencing in license applications by a letter and safety evaluation dated May 5, 2003. The topical report addresses the three critical speeds defined in RG 1.14: (a) the critical speed for ductile failure, (b) the critical speed for non-ductile failure, and (c) the critical speed for excessive deformation of the flywheel. The staff found that the topical report adequately addressed these issues and demonstrated that acceptance criteria, for normal and accident conditions defined in RG 1.14, would continue to be met for all domestic WOG plants following an extension of the inspection interval. The topical report also provided a risk assessment for extending the RCP flywheel inspection interval. The staff's review, documented in the SE for the topical report, determined that the analysis methods and risk estimates are acceptable when compared to the guidance in RG 1.174.
In conclusion, the staff finds that the regulatory positions in RG 1.14 concerning the three critical speeds are satisfied, and that the evaluation indicating that critical crack sizes are not expected to be attained during a 20-year inspection interval is reasonable and acceptable. The potential for failure of the RCP flywheel is, and will continue to be, negligible during normal and accident conditions. The change is therefore acceptable.
In accordance with the Commission's regulations, the [State] State official was notified of the proposed issuance of the amendments. The State official had [choose one: (1) no comments, or (2) the following comments—with subsequent disposition by the staff].
The amendment changes a requirement with respect to the installation or use of a facility component located within the restricted area as defined in 10 CFR part 20 and changes surveillance requirements. The NRC staff has determined that the amendment involves no significant increase in the amounts and no significant change in the types of any effluents that may be released offsite, and that there is no significant increase in individual or cumulative occupational radiation exposure. The Commission has previously issued a proposed finding that the amendment involves no significant hazards consideration, and there has been no public comment on such finding (xx FR xxxxx). Accordingly, the amendment meets the eligibility criteria for categorical exclusion set forth in 10 CFR 51.22(c)(9). Pursuant to 10 CFR 51.22(b) no environmental impact statement or environmental assessment need be prepared in connection with the issuance of the amendment.
The Commission has concluded, based on the considerations discussed above, that: (1) There is reasonable assurance that the health and safety of the public will not be endangered by operation in the proposed manner, (2) such activities will be conducted in compliance with the Commission's
The proposed change to the RCP flywheel examination frequency does not change the response of the plant to any accidents. The RCP will remain highly reliable and the proposed change will not result in a significant increase in the risk of plant operation. Given the extremely low failure probabilities for the RCP motor flywheel during normal and accident conditions, the extremely low probability of a loss-of-coolant accident (LOCA) with loss of offsite power (LOOP), and assuming a conditional core damage probability (CCDP) of 1.0 (complete failure of safety systems), the core damage frequency (CDF) and change in risk would still not exceed the NRC's acceptance guidelines contined in RG 1.174 (<1.0E-6 per year). Moreover, considering the uncertainties involved in this evaluation, the risk associated with the postulated failure of an RCP motor flywheel is significantly low. Even if all four RCP motor flywheels are considered in the bounding plant configuration case, the risk is still acceptably low.
The proposed change does not adversely affect accident initiators or precursors, nor alter the design assumptions, conditions, or configuration of the facility, or the manner in which the plant is operated and maintained; alter or prevent the ability of structures, systems, components (SSCs) from performing their intended function to mitigate the consequences of an initiating event within the assumed acceptance limits; or affect the source term, containment isolation, or radiological release assumptions used in evaluating the radiological consequences of an accident previously evaluated. Further, the proposed change does not increase the type or amount of radioactive effluent that may be released offsite, nor significantly increase individual or cumulative occupational/public radiation exposure. The proposed change is consistent with the safety analysis assumptions and resultant consequences. Therefore, the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
The proposed change in flywheel inspection frequency does not involve any change in the design or operation of the RCP. Nor does the change to examination frequency affect any existing accident scenarios, or create any new or different accident scenarios. Further, the change does not involve a physical alteration of the plant (
The proposed change does not alter the manner in which safety limits, limiting safety system settings, or limiting conditions for operation are determined. The safety analysis acceptance criteria are not impacted by this change. The proposed change will not result in plant operation in a configuration outside of the design basis. The calculated impact on risk is insignificant and meets the acceptance criteria contained in RG 1.174. There are no significant mechanisms for inservice degradation of the RCP flywheel. Therefore, the proposed change does not involve a significant reduction in a margin of safety.
Based upon the reasoning presented above and the previous discussion of the amendment request, the requested change does not involve a significant hazards consideration.
For the Nuclear Regulatory Commission.
Oral presentations may not exceed ten (10) minutes. The time for individual presentations may be reduced proportionately, if necessary, to afford all participants who have submitted a timely request to participate an opportunity to be heard.
Participants wishing to submit a written statement for the record must submit a copy of such statement to OPIC's Corporate Secretary no later than 5 p.m., Monday, July 7, 2003. Such statements must be typwewritten, double-spaced, and may not exceed twenty-five (25) pages.
Upon receipt of the required notice, OPIC will prepare an agenda for the hearing identifying speakers, setting forth the subject on which each participant will speak, and the time allotted for each presentation. The agenda will be available at the hearing.
A written summary of the hearing will be compiled, and such summary will be made available, upon written request to OPIC's Corporate Secretary, at the cost of reproduction.
Azco Mining Inc., a Delaware corporation (“Issuer”), has filed an application with the Securities and Exchange Commission (“Commission”), pursuant to section 12(d) of the Securities Exchange Act of 1934 (“Act”)
The Issuer stated in its application that it has met the requirements of Amex Rule 18 by complying with all applicable laws in the State of Delaware, in which it is incorporated, and with the Amex's rules governing an issuer's voluntary withdrawal of a security from listing and registration.
The Issuer states that it is taking such action because the Issuer has been notified that it is not in compliance with the Amex's listing standards. In addition, the Issuer believes that its needs would be better served by listing its Security on the OTC Bulletin Board (“OTCBB”).
The Issuer's application relates solely to the withdrawal of the Securities from listing on the Amex and from registration under section 12(b) of the Act
Any interested person may, on or before July 9, 2003, submit by letter to the Secretary of the Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609, facts bearing upon whether the application has been made in accordance with the rules of the Amex and what terms, if any, should be imposed by the Commission for the protection of investors. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to initiate a pilot program (“Pilot Program”) that will allow the Exchange to list options on selected stocks trading below $20 at one-point intervals. The text of the proposed rule change appears below. Additions are in
Rule 6.4(a)-(e)—No change.
Commentary .01-.03—No change.
[.04]
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
PCX policy establishes the guidelines regarding the addition of series for trading on the Exchange.
When a stock underlying an option trades at a lower price, it takes a larger percentage gain in the stock for an option to become in-the money. For example, when a stock trades at $8 an investor who wants to buy a slightly out-of-the-money call option would have to buy the call with a $10 strike price. At these levels, the stock price would need to register a 25% change before it reached $10 (
The Exchange proposes to amend PCX Rule 6.4 in order to list series with $1 strike price intervals on equity option issues that overlie up to five individual stocks, provided that the strike prices are $20 or less, but not less than $3. The PCX's Options Listing Committee would make the determination of which underlying stocks are to be included in the Pilot Program. An issue becomes eligible for inclusion in the Pilot Program when the underlying stock closes below $20 in its primary market on the previous business day. Underlying stocks trading under $20 that are not a part of the Pilot Program would continue to be eligible for trading in $2.50 and $5.00 intervals. Although the PCX may select only up to five individual stocks to be included in the Pilot Program, the Exchange would not be precluded from also listing options on other individual stocks at $1 strike price intervals if other options exchanges listed those series pursuant to their respective $1 strikes pilot programs.
The Exchange proposes to amend Rule 6.4 to specify the standards that will apply when adding additional $1 strike price intervals under the Pilot Program. Under the proposal, the closing price of the underlying stock serves as the reference point for determining which $1 strike prices the Exchange may open for trading. Specifically, the Exchange will only list $1 strike prices that fall within a $5 range of the underlying stock price, and no strike prices will be added outside of the $5 range. For example, if the underlying stock trades at $6, the Exchange could list $1 strikes from $3 to $11.
The Exchange may currently list strike prices with $2.50 intervals when an underlying stock trades below $25.
When a stock becomes part of the Pilot Program, the Exchange will begin the corresponding process of phasing-out the existing $2.50 intervals on the same stock in favor of $1 intervals. To phase out the $2.50 intervals, the Exchange would first delist those $2.50 series for which there is no open interest. Second, the Exchange would no longer add new expiration months at $2.50 intervals below $20 when the existing months expire. This would cause the $2.50 strike price intervals below $20 to be phased-out when the farthest-out month with a $2.50 interval eventually expires.
The Exchange will not list long-term options (also known as “LEAPS”) in equity option classes at $1 strike price intervals.
PCX Rule 6.4 will govern the addition of expiration months for the Pilot Program. Pursuant to this rule, the Exchange generally opens up to four expiration months for each class upon initial listing of an options class for trading, and upon expiration of the near-term month, the Exchange lists an additional expiration month. With respect to options in the Pilot Program, the Exchange may list an additional expiration month for a $1 strike series provided that the underlying strike price closes blow $20 on its primary market on expiration Friday. If the underlying closes at or above $20 on expiration Friday, the Exchange would not list an additional month for $1strike series until the stock again closes below $20.
At any time, the Exchange may cease trading options series, including series
The PCX believes that OPRA has the capacity to accommodate the increase in the number of series added pursuant to the Pilot Program. The Pilot Program is limited to only five underlying securities, and the Pilot Program will result in an increase of between seven and 14 additional strikes for each underlying (depending on the number of existing $2.50 strikes listed). Thus, the Pilot Program will result in a maximum of 70 additional series, which is a small increase in the 59,000 series currently traded on the PCX. Currently, OPRA's one-minute peak has been less than one-third its total capacity.
The Exchange believes that the addition of $1 strike prices would stimulate customer interest in options overlying lower-priced stocks by creating greater trading opportunities and flexibility. The Exchange further believes that $1 strike prices would provide customers with the ability to more closely tailor investment strategies to the precise movement of the underlying security. For these reasons, the Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder and, in particular, the requirements of section 6(b) of the Act.
The PCX does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments on the proposed rule change were neither solicited nor received.
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 filings will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-PCX-2003-28 and should be submitted by July 15, 2003.
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
As noted above, the Commission is approving the PCX's proposal on a pilot basis. In the event that PCX proposes to extend the Pilot Program beyond June 5, 2004, expand the number of options eligible for inclusion in the Pilot Program, or seek permanent approval of the Pilot Program, it should submit a Pilot Program report to the Commission
The Commission finds good cause for approving the proposal prior to the thirtieth day after the date of publication of notice of filing thereof in the
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to (1) eliminate the Nasdaq-100 Index Tracking Stock (“QQQ”)
On December 8, 2000, the Phlx filed a proposed rule change with the Commission to amend its fee schedule to accommodate the trading of the QQQ.
Due to a programming error, the QQQ specialist $0.002 per share transaction fee was programmed for non-PACE trades only, thereby erroneously excluding PACE trades from it.
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to rectify the effects of a programming error that occurred in connection with the billing of the QQQ specialist $0.002 per share transaction fee. The QQQ specialist $0.002 per share transaction fee had been programmed for non-PACE trades only, thereby erroneously excluding PACE trades from it. The Exchange believes that, had the fee been billed as originally filed, the Exchange would have amended or terminated the fee in order to remain competitive in its charges to specialists trading the QQQ product.
This proposal corrects the billing error by eliminating the QQQ specialist fee retroactive to its implementation date and refunding to the Phlx specialist the QQQ specialist $0.002 per share transaction fees that were billed and collected, specifically as applied to non-PACE QQQ trades, during the time period that the fee was in effect.
The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any inappropriate burden on competition.
No written comments were either solicited or received.
The foregoing rule change establishes or changes a due, fee, or charge imposed by the Exchange and, therefore, has become effective upon filing pursuant to section 19(b)(3)(A)(ii) of the Act
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 at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-Phlx-2003-33 and should be submitted by July 15, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Small Business Administration.
Notice of reporting requirements submitted for OMB review.
Under the provisions of the Paperwork Reduction Act (44 U.S.C. chapter 35), agencies are required to submit proposed reporting and recordkeeping requirements to OMB for review and approval, and to publish a notice in the
Submit comments on or before July 24, 2003. If you intend to comment but cannot prepare comments promptly, please advise the OMB Reviewer and the Agency Clearance Officer before the deadline.
Address all comments concerning this notice to: Agency
Jacqueline White, Agency Clearance Officer, (202) 205-7044.
In accordance with a notice received from the Department of Homeland Security—Federal Emergency Management Agency, effective June 10, 2003, the above numbered declaration is hereby amended to establish the incidence period for this disaster as beginning on May 2, 2003, and continuing through June 10, 2003.
All other information remains the same,
The Social Security Administration (SSA) publishes a list of information collection packages that will require clearance by the Office of Management and Budget (OMB) in compliance with Pub. L. 104-13 effective October 1, 1995, The Paperwork Reduction Act of 1995. The information collection packages that may be included in this notice are for new information collections, approval of existing information collections, revisions to OMB-approved information collections and extensions (no change) of OMB-approved information collections.
SSA is soliciting comments on the accuracy of the agency's burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility and clarity; and on ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Written comments and recommendations regarding the information collection(s) should be submitted to the OMB Desk Officer and the SSA Reports Clearance Officer. The information can be sent to the individuals listed below:
I. The information collections listed below are pending at SSA and will be submitted to OMB within 60 days from the date of this notice. Therefore, your comments should be submitted to SSA within 60 days from the date of this publication. You can obtain copies of the collection instruments by calling the SSA Reports Clearance Officer at 410-965-0454 or by writing to the address listed above.
The Social Security Act requires applicants to furnish medical, work history and other evidence or information to prove they are disabled. The information on the Adult Disability Report, together with other evidence and information, will be used by State Disability Determination Services (DDS) to develop medical evidence, assess the alleged disability, and make a determination on whether or not the applicant is disabled under the Act. DDSs are State agencies that make disability determinations on behalf of SSA.
In addition to the traditional paper application, claimants for disability benefits will have the option to complete the Disability Report through the Internet (i3368) or in an interview format with an SSA representative at an SSA field office using the Electronic Disability Collection System (EDCS). Both the i3368 and EDCS formats collect the same information as that contained on the paper SSA-3368, but include enhancements to guide the claimant or interviewer through the application process. For example, the i3368 provides applicants with self-help screens and propagates certain information. Both the i3368 and EDCS applications will, when needed, collect additional information on a claimant's work history. In the paper-based process, however, additional work history information is collected through another form, the SSA-3369, OMB control number 0960-0578. The respondents are applicants for title II and title XVI disability benefits.
The information collected on Form SSA-21 is used by SSA to determine continuing entitlement to Social Security benefits and the proper benefit amounts of alien beneficiaries living outside the United States (U.S.). It is also used to determine whether benefits are subject to withholding tax. The respondents are comprised of individuals entitled to Social Security benefits who are, will be, or have been residing outside the U.S.
SSA uses Forms SSA-L2765, SSA-L3365 and SSA-L4002 to request correct information when an employer, employee or self-employed person reports an individual's earnings without a Social Security Number (SSN) or with an incorrect name or SSN. The respondents are employers, employees or self-employed individuals who are requested to furnish additional identifying information.
In special situations, when there is no standard form or questionnaire, Form SSA-795 is used by SSA to obtain information from claimants or other persons having knowledge of facts in connection with many aspects of the Social Security or Supplementary Supplemental Security Income (SSI) programs. The information requested on form SSA-795 must be of sufficient importance that a signed statement, including a penalty clause, is necessary. The information collected is used to process such issues as claims for benefits or continuing eligibility, benefit amount, insure status, use of funds by a representative payee or a myriad of other program-related matters. The most typical respondents are applicants for Social Security or SSI benefits or beneficiaries of these programs. However, respondents could also include friends and relatives of the involved parties, coworkers, neighbors, or anyone else in a position to provide information pertinent to the issue(s).
These rules cover the basic administrative reporting and recordkeeping requirements for applicable recipients of grants and agreements. Because very specific requirements must be met, it is necessary that SSA collect significant information from the applicants and grantees to determine if they meet, or continue to meet, the conditions specified. The respondents are institutions of higher education, hospitals, and other non-profit and commercial organizations. SSA currently has a total of 17 grant recipients that are subject to the requirements of the proposed rule.
The Social Security Act provides that the Commissioner of Social Security shall establish a system of accountability monitoring for institutions in each state that serve as a representative payee for recipients of Social Security and SSI benefits. As part of this accountability process, SSA collects information on Form SSA-9584 to determine whether the institution policies and practices conform to SSA's regulations on the use of benefits and whether the institution is performing other duties and responsibilities required of a representative payee. The information also provides a basis for conducting an onsite review of the institution and is used in the preparation of the subsequent report of findings. The respondents are state mental institutions that serve as representative payees.
The information collected on Form SSA-1535-U3 is required to provide the Census Bureau with sufficient identification information, which will allow an accurate search of census records to establish proof of age for an individual applying for Social Security Benefits. It is used for individuals who must establish age as a factor for entitlement. The respondents are individuals applying for Social Security benefits who need to document their date of birth.
Form SSA-3373 records information about the disability applicant's impairment-related limitations and ability to function. It documents the types of information specified in SSA regulations and provides disability inteviewers with a convenient means to record information about how the claimant's condition affects his or her ability to function. This information, together with medical evidence, forms the evidentiary basis upon which the initial disaiblity proces is founded. The respondents are title II and XVI benefits applicants.
II. The information collections listed below have been submitted to OMB for clearance.
Your comments on the information collections would be most useful if received by OMB and SSA within 30 days from the date of this publication. You can obtain a copy of the OMB clearance package by calling the SSA Reports Clearance Officer at 410-965-0454, or by writing to the address listed above.
SSA is testing the Internet Representative Payee Report form (I623) that electronically reports on the use of benefit payments made on behalf of Social Security beneficiaries and SSI recipeints. In support of this process, a proof of concept (POC) test limited to 40 organizational representative payees use the I623 to complete and file the representative payee report instead of using the paper SSA-623. Initially SSA projected a 6-month POC test, but is planning to expand the POC to a full operational year.
Organizations participating in the POC will designate up to three employees that will be authenticated using SSA's existing Integrated Registration for Employers and Submitters (IRES) OMB control number 0960-0626. Once authenticated, the employee will be required to enter a Personal Identification Number (PIN) and Password to gain access to the online I623 application. The PIN and Password will serve as the electronic signature. SSA will use the information collected through the I623 to determine whether the payments provided to the representative payee have been used for the beneficiary's current maintenance and personal needs and whether the representative payee continues to be concerned with the beneficiary's welfare. The respondents are organizatioanal representative payees designated to receive funds on behalf of Social Security beneficiaries and/or SSI recipients.
Form SSA-3033 is used to determine if the claimant meets the disability requirements of the law, when the claimant returns to work after the alleged or established onset date of disability. When a possible unsuccessful work attempt or nonspecific subsidy is involved, Form SSA-3033 will be used to request a description of the employee's work effort. The respondents are employers of Old-Age and Survivors Disability Insurance (OASDI) and SSI disability applicants and beneficiaries.
Both federal and state disability hearing officers (DHOs) use the SSA-1209 in preparing the disability determination. The form provides the framework for addressing the crucial elements of the case in a sequential and logical fashion. The completed form will be the official document of the decision. A copy becomes the personalized portion of the notice to the claimant/representative. the respondents are both federal and state disability hearing officers.
Forms SSA-5062 and SSA-L5063 are used to obtain statements about food and/or shelter provided to an SSI claimant. SSA uses the information to determine whether food and/or shelter are a bona fide loan or should be counted as income. This determination can affect eligibility for SSI and the amount of SSI that is payable. The respondents are claimants for SSI benefits and individuals, who provide (loan) food or shelter to SSI claimants.
Type of Request: Extension of an OMB-approved information collection
Department of Transportation.
Notice of order granting exemption (Order 2003-6-15, Docket OST-03-13807).
The Department of Transportation has granted an application by the International Air Transport Association (IATA) to permit IATA to implement certain resolutions and recommended practices of its worldwide Passenger Services Conference (PSC), without filing the resolutions and recommended practices for prior approval by the Department and without obtaining immunity from the U.S. antitrust laws.
Mr. John Kiser or Ms. Bernice Gray, Pricing & Multilateral Affairs Division (X-43, Room 6424), U.S. Department of Transportation, 400 Seventh Street, SW., Washington, DC 20590, 202-366-2435.
Department of Transportation.
Notice of Orders Granting Exemptions (Order 2002-1-15, Docket OST-01-9575; Order 2002-7-3, Docket OST-02-11798; and Order 2002-8-16, Docket OST-02-11589).
The Department of Transportation has granted these applications by the International Air Transport Association (IATA) to permit IATA to implement certain resolutions and recommended practices of its worldwide Passenger Services Conference (PSC) and Cargo Service Conference (CSC), without filing the resolutions and recommended practices for prior approval by the Department and without obtaining immunity from the U.S. antitrust laws.
Mr. John Kiser or Ms. Bernice Gray, Pricing & Multilateral Affairs Division (X-43, Room 6424), U.S. Department of Transportation, 400 Seventh Street, SW., Washington, DC 20590, 202-366-2435.
Federal Aviation Administration (FAA), DOT.
Notice.
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Comments must be submitted on or before July 24, 2003. A comment to OMB is most effective if OMB receives it within 30 days of publication.
Judy Street on (202) 267-9895.
1.
2.
Send comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW., Washington, DC 20503, Attention FAA Desk Officer.
Comments are invited on: Whether the proposed collection of information is necessary for the proper performance of the functions of the Department, including whether the information will have practical utility; the accuracy of the Department's estimates of the burden of the proposed information collection; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology.
Federal Aviation Administration (FAA), DOT.
Notice of petitions for exemption received.
Pursuant to FAA's rulemaking provisions governing the application, processing, and disposition of petitions for exemption part 11 of title 14, Code of Federal Regulations (14 CFR), this notice contains a summary of certain petitions seeking relief from specified
Comments on petitions received must identify the petition docket number involved and must be received on or before July 14, 2003.
You may submit comments (identified by DOT DMS Docket Number FAA-200X-XXXXX) by any of the following methods:
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Denise Emrick (202) 267-5174, Office of Rulemaking (ARM-1), Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85 and 11.91.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
Pursuant to FAA's rulemaking provisions governing the application, processing, and disposition of petitions for exemption, part 11 of title 14, Code of Federal Regulations (14 CFR), this notice contains a summary of a certain petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of any petition or its final disposition.
Comments on petitions received must identify the petition docket number involved and must be received on or before July 14, 2003.
Send comments on the petition to the Docket Management System, U.S. Department of Transportation, Room Plaza 401, 400 Seventh Street, SW., Washington, DC 20590-0001. You must identify the docket number FAA-2002-14013 at the beginning of your comments. If you wish to receive confirmation that the FAA received your comments, include a self-addressed, stamped postcard.
You may also submit comments through the Internet to
Madeleine Kolb (425-227-1134), Transport Airplane Directorate (ANM-113), Federal Aviation Administration, 1601 Lind Ave, SW., Renton, WA 98055-4056; or Vanessa Wilkins (202-267-8029), Office of Rulemaking (ARM-1), Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85 and 11.91.
Federation Aviation Administration (FAA), DOT.
The FAA is issuing this notice to advise the public that a meeting of the Federal Aviation Administration Air Traffic Procedures Advisory Committee (ATPAC) will be held to review present air traffic control procedures and practices for standardization, clarification, and upgrading of terminology and procedures.
The meeting will be held from Monday, July 28, to Wednesday, July 30, from 9 a.m. to 4:30 p.m.
The meeting will be held at the Radisson Paper Valley Hotel, 333 W. College Avenue, Appleton, Wisconsin 54913.
Mr. John A. Clayborn, Executive Director, ATPAC, Air Traffic Planning and Procedures, 800 Independence Avenue, SW., Washington, DC 20591, telephone (202) 267-3725.
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463; 5 U.S.C. App. 2), notice is hereby given of a meeting of the ATPAC to be held Monday, July 28, to Wednesday,
1. Approval of Minutes.
2. Submission and Discussion of Areas of Concern.
3. Discussion of Potential Safety Items.
4. Report from Executive Director.
5. Items of Interest.
6. Discussion and agreement of location and dates for subsequent meetings.
Attendance is open to the interested public but limited to the space available. With the approval of the Chairperson, members of the public may present oral statements at the meeting. Persons desiring to attend and persons desiring to present oral statements should notify the person listed above not later than July 25, 2003. The next quarterly meeting of the FAA ATPAC is planned to be held from October 20-23, 2003, in Washington, DC.
Any member of the public may present a written statement to the Committee at any time at the address given above.
Federal Aviation Administration (FAA), DOT.
Notice of RTCA Program Management Committee meeting.
The FAA is issuing this notice to advise the public of a meeting of the RTCA Program Management Committee.
The meeting will be held June 25, 2003 starting at 9 am.
The meeting will be held at RTCA, Inc., 1828 L Street, NW., Suite 805, Washington, DC, 20036.
RTCA Secretariat, 1828 L Street, NW., Suite 850, Washington, DC, 20036; telephone (202) 833-9339; fax (202) 833-9434; Web site
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., Appendix 2), notice is hereby given for a Program Management Committee meeting. The revised agenda will include:
Attendance is open to the interested public but limited to space availability. With the approval of the chairmen, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), DOT.
Notice of intent to rule on application.
The FAA proposes to rule and invites public comment on the application to impose and use a PFC at Metropolitan Oakland International Airport under the provisions of the Aviation Safety and Capacity Expansion Act of 1990 (Title IX of the Omnibus Budget Reconciliation Act of 1990) (Pub. L. 101-508) and Part 158 of the Federal Aviation Regulations (14 CFR Part 158).
Comments must be received on or before July 24, 2003.
Comments on this application may be mailed or delivered in triplicate to the FAA at the following address: Federal Aviation Administration, Airports Division, 15000 Aviation Blvd., Lawndale, CA 90261, or San Francisco Airports District Office, 831 Mitten Road, Room 210, Burlingame, CA 94010-1303. In addition, one copy of any comments submitted to the FAA must be mailed or delivered to Mr. Tay Yoshitani, Executive Director, Port of Oakland, at the following address: 530 Water Street, Oakland, CA 94607. Air carriers and foreign air carriers may submit copies of written comments previously provided to the Port of Oakland under section 158.23 of Part 158.
Marlys Vandervelde, Airports Program Analyst, San Francisco Airports District Office, 831 Mitten Road, Room 210, Burlingame, CA 94010-1303, Telephone: (650) 876-2806. The application may be reviewed in person at this same location.
The FAA proposes to rule and invites public comment on the application to impose and use the revenue from a PFC at Metropolitan Oakland International Airport under the provisions of the
On April 28, 2003, the FAA determined that the application to impose and use a PFC submitted by the Port of Oakland was substantially complete within the requirements of § 158.25 of Part 158. The FAA will approve or disapprove the application, in whole or in part, no later than July 31, 2003. The following is a brief overview of the application No. 03-13-C-00-OAK:
Brief description of proposed impose and use projects: Terminal Two Building and Security Improvements, Reconstruction of Taxiway Uniform, Multi-User System Equipment (MUSE) Phase 3, Security Checkpoint Enhancements, and Airports BART Connector Project, Phase One.
Any person may inspect the application in person at the FAA office listed above under
Federal Aviation Administration (FAA), DOT.
Notice of intent to rule on application.
The FAA proposes to rule and invites public comment on the application to impose and use the revenue from a PFC at University Park Airport under the provisions of the 49 U.S.C. 40117 and Part 158 of the Federal Aviation Regulations (14 CFR Part 158).
Comments must be received on or before date, which is 30 days after date of publication in the
Comments on this application may be mailed or delivered in triplicate to the FAA at the following address: Ms. Lori Ledebohm, Community Planner/PFC Contact, Harrisburg Airports District Office, 3905 Hartzdale Drive, Suite 508, Camp Hill, PA 17011.
In addition, one copy of any comments submitted to the FAA must be mailed or delivered to William R. Stacey of The Pennsylvania State University at the following address: Room 106 Physical Plant, University Park, Pennsylvania 16803.
Air carriers and foreign air carriers may submit copies of written comments previously provided to The Pennsylvania State University under section 158.23 of Part 158.
Lori Ledebohm, Community Planner/PFC Contact, Harrisburg Airports District Office, 3905 Hartzdale Drive, Suite 508, Camp Hill, PA 17011, 717-730-2835. The application may be reviewed in person at this same location.
The FAA proposes to rule and invites public comment on the application to impose and use the revenue from a PFC at University Park Airport under the provisions of the 49 U.S.C. 40117 and Part 158 of the Federal Aviation Regulations (14 CFR Part 158).
On June 5, 2003, the FAA determined that the application to impose and use the revenue from a PFC submitted by The Pennsylvania State University was substantially complete within the requirements of § 158.25 of Part 158. The FAA will approve or disapprove the application, in whole or in part, no later than September 24, 2003.
The following is a brief overview of the application.
Class or classes of air carriers which the public agency has requested not be required to collect PFCs: air taxis operating Part 135, and filing form 1100—1800-31.
Any person may inspect the application in person at the FAA office listed above under
In addition, any person may, upon request, inspect the application, notice and other documents germane to the application in person at The Pennsylvania State University.
National Highway Traffic Safety Administration, DOT.
Announcement of a discretionary cooperative agreement program to address Impaired Motorcycle Operation.
The National Highway Traffic Safety Administration (NHTSA) announces a discretionary cooperative agreement to provide funding to individuals and organizations to address impaired motorcycle operation. The National Agenda for Motorcycle Safety lists reducing impaired riding as an urgent recommendation. The National Agenda for Motorcycle Safety was developed by a diverse group of motorcycle advocates, injury prevention specialists, health care, insurance, and safety research representatives working together. Sponsored by NHTSA and the Motorcycle Safety Foundation, the National Agenda provides eighty-two (82) recommendations, five (5) of which address impaired driving. The five recommendations on impaired driving are: (1) Study how alcohol, drugs and other substances, including over-the-counter medications, can affect a motorcyclists operating skills; (2) Study the alcohol, drug and other substance use patterns of motorcyclist's; (3) continue to discourage mixing alcohol and other drugs with motorcycling; (4) educate law enforcement about unique alcohol-related behavior of motorcyclists; (5) encourage partnerships with groups already involved in alcohol/substance abuse issues related to motor vehicle crashes (e.g., Mothers Against Drunk Driving, Students Against Destructive Decisions).
In February 2003, NHTSA published results of a focus group study that sought input from motorcyclists, those in leadership positions in motorcycling organizations and in traffic safety on what they perceived would be effective approaches in reducing impaired riding. The final report, Drinking, Riding, and Prevention: A Focus Group Study discusses the following approaches: (1) Peer to peer activities; (2) intervention techniques; and (3) social norms models; and (4) motorcycle impoundment.
In addition to the guidance provided National Agenda and Drinking, Riding, and Prevention: A Focus Group Study, other possible approaches include law enforcement and prosecutor training and in the detection of impaired motorcyclists, educating judges in the efficient handling of impaired riding cases, and projects that may be implemented by State motorcycle training programs.
These recommendations and approaches are designed to be a road map for interested motorcycle organizations or individuals as they develop programs to reduce impaired motorcycle operation.
NHTSA anticipates funding approximately four competitive cooperative agreements for a minimum of 2 years and a maximum of 3 years. To this end, this cooperative agreement will develop programs and projects that foster implementation of the National Agenda for Motorcycle Safety and Drinking, Riding, and Prevention: A Focus Group Study.
This notice solicits applications from public and private, non-profit, not for-profit, and for-profit organizations, State and local governments and their agencies or a consortium of the above. Interested applicants must submit an application packet as further described in the application section of this notice. The application will be evaluated to determine the proposals that will receive funding under this announcement. Non-federal employees under contract to NHTSA may serve on an application review team that will evaluate the applications.
Applications must be received in the office designated below on or before 3 p.m. (EST), on July 22, 2003.
Applications must be submitted to the National Highway Traffic Safety Administration, Office of Contracts and Procurement (NPO-220), Attention: Ross S. Jeffries, Contract Specialist, 400 Seventh Street SW., Room 5301, Washington, DC 20590. All applications submitted must include a reference to NHTSA Cooperative Agreement Program Number DTNH22-03-H-05133.
