Aging Administration
Historic Preservation, Advisory Council
Agricultural Marketing Service
Agricultural Research Service
Animal and Plant Health Inspection Service
Forest Service
Grain Inspection, Packers and Stockyards Administration
International Trade Administration
National Oceanic and Atmospheric Administration
National Telecommunications and Information Administration
Uniformed Services University of the Health Sciences
Agency for Healthcare Research and Quality
Agency for Toxic Substances and Disease Registry
Aging Administration
Food and Drug Administration
Indian Health Service
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Antitrust Division
Justice Programs Office
Employee Benefits Security Administration
Agency for Toxic Substances and Disease Registry
Federal Aviation Administration
Maritime Administration
Surface Transportation Board
Foreign Assets Control Office
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions.
Animal and Plant Health Inspection Service, USDA.
Final rule; correction.
We are correcting an error in the rule portion of a final rule that amended the regulations for importing nursery stock to require additional certifications for imported niger seed and lilac, to reflect changes in plant taxonomy and pest distributions, and to make various changes to the requirements for postentry quarantine of imported plants. The final rule was published in the
September 19, 2003.
Mr. William Thomas, Import Specialist, Phytosanitary Issues Management Team, PPQ, APHIS, 4700 River Road Unit 140, Riverdale, MD 20737-1236; (301) 734-5214.
On August 20, 2003, we published in the
In the rule portion of the final rule, § 319.37-8, in paragraph (g), we provided an address in Riverdale, MD, to which requests for the guidelines established by the International Plant Protection Convention of the United Nations' Food and Agriculture Organization for conducting pest risk assessments may be sent. The office that handles these requests has been transferred to another location, but we inadvertently did not update the address in the final rule. This document corrects that error.
In FR Doc. 03-21304, published on August 20, 2003 (68 FR 50039-50048), make the following correction: On page 50047, in the third column, in § 319.37-8(g), correct “Permits and Risk Assessment, Commodity Risk Analysis Branch, 4700 River Road Unit 133, Riverdale, MD 20737” to read “Center for Plant Health Science and Technology, Plant Epidemiology and Risk Assessment Laboratory, 1017 Main Campus Drive, Suite 2500, Raleigh, NC 27606”.
Grain Inspection, Packers and Stockyards Administration, USDA.
Direct final rule.
The Grain Inspection, Packers and Stockyards Administration (GIPSA) is amending the regulations under the United States Grain Standards Act, as amended, entitled Official Performance Requirements for Grain Inspection Equipment by removing regulation on tolerance for dividers. This change is being made to simplify inspection regulations. The removed section has been determined to be unnecessary, since testing of dividers has been modified in current instructions and directives to eliminate testing with grain and to require only a visual condition examination of grain dividers.
This rule is effective December 22, 2003 without further action, unless adverse comments or written notice of intent to submit adverse comments are received by November 24, 2003. If adverse comments are received, GIPSA will publish a timely withdrawal of the rule in the
Comments or notice of intent must be sent to Tess Butler, USDA, GIPSA, Room 1647-S, STOP 3604, 1400 Independence Avenue, SW., Washington, DC 20250-3604, FAX (202) 690-2755. All comments received will be made available for public inspection at the above address during regular business hours (8 a.m.-3:30 p.m.) (7 CFR 1.27(b)).
John Giler, Chief, Policies and Procedures Branch at (202) 720-0252 or e-mail:
Each type (design) of grain divider receives a thorough laboratory test and evaluation, prior to approval. The type of divider must provide a statistically unbiased division of the sample into representative portions. Representative portions are sub-samples that contain the same percentage of various components as the sample from which they are taken. Also, for ease of use, each must meet criteria for accuracy and repeatability of portion weight delivered.
Testing of each individual divider on a periodic basis at field locations was intended to ensure that they function properly. After receiving recommendations from a task force on equipment testing requirements and from other experienced personnel, GIPSA determined that field testing dividers with grain samples to evaluate the weight of grain delivered to each collection pan is unnecessary. It was determined that the test was actually a user adjustment that was more appropriately performed as a maintenance function, on an as needed basis.
Because of the prior laboratory approval testing, testing of dividers was modified in instructions and directives to eliminate testing with grain and to require only a visual condition examination of grain dividers. This practice is in accord with the visual examination required of similar kinds of equipment used for sampling grain.
The rule has been determined to be not significant for purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget. This action simplifies the regulations concerning official performance requirements for grain inspection equipment by removing unnecessary language. No cost to affected entities results from this action.
This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This action is not intended to have a retroactive effect. The Act provides in section 87g that no State or subdivision may require or impose any requirements or restrictions concerning the inspection, weighing, or description of grain under the Act. Otherwise, this rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. There are no administrative procedures which must be exhausted prior to any judicial challenge to the provisions of this rule.
Donna Reifschneider, Administrator, GIPSA, has determined that this rule will not have a significant economic impact on a substantial number of small entities as defined in the Regulatory Flexibility Act (5 U.S.C. 602
This rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995. (44 U.S.C. 3501,
FGIS is publishing this rule without a prior proposal because we view this action as noncontroversial and anticipate no adverse public comment. This rule will be effective, as published in this document, 60 days after the date of publication in the
If we receive written comments or written notice of intent to submit comments, we will publish a notice in the
As discussed above, if we receive no written comments or written notice of intent to submit comments within 30 days of publication of this direct final rule, this final rule will become effective 60 days following its publication. We will publish a notice to this effect in the
Grain inspection, Scientific equipment, and Weighing.
Pub. L. 94-582,90 Stat.2867, as amended, (7 U.S.C. 71
Agricultural Marketing Service, USDA.
Final rule.
The Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim final rule which decreased the assessment rate established for the Prune Marketing Committee (Committee) under Marketing Order No. 993 for the 2003-04 and subsequent crop years from $2.60 to $2.00 per ton of salable dried prunes. The Committee locally administers the marketing order which regulates the handling of dried prunes grown in California. Authorization to assess dried prune handlers enables the Committee to incur expenses that are reasonable and necessary to administer the program. The crop year began August 1 and ends July 31. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.
November 24, 2003.
Toni Sasselli, Program Assistant, or Richard P. Van Diest, Marketing Specialist, California Marketing Field Office, 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, 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, both as amended (7 CFR part 993), regulating the handling of dried prunes grown in California, hereinafter referred to as the “order.” The marketing agreement and order are effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”
USDA is issuing this rule in conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, California dried prune handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as issued herein will be applicable to all assessable dried prunes beginning on August 1, 2003, and continue until
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. Such 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 continues to decrease the assessment rate established for the Committee for the 2003-04 and subsequent crop years from $2.60 per ton to $2.00 per ton of salable dried prunes.
The California dried prune marketing order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers and handlers of California dried prunes. They are familiar with the Committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.
For the 2002-03 and subsequent crop years, the Committee recommended, and USDA approved, an assessment rate that would continue in effect from crop year to crop year unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.
The Committee met on June 26, 2003, and unanimously recommended 2003-04 expenditures of $341,000 and an assessment rate of $2.00 per ton of salable dried prunes. In comparison, last year's budgeted expenditures were $384,370. The assessment rate is $0.60 lower than the rate previously in effect. The Committee was able to recommend a lower assessment rate this year because salable prune production is expected to be 170,500 tons, 15,500 tons higher than production last year. With a larger 2003-04 prune crop and lower budget, an assessment rate of $2.00 per ton will provide sufficient funds for Committee operations this year. The following table compares major budget expenditures recommended by the Committee on June 26, 2003, and major budget expenditures in the 2002-03 budget.
The assessment rate recommended by the Committee was derived by dividing anticipated expenses by the estimated salable tons of California dried prunes. Production of dried prunes for the year continues to be estimated at 170,500 salable tons, which should provide $341,000 in assessment income. Income derived from handler assessments will be adequate to cover budgeted expenses. Interest income also will be available if assessment income is reduced for some reason. The Committee is authorized to use excess assessment funds from the 2002-03 crop year (currently estimated at $78,947) for up to 5 months beyond the end of the crop year to meet 2003-04 crop year expenses. At the end of the 5 months, the Committee refunds or credits excess funds to handlers (§ 993.81(c)).
The assessment rate will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.
Although this assessment rate is effective for an indefinite period, the Committee will continue to meet prior to or during each crop year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Committee's 2003-04 budget and those for subsequent crop years will be reviewed and, as appropriate, approved by USDA.
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final 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 the 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 less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $5,000,000.
Eight of the 21 handlers (38%) shipped over $5,000,000 of dried prunes and could be considered large handlers by the Small Business Administration. Thirteen of the 21 handlers (62%) shipped under $5,000,000 of dried prunes and could be considered small handlers. An estimated 32 producers, or less than 3% of the 1,205 total producers, may be considered large growers with annual income over $750,000. The majority of handlers and producers of California dried prunes may be classified as small entities.
This rule continues to decrease the assessment rate established for the Committee and collected from handlers for the 2003-04 and subsequent crop years from $2.60 per ton to $2.00 per ton of salable dried prunes. The Committee unanimously recommended 2003-04 expenditures of $341,000 and an assessment rate of $2.00 per ton of salable dried prunes.
The assessment rate is $0.60 lower than the rate previously in effect. The quantity of assessable dried prunes for the 2003-04 crop year continues to be estimated at 170,500 salable tons. Thus, the $2.00 rate should provide $341,000 in assessment income and be adequate to meet this year's expenses. Interest
The following table compares major budget expenditures recommended by the Committee on June 26, 2003, and major budget expenditures in the 2002-03 budget.
Prior to arriving at its budget of $341,000, the Committee considered information from various sources, such as the Committee's Executive Subcommittee. An alternative to this action was to continue with the $2.60 per ton assessment rate. However, an assessment rate of $2.60 per ton in combination with the estimated crop of 170,500 salable tons would have generated monies in excess of that needed to fund all the budget items for 2003-04. The assessment rate of $2.00 per ton of salable dried prunes was determined by dividing the total recommended budget by the estimated salable dried prunes. The Committee is authorized to use excess assessment funds from the 2002-03 crop year (currently estimated at $78,947) for up to 5 months beyond the end of the crop year to fund 2003-04 crop year expenses. At the end of the 5 months, the Committee refunds or credits excess funds to handlers (§ 993.81(c)). Anticipated assessment income and interest income during 2003-04 will be adequate to cover authorized expenses.
The grower price for the 2003-04 season is expected to average about the same as the estimated 2002-03 average grower price of about $800 per salable ton of dried prunes. Based on an estimated 170,500 salable tons of dried prunes, assessment revenue during the 2003-04 crop year is expected to be less than 1 percent of the total expected grower revenue.
This action continues to decrease the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers, and may reduce the burden on producers. In addition, the Committee's meeting was widely publicized throughout the California dried prune industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the June 26, 2003, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.
This action imposes no additional reporting or recordkeeping requirements on either small or large California dried prune handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.
USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.
An interim final rule concerning this action was published in the
A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at:
After consideration of all relevant material presented, including the information and recommendation submitted by the Committee and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.
Marketing agreements, Plums, Prunes, Reporting and Recordkeeping requirements.
Accordingly, the interim final rule amending 7 CFR part 993 which was published at 68 FR 46436 on August 6, 2003, is adopted as a final rule without change.
Agricultural Marketing Service, USDA.
Final rule.
The Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim final rule which suspended for three years the outgoing prune inspection and quality requirements under the California Dried Prune Marketing Order (Order) and its administrative rules and regulations, and the prune import regulation. Continued suspension of the outgoing inspection and quality requirements, and import regulation provisions ensures relief from these requirements. The Order regulates the handling of dried prunes produced in California and is administered locally by the Prune Marketing Committee (Committee). During the three-year suspension, the industry will have the opportunity to develop and implement outgoing inspection and finished product grade standards more consistent with current industry needs. In the absence of additional rulemaking to modify or terminate the suspended provisions, they will come back into effect automatically at the end of the three-year period. The modifications to the undersized prune disposition requirements made by the interim final rule also are continued without change.
November 24, 2003.
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.”
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 continues in effect the suspension of the outgoing prune inspection and quality requirements in the order and its administrative rules and regulations, and the prune import regulation for a three-year period, and modification of the undersized prune disposition requirements. These changes became effective with the start of the new crop year on August 1, 2003. The order regulates the handling of dried prunes produced in California and is administered locally by the Prune Marketing Committee (Committee). The Committee unanimously recommended suspension of the outgoing inspection, and outgoing prune quality requirements at meetings held on April 3, and May 1, 2003, because it is the quickest way to ensure relief from these regulations. During the three-year suspension period, the industry will have the opportunity to develop and implement outgoing inspection and finished product grade standards that are more in line with current industry needs. As discussed below, suspension of the prune import regulation is required under section 8e of the Act.
Section 993.50(g) states in part: “rules and regulations to insure proper disposition of the [undersized] prunes shall be established by the Committee with the approval of the Secretary.”
Section 993.90(a) states in part: “The Secretary shall terminate or suspend the operation of any or all of the provisions of this subpart, whenever he finds that such provisions do not tend to effectuate the declared policy of the act.”
The order previously mandated outgoing inspections and outgoing prune quality, size, and labeling requirements of California produced prunes by California prune handlers to verify that such prunes meet quality requirements. These requirements were based on the U.S. Standards for Grades of Dried Prunes and marketing order grade standards. The objective of the inspection, grade, size, and labeling requirements was to ensure that only prunes of acceptable quality and size entered the domestic and foreign markets for human consumption, thereby ensuring consumer satisfaction, increasing sales, and improving returns to producers. While the industry continues to believe that quality is an important factor in maintaining sales, the Committee believes that the costs associated with existing minimum grade, size, and labeling standards may exceed the benefits accrued from such requirements at this time.
Section 8e of the Agriculture Marketing Agreement Act of 1937 (Act) provides that when certain domestically produced commodities, including prunes, are regulated under a Federal marketing order, imports of that commodity must meet the same or comparable grade, size, quality, and maturity requirements. Section 999.200 contained the prune import regulations that were comparable to the domestically produced prune outgoing quality and size requirements. Since this rule continues to suspend the outgoing quality and size requirements for domestically produced prunes for three years, these requirements in the import regulation must continue to be suspended during this period as well.
U.S. imports of dried prunes are insignificant compared to U.S. production. In 2002, while the U.S. produced 158,000 tons of dried prunes, only 616 tons were imported. In that year, the domestically produced tonnage was over 250 times as large as the imported tonnage. In 2001, 204 tons were imported, but the U.S. produced 150,000 tons. Production was 735 times as large as imports.
In recent years, about 90 percent of U.S. imports of dried prunes have come from Argentina. Other countries that export to the United States include Chile, France, Mexico, Iran, and Turkey.
The prune administrative rules and regulations previously required handlers to have a third party inspection of each lot of undersized prunes prior to shipment into nonhuman outlets or other disposition. Under § 993.51 of the Order, inspections are performed by the Dried Fruit Association of California. These requirements also required handlers to submit to the Committee comprehensive documentation verifying that they have satisfied their undersized prune obligation.
The prune administrative rules and regulations previously limited the quantities of larger size prunes that can be used to meet a handler's undersized disposition obligation. While the Committee plans to continue to restrict the shipment of undersized prunes into human consumption outlets, the Committee continues to believe that the costs associated with the inspection and documentation of the disposal of undersized prunes may exceed the benefits. To reduce the cost and time for handlers to file reports and verify the disposition of undersized prunes through inspection, the Committee unanimously recommended removing the inspection requirements, and simplifying the documentation required from handlers to satisfy their undersized obligation as well as removing the limits on the weights of larger prunes that can be used to meet undersized obligations.
California prune handlers are currently selling prunes in many forms to customers throughout the world. The
Previously used procedures required detailed administrative notating and reporting of defect information, large numbers of line inspectors at handler plants, and tracking and segregating lots and bins of fruit to comply with the order. As a result, handlers expended significant amounts of time and money on the inspection process. Also, almost all fruit is inspected by international buyers upon receipt, and is accepted or rejected based on the fruits' condition at the time of that review, regardless of any prior inspection process or certification. Further, prunes produced in other countries must meet customer specifications and inspection criteria.
Because of increased foreign competition that sells quality-processed fruit, shifting consumer demand from natural condition to processed prunes, and increasingly competitive specifications, the minimum marketing order standards no longer reflect current industry needs. The Committee continues to believe that California prune handlers must reduce all unnecessary costs in order to remain competitive with imported fruit and to profitably sell fruit in international markets.
The mandatory outgoing inspections focused on cosmetic defects or defects that tend to be removed through steaming, pitting, or juicing the fruit. While the industry once sold primarily unprocessed prunes, consumer demand has changed and some processing is invariably required, leaving the outgoing inspection criteria inapplicable and out-dated.
With regard to import requirements, section 8e of the Act requires import regulations to be comparable to the domestic regulations, not more restrictive. Since this rule continues to suspend outgoing grade and size regulations for domestically produced prunes, and substantially relaxes the disposition and verification requirements on undersized prunes under the order, the import regulation must continue to be suspended as well.
During the three-year suspension period, the industry will have the opportunity to develop and implement more appropriate finished product grade standards through amendments to the order and administrative rules and regulations. In the interim, the suspension of these provisions continues to ensure that these provisions are not implemented. In the absence of any additional action, the provisions will automatically come back into effect at the end of the suspension period.
At its May 1, 2003, meeting, the Committee unanimously recommended suspension of all outgoing inspection, outgoing quality, size, and labeling requirements in the marketing order and the administrative rules and regulations for three years, beginning with the start of the new crop year on August 1, 2003. The suspension of these provisions continues to reduce some administrative costs.
This rule continues to suspend in their entirety §§ 993.50(a) through (f) and 993.97 Exhibit A—Part II of the order, and §§ 993.150(a) and (b), 993.150(d) through (g)(1), 993.515, 993.516, 993.517, 993.518 of the administrative rules and regulations, as well as the import regulation specified in § 999.200. Portions of §§ 993.50(g) and 993.51 of the order, and portions of §§ 993.601 of the administrative rules and regulations continue to be suspended. These sections of the order and administrative rules and regulations pertain to the various requirements of the outgoing inspection, outgoing quality, size, and labeling requirements, and import regulation provisions.
Prune handlers opposed the previously stated undersized prune regulations because they were costly to use. Undersized prunes have marginal value as cattle feed or use in tobacco products (about $40-$45 per ton), and the costs of completing the required Committee paperwork and having them inspected by the DFA of California may exceed the revenue received. The industry is now also less concerned about the minimal amount of poor quality undersized prunes. Supplies of undersized prunes are now lower because of the recent tree pull programs and growers field sizing programs to drop small prune plums in the orchard, rather than deliver them to handlers.
The Committee chose to recommend removal of the limits on the quantities of larger-sized prunes that can be used to meet a handler's undersized weight disposition obligation, and the requirement for inspection of the undersized prunes and certification of handlers' receipt of usage, because these changes eliminate certain inspection costs and reduce Committee and handler administration costs.
At the April 3, 2003, meeting, the Committee unanimously recommended modification of the undersized prune disposition provisions in the marketing order and the administrative rules and regulations, which began with the start of the new crop year on August 1, 2003. The modification of these provisions continues to reduce some committee and handler administrative costs.
This rule continues to remove § 993.150(g)(2)(i), § 993.150(g)(2)(iii), and § 993.150(g)(2)(iv) in the administrative rules and regulations. Portions of § 993.150(g)(3) continue to be amended.
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 final 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.
Eight 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
In addition, there are an estimated 30 importers and one third-party entity that performed inspections under the order. USDA does not have precise information on these entities, but believes that the majority of the importers and the inspection agency are small entities.
This rule continues to suspend the outgoing prune inspection and outgoing prune quality requirements under the order and the administrative rules and regulations, and the prune import provisions for a three-year period, and continues to modify the undersized prune disposition requirements. These changes continue to be effective since the start of the new crop year on August 1, 2003, for three years. In the absence of additional rulemaking, the suspended requirements will come back into effect at the end of the three-year period.
The industry chose suspension of the outgoing inspection, outgoing prune quality and size and labeling requirements, because suspension is the quickest way to ensure relief from these regulations. During the three-year suspension period, the industry continues will have the opportunity to develop and implement more effective finished product grade standards through amendments to the order and administrative rules and regulations. It also has an opportunity to decide whether these requirements should be terminated.
Authority to suspend these provisions of the marketing order and administrative rules and regulations is provided in § 993.90(a) of the order. Authority to modify the disposition requirements and procedures for undersized prunes in the administrative rules and regulations is provided in §§ 993.50(g) and 993.52 of the order. Authority for the import regulation is in section 8e of the Act.
Regarding the impact of this rule on affected entities, this action continues the reduced reporting and recordkeeping burden on California prune handlers and continues the reduction in the Committee's and handlers' administrative costs. Also, this action continues to reduce the number of inspections performed by the inspection agency under the order. The Committee estimates that 21 California prune handlers are subject to these provisions and to filing the handler reports. Also under the prune import regulations, it is estimated that as many as 10 importers would file forms applicable to the import regulations. The handler annual burden to file these reports is 70.04 hours, and the respondent annual burden to file reports under the import regulations is 6.05 hours. Thus, there is a potential to reducing the annual handler and importer reporting burden by 76.09 hours during the suspension period. The benefits of this final rule apply to all prune handlers and importers, regardless of their size of operation.
The forms affected by this rule are as follows: (1) Form PMC 2.2, Application for Permission to Dispose of Substandard Prunes; (2) Form PMC 2.6, Statement of Proposed Disposition of Substandard Prunes; (3) Form PMC 4.72A, Foreign Export “ Notice of Substandard Prunes for Manufacturing Purposes; (4) Form PMC 4.72B, Foreign Export “ Notice of Usage of Substandard Prunes for Manufacturing Purposes; (5) Form PMC 2.21, Application for Permission to Dispose of Undersized Prunes for Non-Human Usage; (6) Form PMC 4.71A, User's Receipt of Dried Undersized Prunes for Non-Human Usage; (7) Form PMC 4.71B, User's Certificate of Non-Human Usage of Dried Undersized Prunes; (8) Form PMC 2.63, Statement of Proposed Disposition of Undersized Prunes; (9) Form FV-170, Prune Form No. 1; and (10) Form FV-171, Prune Form No. 2.
It should be noted that if the Committee determines that these suspensions are having an unfavorable impact on the industry, it could meet and recommend rescinding the suspensions. Also, as previously mentioned, the provisions automatically come back into effect at the end of the suspension period.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection requirements being suspended by this rule were previously approved by the Office of Management and Budget, under OMB No. 0581-0178. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.