General administrative questions may be directed to Ross S. Jeffries, Office of Contracts and Procurement at (202) 366-6283, or by e-mail at rjeffries@nhtsa.dot.gov. Programmatic questions relating to this cooperative agreement program should be directed to Robert L. Hohn, Impaired Driving Division, NHTSA, 400 Seventh Street, SW., (NTI-111), Washington, DC 20590, by e-mail at
Despite significant gains since the enactment of Federal motor vehicle and highway safety legislation in the mid 1960s, the annual toll of traffic crashes remains tragically high. In 2001, the National Highway Traffic Safety Administration's (NHTSA) Fatality Analysis Reporting System (FARS) and General Estimates System (GES) reported that approximately 42,116 people were killed and another 3.03 million were injured on our Nation's roadways. Traffic crashes continue to account for 95 percent of all transportation fatalities and 99 percent of injuries, and represent the leading cause of death for individuals ages 4 through 33. The large number of crashes has placed a considerable burden on our Nation's health care system affecting the economy—reaching $230.6 billion a year, or an average of $820 for every person living in the United States.
Recent data indicate that injuries and deaths attributable to motorcycle crashes are becoming a larger portion of this grave public health problem. Motorcycle crash-related fatalities have been increasing since 1997, while injuries have been increasing since 1999. More than 100,000 motorcyclists have died in traffic crashes since the enactment of the Highway Safety Act and the National Traffic and Motor Vehicle Safety Act of 1966. Like other roadway users who are urged to protect themselves from injury or death by wearing safety belts, driving sober, and observing traffic rules, many motorcycle deaths could be prevented if motorcyclists would take responsibility for ensuring they have done everything possible to make the ride safe by taking operator training, becoming properly licensed, wearing protective gear, and riding sober.
The effects of a crash involving a motorcycle can often be devastating. While 20 percent of passenger vehicle crashes result in injury or death, an astounding 80 percent of motorcycle crashes result in injury or death. According to NHTSA's data, while total traffic deaths increased by four tenths of a percent in 2001, motorcycle deaths were up by 10 percent, compared to 2000. Motorcyclist fatalities have increased each year since reaching an historic low of 2,116 fatalities in 1997. It is estimated in 2002, 3,216 motorcyclists were killed, an increase of almost 55 percent between 1997 and 2002. Without this substantial increase in motorcyclist fatalities between 1997
The motorcycle community is experiencing astounding growth. New unit sales of on-highway motorcycles have increased approximately 91 percent since 1997. The Motorcycle Industry Council (MIC) estimates that 471,000 new on-highway motorcycles were sold in the United States in 2000 alone compared to 379,000 in 1999. In 2001, motorcycles represented 2.2 percent of all registered vehicles in the United States and accounted for 0.34 percent of vehicle miles traveled, but crashes involving motorcycles accounted for 7.6 percent of total traffic fatalities on America's roadways. MIC expects motorcycle sales to continue to increase over the next 5 to 7 years—meaning more motorcycles on our Nation's roadways.
Exposure, measured in terms of vehicle miles of travel (VMT) in 2001, shows that motorcyclists were about 26 times as likely to die in a crash than someone riding in a passenger car, and are 5 times as likely to be injured. This is a steep increase from 1997, when motorcyclists were 14 times as likely to die in a crash than someone riding in a passenger car. Per registered vehicle, the fatality rate for motorcyclists in 2001 was 4.1 times the fatality rate for passenger car occupants. The injury rate for passenger car occupants per registered vehicle was 1.2 times the injury rate for motorcyclists.
Like operators of other vehicles, motorcycle operator impairment, mainly from the use of alcohol, is a serious problem. In 2001, motorcycle operators in fatal crashes had higher intoxication rates than any other type of driver. Twenty-nine percent of fatally injured motorcycle operators were intoxicated at 0.08 g/dl or greater blood alcohol concentration (BAC), and another 7 percent were reported to be at BAC 0.01 to 0.07 g/dl. In single vehicle motorcycle crashes, 41 percent of the fatally injured motorcyclists were intoxicated with a BAC ≥.08 g/dl.
The risk entailed in drinking and then riding is exacerbated by other risk-taking behaviors, such as riding without the proper protective gear, including protective clothing and a motorcycle helmet. Data indicate that in 2001, only 40 percent of intoxicated motorcycle operators killed wore helmets, compared with 60 percent for those who were sober. The intoxication rate was highest for fatally injured operators between 40 to 44 years old (42 percent), followed by ages 35 to 39 (40 percent) and ages 30 to 34 (35 percent). More than 5 percent of motorcycle operators in fatal crashes in 2001 had at least one prior conviction for driving while intoxicated on their driver records, compared to fewer than 4 percent of passenger vehicle drivers.
The National Agenda for Motorcycle Safety reflects the thoughts and visions of the participants who developed recommendations that address motorcycle safety on a variety of fronts. The publication is used as a stepping-stone in the process of changing the motorcycling environment as it relates to motorcycle safety.
The approaches outlined in the Drinking, Riding and Prevention: A Focus Group Study are considered, by the participants, to be those that will have the most impact on changing the behavior and attitude of motorcyclists regarding impaired riding. The recommended approaches are: (1) Peer to peer activities—the strong social fabric of motorcyclists and ongoing informal peer-based activities to reduce drinking riding suggests building upon this foundation to effectively reduce impaired riding. The goal is to encourage peers to promote personal responsibility safe drinking and riding practices (through drinking and riding awareness); (2) intervention techniques—many of the riders participating in the focus groups discussed the need for awareness training for servers and event staff for intervention with intoxicated riders. The riders stressed the importance of server expertise in responsible alcohol service and intervention strategies; (3) social norms models—social norms models may be effective because many riders report that their groups already discourage drinking and riding and that new and independent riders may harbor misconceptions of rider views toward drinking and riding. These models may serve to reinforce ongoing and future peer-based interventions; and (4) motorcycle impoundment—riders participating the focus groups suggested that impounding motorcycles might be an effective countermeasure to drinking and riding. Since motorcyclists prize their motorcycles, the possibility of losing motorcycles through impoundment for violating impaired driving laws could possibly deter irresponsible drinking.
The challenge is to determine which approaches are most effective and have the most impact on reducing the incidence of impaired riding. To help facilitate this evaluation process, NHTSA proposes to support four (4) cooperative agreement programs aimed at implementing one or more of the approaches outlined in the National Agenda for Motorcycle Safety and Drinking, Riding, and Prevention: A Focus Group Study.
Copies of the National Agenda for Motorcycle Safety and Drinking, Riding, and Prevention: A Focus Group Study are available on the NHTSA Web site at
The purpose of this cooperative agreement program is to support implementation of the approaches recommended in Drinking, Riding, and Prevention: A Focus Group Study. Approximately four projects will be supported. Applications based upon the recommendations of the National Agenda will be considered if they support the approaches discussed in Drinking, Riding, and Prevention: A Focus Group Study. Each cooperative agreement recipient will be expected to implement and evaluate an approach to determine the effectiveness of reducing the incidence of impaired riding. Project length will vary depending on the scope of the proposed effort. However, projects will be considered for a minimum of two years and a maximum of three years. Upon completion, the programs may be implemented in other areas for a more thorough evaluation.
The objective of this cooperative agreement is to provide funds for implementing and evaluating one or more of the approaches outlined in Drinking, Riding, and Prevention: A Focus Group Study to determine the effectiveness in reducing impaired riding. Applications may address any one or more of the approaches. Applications based upon the recommendations of the National Agenda will be considered if they support the approaches discussed in Drinking, Riding, and Prevention: A Focus Group Study. Examples of possible projects include activities or program that:
1. Enhance peer-to-peer activities relating to personal responsibility.
2. Enhance social norms within groups to discourage drinking and riding.
3. Focus on training servers and event staff in intervention with impaired riders.
4. Effectively separate impaired riders from their motorcycle, while providing appropriate security for the motorcycle.
5. Provide training to law enforcement personnel and prosecutors in the detection of impaired motorcyclists and conduct specialized enforcement
6. Develop educational programs for judges to increase efficiency in handling impaired motorcyclist cases.
7. Develop and evaluate projects to be implemented by State motorcycle training programs that will impact the impaired motorcyclist.
NHTSA will be involved in all activities undertaken as part of the cooperative agreement program and will:
1. Provide a Contracting Officer's Technical Representative (COTR) to participate in the planning and management of this cooperative agreement and to coordinate activities between the Grantee and NHTSA.
2. Provide information and technical assistance from state and local government sources and as determined appropriate by the COTR.
3. Serve as a liaison between NHTSA Headquarters, Regional Offices, and others (Federal, State and local) interested in reducing motorcycle-related injuries and fatalities and promoting the activities of the grantee.
4. Review and provide comments on program content, reviews materials, and evaluation activities.
5. Stimulate the transfer of information among grant recipients and others engaged in motorcycle safety activities.
Approximately $400,000 is available to fund a number of projects. The total number of awards will depend on the nature of the projects submitted for consideration. Given the amount of funds available for this effort, applicants are strongly encouraged to seek other funding opportunities to supplement the Federal funds. At the discretion of the government, funds may be obligated fully at the time of award of the cooperative agreement or incrementally over the period of the cooperative agreement. Nothing in this solicitation should be constructed as committing NHTSA to make any award.
The period of performance for this cooperative agreement will be up to 3 years from the effective date of award. However, the actual period of performance will depend on the scope of work for the submitted project.
Public and private, non-profit, not-for-profit, and for-profit organizations, and State and/or local governments and their agencies or a consortium of the above may submit applications. Thus, universities, colleges, research institutions, hospitals, other public and private organizations, and state and local governments are eligible to apply. Interested applicants are advised that no fee or profit will be allowed under this cooperative agreement program. Preference may be given to those applications that have proposed cost-sharing strategies and/or other proposed funding sources in addition to those in this announcement. Applications seeking support for only a public information and education campaign will not be considered.
To be eligible to participate in this cooperative agreement, applicants must meet the following special competencies:
1. Demonstrate expertise in traffic safety, program development and implementation, and knowledge and experience in motorcycle safety issues, especially related to the specific approaches addressed by applicant.
2. Demonstrate capability of technical and management skills to successfully administer and complete projects in a timely manner. Include a narrative description of the documented experience, clearly indicating the relationship to this project and providing details such as project description and sponsoring agency. References to completed final project reports should include author's name.
3. Demonstrate capacity to:
a. Design, implement, and evaluate innovative approaches for addressing difficult problems related to issues associated with impaired motorcycle riding;
b. Work successfully with motorcycle and other community groups;
c. Collect and analyze both quantitative and qualitative data; and
d. Synthesize, summarize, and report results, which are useable and decision-oriented.
4. Demonstrate experience in working in partnership with others, for example, law enforcement, health care systems, government agencies, the media, etc.
Each applicant must submit one (1) original and five (5) copies of the application package to: NHTSA, Office of Contracts and Procurement (NPO-220), Attention: Ross S. Jeffries, Contract Specialist, 400 Seventh Street SW., Room 5301, Washington, DC 20590. Applications must include a completed Application for Federal Assistance (Standard Form 424—Revised 4/88).
Only complete packages received on or before 3 p.m., July 22, 2003 will be considered. No facsimile transmissions will be accepted. Due to the large number of actions being processed, applications must be typed on one side of the page only and contain a reference to NHTSA Cooperative Agreement Number DTNH22-03-H-05133. Unnecessarily elaborate applications beyond what is sufficient to present a complete and effective response to this invitation are not desired. Please direct application questions to Ross S. Jeffries, at (202) 366-6283 or by email at
A. The application package must be submitted with OMB Standard Form 424, (Rev 7-97 or 4-88, including 424A and 424B), Application for Federal Assistance, including 424A, Budget Information-Nonconstruction Program, and 424B, Assurances-Nonconstruction Programs, with the required information provided and the certified assurances included. While the Form 424-A deals with budget information, and Section B identifies Budget Categories, the available space does not permit a level of detail, which is sufficient to provide for a meaningful evaluation of the proposed costs. A supplemental sheet should be provided which presents a detailed breakout of the proposed costs (detail labor, including labor category, level of effort, and rate; direct materials, including itemized equipment; travel and transportation, including projected trips and number of people traveling; subcontractors/subgrants, with similar detail, if known; and overhead), as well as any costs the applicant proposes to contribute or obtain from other sources in support of the projects in the project plan.
B. Funding sources other than the funds being provided through this cooperative agreement are encouraged. Since activities may be performed with a variety of financial resources, applicants need to fully identify all project costs and their funding sources in the proposed budget. The proposed budget must identify all funding sources in sufficient detail to demonstrate that the overall objectives of the project will be met.
C. Program Narrative Statement: Proposal must fully describe the scope
1. A table of contents including page number references.
2. A description of the community (if applicable to effort proposed by grantee) in which the grantee proposes to implement a motorcycle safety program effort in support of the selected approach identified in Drinking, Riding, and Prevention: A Focus Group Study or the National Agenda for Motorcycle Safety that support the approaches identified in the focus group study. For the purpose of this program a community includes a city, town or county, small metropolitan area or a group of cities, towns or counties in particular region. It should be large enough so that the program can have a demonstrable effect on motorcycling and motorcycle safety. The description of the community should include, at a minimum, community demographics including motorcycle population, the community's motorcycle impaired riding problems, data sources available, existing traffic safety programs, motorcycle education programs and community resources.
3. A description of the project or program's goal and how the grantee plans to meet the goal. The grantee must be
4. A description of the specific activity proposed by the grantee. What actions will be undertaken to support the proposed project? What partners need to be involved in the effort to ensure success? To what degree has the buy-in of these groups been secured? How does the proposed project contribute to reducing impaired motorcycle riding? What is “success” and how will it be determined?
5. A description of the evaluation plan, including how information (data) will be obtained, compiled, analyzed, and reported.
6. A description of how the proposed projects will be managed. The application shall identify the proposed project manager and other personnel considered critical to the successful accomplishment of the project, including a brief description of their qualifications and respective organizational responsibilities. The role and responsibilities of the grantee and any others included in the application package shall be specified. The proposed level of effort in performing the various activities shall also be identified.
7. A detailed explanation of time schedules, milestones, and product deliverables, including monthly reports and draft and final reports. (See Terms and Conditions of Award.)
8. A separately-labeled section with information demonstrating that the applicant meets all of the special requirements outlined in the Eligibility Requirements section of this announcement.
D. Commitment and Support: When other sources and organizations are required to complete the proposed effort, the grantee shall provide proof of said organization's willingness to cooperate on the effort. Such proof can be a letter of support or buy-in indicating what the organization will supply to the grantee.
Each application package will be reviewed initially to confirm that the applicant is an eligible recipient, meets applicant competency factors listed in the Eligibility Requirements section, and has included all of the items specified in the Application Procedures section of this announcement. An Evaluation Committee will then evaluate each complete application from an eligible recipient. Non-federal employees under contract to NHTSA may serve on this Evaluation Committee.
The applications will be evaluated using the following criteria:
The extent to which the proposed staff are clearly described, appropriately assigned, and have adequate skills and experiences; the extent to which the applicant has the capacity and facilities to administer and execute the proposed project; the extent to which the applicant has the expertise in program development and evaluation and meets the special competency requirements; and to the extent to which the applicant has provided details regarding the level of effort and allocation of time for each staff position. The applicant must furnish an organizational chart and résumés of each proposed staff member. Is the applicant's staffing plan reasonable for accomplishing the objectives of the project within the time frame set forth in the announcement? Is the timeline submitted by the grantee reasonable? Has the applicant's financial budget provided sufficient detail to allow NHTSA to determine that the estimated costs are reasonable and necessary to perform the proposed effort? Has financial or in-kind commitment of resources by the applicant's organization or other supporting organizations been clearly identified? Documented experience in developing, implementing and evaluating motorcycle safety or impaired driving programs.
The extent to which the applicant's goals are clearly articulated and the objectives are time-phased, specific, action-oriented, measurable, and achievable. The extent to which the work plan will achieve an outcome-oriented result that ultimately will reduce the incidence of impaired motorcycle riding. The work plan must address what the applicant proposes to develop and implement; how this will be accomplished; and must include the major tasks/milestones necessary to complete the project. This involves identification of, and solutions to, potential technical problems and critical issues related to successful completion of the project. The work plan will be evaluated with respect to its feasibility, realism, and ability to achieve desired outcomes.
The extent to which the evaluation plan clearly articulates the project's potential to make a significant impact on reducing impaired motorcycle riding and the associated crashes, injuries and fatalities. This should be more than a process evaluation. The extent, to which the evaluation plan indicates how the information/data collected in the project will be compiled, analyzed, interpreted and reported. When information is qualitative, what criteria will be used to analyze it? Are there sufficient data/information sources and is access ensured from appropriate owners or collectors of data to obtain and appropriately analyze the quantitative and qualitative information needed on the proposed project?
The extent to which the applicant is knowledgeable about impaired
The extent to which the applicant has met the special competencies (see Eligibility Requirements) including knowledge and familiarity with motorcycle impairment issues associated with the proposed intervention or effort; technical and management skills needed to successfully design, conduct, and evaluate the proposed effort; ability to work with various organizations and the motorcycle community to implement programs or compile data; ability to design and implement approaches for addressing motorcycle safety related problems; and experience in fostering new partnership with nontraditional partners.
While not a requirement of this announcement, applicants are strongly urged to seek funds from other Federal, State, local, and private sources to augment those available under this announcement. For those applications that are evaluated as meritorious for consideration of award, preference may be given to those that have proposed cost-sharing strategies and/or other proposed funding sources in addition to those in this announcement.
1. Prior to award, each grantee must comply with the certification requirements of 49 CFR part 20, Department of Transportation New Restrictions on Lobbying, and 49 CFR part 29, Department of Transportation government wide Debarment and Suspension (Non-procurement) and Government-wide Requirement for Drug Free Work Place (Grants).
2. Reporting Requirements and Deliverables: A. Monthly Progress Reports must include a summary of the previous month's activities and accomplishments, as well as the proposed activities for the upcoming month. Any decisions and actions required in the upcoming month should be included in the report. Any problems and issues that may arise and need the Contracting Officer's Technical Representative (COTR) or Contracting Officer (CO) attention should be clearly identified in the monthly report in a specific, identified section. The grantee shall supply the progress report to the COTR every thirty (30) days, following date of award.
B. Initial and Subsequent Meetings with COTR: The grantee will meet with the COTR and appropriate NHTSA staff in Washington, DC at NHTSA's offices to discuss and refine the development, implementation, and evaluation of the project. The grantee will prepare a 20 to 30 minute presentation describing the project and will be prepared to answer questions from the COTR and others present at the briefing. After this initial meeting with the COTR, the grantee should meet at least once a year with the COTR in Washington, DC at NHTSA's offices to discuss the project's progress and results. These meetings will be a minimum of 4 hours in length.
C. Revised Project Plan: If needed, the grantee will submit a revised project plan incorporating verbal and written comments from the COTR. This revised plan is due no more than one (1) month from date of the initial meeting with COTR.
D.
E.
F.
1. Digital artwork for printing shall be provided to NHTSA on diskette (250 meg Zip disk or CD ROM). Files should be in current desktop design and publication programs, for example, Adobe Illustrator, Adobe Photoshop, Adobe PageMaker, Macromedia Freehand, QuarkXPress. The contractor shall provide all supporting files and fonts (both screen and printers) needed for successful output, black and white laser separations of all pages, disk directory(s) with printing specifications provided to the Government Printing Office (GPO) on GPO Form 952 to guide NHTSA's printing office, GPO, and any outside organizations assisting with program production. The contractor shall confer with the COTR to verify all media format and language.
2. Additionally, the program materials shall be submitted in the following format for placement on NHTSA's homepage of the World Wide Web.
• Original application format, for example, *pm5; *.doc; *.ppt;
• HTML level 3.2 or later.
• A PDF file for viewing with Adobe Acrobat.
3. All HTML deliverables must be delivered on either a standard 3.5” floppy disk or on a Windows 95 compatible formatted Iomega zip disk and labeled with the following information:
• Contractor name and phone number.
• Names of relevant files.
• Application program and version used to create the file(s).
• If the files exceed the capacity of a high density floppy, a Windows 95 compatible formatted Iomega zip disk is acceptable
4. Graphics must be saved in Graphic Interchange Format (GIF) or Joint Photographic Expert Group (JPEG). Graphics should be prepared in the smallest size possible, without reducing the usefulness or the readability of the figure on the screen. Use GIF for solid color or black and white images, such as bar charts, maps, or diagrams. Use JPEG (highest resolution and lowest
• Tabular data must be displayed in HTML table format.
• List data must be displayed in HTML list format.
• Pre-formatted text is not acceptable.
• Currently, frames are not acceptable.
• JAVA, if used, must not affect the readability or usefulness of the document, only enhance it.
• Table background colors may be used, but must not be relied upon (for example, a white document background with a table with colored background may look nice with white text, but the colored background does not show up on the user's browser the text will be white against white and unreadable).
• All HTML documents must be saved in PC format and tested on a PC before delivery.
5. During all phases of program development, draft program content and materials shall be provided to the COTR, as appropriate, for approval and coordination within NHTSA. If applicable, draft materials shall also be used for program message testing (the method of testing chosen in consultation with and approved by the COTR) to ensure that the content and messages are clear, easily understood and produce the desired effect with intended audiences.
6. All HTML deliverables rendered under this contract must comply with the accessibility standards at 36 CFR 1194.22 that implements Section 508 of the Rehabilitation Act of 1973, as amended. This standard is available for viewing at the Access Board Web site at:
Unless otherwise indicated, the contractor represents by signature of this contract that all deliverables comply with the Access Board standards.
G.
In consultation with the COTR, the grantee will select a national meeting to deliver a presentation of the project and it effectiveness.
H. An electronic Microsoft PowerPoint (2000) presentation that NHTSA staff shall be able to use to brief senior staff or motorcycle partners at various meetings and conference.
3. During the effective performance period of the cooperative agreements awarded as a result of this announcement, the agreement as applicable to the grantee, shall be subject to the National Highway Traffic Safety Administration's General Provisions for Assistance Agreement, dated July 1995.
National Highway Traffic Safety Administration (NHTSA), DOT.
Cancellation of Public Meeting.
NHTSA has cancelled the public meeting scheduled for June 27, 2003 regarding its Initial Decision that NexL Sports Products (NexL) “Beanie DOT Motorcycle Helmets” (model 02) fail to comply with Federal Motor Vehicle Safety Standard (FMVSS) No. 218,
George Gillespie, National Highway Traffic Safety Administration, 400 Seventh Street, SW., Washington, DC 20590; (202) 366-5299. NHTSA's Initial Decision, and the information on which it is based, are available at NHTSA's Technical Information Services, Room 5111, 400 Seventh Street, SW., Washington, DC 20590; Telephone: 202-366-2588. When visiting Technical Information Services or contacting it via the telephone, refer to Investigation File CI-218-020612.
On April 11, 2003, NHTSA published a Notice in the
49 U.S.C. 30118(a), (b), and 49 U.S.C. 30120(c), (e); delegations of authority at 49 CFR 1.50(a) and 49 CFR 501.8.
The Surface Transportation Board has received a request from Mayer, Brown, Rowe & Maw on behalf of The Burlington Northern and Santa Fe Railway Company (BNSF) (WB461-9—6/17/2003) for permission to use certain data from the Board's Carload Waybill Samples. A copy of this request may be obtained from the Office of Economics, Environmental Analysis, and Administration.
The waybill sample contains confidential railroad and shipper data; therefore, if any parties object to these requests, they should file their objections with the Director of the Board's Office of Economics, Environmental Analysis, and Administration within 14 calendar days of the date of this notice. The rules for release of waybill data are codified at 49 CFR 1244.9.
Contact: Mac Frampton, (202) 565-1541.
Financial Management Service, Fiscal Service, Department of the Treasury
Notice.
This is Supplement No. 16 to the Treasury Department Circular 570; 2002 Revision, published July 1, 2002 at 67 FR 44294.
Surety Bond Branch at (202) 874-1033.
Notice is hereby given that the Certificate of Authority issued by the Treasury to the above named Company, under the United States Code, title 31, sections 9304-9308, to quality as an acceptable surety on Federal bonds it terminated effective today.
The Company was last listed as an acceptable surety on Federal bonds at 67 FR 44298, July 1, 2002.
With respect to any bonds currently in force with above listed Company, bond-approving officers should secure new bonds with acceptable sureties in those instances where a significant amount of liability remains outstanding. In addition, in no event, should bonds that are continuous in nature be renewed.
The Circular may be viewed and downloaded through the Internet at
Questions concerning this notice may be directed to the U.S. Department of the Treasury, Financial Management Service, Financial Accounting and Services Division, Surety Bond Branch, 3700 East-West Highway, Room 6F07, Hyattsville, MD 20782.
Financial Management Service, Fiscal Service, Department of the Treasury.
Notice.
This is Supplement No. 17 to the Treasury Department Circular 570; 2002 Revision, published July 1, 2002 at 67 FR 44294.
Surety Bond Branch at (202) 874-1033.
Notice is hereby given that the Certificate of Authority issued by the Treasury to the above named Company, under the United States Code, Title 31, Sections 9304-9308, to qualify as an acceptable surety on Federal bonds is terminated effective today.
The company was last listed as an acceptable surety on Federal bonds at 67 FR 44298, July 1, 2002.
With respect to any bonds currently in force with above listed Company, bond-approving officers should secure new bonds with acceptable sureties in those instances where a significant amount of liability remains outstanding. In addition, in no event, should bonds that are continous in nature be renewed.
The Circular may be viewed and downloaded through the Internet at
Questions concerning this notice may be directed to the U.S. Department of the Treasury, Financial Management Service, Financial Accounting and Services Division, Surety Bond Branch, 3700 East-West Highway, Room 6F07, Hyattsville, MD 20782.
Financial Management Service, Fiscal Service, Department of the Treasury
Notice.
This is Supplement No. 15 to the Treasury Department Circular 570; 2002 Revision, published July 1, 2002, at 67 FR 44294.
Surety Bond Branch at (202) 874-7116.
A Certificate of Authority as an acceptable surety on Federal bonds is hereby issued to the following Company under 31 U.S.C. 9304 to 9308. Federal bond-approving officers should annotate their reference copies of the Treasury Circular 570, 2002 Revision, on page 44316 to reflect this addition:
Certificate of Authority expire on June 30 each year, unless revoked prior to that date. The Certificates are subject to subsequent annual renewal as long as the companies remain qualified (31 CFR part 223). A list of qualified companies is published annually as of July 1 in Treasury Department Circular 570, with details as to underwriting limitations, areas in which licensed to transact surety business and other information.
The Circular may be viewed and downloaded through the Internet at
Questions concerning this Notice may be directed to the U.S. Department of the Treasury, Financial Management Service, Financial Accounting and Services Division, Surety Bond Branch,
Financial Management Service, Fiscal Service, Department of the Treasury.
Notice.
This is Supplement No. 18 to the Treasury Department Circular 570; 2002 Revision, published July 1, 2002 at 67 FR 44294.
Surety Bond Branch at (202) 874-1033.
Notice is hereby given that the Certificate of Authority issued by the Treasury to the above named Company, under the United States Code, Title 31, Sections 9304-9308, to qualify as an acceptable surety on Federal bonds is terminated effective today.
The Company was last listed as an acceptable surety on Federal bonds at 67 FR 44317, July 1, 2002.
With respect to any bonds currently in force with above listed Company, bond-approving officers should secure new bonds with acceptable sureties in those instances where a significant amount of liability remains outstanding. In addition, in no event should bonds that are continuous in nature be renewed.
The Circular may be viewed and downloaded through the Internet at
Questions concerning this notice may be directed to the U.S. Department of the Treasury, Financial Management Service, Financial Accounting and Services Division, Surety Bond Branch, 3700 East-West Highway, Room 6F07, Hyattsville, MD 20782.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form 13369, Agreement to Mediate.
Written comments should be received on or before August 25, 2003 to be assured of consideration.
Direct all written comments to Glenn P. Kirkland, Internal Revenue Service, room 6411, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the form should be directed to Carol Savage at Internal Revenue Service, room 6407, 1111 Constitution Avenue NW., Washington, DC 20224, or at (202) 622-3945, or through the Internet at
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Amended notice.
An open meeting of the Taxpayer Advocacy Panel (TAP) Multilingual Initiative Issue (MLI) Committee will be conducted (via teleconference).
The meeting will be held Thursday, June 26, 2003.
Inez E. De Jesus at 1-888-912-1227, or 954-423-7977.
Notice is hereby given pursuant to section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Taxpayer Advocacy Panel Multilingual Initiative Issue Committee will be held Thursday, June 26, 2003 from 1 p.m. EDT to 2 p.m. EDT via a telephone conference call. The Taxpayer Advocacy Panel is soliciting public comments, ideas and suggestions on improving customer service at the Internal Revenue Service. Individual comments will be limited to 5 minutes. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 954-423-7977, or write Inez E. De Jesus, TAP Office, 1000 South Pine Island Rd., Suite 340, Plantation, FL 33324. Due to limited conference line, notification of intent to participate in the telephone conference call meeting must be made with Inez E. De Jesus. Ms. De Jesus can be reached at 1-888-912-1227 or 954-423-7977.
Last minute changes to the agenda are possible and could prevent effective advance notice.
Internal Revenue Service (IRS), Treasury.
Notice.
An open meeting of the Wage & Investment Reducing Taxpayer Burden (Notices) Issue Committee of the Taxpayer Advocacy Panel will be conducted (via teleconference).
The meeting will be held Wednesday, July 23, 2003.
Nancy Ferree at 1-888-912-1227, or 954-423-7973.
Notice is hereby given pursuant to Section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Wage & Investment Reducing Taxpayer Burden (Notices) Issue Committee of the Taxpayer Advocacy Panel will be held Wednesday, July 23, 2003, from 12 noon EDT to 1 pm EDT via a telephone conference call. The Taxpayer Advocacy Panel is soliciting public comments, ideas and suggestions on improving customer service at the Internal Revenue Service. Individual comments will be limited to 5 minutes. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 954-423-7979, or write Sallie Chavez, TAP Office, 1000 South Pine Island Road, Suite 340, Plantation, FL 33324. Due to limited conference lines, notification of intent to participate in the telephone conference call meeting must be made with Sallie Chavez. Ms. Chavez can be reached at 1-888-912-1227 or 954-423-7973.
Last minute changes to the agenda are possible and could prevent effective advance notice.
Internal Revenue Service (IRS), Treasury.
Notice.
An open meeting of the Area 3 Taxpayer Advocacy Panel will be conducted (via teleconference).
The meeting will be held Friday, July 18, 2003.
Sallie Chavez at 1-888-912-1227, or 954-423-7979.
Notice is hereby given pursuant to Section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Area 3 Taxpayer Advocacy Panel will be held Friday, July 18, 2003, from 11 am EDT to 12:30 pm EDT via a telephone conference call. The Taxpayer Advocacy Panel is soliciting public comments, ideas and suggestions on improving customer service at the Internal Revenue Service. Individual comments will be limited to 5 minutes. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 954-423-7979, or write Sallie Chavez, TAP Office, 1000 South Pine Island Rd., Suite 340, Plantation, FL 33324. Due to limited conference lines, notification of intent to participate in the telephone conference call meeting must be made with Sallie Chavez. Ms. Chavez can be reached at 1-888-912-1227 or 954-423-7979.
The agenda will include the following: Various IRS issues.
Last minute changes to the agenda are possible and could prevent effective advance notice.
Internal Revenue Service (IRS), Treasury.
Notice.
An open meeting of the Area 7 Taxpayer Advocacy Panel will be conducted (via teleconference).
The meeting will be held Monday, July 21, 2003.
Mary Peterson O'Brien at 1-888-912-1227, or 206-220-6098.
Notice is hereby given pursuant to section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Area 7 Taxpayer Advocacy Panel will be held Monday, July 21, 2003 from 8 a.m. Pacific Time to 9 a.m. Pacific Time via a telephone conference call. The public is invited to make oral comments. Individual comments will be limited to 5 minutes. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 206-220-6098, or write to Mary Peterson
Last minute changes to the agenda are possible and could prevent effective advance notice.
Notice.
An open meeting of the Small Business/Self Employed—Payroll Tax Committee of the Taxpayer Advocacy Panel will be conducted (via teleconference).
The meeting will be held Thursday, July 31, 2003.
Mary O'Brien at 1-888-912-1227, or 206 220-6096.
Notice is hereby given pursuant to section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Small Business/Self Employed—Payroll Tax Committee of the Taxpayer Advocacy Panel will be held Thursday, July 31, 2003 from 3 p.m. EST to 4 p.m. EST via a telephone conference call. The public is invited to make oral comments. Individual comments will be limited to 5 minutes. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 206-220-6096, or write to Mary O'Brien, TAP Office, 915 2nd Avenue, MS W-406, Seattle, WA 98174. Due to limited conference lines, notification of intent to participate in the telephone conference call meeting must be made with Mary O'Brien. Ms. O'Brien can be reached at 1-888-912-1227 or 206-220-6096.
Last minute changes to the agenda are possible and could prevent effective advance notice.
Notice.
An open meeting of the Small Business/Self Employed—Schedule C Non-Filers Committee of the Taxpayer Advocacy Panel will be conducted (via teleconference).
The meeting will be held Tuesday, July 8, 2003.
Mary O'Brien at 1-888-912-1227, or 206 220-6096.
Notice is hereby given pursuant to section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988) that an open meeting of the Small Business/Self Employed—Schedule C Non-Filers Committee of the Taxpayer Advocacy Panel will be held Tuesday, July 8, 2003 from 2 p.m. EST to 3 p.m. EST via a telephone conference call. The public is invited to make oral comments. Individual comments will be limited to 5 minutes. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 206-220-6096, or write to Mary O'Brien, TAP Office, 915 2nd Avenue, MS W-406, Seattle, WA 98174. Due to limited conference lines, notification of intent to participate in the telephone conference call meeting must be made with Mary O'Brien. Ms O'Brien can be reached at 1-888-912-1227 or 206-220-6096.
Last minute changes to the agenda are possible and could prevent effective advance notice.
Research and Development Office.
Notice of government owned invention available for licensing.
The invention listed below is owned by the U.S. Government as represented by the Department of Veterans Affairs, and is available for licensing in accordance with title 35 U.S.C. 207 and title 37 CFR part 404 to achieve expeditious commercialization of results of federally funded research and development. Foreign patents are filed on selected inventions to extend market coverage for U.S. companies and may also be available for licensing.
Technical and licensing information on the invention may be obtained by writing to: Mindy Aisen, MD, Department of Veterans Affairs, Director Technology Transfer Program, Research and Development Office, 810 Vermont Avenue, NW., Washington, DC 20420; fax: 202-254-0473; e-mail at
The invention available for licensing is: PCT/US03/06715 “Method and Kit for Identifying Pseudomonas Aeruginosa.”
Department of Veterans Affairs.
Notice of intent to designate.
The Secretary of the Department of Veterans Affairs (VA) intends to designate approximately five acres of land at the Department of Veterans Affairs Medical Center, Saint
Vanessa Chambers, Capital Asset Management and Planning Service (182C), Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, (202) 565-6554.
38 U.S.C. 8161
In rule document 03-15143 beginning on page 35534 in the issue of Monday, June 16, 2003, make the following corrections:
1. On page 35535, in 71.1, in the first column, under the heading
2. On the same page, in the same section, in the same column, under the same heading, in the sixth line, “long. 76°15′52″” should read, “long. 76°17′52″”.
3. On the same page, in the same section, in the second column, the heading
In notice document 03-15284 beginning on page 36632 in the issue of Wednesday, June 18, 2003, make the following correction:
On page 36632, in the third column, in the
National Highway Traffic Safety Administration (NHTSA), Department of Transportation.
Final rule.
This document makes a number of revisions to the Federal safety standard for child restraint systems, including amendments for incorporating improved test dummies and updated procedures used to test child restraints and extension of the standard to apply it to child restraints recommended for use by children up to 65 pounds (30 kilograms). This action strengthens the technical underpinnings of the standard and ensures that a firmer foundation is laid for possible technical improvements in the future. Child restraints will be tested using the most advanced test dummies available today and tested to conditions representing current model vehicles. This final rule fulfills the mandate of the Transportation Recall Enhancement, Accountability and Documentation Act of 2000 that the agency undertake rulemaking on the safety of child restraints.
The amendments made in this rule are effective December 22, 2003. The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of December 22, 2003. If you wish to petition for reconsideration of this rule, your petition must be received by August 8, 2003.
If you wish to petition for reconsideration of this rule, you should refer in your petition to the docket number of this document and submit your petition to: Administrator, Room 5220, National Highway Traffic Safety Administration, 400 Seventh Street SW., Washington, DC 20590.
For non-legal issues, you may call Mike Huntley of the NHTSA Office of Crashworthiness Standards, at 202-366-0029.
For legal issues, you may call Deirdre Fujita of the NHTSA Office of Chief Counsel, at 202-366-2992.
You may send mail to both of these officials at the National Highway Traffic Safety Administration, 400 Seventh St., SW., Washington, DC 20590.
This document makes a number of revisions to Federal Motor Vehicle Safety Standard (FMVSS) No. 213, “Child Restraint Systems” (49 CFR 571.213). The revisions incorporate four elements into the standard: (a) An updated bench seat used to dynamically test add-on child restraint systems; (b) a sled pulse that provides a wider test corridor; (c) improved child test dummies; and (d) expanded applicability to child restraint systems recommended for use by children weighing up to 65 pounds. This action strengthens the technical underpinnings of the standard and ensures that a firmer foundation is laid for possible technical improvements in the future. Child restraints will be tested using the most advanced test dummies available today and tested to conditions representing current model vehicles. This final rule does not adopt the scaled injury criteria developed for the occupant protection standard (FMVSS No. 208), except that the time interval used to calculate the head injury criterion is amended from an unlimited time interval to 36 milliseconds.
This final rule fulfills the mandate in the Transportation Recall Enhancement, Accountability and Documentation Act (the TREAD Act) (November 1, 2000, Pub. L. 106-414, 114 Stat. 1800) to initiate a rulemaking for the purpose of improving the safety of child restraints.
Section 14(a) of the TREAD Act mandated that the agency “initiate a rulemaking for the purpose of improving the safety of child restraints, including minimizing head injuries from side impact collisions.” Section 14(b) identified specific elements that the agency must consider in its rulemaking. The Act gave the agency substantial discretion over the decision whether to issue a final rule on the specific elements. Section 14(c) specified that if the agency does not incorporate any element described in § 14(b) in a final rule, the agency shall explain in a report to Congress the reasons for not incorporating the element in a final rule.
In response to Section 14, the agency examined possible ways of revising and updating its child restraint standard. Today's final rule is substantially based on a combination of pre- and post-TREAD Act agency activities, including research studies of child restraints and dummies by NHTSA following issuance of the NPRM. This final rule was also developed based on extensive information provided by comments to the NPRM. Several factors relating to child restraint performance and use in this country guided the agency in its decision-making on this rulemaking, in addition to the statutory mandates
The agency also issued an advance notice of proposed rulemaking (ANPRM) published concurrently with the NPRM, in which comments were sought on the agency's work on developing a possible side impact protection standard for child restraint systems. This advanced notice is discussed in Section V of today's preamble. The ANPRM announced that the agency had conducted extensive testing and analysis over the year proceeding the ANPRM to develop a possible side impact protection standard for children in child restraints but acknowledged that there are many unknowns. The agency sought comment on the suitability of the test procedures it was considering, on appropriate injury criteria for children in side impacts, on cost beneficial countermeasures, and on other issues. Additionally, after the ANPRM was published the agency evaluated possible mitigation concepts, such as adding padding material to the child restraint system. After reviewing the comments and the results of its post-ANPRM study, the agency has decided that the level and amount of effort needed to further develop and validate a side impact component for incorporation into FMVSS No. 213 far exceeds what could be accomplished within the time constraints of the TREAD Act. While an NPRM is not feasible at this time, NHTSA's research into improved side impact protection requirements for child restraints will continue as an ongoing agency program.
The updates to the seat assembly are based on studies that NHTSA contracted to have done in response to the TREAD Act. This final rule makes the following changes: the seat bottom cushion angle is increased from 8 degrees off horizontal to 15 degrees; the seat back cushion angle is increased from 15 degrees off the vertical to 20 ± 1 degrees; the spacing between the anchors of the lap belt is increased from 222 millimeters (mm) to 400 mm in the center seating position and from 356 mm to 472 mm in the outboard seating positions; and the seat back of the seat assembly is changed, from a flexible seat back to one that is fixed, to represent a typical rear seat in a passenger car.
The changes to the sled pulse are based on studies conducted in response to the TREAD Act. The test corridor is widened to make it easier for more test facilities to reproduce. The wider corridor extends the pulse from 80 milliseconds (ms) to approximately 90 ms in duration. The expanded corridor does not reduce the stringency of the test, and makes it easier to conduct compliance tests at speeds closer to 30 mph.
This document enhances the use of test dummies in the evaluation of child restraints under Standard No. 213. NHTSA replaces most of the existing dummies with the new 12-month-old Child Restraint Air Bag Interaction (CRABI) dummy, and the state-of-the art Hybrid III 3- and 6-year-old dummies. NHTSA also incorporates a weighted 6-year-old dummy (
The agency has decided against adopting the scaled injury criteria developed in the context of the advanced air bag rulemaking of FMVSS No. 208. The agency was unable to confirm the existence of a safety problem that the scaled injury limits of FMVSS No. 208 would remedy. Relatedly, not enough is known about what modifications to child restraints could be made for the restraints to meet the proposed injury limits. In balancing the effects of meeting the scaled injury criteria against the possible impacts on the price of restraints, the agency determined that the scaled injury limits should not be added to FMVSS No. 213 at this time.
NHTSA has examined the benefits and costs of these amendments, wishing to adopt only those amendments that contribute to improved safety, and mindful of the principles for regulatory decisionmaking set forth in Executive Order 12866, Regulatory Planning and Review. Its efforts to do so, however, have been limited by several factors. One is the limited time allowed by the schedule specified in the TREAD Act for initiating and completing this rulemaking. That has limited the amount and variety of information that the agency could obtain and testing that the agency could conduct to examine the efficacy of possible countermeasures under consideration and the effects of the various proposed amendments on child restraint performance. The other is the lack of specific accident data on children in motor vehicle crashes generally. For example, there is little available data on neck injury in children involved in motor vehicle crashes. Together, these limitations have made it difficult to assess and compare the benefits and costs of this rulemaking.
The agency does not believe that updating the seat assembly and revising the crash pulse would affect dummy performance to an extent that benefits would accrue from such changes. The amendment of FMVSS No. 213 incorporating use of the new dummies in compliance tests, including testing with a weighted 6-year-old dummy, would result in a one-time cost of $1.68 million for manufacturers to purchase the new test dummies and $1.39 to $3.44 million to certify existing child restraints to the new dummies and test requirements. The annual long-term costs are estimated to be $31,200 to test new models of booster seats (including built-in restraints) with a weighted 6-year-old dummy. We believe that use of the new dummies, in itself, would not necessitate redesign of child restraints.
Of the 31,910 passenger vehicle occupants killed in 2001, 1,003 were children ages 0 through 10 years old. Four hundred ninety-seven (497) of these were less than 5 years old. The failure to use occupant restraints is a significant factor in most fatalities resulting from motor vehicle crashes for both adults and children. Of the 31,910 passenger vehicle occupants killed in 2001, over half (55 percent) were unrestrained. Forty-six (46) percent of the 1,003 child occupant fatalities, ages 0 through 10 years old, were unrestrained. For child occupants less than 5 years old, 45 percent of the 497 fatalities were unrestrained.
NHTSA developed three strategies for reducing the number of children killed and injured in motor vehicle crashes in this country. (
The second strategy was to improve existing requirements for the performance and testing of child restraint systems. Since NHTSA first began regulating child safety seats in 1971, the agency has made numerous improvements to the original Federal safety standard. On a frequent basis, the agency has issued planning documents or has held public meetings on child passenger safety issues at the attention of the agency and the agency's long view of possible regulatory actions that might be taken in response. The public is invited to comment on the agency's plans. The November 2000 Planning Document announced that the agency planned to undertake rulemaking to update the bench seat and belt geometry used in Standard No. 213's compliance test, revise the crash pulse used in the test, incorporate state-of-the art infant, 3-year-old and 6-year-old crash test dummies and child-specific injury criteria, and continue efforts working with the Society of Automotive Engineers in developing a 10-year-old child test dummy. The plan also stated that the agency would conduct research into possible side impact test requirements for child restraints and developing a test dummy appropriate for use in side impact tests. In addition, the plan announced that NHTSA would begin testing child restraints in full frontal and side impact vehicle crash tests under the agency's New Car Assessment Program.
The third strategy called for improved mechanisms for getting safety information to consumers, to increase the likelihood that child restraints would be purchased and correctly used. The agency sought to improve the information it provided to consumers, both on the performance and proper use of child restraint systems, as well as on defect investigations and safety recalls.
In November 2000, the TREAD Act was enacted. Section 14 of the TREAD Act directed NHTSA to initiate a rulemaking for the purpose of improving the safety of child restraints and included specific elements, listed below, that the agency had to consider as part of the rulemaking. Most of the elements for consideration had been included in NHTSA's Planning Document as part of the strategy for improving the safety of child restraints. Thus, Section 14 reaffirmed the importance of the agency's planned programs for amending Standard No. 213. Nonetheless, the TREAD Act had very tight deadlines for initiating and completing the rulemaking which also defined for the agency the actions it could take and complete within those deadlines.
Section 14 of the TREAD Act directed NHTSA to initiate a rulemaking for the purpose of improving the safety of child restraints by November 1, 2001, and to complete it by issuing a final rule or taking other action by November 1, 2002. The relevant provisions in Section 14 are as follows:
(a) In General. Not later than 12 months after the date of enactment of this Act, the Secretary of Transportation shall initiate a rulemaking for the purpose of improving the safety of child restraints, including minimizing head injuries from side impact collisions.
(b) Elements for Consideration. In the rulemaking required by subsection (a), the Secretary shall consider—
(1) Whether to require more comprehensive tests for child restraints than the current Federal motor vehicle safety standards requires, including the use of dynamic tests that—
(A) Replicate an array of crash conditions, such as side-impact crashes and rear-impact crashes; and
(B) Reflect the designs of passenger motor vehicles as of the date of enactment of this Act;
(2) Whether to require the use of anthropomorphic test devices that—
(A) Represent a greater range of sizes of children including the need to require the use of an anthropomorphic test device that is representative of a ten-year-old child; and
(B) Are Hybrid III anthropomorphic test devices;
(3) Whether to require improved protection from head injuries in side-impact and rear-impact crashes;
(4) How to provide consumer information on the physical compatibility of child restraints and vehicle seats on a model-by-model basis;
(5) Whether to prescribe clearer and simpler labels and instructions required to be placed on child restraints;
(6) Whether to amend Federal Motor Vehicle Safety Standard No. 213 (49 CFR 571.213) to cover restraints for children weighing up to 80 pounds;
(7) Whether to establish booster seat performance and structural integrity requirements to be dynamically tested in 3-point lap and shoulder belts;
(8) Whether to apply scaled injury criteria performance levels, including neck injury, developed for Federal Motor Vehicle Safety Standard No. 208 to child restraints and booster seats covered by in [sic] Federal Motor Vehicle Safety Standard No. 213; and
(9) Whether to include [a] child restraint in each vehicle crash tested under the New Car Assessment Program.
(c) Report to Congress. If the Secretary does not incorporate any element described in subsection (b) in the final rule, the Secretary shall explain, in a report to the Senate Committee on Commerce, Science, and Transportation and the House of Representatives Committee on Commerce submitted within 30 days after issuing the final rule, specifically why the Secretary did not incorporate any such element in the final rule.
(d) Completion. Notwithstanding any other provision of law, the Secretary shall complete the rulemaking required by subsection (a) not later than 24 months after the date of the enactment of this Act.
The agency developed its proposed and final rules responding to the TREAD Act while bearing in mind and in some cases, balancing, several compelling principles and considerations that generally come to the forefront in rulemaking in this area. These are discussed below.
(a) When used, child restraints are highly effective in reducing the likelihood of death and or serious injury in motor vehicle crashes. NHTSA estimates (“Revised Estimates of Child Restraint Effectiveness,” Hertz, 1996) that for children less than one-year-old, a child restraint can reduce the risk of fatality by 71 percent when used in a passenger car and by 58 percent when used in a pickup truck, van, or sport utility vehicle (light truck). Child restraint effectiveness for children between the ages 1 to 4 years old is 54 percent in passenger cars and 59 percent in light trucks. The failure to use occupant restraints is a significant factor in most fatalities resulting from motor vehicle crashes. For child occupants less than 5 years old, 45 percent of the 497 fatalities in 2001 were unrestrained.
Over the past decade, the agency has sought to increase use of vehicle seat belt and child restraint systems. NHTSA conducts national campaigns to educate the public about the importance of buckling children into child restraint systems, supports efforts by state and
If child restraints were made more effective, some lives could also possibly be saved. However, in making regulatory decisions on possible enhancements, the agency must bear in mind the consumer acceptance of cost increases to an already highly-effective item of safety equipment. Any enhancement that would significantly raise the price of the restraints could potentially have an adverse effect on the sales of this voluntarily-purchased equipment. The net effect on safety could be negative if the effect of sales losses exceeds the benefit of the improved performance of the restraints that are purchased. Thus, to maximize the total safety benefits of its efforts to extend and upgrade its restraint requirements, the agency must balance those improvements against impacts on the price of restraints. The agency must also consider the effects of improved performance on the ease of using child restraints. If the use of child restraints becomes overly complex, the twin problems of misuse and nonuse of child restraints could be exacerbated.
(b) Estimating the net effect on safety of this rulemaking, consistent with the principles for regulatory decisionmaking set forth in Executive Order 12866, Regulatory Planning and Review, was limited by several factors. One was the lack of specific accident data on children in motor vehicle crashes generally. Second, the limited time allowed by the schedule specified in the TREAD Act for initiating and completing this rulemaking limited the amount and variety of information that the agency could obtain and testing that the agency could conduct to examine the efficacy of possible countermeasures and the effects of various proposed amendments on child restraint performance. Together, these limitations made it difficult to assess and compare the benefits and costs of this rulemaking.
(c) The rulemaking schedule imposed by the TREAD Act also limited the rulemaking to elements that could be completed within the statutory schedule. The development of an anthropomorphic test device representing a 10-year-old child could not be completed within the timeframe of the TREAD Act and so was not part of the rulemaking, notwithstanding its inclusion as an element for consideration in NHTSA's Planning Document and in Section 14 of the TREAD Act. Development of a seat cushion with different stiffness characteristics for the test seat assembly could not be completed and analyzed in time to be included in this rulemaking. Development of a side impact test procedure, injury criteria, and cost-effective countermeasures also could not be completed within the TREAD Act rulemaking schedule. Work is continuing in some of these areas. While ideally the agency would have wanted to address all related aspects of the standard, what could be accomplished in the near term was addressed and what could not but should will be pursued in the future.
Bearing in mind the principles and considerations discussed in the previous section, the agency initiated several actions following enactment of the TREAD Act. These are summarized below.
On May 1, 2002 (67 FR 21806, docket 11707), the agency published a notice of proposed rulemaking (NPRM) proposing to incorporate five elements into the standard: (a) An updated bench seat used to dynamically test add-on child restraint systems; (b) a sled pulse that provides a wider test corridor; (c) improved child test dummies; (d) expanded applicability to child restraint systems recommended for use by children weighing up to 65 pounds; and (e) new or revised injury criteria to assess the dynamic performance of child restraints. The 60-day comment period provided by the NPRM on the proposals was extended an additional 30 days in response to petitions from the Juvenile Products Manufacturers Association and ARCCA, Inc. 67 FR 44416; July 2, 2002.
The proposed updates to the seat assembly were based on studies that NHTSA contracted to have done in response to the TREAD Act. The NPRM proposed the following changes: the seat bottom cushion angle would be increased from 8 degrees off horizontal to 15 degrees; the seat back cushion angle would be increased from 15 degrees off the vertical to 22 degrees; the spacing between the anchors of the lap belt would be increased from 222 millimeters (mm) to 392 mm in the center seating position and from 356 mm to 472 mm in the outboard seating positions; and the seat back of the seat assembly would be changed, from a flexible seat back to one that is fixed, to represent a typical rear seat in a passenger car.
The agency also proposed to widen the corridor of the sled pulse to make it easier for more test facilities to reproduce. The wider corridor extends the pulse from 80 milliseconds (ms) to approximately 90 ms in duration. The agency believed that the expanded corridor would not reduce the stringency of the test, and would also make it easier to conduct compliance tests at speeds closer to 30 mph.
The NPRM proposed two initiatives toward enhancing the use of test dummies in the evaluation of child restraints under Standard No. 213. NHTSA proposed to replace some of the existing dummies with the new 12-month-old Child Restraint Air Bag Interaction (CRABI) dummy, and the state-of-the art Hybrid III 3- and 6-year-old dummies. NHTSA also proposed testing child restraints for older children with a weighted 6-year-old dummy (
The NPRM proposed to extend Standard No. 213 to apply to child restraint systems for children who weigh 65 lb or less. Restraints recommended for children weighing 50 to 65 lb would be tested with the weighted 6-year-old dummy.
The proposal to use the new and scaled injury criteria of Standard No. 208 was based on research that the agency had done in support of the agency's May 2000 final rule on advanced air bag technology, which amended Standard No. 208 by, among other things, adjusting the criteria and performance limits to account for motor vehicle injury risks faced by different size occupants (65 FR 30680; May 12, 2000), as well as on NCAP and sled testing done in response to the TREAD Act. The NPRM proposed to adopt the scaled Head Injury Criterion (HIC) limits from the Standard No. 208 rulemaking into Standard No. 213, as well as the chest deflection and acceleration limits. The Nij neck criterion was also proposed to be added to Standard No. 213, but without the limits on axial force.
NHTSA estimated that the proposal to use the new and scaled injury criteria of Standard No. 208 would prevent an estimated 3-5 fatalities and 5 MAIS 2-
NHTSA did not identify countermeasures to improve child restraint performance in frontal tests that would allow child restraint manufacturers to meet the proposed neck injury criterion. Consequently, the agency was unable to estimate the costs of such countermeasures. Comments were requested on possible countermeasures and their costs. The agency believed that the proposal to use new dummies in compliance tests, including testing with a weighted 6-year-old dummy, could result in increased testing costs for manufacturers that want to certify their restraints using the tests that NHTSA will use in compliance testing. NHTSA estimated that use of the new dummies and other changes to the test procedure would add testing costs of $2.72 million. The agency believed that those changes would not result in redesign of child restraints.
On May 1, 2002, concurrent with the publication of the NPRM and in further response to section 14(b) of the TREAD Act, NHTSA issued an advance notice of proposed rulemaking (ANPRM) seeking public comments on the agency's work on developing near-term a possible side impact protection standard for child restraint systems. 67 FR 21836, May 1, 2002; Docket No. 02-12151.
The ANPRM primarily addressed side impact protection for children in child restraints in the following areas: (a) Determination of child injury mechanisms in side impacts, and crash characteristics associated with serious and fatal injuries to children in child restraints; (b) development of test procedures, a suitable test dummy and appropriate injury criteria; and (c) identification of cost beneficial countermeasures. Uncertainties in these areas, together with the statutory schedule for this rulemaking, made it difficult for the agency to assess and make judgments on the benefits and costs of a rulemaking on side impact protection. The ANPRM also requested comments on the appropriateness of proposing to incorporate a rear impact test procedure into FMVSS No. 213 for rear-facing child restraint systems.
The agency received approximately 17 comments on the ANPRM. Commenters expressed qualified support for NHTSA's efforts to enhance child passenger protection in side impact crashes, but were concerned about the uncertainties with respect to the three areas highlighted above. A number of commenters believed that a dynamic test should account for some degree of vehicle intrusion into the occupant compartment, which overall the tests that the agency had been considering did not.
Following publication of the ANPRM, the agency began a program of child restraint systems side impact testing that continues today, for completion in fall 2003. Some of the side impact testing in which the agency is engaged is as follows:
If the results from the above two evaluations are successful in reducing injury levels, NHTSA will consider conducting a test series to determine if the stiffer shoulder/upper arm area of the HIII 3-year-old dummy influences head/neck performance, as compared to the TNO Q3 dummy developed by a European test dummy manufacturer.
Upon further consideration of the comments on the ANPRM and the agency's side impact test program, we have decided not to issue an NPRM and final rule on side and rear impact protection at this time and thus are withdrawing the action. A full explanation of the agency's reasons for this decision is set forth in a report to Congress that NHTSA has issued concurrently with today's final rule.
The level and amount of effort needed to further develop and validate the ISO side impact test procedure far exceeds what could be accomplished within the time constraints of the TREAD Act. While an NPRM is not feasible at this time, NHTSA's research into improved side impact protection requirements for child restraints will continue as an ongoing agency program.
Two other regulatory initiatives on child restraint systems were completed in response to Section 14 of the TREAD Act. Pursuant to § 14(b)(5) of the Act, the agency issued a final rule on October 1, 2002 (67 FR 61523, Docket 10916) on Standard No. 213's labeling and owner's manual requirements. The final rule amends the format, location, and content of some of Standard No. 213's labeling requirements to make the labels and instructions clearer and simpler.
In addition, pursuant to § 14(g) of the Act, NHTSA published a final rule establishing an ease-of-use child restraint ratings program on November 2, 2002 (
NHTSA is also continuing an evaluation of whether to establish two complementary consumer information programs. The first would be based on child restraint dynamic performance.
The agency conducted several research projects since publication of the NPRM in an effort to assess whether the proposed changes would reduce the safety currently afforded by child restraints. NHTSA conducted three test projects, which are fully discussed in sections VIII.a.1, VIII.c.1, and VIII.e.1 of this preamble. The first test project related to the effect the revisions to the test seat assembly might have on the dynamic performance of child restraints. Dummies currently specified in FMVSS No. 213 were tested with child restraints on the revised seat assembly, and the performance of the dummies was compared to that observed in compliance tests. The second test project related to assessing any performance differences that may exist between the Hybrid II and the Hybrid III dummies. The third test project involved evaluating whether child restraints tested with the Hybrid III dummies could meet the proposed scaled HIC, chest injury limits, and Nij measures. Reports relating to these projects have been placed in the docket for this rulemaking.
NHTSA received approximately 35 comments on the May 1, 2002 NPRM for this final rule. Commenters included child restraint manufacturers, motor vehicle manufacturers, motor vehicle dealers and other industry associations, child passenger safety consumer groups, the National Transportation Safety Board, child safety research and testing organizations, and private individuals. The Juvenile Products Manufacturers Association (JPMA) conducted a series of 80 sled tests of child restraints in response to the NPRM and included the results of the testing in its comment.
The commenters generally expressed support for the regulatory goals of the NPRM to enhance child passenger safety.
The rulemakings suggested by these commenters go beyond those included in the NPRM for consideration by the agency within the tight deadlines of the act. The suggestions will be considered suggestions for future rulemaking. Copies of the comments will be placed in Docket 7938 (NHTSA plan for future work on child passenger safety).
This concern was echoed by other commenters. TraumaLink at the Children's Hospital of Philadelphia stated that data collected through its “Partners for Child Passenger Safety” study indicate that children in child restraints do extremely well in all types of crashes. “The extremely low injury rate in child restraints indicates that despite substantial misuse, these devices perform exceedingly well across the range of crash severities and directions of impact * * * It is important to consider the unintended consequences of these [proposed] changes, both in terms of inadvertent reduction in the current excellent performance of the CRS [child restraint system] or the resultant increase in cost.” The National Safe Kids Campaign (Safe Kids) urged the agency “to be mindful of the practicalities and costs associated with changes that might overly burden child restraint and vehicle manufacturers, thereby requiring them to discontinue certain product models or pass on unreasonable costs to consumers. Child safety seats must remain both affordable and safe.” The American Academy of Pediatrics stated, “While the Academy strongly supports the proposed measures to make child restraints even more protective than they are today, these improvements cannot come at the expense of fewer children using child restraints or more children using outdated car safety seats.” The Association of International Automobile Manufacturers, Inc., expressed concern that “the lack of use or the misuse of child restraint systems presents a far greater opportunity to improve child passenger safety than seeking enhanced performance of child restraint systems, particularly if the consequence of the enhanced performance is decreased use and increased misuse.”
Safe Kids also expressed concern that increased prices of child restraints could affect State child restraint use laws. Safe Kids stated that most parents and caregivers will be expected to purchase a minimum of two or three restraints for each child to comply with evolving State child restraint use laws that extend coverage to more and more children. “As those seats become more expensive, legislators may be reluctant to make important legislative
There was unanimous support for amending Standard No. 213's specifications for the test seat assembly used to test child restraints in the agency's compliance tests. Almost all of the commenters believed that the test seat assembly should be more representative of the seats of newer passenger vehicles. Two commenters (Martha Bidez, Public Citizen) had an opposing view. Ms. Bidez believed that the seat assembly should either have features representing seats in the average age vehicle in the U.S. (which the commenter stated is 9 years old) or features that present the most demanding (“worst case”) conditions under which child restraints should be tested. Public Citizen suggested that the agency should adjust its testing, or create another test, that will measure the effectiveness of child restraints in older cars.
Amending the seat cushion angle by increasing it from 8 degrees off horizontal to 15 degrees was generally supported, as was amending the seat back angle by increasing it from 15 degrees off vertical to 22 degrees. Several commenters viewed these changes as aligning the bench seat more with the ECE Regulation 44 seat assembly bench and suggested that the agency completely use the ECE Regulation 44 seat dimensions.
Most commenters agreed with the proposals for amending the seat belts on the test seat assembly. Some commenters expressed concerns about certain aspects of the test seat assembly's seat belts that were not addressed by the NPRM, such as the vertical location of the lap belt anchorages.
On the other hand, commenters did not see eye-to-eye on the proposal to change the seat back to represent a fixed vehicle seat. Supporters of the change believed that a fixed seat back replicates today's seat back in passenger cars and harmonizes with the test bench setups for ECE, Canadian and Australian regulations. Some commenters were concerned that not enough was known about how fixing the seat back would affect child restraint system performance, while others opposed the proposal believing that fixing the seat back would result in a less rigorous test condition.
Several commenters responded to the NPRM's request for comments on the agency's decisions against changing, at this time the length of the bench seat's bottom seat cushion, including a floor to the seat assembly; and changing the stiffness of the seat assembly's cushion. A number of commenters believed that the stiffness of the seat cushion has a strong effect on child restraint performance. Some commenters were uncertain whether performance would be affected and suggested that testing and research be completed before changing the foam.
The comments focused generally on the issues of the sled pulse shape (widening of the corridor) and severity. Many commenters agreed with the agency that widening the corridor of the sled pulse from 80 milliseconds (ms) to approximately 90 ms in duration would allow more laboratories to run the compliance test without decreasing the effectiveness of the testing. However, child restraint manufacturers expressed concern that widening the corridor will make the standard more stringent, because child restraint manufacturers will have to design products that can comply at the new extremes of the compliance corridor. These commenters also believed that a wider test corridor will necessarily lead to more lab-to-lab variability during certification and compliance testing, which, the commenters stated, increases the compliance burden on manufacturers.
ARCCA, Inc. believed that the Standard No. 213 pulse is actually less severe than all of the 30 mph barrier test pulses from actual vehicles, and that the standard's pulse severity should be increased. All other commenters did not want to increase the severity of the crash pulse. Many expressed the view that the velocity change should not be raised because the current test is already reflective of the top few percent of crashes. A number of commenters believed that the crash pulse should be reduced in severity because the most frequent crashes involving children in child restraints are those with lower crash pulse severities than the test pulse. Others believed that a relatively severe, “worst case” scenario should be replicated.
Commenters generally supported using the CRABI and Hybrid III 3-year-old dummies in Standard No. 213 compliance tests, in place of the 9-month and Hybrid II 3-year-old dummies now used by the agency. However, a number of commenters expressed concerns that the Hybrid III 6-year-old dummy's neck was too flexible for use in testing child restraints. These commenters suggested that the agency continue its use of the Hybrid II 6-year-old dummy rather than use the Hybrid III dummy in its place. Most commenters objected to using the weighted Hybrid III 6-year-old dummy (weighted to 62 lb) to assess injury reference values in compliance tests of child restraints recommended for use by children weighing over 50 lb. Most believed that the dummy's weighting produced a dummy that was unrepresentative of a 62 lb child. Some were concerned that the weights could interfere with the proper functioning of the dummy's instrumentation. Some of these commenters suggested that the dummy should be used only to assess the structural integrity of child restraints in the standard's dynamic test, and not the capability of the restraint to limit head excursion or forces to the dummy's head, neck or chest areas.