In addition, as noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.
At meetings held on April 3, and May 1, 2003, the Committee and industry members discussed different alternatives to these actions. The Committee discussed the possibility of suspending the total Federal prune marketing order, but its benefit in other areas is recognized by the industry. Another alternative discussed was to suspend all mandatory inspections (both incoming and outgoing inspections), but many on the Committee and in the industry deemed this action too extreme. Another alternative discussed was to exempt handlers from the inspection requirements if they could demonstrate that the automation of their plant assured consistent delivery of higher quality prunes, but this would not be practicable. Another alternative considered was a two-year suspension of the undersized prune regulation. This was opposed because it would increase the domestic salable tonnage and would add to the industry's oversupply.
The Committee's April 3, and May 1, 2003, meetings where the outgoing inspection, outgoing prune quality, size, and labeling requirement issues were deliberated were public meetings and widely publicized throughout the prune industry. At the April 3, 2003, meeting, the Committee recommended removing the limits on the quantity of larger-sized prunes that could be used to meet handler undersized obligations and eliminating the DFA of California undersized prune inspection and certification of receipt and usage. This was to reduce costs, including inspection fees and other Committee costs associated with mandatory inspection, and the reporting burden resulting from the inspection requirements.
All interested persons were invited to attend the meetings and participate in the industry's deliberations. Finally, interested persons were invited to submit information on the regulatory and informational impacts of these changes on small businesses.
An interim final rule concerning this action was published in the
A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at:
The Office of the U.S. Trade Representative has reviewed this rule and concurs with its issuance.
After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that finalizing the interim final rule, without change, as published in the
Marketing agreements, Plums, Prunes, Reporting and recordkeeping requirements.
Dates, Filberts, Food grades and standards, Imports, Nuts, Prunes, Raisins, Reporting and recordkeeping requirements, Walnuts.
Accordingly, the interim final rule amending 7 CFR parts 993 and 999 which was published at 68 FR 43614 on July 24, 2003, is adopted as a final rule without change.
Federal Aviation Administration, DOT.
Final rule; correction.
This document corrects an error that appeared in airworthiness directive (AD) 2003-19-05 that was published in the
Effective October 27, 2003.
Ron Atmur, Aerospace Engineer, Airframe Branch, ANM-120L, FAA, Los Angeles Aircraft Certification Office, 3960 Paramount Boulevard, Lakewood, California 90712-4137; telephone (562) 627-5224; fax (562) 627-5210.
Airworthiness Directive (AD) 2003-19-05, amendment 39-13308, applicable to certain McDonnell Douglas Model DC-10-10, -10F, -15, -30, -30F (KC-10A and KDC-10), -40, and -40F airplanes; and certain Model MD-10-10F and -30F airplanes; was published in the
As published, the Type Certificate (TC) holder name appears as “BOEING” in the regulatory text of the AD. The correct TC holder name is McDonnell Douglas, which is correctly referenced throughout the preamble of the the AD.
Since no other part of the regulatory information has been changed, the final rule is not being republished in the
The effective date of this AD remains October 27, 2003.
On page 54993, in the second column, paragraph 2. of Part 39—Airworthiness Directives of AD 2003-19-05 is corrected to read as follows:
2. Section 39.13 is amended by adding the following new airworthiness directive:
Federal Aviation Administration, DOT.
Final rule; rescission.
This amendment rescinds Airworthiness Directive (AD) 98-16-17 R1, which is applicable to all Cessna Model 750 Citation X series airplanes. That AD requires repetitive in-flight functional tests to verify proper operation of the secondary horizontal stabilizer pitch trim system, and repair if necessary. The requirements of that AD were intended to detect and correct contamination and damage in the system actuator, which could result in simultaneous failure of both primary and secondary pitch trim systems, and consequent reduced controllability of the airplane. Since the issuance of that AD, an improved part has been developed, which, if installed, would terminate the repetitive tests; that improved part has been installed on all affected airplanes or is being installed in production. Therefore, the identified unsafe condition no longer exists.
October 23, 2003.
Joel M. Ligon, Aerospace Engineer, Systems and Propulsion Branch, ACE-116W, FAA, Small Airplane Directorate, Wichita Aircraft Certification Office, 1801 Airport Road, Room 100, Mid-Continent Airport, Wichita, Kansas 67209; telephone (316) 946-4138; fax (316) 946-4407.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to all Cessna Model 750 Citation X series airplanes was published in the
We provided the public the opportunity to participate in the development of this AD. We received no comments on the proposed rescission.
We have carefully reviewed the available data and determined that air safety and the public interest require rescinding the AD as proposed.
Since AD 98-16-17 was issued, an improved part has been developed. Installation of that part terminates the repetitive tests required by the existing AD. The FAA has been advised that the improved part has been installed on all affected airplanes or will be installed in production. The FAA has determined that the previous part number is no longer available or allowed to be installed. Therefore, the identified unsafe condition no longer exists, and we have determined that it is necessary to rescind AD 98-16-17 to prevent operators from performing unnecessary actions.
Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration amends part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows:
49 U.S.C. 106(g), 40113, 44701.
This rescission is effective October 23, 2003.
Internal Revenue Service (IRS), Treasury.
Correction to final regulations.
This document contains a correction to final regulations that were published in the
This correction is effective July 17, 2003.
Deane M. Burke (202) 622-3070 (not a toll free number).
The final regulations that are the subject of this correction are under section 1361 of the Internal Revenue Code.
As published, the final regulations (TD 9078), contain an error that may prove to be misleading and is in need of clarification.
Office of Foreign Assets Control, Treasury.
Policy statement.
The Treasury Department's Office of Foreign Assets Control (“OFAC”) has excluded certain transactions from the scope of the general license found in 31 CFR 575.533(a). This exclusion prohibits any attachment, judgment, decree, lien, execution, garnishment, or other judicial process with respect to certain property consisting of historic and modern books, documents, parchment scrolls, and other items pertaining to the Iraqi Jewish community that have been brought to the United States for restoration and temporary exhibition.
Effective August 28, 2003.
Office of Foreign Assets Control, Department of the Treasury, Washington, DC 20220, tel.: 202/622-2500.
On August 2, 1990, the President issued Executive Order 12722, declaring a national emergency with respect to Iraq. This order was issued under the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701
On May 22, 2003, the United Nations Security Council adopted Resolution 1483, which substantially lifted the multilateral economic sanctions with respect to Iraq. On May 23, 2003, OFAC issued a general license that reflected Resolution 1483 by authorizing most transactions that had been prohibited by the Regulations. This general license was published in the
Section 575.502 of the Regulations provides that the Director of OFAC reserves the right to exclude any person, property, or transaction from the operation of any license, or from the privileges therein conferred, or to restrict the applicability thereof with respect to particular persons, property, transactions, or classes thereof. On August 28, 2003, the Director of OFAC exercised this right to exclude certain transactions from the scope of the general license contained in § 575.533 of the Regulations. The text of the exclusion is reproduced below.
Under the authority of section 575.502 of the Iraqi Sanctions Regulations, 31 CFR part 575 (the “Regulations”), except to the extent provided in section 203(b)(3) of IEEPA (50 U.S.C. 1702(b)(3)), any attachment, judgment, decree, lien, execution, garnishment, or other judicial process with respect to the following property is hereby prohibited and excluded from the transactions authorized in paragraph (a) of § 575.533 of the Regulations:
Historic and modern books, documents, parchment scrolls, and other items discovered in early May 2003 in the basement of the Mukhabahrat in Baghdad, most of which pertain to the Jewish community, which will be imported into the United States for temporary exhibition, including restoration necessary thereto, by the National Archives and Records Administration (NARA).
Farm Credit Administration.
Proposed rule; reopening of comment period.
The Farm Credit Administration (FCA, agency, or we) is reopening the comment period on the proposed rule to amend the agency's regulations governing other financing institutions (OFIs) and investments in Farmers' notes so all interested parties will have more time to respond.
Please send your comments to the FCA by December 22, 2003.
We encourage you to send comments by electronic mail to “
Dennis K. Carpenter, Senior Policy Analyst, Office of Policy and Analysis, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4498, TTY (703) 883-4434 or Richard A. Katz, Senior Attorney, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-2020.
On August 11, 2003, we published a proposed rule in the
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for Rolls-Royce plc (RR) models RB211 Trent 875-17, Trent 877-17, Trent 884-17, Trent 892-17, Trent 892B-17, and Trent 895-17 turbofan engines, with low pressure (LP) compressor fan blades part number (P/N) FW18548 installed. This proposed AD would require LP compressor fan blade replacement with new or previously reworked blades, or rework of the existing LP compressor fan blades. This proposed AD is prompted by a number of new production LP compressor fan blades found with surfaces formed outside of design intent. Findings included sharp edges, burrs, and damage present in the area at the top of the shear key slots. We are proposing this AD to prevent possible multiple uncontained LP compressor fan blade failure, due to cracking in the blade root caused by increased stresses in the shear key slots.
We must receive any comments on this proposed AD by December 22, 2003.
Use one of the following addresses to submit comments on this proposed AD:
• By mail: Federal Aviation Administration (FAA), New England Region, Office of the Regional Counsel, Attention: Rules Docket No. 2003-NE-38-AD, 12 New England Executive Park, Burlington, MA 01803-5299.
• By fax: (781) 238-7055.
• By e-mail:
You can get the service information identified in this proposed AD from Rolls-Royce plc, PO Box 31, Derby, England, DE248BJ; telephone: 011-44-1332-242424; fax: 011-44-1332-245418.
You may examine the AD docket, by appointment, at the FAA, New England Region, Office of the Regional Counsel, 12 New England Executive Park, Burlington, MA.
James Lawrence, Aerospace Engineer, Engine Certification Office, FAA, Engine And Propeller Directorate, 12 New England Executive Park; Burlington, MA 01803-5299; telephone (781) 238-7176; fax (781) 238-7199.
We invite you to submit any written relevant data, views, or arguments regarding this proposal. Send your comments to an address listed under
We are reviewing the writing style we currently use in regulatory documents.
You may examine the AD Docket (including any comments and service information), by appointment, between 8 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays.
The Civil Aviation Authority (CAA), which is the airworthiness authority for the United Kingdom (U.K.), recently notified the FAA that an unsafe condition may exist on Rolls-Royce plc RB211 Trent 800 series turbofan engines. The CAA advises that the results of a recent examination of a number of new production LP compressor fan blades, found surfaces in the area of the shear key slot and the junction of the blade root profile, to be formed outside of design intent. Findings included sharp edges, burrs, and damage present in the area at the top of the shear key slots. This can lead to cracking in the blade root, causing multiple uncontained LP compressor fan blade failure.
We have reviewed and approved the technical contents of service bulletin No. RB.211-72-E044, Revision 1, dated May 2, 2003, that describes procedures for reworking LP compressor fan blades, P/N FW18548.
These Rolls-Royce plc (RR) models RB211 Trent 875-17, Trent 877-17, Trent 884-17, Trent 892-17, Trent 892B-17, and Trent 895-17 turbofan engines, manufactured in the U.K., are type-certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the CAA has kept us informed of the situation described above. We have examined the CAA's findings, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States. Therefore, we are proposing this AD, which would require, at or before the accumulation of certain cycles-since-new based on engine application, replacement of LP compressor fan blades, P/N FW18548, with new or previously reworked LP compressor fan blades, or rework of the existing blades.