Of the commenters addressing application of the standard, a majority supported increasing the weight limit contained in the “child restraint system” definition. Most of these commenters supported increasing the weight limit to 65 lb with a future increase to 80 lb upon introduction of the 10-year-old dummy. A few commenters opposed establishing 65 lb as an intermediate step in favor of amending the standard directly to 80 lb. There were also a few divergent comments on whether the agency should extend the regulation to a maximum weight beyond that of the heaviest dummy used in the standard.
The agency received widely divergent comments on the proposal to limit measurement of HIC to 15 milliseconds and to use the injury criteria of Standard No. 208 that were scaled for children. The Alliance, UMTRI and SafetyBeltSafe supported the use of a 15 ms limit on the head injury criterion (HIC) limit as a more realistic way to assess head and brain injury, with the lower HIC values proposed for each dummy. JPMA stated that it was willing to consider supporting a 15 ms limit (HIC 15), if the agency can undertake research to assure that there will not be unintended consequences from countermeasures needed to meet HIC 15. However, JPMA did not support the other proposed new injury criteria, including the scaled HIC values. The commenter stated that the tests of child restraints it conducted with the proposed CRABI and Hybrid III dummies produced injury reference values that exceeded the proposed limits, which the commenter said is a concern given the high level of
A few commenters supported while others opposed the proposals to adopt a new chest deflection criterion and to adopt the chest acceleration limits that were scaled for children and incorporated into FMVSS No. 208. JPMA, TraumaLink, UMTRI, SafetyBeltSafe and others opposed incorporation of the proposed chest deflection and reduced chest acceleration limits, because these types of injuries do not occur in children in child restraint systems. These commenters and others suggested that the agency collect data on chest deflection to establish a database that could be used to evaluate these measures more in the future.
Virtually all parties commenting on this aspect of the proposal opposed the modified Nij neck criterion (modified from the criterion in FMVSS No. 208 in that the limits on axial force were excluded). JPMA, SafetyBeltSafe, UMTRI, TraumaLink and others did not support adopting the proposed Nij criterion at this time because the relationship between the criterion and real-world injuries “under the type of loading simulated by FMVSS 213” is “not well established” (quoting UMTRI). SafetyBeltSafe believed that neither Nij as proposed nor Nij with a limit on tension should be used as a compliance criterion unless these are proven to be useful predictors of child neck injury. The Insurance Institute for Highway Safety (IIHS) was concerned that studies of real-world crashes indicate that neck injuries due to inertial forces appear to be rare, and, the commenter stated, it is not clear how child restraints could be better designed to lower neck injury measures.
As discussed in the NPRM, NHTSA had initiated a test program in response to the TREAD Act to assess seat parameters of production seats, working with the U.S. Naval Air Warfare Center Aircraft Division at Patuxent River, Maryland (PAX). PAX analyzed seat geometry data, including seat cushion angle, seat back angle, seat cushion length, seat back length, tether anchor locations, child restraint anchorage system anchor locations, and seat belt locations.
After publication of the NPRM, PAX conducted a series of dynamic tests using a revised test seat assembly that had been constructed incorporating the changes to the test seat assembly proposed in the NPRM. These tests were conducted with the dummies currently specified in FMVSS No. 213 (the newborn and TNO 9-month, and Hybrid II 3- and 6-year-old dummies), and with various types of child restraints (rear-facing infant only, rear- and forward-facing convertible, forward-facing “hybrid boosters” (a child restraint that can be used as a forward-facing restraint with harness for toddlers up to 40 lb and as a belt-positioning booster with children over 40 lb), and both backless and high-back boosters).
The results from this series of dynamic sled tests were compared to actual compliance tests that the agency had conducted to determine what effect, if any, the revisions to the test seat assembly might have on the dynamic performance of child restraints. NHTSA compared measurements taken for seat back rotation in rear-facing tests, and HIC, chest acceleration, and head and knee excursion in forward-facing tests. All of the proposed changes were simultaneously incorporated into the test seat assembly, and were not individually assessed for its effect on child restraint performance.
Rear-facing tests were conducted using the revised test seat assembly with rear-facing infant only seats using the newborn dummy, and rear-facing convertible restraints using the newborn and Hybrid II 9-month-old dummies. In tests of rear-facing restraints, HIC and chest acceleration are not currently measured, since the newborn and 9-month-old dummies are not instrumented. Further, head and knee excursion are not measured. The only measured parameter in testing rear-facing child restraints is provided in S5.1.4 of FMVSS No. 213, which specifies that when a rear-facing child restraint is tested, the angle between the system's back support surface for the child and the vertical shall not exceed 70°.
The seat back rotation measured in these tests is compared to the seat back rotation measured in NHTSA compliance tests of the identical child restraints in Table 1 below.
The data indicated no clear effect of the revised test seat assembly on measured seat back rotation in rear-facing tests. In tests using the newborn dummy and two different rear-facing infant-only child restraints, the seat back rotation angle increased by 19.8 percent over that measured in the comparable compliance test in one, and decreased by 7.6 percent in the other. When the same infant-only seats were tested rear facing with the 9-month-old dummy, the restraint that had previously shown increased seat back rotation with the newborn dummy decreased by 5.4 percent over that measured in the comparable compliance test, while the restraint that had shown decreased seat back rotation with the newborn dummy increased by 1.7 percent over that measured in the comparable compliance test. In all cases, the measured seat back rotation was well under the FMVSS No. 213 limit of 70°.
Tests were conducted using the revised test seat assembly on three different rear-facing convertible child restraints with the newborn dummy. In each case, the measured seat back rotation angle was well below the FMVSS No. 213 limit.
PAX also conducted tests of two different rear-facing convertible child restraints with the 9-month-old dummy using the revised test seat assembly. In each of these tests, the seat back rotation increased by at least 20 percent over that measured in the comparable FMVSS No. 213 compliance tests conducted on the existing test seat assembly. Again, however, the rotation was within the allowable limits.
Sled tests were conducted using the revised test seat assembly with the Hybrid II 3-year-old dummy in forward-facing convertible restraints, and in forward-facing hybrid boosters using the restraint's internal harness (in the toddler seat mode), and with the Hybrid II 6-year-old dummy in both backless and high back belt-positioning booster restraints. The HIC measured in these tests is compared to the HIC measured in NHTSA compliance tests of the same model child restraints in Table 2 below.
The effect of the revised seat assembly on HIC measurements appear to be varied, and largely dependent on the dummy used in the testing. In three of four tests conducted with the 3-year-old dummy, the measured HIC was higher using the revised test seat assembly as compared to compliance tests performed on the existing test seat assembly. This includes both tests conducted using forward-facing convertible restraints, and one of two tests using a forward-facing hybrid booster with its internal harness system. However, in each of four tests conducted with the 6-year-old dummy, two each with backless boosters and high back boosters, the measured HIC was lower than in the identical compliance tests conducted on the existing test seat assembly. Overall, some measurements differed by as much as ± 40 percent between tests conducted on the two different test seat assemblies. All HIC measurements were well within the existing limit of 1000.
All chest acceleration measurements recorded were well within the current limit of 60 g's maximum. It is noted, however, that while most chest acceleration measurements were comparable in magnitude between the two test seat assemblies, there was one test in which the measured values differed by 42 percent for the same child restraint.
In the tests outlined in Tables 2 and 3, supra, head excursion was measured. In addition, head excursion was measured in sled tests performed with the TNO 9-month-old dummy on two different forward-facing convertible restraints. Head excursion was compared to the head excursion measured in compliance tests of the identical child restraints using the same dummies. Table 4 provides this comparison.
In three of four tests conducted using forward-facing convertible child restraints, a decrease in head excursion was observed in tests using the revised test seat assembly. However, in tests conducted on the revised seat assembly using forward-facing hybrid boosters, backless and high back belt-positioning booster seats, a marginal increase in head excursion was observed. All measured head excursions, on the existing and revised test seat assemblies, were well within the established 813 mm limit prescribed in FMVSS No. 213.
There was unanimous support for amending Standard No. 213's specifications for the test seat assembly
The agency has decided to revise the seat cushion angle as proposed. Increasing seat cushion angle from 8 degrees off horizontal to 15 degrees will make the seat assembly more representative of currently manufactured vehicle seats and will reduce or eliminate the need for supplementary devices, such as rolled towels or swimming noodles, now being used with infant seats to compensate for the difference in seat cushion angle of the current seat assembly and new vehicle seats. The agency does not agree with Ms. Bidez and Public Citizen that the seat assembly should be representative of seats in 9-year-old vehicles. Such a rearward-looking approach ensures the obsolescence of the standard, since seats in the vehicle fleet are already in the process of being replaced by the seats of more modern design.
UMTRI expressed concern that tests of child restraints on a seat assembly with a seat cushion at the proposed 15 degree angle to horizontal generally resulted in decreased head excursion values of about two inches and increased chest accelerations by an average of 4 g. UMTRI suggested reducing the allowable head excursion limit in Standard No. 213 by two inches to compensate for the change. JPMA disagreed with UMTRI's comment that the head excursion limit should be changed, stating its belief that there is no difference in safety since the reference point from which head excursion is measured is unchanged. JPMA further stated that—
The agency does not agree that testing on the new seat assembly will result in across-the-board reductions in dummy head excursions as compared to head excursions of dummies tested on the current assembly. It is not evident from the agency's test data that use of the revised test seat assembly will have a positive or negative effect on measured head excursion. Table 4, supra, provides test results comparing head excursion measurements in a total of 10 tests using the revised test seat assembly and using the existing test seat assembly (compliance test results). These tests were conducted using (1) the 9-month-old dummy in two different forward-facing convertible restraints, (2) the 3-year-old dummy in two forward-facing convertible restraints and two forward-facing hybrid booster restraints, and (3) the 6-year-old dummy in two backless boosters and in two high back belt-positioning boosters. In three of four tests conducted using forward-facing convertible child restraints, a decrease in head excursion was observed in tests using the revised test seat assembly. However, in tests conducted on the revised seat assembly using forward-facing hybrid boosters, backless and high back belt-positioning booster seats, a marginal increase in head excursion was observed.
While differences of up to +32.4 percent and −24.6 percent were measured in tests using the revised and existing test seat assemblies, there was no distinctive trend across dummy or child restraint types. Thus, the agency cannot conclude that the new seat assembly necessarily results in a less rigorous test of a child restraint's ability to limit head excursion as compared to the existing seat assembly. Further, all measured head excursions on the existing and revised test seat assemblies in NHTSA's program were well within the established 813 mm limit prescribed in FMVSS No. 213. Thus, the agency does not believe that there has been a showing of a safety need to reduce the head excursion limit to take account of the effect of testing on the new test assembly.
In response to JPMA's comment about increased head excursion benefiting overall child restraint performance due to increased “ride down” of crash forces, the agency agrees that generally speaking, increased ride down can help reduce head, neck and chest accelerations. However, increased ride down obviously must not come at the cost of increased risk of head impacts due to excessive head excursions in a crash. Thus, the agency does not concur with any implication that head excursions beyond what is permitted by Standard No. 213 is acceptable. The agency is concerned that child restraints that might meet the head excursion requirements of the standard when tested on the new test seat assembly might allow excessive head excursion when used in actual vehicles whose seat cushions are more like the current seat assembly. The agency asks the public for help in monitoring this situation and providing information of a real world problem should one occur. If there are unreasonable excessive head excursions due to child restraints being used on vehicle seats that are flatter than the revised seat assembly, reducing the head excursion limit of the standard will be considered by the agency.
Amending the seat back angle by increasing it from 15° off vertical to 22° was widely supported. Several commenters viewed these changes as aligning the bench seat more with the ECE Regulation 44 seat assembly bench, which has a seat back angle of 20 ± 1°. In response to commenters and in further consideration of the agency's efforts to harmonize its standards where possible, the agency amends the seat back angle by increasing it to 20 ± 1° to make it consistent with the test seat assembly of ECE Regulation 44. The agency believes that the difference between 22° and 20 ± 1° is negligible and should have no significant effect on child restraint performance.
This final rule adopts the proposals, except the spacing between the anchors of the lap belt in the center seating position will be 400 mm, rather than 392 mm as proposed. The agency believes that the 8 mm difference between 400 and 392 mm is negligible, yet the 400 mm specification will make the spacing identical to that of the test seat assembly of ECE Regulation 44, so it is adopted. The lap belt anchorage spacing in the outboard seating position is revised to 472 mm, as proposed. (The ECE regulation specifies a spacing of 400 mm for both lap only tests and lap/shoulder tests. The agency cannot conclude that the difference between 472 mm and 400 mm is insignificant, so the agency is not adopting the ECE specification.) In response to Ms. Bidez, the Federal motor vehicle safety standards specify a minimum spacing for the anchorages, not a maximum. As to setting the anchorages at the maximum spacing that the agency has measured in its test program, the agency declines this suggestion. The agency does not have sufficient information to form the basis for a conclusion that a safety need exists to set the anchorages at the widest spacing observed on a vehicle seat. Further, setting the anchorages at the maximum spacing was not proposed in the NPRM or evaluated in the agency's test program at PAX River.
A few commenters expressed some concerns about certain aspects of the test seat assembly's seat belts that were not addressed by the NPRM. GM, the Alliance, and ARCCA, Incorporated (ARCCA), stated that the seat belt lower anchors for both the center and outboard seating configurations do not represent typical anchorage locations found on new vehicles. As stated by the Alliance, “The lap belt anchorages are too far back and too low and the lower anchors for the outboard seat are too high to represent a typical rear seat.” GM and the Alliance also believed that the current two-piece lap and shoulder belt should be replaced with a three-point continuous loop shoulder/lap belt with a simulated retractor. Ford suggested that, to improve reproducibility of test results, the standard should specify a “reasonably tight” tolerance of 8% ± 1% elongation at 10,000 N for the belt webbing used on the standard test bench.
The agency did not pursue revising the fore-and-aft and vertical placement of the seat belt anchorages in response to the TREAD Act. This was due in part to the short deadlines of the TREAD Act. In addition, information from a 1994 test program indicated an absence of a need to change those anchorage locations. In 1994, the agency explored locating lap and shoulder belt anchorages on the standard seat assembly in a test program supporting rulemaking amending FMVSS No. 213 to facilitate the production of belt-positioning booster seats. The agency found that the fore-aft and vertical placement of the lap belt had a negligible effect on the performance of the child restraints evaluated in the program. 59 FR 37167, 37171; July 21, 1994. Nonetheless, in that rulemaking the agency placed the inboard anchor to reflect the location of the average condition identified by the research. The agency believes that those fore-aft and vertical locations are still sufficiently representative of current vehicles so as to provide a true and thorough evaluation of a child restraint's performance in a crash.
Given agency resources and rulemaking priorities, NHTSA does not anticipate exploring in the near future whether the fore-aft and vertical placement of the lap belt anchorages should be changed, or whether the current two-piece lap and shoulder belt should be replaced with a three-point continuous loop lap/shoulder belt with a simulated retractor. Our assessment of the safety need for such a rulemaking could change, if new information arises that indicates that these issues should be explored.
In response to the issue raised by Ford, the elongation of the standard belt webbing used in FMVSS No. 213's compliance test was not discussed in the NPRM. It should be noted that specifying elongation of the webbing was addressed by NHTSA in the July 21, 1994 final rule on belt-positioning boosters (59 FR at 37171). Under current FMVSS No. 213 test procedures, NHTSA tests child restraint systems using webbing that is typical of that installed in vehicles. NHTSA obtains webbing material from seat belt suppliers. These suppliers also furnish vehicle manufacturers with the webbing used in motor vehicles. This aspect of the compliance test increases the likelihood that the belts used to attach child restraints to the standard seat assembly are those that will actually be used by consumers to attach the restraints to their vehicle seats.
The belt webbing is required by FMVSS No. 209 (S4.2(c)) to meet elongation requirements. Ford believed that the elongation allowed by that standard is too varied (“from zero to twenty percent for a lap belt, * * * up to 30 percent for the pelvic portion of a lap/shoulder belt, and * * * up to 40 percent for the upper torso portion of a lap/shoulder belt. Such a large permitted variation in choice of belt webbing elongation could markedly affect FMVSS 213 dynamic test results.”) Ford did not provide data substantiating that differences in test results were obtained that were attributed to the use of webbing with different elongation characteristics. The agency also cannot conclude that testing with webbing with a “tight tolerance” of 8 percent, as Ford suggested, is preferable over testing with webbing with a larger tolerance,
In an effort to assure that the proposed fixed seatback configuration does not pose a less stringent test condition for dynamic tests of child restraints than the existing flexible seatback, NHTSA conducted a series of rigid versus flexible seatback tests at the agency's Vehicle Research and Test Center (VRTC) on September 23-27, 2002. The proposed seatback and seat base angles were used.
Six pairs of tests using rigid and flexible seatbacks were conducted using
The CRABI 12-month-old dummy was tested in a rear-facing infant-only child restraint with both the rigid and the flexible seat backs. Charts A and B of the aforementioned document provide plots of the normalized injury criteria measurements from these tests for HIC and chest acceleration. There are no established head and knee excursion limits for rear-facing child restraints.
The Hybrid III 3-year-old dummy was tested in three forward-facing child restraints—a 5-point harness, an overhead shield, and a shield-type booster with the shield in place—using both the rigid and flexible seat backs as in the tests with the CRABI dummy. Charts C through K provide plots of the normalized injury criteria measurements from these tests for HIC, chest acceleration, head and knee excursion.
Similar tests were conducted using the Hybrid III 6-year-old dummy in both a backless belt-positioning booster and in a high-back belt-positioning booster seat. The plots of the normalized injury criteria measurements are provided in Charts L through Q of the document.
In each of the tested configurations (
Based on the above data, NHTSA concludes that any differences seen between testing conducted with a rigid versus a flexible seat back would be minimal, and therefore, a move to a rigid seat back would not represent a less stringent test for child restraints. Further, the agency notes that there are more passenger cars (with rigid seat backs) than vans and multipurpose vehicles (with more flexible seat backs) in the existing vehicle fleet. As such, the move to a rigid seat back would more closely represent the existing vehicles on the road. The rigid seat back, on balance, will not be a less stringent requirement, and that it will allow child restraint performance optimization more representative of the vehicle fleet. In addition, a rigid seat back further harmonizes the standard's test seat assembly with ECE Regulation 44, which specifies a rigid seat back in testing child restraints to that standard. For the above reasons, NHTSA is adopting the rigid seat back as proposed in the NPRM.
Figure 1A of FMVSS No. 213 is revised to reflect the above changes, as is the drawing package of the seat assembly that is incorporated by reference into the standard. (This final rule makes a technical amendment to 49 CFR 571.5 to provide information on obtaining copies of the drawing package).
NHTSA continues to believe that the length of the seat cushion of the standard seat assembly need not be changed, as it closely reflects production seats and because there is no information indicating that the difference in seat cushion length may affect child restraint performance on the seat. In addition, in view of the time constraints of the TREAD Act, NHTSA did not assess seat cushion support. However, the agency does not believe that seat support is critical. While some existing passenger cars will likely have a seat cushion that is supported more fully toward the leading edge of the cushion, vans and SUVs with bench-type seats that are removable or foldable, or individual seats such as “Captains Chairs” typically found in the second row of seating positions, will likely have much less support toward the leading edge of the seat cushion than in passenger cars. The agency does not anticipate undertaking efforts to evaluate which of these conditions would provide a more stringent test.
Several commenters believed that the stiffness of the seat cushion has a strong effect on child restraint performance. Consumers Union (CU) commented that it believed that cushion stiffness plays a major role in child restraint installation and suggested that further tests and analysis were needed. UMTRI expressed concern that the foam of the present test seat assembly is softer than many seats in the current fleet: “Instead of representing a worst-case scenario, the response of the soft foam and its tendency to bottom-out on to the unrealistically stiff plywood backing can lead to misleading results that can reduce the level of child passenger safety.” Ms. Bidez believed that cushion stiffness has a critical influence on child restraint performance relative to head excursion. These commenters did not provide supporting data.
Some commenters were uncertain whether performance would be affected. JPMA stated that it conducted a small group of tests to evaluate the effect of foam in the tests, but the results “yielded more questions than it answered.” Without elaborating on its statement, JPMA provided data from a test program it conducted on foam that was 4 inches thick with a 25 percent compression/deflection resistance of 49.5 lb.
Commenters had different views as to how the seat cushion foam should be changed. JPMA expressed cautious support for changing the foam to resemble more closely the foam thickness and compression of rear seats in real-world automobiles. UMTRI suggested that the agency characterize the overall seat stiffness of several modern vehicles and select a foam stiffness that matches a mean response. Ford stated that current rear seats are typically thinner and firmer than the test bench seat cushion. Ms. Bidez believed that the test cushion must reflect the softer seats of the majority of used vehicles on the road today. ARCCA believed that the seat cushion in Standard No. 213 may be too thick to match the vehicle seats, thereby allowing more deflection before becoming stiffer. The commenter suggested that the standard “should err on the side of a softer cushion which will likely result in increased occupant excursion * * *.”
After reviewing the comments and considering the agency's research needs and limited resources, NHTSA has decided not to endeavor at this time to change the stiffness of the standard seat assembly's seat cushion foam. As discussed in the NPRM, NHTSA is aware of data that indicate that the stiffness of the seat assembly cushion might not have a marked effect on child restraint performance. The agency conducted a study in 1988 comparing the stiffness characteristics of the seat assembly cushion with the characteristics of then current seats. 67 FR at 21812. Most vehicle seats were stiffer than the FMVSS No. 213 seat assembly. Sled tests were performed in the study to compare the dummy responses of the standard's seat cushion, a representative seat cushion that was softer, and a stiff cushion. The agency concluded that dummy response differences were not sufficiently large or consistent to warrant specifying a different cushion than that used in the current test seat assembly. Because possibly revising this parameter of the seat assembly would require further research, utilizing scarce agency resources, for disproportionate safety benefits, the agency will not pursue changing seat cushion stiffness for the time being.
NHTSA regularly coordinates its vehicle safety plans and programs with Transport Canada and the agencies work closely on regulatory initiatives concerning child restraint safety. Harmonizing the countries' requirements to the extent consistent with the safety needs of each country is a goal shared by both entities. Specifically with respect to the TREAD Act, NHTSA has discussed each of the revisions with Transport Canada. Transport Canada is aware of the changes, and the agencies will continue efforts to harmonize regulations to the extent possible.
The comments received on this aspect of the NPRM focused generally on the issues of the sled pulse shape (widening of the corridor) and severity.
As for widening the corridor of the sled pulse from 80 milliseconds (ms) to approximately 90 ms in duration, all but few of the commenters responding to this issue supported the change. Many agreed with the agency that the change would allow more laboratories to run the compliance test “without decreasing the effectiveness of the testing” (quoting UMTRI). SafetyBeltSafe (SBS) also agreed with NHTSA's assessment, explained in the preamble to the NPRM, that the pulse would enable tests to be conducted closer to 30 mph.
The JPMA and Graco did not support revising the corridor. JPMA stated that widening the corridor necessarily makes the standard more stringent, because child restraint manufacturers will have to design products that can comply at the new extremes of the compliance corridor. The commenter stated that difficulties experienced by test labs in fitting their pulses within the existing corridor “should be addressed by insisting that the test labs figure out how to meet the existing test corridor.”
The agency responds by concurring that the revision to the pulse could affect the manufacture of child restraints. Widening the test corridor from 80 ms to approximately 90 ms in duration does enable NHTSA to test child restraints closer to 30 mph than the present. To the extent that the 30 mph tests are more stringent than tests conducted in the past at slightly lower speeds, that result is a desired outcome of the amendment. Widening the corridor improves the effectiveness of the test. Child restraint manufacturers will have to certify that their child restraints meet the requirements of FMVSS No. 213 when tested using the test pulse, possibly at a higher velocity. They may have to conduct some testing to ensure that the restraints can be certified to the requirements when tested in the more effective manner using this pulse. The agency acknowledged in the NPRM the likely need for manufacturers to retest their restraints because of the new seat assembly and, by implication, due to the changes to the crash pulse (67 FR at 21829). However, the agency believed then and continues to do so now that it is unlikely that child restraints must be redesigned because of the change in the assembly and pulse.
To illustrate, NHTSA examined some of the work that was performed in support of the development of the child restraint ratings program required under Section 14(g) of the TREAD Act. As part of this effort, the agency examined the margin by which existing child restraints meet the injury limits currently specified in FMVSS No. 213. In model year 2000, the agency tested 50 upright, forward-facing child restraints in accordance under the agency's FMVSS No. 213 compliance test program. Twenty-four (24) seats were tested without a top tether, and 26 seats were tested with a top tether. We secured all seats with only a lap belt (no lower anchorages or shoulder belts). Currently, to pass the FMVSS No. 213 compliance test, a child restraint must achieve dummy injury numbers of a HIC less than 1,000 and a resultant chest acceleration of less than 60 G's. As shown below in Figure 1, regardless of whether we equipped the child restraints with a top tether, all child restraints achieved dummy injury readings below the maximum allowable values. Figures 2 and 3 illustrate the margin of compliance for HIC and chest acceleration, respectively. The margin of compliance is one minus the measured injury reading divided by the injury assessment reference value (IARV) times 100. Higher percentages are better, having less probability of injury. Regarding the HIC, all model year 2000 child restraints tested easily fall within the limits specified by the FMVSS No. 213 compliance tests. Most had a compliance margin of more than 50%. Although the margin is not as large for chest acceleration, all tested child restraints passed this compliance requirement as well.
FMVSS. No. 213 also has a requirement for head and knee excursions. Head excursion is limited to 720 mm (28 in) when a top tether is used, and 813 mm (32 in) without use of a top tether. Knee excursion is limited to 915 mm (36 in). Figures 4 and 5 below illustrate the margin of compliance for head excursion and knee excursion, respectively. Head and knee excursion limits are compliance limits imposed to reduce the chances of a child striking the vehicle interior or submarining (sliding under the belt feet first) in an automotive crash. Head and knee excursions are much closer to the compliance limits than HIC and chest acceleration. This may reflect attention to occupant protection, since increases in distance traveled by the occupant reduces the forces experienced by the occupant.
During the development of the child restraint ratings program, the agency also conducted dynamic testing of a number of child restraints both at 30 and 35 mph to examine what differences, if any, resulted from the increase in the velocity at which the test was conducted. To attain the higher speed, a sled pulse with a similar shape and duration length as that of the FMVSS No. 213 pulse was used, except that the change-of-velocity was elevated from 30 mph (48km/h) to 35 mph (56km/h). All of the child restraints tested produced dummy injury measurements well below the FMVSS No. 208 criteria of 570 HIC and 55g chest acceleration (Hybrid III 3-year-old dummies were used in the tests). Although the injury assessment values were slightly greater in the 35 MPH (56 km/h) sled tests than in 30 mph (48 km/h) sled test, eight of the nine child seats tested rated within the 5 star range, and one fell just marginally below in the 4 star range. This data, in conjunction with the information provided above regarding the compliance margin achieved by existing child restraints, demonstrates that a nominal increase in the test velocity resulting from the crash pulse corridor established as part of this final rule will not necessitate a redesign of existing child restraint designs to meet the injury criteria limits established in the standard.
The agency also does not believe that unusual or unacceptable variability will be introduced into the test results simply because more test labs will be involved in conducting child restraint tests. Any lab-to-lab variability resulting from a properly conducted test will be insignificant, in part because each laboratory must ensure that the pulse it uses in the FMVSS No. 213 sled test falls within the corridor specified in the standard. In addition, it is the responsibility of manufacturers to design and manufacture child restraints to meet the requirements of the standard, taking into account whatever variability occurs from seat-to-seat manufacturing differences and from lab-to-lab testing differences. It should also be noted that child restraint manufacturers are responsible for ensuring that their restraints meet the requirements of the standard when tested by NHTSA in its compliance test. Manufacturers testing their products to the most demanding requirements under the most demanding test conditions increase the likelihood that their products will meet the requirements when tested by NHTSA under the same or less severe conditions. In the same manner, prudent testing by the manufacturer accounts for routine lab-to-lab variability that may occur when testing child restraints. Manufacturers must design and produce products that will pass the compliance test regardless of the laboratory conducting the test.
ARCCA opposed the NPRM based on concerns that the proposed changes to the crash pulse would “lower, rather than raise, the bar for child restraints.” The commenter believed that the Standard No. 213 pulse is actually less severe than all of the 30 mph barrier test pulses from actual vehicles, and that the standard's pulse severity should be increased. The commenter suggested that the standard specify that the dynamic test will be conducted at velocities of not less than 30 mph. “This will ensure that manufacturers do not take advantage of the wider corridor to conduct testing that is less severe than what is currently required by FMVSS 213.” ARCCA also stated that the standard “should contain a minimum acceptable peak acceleration level that is more than the 19 G's or [sic] the
ARCCA suggested that the agency specify in Standard No. 213 that the test pulse must fall within a specific corridor and must have a velocity of at least 30 mph and a peak acceleration of at least some predetermined value. ARCCA believed that that acceleration value should be based on the values obtained from barrier crash tests and be greater than the majority of all FMVSS No. 208 tests reported. ARCCA was also concerned about how the values presented in Table 4 of the NPRM were calculated, especially the peak g values. The commenter believed that the values in the NPRM were erroneously based on “average pulses”
The agency does not agree with ARCCA that the standard's pulse is deficient and should be increased. The pulse is representative of a severe crash and subjects child restraints to “worst case” testing in a sufficient manner. The severity of a crash pulse is determined through a combination of three factors: the acceleration onset rate, the peak acceleration, and the time duration of the pulse. The data presented in the PAX report are based on FMVSS No. 208 rigid barrier testing at 30 mph impact speed (approximately 32 mph total change in velocity, ΔV) and New Car Assessment Program (NCAP) rigid barrier testing at 35 mph (approximately 37 mph ΔV).
The FMVSS No. 213 pulse was very similar to the pulses generated by sport utility vehicles (SUVs), trucks and small school buses in an FMVSS No. 208 (32 mph ΔV) crash test. NHTSA believes that the pulse should be severe enough to be adequately representative of these vehicles since child restraints are regularly and increasingly used in these types of vehicles. That is, the stringency of the pulse is justified to better ensure that each child restraint will not have structural degradation in a crash and will limit forces to the child's head, neck and torso to tolerable levels, no matter the vehicle the child is in.
ARCCA was correct that the agency had averaged the pulses for the three classes of vehicles (SUVs, trucks and a small school bus) to develop a composite pulse for each vehicle class, and that the composite pulses had peak acceleration levels that are typically lower than the highest peak accelerations measured in the individual tests. However, the averaged pulses allowed the agency to examine general trends with respect to the crash parameters that determine the performance of vehicles in a crash. As such, they are representative of the pulses of vehicles in which child restraints are likely to be used and provide a reasonable foundation upon which the standard's pulse can be based. Further, the agency is unaware of the testing to which ARCCA referred that allegedly demonstrated “that various child restraints structurally failed in 30 mile per hour sled testing using the vehicle's barrier crash pulse.” To the contrary, child restraints have proven very effective in real world crashes and have performed well in the agency's studies of child restraint performance in vehicles tested in NCAP 35-mph frontal crashes.
ARCCA suggested that the standard specify that the dynamic test will be conducted at velocities of not less than 30 mph. This specification is unnecessary, since the standard currently requires the dynamic tests to be frontal barrier impact simulations “at a velocity change of 48 km/h [30 mph] with the acceleration of the test platform entirely within the curve shown in Figure 2 * * *.” Thus, the agency already conducts the dynamic test at velocities as close as possible to 30 mph without exceeding 30 mph or causing the pulse to fall outside of the curve of Figure 2 of the standard.
ARCCA believed that the velocity of the sled test should be increased from 30 mph to 33 mph to replicate the change in velocity typically seen in a 208 barrier test. “For the 213 pulse to be near the 30 mph barrier test the velocity, acceleration and duration would all have to be increased.” The commenter also believed that, since “well-restrained adult occupants are capable of surviving crashes comparable to a 35 mph barrier crash where the change in velocity is closer to 40 mph,” tests of child restraints should be performed at the levels specified by the agency in testing vehicles in the New Car Assessment Program.
In contrast, all other commenters except ARCCA commenting on this issue did not want to increase the severity of the crash pulse. SafetyBeltSafe (SBS) believed that the velocity change should not be raised to 33 mph because “the current test is already reflective of the top few percent of crashes.” SBS stated that increasing the velocity “will not significantly improve child restraint performance in the real world but will surely make the products more expensive.” Graco stated that if the pulse were increased to 33 mph, it would expect a large number of child restraints needing to be redesigned with “minimal benefit to child passenger safety.” UMTRI stated that the change in velocity for the test should remain at 30 mph, stating that it conducted a recent analysis of National Automotive Sampling System (NASS) data from 1995-2000 which showed that a 30 mph change in velocity is more severe than approximately 98 percent of the frontal impact crashes nationwide. UMTRI further noted that since the NASS database only includes tow-away crashes, “this is a conservative estimate of the percentage of frontal impacts that are less severe than 30 mph.” UMTRI was concerned that increasing the velocity of the test is not likely to increase safety, but will increase consumer cost of child restraints and may lead to child restraint designs that could make the restraints less effective or more easily misused at lower severity crashes, “which occur much more frequently.” The Insurance Institute for Highway Safety (IIHS) stated that its review of NASS cases showed that child restraints designed to pass the current 30 mph sled test are providing very good protection to children in frontal crashes. IIHS also stated, “There was no indication, based on an analysis of injuries, crash description, and photos in these 10 frontal crashes that designing child restraints to withstand higher crash forces could have prevented or mitigated any of the serious or fatal injuries.”
NHTSA concurs with these comments that the standard's crash pulse adequately meets a safety need. Increasing the severity could necessitate the redesign of many child restraints and could increase costs of the restraints to manufacturers, without a proportionate safety benefit. Thus, the agency concludes that the pulse should not be made more severe at this time.
While there was almost unanimous agreement among commenters that the crash pulse should not be increased, commenters expressed opposing opinions on whether the severity of the test pulse should be decreased. The crash pulse is more severe than most other pulses, but is similar to crash pulses of large sport utility vehicles and light trucks (passenger vehicles that are becoming more and more popular for use as family vehicles) and very similar to the crash pulse of small school buses. The agency determined in the NPRM that the crash pulse should maintain its level of stringency so as to replicate vehicle crashes involving vehicles that had relatively severe crash pulses. Some commenters disagreed, believing that the crash pulse should be reduced in severity because the most frequent crashes involving children in child restraints are those with lower crash pulse severities than the test pulse, while others agreed that a relatively severe, “worst case” scenario should be replicated.
In support of reducing the severity of the crash pulse, the Alliance of Automobile Manufacturers (Alliance) stated that the current sled pulse represents—
The Alliance stated that an attachment it submitted with its comment contains an analysis comparing the severity (acceleration pulses) of full frontal barrier crashes with vehicle-to-vehicle crash tests. “In this analysis a 30 mph full frontal barrier test is found equivalent to a 41 mph vehicle-to-vehicle crash. A reduced speed of 22 mph for full frontal rigid barrier test is found to represent vehicle-to-vehicle crashes with 50%-100% overlap, with each vehicle traveling at 30 mph.”
Along the same lines, General Motors (GM) believed that the crash pulse should represent the most frequent collision event. The commenter urged research to define the real world collision speeds and deceleration pulses at which the majority of the harm to children occurs. GM believed that increasing the pulse duration and widening the corridor increases the pulse severity somewhat, and coupling this increase with the use of the new test dummies and injury criteria “could make compliance more difficult.” GM suggested that NHTSA consider using the FMVSS No. 208 generic sled pulse if the final rule adopts the Hybrid III test dummies and injury measures proposed in the NPRM.
The Children's Hospital of Philadelphia (TraumaLink) supported altering the pulse to be more representative of the passenger car environment to “make it more relevant to a larger proportion of the real-world crash-involved population.” The commenter stated that out of the 59,968 children studied in TraumaLink's Partners for Child Passenger Safety study, only 24.1 percent of children were riding in SUV's and light trucks.
In contrast, in support of the agency's decision not to reduce the severity of the crash pulse, Advocates for Highway and Auto Safety (Advocates) believed that although cars remain more numerous in the vehicle fleet, use of an LTV crash pulse is representative of real-world crash experience given that increasing numbers of LTVs have entered the fleet and are frequently used as passenger and family vehicles. The commenter also discussed why it believed the crash pulse should replicate the “worst case” scenario over the “most frequent” or “average” crash:
Although Advocates has urged the agency to update its test procedures in certain respects to ensure that they are representative of the modern vehicle fleet, this does not mean that critical test procedures should mirror the attributes or test the performance of only the “average” vehicle. While test procedures should be representative of the vehicle fleet in many respects, not all tests or test procedures should be based on the most common or average vehicle in the fleet. To ensure safety protection for all vehicle occupants, critical aspects of test procedures should replicate more stringent conditions than would be experienced in the average vehicle. This is especially true when only one test and a single set of test conditions are used as the basis for compliance. Thus, although there are still more cars than LTVs on U.S. highways, and even though more children are injured while riding in cars than are injured while riding in LTVs, the FMVSS 213 sled test should replicate the faster acceleration onset rate and higher peak acceleration exerted in an SUV crash pulse. Of the two, the LTV crash pulse presents the more stringent test condition. Using the LTV-like crash pulse ensures that children exposed to such a severe force, as well as children exposed to less severe conditions in cars, will be afforded protection. The reverse, however, is not true. If FMVSS 213 adopted a car-like sled test crash pulse, children in cars may be protected but that same degree of safety would not necessarily be provided to children in LTVs with “stiffer” frames that transfer more of the crash generated energy to the occupants. As a result, Advocates concurs in the agency's judgment that the existing FMVSS 213 crash pulse be retained.
After reviewing all the comments on this issue, NHTSA has decided to retain the current severity of the pulse and not reduce it. The agency concurs with Advocates that to ensure safety protection for as many child occupants as possible, “critical aspects of test procedures should replicate more stringent conditions than would be experienced in the average vehicle,” and that, given that child restraints are used with a wide range of vehicle types and are involved in crashes of varying degrees of severity, such a critical aspect is the sled pulse. Accordingly, the agency declines to replicate the crash conditions of the most frequent collision event.
GM suggested that NHTSA consider using the FMVSS No. 208 generic sled pulse if this final rule adopts the Hybrid III test dummies and injury measures proposed in the NPRM. As discussed later in this preamble, this final rule adopts the Hybrid III test dummies but does not adopt the majority of the injury measures proposed in the NPRM. Nonetheless, the agency makes the following observations about the suggestion to use the FMVSS No. 208 generic sled pulse. The generic sled pulse is less severe than the FMVSS No. 213 pulse. As shown in the following overlay of the existing FMVSS No. 213 pulse with the FMVSS No. 208 generic sled pulse, the former has a greater onset rate, higher peak acceleration and shorter time duration. Further, the FMVSS No. 208 sled pulse, with a peak acceleration of about 17 g's, is less stringent than most 30 mph passenger vehicle crashes. Because the FMVSS No. 208 sled pulse is less severe than the FMVSS No. 213 pulse, this final rule declines the suggestion to adopt it.
As part of the test program conducted for NHTSA at the Patuxent River (PAX) test center, PAX conducted a series of dynamic sled tests to evaluate identical child restraints on the revised test seat assembly using both the Hybrid II and the Hybrid III 3- and 6-year-old dummies. All of these tests were conducted with the restraints attached to the test seat assembly with the lap belt only, as would be done in a compliance test. Similar comparison tests were conducted with the Hybrid II 9-month-old and the CRABI 12-month-old dummy, but as the 9-month-old dummy is uninstrumented, little comparative information was gleaned from these tests. Accordingly, the data from the latter tests are not provided.
The Cosco Touriva and the Century Accel are both forward-facing convertible child restraints, and the Century Breverra and the Cosco High Back Booster are forward-facing hybrid boosters. All were tested with the dummy in the restraint's internal harness system.
The results from this series of testing appear to be mixed. Three of four tests showed a marked decrease in measured HIC values when testing with the Hybrid III dummy as compared to the Hybrid II dummy, while the fourth test in the series resulted in a significant increase (446.4 to 704.9) in HIC values. Similar results are seen when looking at chest acceleration and head and knee excursions. The varied results can be attributable in part to the very limited sample size of child restraints tested. No repeatability tests were performed. All injury numbers were well within the current limits prescribed in FMVSS No. 213.
The following Table 7 outlines the results of these tests:
The original test matrix called for testing each restraint with both the Hybrid II and the Hybrid III 6-year-olds to facilitate a direct comparison between the two dummies, as was done for the other dummies. However, during the conduct of the sled tests at PAX, the Cosco Grand Explorer was instead inadvertently tested twice with the Hybrid II 6-year-old, and the Evenflo Right Fit was tested twice with the Hybrid III 6-year-old.
NHTSA acknowledges that this makes a direct comparison between the two dummies in the same restraint impossible. However, unlike rear-facing infant seats and forward-facing toddler seats, there is very little difference in design characteristics between the two backless booster seats in question that would influence the dynamic response of the dummies in a sled test. As such, NHTSA has included the data for information.
Further, it is noted that VRTC conducted a study comparing the performance between the Hybrid II and the Hybrid III child dummy families in support of the NPRM for this final rule. (
Commenters generally supported using the CRABI 12-month-old and the Hybrid III 3-year-old dummies in Standard No. 213 compliance tests, in place of the TNO 9-month and the
SafetyBeltSafe referred to the tests performed by TraumaLink to conclude that “We do not now believe that the HIII 6-year-old dummy is an appropriate test device to simulate a restrained child” because of “unrealistic stretching and bending of this dummy's neck while tightly restrained by a lap-shoulder belt in a booster. The result was that the dummy's face directly contacted the chest, generating an unrealistic and unacceptably high HIC.” SafetyBeltSafe also stated that test data from NHTSA's Vehicle Research and Test Center indicated that tests with the dummy generated “[head] excursion increases of from 2.1 to 4.5 inches in a booster with lap-shoulder belt. The likely reason for this is that the neck is not a true Hybrid III type neck, as it lacks the metal disks needed to limit its bending.” The commenter was also concerned about the dummy's “permanently flexed hips, which, unlike the new 10-year-old design, do not allow a slouched position and may inhibit submarining in non-optimal booster designs.”
Ford Motor Company likewise stated that the Hybrid III dummies are much more likely to experience head-to-knee contacts than Hybrid II dummies, because of the more flexible ribs and neck of the HIII dummies. Further, Ford said that a 1984 study (Culver
NHTSA disagrees with the commenters that the HIII 6-year-old dummy should not be used in FMVSS No. 213 testing. The neck of the HIII 6-year-old is currently performing within the specifications established by the Hybrid III Dummy Family Task Force of the Society of Automotive Engineers (SAE). The agency is not aware of specific test information and/or data substantiating the claims of the commenters that the dummy is an unsuitable test device for FMVSS No. 213 testing.
When the dummy was incorporated into the regulation on anthropomorphic test devices, 49 CFR part 572, the agency made the following determinations (65 FR 2059) about the dummy:
The agency continues to believe that the performance of child restraint systems will be more thoroughly and precisely assessed by use of the HIII dummy because of the dummy's enhanced biofidelity and extensive instrumentation. With regard to concerns about the dummy's neck, it should be noted that the Hybrid II dummy currently in use also does not have the metal disks. Since the Hybrid III is more biomechanically based, we continue to believe that it provides a more humanlike response than the Hybrid II version of the dummy.
Sled tests have shown the HIII 6-year-old to be a suitable replacement for the existing HII 6-year-old in FMVSS No. 213 compliance tests. None of the sled testing conducted with the HIII 6-year-old dummy at VRTC or PAX in support of the TREAD Act has indicated that head-to-chest or head-to-knee impacts is an issue. Such impacts are not typical.
The agency is not entirely convinced that neck elongation is not occurring to children in real crashes. We believe it possible that neck injury may sometimes not be diagnosed even though it occurs. Since a child's neck is not fully developed, detection of injuries is more difficult and injuries could manifest in later years. Also, for fatal injuries, there is often a reluctance to conduct autopsies in deference to family sensitivity. Consequently, the cause of death may be listed as massive head injury, while injury to the neck may have also occurred.
The agency is continuing to conduct research to establish better neck injury response and injury criteria for children. Research may show the presence of neck injury and a possible need for a neck injury criterion in FMVSS No. 213. If that occurs, a test dummy incorporated into the standard that offers improved biofidelity and neck instrumentation would prove useful. Because we believe that the current neck on the HIII 6-year-old dummy provides improved biofidelity over the current dummy and is suitable for compliance purposes, this final rule adopts the dummy into FMVSS No. 213 as proposed.
(a) Not later than 24 months after the date of the enactment of this Act, the Secretary shall develop and evaluate an anthropomorphic test device that simulates a 10-year old child for use in testing child restraints used in passenger motor vehicles.
(b) Within 1 year following the development and evaluation carried out under subsection (a), the Secretary shall initiate a rulemaking proceeding for the adoption of an anthropomorphic test device as developed under subsection (a).
Other provisions relating to child restraint performance were also included in the statute.
IIHS, ACTS, Public Citizen, the Alliance, and GM stated that the lack of biofidelity should preclude the use of the weighted dummy. Many commenters urged the agency to develop the 10-year-old dummy as an alternative. Public Citizen urged the agency to move ahead with regulations in anticipation of the 10-year-old dummy's future availability. NTSB suggested using the European 10-year-old dummy (P-series) as an interim measure. While acknowledging the existence of problems with the P-series, NTSB stated that European dummy would better represent height and seat belt fit.
While raising concerns with biofidelity, a number of commenters agreed that, if necessary, the weighted 6-year-old dummy could be used in a limited capacity to test the structural integrity of child restraints until such time as the Hybrid III 10-year-old dummy became available. Evenflo also supported using the weighted dummy to measure head excursion.
The agency agrees that the Hybrid III 10-year-old dummy, envisioned by Anton's Law, represents the long-term solution to the issue of testing booster seats certified for higher weights. Development of the Hybrid III 10-year-old dummy is proceeding as quickly as possible, but this dummy is not currently ready for use in compliance tests. The agency is currently testing the Hybrid III 10-year-old dummy to determine its suitability for FMVSS No. 213 compliance testing. A notice proposing to incorporate this dummy into Part 572 for use in compliance testing is expected to be published in early 2004.
Despite limited results showing a general correlation between the testing performance of the weighted 6-year-old dummy and the Hybrid III 6-year-old dummy, the agency is persuaded by the comments that the weighted dummy should not be used for testing with full instrumentation. The weighted dummy would not perform the same as the 10-year-old dummy in development and it may not accurately represent an 8-year-old child. IIHS stated that the weighted dummy is too short to represent the tallest occupants for whom boosters are recommended, noting that “[s]itting height is an important factor in testing booster seats because a poorly designed booster may permit too much head excursion for taller occupants. Weight is, at most, a secondary issue for the restraints because the vehicle belts, which are not subject to testing under this standard, restrain the inertia of booster seat occupants.”
While the 0.7-inch increase in sitting height achieved through the addition of weights to the Hybrid III 6-year-old dummy is comparable to that of a 50th percentile 8-year-old child, the overall weight and height, and consequently the weight distribution, are not. The 50th percentile 8-year-old child is 50.5 inches tall, as compared to the 50th percentile 6-year-old child which is 45.5 inches tall. The weight added to the 6-year-old dummy is not distributed as it would normally be on a 50th percentile 8-year-old, making injury measurements suspect.
The agency agrees that the kinematics of the weighted 6-year-old dummy may not be representative of the older child that it attempts to model and it could potentially interact with the belt system differently than a dummy developed to represent an 8-year-old child. Therefore, the weighted dummy will be used only as a means of ballast to evaluate the structural integrity of the tested child restraint. While the weighted dummy will not be instrumented to determine compliance, it will be instrumented to collect data for use in research.
Anton's Law
While several commenters suggested using alternative dummies as an interim measure, none of the suggested alternatives are appropriate even for use as ballast. NTSB recommended using the European P-series 10-year-old dummy in a limited capacity to provide a better means of evaluating proper seat belt fit and to enhance efforts to enact booster seat laws in the states. NHTSA is not confident in the ability of the P-series dummy to uniformly load the restraint system in a manner necessary for the evaluation of the booster seat, even structurally. The P-series dummy is designed with too many degrees of freedom, and its interaction with a restraint system would be inconsistent.
AAP suggested using the Hybrid III 5th percentile female to test child restraints to allow regulation up to 80 lb in advance of the availability of the Hybrid III 10-year-old dummy. The weight of the Hybrid III 5th percentile female dummy is 108 lb, 28 lb heavier than the maximum weight of a child that the child restraint would be certified for in compliance testing. The heavier weight of the 5th percentile female dummy would not offer an accurate representation of an 8-year-old or even 10-year-old child.
Some rear-facing infant car seat/carriers, which are designed with a handle for toting the infant outside of the vehicle, are recommended for use with infants weighing only up to 20 lb. Under current S5.2.1.1, these restraints (recommended for children up to 20 lb) must have a seat back of a height of not less than 18 inches. This final rule amends S5.2.1.1 to require these restraints to have a seat back height of not less than 20 inches.
The agency proposed to use the CRABI dummy in place of the 9-month-old dummy in all tests in which the latter dummy is used, including tests of rear-facing infant car seat/carriers. Thus, it was proposed that the CRABI (at 22 lb) would be used to test car seat/carriers. Comments were requested on the appropriateness of using the CRABI dummy to test infant car seat/carriers recommended for children up to 20 lb, when the 22-lb dummy is heavier than the children recommended for the restraints. Comments were requested on whether all infant car seat/carriers have back supports that are high enough to support the CRABI.
No commenter opposed the use of the CRABI in place of the 9-month old dummy, but some issues were raised about possible effects of using the dummy to test infant seats. Graco suggested that S5.2.1.1 could be deleted, for lack of a safety need, if Standard No. 213 were amended to specify use of the CRABI dummy to assess the ability of a rear-facing restraint to limit the rearward excursion of the dummy in Standard No. 213's dynamic test (S5.1.3.2).
In response to Graco, NHTSA agrees that S5.2.1.1 and S5.1.3.2 both provide protection to a rear-facing child in a frontal impact by limiting occupant excursion outside of the confines of the restraint system. However, the agency is unable to conclude that the two requirements serve the same safety need for rear-facing restraints. S5.2.1.1 specifies seat back height and width requirements and also limits how far rearward the test dummy's head may rotate during dynamic testing. These requirements may provide protection in dynamic conditions other than that replicated by the Standard No. 213 sled test. A child restraint might be able to meet S5.1.3.2 with a seat back that is lower or narrower than that specified by S5.2.1.1. Deleting S5.2.1.1's requirements for rear-facing restraints could reduce some of the current protections afforded by child restraints. Thus, the agency declines to delete S5.2.1.1.
At the same time, however, the agency has concluded that with the incorporation of the CRABI dummy into the standard, amendments to S5.2.1.1 are in order. Information indicates that infants should be positioned rear-facing until at least 12-months old, until such time their neck and muscular structure are developed to more adequately support their head. If rear-facing infant seats were recommended for use with an infant until the infant weighs 22 lb, there is a greater likelihood that parents will keep their infants in the rear-facing restraint until the infant reaches or is closer to reaching 12 months of age than if the restraint were only recommended for infants up to 20 lb. (The agency believes that many infants are positioned forward-facing in a toddler restraint after being transitioned out of a rear-facing car seat/carrier, and that many of these infants are not developmentally ready to be forward-facing in the vehicle.)
The agency is amending S5.2.1.1(a) to encourage the production of rear-facing infant car seat/carriers that are recommended for use by infants up to 12 months in age. The agency is amending the table in S5.2.1.1(a) such that infant car seat/carriers must have a minimum seat back height of 20 inches.
This final rule does not require manufacturers to recommend on the labels accompanying infant restraints that the restraints are recommended for infants up to 22 lb, but provides the incentive for them to do so. Because the 22-lb CRABI will be the test instrument used in compliance tests of the infant seats, and because under S5.2.1.1(a) the infant seats must have a minimum seat back of 20 inches, the agency believes that manufacturers will certify most if not all infant restraints to 22 lb.
The agency is providing for a 2-year leadtime for this change. Evenflo stated that several models of infant-only restraints do not have backs high enough to support the CRABI 12-month-old dummy and will thus have to be redesigned. Evenflo suggested that replacement of the 9-month-old dummy by the CRABI in 4 years would help minimize the financial impact to child restraint manufacturers. JPMA suggested a 3 year leadtime. NHTSA declines to provide such long leadtimes suggested by Evenflo and JPMA because there could be safety benefits associated with keeping more infants rear-facing until they are at least 12-months old, which could result from the change to the CRABI and to S5.2.1.1 of Standard No. 213. The short deadlines of the TREAD Act also indicate Congress's interest in having the standard be upgraded as quickly as possible. The 2-year leadtime NHTSA is providing balances the safety benefits with the need for some child restraint manufacturers to modify some of their seats.
The agency proposed in the NPRM that manufacturers be provided two years of leadtime, after publication of a final rule, before specifying the use of the CRABI and Hybrid III dummies in compliance tests. The NPRM proposed using the weighted 6-year-old dummy in compliance tests 180 days after publication of a final rule. JPMA supported the addition of the new dummies to the standard, provided that the agency gives “a phase in of at least three years from the issuance of the final rule * * * to avoid costly recertification requirements for existing seats, and to avoid the possible elimination of some current seats from the marketplace.” JPMA stated that because of dimensional differences between the proposed CRABI 12-month-old and the 9-month-old dummy currently used to test infant-only child restraints, the commenter believed that the use of the CRABI dummy will likely result in the elimination of current infant-only child restraints. JPMA stated that “millions of dollars of tooling and development testing will be rendered worthless'' by incorporating the new dummies and that “[m]anufacturers should be given a longer lead time before having to endure the several financial consequences of these changes.”
The agency is providing for a 2-year leadtime for the changeover to the new dummies. As explained above, the agency believes there are safety benefits associated with keeping more infants rear-facing until they are at least 12-months old, which could result from the change to the CRABI and to S5.2.1.1 of Standard No. 213. At the same time, the two year leadtime is provided to lessen the cost impacts of the rule on manufacturers' testing costs (retesting current child restraints on the new seat assembly using the new dummies, and at test speeds closer to 30 mph) and possible retooling costs.
NHTSA believes there also are safety benefits to testing the structural integrity of child restraints recommended for children weighing from 50 to 65 lb. However, an effective date short of approximately two years is not provided for use of the weighted dummy because the rulemaking incorporating the dummy into 49 CFR part 572 is not yet completed. The NPRM was published May 7, 2003; 68 FR 24417. The rulemaking should be completed with sufficient time to allow manufacturers to certify their restraints to Standard No. 213 by the two-year compliance date.
Most commenters supported increasing the weight limit in the definition of “child restraint system” above the current 50 lb. The only commenter opposed to any increase was the Automotive Coalition for Traffic Safety, because of concern with the weighted 6-year-old dummy. Of those supporting an increase, a majority supported increasing the weight to 65 lb based on the use of the weighted 6-year-old dummy, with future amendments increasing the weight to 80 lb upon the introduction of the 10-year-old dummy. Advocates stated that it would support increasing the limit to 65 lb upon showing that the weighted 6-year-old dummy (62 lb) is sufficient to assess child restraint use with children weighing up to 65 lb. Graco suggested that the agency should defer increasing the limit to the time the 10-year-old dummy is available.
Several commenters did not support an intermediate level of 65 lb and preferred amending the standard now to specify the application to restraints recommended for children up to 80 lb. Ms. Bidez supported incorporating the 10-year-old dummy in its current form and amending the weight limit to reflect the 80 lb weight of the 10-year-old dummy. AAP recommended using the 5th percentile female to allow regulation up to 80 lb in advance of the 10-year-old dummy. E-Z-On believed that the limit should be extended to 80 lb, and that costs to vehicle and child restraint manufacturers to provide stronger anchorages and hardware would be minimal.
The agency agrees with commenters in that the weight limit in the definition of “child restraint system” should be increased above 50 lb. While the weighted 6-year-old dummy injury measurement reliability may not be sufficient for compliance testing, the dummy is suitable for testing the structural integrity of child restraints up to 65 lb. Use of the weighted dummy provides an interim weight limit in advance of the Hybrid III 10-year-old dummy. The agency is confident in the ability of the 62-lb-weighted dummy to test restraints certified up to 65 lb. There will be only a 3-lb difference between the weighted dummy and the maximum certification weight. The Hybrid II 3 year-old, weighing 33 lb, has proven efficient at testing child restraint systems certified with a maximum weight of 40 lb.
However, the weighted 6-year-old dummy is not sufficient to assess the dynamic performance of a child restraint in restraining an 80-lb child, and as stated above, use of an alternative dummy to allow increasing the limit to 80 lb is not appropriate. The agency is not confident in the ability of the European P-series 10-year-old dummy to uniformly load the restraint, and the Hybrid III 5th percentile female is 35 percent heavier than the suggested maximum weight of 80 lb.
For the aforementioned reasons, NHTSA is increasing the reference to the weight limit in the definition of “child restraint system” from 50 lb to 65 lb. This amendment, effective in 180 days, affects primarily manufacturers of child restraints recommended for older children,
Several comments were submitted on whether manufacturers should be prohibited from recommending their seats for children of weights higher than the heaviest dummy used to test the restraint. Consumer Union stated that the agency should limit manufacturers' ability to advertise child restraint weight maximums only to the weight of the heaviest dummy used for its certification testing. Alternatively , Consumer Union stated that the agency should develop dummies that are at the maximum weight advertised for the restraint, or require the addition of ballast weights to existing test dummies.
In contrast, TraumaLink believed that manufacturers should be permitted to recommend child restraints at weights above that of the heaviest dummy used to test the restraint. TraumaLink stated that there was no field data to indicate a problem with convertible restraints (typically recommended for children up to 40 lb) which have been tested with a 33 lb dummy (the Hybrid II 3-year-old). Limiting the regulation based on the heaviest dummy, TraumaLink continued, would place artificial limits on the protections afforded children. Similarly, AAP opposed limiting a
In a rulemaking amending FMVSS No. 213 to incorporate several test dummies into the standard (61 FR 30827; June 18, 1996), NHTSA responded to Consumer's Union (CU) belief, expressed during that rulemaking, that restraints (
NHTSA reaffirms the conclusions reached in that rulemaking and concurs with the views of TraumaLink and AAP that information on tests with current test dummies does not indicate a need to restrict recommending child restraints for children weighing more than the test dummies used to test the restraint. As to CU's suggestion for developing dummies that reach the maximum weight recommended for a restraint or requiring the addition of ballast weights to existing dummies, this suggestion is beyond the scope of the present rulemaking.
NHTSA testing performed at PAX and VRTC, described in the NPRM, resulted in dummy responses that were generally within the injury limits proposed in the NPRM, with the exception of Nij. (While acceptable Nij readings were found in tests using the Hybrid III 3-year-old dummy, there were widespread failures in both rear- and forward-facing tests using the CRABI 12-month old dummy and each of four tests with the Hybrid III 6-year-old dummy.) However, the test results presented by JPMA were quite different. JPMA's testing, using the revised test seat assembly and new dummies as NHTSA tested, but across a wider variety of child restraint types, showed very mixed results. In many instances, the measured injury parameters either exceeded or marginally passed the scaled injury limits proposed in the NPRM. Further, there were many JPMA tests that resulted in either failing or marginal results when using the existing injury criteria. This raised questions regarding the combined effect of the changes to the test seat assembly, incorporation of the new dummies, and use of the scaled injury criteria limits together.
A total of 20 additional tests were conducted in this third series of sled tests. The results of this series of sled tests more closely paralleled those found in the JPMA tests, in that a wider range of failing and marginal test results were seen as compared to the predominately passing results seen in the PAX test series. The testing of 5-point harness restraints at PAX resulted in injury values that were predominately within the established or proposed limits (with the exception of Nij). However, the VRTC Series III tests showed a wider variation in both marginal and failing responses that appear to be a result of the restraint type
JPMA stated that it was willing to consider supporting a 15 ms limit (HIC
Since the TREAD Act directed NHTSA to consider adopting the scaled injury criteria adopted by the May 2000 final rule on advanced air bags, NHTSA proposed that the HIC limits of 390
In this final rule, NHTSA has decided against incorporating the scaled injury limits used in FMVSS No. 208 because the data obtained from the JPMA and NHTSA (series III) test programs indicate that current child restraints generally do not meet the proposed limits. There are several reasons why this was a concern for the agency. First and foremost, child restraints are currently highly effective in reducing the likelihood of death and/or serious injury in motor vehicle crashes. The agency was unable to identify a safety problem that the scaled injury limits of FMVSS No. 208 would remedy.
Second, it is unknown what modifications to child restraints would be necessary for the restraints to meet the proposed injury limits. Commenters did not provide information on how child restraints that failed to meet the proposed Nij and other limits could be modified to meet the criteria. Assuming that the restraints could be redesigned to meet the proposed injury limits, there would likely be costs associated with the redesign which would result in increases in the price of the restraints. As noted above in section IV of this preamble, the agency considers the consumer acceptance of cost increases to child restraints (an already highly-effective item of safety equipment) in determining the net safety effects of changes to the child restraint standard. In balancing the effects of meeting the scaled injury criteria against the possible impacts on the price of restraints, the agency determined that the net effect on safety could be negative in this instance because of the minimal benefits of such a change, weighed against the delayed replacement of old restraints by current owners or non-purchase by non-owners. For these reasons, in accordance with the TREAD Act, we have considered whether to apply scaled injury criteria performance levels developed for FMVSS No. 208 to child restraints and have determined it would not be prudent to do so.
NHTSA is adopting HIC
Limiting the duration over which HIC is calculated to a maximum of 36 ms, while limiting HIC to 1000, assures that the acceleration level of the child's head will not exceed 60 g's for any period greater than 36 ms. The 60 g acceleration limit was set as a reasonable head injury threshold by the originators of the “Wayne State Tolerance Curve”, which was used in the development of the HIC calculation.
The change to a 36 millisecond time measurement for HIC will not necessarily result in lower HIC values in compliance testing because of the changeover in this rulemaking to the new dummy family. NHTSA compared the differences between using the HIC
In some of the tests Hybrid III HIC
JPMA opposed the proposed chest injury criteria for the reasons explained in the preceding section. TraumaLink also opposed incorporation of the proposed chest deflection and reduced chest acceleration limits, because according to data it has collected in its study, “These types of injuries do not occur in children in [child restraint systems].” TraumaLink further stated: “We are concerned about the tradeoff between including these more restrictive thoracic criteria and reducing the overall protection of the head through increased head excursions and accelerations.” These concerns were echoed by UMTRI, which stated that the relationship between the chest deceleration and deflection limits and field injuries under the type of loading simulated in FMVSS No. 213 are not well established. “Introducing these injury criteria now [including neck injury] could lead to counterproductive child restraint designs because many restraints that perform well in the field, particularly booster seats, are likely to exceed the new injury tolerance measures.”
SafetyBeltSafe also opposed the proposed chest injury criteria. It expressed concern that the new seat bench assembly has an added slope to
Ford stated that in its sled tests of booster seats using the Hybrid III six-year-old dummy and the FMVSS No. 213 sled pulse, none of the tested boosters could be certified as meeting the proposed limits. “Boosters that showed good shoulder belt fit routinely measured chest acceleration at or near the 60 g limit and chest deflection very near the 40 mm limit. Dummy chest values were sometimes below the compliance limit, but were seldom far enough below the limit to provide a reasonable compliance margin.” The commenter believed that boosters do improve child safety when used properly, and that “if dynamic testing of boosters is continued, the test procedure needs a major overhaul to effectively differentiate between acceptable and unacceptable designs.”
The data presented by JPMA, and to a lesser degree, the follow-on tests conducted at VRTC, show difficulty for current restraints to meet the scaled chest criteria, and also show problems for certain restraint types to meet the existing requirements with the revised test seat assembly and new dummies. Redesigning the restraints to meet the requirements, assuming such redesign is practicable, would involve a cost increase to manufacturers, which would be passed on to consumers. The agency does not believe that the cost increase is justified in this instance, and is concerned about the possible effect the cost increase could have on the purchase and use of child restraints. For the aforementioned reasons, we conclude that it is not in the interest of safety to adopt the chest injury criteria developed for FMVSS No. 208 into FMVSS No. 213.
JPMA, SafetyBeltSafe, UMTRI, TraumaLink and others did not support adopting the proposed Nij criterion at this time. SafetyBeltSafe believed that neither Nij as proposed nor Nij with a limit on tension should be used as a compliance criterion unless these are proven to be useful predictors of child neck injury. UMTRI believed that Nij should not be incorporated at this time because the relationship between the criterion and real-world injuries “under the type of loading simulated by FMVSS 213 are [sic] not well established.” The Insurance Institute for Highway Safety (IIHS) was concerned that studies of real-world crashes indicate that neck injuries due to inertial forces appear to be rare, yet, the commenter stated, it is not clear how child restraints could be better designed to lower neck injury measures. Ford stated that, in its sled tests of booster seats, “Upper neck tensions and extension moments above the FMVSS 208 criteria were also routinely measured. Every test exceeded at least one of the Nij limits.”