On July 10, 2002, we published a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs the FAA's AD system. This regulation now includes material that relates to altered products, special flight permits, and alternative methods of compliance. 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.
There are about 350 RR models RB211 Trent 875-17, Trent 877-17, Trent 884-17, Trent 892-17, Trent 892B-17, and Trent 895-17 turbofan engines of the affected design in the worldwide fleet. We estimate that 106 engines installed on airplanes of U.S. registry would be affected by this proposed AD. We also estimate that it would take about 100 work hours per engine to perform blade rework, and that the average labor rate is $65 per work hour. Based on these figures, we estimate the total cost of the proposed AD to U.S. operators to be $689,000.
We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would 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.
For the reasons discussed above, I certify that the proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and
3. Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
We prepared a summary of the costs to comply with this proposal and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under
Air transportation, Aircraft, Aviation safety, Safety.
Accordingly, under the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend 14 CFR part 39 as follows:
1. The authority citation for part 39 continues to read as follows:
49 U.S.C. 106(g), 40113, 44701.
2. The FAA amends § 39.13 by adding the following new airworthiness directive:
(a) The FAA must receive comments on this airworthiness directive (AD) action by December 22, 2003.
(b) None.
(c) This AD applies to Rolls-Royce plc (RR) models RB211 Trent 875-17, Trent 877-17, Trent 884-17, Trent 892-17, Trent 892B-17, and Trent 895-17 turbofan engines, with low pressure (LP) compressor fan blades, part number (P/N) FW18548 installed. These engines are installed on, but not limited to, Boeing 777 series airplanes.
(d) This AD was prompted by a number of new production LP compressor blades found with surfaces formed outside of design intent. Findings included sharp edges, burrs, and damage present in the area at the top of the shear key slots. We are issuing this AD to prevent possible multiple uncontained LP compressor fan blade failure, due to cracking in the blade root caused by increased stresses in the shear key slots.
(e) You are responsible for having the actions required by this AD performed within the compliance times specified unless the actions have already been done.
(f) Replace LP compressor fan blades with new or previously reworked LP compressor blades at or before accumulating the specified cycles in the following Table 1, or rework the existing blades as specified in paragraph (g) of this AD.
(g) Rework LP compressor fan blades at or before accumulating the specified cycles in the following Table 1. Follow paragraphs 3.A. through 3.B.(22) of Accomplishment Instructions of RR service bulletin (SB) No.
(h) The Manager, Engine Certification Office, has the authority to approve alternative methods of compliance for this AD if requested using the procedures found in 14 CFR 39.19.
(i) You must use RR SB No. RB.211-72-E044, Revision 1, dated May 2, 2003, to perform the blade rework required by this AD.
(j) CAA airworthiness directive 001-05-2003, dated June 20, 2003, also addresses the subject of this AD, and RR SB No. RB.211-72-E055, Revision 1, dated June 20, 2003, pertains to the subject of this AD.
Consumer Product Safety Commission.
Advance notice of proposed rulemaking.
The Consumer Product Safety Commission (CPSC or Commission) has found, based on available information, that a new flammability standard or other regulation may be needed for upholstered furniture products and for fabrics and related materials used in, or intended for use in, upholstered furniture, to protect the public against unreasonable risk of fire leading to death, personal injury, or significant property damage. The risk of fire addressed in today's advance notice of proposed rulemaking (ANPR) is from ignition of upholstered furniture by small open flames and/or smoldering cigarettes. This proceeding is being conducted under authority of the Flammable Fabrics Act (FFA).
In 1994, the Commission commenced a regulatory proceeding under the FFA addressing the risk of fire from ignition of upholstered furniture by small open flame sources such as matches, cigarette lighters, and candles. 59 FR 30735 (1994). This ANPR reflects the Commission's decision to expand that proceeding to explicitly address cigarette ignitions as well.
The Commission solicits written comments from interested persons concerning the risk of injury and death associated with ignition of upholstered furniture by smoldering cigarettes and/or small open flames, data on cigarette or small open flame ignition testing of upholstered furniture, the regulatory alternatives discussed in this notice, other possible means to address this risk, and the economic impacts of the various alternatives. The Commission also invites interested persons to submit an existing standard, or a statement of intent to modify or develop a voluntary standard, to address the risk of death or injury due to ignition of upholstered furniture by small open flames and/or smoldering cigarettes.
Written comments and submissions in response to this notice must be received by December 22, 2003.
Comments and other submissions should be captioned “Upholstered Furniture Flammability Proceeding” and mailed to the Office of the Secretary, Consumer Product Safety Commission, Washington, DC 20207, or delivered to that office, room 502, 4330 East-West Highway, Bethesda, Maryland 20814. Comments and other submissions may also be filed by facsimile to (301) 504-0127 or by e-mail to
Dale R. Ray, Project Manager, Directorate for Economic Analysis, U.S. Consumer Product Safety Commission, Washington, DC 20207; telephone (301) 504-7704; fax (301) 504-0109; e-mail
Products within the scope of this ANPR include: (1) upholstered furniture used in homes, offices, and other places of assembly and public accommodation that consist in whole or in part of resilient materials (such as polyurethane foam, cotton batting, or related materials) enclosed within a covering consisting of fabric or related materials, and (2) fabric or related materials used or intended for use in the production of upholstered furniture. This scope is the same as that of the Commission proceeding commenced in 1994 under the FFA concerning small open flame ignition of upholstered furniture. 59 FR 30735 (1994).
The Commission staff estimates that there were over 1,500 U.S. manufacturers of upholstered furniture, accounting for an estimated $8.4 billion in shipments in 1997, the most recent year for which Census of Manufacturers data are available.
The average life of most upholstered furniture is about 15-17 years. The CPSC staff estimates that over 400 million pieces of upholstered furniture are in use in the U.S.
There are between 100 and 200 manufacturers of fabric for household upholstered furniture. This number includes textile mills that produce finished upholstery fabric, and textile finishers that purchase unfinished goods and perform additional operations, such as printing and dyeing. The top 16 firms account for about 80 percent of the upholstery fabric market.
U.S. upholstery fabric production in 1997 was 665.5 million square yards, about 345-360 million square yards of which went into production of residential upholstered furniture. Approximately two percent of total consumption of upholstery fabric for residential furniture production was imported. About 53 percent of upholstered furniture cover materials were predominantly synthetic, mostly thermoplastic fabrics such as polyester, polyolefin and nylon. About 27 percent were predominantly cellulosic fabrics like cotton and rayon. About 20 percent were leather.
Cigarette ignitions of upholstered furniture have long been a leading cause of residential fire deaths, injuries and property damage. The Commission has extensively investigated this risk since the 1970s, when the CPSC staff prepared a draft proposed cigarette ignition standard. In 1977, a furniture industry group, the Upholstered Furniture Action Council (UFAC), established a voluntary industry program as an alternative to CPSC rulemaking. The UFAC voluntary guidelines were amended in 1983, and are widely followed among manufacturers today.
Based on a 1996 CPSC survey, more than 85 percent of currently manufactured upholstered furniture (including products from non-UFAC member firms) met the UFAC guidelines. Further, based on sales-weighted estimates of CPSC laboratory test results, more than 80 percent of currently produced furniture was estimated to resist cigarette ignition. This estimate, which reflects a gradual increase in the use of inherently cigarette-resistant upholstery fabrics and filling materials, represents about a 70 percent improvement in cigarette ignition resistance since 1980.
Upholstered furniture products meeting the existing State of California regulation, Technical Bulletin (TB) 117, offer a level of cigarette ignition resistance comparable to that of products conforming to the UFAC guidelines. In 1998, the California Bureau of Home Furnishings and Thermal Insulation initiated a project to upgrade the small open flame resistance provisions of TB-117. The cigarette resistance provisions of TB-117 are not being revised.
Both the American Furniture Manufacturers Association (AFMA) and a group of six upholstery fabric manufacturers known as the Fabric Coalition have expressed support for a mandatory national standard addressing cigarette and small open flame ignitions of upholstered furniture.
Beginning in 1994, CPSC staff developed a draft small open flame standard for residential upholstered furniture that would prevent or limit fire growth following exposure to a small open flame such as that from a match or cigarette lighter. The staff's draft standard contains flammability performance tests for seating areas and dust covers, as well as requirements for production testing and recordkeeping. The most recent draft appears in the CPSC staff's October 2001 briefing package.
Manufacturers have identified flame retardant (FR) upholstery fabrics as a likely means of limiting fire growth to meet the draft small open flame standard. FR fabrics are not needed to meet the existing California TB-117 regulation or the UFAC voluntary guidelines. CPSC laboratory testing suggested, however, that FR upholstery fabrics would reduce the risk of upholstered furniture fires ignited by smoldering cigarettes as well as by small open flame sources. CPSC staff estimates that about 80 percent of the projected benefits of a possible small open flame standard would accrue from reductions in cigarette fire losses.
This proceeding is conducted under authority of the Flammable Fabrics Act. 15 U.S.C. 1191-1204. An item of upholstered furniture is an “interior furnishing” “product” as those terms are defined in sections 2(e) and (h) of the FFA. 15 U.S.C. 1191(e) and (h). The Commission has authority under section 4(a) of the FFA to institute a proceeding to issue a flammability standard or other regulation, including labeling, for an interior furnishing product if it determines that such a standard “may be needed to adequately protect the public against unreasonable risk of the occurrence of fire leading to death or personal injury, or significant property damage.” 15 U.S.C. 1193(a).
A proceeding to promulgate a regulation establishing a flammability standard begins by publication of an ANPR. FFA section 4(g), 15 U.S.C. 1193(g). If the Commission elects to continue the rulemaking proceeding after considering responses to the ANPR, the Commission must publish a preliminary regulatory analysis along with the text of the proposed rule. FFA section 4(i), 15 U.S.C. 1193(i).
If the Commission then moves forward to issue a regulation, in addition to the text of the final rule, it must publish a final regulatory analysis that includes: (1) A description of the potential benefits and costs of the rule; (2) a summary of any alternatives that were considered, their costs and benefits, and the reasons for their rejection; and (3) a summary and assessment of any significant issues raised on the preliminary regulatory analysis that accompanied the proposed rule. FFA section 4(j)(1), 15 U.S.C. 1193(j)(1). In addition, the Commission must make findings concerning the inadequacy of any pertinent voluntary standard, that the benefits of the rule bear a reasonable relationship to its costs, and that the rule is the least burdensome requirement that prevents or adequately reduces the risk of injury. FFA section 4(j)(2), 15 U.S.C. 1193(j)(2).
Fires involving ignitions of upholstered furniture constitute a leading cause of residential fire losses. Furniture fires killed more people in 1998 (the latest year for which data are
Although
The UFAC voluntary program contains six cigarette ignition performance tests for different upholstered furniture components (cover and interior fabrics, “barriers”
The UFAC fabric classification test (now embodied in ASTM voluntary test method E-1390) denotes upholstery cover fabrics as either Class I or Class II. Class I fabrics are less ignition-prone. Class II fabrics are more ignition-prone. To conform to the UFAC guidelines, Class II fabrics may only be used in constructions with smolder-resistant batting (or other materials that conform to the UFAC “barrier” test) between the fabric and interior materials of the furniture. However, CPSC laboratory testing of full scale chairs demonstrated that UFAC-conforming products made with smolder-prone fabrics can ignite and burn even when polyester batting or other ignition-resistant fillings are present. Thus, CPSC staff believes that UFAC component conformance does not guarantee cigarette resistance of the finished article.
California Technical Bulletin 117, which is mandatory for all upholstered furniture sold in the state, contains component performance tests for cigarette ignition resistance of fibrous/loose fill and cellular foam filling materials. Upholstered furniture sold in California must also be labeled as complying with the TB-117 performance requirements.
Like the UFAC voluntary program, TB-117 is comprised of component tests. Another California standard, TB-116, is available to manufacturers on a voluntary basis. TB-116 incorporates a full-scale (or small-scale composite) cigarette test. Manufacturers whose products meet this standard may use labels stating that the products provide a higher level of fire protection.
TB-116 and 117 are not national standards. However, some manufacturers, importers and retailers offer TB-117-compliant products for nationwide distribution.
Regulations implementing New York State legislation requiring “fire-safe,”
Based on information currently available to it from investigations, research, and other sources, the Commission finds that a new flammability standard, or other regulation, may be needed for upholstered furniture products made from fabrics and related materials, and for fabrics and related materials used in, or intended for use in upholstered furniture, to protect the public against the unreasonable risk of the occurrence of fire leading to death, personal injury or significant property damage. FFA section 4(a), 15 U.S.C. 1193(a). The risk of the occurrence of fire addressed in this ANPR is that from ignition of upholstered furniture by small open flames and/or smoldering cigarettes. Commencing this proceeding expands the Commission's prior FFA proceeding addressing small open flame ignition sources such as matches, cigarette lighters, and candles to also include ignition by smoldering cigarettes.
If the Commission finds that one is needed to adequately protect the public against an unreasonable risk of the occurrence of fire leading to death, injury, or significant property damage, it may promulgate a flammability standard for upholstered furniture. Any such standard must be stated in objective terms and be reasonable, technologically practicable, and appropriate. FFA section 4(b), 15 U.S.C. 1193(b). It also must be limited to those fabrics, related materials, or products that have been determined to present the unreasonable risk of fire at issue in the proceeding. Id.
Either separately or as part of a flammability standard, the Commission may consider issuing a labeling regulation as part of this proceeding. FFA section 4(a), 15 U.S.C. 1193(a).
If the Commission determines that any voluntary or other standard or portion thereof submitted in response to this ANPR would eliminate or adequately reduce the risk of injury in question it may issue that standard, or a portion of it, as a proposed regulation. FFA section 4(h)(1); 15 U.S.C. 1193(h). In general, the Commission may not promulgate a regulation if there is an existing voluntary standard addressing the same risk that would likely result in the elimination or adequate reduction of that risk and with which there would likely be substantial compliance. FFA sections 4(h)(2) and (j)(2); 15 U.S.C. sections 1193(h)(2) and (j)(2).
This ANPR is the first step in a proceeding which could result in a mandatory flammability standard and/or labeling regulation, or a voluntary standard for upholstered furniture that presents an unreasonable risk of the occurrence of fire due to cigarette or small open flame ignition leading to death or personal injury or significant property damage. The Commission invites interested persons to submit their comments on any aspect of the alternatives discussed above. Specifically, in accordance with section 4(g) of the FFA, the Commission solicits:
1. Written comments with respect to: (a) The risk identified by the Commission; (b) the need for flammability performance requirements to address cigarette and/or small open flame ignition of upholstered furniture; (c) the need for a uniform national upholstered furniture flammability standard; (d) the relationship between cigarette and small open flame ignition performance; (e) the regulatory alternatives being considered and the potential effectiveness and economic impacts of these alternatives; and (f) other possible alternatives for addressing the risk and the effectiveness and economic impacts of these alternatives.
2. Any existing standard or portion of a standard which could be issued as a proposed regulation.
3. A statement of intention to modify or develop a voluntary standard to address the risk of injury discussed in this notice, together with a description of a plan to do so.
In addition, the Commission would like to receive data on cigarette and small open flame ignition tests of upholstered furniture.
Comments and other submissions should be captioned “Upholstered Furniture Flammability Proceeding” and mailed to the Office of the Secretary, Consumer Product Safety Commission, Washington, DC 20207, or delivered to that office, room 502, 4330 East-West Highway, Bethesda, Maryland 20814. Comments and other submissions may also be filed by facsimile to (301) 504-0127 or by e-mail to
Advisory Council on Historic Preservation.
Proposed rule; extension of comment period.
The Advisory Council on Historic Preservation is extending by 30 days the public comment period for the proposed amendments to the regulations implementing Section 106 of the National Historic Preservation Act. Such proposed amendments were published in the
Comments must be received on or before November 26, 2003.
Address all comments concerning this proposed rule to the Executive Director, Advisory Council on Historic Preservation, 1100 Pennsylvania Avenue, NW., Suite 809, Washington, DC 20004. Fax (202) 606-8672. You may submit electronic comments to:
Javier Marqués, Advisory Council on Historic Preservation, 1100 Pennsylvania Avenue, NW., Suite 809, Washington, DC 20004; (202) 606-8503.
In response to requests filed with the Advisory Council on Historic Preservation (ACHP), the comment period for the proposed amendments to the regulations implementing Section 106 of the National Historic Preservation Act now ends on November 26, 2003. This is an extension of 30 days beyond the comment period established in the
The Section 106 regulations set forth how Federal agencies take into account the effects of their undertakings on historic properties and afford the ACHP a reasonable opportunity to comment, pursuant to Section 106 of the National Historic Preservation Act. Most of the proposed amendments to those regulations respond to recent court decisions which held that (1) the ACHP could not force a Federal agency to change its determinations regarding whether its undertakings affected or adversely affected historic properties, and (2) that Section 106 does not apply to undertakings that are merely subject to State or local regulation administered pursuant to a delegation or approval by a Federal agency. Another proposed amendment clarifies the time period for objections to “No Adverse Effect” findings. The last proposed amendments clarify that the ACHP can propose an exemption to the Section 106 process on its own initiative, rather than needing a Federal agency to make such a proposal. See the proposal as published in the
Agricultural Marketing Service, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), this notice announces the Agricultural Marketing Service's (AMS) intention to request an extension and revision of a currently approved information collection for the Farmers Market Questionnaire.
Comments on this notice must be received by December 22, 2003 to be assured of consideration.
Contact or send comments to Ed Ragland, Marketing Service Branch, Transportation and Marketing, Agricultural Marketing Service, U.S. Department of Agriculture, 1400 Independence Ave., SW., Room 2646, South Building, Washington DC 20250-0269; (202) 720-8317 and Fax (202) 690-0031.
Comments are invited on: (1) 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) the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent to Ed Ragland, Marketing Services Branch, Transportation and Marketing, Agricultural Marketing Service, U.S. Department of Agriculture, 1400 Independence Ave., SW., Room 2646, South Building, Washington DC 20250-0269. All comments received will be available for public inspection during regular business hours at the same address.
All responses to this notice will be summarized and included in the request for OMB approval. All comments will become a matter of public record.
AMS is committed to implementation of the Government Paperwork Elimination Act, which provides for the use of information resources to improve the efficiency and effectiveness of government operations, including providing the public with the option of submitting information or transacting business electronically to the extent possible.
Office of the Under Secretary, Research, Education, and Economics, USDA.
Advisory Committee on Biotechnology and 21st Century Agriculture; Nominations.
The Agricultural Research Service is requesting nominations for qualified persons to serve as members of the Secretary's Advisory Committee on Biotechnology and 21st Century Agriculture (AC21). The charge for the AC21 is two-fold: to examine the long-term impacts of biotechnology on the U.S. food and agriculture system and USDA; and to provide guidance to USDA on pressing individual issues, identified by the Office of the Secretary, related to the application of biotechnology in agriculture.
Written nominations must be received by fax or postmarked on or before November 24, 2003.
All nomination materials should be sent to Michael Schechtman, Designated Federal Official, Office of the Deputy Secretary, USDA, 202B Jamie L. Whitten Federal Building, 14th and Independence Avenue, SW.,
Questions should be addressed to Michael Schechtman, Designated Federal Official, telephone (202) 720-3817; fax (202) 690-4265; e-mail
AC21 members serve staggered 2-year terms, with terms for half of the Committee members expiring in any given year. Nominations are being sought for open Committee seats. The terms of 9 members of the AC21 will expire in early 2004. The AC21 Charter allows for flexibility to appoint up to a total of 11 members. Members can be reappointed to serve up to 6 consecutive years. Equal opportunity practices, in line with USDA policies, will be followed in all membership appointments to the Committee. To ensure that the recommendations of the Committee have taken into account the needs of the diverse groups served by USDA, membership shall include, to the extent practicable, individuals with demonstrated ability to represent minorities, women, and persons with disabilities.
Nominees of the AC21 should have recognized expertise in one or more of the following areas: recombinant-DNA (rDNA) research and applications using plants; rDNA research and applications using animals; rDNA research and applications using microbes; food science; silviculture and related forest science; fisheries science; ecology; veterinary medicine; the broad range of farming or agricultural practices; weed science; plant pathology; biodiversity; applicable laws and regulations relevant to agricultural biotechnology policy; risk assessment; consumer advocacy and public attitudes; public health/epidemiology; ethics, including bioethics; human medicine; biotechnology industry activities and structure; intellectual property rights systems; and international trade. Members will be selected by the Secretary of Agriculture in order to achieve a balanced representation of viewpoints to address effectively USDA biotechnology policy issues under consideration.
Nominations for AC21 membership must be in writing and provide the appropriate background documents required by USDA policy, including background disclosure form AD-755.
The AC21 meets in Washington, DC, up to four (4) times per year. The function of the AC21 is solely advisory. Members of the AC21 and its subcommittees serve without pay, but with reimbursement of travel expenses and per diem for attendance at AC21 and subcommittee functions for those AC21 members who require assistance in order to attend the meetings. While away from home or their regular place of business, those members will be eligible for travel expenses paid by REE, USDA, including per diem in lieu of subsistence, at the same rate as a person employed intermittently in the government service is allowed under Section 5703 of Title 5, United States Code.
1. A brief summary of no more than two (2) pages explaining the nominee's suitability to serve on the AC21.
2. A resume or curriculum vitae.
3. A completed copy of form AD-755.
Nominations should be sent to Michael Schechtman at the address listed above, and be post marked no later than [the date set forth above].
Animal and Plant Health Inspection Service, USDA.
Extension of approval of an information collection; comment request.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the Animal and Plant Health Inspection Service's intention to request an extension of approval of an information collection in support of the Cooperative Agricultural Pest Survey.
We will consider all comments that we receive on or before December 22, 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. 03-089-1, 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. 03-089-1. 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
For information regarding the Cooperative Agricultural Pest Survey, contact Ms. Coanne O'Hern, National Survey Coordinator, Pest Detection and Management Programs, PPQ, APHIS, 4700 River Road, Unit 137, Riverdale, MD 20737-1236; (301) 734-4387. For copies of more detailed information on the information collection, contact Mrs. Celeste Sickles, APHIS’ Information Collection Coordinator, at (301) 734-7477.
To this end, the Animal and Plant Health Inspection Service, Plant Protection and Quarantine (PPQ) program, has joined forces with the States and other agencies to create a program called the Cooperative Agricultural Pest Survey (CAPS). The CAPS program collects and manages
This program allows the States and PPQ to conduct surveys to detect and measure the presence of exotic plant pests and weeds and to enter survey data into a national computer-based system known as the National Agricultural Plant Information System (NAPIS). This, in turn, allows APHIS to obtain a more comprehensive picture of pest conditions in the United States as well as detect, in collaboration with the National Plant Diagnostic Network and the U.S. Department of Agriculture's Cooperative State Research, Education, and Extension Service (CSREES), population trends that could indicate an agricultural bioterrorism act.