TraumaLink was concerned about the state of knowledge about pediatric neck injury and suggested that not enough was known to proceed at this time. The commenter stated that data on the biomechanical response of the pediatric neck to trauma are severely limited and as a result, the neck of current child dummies may not be representative of the real child. The commenter also believed that efforts to include pediatric neck tolerance levels in regulatory efforts are scientifically premature. TraumaLink further stated:
Similarly, commenters JPMA, SafetyBeltSafe, UMTRI and the IIHS suggested that more research is needed on neck injury among restrained children. Some of these suggested that NHTSA measure neck force and moment parameters during compliance tests to become familiar with the range of results.
NHTSA does not believe that enough is known regarding neck injury for children at this time. As the agency is not proposing the incorporation of Nij in this final rule, NHTSA likewise does not feel that it is appropriate at this time to specify neck tension limits or any other neck criterion. These are areas where the agency could perform additional research in the coming years, as warranted by a safety need and the demands on the agency's resources.
In accordance with the TREAD Act, NHTSA has considered adopting the neck injury criteria developed for FMVSS No. 208 into FMVSS No. 213. For the aforementioned reasons, we conclude that incorporating the criteria into Standard No. 213 is not warranted at this time.
The TREAD Act required NHTSA to complete this rulemaking by November 1, 2002. With that date in mind, the agency made the following conclusions about the dates on which compliance with the requirements will become mandatory.
a. NHTSA believes that manufacturers could begin certifying their child restraints based on testing done on the new seat assembly and pulse in approximately 2 years (
b. This final rule provides for about a 2-year effective date for the requirement to use the new CRABI and Hybrid III dummies in compliance tests (the effective date for the change will be August 1, 2005). The agency does not expect that the changes to the dummies will have a significant effect on the results of compliance tests, with the exception of some infant-only car seat/carriers. However, restraint manufacturers will likely have to conduct testing to confirm compliance of their restraints. This will be a financial impact on the manufacturers that could be spread out over a 2-year time period. Some infant-only restraints do not have backs high enough to support the CRABI 12-month-old dummy and will thus have to be redesigned.
The agency cannot estimate any lives saved or injuries avoided from the amendment. There could be safety benefits associated with keeping more infants rear-facing until they are at least 12-months old, which could result from the change to the CRABI and to having infant car seat/carriers be designed with higher back support structures.
c. As for using the weighted 6-year-old dummy to test restraints (typically booster seats) recommended for children with masses of over 22.7 kg (weights over 50 lb), this rule specifies a 2-year leadtime for the requirement (the effective date for the change will be August 1, 2005). We do not anticipate that manufacturers will have to redesign their booster seats or safety harnesses to certify compliance using the dummy. However, the rulemaking to incorporate the weighted 6-year-old dummy into part 572 is not complete, so the effective date is provided to account for the completion of that rulemaking. (The part 572 NPRM was published May 7, 2003; 68 FR 24417.)
d. Manufacturers are permitted the option of voluntarily using the new sled assembly and pulse and the new test dummies prior to the date (August 1, 2005) on which they would be required to do so.
The agency has considered the impacts of this final rule under Executive Order 12866 and the Department of Transportation's regulatory policies and procedures. While the NPRM was reviewed under the Executive Order, this document was not reviewed because it is considerably narrower than the NPRM and has minimal costs. This document was treated as “not significant” under the Department of Transportation's regulatory policies and procedures.
The estimated costs for this final rule are discussed in NHTSA's final regulatory evaluation (FRE) for this final rule.
The agency does not believe that updating the seat assembly and revising the crash pulse will affect dummy performance to an extent that benefits would accrue from such changes, nor will benefits be gained by the change to the dummies. There could be safety benefits associated with keeping more
The Regulatory Flexibility Act of 1980, as amended, requires agencies to evaluate the potential effects of their proposed and final rules on small businesses, small organizations and small governmental jurisdictions. I hereby certify that this final rule will not have a significant economic impact on a substantial number of small entities. NHTSA estimates there to be about 13 manufacturers of child restraints, four or five of which could be small businesses.
This rule will not generally increase the testing that NHTSA conducts of child restraints, except that booster seats, harnesses and other types of child restraints that could be recommended for children weighing over 50 lb will be tested with the weighted 6-year-old dummy, in addition to the dummies presently used to assess the performance of the restraint (generally these are the 3-year-old and the unweighted 6-year-old dummies). Thus, the certification responsibilities of manufacturers will not generally be affected. The agency does not believe this final rule will impose a significant economic impact on small entities, because these businesses currently must certify their products to the dynamic test of Standard No. 213. That is, the products of these manufacturers already are subject to dynamic testing using child test dummies. The effect of this final rule on most child restraints is to subject them to testing with new dummies in place of existing ones, and/or an additional dummy. Testing child restraints on a new seat assembly is not expected to significantly affect the performance of the restraints.
Executive Order 13132 requires NHTSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, the agency may not issue a regulation with 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, the agency consults with State and local governments, or the agency consults with State and local officials early in the process of developing the proposed regulation. NHTSA also may not issue a regulation with 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.
We have analyzed this final rule in accordance with the principles and criteria set forth in Executive Order 13132 and have determined that this rule does not have sufficient Federal implications to warrant consultation with State and local officials or the preparation of a Federalism summary impact statement. The rule will not have any substantial impact on the States, or on the current Federal-State relationship, or on the current distribution of power and responsibilities among the various local officials.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires Federal agencies to prepare a written assessment of the costs, benefits and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local or tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year ($100 million adjusted annually for inflation, with base year of 1995). (Adjusting this amount by the implicit gross domestic product price deflator for the year 2000 results in $109 million.) This final rule will not result in costs of $109 million or more to either State, local, or tribal governments, in the aggregate, or to the private sector. Thus, this final rule is not subject to the requirements of sections 202 of the UMRA.
NHTSA has analyzed this final rule for the purposes of the National Environmental Policy Act. The agency has determined that implementation of this action will not have any significant impact on the quality of the human environment.
This final rule will not have any retroactive effect. Under 49 U.S.C. 21403, whenever a Federal motor vehicle safety standard is in effect, a State may not adopt or maintain a safety standard applicable to the same aspect of performance which is not identical to the Federal standard, except to the extent that the state requirement imposes a higher level of performance and applies only to vehicles procured for the State's use. 49 U.S.C. 21461 sets forth a procedure for judicial review of final rules establishing, amending or revoking Federal motor vehicle safety standards. That section does not require submission of a petition for reconsideration or other administrative proceedings before parties may file suit in court.
Under the Paperwork Reduction Act of 1995, a person is not required to respond to a collection of information by a Federal agency unless the collection displays a valid OMB control number. This final rule does not contain any collection of information requirements requiring review under the Paperwork Reduction Act.
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA) directs us to use voluntary consensus standards in our regulatory activities unless doing so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (
You may read the comments received by Docket Management at Room PL-401, 400 Seventh Street, SW., Washington, DC, 20590 (telephone 202-366-9324). You may visit the Docket from 10 a.m. to 5 p.m., Monday through Friday.
You may also see the comments on the Internet. To read the comments on the Internet, take the following steps:
(1) Go to the Docket Management System (DMS) Web page of the Department of Transportation (
(2) On that page, click on “search.”
(3) On the next page (
(4) On the next page, which contains docket summary information for the docket you selected, click on the desired comments. You may download the comments. However, since the comments are imaged documents, instead of word processing documents, the downloaded comments are not word searchable.
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
Motor vehicle safety, Reporting and recordkeeping requirements, Tires, Incorporation by Reference.
49 U.S.C. 322, 30111, 30115, 30117 and 30166; delegation of authority at 49 CFR 1.50.
(10)
The revised and added text and figures read as follows:
S4.
Child restraint system means any device, except Type I or Type II seat belts, designed for use in a motor vehicle or aircraft to restrain, seat, or position children who weigh 30 kilograms (kg) or less.
S5.
(d) Each child restraint tested with a part 572 subpart N dummy that is weighted to weigh 28.2 kg need not meet S5.1.2 and S5.1.3.
S5.1.2
S5.1.2.1 When tested in accordance with S6.1 and with the test dummies specified in S7, each child restraint system manufactured on or after August 1, 2005 shall'
(a) Limit the resultant acceleration at the location of the accelerometer mounted in the test dummy head such that, for any two points in time, t1 and t2, during the event which are separated by not more than a 36 millisecond time interval and where t1 is less than t2, the maximum calculated head injury criterion (HIC36) shall not exceed 1,000, determined using the resultant head acceleration at the center of gravity of the dummy head, ar, expressed as a multiple of g (the acceleration of gravity), calculated using the expression:
(b) The resultant acceleration calculated from the output of the thoracic instrumentation shall not exceed 60 g's, except for intervals whose cumulative duration is not more than 3 milliseconds.
S5.1.2.2 At the manufacturer's option (with said option irrevocably selected prior to, or at the time of, certification of the restraint), child restraint systems manufactured before August 1, 2005 may be tested to the requirements of S5 while using the test dummies specified in S7.1.2 of this standard according to the criteria for selecting test dummies specified in that paragraph. That paragraph specifies the dummies used to test child restraint systems manufactured on or after August 1, 2005. If a manufacturer selects the dummies specified in S7.1.2 to test its product, the injury criteria specified by S5.1.2.1 of this standard must be met. Child restraints manufactured on or after August 1, 2005 must be tested using the test dummies specified in S7.1.2.
S5.2
S5.2.1.1 * * *
(a) * * *
S5.2.1.2 The applicability of the requirements of S5.2.1.1 to a front-facing child restraint, and the conformance of any child restraint other than a car bed to those requirements, is determined using the largest of the test dummies specified in S7 for use in testing that restraint, provided that the 6-year-old dummy described in subpart I or subpart N of part 572 of this title is not used to determine the applicability of or compliance with S5.2.1.1. A front-facing child restraint system is not required to comply with S5.2.1.1 if the target point on either side
S5.2.3.1 Each child restraint system other than a child harness, manufactured before August 1, 2005, that is recommended under S5.5.2 for a child whose mass is less than 10 kg and that is not tested with the Part 572 Subpart R dummy, shall comply with S5.2.3.
S5.9 Attachment to child restraint anchorage system.
(a) Each add-on child restraint anchorage system manufactured on or after September 1, 2002, other than a car bed, harness and belt-positioning seat, shall have components permanently attached to the system that enable the restraint to be securely fastened to the lower anchorages of the child restraint anchorage system specified in Standard No. 225 (§ 571.213) and depicted in Drawing Package SAS-100-1000 with Addendum A: Seat Base Weldment (consisting of drawings and a bill of materials), dated October 23, 1998, or in Drawing Package, “NHTSA Standard Seat Assembly; FMVSS No. 213, No. NHTSA-213-2003,” (consisting of drawings and a bill of materials) dated June 3, 2003 (incorporated by reference;
S6.1.1
(a)
(1) Add-on child restraints.
(ii) The test device for add-on restraint systems manufactured before August 1, 2005 is a standard seat assembly consisting of a simulated vehicle bench seat, with three seating positions, which is described in Drawing Package SAS-100-1000 with Addendum A: Seat Base Weldment (consisting of drawings and a bill of materials), dated October 23, 1998 (incorporated by reference in § 571.5). The assembly is mounted on a dynamic test platform so that the center SORL of the seat is parallel to the direction of the test platform travel and so that movement between the base of the assembly and the platform is prevented.
(ii) The test device for add-on restraint systems manufactured on or after August 1, 2005 is a standard seat assembly consisting of a simulated vehicle bench seat, with three seating positions, which is depicted in Drawing Package, “NHTSA Standard Seat Assembly; FMVSS No. 213, No. NHTSA-213-2003,” (consisting of drawings and a bill of materials) dated June 3, 2003 (incorporated by reference;
(b) * * *
(1) Test Configuration I, are at a velocity change of 48 km/h with the acceleration of the test platform entirely within the curve shown in Figure 2 (for child restraints manufactured before August 1, 2005) or in Figure 2A (for child restraints manufactured on or after August 1, 2005), or for the specific vehicle test with the deceleration produced in a 48 km/h frontal barrier crash.
(d)(1) When using the test dummies specified in 49 CFR Part 572, subparts C, I, J, or K, performance tests under S6.1 are conducted at any ambient temperature from 19° C to 26° C and at any relative humidity from 10 percent to 70 percent.
(2) When using the test dummies specified in 49 CFR Part 572, subparts N, P or R, performance tests under S6.1 are conducted at any ambient temperature from 20.6° C to 22.2° C and at any relative humidity from 10 percent to 70 percent.
S6.2.3 Pull the sling tied to the dummy restrained in the child restraint system and apply the following force: 50 N for a system tested with a newborn dummy; 90 N for a system tested with a 9-month-old dummy; 90 N for a system tested with a 12-month-old dummy; 200 N for a system tested with a 3-year-old dummy; or 270 N for a system tested with a 6-year-old dummy; or 350 N for a system tested with a weighted 6-year-old dummy. The force is applied in the manner illustrated in Figure 4 and as follows:
S7
S7.1.1 Child restraints that are manufactured before August 1, 2005, are subject to the following provisions:
(a) A child restraint that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass of not greater than 5 kg, or by children in a specified height range that includes any children whose height is not greater than 650 mm, is tested with a newborn test dummy conforming to part 572 subpart K.
(b) A child restraint that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass greater than 5 but not greater than 10 kg, or by children in a specified height range that includes any children whose height is greater than 650 mm but not greater than 850 mm, is tested with a newborn test dummy conforming to part 572 subpart K, and a 9-month-old test dummy conforming to part 572 subpart J.
(c) A child restraint that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass greater than 10 kg but not greater than 18 kg, or by children in a specified height range that includes any children whose height is greater than 850 mm but not greater than 1100 mm, is tested with a 9-month-old test dummy conforming to part 572 subpart J, and a 3-year-old test dummy conforming to part 572 subpart C and S7.2, provided, however, that the 9-month-old dummy is not used to test a booster seat.
(d) A child restraint that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass greater than 18 kg, or by children in a specified height range that includes any children whose height is greater than 1100 mm, is tested with a 6-year-old child dummy conforming to part 572 subpart I.
(e) A child restraint that is manufactured on or after August 1, 2005, and that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass greater than 22.7 kg, or by children in a specified height range that includes any children whose height is greater than 1100 mm, is tested with a part 572 subpart N dummy that is weighted to weigh 28.2 kg.
S7.1.2 Child restraints that are manufactured on or after August 1,
(a) A child restraint that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass of not greater than 5 kg, or by children in a specified height range that includes any children whose height is not greater than 650 mm, is tested with a newborn test dummy conforming to part 572 subpart K.
(b) A child restraint that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass greater than 5 but not greater than 10 kg, or by children in a specified height range that includes any children whose height is greater than 650 mm but not greater than 850 mm, is tested with a newborn test dummy conforming to part 572 subpart K, and a 12-month-old test dummy conforming to part 572 subpart R.
(c) A child restraint that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass greater than 10 kg but not greater than 18 kg, or by children in a specified height range that includes any children whose height is greater than 850 mm but not greater than 1100 mm, is tested with a 12-month-old test dummy conforming to part 572 subpart R, and a 3-year-old test dummy conforming to part 572 subpart P and S7.2, provided, however, that the 12-month-old dummy is not used to test a booster seat.
(d) A child restraint that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass greater than 18 kg, or by children in a specified height range that includes any children whose height is greater than 1100 mm, is tested with a 6-year-old child dummy conforming to part 572 subpart N.
(e) A child restraint that is manufactured on or August 1, 2005, that is recommended by its manufacturer in accordance with S5.5 for use either by children in a specified mass range that includes any children having a mass greater than 22.7 kg or by children in a specified height range that includes any children whose height is greater than 1100 mm is tested with a part 572 subpart N dummy that is weighted to weigh 28.2 kg.
S7.1.3
S9.1
(c)
(d)
(e)
(f)
S9.3
S9.3.1 When using the test dummies conforming to Part 572 Subpart C, I, J, or K, prepare the dummies as specified in this paragraph. Before being used in testing under this standard, dummies must be conditioned at any ambient temperature from 19° C to 25.5° C and at any relative humidity from 10 percent to 70 percent, for at least 4 hours.
S9.3.2 When using the test dummies conforming to Part 572 Subparts N (weighted and unweighted), P, or R, prepare the dummies as specified in this paragraph. Before being used in testing under this standard, dummies must be conditioned at any ambient temperature from 20.6° C to 22.2° C and at any relative humidity from 10 percent to 70 percent, for at least 4 hours.
S10.2.1 * * *
(b) * * *
(2) When testing rear-facing child restraint systems, place the newborn, 9-month-old or 12-month-old dummy in the child restraint system so that the back of the dummy torso contacts the back support surface of the system. For a child restraint system which is equipped with a fixed or movable surface described in S5.2.2.2 which is being tested under the conditions of test configuration II, do not attach any of the child restraint belts unless they are an integral part of the fixed or movable surface. For all other child restraint systems and for a child restraint system with a fixed or movable surface which is being tested under the conditions of test configuration I, attach all appropriate child restraint belts and tighten them as specified in S6.1.2. Attach all appropriate vehicle belts and tighten them as specified in S6.1.2. Position each movable surface in accordance with the instructions that the manufacturer provided under S5.6.1 or S5.6.2. If the dummy's head does not remain in the proper position, tape it against the front of the seat back surface of the system by means of a single thickness of 6 mm-wide paper masking tape placed across the center of the dummy's face.
(c)(1)(i) When testing forward-facing child restraint systems, extend the arms of the 9-month-old or 12-month-old test dummy as far as possible in the upward vertical direction. Extend the legs of the 9-month-old or 12-month-old test dummy as far as possible in the forward horizontal direction, with the dummy
(2) When testing rear-facing child restraint systems, extend the dummy's arms vertically upwards and then rotate each arm downward toward the dummy's lower body until the arm contacts a surface of the child restraint system or the standard seat assembly in the case of an add-on child restraint system, or the specific vehicle shell or the specific vehicle, in the case of a built-in child restraint system. Ensure that no arm is restrained from movement in other than the downward direction, by any part of the system or the belts used to anchor the system to the standard seat assembly, the specific shell, or the specific vehicle.
Office of the Assistant Secretary for Public and Indian Housing, HUD.
Interim rule.
This interim rule revises the current regulation to extend the period for which an Indian tribe, after its first year of funding, may receive a minimum grant amount under the need component of the Indian Housing Block Grant (IHBG) formula. The minimum funding provision in the regulation for returning tribes expired on September 30, 2002. This interim rule authorizes the extension of the minimum funding provision under the need component through Fiscal Year 2003 to avoid hardship to the affected tribes.
Interested persons are invited to submit comments regarding this rule to the Regulations Division, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500. Comments should refer to the above docket number and title. A copy of each communication submitted will be available for public inspection and copying during regular business hours (weekdays 7:30 a.m. to 5:30 p.m. eastern time) at the above address. Facsimile (FAX) comments are not acceptable.
Rodger Boyd, Deputy Assistant Secretary for Native American Programs, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 4126, Washington, DC 20410-0001; telephone (202) 401-7914 (this is not a toll-free number). Persons with hearing- or speech-impairments may access this number via TTY by calling the toll-free Federal Information Relay Service at 1-800-877-8339.
HUD issued regulations at 24 CFR part 1000 to implement certain provisions of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA) (25 U.S.C. 4101
As indicated above, § 1000.328 contains a sunset provision with respect to the minimum funding amount, that is, funding would not “extend beyond Federal Fiscal Year 2002.” Section 1000.306 (referenced in § 1000.328) provides for a review within five years of the promulgation of the rule to determine the need for the subsidy. It is clear, therefore, that the regulation when adopted intended that the IHBG formula would be reviewed before expiration of the minimum funding provision.
The negotiated rulemaking committee that will review the formula met on April 29, 2003. Resolving the issue of minimum funding by the negotiated rulemaking committee, however, may not be reached for several months. Consequently, because the minimum funding provision has expired and some time may elapse before the resolution of this issue by the negotiated rulemaking committee, if no action is taken now to extend the minimum funding provision, small tribes especially would be affected by the lapse in the funding provision.
This interim rule extends to Federal Fiscal Year 2003 the provision in § 1000.328 with respect to the minimum funding amount for returning tribes under the need component of the IHBG. The provision with respect to the minimum grant amount,
The Department believes that enlarging the time to Federal Fiscal Year 2003 for returning tribes to receive the minimum grant amount would avoid unnecessary hardship to many tribes. Additionally, adoption of this rule allows more time for the negotiated rulemaking committee to meet to review the IHBG formula, including the issue of minimum funding. In the interim, the affected tribes will not suffer a financial loss because of the expiration of the provision in the current regulation.
In general, the Department publishes a rule for public comment before issuing a rule for effect, in accordance with its own regulations on rulemaking at 24 CFR part 10. Part 10, however, does provide in § 10.1 for exceptions from that general rule where the Department finds good cause to omit advance notice and public participation. The good cause requirement is satisfied when the prior public procedure is “impracticable, unnecessary, or contrary to the public interest.”
The Department finds that good cause exists to publish this interim rule for effect without first soliciting public comment. The rule will allow a minimum amount of funding to continue to Indian tribes without a significant lapse in time during which the tribes would be foreclosed from receiving funds entirely or would receive a harmful reduction. The funding meets a critical need of many tribes, which will go unmet during the time that it otherwise would take to publish a rule for effect. The Department is still, however, soliciting public comment on this rule. Any comments received on this rule will be considered in adopting the final rule.
The Office of Management and Budget (OMB) reviewed this rule under Executive Order 12866 (entitled “Regulatory Planning and Review”). OMB determined that this rule is a “significant regulatory action” as defined in section 3(f) of the Order (although not economically significant, as provided in section 3(f)(1) of the Order). Any changes made to the rule subsequent to its submission to OMB are identified in the docket file, which is available for public inspection in the Regulations Division, Room 10276, Office of General Counsel, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500.
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-
Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on State and local governments and is not required by statute, or the rule preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This interim rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive Order.
A finding of no significant impact with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332). The finding of no significant impact is available for public inspection between the hours of 7:30 a.m. and 5:30 p.m. weekdays in the Regulations Division, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500.
The Secretary, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed and approved this interim rule and in so doing certifies that this rule will not have a significant economic impact on a substantial number of small entities. Although HUD has determined that this interim rule does not have a significant economic impact on a substantial number of small entities, HUD invites comments regarding any less burdensome alternatives to this rule that will meet HUD's objectives as described in this preamble.
The Catalog of Federal Domestic Assistance Number is 14.867.
Aged, Community development block grants, Grant programs—housing and community development, Grant programs—Indians, Indians, Individuals with disabilities, Public housing, Reporting and recordkeeping requirements.
25 U.S.C. 4101
In the first year of NAHASDA participation, an Indian tribe whose allocation is less than $50,000 under the need component of the formula shall have its need component of the grant adjusted to $50,000. An Indian tribe's IHP shall contain a certification of the need for the $50,000 funding. In subsequent years, but not to extend beyond Federal Fiscal Year 2003, an Indian tribe whose allocation is less than $25,000 under the need component of the formula shall have its need component of the grant adjusted to $25,000. The need for this section will be reviewed in accordance with § 1000.306.
Office of the Assistant Secretary for Public and Indian Housing, HUD.
Final rule.
This final rule simplifies and streamlines HUD's regulatory requirements for small public housing agencies (PHAs) that administer the public housing and voucher assistance programs under the United States Housing Act of 1937 (1937 Act). Consistent with HUD's basic regulatory responsibilities, the final rule further streamlines the PHA Annual Plan requirements for certain small PHAs and deregulates the assessment and scoring of small PHAs under the Public Housing Assessment System (PHAS) and the Section 8 Management Assessment Program (SEMAP). These changes will alleviate administrative burden and better enable small PHAs to focus on their core mission of providing decent, safe, and affordable housing for the neediest American families. The final rule follows publication of an August 14, 2002, proposed rule and takes into consideration the public comments received on the proposed rule.
Effective Date: July 24, 2003.
Bessy Kong, Deputy Assistant Secretary for Policy, Program, and Legislative Initiatives, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 4116, Washington, DC 20410-0001; telephone (202) 708-0713 (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the toll-free Federal Information Relay Service at 1-800-877-8339.
On August 14, 2002 (67 FR 53276), HUD published a proposed rule for public comment to simplify and streamline its regulatory requirements for small public housing agencies (PHAs) that administer the public housing and voucher assistance programs under the United States Housing Act of 1937 (42 U.S.C. 1437
This final rule follows publication of the August 14, 2002, proposed rule and takes into consideration the public comments received on the proposed rule. The most significant differences between this final rule and the August 14, 2002, proposed rule are as follows:
The public comment period on the August 14, 2002, proposed rule closed on September 13, 2002. HUD received twenty-one public comments on the proposed rule. Comments were received from PHAs, two of the major national organizations representing PHAs, and low-income housing advocates, and service providers. The majority of the commenters supported the rule and applauded HUD's efforts to provide regulatory relief for small PHAs. Several commenters, however, had reservations about certain elements of the rule and suggested changes for addressing these concerns. In many cases, the commenters recommended additional deregulatory changes not contained in the proposed rule.
The summary of comments that follows presents the major issues and questions raised by the public commenters on the August 14, 2002, proposed rule. The underlined headings present the issue or question and are followed by a brief description of the commenter's reasoning. The discussion of the public comments is organized as follows:
Section IV of this preamble discusses the general public comments on the proposed rule.
Section V of the preamble discusses the public comments regarding the proposed changes to the PHA Annual Plan requirements.
Section VI of the preamble discusses the public comments regarding the proposed changes to the PHAS.
Section VII of the preamble discusses the public comments regarding the proposed changes to SEMAP.
Yet another commenter wrote that the final rule should revise the definition of a small PHA to include only PHAs with less than 250 assisted units, including both public housing and voucher units. This commenter wrote that the proposed rule would create the anomalous result that a PHA with 250 public housing units, but potentially thousands of voucher units, would be considered “small” and have fewer planning and reporting requirements than a PHA with 260 public housing units and no voucher units at all. In addition, the commenter noted that the proposed rule would treat all PHAs that only administer vouchers the same, regardless of the size of their voucher programs. The commenter wrote that its suggested change would be the fairest and easiest to understand, and would treat similar PHAs in a similar manner.
Two other commenters, however, urged HUD to ensure that the final rule includes the same definition of small PHA as the proposed rule. One of the commenters endorsed the proposed definition, writing that it will enable PHAs to “focus on the delivery of quality services and being responsive to their community, rather than worrying about filing reports with HUD.”
The commenter wrote that if HUD is concerned about the unfair impacts of using a fewer number of indicators to conduct SEMAP assessments for non-audit PHAs, there are two alternative solutions that are far less drastic than exempting these PHAs altogether from federal oversight. The first alternative is to allow these small PHAs to self-certify their compliance with the seven SEMAP indicators that are independently verified for other PHAs. The second alternative is to alter the percentage threshold for designation as troubled for these small PHAs. The commenter wrote that either of these alternatives, combined with HUD's other proposed changes to SEMAP, would reduce the burden on small PHAs and HUD staff, while retaining some federal oversight of program integrity and accountability, which is the purpose of SEMAP.
The information collection requirements contained in the PHA Plan process (24 CFR part 903) and the PHAS (24 CFR part 902) have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB Control Numbers 2535-0106, 2535-0107, 2507-0001, and 2577-0226, respectively. The regulatory amendments contained in §§ 902.9, 903.5, 903.11, and 903.12 of this final rule merely modify the scope and frequency of these currently approved information collection requirements to streamline and reduce the paperwork burden imposed on small PHAs. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.
The Office of Management and Budget (OMB) reviewed this rule under Executive Order 12866 (entitled Regulatory Planning and Review). OMB determined that this rule is a “significant regulatory action” as defined in section 3(f) of the Order (although not economically significant, as provided in section 3(f)(1) of the Order). Any changes made to the rule subsequent to its submission to OMB are identified in the docket file, which is available for public inspection in the Regulations Division, Room 10276, Office of General Counsel, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500.
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments and the private sector. This final rule does not impose any federal mandates on any state, local, or tribal governments or the private sector within the meaning of the Unfunded Mandates Reform Act of 1995.
Executive Order 13132 (entitled Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on state and local governments and is not required by statute, or the rule preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This final rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive Order.
A Finding of No Significant Impact with respect to the environment was made at the proposed rule stage in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332). The Finding remains applicable to this final rule and is available for public inspection between the hours of 7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500.
The Secretary, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed and approved this final rule and in so doing certifies that this rule will not have a significant economic impact on a substantial number of small entities. Although the final rule is concerned with small PHAs with less than 250 public housing or leased housing units, the amendments made by the rule are deregulatory in nature. Specifically, the final rule eliminates, simplifies, and streamlines regulatory requirements for these small PHAs regarding the PHA Annual Plan process and assessments conducted under the PHAS and SEMAP. Further, the deregulatory amendments do not change the amount of funding available to these PHAs. Accordingly, the economic impact of this rule will not be significant, and it will not affect a substantial number of small entities.
The Catalog of Federal Domestic Assistance Numbers for the programs affected by this final rule are 14.850 (for the Public Housing Program) and 14.871 (for the Housing Choice Voucher Program).
Administrative practice and procedure, Public housing, Reporting and recordkeeping requirements.
Administrative practice and procedure, Public housing, Reporting and recordkeeping requirements.
Grant programs—housing and community development, Housing, Rent
42 U.S.C. 1437d(j), 42 U.S.C. 3525(d).
REAC will assess and score the performance of a PHA with less than 250 public housing units every other PHA fiscal year, unless the small PHA:
(a) Elects to have its performance assessed on an annual basis; or
(b) Is designated as troubled, in accordance with § 902.67.
(a)
(d)
42 U.S.C. 1437c; 42 U.S.C. 3535(d).
(a) * * *
(3) * * * However, HUD may require that half of all PHAs with less than 250 public housing units submit their 5-Year Plan one fiscal year in advance (in the fourth PHA fiscal year rather than the fifth PHA fiscal year).
7. Revise § 903.11(c)(2) to read as follows:
(c) * * *
(2) For small PHAs that are not designated as troubled (see § 902.67(c)) or that are not at risk of being designated as troubled (see § 902.67(b)(4) of this chapter) under section 6(j)(2) of the 1937 Act, the requirements for streamlined Annual Plans are described in § 903.12.
(a)
(b)
(c)
(1) The information required by § 903.7(g) and (o) and, if applicable, § 903.7(b)(2) with respect to site-based waiting lists and § 903.7(k)(1)(i) with respect to homeownership programs under section 8(y) of the 1937 Act;
(2) If the PHA wishes to use the project-based voucher program, a statement of the projected number of project-based units and general locations and how project basing would be consistent with its PHA Plan; and
(3) A certification from the PHA that lists the policies and programs covered by § 903.7(a), (b), (c), (d), (h), (k), and (r) that the PHA has revised since submission of its last Annual Plan and provides assurance by the PHA that:
(i) The Resident Advisory Board had an opportunity to review and comment on the changes to the policies and programs before implementation by the PHA;
(ii) The changes were duly approved by the PHA board of directors (or similar governing body); and
(iii) The revised policies and programs are available for review and inspection at the principal office of the PHA during normal business hours.
(b)
42 U.S.C. 1437a, 1437c, 1437f, and 3535(d).
(a)
(2)
(i) Elects to have its performance assessed on an annual basis; or
(ii) Is designated as troubled, in accordance with § 985.103.
(a)
(2)
(i) The PHA has less than 250 assisted units; and
(ii) HUD determines that an on-site review is unnecessary to determine the needs of the PHA and the actions required to address the program deficiencies.
Agricultural Marketing Service, USDA.
Proposed rule.
This document proposes to adopt as a final rule, order language contained in the interim final rule published in the
Gino Tosi, Marketing Specialist, Order Formulation and Enforcement Branch, USDA/AMS/Dairy Programs, Stop 0231—Room 2968, 1400 Independence Avenue, SW., Washington, DC 20250-0231, (202) 690-1366, e-mail:
This administrative action is governed by the provisions of Sections 556 and 557 of Title 5 of the United States Code and therefore is excluded from the requirements of Executive Order 12866.