The information generated by this program is used by States to predict potential pest situations in the United States and by Federal interests (
The CAPS program entails the use of several information collection activities, including a cooperative agreement and a Specimens for Determination Form (PPQ Form 391).
We are asking the Office of Management and Budget (OMB) to approve our use of these information collection activities for an additional 3 years.
The purpose of this notice is to solicit comments from the public (as well as affected agencies) concerning our information collection. These comments will help us:
(1) Evaluate whether the 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 our estimate of the burden of the information collection, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the information collection on those who are to respond, through use, as appropriate, of automated, electronic, mechanical, and other collection technologies,
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Animal and Plant Health Inspection Service, USDA.
Extension of approval of an information collection; comment request.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the Animal and Plant Health Inspection Service's intention to request an extension of approval of an information collection in support of regulations for user fees for processing applications and permits to import certain animals and animal products.
We will consider all comments that we receive on or before December 22, 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. 03-094-1, 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. 03-094-1. 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
For information regarding user fee regulations for the importation of animals and animal products, contact Mrs. Kris Caraher, Section Head, User Fees Section, Financial Systems and Services Branch, Financial Management Division, MRPBS, APHIS, 4700 River Road, Unit 54, Riverdale, MD 20737-1232; (301) 734-5743. For copies of more detailed information on the information collection, contact Mrs. Celeste Sickles, APHIS’ Information Collection Coordinator, at (301) 734-7477.
The user fees vary depending on such factors as the type of application or the type of animal or product. In order to determine the appropriate fees, Veterinary Services may need to contact applicants for additional information.
We are asking the Office of Management and Budget (OMB) to approve our use of these information collection activities for an additional 3 years.
The purpose of this notice is to solicit comments from the public (as well as affected agencies) concerning our information collection. These comments will help us:
(1) Evaluate whether the 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 our estimate of the burden of the information collection, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the information collection on those who are to respond, through use, as appropriate, of automated, electronic, mechanical, and other collection technologies,
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Animal and Plant Health Inspection Service, USDA.
Notice.
We are advising the public that an environmental assessment and finding of no significant impact have been prepared by the Animal and Plant Health Inspection Service relative to the continued release of the nonindigenous leaf-mining flies
Copies of the environmental assessment and finding of no significant impact are available for public inspection 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.
Dr. Tracy A. Horner, Ecologist, Environmental Services, PPD, APHIS, 4700 River Road, Unit 149, Riverdale, MD 20737-1236; (301) 734-5213.
The Animal and Plant Health Inspection Service (APHIS) is considering an application by a researcher at the U.S. Army Engineer Research and Development Center in Vicksburg, MS, for a permit for the continued release of the nonindigenous leaf-mining flies
Hydrilla, which is native to the warmer areas of Asia, was first discovered in the United States in 1960. A submersed aquatic plant, it has the ability to multiply profusely, producing long, thick stands. It has become a major nuisance in many aquatic systems, displacing native aquatic plants such as pondweeds and eel grass, causing navigational interference, hindering waterflow, and detracting from recreational use of water bodies.
The biological control agents
On May 23, 2003, we published in the
We solicited comments on the EA for 30 days ending June 23, 2003. We did not receive any comments by that date.
In this document, we are advising the public of our finding of no significant impact (FONSI) regarding the continued release of the nonindigenous leaf-mining flies
The EA and FONSI may be viewed on the Internet at
Forest Service, USDA.
Notice of intent to prepare an environmental impact statement.
The USDA Forest Service will prepare an environmental impact statement (EIS) to document and disclose the potential environmental effects of proposed activities within the Gold Creek watershed on the Sandpoint Ranger District, Idaho Panhandle National Forests. The watershed is located about 25 miles south of Sandpoint, Idaho, near the town of Lakeview.
The proposal was designed using science from broad scale assessments including the Interior Columbia Basin Ecosystem Management Project. The proposal is intended to improve the health and productivity of aquatic and terrestrial habitats, and provide for human uses and values by: (1) Reducing road densities and sediment risks from roads and trails, (2) restoring desired forest cover, structure, pattern and species composition across the landscape where they are outside natural or accepted ranges, (3) maintaining or improving stands where desired species are being crowded out, or are declining from competition, (4) promoting the long-term persistence and stability of wildlife habitat diversity, (5) reducing the level of forest fuels and the risk of catastrophic wildfire, (6) providing motorized recreation opportunities while protecting resource values such as wildlife and water, and (7) producing timber as a byproduct of ecosystem restoration and maintenance.
Activities would include: (1) Selective cutting where opportunities exist to maintain or improve stands where desired species are being crowded out, or are declining from competition, (2) regenerating stands where widespread mortality is being caused by insects and disease and replanting them with longer lived seral species, (3) burning to reduce fuels, improve growing conditions, and improve forage for wildlife, (4) constructing several temporary spur roads to facilitate vegetation management activities, (5) decommissioning unneeded road segments, (6) placing a system road into storage, (7) converting two existing roads to motorized trails, and (8) improving Trail #113 in the Packsaddle Inventoried Roadless Area.
The Sandpoint Ranger District of the Idaho Panhandle National Forests in Bonner County, Idaho will administer these activities. The EIS will tier to the Idaho Panhandle National Forests Plan (September 1987).
Comments should be postmarked within 30 days after publication of this notice. Please include your name and address and the name of the project you are commenting on.
Submit written comments and suggestions on the proposed management activities or request to be placed on the project mailing list by writing to: Chloride Bush Project, Attn: A.J. Helgenberg, Sandpoint Ranger District, 1500 Hwy 2, Suite 110, Sandpoint, ID 83864.
A.J. Helgenberg, Project Team Leader, Sandpoint Ranger District at 208-265-6643 or by e-mail at
Comments received in response to this solicitation, including names and addresses of those who comment, will be considered part of the public record on this proposed action and will be available for public inspection. Comments submitted anonymously will be accepted and considered; however, those who submit anonymous comments will not have standing to appeal the subsequent decision under 36 CFR parts 215 or 217. Additionally, pursuant to 7 CFR 1.27(d), any person may request the agency to withhold a submission from the public record by showing how the Freedom of Information Act (FOIA) permits such confidentiality. For persons requesting such confidentiality; it may be granted in only very limited circumstances, such as to protect trade secrets. The Forest Service will inform the requester of the agency's decision regarding the request for confidentiality, and where the request is denied, the agency will return the submission and notify the requester that the comments may be resubmitted with or without name and address within 10 days.
More information about the Chloride Bush Project can be found on the Internet at
The Forest Service will be preparing an environmental impact statement for the following proposed activities and alternative courses of action based on public comments. To improve the health of aquatic habitats, 10.4 miles of existing classified roads would be decommissioned, 7.1 miles of overgrown, undrivable roads would be taken off transportation system maps, 5.0 miles of road would be placed into storage and 4.8 miles of road would be upgraded. To achieve vegetation management objectives, helicopter and road-based logging systems, prescribed burning and reforestation would be used. Additionally, several short logging spurs totaling 1.8 miles would be constructed to access stands for treatment using road-based logging systems. Of the 9,413 acres in the project area, 860 acres would be selectively cut, and 1,637 acres would be regenerated. Prescribed fire would be used on regenerated areas, selectively cut dry sites (423 acres), and to maintain old growth ponderosa pine stands and shrub fields (145 acres). Regenerated areas would be reforested with larch, white pine and ponderosa pine seedlings. Motorized recreation opportunities would be managed by converting 3.3 miles of road to motorized trail, and upgrading 5.0 miles of an existing motorized trail. Preliminary issues identified relate to the effects of roads and road construction on sediment, water yield, fish habitat, noxious weed spread, motorized access, and wildlife security, the effects of logging and creating openings on water yield, fish and wildlife habitat and wildlife security, and the effects of road decommissioning on private land access and ability to manage forest vegetation. Current alternatives consist of the proposed action and no action.
Two periods are specifically designated for comments on this analysis: (1) During the scoping period which is 30 days from the date of this notice in the
Comments from the public and other agencies will be used in preparation of the Draft EIS to identify potential issues and concerns, potential alternatives to the proposed action and to promote communications with members of the public or other agencies. The draft environmental impact statement (DEIS) will be filed with the Environmental Protection Agency (EPA) and made available for public review in spring of 2004. The final environmental impact statement is expected to be completed in fall of 2004. The comment period on the draft environmental impact statement will be 45 days from the date the Environmental Protection Agency publishes the notice of availability in the
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 environment review process. First, reviewers of draft environmental impact statements must structure their participation in the environmental review of the proposal so that it is meaningful and alerts and agency to the reviewer's position and contentions.
To assist the Forest Service in identifying and considering issues related to the proposed action, comments on the draft environmental impact statement 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 environmental impact statement or the merits of the alternatives formulated and discussed in the statement. Reviewers may wish to refer to the Council on Environmental Quality Regulations for implementing the procedural provisions of the National Environmental Policy Act at 40 CFR 1503.3 in addressing these points.
The United States Department of Agriculture (USDA) prohibits discrimination in its programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, and marital or familial status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means of communication of program information (braille, large print, audiotape,
The Idaho Panhandle National Forests Supervisor is the Deciding Officer on this project. The decision will be made after considering comments and responses, environmental consequences discussed in the Final EIS, and applicable laws, regulations and policies. The decision and supporting reasons will be documented in a Record of Decision upon release of the Final EIS.
Forest Service, USDA.
Notice of Intent to Prepare an Environmental Impact Statement in conjunction with planning the Vail Valley Forest Health Project.
The USDA Forest Service, White River National Forest, gives notice of the agency's intent to prepare an environmental impact statement (EIS) to disclose the environmental effects of commercial and non-commercial timber cutting and prescribed fire, in conjunction with designing the Vail Valley Forest Health Project for the Holy Cross Ranger District of the White River National Forest. These proposed actions are being considered together because they represent either connected or cumulative actions as defined by the Council on Environmental Quality (40 CFR 1508.25). This notice describes the project area, the purpose and need for the action, the proposed action, potential environmental issues, information concerning public participation, estimated dates for filing the environmental impact statement, and the names and addresses of the agency officials who can provide additional information.
The Vail Valley Forest Health Project area encompasses approximately 72,000 acres in the Vail Valley on the Holy Cross Ranger District of the White River National Forest, Eagle County, CO. It extends approximately 2.5 miles on either side of the I-70 corridor from Vail Pass on the east to the town of Avon on the west. The area is located in T6S, R79W, Sec 4-6, 8-10, 15, 16; T5S, R79W, Sec. 5-9, 16-18, 19-21, 28-30, 32-34; T4S, R79W, Sec 30-32; T5S, R80W, Sec 1-25; T4S, R80W, Sec 22, 27-34; T6S, R81W, Sec 3, 5, 6; T5S, R81W, Sec 1-36; T4S, R81W, Sec 25, 30-36; T6S, R82W, Sec 1, 2; T5S, R82W, Sec 1-3, 10-16, 21-27, 35, 36; and T4S, R82W, Sec 25, 26, 35, 36.
The mountain pine beetle population in the Vail Valley is currently at
There is a need to modify the mountain pine beetle activity in this important setting. Manipulating lodgepole pine stand conditions in critical areas by creating a mosaic of forested ages, a variety of tree densities and sizes and increasing the aspen component will work toward managing future mountain pine beetle risk and wildland fuel hazard. There is also a need to maintain acceptable fuel loads in the wildland/urban interface by removing dead, dying, and high-risk trees while they have some economic value to offset the treatment cost.
Much of the shrublands in the Vail Valley are outside their historic range of variability due to fire suppression. This has resulted in homogenous, over-mature shrublands that pose a risk of higher intensity fires due to the buildup of hazardous fuels.
Creating a mosaic of age and structural classes in the shrublands will reduce the intensity and severity of wildfires and their detrimental effects to these mountain communities, such as higher risk to firefighters, loss of homes, and landslides.
The Project proposes to use a variety of techniques to improve stand structure and species diversity and consequently the health of the forest, while protecting the heritage, recreation, visual, watershed and wildlife resources.
Through this proposed action, the White River National Forest intends to:
Manage the lodgepole pine stands in the Vail Valley south of I-70 for future mountain pine beetle (MPB) risk and wildland fuel hazard by increasing structural and species diversity using vegetation treatments. Approximately 1215 acres of vegetation management are proposed.
• 871 acres of lodgepole pine stands will be thinned to leave approximately 50-70% of the basal area. This will open up the stands to increased sun and wind to disrupt the MPB broods. In areas where the dbh is 10-11 inches or greater, small patch cuts will be made to remove the primary MPB host trees.
• 344 acres of aspen within the lodgepole pine stands will be enhanced in the wildland/urban interface for forested fuel breaks and for MPB flight interruption. For patches of aspen, the pine will be removed within the aspen and for 1-2 tree lengths around the patch. This area is within an inventoried roadless area as identified by the 2002 White River National Forest Land and Resource Management Plan.
Manage the shrublands and aspen stands north of I-70 to move them toward their historic range of variability. Mechanical vegetation treatments and prescribed fire will create a mosaic of age and structural classes in order to reduce the intensity and severity of wildfires in the wildland/urban interface. Approximately 1884 acres of vegetation management are proposed.
• 905 acres of shrublands will be broadcast burned. This will change the fuel types to reduce future potential wildfire intensity and aid firefighters in wildfire suppression.
• 521 acres in the Eagle's Nest Wilderness will be broadcast burned to maintain and improve aspen stands, reducing future potential wildfire intensity and rate of spread. This will create a forested fuel break between conifer stands and the town of Vail and will help facilitate wildland fire use should a wildfire start in the wilderness area.
• 231 acres within the wildland/urban interface and outside the Eagle's Nest Wilderness will be treated to maintain and improve aspen stands, reducing future potential wildfire intensity and rate of spread. Dead trees will be cut, piled and burned. The area will then be broadcast burned. This will create a forested fuel break between confier stands and the town of Vail and will help facilitate wildland fire use should a wildfire start in the wilderness area.
• 227 acres within the wildland/urban interface will be treated to maintain and improve aspen stands, reducing future potential wildfire intensity and rate of spread. All conifers will be cut and aspen will be patch-cut, piled and burned within 200′ of private land. This will create a forested fuel break between confier stands and the town of Vail.
All proposed treatments and activities would follow the standards and guidelines found in the Revised White River Land and Resource Management Plan—2002.
No road construction or commercial timber harvest is proposed in the inventoried roadless areas designated by the Revised Forest Plan.
Issues identified to date include: impacts of timber harvesting and prescribed burning on visual quality in a recreation setting; the impacts of timber harvesting and prescribed burning on water quality; the impacts of prescribed burning in a wilderness area; impacts of vegetation management in an inventoried roadless area; potential impacts to heritage resources; potential spread of noxious weeds; air quality impacts from burning; and effects on threatened, endangered, sensitive and management indicator species.
Possible alternatives to the proposed action may include no burning within the Eagle's Nest Wildness area, no vegetation management within the inventoried roadless area, or a combination of the activities described above.
Pursuant to Part 36 Code of Federal Regulations (CFR) 219.10(g), the Forest Supervisor for the White River National Forest gives notice of the agency's intent to prepare an environmental impact statement for the Vail Valley Forest Health Project described above. The Forest Service is seeking information, comments, and assistance from individuals, organizations and federal, state, and local agencies that may be interested in or affected by the proposed action (36 CFR 219.6).
Public participation will be solicited by notifying in person and/or by mail known interested and affected publics. A legal notice and news releases will be used to give the public general notice. Public participation activities will include requests for written comments and an open house to be held at a local venue. The public is invited to help identify issues and define the range of alternatives to be considered in the environmental impact statement.
A reasonable range of alternatives will be evaluated and reasons will be given for eliminating some alternatives from detailed study. A “non-action alternative” is required, meaning that
Comments concerning the proposed action should be received in writing by November 29, 2003.
Send written comments to: Vail Valley Forest Health Project, Holy Cross Ranger District, P.O. Box 190, Minturn, CO 81645.
Peech Keller at (970) 468-5400 or Bob Currie at (970) 827-5715.
The DEIS is expected to be filed with the Environmental Protection Agency (EPA) and to be available for public comment in June 2004. At that time, the EPA will publish a notice of availability for the DEIS in the
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 the DEIS must structure their participation in the environmental review of the proposal so that it is meaningful and alerts an agency to the reviewer's position and contentions;
To assist the Forest Service in identifying and considering issues and concerns on the proposed actions, comments on the DEIS should be as specific as possible. It is also helpful if comments refer to specific pages or chapters of the draft statement. Comments may also address the adequacy of the DEIS or the merits of the alternatives formulated and discussed in the statements. Reviewers may wish to refer to the Council on Environmental Quality Regulations for implementing the procedural provisions of the National Environmental Policy Act at 40 CFR 1503.3 in addressing these points.
After the comment period ends on the DEIS, comments will be analyzed, considered, and responded to by the Forest Service in preparing the Final EIS. The FEIS is scheduled to be completed in September 2004. The responsible official will consider the comments, responses, environmental consequences discussed in the FEIS, and applicable laws, regulations, and policies in making decisions regarding these revisions. The responsible official will document the decisions and reasons for the decisions in a Record of Decision for the revised Plan. The decision will be subject to appeal in accordance with 36 CFR 217.
Martha J. Ketelle, Forest Supervisor, White River National Forest. P.O. Box 948, Glenwood Springs, CO 81602-0948. “As the Responsible Official, I will decide which, if any, of the proposed projects will be implemented. I will document the decision and reasons for the decision in the Record of Decision. That decision will be subject to Forest Service appeal regulations.”
North Central Idaho Resource Advisory Committee, Kamiah, Idaho, USDA, Forest Service.
Notice of meeting.
Pursuant to the authorities in the Federal Advisory Committee Act (Pub. L. 92-463) and under the Secure Rural Schools and Community Self-Determination Act of 2000 (Pub. L. 106-393) the Nez Perce and Clearwater National Forests' North Central Idaho Resource Advisory Committee will meet Friday, November 14, 2003 in Orofino, Idaho for a business meeting. The meeting is open to the public.
The business meeting on November 14, begins at 10 a.m. (PST) at the Clearwater National Forest, Supervisor's Office, 12730 Highway 12, Orofino, Idaho. Agenda topics will include discussion of potential projects. A public forum will begin at 2:30 p.m. (PST).
Ihor Mereszczak, Staff Officer and Designated Federal Officer, at (208) 935-2513.
Import Administration, International Trade Administration, Department of Commerce.
Notice of extension of time limit for the preliminary results of antidumping duty administrative and new shipper reviews.
The Department of Commerce is extending the time limit for the preliminary results of the administrative and new shipper reviews of the antidumping duty order on fresh garlic from the People's Republic of China until December 1, 2003. This extension applies to the administrative review of four exporters, Jinan Yipin Corporation, Ltd., Shandong Heze International Trade and Developing Company, Top Pearl Ltd., and Wo Hing (H.K.) Trading Co., and the new shipper reviews of two exporters, Jining Trans-High Trading Company and Zhengzhou Harmoni Spice Co., Ltd. The period of review is November 1, 2001, through October 31, 2002.
October 23, 2003.
Jennifer Moats or Minoo Hatten, AD/CVD Enforcement 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230;
On December 26, 2002, the Department of Commerce (the Department) published the
Section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act), provides that the Department will issue the preliminary results of an administrative review of an antidumping duty order within 245 days after the last day of the anniversary month of the date of publication of the order. The Act provides further that the Department may extend that 245-day period to 365 days if it determines it is not practicable to complete the review within the foregoing time period. Section 751(a)(2)(B)(iv) of the Act also provides that we may extend the deadlines in a new shipper review period if we determine that the case is extraordinarily complicated.
The Department has determined that the aligned administrative review and new shipper reviews of Jinan Yipin Corporation Ltd., Shandong Heze International Trade and Developing Company, Jining Trans-High Trading Company, and Zhengzhou Harmoni Spice Co., Ltd., are extraordinarily complicated and that it is not practicable to complete the preliminary results by the partially extended deadline of October 31, 2003. There are a number of complex factual and legal questions related to the calculation of the antidumping margins in the administrative review and new shipper reviews, in particular the analysis of the
Therefore, in accordance with sections 751(a)(2)(B)(iv) and 751(a)(3)(A) of the Act, the Department is extending the time limit for the preliminary results by an additional 30 days, until no later than December 1, 2003.
Import Administration, International Trade Administration, Department of Commerce.
Notice of antidumping duty order.
October 23, 2003.
Julie Santoboni or Cole Kyle, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-4194 or (202) 482-1503, respectively.
For purposes of this order, the products covered are all varieties of hard red spring (“HRS”) wheat from Canada. This includes, but is not limited to, varieties commonly referred to as Canada Western Red Spring, Canada Western Extra Strong, and Canada Prairie Spring Red. The merchandise subject to this investigation is currently classifiable under the following Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings: 1001.90.10.00, 1001.90.20.05, 1001.90.20.11, 1001.90.20.12, 1001.90.20.13, 1001.90.20.14, 1001.90.20.16, 1001.90.20.19, 1001.90.20.21, 1001.90.20.22, 1001.90.20.23, 1001.90.20.24, 1001.90.20.26, 1001.90.20.29, 1001.90.20.35, and 1001.90.20.96. This investigation does not cover imports of wheat that enter under the subheadings 1001.90.10.00 and 1001.90.20.96 that are not classifiable as hard red spring wheat. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this proceeding is dispositive.
In accordance with section 735(a) of the Tariff Act of 1930, as amended (“the Act”), the Department of Commerce (“the Department”) published its final determination that HRS wheat from Canada is being sold in the United States at less than fair value.
Therefore, in accordance with section 736(a)(1) of the Act, the Department will direct U.S. Customs and Border Protection (“CBP”) to assess, upon further advice by the Department,
On or after the date of publication of the ITC's notice of final determination in the
This notice constitutes the antidumping duty order with respect to HRS wheat from Canada, pursuant to section 736(a) of the Act. Interested parties may contact the Central Records Unit, Room B-099 of the main Commerce building, for copies of an updated list of antidumping duty orders currently in effect.
This order is published in accordance with section 736(a) of the Act and 19 CFR 351.211.
Import Administration, International Trade Administration, Department of Commerce.
Notice of countervailing duty order.