These proposed amendments have been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have a retroactive effect. If adopted, this proposed rule will not preempt any state or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may request modification or exemption from such order by filing with the Department of Agriculture (USDA) a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with the law. A handler is afforded the opportunity for a hearing on the petition. After a hearing, the Department would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has its principal place of business, has jurisdiction in equity to review the Department's ruling on the petition, provided a bill in equity is filed not later than 20 days after the date of the entry of the ruling.
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601
In June 2001, there were 12,748 producers pooled on, and 57 handlers regulated by the Upper Midwest order. Based on these criteria, the vast majority of the producers and handlers would be considered as small businesses. The adoption of the proposed pooling standards serves to revise established criteria that determine those producers, producer milk, and plants that have a reasonable association with, and are consistently serving the fluid needs of, the Upper Midwest milk marketing area and are not associated with other marketwide pools concerning the same milk. Criteria for pooling are established on the basis of performance levels that are considered adequate to meet the Class I fluid needs and, by doing so, determine those that are eligible to share in the revenue that arises from the classified pricing of milk. Criteria for pooling are established without regard to the size of any dairy industry organization or entity. The criteria established are applied in an identical fashion to both large and small businesses and do not have any different economic impact on small entities as opposed to large entities. Therefore, the amendments will not have a significant economic impact on a substantial number of small entities.
A review of reporting requirements was completed under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). It was determined that these amendments would have no impact on reporting, recordkeeping, or other compliance requirements because they would remain identical to the current requirements. No new forms are proposed and no additional reporting requirements would be necessary.
This action does not require additional information collection that requires clearance by the Office of Management and Budget (OMB) beyond currently approved information collection. The primary sources of data used to complete the forms are routinely used in most business transactions. Forms require only a minimal amount of information which can be supplied without data processing equipment or a trained statistical staff. Thus, the information collection and reporting burden is relatively small. Requiring the same reports for all handlers does not significantly disadvantage any handler that is smaller than the industry average.
Prior documents in this proceeding:
Notice of Hearing: Issued June 5, 2001; published June 11, 2001 (66 FR 31185).
Tentative Final Decision: Issued February 8, 2002; published February 14, 2002 (67 FR 7040).
Interim Final Rule: Issued April 16, 2002; published April 22, 2002 (67 FR 19507).
A public hearing was held upon proposed amendments to the marketing agreement and the order regulating the handling of milk in the Upper Midwest marketing area. The hearing was held, pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), and the applicable rules of practice (7 CFR part 900), at Bloomington, Minnesota, on June 26-27, 2001, pursuant to a notice of hearing issued June 5, 2001, and published June 11, 2001 (66 FR 31185).
Upon the basis of the evidence introduced at the hearing and the record thereof, the Administrator, on February 8, 2002, issued a Tentative Final Decision containing notice of the opportunity to file written exceptions thereto.
The material issues, findings, and conclusions, rulings, and general findings of the tentative final decision are hereby approved and adopted and are set forth in full herein. The material issues on the record of hearing relate to:
1. Eliminating the simultaneous pooling of milk on the order and on a State-operated milk order that has marketwide pooling.
2. Allowing overbase milk from California to remain as eligible for pooling on the Upper Midwest Federal milk order.
3. Changing certain pooling provisions of the order regarding performance standards and diversion limits.
4. Changing the rate of partial payments to producers.
5. Determining whether emergency marketing conditions exist that would warrant the omission of a recommended decision and the opportunity to file written exceptions.
The following findings and conclusions on the material issues are based on evidence presented at the hearing and the record thereof:
A proposal, published in the hearing notice as Proposal 1, seeking to prevent the simultaneous pooling of milk on the Upper Midwest order and on a State-operated order with marketwide pooling, previously adopted on an interim basis, is proposed to be adopted on a permanent basis by this final decision. The practice of pooling milk on a Federal milk order and simultaneously pooling the same milk on a State-operated milk order has also come to be referred to as “double dipping.” Currently, the Upper Midwest order (Order 30) only provides prohibitions for the simultaneous pooling of the same milk on more than one Federal order. The record provides evidence and support for eliminating the ability of milk receiving the benefits of marketwide pooling through a State-operated milk order from simultaneously being pooled on Order 30.
Proposal 1, which sought to end the practice of double dipping, was proposed by Associated Milk Producers, Inc.
A witness appearing on behalf of Associated Milk Producers, Inc. (AMPI), a supporter for the direct elimination of double-dipping, provided evidence and testimony that showed an increasing amount of California milk being pooled on Order 30. For the time period of October 2000 through May 2001, said the AMPI witness, there was an estimated $11.4 million negative effect on the pool, the equivalent of about a ten-cent ($0.10) reduction for each hundredweight of milk pooled on the order, as a result of pooling California milk on Order 30. According to the AMPI witness, this estimate was calculated by factoring the amount of milk from California that had been pooled on the Upper Midwest pool from the Order's actual Producer Price Differential (PPD) and applying the difference to the volume of milk pooled on the order.
The AMPI witness indicated the reform of the Federal milk marketing order system, implemented in January 2000, provided economic incentives for California milk to pool on Order 30. Specifically, said AMPI, the use of the higher of either the Class III or Class IV milk price in setting and moving Class I milk prices had yielded generally higher PPDs than existed in the Upper Midwest region prior to reform.
The AMPI witness surmised that Order 30's pooling of California milk, already pooled under the State-operated milk order of California, resulted in obvious inequities. The witness provided estimates of extent and impact on Upper Midwest dairy farmers and was of the opinion that this situation is severe enough to conclude that the Department should move directly to a final decision and avoid the more lengthy procedure of first issuing a recommended decision and then issuing a final decision.
These views and conclusions by the AMPI witness were supported in testimony by a witness appearing on behalf of Foremost Farms USA (Foremost). The Foremost witness testified that California milk pooled on Order 30 grew from about 10 million pounds to an average of 260 million pounds during the 3-month period of March through May 2001. According to calculations by Foremost, an estimated $6 million reduction in value for all milk pooled on the order occurred due to the pooling of California milk on Order 30. This revenue, said Foremost, comes from Upper Midwest dairy farmers who already have the lowest PPD in the Federal order system. Acknowledging that tighter pooling provisions may serve to eliminate the double dipping issue, Foremost was of the opinion that tightening pooling standards would not be the best way to accomplish that end.
A witness representing the Mid-West Dairymen's Company/Lakeshore Federated Dairy Cooperative (MDC), a dairy farmer cooperative located in northern Illinois and southern Wisconsin, testified in support of ending double dipping. This witness also spoke on behalf of Lakeshore Federated Dairy Cooperative, which represents over 4,000 dairy farmers located in Illinois, Iowa, and Wisconsin, and whose milk is pooled mostly on the Upper Midwest order and to a lesser extent on the Central and Mideast Federal milk orders. This witness indicated that Mid-West Dairymen's Company milk supplies the fluid market.
The MDC witness expressed concern about equity among producers and equity among handlers. In this regard, the witness maintained that this issue should be handled on an expedited basis. The MDC witness indicated that the Federal order program has a long history of promoting equity to both
Federal orders prohibit the pooling of the same milk of a producer on more than one Federal order, noted the MDC witness. Drawing money from one Federal order pool equitably shares revenue with those producers who supply the market, but drawing additional revenue from a second Federal order pool destroys the goal of equity among producers, a reason why the Federal order program prohibits double pooling, maintained MDC. As evidence of the impact of double dipping, MDC presented analysis showing that from January 2000 through April 2001, the Order 30 statistical uniform price per hundredweight averaged $10.8850, with a pool draw of 84.5 cents. Over the same 16-month period, said MDC, the California overbase price averaged about 21.5 cents higher than the blend price in Order 30. Not only is the California overbase price higher than in Order 30, noted MDC, but a California dairyman pooled on Order 30 will also draw the 84.5 cents by being able to simultaneously pool the same milk on Order 30.
The MDC witness testified that the California milk pooling plan places high importance on providing equity to producers and to handlers regulated by the state. The witness noted that establishing producer equity is a basic cornerstone of both the California and Federal milk order programs and that both accomplish this through marketwide pooling. If the Federal order program does not eliminate double dipping, there cannot be equity in prices received by producers in the Midwest or California, said the witness. Eliminating double dipping is desirable, said MDC, because it would not change the movement or the marketing of milk in any significant fashion. Milk would continue to be picked up at the farm and taken to the same plants as is currently done. According to the MDC witness, the only difference would be that no financial benefit would accrue to some producers who currently are able to double dip.
A dairy farmer from Minnesota, who is also the Chairman of the First District Association, President of the Nelson Creamery Association, and serves on the board of the Minnesota Milk Producer's Association (First District), testified in support of amending the Upper Midwest order to prohibit double dipping. The First District witness testified that it is unfair and wrong for dairy farmers pooled on Order 30 to have their milk price intentionally diluted as a result of California milk being pooled on the order. This witness estimated that the impact on the price received by dairy farmers in the Upper Midwest was about 15 to 17 cents per hundredweight. The First District witness also thought it important to indicate that California, with its State-wide milk regulatory system, had chosen not to be a part of the Federal milk order system.
A consultant witness with extensive experience in milk marketing regulations appeared on behalf of the supporters of Proposal 1. The witness provided detailed analysis regarding California milk movements and offered modified wording from that published in the hearing notice to end double dipping. This witness testified that Federal order provisions have always been tailored to prevent producers from pooling the same milk twice and enjoying the benefits of marketwide pooling from more than one order. To this end, according to the witness, a handler regulated on the Upper Midwest order should not be permitted to pool diverted milk if that milk is pooled and priced under either a Federal order or State order that provides for marketwide pooling.
Important to the new consolidated orders was the rejection of “open pooling” where milk from anywhere can be pooled on any marketing order, said the witness. The witness indicated that, in his opinion, the Department rejected open pooling because it did not provide an assurance of milk being made available for the fluid market. The witness also expressed the opinion that in markets with 20 percent or less milk used for fluid purposes, the notion of assuring an adequate supply of milk for fluid use becomes of questionable importance.
The witness testified that the statutory requirements for milk marketing orders specify the uniform treatment of producers and that uniform treatment is fundamentally the same as the equitable treatment of producers. The witness said that equitable treatment includes the equal sharing of the proceeds of the pool among all producers pooled on the order. However, the witness thought the notion of equitable treatment would not include producers who are sharing in the proceeds of other marketwide pools on the same milk. To this end, the witness maintained that pooling milk on both the California and Order 30 marketwide pools has resulted in the non-uniform distribution of proceeds to those producers who pool the same milk twice.
The witness also presented an analysis of data from the California Department of Food and Agriculture as well as relied on his knowledge of milk receipts at plants located in the western States of Oregon, Nevada, and Arizona. This analysis shows, said the witness, that almost all of the California milk pooled on the Upper Midwest order is not physically received within the Order 30 area, but is instead being received at California plants. Because the milk is received at California plants, it is pooled under the California marketwide system.
The Secretary of the Wisconsin Department of Agriculture, Trade, and Consumer Protection (WDATCP), accompanied by the Director of Value Added Agricultural Development of the WDATCP, testified in support of amending the Upper Midwest order to stop and prevent the double dipping of milk. The witnesses testified that increasing volumes of California milk was diluting the Class I utilization of the market and was also lowering the benefit to dairy farmers in Minnesota and Wisconsin who are pooled on Order 30.
These Wisconsin officials were of the opinion that artificial regulations, not market forces, allow California milk to simultaneously pool under California's State order program and Order 30. The witnesses found this to be patently unfair and noted that it only serves to lower the income to Wisconsin and Minnesota dairy farmers.
With regard to milk produced far from the order and pooled on Order 30, these witnesses expressed minimal concern about such milk being able to pool on the order provided the same milk could not and would not enjoy the benefit of two marketwide pools. While the impact of pooling distant milk that cannot double dip was acknowledged to have the same impact in lowering returns to Minnesota and Wisconsin dairy farmers, these witnesses took no issue with such distant milk being able to pool on the Upper Midwest order. They expressed the view that adopting more restrictive pooling standards for the purpose of preventing double dipping would interfere with and supplant market forces, such as the economics of transportation and distribution, with artificial regulations.
The President and Chief Executive Officer of Hilmar Cheese, located in Hilmar, California, also testified in favor of preventing California milk from being
The Hilmar witness stated that dairymen in California participate in a marketwide pool through a regulated milk pricing and pooling system that includes quota milk and that is operated by the State of California. The Hilmar witness confirmed the testimony of the California State government witnesses that all Grade A milk sold to a pool plant in California is associated with the pool and shares in the revenue generated from the use of milk in all classes of use. While all plants that manufacture milk into manufactured products such as cheese, frozen products, butter, and milk powder need not be pool plants, said the witness, most plants opt to participate in the pool so that their dairy farmers can reap the benefits of marketwide pooling. Manufacturing plants become pool plants, said Hilmar, by making some of their milk receipts available for Class I and Class II uses. Producers are paid for their milk on the basis of the milk components they ship and on the proportion of their milk sales that are covered by their quota holdings, said this witness. Fat and solids-not-fat, said Hilmar, have their own separate pools, and all producers share equally in the revenue generated by sales in the various milk classes. The total revenue from solids-not-fat in all classes, including revenue from the Class I fluid carrier value, is first adjusted to pay for transportation allowances and credits, and the remaining revenue is reduced by the total value of milk that is quota milk, said the witness. The quota milk pool is determined, said Hilmar, primarily by the pounds of solids-not-fat quota shipped multiplied by the quota premium of $0.195 per pound of solids-not-fat, which is also equal to $1.70 per hundredweight. After deducting the value of quota milk from the adjusted solids-not-fat revenue in the pool, the remaining revenue is divided by the total pounds of solids-not-fat to obtain the overbase (product in excess of quota) and the base solids-not-fat price, said the witness. The quota solids-not-fat price, said Hilmar, is equal to the overbase price plus $0.195 per pound. Under the California milk pooling system, testified Hilmar, all dairy farmers in the pool receive a portion of the revenue from milk sales in all milk classes, even though some dairy farmers will receive more as quota holders than those who hold less quota or no quota.
Because of this revenue sharing with all producers pooled under the California system, testified the Hilmar witness, the same dairy farmers should not also have the opportunity to pool the same milk on a Federal milk order. The witness found it odd that some producers would seek to capture pool revenue from other parts of the country and, at the same time, collect pool revenue from the California pool. Engaging in this sort of behavior, said the Hilmar witness, results in some undesirable consequences. The witness presented an analysis of a 17-month period (beginning with the implementation of order reform) that compared California milk prices with Federal order milk prices. This analysis revealed, according to the witness, that during the 17-month time period, the California overbase price averaged $11.21 per hundredweight (cwt), or $1.03 per cwt over the California Class 4-B (milk used in cheese) milk price. In the Upper Midwest order at Hennepin County (Minneapolis), noted the witness, milk value was only 73 cents higher than the order's Class III price at the reference test. The witness drew attention to the California overbase price averaging nearly 22 cents above the Upper Midwest statistical blend price despite the use of a quota system by California. California overbase dairy farmers, said the witness, already benefit significantly from its diverse product pool, and quota holders benefit in prices received by an additional $1.70 per cwt of milk.
There is an inequity to Upper Midwest producers, said Hilmar, when California overbase milk is pooled in both California and on the Upper Midwest order. Hilmar compared the producer price differential (PPD) for two different locations in the Upper Midwest marketing area (Chicago and Minneapolis) with a plant located in Glenn County, California (some 90 minutes north of Sacramento), where milk pooled under the Upper Midwest order is received. Hilmar testified that comparison of both the California overbase price and the Federal order PPD on the California milk that is pooled but not delivered to the Upper Midwest results in a 95-cent net higher price for the “double-pooled” California milk than from California milk not pooled on Order 30. According to the Hilmar witness, the double pooling only serves to augment California prices received by producers by drawing money from the Upper Midwest market, which already has milk prices lower than California's.
In light of their analysis, said Hilmar, double dipping is not the type of innovation that creates real value, and double dipping only moves money and distorts and discourages—and ultimately damages—the dairy industry. Hilmar chose not to engage in this behavior.
Additional support for eliminating double dipping was offered by a representative of Marigold Foods. Marigold Foods (Marigold) is a handler that has five regulated distributing plants located within the Upper Midwest order. Marigold is concerned, the witness indicated, about California milk being pooled on the order and reducing dollars paid to their local dairy farmers. According to the Marigold witness, California milk is not leaving the State of California and is not available to serve the fluid market in Order 30. Marigold indicated that they pay a $1.70 Class I differential on most of their milk purchases as well as over-order premiums to assure a supply of milk. However competitive the over-order premiums, Marigold indicated, they are not enough to assure themselves a supply of milk, noting that several of their suppliers have indicated a financial need to reduce shipments to Marigold's distributing plants. The witness attributed this situation to the ability of California milk to be pooled simultaneously on the California State order and on Order 30.
The Marigold witness testified that the Order 30 PPD was being reduced by 10 to 15 cents per cwt by the pooling of California milk. Marigold indicated that this money was funded by the market's Class I fluid milk processors and that these funds should be going to the dairy farmers who serve, or are available to serve as needed, the Order 30 fluid market. Marigold stressed that they already compete for a supply of milk with handlers who are regulated by another Federal order and with entities who have obtained funds from Order 30 from the pooling of California milk. Competing with California only intensifies an inequitable situation in Marigold's ability to compete for a supply of milk, said the witness.
Marigold stated that it is through a regulatory loophole that producer milk which is not available to serve the fluid market is permitted to receive money from the Order 30 pool when the same milk is already receiving a benefit from marketwide pooling in a State-operated order. The witness said that this situation is unjust and contrary to the purposes of the legislation that authorizes Federal milk marketing orders for bringing forth an adequate supply of milk to meet fluid needs.
Land O' Lakes is of the opinion that California does not have marketwide pooling. In support of their proposal, LOL pointed to other State dairy programs. They noted that the North Dakota State Order and the Pennsylvania Milk Marketing Board are currently considering the adoption of marketwide pooling. Other pricing programs, said LOL, such as the Northeast Compact and various over-order pricing agencies such as the Upper Midwest Marketing Agency would appear threatened if Proposal 1 were adopted. Other LOL views and proposals are discussed later in this decision.
Other opposition took the form of describing the general inadequacy of the Upper Midwest's pooling provisions and not the elimination of double dipping per se. While Dairy Farmers of America (DFA) testified that it opposes the ability of the same milk to simultaneously pool on two Federal milk orders, they did not oppose simultaneous pooling occurring on both a Federal and State-operated milk order such as California's. DFA indicated their ability to derive monetary benefits from both the Federal and California State milk order program has been of assistance in meeting their desired business objectives. DFA did submit their own proposal, published in the hearing notice as Proposal 4, which addressed broader pooling standards and concerns. DFA's proposal is discussed later in this decision.
For over 60 years, the Federal government has operated the milk marketing order program. The law authorizing the use of milk marketing orders, the Agricultural Marketing Agreement Act of 1937 (AMAA), as amended, provides authority for milk marketing orders as an instrument that dairy farmers may voluntarily opt to use to achieve objectives consistent with the AMAA and that are in the public interest. An objective of AMAA, as it relates to milk, was the stabilization of market conditions in the dairy industry.
The declaration of the AMAA is specific: “the disruption of the orderly exchange of commodities in interstate commerce impairs the purchasing power of farmers and destroys the value of agricultural assets which support the national credit structure and that these conditions affect transactions in agricultural commodities with a national public interest, and burden and obstruct the normal channels of interstate commerce.” The AMAA provides authority for employing several methods to achieve more stable marketing conditions. Among these is classified pricing, which entails pricing milk according to its use by charging processors differing milk prices on the basis of form and use.
In addition, the AMAA provides for specifying when and how processors are to account for and make payments to dairy farmers. Plus, the AMAA requires that milk prices established by an order be uniform to all processors and that the price charged can be adjusted by, among other things, the location at which milk is delivered by producers (Section 608c(5)). As these features and constraints were employed in establishing prices under Federal milk orders, some important market stabilization goals were achieved. The most often recognized goal was the near elimination of ruinous pricing practices of handlers competing with each other on the basis of the price they paid dairy farmers for milk and in price concessions made by dairy farmers. The need for processors to compete with each other on the price they paid for milk was significantly reduced because all processors are charged the same minimum amount for milk, and processors had assurance that their competitors were paying the same value-adjusted minimum price.
The AMAA also authorizes the establishment of uniform prices to producers as a method to achieve stable marketing conditions. Although some hearing participants are of the opinion that marketwide pooling cannot solve disorderly marketing conditions, marketwide pooling has been adopted in all Federal orders because of its superior features of providing equity to both processors and producers. A marketwide pool, using the mechanism of a producer settlement fund to equalize on the use-value of milk pooled on an order, speaks directly to the objective of the AMAA of ensuring uniform prices to producers supplying a market. The Federal order program purposefully moved away from individual handler pooling—a pooling method not uncommon when many milk marketing orders represented much smaller and much more local milk marketing areas. Through marketwide pooling, the equalization of prices paid to dairy farmers did have implications that affected the competitive relationship between processors along with uniform prices received by dairy farmers. Under individual handler pooling, the use-values of milk by a handler are averaged, or blended, and distributed separately to only those producers who had supplied the handler. With marketwide pooling, a handler regulated by an order with high Class I use was no longer able to exercise control over producers through the higher blend prices they were able to pay to producers who were, for example, more favorably located to the plant. Similarly, handlers with lower Class I use who were unable to pay as large a blend price found that marketwide pooling greatly improved their position in competing for a supply of milk. Prices paid by handlers were equalized across the entire market where handlers competed with each other for fluid sales and producers received a more uniform price for their milk.
Under the California State milk order program, similar objectives to that of the AMAA are clear. The record evidence indicates the California State order program has a long history in the development and evolution of a classified pricing plan and in providing equity in pricing to handlers and producers. Important as classified pricing has been in setting minimum prices, the issue of equitable returns to producers for milk could not be satisfied by only the use of a classified pricing plan. Some California plants had higher Class I fluid milk use than did others, and some plants processed little or no fluid milk products. As with the Federal order system, producers who were fortunate enough to be located nearer Class I processors received a much higher return for their milk than producers shipping to plants with lower Class I use or to plants whose main business was the manufacturing of dairy products. Over time, disparate price differences grew between producers located in the same production area of the State which, in turn, led to disorderly marketing conditions and practices. These included producers who became increasingly willing to make price concessions with handlers by accepting lower prices and in paying higher charges for services such as hauling. Contracts between producers and handlers were the norm, but the contracts were not long-term (rarely more than a single month) and could not provide a stable marketing relationship from which the dairy farmers could plan their operations.
In 1967, the California State legislature passed and enacted the Gonsalves Milk Pooling Act. The law provided the authority for the California
It is clear from this review of the Federal and the California State programs that the orderly marketing of milk is intended. Both provide a stable marketing relationship between handlers and dairy farmers and both serve the public interest. It would be incorrect to conclude that the Federal and California milk order programs have differing purposes when the means, mechanisms, and goals are so nearly identical. In fact, and as indicated in both briefs and in comments to the tentative final decision by the supporters for Proposal 1, the Federal order program has precedent in recognizing that the California State milk order program has marketwide pooling. Under milk order provisions in effect prior to milk order reform, and under § 1000.76, a provision currently applicable to all Federal milk marketing orders, the Department has consistently recognized California as a State government with marketwide pooling.
Since the 1960's, the Federal milk order program recognized the harm and disorder that resulted to both producers and handlers when the same milk of a producer was simultaneously pooled on more than one Federal order. As noted above, producers do not receive uniform minimum prices, and handlers receive unfair competitive advantages. The need to prevent “double pooling” became critically important as distribution areas expanded and orders merged. The issue of California milk, already pooled under its State-operated program and able to simultaneously pool under a Federal order, has, for all intents and purposes, the same undesirable outcomes that Federal orders once experienced and subsequently corrected. It is clear that the Upper Midwest order needs amending to prevent the ability to pool milk on more than one order when both orders employ marketwide pooling.
There are other State-operated milk order programs that provide for marketwide pooling. For example, New York, as indicated in record testimony, operates a milk order program for the western region of that State. A key feature explaining why this State-operated program has operated for years alongside the Federal milk order program is the exclusion of milk from the State pool when the same milk is already pooled under a Federal order. Because Federal orders have prohibited the same milk being pooled simultaneously, the Federal order program has had no reason again to address specifically double dipping or double pooling issues, the disorderly marketing conditions that arise from such practice, or the primacy of one regulatory program over another. The other states with marketwide pooling similarly do not double pool Federal order milk.
The record contains various opinions offered to explain why the practice of double dipping has occurred. Some offered that the Class I price structure changes implemented with Federal order reform resulted in a much higher PPD than existed under the old Upper Midwest and Chicago orders, providing a financial incentive. Some cited the change in how orders, including Order 30, zoned Class I prices and producer blend prices, suggesting if these zoning methods had been retained, the incentive for California milk to double dip on Order 30 may never have been an issue. Others noted that the Federal order location value of fluid milk in much of California is actually higher than in Order 30 and thus implied that tighter pooling provisions would most likely prevent California milk from being pooled on Order 30.
These are all interesting and valid observations that can lead to reasonably concluding that California milk would not seek to be pooled on Order 30 if not for the regulatory amendments. However, determining whether double dipping and its impacts are a result of the reformed Class I pricing structure does not lead to the conclusion that the price structure needs to be abandoned or severely altered. Rather, the issues here are whether the double dipping is a pooling problem that needs to be solved and whether the first proposal, with or without various modifications, is an effective solution to that problem. As noted above, the Department believes the pooling problem needs a pooling solution and a modification of the first proposal will effectively solve the problem. When equity is not provided for, the disorderly marketing conditions that have arisen in Order 30 become the same as those existing prior to Federal orders adopting provisions preventing the double pooling of milk.
California milk should only be eligible for pooling on Order 30 when it is not pooled on the California State order and it meets the Upper Midwest's pooling standards. A distinction needs to be made here between a producer and the milk of a producer. While much of the record testimony speaks of producers in the same vein as the milk of producers, it is necessary to clarify the obvious intent of all hearing participants that it is the milk of a producer that becomes pooled. It is clear from the context of the record testimony that this was intended.
The Federal milk order program, including Order 30, does not regulate producers. Rather, the program regulates handlers—those entities that are the first buyers of milk from producers and who incur the minimum payment obligations to producers. The Federal milk order program has no authority to regulate producers in their capacity as producers and cannot, for example, preclude a producer from being pooled anywhere, provided the milk of the producer meets the pooling standards of an order. For this reason, Federal milk orders, including Order 30, provide separate definitions for a producer in the
The amendatory wording provided below, intended to eliminate double dipping, is at some variance from that proposed by the proponents of Proposal 1. The wording is different because the proposed modified wording of Proposal 1 would prevent double dipping on only diverted milk. The wording presented below would apply to any milk that participates in a State-operated milk order that provides for the marketwide pooling of milk and would not prohibit the ability of milk to participate in the Order 30 pool when not part of a State-operated milk order program providing for marketwide pooling.
A proposal, published in the hearing notice as Proposal 3, that sought to exclude California quota milk from being pooled on the Upper Midwest order is not adopted. As California has quota and overbase prices for milk, this
Two proposals were offered by Land O'Lakes (LOL) that sought to permit the continued pooling of California milk on the Upper Midwest Order. Specifically, a proposal, published in the hearing notice as Proposal 2, would “grandfather” or exempt any California milk previously qualified for pooling on the Upper Midwest order from any amendment to the order which would thereafter exclude the pooling of such milk. This proposal was abandoned and is not discussed further in this decision. Another proposal, published in the hearing notice as Proposal 3, sought to exclude only California quota milk from being pooled on the Upper Midwest order. LOL is a cooperative association that has member producers whose milk is pooled under both the California State and Upper Midwest milk orders.
The witness testifying on behalf of LOL indicated that his organization supports the concept of efficient and orderly marketing and that the pooling of milk under an order should be based on performance. However, LOL indicated they were not in favor of restricting access to pooling to benefit a select few. LOL was of the opinion that fewer restrictions to pooling provides for market efficiencies, resulting in lower costs in serving the Class I needs of a market. The witness testified that LOL engages in double dipping. They indicated they engage in this practice to gain additional revenue to subsidize the losses incurred in servicing the fluid market in Order 30. They did not think marketing conditions warrant the Department of Agriculture treating the issue as an emergency.
The real issue facing the industry, said the LOL witness, is not California milk. The impact of pooling reserve supplies of milk is the same regardless of where the milk is located, said LOL. The witness argued that regardless of location, performance criteria must be met to provide for pooling eligibility, and therefore performance requirements rather than the artificial restrictions offered by Proposal 1 should be addressed. According to the witness, increasing shipping requirements would provide all the equity necessary as handlers shipping the minimum requirements will be forced to ship more milk or reduce the volume of milk pooled. LOL contends that producers have the right to pool milk based on performance, stressing that where the milk originates is irrelevant.
The LOL witness testified that the Class I pricing surface adopted as a result of Federal milk order reform has allowed for more liberalized pooling, thereby allowing access to higher levels of Class I revenues. The witness said that the net impact of Federal order reform has been positive for Upper Midwest dairy farmers. LOL did stress that access to additional Class I revenues should only be gained through performance, with market participants demonstrating a willingness to service the fluid needs of the market. According to the LOL witness, the utilization of milk for Class I fluid uses will tend to equilibrate as the needs of milk order areas beyond Order 30 are met based on performance. The witness said that the milk of producers should be allowed to move freely to meet the needs of the markets. In this regard, testified LOL, Upper Midwest entities must be willing to share the local proceeds from Class I use if they expect to share other markets' Class I proceeds or risk the loss of credibility when participating in deciding how milk orders should function.
According to the LOL witness, California does not have a marketwide pool. The witness noted that proceeds from fluid and soft dairy product use are paid to producers on the basis of quota, while non-quota milk is priced based on manufacturing values. The returns on quota equity, said LOL, are not distributed marketwide, noting that is has been only recently that the State of California instituted a value difference between quota and overbase milk. It is LOL's assertion that California's lack of marketwide pooling should not prohibit the ability of overbase milk to be pooled on Order 30.
The LOL proposal for allowing the pooling of overbase milk from California on Order 30 should not be adopted for the same reasons discussed in finding that Proposal 1 should be adopted immediately. Regardless of LOL opinions, the only reasonable conclusion that can be reached is that the California State order program does have marketwide pooling and that overbase milk received at a California plant is pooled on the State order and thereby shares in the benefits that accrue to producers under the State's marketwide pooling plan. This conclusion is substantiated by the testimony and participation by California State officials who operate the California State milk order program. Additionally, it seems contrary to the argument advanced by LOL that milk, regardless of where it is located, should be pooled on the basis of performance. California milk, other than a one-time shipment of a days' production of a producer, does not actually leave the State to consistently service the Order 30's Class I needs.
A proposal offered by the Dairy Farmers of America (DFA) and the National Farmers Organization (NFO), published in the hearing notice as Proposal 4, addressed two separate issues: establishing performance standards for milk not traditionally associated with the Upper Midwest marketing area and the ability of pool distributing plants to divert an unlimited volume of milk to nonpool plants. The portion of the proposal seeking to establish diversion limits for pool distributing plants adopted on an interim basis is proposed to be adopted on a permanent basis in this final decision. The record does not support adoption of performance standards for milk based on the location of the producer or the milk of a producer. DFA is a member-owned cooperative of nearly 17,000 farms that produce and market milk across a significant portion of the United States. NFO is also a member-owned cooperative that produces and markets milk in Order 30, the State of California, and in other Federal milk orders.
Specifically, the Upper Midwest order is proposed to be amended to provide a diversion limit of 90 percent of producer receipts, including diversions, for pool distributing plants regulated under the order. In addition, the market administrator may adjust the diversion limit for pool distributing plants as marketing conditions warrant. Since supply plants pooling milk on the Upper Midwest order must ship 10 percent of receipts, including milk diverted to a pool distributing plant and certain other types of plants, there is no reason to impose a diversion limit on supply plants.
DFA testified that two primary benefits of the Federal order program include allowing producers to benefit from the orderly marketing of milk and to share in the marketwide distribution of revenue that results mostly from Class I milk sales. Orderly marketing influences milk to move to the highest value use when needed and for milk to clear the market when not used in Class I, said DFA. The witness insisted that the pooling of distant milk that does not show a service to the Class I market is inconsistent with Federal order policy, and such milk should not be eligible to share in the revenue that accrues from Class I use.
Pooling standards are universal in their intention, said DFA, requiring a measure of commitment to a market
The DFA witness drew from the history of milk marketing and commented on the problems of producers in their attempts at improving their economic circumstances. The witness identified shortcomings of the marketplace resulting in the difficulty of the milk supply being able to service the market's fluid needs in a manner that treats all producers equitably. The superior negotiating position of milk buyers and the variations in supply and demand were examples provided by the witness that have always “tripped up” dairy farmers in their marketing efforts. The witness added that farmers' attempts to improve on past efforts always seemed to fail when one or more suppliers would find a way to opt out of the added cost of serving the market to obtain a higher return for themselves. Marketwide pooling, said the DFA witness, eliminated the differences in prices paid to suppliers within the same market and, in turn, eliminated the non-productive competitive drive for higher returns since everyone faced the same terms of trade. The witness also noted the absence of any action recommending any change to these fundamental features of milk orders and noted that every Federal order shares returns to all producers marketwide.
The DFA witness was of the opinion that the new Class I pricing structure, together with the interface of the pricing surface and the pooling provisions found in each order, resulted in significant changes in the marketplace for milk. The link between performance and pooling, said the witness, was altered by these reforms and needs to be reviewed. DFA noted that many entities, including themselves, moved quickly to take advantage of these changes in order rules. The witness indicated that when in a competitive dairy economy, an entity must make pooling decisions that aim to increase returns, and competitors must attempt to do the same or risk their competitive position.
Pooling provisions of Order 30 work well for milk produced in the marketing area, said DFA, but do not work well for milk produced out of the area. Producers need only deliver a days' production a single time to a pool plant to have their milk eligible for pooling. This, combined with no loss of producer eligibility, provided a producer does not deliver to another Federal order plant, makes Order 30 an attractive market in which to pool milk, the witness stated.
The witness also relied on, and drew heavily from, the order reform Final Decision (64 FR 16026) which explained the marketing area boundaries of the consolidated Upper Midwest marketing area. Although the prior marketing order areas of the Chicago Regional and Upper Midwest orders did not have a considerable degree of overlapping fluid milk disposition, they did have an extensive overlapping procurement area, according to the witness. In light of this, the witness noted that the reform Final Decision could therefore find no justification on the basis of overlapping sales for increasing the consolidated marketing area beyond what was adopted. Rather, it is the extensive overlapping of a common procurement area, or milkshed, that is the most compelling reason for explaining the boundaries of the consolidated Upper Midwest marketing area.
The witness noted, too, that there was extensive discussion early in the construct of the 1996 Farm Bill concerning the merits of having a single national Federal order. Such an outcome would have resulted in a single blend price across the entire country. Noting that Congress debated several proposals and several economic studies over this issue, Congress rejected the idea of a single marketing order with the premise of one blend price. According to the witness, open pooling, which may result in blend prices being equalized across a large territory, is counter to the intent of Congress and the legislative directive of the Farm Bill—-to consolidate the orders into no fewer than 10 and not more than 14.
The DFA witness expressed alarm about milk from distant areas sharing in the blend price when that milk neither serves the fluid market nor balances the market when extra milk is needed by fluid processors. The witness referenced the rejection of the concept of open pooling discussed in the reform Final Decision and indicated that the decision rejected this because open pooling provides no reasonable assurance that milk will be made available to satisfy the fluid needs of the market. The witness also noted further that proposals to create and fund “stand-by” pools were also rejected.
DFA was of the opinion that open pooling is not appropriate for Order 30. Additionally, because of the distance and cost involved in moving milk to the market, milk needed in the fall months to accommodate increased demand because of increased school milk sales—or to provide a manufacturing outlet for milk produced in excess of fluid needs—would not be provided. It is irrelevant, said the witness, if the milk in question originates from California or any other place because such milk is no more burdensome than distant milk produced in Idaho or any other area. Under the open-pooling concept, said DFA, “distant” milk able to pool alongside “local” deliveries only serves to pyramid the volume pooled.
Prohibiting the simultaneous pooling of milk on a State-operated marketwide pool and the Order 30 pool (the focus of Proposal 1) said DFA, does not fully address the pooling problems at hand. The witness provided evidence and testimony that showed an increasing amount of “distant” milk pooled on the Upper Midwest order which, they maintain, is not serving the Class I needs of the market. The witness submitted analysis demonstrating that when milk is pooled without being available for Class I use—referred to as “paper pooled”—on Order 30, returns to local producers who are consistently serving the fluid market are decreased.
Analysis was provided by DFA to illustrate how the pooling of milk on Order 30 has changed by examining the amount of milk pooled on the order and where the milk was produced. Using October 1997 as a reference time period prior to the consolidation of the orders, the witness provided data showing that 2.4 billion pounds of milk were associated with the Chicago Regional and Upper Midwest markets, but only 1.6 billion pounds of milk were pooled because of class-price relationships. The 2.4 billion pounds were produced by 27,250 producers located in 13 States from Tennessee to Minnesota and from New Mexico to Michigan. The witness noted that over 93 percent of the producer milk was produced within the consolidated marketing area, and 91.4 percent of the milk pooled was produced within the States of Wisconsin and Minnesota. In comparison, the witness provided data subsequent to the implementation of order reform: During June 2001, 12,748 producers pooled 1.5 billion pounds of milk on consolidated Order 30, with a total of 84 percent of the milk pooled produced within the consolidated marketing area and 79 percent
The witness testified that DFA considers it important to end the near open pooling of large volumes of milk that never serve the fluid market by modifying the order's pooling standards and establishing diversion limits for pool plants. To this end, DFA offered a proposal requiring milk produced outside the States that comprise the Upper Midwest milk marketing area be grouped into, and reported as, individual State “units.” Each unit would be subject to the same shipping standards for pool supply plants, said DFA.
Additionally, DFA was of the opinion that the order lacks the means to define the potential size of the pool. In this regard, DFA thought it appropriate to establish a limit on the amount of producer milk that a pool plant can divert. Because a producer need only deliver one day's production to an Order 30 pool plant to qualify and thereafter remain qualified to pool their milk on the order, DFA noted, a pool plant may subsequently divert all of the producer's milk to any plant without any of that milk being required to serve the fluid market. It is this shortcoming of the Order 30 producer milk definition that provides the means by which milk from distant areas is able to pool on Order 30, stated DFA.
Stressing the costs associated with transporting milk long distances, DFA was of the opinion that no economic basis exists for such milk to actually make itself available to consistently serve the fluid market. Therefore, the witness concluded, milk located far from the order should be required to meet performance standards equal to the performance standards for milk originating within the order. The ease of qualifying for pooling on Order 30, said DFA, has attracted and caused to be pooled increasing volumes of milk which have only served to lower the order's blend price. The economic burden of the cost of delivering milk to a pool plant becomes a one-time event, said DFA. Thereafter the milk need never perform in servicing the fluid market while reducing returns to producers whose milk is actually serving the market's Class I needs, the witness concluded.
DFA was of the opinion that their proposal provides reasonable standards for demonstrating consistent performance in supplying the fluid market by milk from outside the States comprising Order 30. This would result in milk from distant areas performing on the same basis as local milk, said the witness, while not discriminating, penalizing, or establishing any barriers to the pooling of milk from any area on Order 30. The witness also stated this feature of their proposal is an adequate and reasonable standard for requiring all market participants to share in the responsibility of serving the fluid market.
DFA presented an analysis of data depicting mileages from California and Idaho to locations in Order 30 with the performance standards they proposed. This was offered to illustrate DFA's opinion that distant milk would not rationally seek to be pooled on Order 30 when required to perform in the same way as milk from within the States that comprise the marketing area. The witness presented a review of the relationship between the order's blend price return versus the cost of delivering milk to the Order 30 market. The witness claimed that a daily delivery of milk from California would yield a net loss of $71,647, while a daily delivery from Idaho would yield a net loss of $48,576 in the month of January 2000. On the basis of such losses, DFA concluded that such distant milk would not seek to be pooled on Order 30.
DFA then presented a comparison of blend price return versus hauling costs with no performance standards. After absorbing the one-time hauling cost, both the California and Idaho milk supplies would have generated a positive return in the first month, growing to much higher returns in the second month, concluded the witness. Stressing that once the cost of the initial haul to qualify a producer for pooling is incurred, the subsequent pooling of milk would continually enjoy monetary benefits of being pooled on Order 30 without servicing the fluid market.
The DFA witness was of the opinion that their proposal has a measurable economic consequence that is in line with existing Federal milk order principles. If the economic returns are positive, said DFA, regulation would not prohibit pooling of distant milk and thus would provide a reasonable and defendable standard. The witness also said that each State unit must be treated individually and perform as a stand-alone entity under the same performance standards as currently applicable to supply plants. The witness stressed that this feature of their proposal provides a reasonable economic test of whether or not the market needs such milk for Class I use, and that economic returns must be earned in the marketplace and not by what is provided in pooling reports.
DFA was of the opinion that Order 30 should not be amended on an emergency basis prior to proceedings to consider amending other orders. The distant pooling of milk on Order 30 has been occurring for a long time—since January 2000, DFA stated. While the volume of distant milk pooled has increased, the negative impact on Order 30 blend prices has been reduced by the fact that Order 30 handlers have, in a not dissimilar fashion, pooled large volumes of milk on the Central and Mideast Federal milk orders, stated the witness, adding that California milk under their control was also being double pooled on the Central Order, Order 32. DFA was also of the opinion that if the Upper Midwest order is amended prior to consideration of appropriate amendments to the Central and Mideast orders, the pooling problems exhibited in the Upper Midwest would only “migrate” to these other marketing areas, resulting in even more disorderly marketing conditions.
A witness from the Northwest Milk Marketing Federation testified in support of DFA's proposals. The Northwest Milk Marketing Federation (NMMF) is a cooperative representing over 97 percent of dairy farmers whose milk is pooled on the Pacific Northwest Federal milk order.
The NMMF witness stated that Federal orders should have performance requirements which reasonably require all volumes of milk associated with the pool to proportionately service the fluid needs of the market. The witness was of the opinion that Idaho milk could pose a threat to producers in the Pacific Northwest if that milk can be pooled without meeting performance standards. The proposals offered by DFA adequately address such pooling issues and should be adopted in Order 30, said the witness. This would not only alleviate the issue of pooling distant milk, but would serve as a model for other Federal order hearings, namely the Pacific Northwest, where similar pooling problems exist, said the witness.
Opponents of DFA's proposals stressed that marketing conditions prevailing in the Upper Midwest require only the elimination of double dipping. Associated Milk Producers, Inc., First District Association, and Lakeshore Federated Dairy Cooperative expressed concern that DFA's proposal does not thoroughly address the need to end double dipping. They claimed that DFA's analysis of hauling costs only serves to exclude and target Idaho and California milk, and the value of such analysis of the Order 30 marketing conditions is misplaced. Similarly, they
The opponents also claimed that other loopholes in DFA's proposal might allow California milk to continue double pooling on Order 30. Class I fluid milk products, including concentrated milk which California plants routinely process in meeting the fluid milk standards of California, could be pooled on Order 30, noted the witness. For example, concentrated milk could be delivered to Order 30 and subsequently returned to California for use in that State's Class 4a or 4b uses of milk, the witness added.
Opponents were also of the opinion that illegal trade barriers to the movement of milk in Federal orders would be erected if DFA's proposal were adopted. Idaho milk that performs in the same manner as Minnesota milk should be eligible for pooling in the same way the order now provides for Minnesota milk, provided the same milk is not pooled more than once, stated opponents. Similarly, said the opponents, eligibility requirements in other Federal milk orders should not exclude milk based on its point of origin. They also stressed that trying to differentiate “historical” milk supplies from other “distant” milk for pooling purposes would be difficult and an unreliable test for determining pooling eligibility. In this regard, they noted the pooling of milk received from Montana dairy farmers on the old Upper Midwest order, Order 68. Also, their review of historical data revealed that Missouri milk, for example, was long associated with the Texas order, but is now associated with the Southeast order. Changes in milk association can and do occur, opponents noted, and USDA should not create rigid rules as to when, where, and how such association may be permitted.
A witness representing Kraft Foods (Kraft) also testified in opposition to DFA's proposal, depicting it as being designed to create a severe, detrimental, and economic disincentive to pool milk on the Upper Midwest market because the performance standards called for would increase the transportation burden borne by distant producers. They were of the opinion that if this proposal were adopted, it would be nothing more than Government imposing a discriminatory transportation burden on distant producers and hindering a producer's free marketing choices.
Along the theme of transportation burdens, the Kraft witness also expressed the opinion that when producers incur disproportionately large transportation costs in supplying the fluid needs of the market, those producers would not be receiving uniform prices as required by law. Kraft was of the opinion that DFA's proposal is inconsistent with what the witness described as the AMAA's prohibition against consideration of a handler's use of milk as a condition of blend price receipt, adding also that it would create an unlawful and unauthorized exception in providing for uniform prices to producers. In effect, the Kraft witness explained that the DFA proposal would require selected groups of distant producers to incur transportation costs and other regulatory burdens not required of nearby producers under the order. Participation in the Upper Midwest market would only guarantee that distant farms would incur monetary losses, Kraft asserts. Additionally, said Kraft, DFA's proposal is unlawful because it conditions the pooling of distant producers upon utilization of their milk by a Class I distributing plant. In this regard, Kraft questioned the legality of requiring designated groups of dairy farmers to incur extraordinary expenses of shipping milk to Class I plants while other pooled farmers would be able to share in the Class I revenue without the same burden.
Finally, Kraft expressed the opinion that DFA's proposal would, if adopted, violate the law because it would be erecting illegal trade barriers by limiting the marketing of milk products in Order 30 depending on where the milk is located. The performance requirements placed on producers within Order 30, said Kraft, would be different from requirements for producers outside the order.
The part of the proposal by DFA limited to the establishment of diversion limits for pool distributing plants adopted on an interim basis is proposed to be adopted on a permanent basis in this final decision. The record does not support the adoption of performance standards for pooling milk on the order on the basis of its location. Establishing a limit on the amount of milk that a pool distributing plant may divert provides for a complete set of provisions for identifying which producers, which producer milk, and which handlers should share in the benefits that accrue from the marketwide pooling of milk on the Upper Midwest order. By setting a limit, the integrity of the performance standards of the order will be improved. If Order 30 does not limit the amount of milk that may be diverted by pool distributing plants, the pool is effectively undefined.
Diversions are needed to accommodate the movement of milk properly associated with the market when not needed for Class I use. A diversion limit will also establish the amount of producer milk that may be associated with the integral milk supply of a pool plant. As discussed earlier, the diversions being considered are shipments of milk directly from the farm to a nonpool plant pursuant to the Producer milk definition provided for in § 1030.13(d). The Upper Midwest order also allows for supply plants to deliver producer milk directly from the farm to another pool plant. However, since the intent of allowing a supply plant to ship producer milk directly from the farm to pool plants is to provide for more efficient movement of milk to pool distributing plants, milk shipments such as these are not included in the context of diversions as it relates to pool distributing plants and are, therefore, not limited in the quantity of milk a supply plant can direct ship to another pool plant.
The marketing conditions of the Upper Midwest order are unique, and this uniqueness should be reflected in the pooling standards of this order. As indicated in testimony and in briefs, the Upper Midwest market area has about a 20 percent use of milk for fluid use, with the remainder of the milk used in lower-valued classes. In light of this relatively low share of milk volume that is needed to supply the Class I needs of the market, this decision finds basic agreement with those who expressed opposition to DFA's proposal. Specifically, the marketing conditions of Order 30 do not exhibit the need to require additional performance standards for milk located outside of the marketing area or, as DFA describes, milk located outside of the States that currently comprise the consolidated Upper Midwest Milk Marketing Area. Accordingly, all pool plants, regardless of location, may become eligible to have the milk of producers pooled on Order 30 by meeting the performance standards specified for the various types of pool plants.
In several instances in testimony and in their post-hearing brief, DFA was of the opinion that “distant” milk does not have, and is not required to meet, the same performance standards as “local” milk. Any supply plant or a cooperative acting as a handler (as provided for and described in § 1000.9(c)) would need to ship ten (10) percent of their reported
DFA maintains that the proposal seeking only to eliminate double dipping (Proposal 1) does not go far enough in addressing their general concerns about performance standards for the system of orders, including the Upper Midwest order. The argument is troublesome. On one hand, DFA fundamentally asserts that performance standards are critical to the orderly marketing of milk and for determining those participants who are actually serving the fluid market, including the Order 30 market, stressing that only these participants should share in the benefits of the pool. At the same time, by their own testimony, DFA engages in the practice of double dipping, yet does not find double dipping disruptive to the orderly marketing of milk, even when such “distant” milk from California will rarely, if ever, again be shipped to pool plants, including distributing plants regulated by the order. This decision finds little logic in asking for a finding that no disorder results from allowing the simultaneous pooling of distant milk under California's State operated system and on Order 30, while at the same time asking for a finding that alternative performance standards are needed because of the disruptive effects to orderly marketing by pooling “distant” milk which does not consistently service the fluid market.
Pooling standards of milk orders, including Order 30, are intended to ensure that an adequate supply of milk is supplied to meet the Class I needs of the market and to provide the criteria for identifying those who are reasonably associated with the market for sharing in the Class I proceeds. Pooling standards of the order are represented in the
With regard to the Final Decision for the reform of the Federal milk order program, it is true that the common procurement area was the most compelling basis in forming the consolidated Upper Midwest marketing area. However, it is not the procurement area that provides the additional revenue to the pool. Rather, the revenue is derived largely from the Class I use of milk by regulated handlers that have Class I sales in the marketing area. In this regard, it is not important who provides the milk for Class I use or from where this milk originates. The order boundaries of the Upper Midwest order were not intended to limit or define which producers, which milk of those producers, or which handlers could enjoy in the benefits of being pooled on Order 30. What is important and fundamental to all Federal orders, including Order 30, is the proper identification of producers, the milk of those producers, and handlers that should share in the market's pool proceeds.
Pooling of “distant” milk on the Upper Midwest order is neither new nor without precedent. The record testimony and evidence show milk pooled on Order 30 from nearly all corners of the country. However, this decision acknowledges that with the advent of the economic incentives for California milk to pool on Order 30 and, at the same time, enjoy the benefits of being pooled under California's State-operated milk pooling program, significantly more milk has come to be pooled that has no legitimate association with the integral milk supplies of Order 30 pool plants. The association at present has been made possible only through what some market participants describe as a regulatory loophole. The Upper Midwest order also provides a significant degree of pooling flexibility in the form of provisions allowing system and unit pooling. These provisions promote the orderly marketing of milk by minimizing the inefficient movement of milk for the sole purpose of meeting pooling standards.
This final decision finds basic agreement with some of the reasons offered in testimony and reiterated in briefs by opponents to DFA's proposal for organizing “distant” milk into State units. Requiring each State unit to ship at least 10 percent of the quantity of milk to a distributing plant regulated under the order effectively sets a performance standard different from the States that comprise Order 30. For example, of the milk received from Idaho, the DFA proposal would establish a standard for at least 10 percent of such milk to be shipped to a distributing plant in order for this milk to be producer milk pooled on the order. However, the same would not be required, for example, that 10 percent of all Wisconsin milk be shipped to distributing plants regulated under the order. It is the ability of milk from California to double dip that is the primary source of disorderly marketing conditions and for much more milk being pooled on Order 30. By eliminating the ability to double dip, it is reasonable to conclude that California milk is unlikely to be pooled on Order 30 for economic reasons illustrated in DFA's testimony and analysis contained in the record of this proceeding.
In their exceptions to the tentative final decision, DFA indicated disappointment that their proposal for establishing “state units” for milk pooling purposes was not adopted. Their exception asserted that without the adoption of this proposal milk located distant from the Upper Midwest marketing area would be able to be pooled without demonstrating any actual service to the market's fluid needs. Their exceptions further asserted that by not adopting the “state units” pooling provision, the tentative final decision failed to properly distinguish between “in area” and “out of area” milk for pooling purposes. In addition, their exception criticized the tentative decision because it does not recognize geographic location as a pertinent market factor in determining milk's qualification for pooling.
Notwithstanding DFA's exception, the record does not support adopting the “state unit” or location-based performance standards for pooling milk on the order for the reasons articulated in the tentative decision. The marketing conditions of the Upper Midwest marketing area do not exhibit the need for performance standards beyond those adopted in the tentative final decision. Accordingly, the exceptions submitted for adopting location-based performance standards are not persuasive and are therefore denied. The remaining issue is establishing appropriate diversion limits for all pool plants, including limits for distributing plants which limits currently do not exist in the Upper Midwest milk order provisions.
In addition to describing what a dairy farmer must do to become a producer under the order, the producer definition of the order provides that a full day's
Diverted milk is milk not physically received at a pool plant. However, it is included as a part of the total producer milk receipts of the pool plant causing the milk to be diverted. While diverted milk is not physically received at the pool plant that causes the milk to be diverted, such milk is nevertheless an integral part of the milk supply of the diverting pool plant. If such milk is not part of the integral supply of the diverting plant, then that milk should not, and is not, properly associated with the diverting plant. Therefore, such milk should not be pooled.
Associating more milk than is actually part of the diverting plant's milk supply only serves to reduce the potential blend price paid to all dairy farmers whose milk is part of the pool. Allowing the pooling of milk far in excess of reasonable needs by the absence of diversion limits only provides for association with the market through “paper-reporting” and not by service to the Class I needs of the market. Without a diversion limit, the order's ability to provide for effective performance standards and orderly marketing is weakened.
On the basis of the record, the lack of a diversion limit for producer milk by distributing plants has opened the door for pooling much more milk, and, in theory, an infinite amount of milk on the market. In the specific marketing conditions of Order 30 evidenced by the record of this proceeding, the lack of a diversion limit for producer milk at distributing plants has caused milk to be pooled on the order that cannot be considered reasonably associated with the market.
The diversion limits for pool distributing plants offered by DFA are reasonable, and, in fact, are needed for upholding the purpose of providing for performance requirements in serving the Class I needs of the market. The order already effectively sets a diversion limit on pool supply plants by requiring these plants to ship 10 percent of their receipts, including diversions, to distributing plants regulated under the order. Therefore, an effective 90 percent limit on the amount of milk that could be diverted has already been established. Accordingly, the specific amendatory wording offered by DFA with respect to pool supply plants is not necessary. However, in the case of pool distributing plants, the order does need specific amendatory language to carry out this intent.
The amendatory language provided by DFA would add other order distributing plants to which cooperative handlers (as described in § 1000.9(c)) may divert milk. DFA claims that this matches the pool supply plant provisions for shipments to a distributing plant. It does do this. However, the amount of milk for which a pool supply plant is able to qualify for pooling is limited to the amount of shipments that are not made on the basis of agreed-upon Class II, Class III, and Class IV utilization. Milk that moves directly from the farm to another order pool distributing plant that is allocated to Class I becomes producer milk in the receiving order. This milk cannot be used for qualification, and the cooperative handler (as described in § 1000.9(c)) does not receive a qualification credit on direct shipped milk for Class I. A cooperative handler should not receive qualification for milk it ships to distributing plants if such milk is only to be used for pool qualification purposes and is delivered on an agreed upon Class II, Class III, or Class IV use of milk.
In exceptions to the tentative final decision, DFA asserted that the amendatory language they offered is integral to the establishment of appropriate diversion limits. Despite DFA's exception, the record strongly supported a 90 percent diversion limit without location differentiation for pool distributing plants. A 90 percent diversion limit adopted on an interim basis is serving as an effective means of identifying those producers, producer milk, and handlers who should benefit from marketwide pooling of milk on the Upper Midwest order. Adopting this standard on a permanent basis should continue its effectiveness.
A proposal that would change the rate of the partial payment to producers and cooperatives for milk delivered during the first 15 days of the month to the lowest class price for the prior month times 103 percent, published in the hearing notice as Proposal 5, is not adopted. Therefore, the partial payment rate should remain as currently provided for by the order—at the lowest class price for the prior month.
Both DFA and NFO were among those who supported increasing the minimum partial or advance payment due producers and cooperatives from the prior month's lowest class price to 103 percent of the prior month's lowest class price. A representative of DFA testified that since the inception of Federal order reform, the percentage of a producer's pay price, as measured by dividing the statistical uniform price by the prior month's Class III price, has declined from 95 percent to 91 percent in comparison to this relationship prior to reform. The witness presented detailed analysis supporting their position that the relative reduction in the partial payment is a trend that is having a significant negative impact on dairy farmers' cash flow. According to analysis presented, DFA concluded that using 103 percent of the lowest class price of the previous month would return the balance between the partial payment and final payment to the same relative level as prior to Federal order reform. The change should not have significant impact on handlers required to make minimum payments, said the witness.
A witness for the Wisconsin Cheese Makers Association (WCMA) testified in opposition to changing the rate of the minimum partial payment provision. The witness testified that the WCMA represents 25 supply plants on the Upper Midwest order and that increasing the required minimum payment would be a burden to their member plants because they would need to borrow more money to meet the partial payment. Requiring a larger partial payment, testified the WCMA witness, would require increased borrowing and thus increased costs for the plants. The witness explained that since the partial payment is only a minimum payment, plants may pay more if they desire to, but not all plants pay more than the minimum partial payment. According to the witness, the reduction in the percent of the prior month's Class III price as a percent of the statistical uniform price is a short-term phenomena and that, over time, the relationship would move back to the higher percentage that occurred prior to Federal order reform.
It is difficult to determine whether or not there is a trend occurring, as DFA maintains, that would be corrected or mitigated by changing the rate of the
Since Federal order reform, a 17-month period at the time of the hearing, the data shows two months in which the partial payment and the final payment were equal. However, if the partial payment rate were increased to 103 percent of the lowest class price, as proposed, four months (about 24 percent of the 17-month period) would have had a partial payment greater than or equal to the final payment.
The opponents of this proposal noted that Federal order reform and its newer pricing system have only been in place for a short time—17 months—suggesting that there has not been adequate time to observe various pricing scenarios that might occur over a more lengthy evaluation period. For example, there has been no significant price decline since the implementation of Federal order reform that would serve to aid in evaluating the effect of declining prices on the difference between the partial and final payment obligations. Class III and Class IV prices have been relatively stable during the beginning two thirds of the 17-month period, with prices beginning to show consistent increases during the last third of the period (December 2000 through May 2001).
The record testimony and post-hearing briefs supporting a change in the rate of partial payment assert that payments to producers and cooperatives, particularly by a cheese plant, are a “pass through” from the Federal order pool. A cheese plant/Class III handler receives the PPD from the pool (a “pool draw”) in order to pay the order's minimum prices to producers. However, the majority of the payment to producers and cooperatives in the Upper Midwest is derived from cheese sales. The statistical uniform or blend price is received by producers in the form of a PPD calculated from the marketwide pooling of all milk on the order at classified prices. In a market like the Upper Midwest, which has a relatively low Class I differential ($1.80) and low Class I utilization (15-20 percent), the resulting PPD is less than in markets with higher Class I use and higher Class I differential values. Over the 17-month period of January 2000 through May 2001, the Upper Midwest PPD ranged from 43 cents to $1.43 and averaged $0.83 per cwt. Handlers did not know what the PPD would be until several days before payment was due to its dairy farmers. In light of this, it is not reasonable to establish a partial payment rate at a level that may increase the likelihood of requiring handlers to pay out part or all of the PPD prior to receiving payments from the producer settlement fund. This caution seems especially important in the Upper Midwest market where the PPD is relatively low and can be completely offset by the price difference between the prior month's lowest class price and the current month's Class III price.
There is no compelling reason for changing the payment rate of the partial payment to producers. In the data presented by proponents at the hearing, the partial payment required by the order exceeded the final payment during numerous months. In most cases, the months in which the partial payment exceeded the final payment occurred prior to the implementation of Federal order reform.
A DFA exception to the tentative final decision asserted that the current partial payment terms of Order 30 result in dairy farmers effectively financing the operations of handlers. The partial payment provision of the order is a minimum requirement placed on handlers to pay producers. The provision places no restrictions on producers or handlers to negotiate alternative payment arrangements that may call for more frequent payments. Accordingly, no persuasive argument is made for a higher rate frequency of payment for milk beyond that already provided under the terms of the order.
Briefs and proposed findings and conclusions were filed on behalf of certain interested parties. These briefs, proposed findings and conclusions, and the evidence in the record were considered in making the findings and conclusions set forth above. To the extent that the suggested findings and conclusions filed by interested parties are inconsistent with the findings and conclusions set forth herein, the requests to make such findings or reach such conclusions are denied for the reasons previously stated in this final decision.
The findings and determinations hereinafter set forth supplement those that were made when the Upper Midwest order was first issued and when it was amended. The previous findings and determinations are hereby ratified and confirmed, except where they may conflict with those set forth herein.
(a) The tentative marketing agreement and the order, as hereby proposed to be amended, and all of the terms and conditions thereof, will tend to effectuate the declared policy of the Act;
(b) The parity prices of milk as determined pursuant to section 2 of the Act are not reasonable in view of the price of feeds, available supplies of feeds, and other economic conditions which affect market supply and demand for milk in the marketing area, and the minimum prices specified in the tentative marketing agreement and the order, as hereby proposed to be amended, are such prices as will reflect the aforesaid factors, insure a sufficient quantity of pure and wholesome milk, and be in the public interest; and
(c) The tentative marketing agreement and the order, as hereby proposed to be amended, will regulate the handling of milk in the same manner as, and will be applicable only to persons in the respective classes of industrial and commercial activity specified in, a marketing agreement upon which a hearing has been held.
In arriving at the findings and conclusions, and the regulatory provisions of this decision, each of the exceptions received was carefully and fully considered in conjunction with the record evidence. To the extent that the findings and conclusions and the regulatory provisions of this decision are at variance with any of the exceptions, such exceptions are hereby overruled for the reasons previously stated in this decision.
Annexed hereto and made a part hereof is one document: A Marketing Agreement regulating the handling of milk. The Order amending the order regulating the handling of milk in the Upper Midwest marketing area was approved by producers and published in the
It is hereby ordered, that this entire final decision and the Marketing Agreement annexed hereto be published in the
March 2003 is hereby determined to be the representative period for the purpose of ascertaining whether the issuance of the order, as amended in the Interim Final Rule published in the
Milk marketing orders.
This order shall not become effective unless and until the requirements of § 900.14 of the rules of practice and procedure governing proceedings to formulate marketing agreements and marketing orders have been met.
The findings and determinations hereinafter set forth supplement those that were made when the order was first issued and when it was amended. The previous findings and determinations are hereby ratified and confirmed, except where they may conflict with those set forth herein.
(a)
Upon the basis of the evidence introduced at such hearing and the record thereof, it is found that:
(1) The said order as hereby amended, and all of the terms and conditions thereof, will tend to effectuate the declared policy of the Act;
(2) The parity prices of milk, as determined pursuant to section 2 of the Act, are not reasonable in view of the price of feeds, available supplies of feeds, and other economic conditions which affect market supply and demand for milk in the aforesaid marketing area. The minimum prices specified in the order as hereby amended are such prices as will reflect the aforesaid factors, insure a sufficient quantity of pure and wholesome milk, and be in the public interest; and
(3) The said order as hereby amended regulates the handling of milk in the same manner as, and is applicable only to persons in the respective classes of industrial or commercial activity specified in, a marketing agreement upon which a hearing has been held.
The provisions of the order amending the order contained in the interim amendment of the order issued by the Administrator, Agricultural Marketing Service, on April 16, 2002, and published in the
The parties hereto, in order to effectuate the declared policy of the Act, and in accordance with the rules of practice and procedure effective thereunder (7 CFR Part 900), desire to enter into this marketing agreement and do hereby agree that the provisions referred to in paragraph I hereof as augmented by the provisions specified in paragraph II hereof, shall be and are the provisions of this marketing agreement as if set out in full herein.
I. The findings and determinations, order relative to handling, and the provisions of §§ 1030.1 to 1030.86 all inclusive, of the order regulating the handling of milk in the Upper Midwest marketing area (7 CFR part 1030) which is annexed hereto; and
II. The following provisions: Record of milk handled and authorization to correct typographical errors.
(a) Record of milk handled. The undersigned certifies that he/she handled during the month ( ), ____ hundredweight of milk covered by this marketing agreement.
(b) Authorization to correct typographical errors. The undersigned hereby authorizes the Deputy Administrator, or Acting Deputy Administrator, Dairy Programs, Agricultural Marketing Service, to correct any typographical errors which may have been made in this marketing agreement.
Effective date. This marketing agreement shall become effective upon the execution of a counterpart hereof by the Department in accordance with Section 900.14(a) of the aforesaid rules of practice and procedure.
In Witness Whereof, The contracting handlers, acting under the provisions of the Act, for the purposes and subject to the limitations herein contained and not otherwise, have hereunto set their respective hands and seals.