October 23, 2003.
Stephen Cho or Audrey Twyman, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-3798 or (202) 482-3534, respectively.
For purposes of this order, the products covered are all varieties of hard red spring (“HRS”) wheat from Canada. This includes, but is not limited to, varieties commonly referred to as Canada Western Red Spring, Canada Western Extra Strong, and Canada Prairie Spring Red. The merchandise subject to this investigation is currently classifiable under the following
In accordance with section 705(a) of the Tariff Act of 1930, as amended (“the Act”), the Department of Commerce (“the Department”) published its final determination that countervailable subsidies are being provided to producers and exporters of HRS wheat from Canada.
Therefore, in accordance with section 706(a)(3) of the Act, the Department will direct U.S. Customs and Border Protection (“CBP”) to assess, upon further advice by the Department, countervailing duties for all relevant entries of HRS wheat from Canada. For all producers and exporters countervailing duties will be assessed on all unliquidated entries of HRS wheat entered, or withdrawn from warehouse, for consumption on or after March 10, 2003, the date of publication of the Department's preliminary determination in the
On or after the date of publication of the ITC's notice of final determination in the
This notice constitutes the countervailing duty order with respect to HRS wheat from Canada, pursuant to section 706(a) of the Act. Interested parties may contact the Central Records Unit, Room B-099 of the main Commerce building, for copies of an
This countervailing duty order is published in accordance with sections 706(a) and 777(i) of the Act and 19 CFR 351.211.
Import Administration, International Trade Administration, Department of Commerce.
Notice of extension of time limit for preliminary results of countervailing duty administrative reviews.
October 23, 2003.
Tipten Troidl, Office of AD/CVD Enforcement VI, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-2786.
Section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act), requires the Department of Commerce (Department) to make a preliminary determination within 245 days after the last day of the anniversary month of an order/finding for which a review is requested and a final determination within 120 days after the date on which the preliminary determination is published. However, if it is not practicable to complete the review within the time period, section 751(a)(3)(A) of the Act allows the Department to extend these deadlines to a maximum of 365 days and 180 days, respectively.
On March 25, 2003, the Department published a notice of initiation of administrative reviews of the countervailing duty orders on low enriched uranium from France, Germany, the Netherlands, and the United Kingdom, covering the period May 14, 2001, through December 31, 2002 (
We determine that these cases are extraordinarily complicated because there are a large number of complex issues which require thorough consideration and analysis by the Department, including numerous existing programs from the original investigation and changes to certain programs found countervailable in the investigation. In order to complete our analysis, we not only require additional information, but may also possibly conduct verification of this information. Therefore, we require more time to properly analyze these issues. As a result, it is not practicable to complete the preliminary results of these reviews within the original time limits. Therefore, the Department is extending the time limits for completion of the preliminary results until no later than January 29, 2004. This date constitutes a 90-day extension for the administrative reviews of low enriched uranium from France, Germany, the Netherlands, and the United Kingdom.
This extension is in accordance with section 751(a)(3)(A) of the Act.
Office of Ocean and Coastal Resource Management, National Ocean Service, National Oceanic and Atmospheric Administration (NOAA), DOC.
Notice of intent to evaluate and notice of availability of final evaluation findings.
The NOAA Office of Ocean and Coastal Resource Management (OCRM) announces its intent to evaluate the performance of the Alabama Coastal Management Program and the Weeks Bay National Estuarine Research Reserve, Alabama. The Coastal Zone Management Program evaluation will be conducted pursuant to section 312 of the Coastal Zone Management Act of 1972, as amended, (CZMA) and regulations at 15 CFR part 923, subpart L. The National Estuarine Research Reserve evaluation will be conducted pursuant to sections 312 and 315 of the CZMA and regulations at 15 CFR part 921, subpart E and part 923, subpart L.
The CZMA requires continuing review of the performance of states With respect to coastal program implementation. Evaluation of Coastal Zone Management Programs and National Estuarine Research Reserves requires findings concerning the extent to which a State has met the national objectives, adhered to its Coastal Management Program document or Reserve final management plan approved by the Secretary of Commerce, and adhered to the terms of financial assistance awards funded under the CZMA.
The evaluations will include a site visit, consideration of public comments, and consultations with interested Federal, State and local agencies and members of the public. Public meetings will be held as part of the site visits.
Notice is hereby given of the dates of the site visits for the listed evaluations, and the dates, local times, and locations of the public meetings during the site visits.
The Alabama Coastal Management Program evaluation site visit will be held December 8-12, 2003. One public meeting will be held during the week. The public meeting will be on Wednesday, December 10, 2003, from 6 p.m. to 7 p.m., in the Killian Room, International Trade Center, 250 North Water Street, Mobile, Alabama.
The Weeks Bay National Estuarine Research Reserve evaluation site visit will be held December 8-12, 2003. One public meeting will be held during the week. The public meeting will be on Thursday, December 11, 2003, from 5 p.m. to 6 p.m., at the Interpretive Center Auditorium, Weeks Bay National Estuarine Research Reserve, 11300 U.S. Highway 98, Fairhope, Alabama.
Copies of States' most recent performance reports, as well as OCRM's notifications and supplemental request letters to the States, are available upon request from OCRM. Written comments from interested parties regarding these Programs are encouraged and will be accepted until 15 days after the last public meeting. Please direct written comments to Ralph Cantral, Chief, National Policy and Evaluation Division, Office of Ocean and Coastal Resource Management, NOS/NOAA,
Notice is hereby given of the availability of the final evaluation findings for the Delaware, Hawaii, Louisiana, Michigan, Mississippi, and Pennsylvania Coastal Management Programs (CMPs); and the Ace Basin (South Carolina), Delaware (Delaware), and Jobos Bay (Puerto Rico) National Estuarine Research Reserves (NERRs). Sections 312 and 315 of the Coastal Zone Management Act of 1972 (CZMA), as amended, require a continuing review of the performance of coastal states with respect to approval of coastal management programs, and the operation and management of NERRs.
The states of Delaware, Hawaii, Louisiana, Michigan, Mississippi, and Pennsylvania were found to be implementing and enforcing their federally approved coastal management programs, addressing the national coastal management objectives identified in CZMA Section 303(2)(A)-(K), and adhering to the programmatic terms of their financial assistance awards. Delaware and Ace Basin NERRs were found to be adhering to programmatic requirements of the NERR System. Jobos Bay NERR was found to be not fully adhering to the programmatic requirements of the NERR System.
Copies of these final evaluation findings may be obtained upon written request from: Ralph Cantral, Chief, National Policy and Evaluation Division, Office of Ocean and Coastal Resource Management, NOS/NOAA, 1305 East-West Highway, 10th Floor, Silver Spring, Maryland 20910, or
Ralph Cantral, Chief, National Policy and Evaluation Division, Office of Ocean and Coastal Resource Management, NOS/NOAA, 1305 East-West Highway, 10th Floor, Silver Spring, Maryland 20910, (301) 713-3155, extension 118.
National Oceanic and Atmospheric Administration, U.S. Department of Commerce.
Notice of availability of draft environmental assessment and request for comments.
Notice is hereby given of the availability of the Draft Environmental Assessment (EA) and proposed Finding of No Significant Impact for the National Oceanic and Atmospheric Administration's (NOAA) approval of the State of New Hampshire request to expand its coastal management program boundary. The EA was prepared pursuant to the National Environmental Policy Act (NEPA) U.S.C. 4321
For the purposes of this EA, the proposed action is approval of the proposed expanded NHCP coastal boundary to include the full geographic jurisdiction of the State's 17 coastal municipalities. The NHCP's boundary revision will expand the State's coastal management boundary from its current, narrower delineation by a two-tier geographical system related to distance from coastal waste body features, to encompassing the entire jurisdiction of all coastal municipalities. The practical effect will be to increase the State's ability to review State and federal activities in a larger area of the coast for their consistency with the State's federally-approved coastal policies, and to provide CZMA funds for additional activities in the expanded coastal area.
NOAA finds that the NHCP has met the requirements for submitting an amendment to OCRM and proposes to approve the program change. Based upon the EA, NOAA proposes to conclude that a Finding of No Significant Impact is appropriate, and therefore, an Environmental Impact Statement is unnecessary. The Council on Environmental Quality's regulations to implement NEPA requires agencies to provide public notice of the availability of environmental documents. 40 CFR section 1506.6. This notice is part of NOAA's action to comply with this requirement.
A copy of the Draft EA and proposed Finding of No Significant Impact may be found on the NOAA Web site at
Individuals or organizations wishing to submit comments on the Draft EA or proposed Finding of No Significant Impact should do so by November 24, 2003.
Comments should be made to: John King, Acting Chief, Coastal Programs Division (N/ORM3), Office of Ocean and Coastal Resource Management, NOS, NOAA, 1305 East-West Highway, Silver Spring, Maryland, 20910, phone: (301) 713-3155, x188, e-mail:
Helen Farr, Coastal Programs Division (N/ORM3), Office of Ocean and Coastal Resource Management, NOS, NOAA, 1305 East-West Highway, Silver Spring, Maryland, 20910, phone: (301) 713-3155, x150, e-mail:
National Marine Fisheries Service (NMFS), National Oceanic and
Notice of public meeting.
The Gulf of Mexico Fishery Management Council will convene public meetings.
The meetings will be held November 9 through 12, 2003.
These meetings will be held at the Palace Casino Resort, 158 Howard Avenue, Biloxi, MS; telephone: 800-725-2239.
Wayne E. Swingle, Executive Director, Gulf of Mexico Fishery Management Council; telephone: 813-228-2815.
9-10 a.m.--(Partially Closed Session) Convene a joint meeting of the Personnel and Administrative Policy Committees to review past personnel issues.
10-11:30 a.m.--Convene the Administrative Policy Committee to review changes to the Administrative Handbook.
1-5:30 p.m.--Convene the Reef Fish Management Committee to review Secretarial Reef Fish Amendment 1 that contains alternatives for arresting overfishing of red grouper by the commercial and recreational fishermen. They will also review Draft Reef Fish Amendment 22 that contains alternatives for a red snapper rebuilding plan; and a Vermilion Snapper Regulatory Amendment that contains alternatives for arresting overfishing of that stock by commercial and recreational fishermen. Public hearings will be held on both of these amendments in December or January. The Committee will also review the yellowtail snapper assessment and will develop recommendations for consideration by full Council on Tuesday afternoon.
8:30-10 a.m.--Reconvene the Reef Fish Management Committee if necessary.
10-12 noon--Convene the Shrimp Management Committee to review Draft Shrimp Amendment 13/Environmental Assessment that includes alternatives for status criteria and benchmarks as well as a revised standardized bycatch reporting methodology: The Shrimp Committee will also review a Draft Options Paper for Shrimp Amendment 14/Supplemental and Environmental Impact Statement that includes alternatives to improve the bycatch reporting methodology, further reduce bycatch, and for a limited access program and vessel monitoring system.
1:30-2:30 p.m.--Convene the Migratory Species Management Committee to review information on bycatch of sharks in the menhaden fishery.
2:30-4 p.m.--Convene the Habitat Protection Committee to review and revise a Council policy for mariculture developed by the Gulf States Marine Fisheries Commission.
4-5:30 p.m.--Convene the Data Collection Committee to hear a report on the Fishery Information System program implemented by the states for collection of fishery statistics from recreational and commercial fishermen. The Committee will also discuss a study proposal to collect some of these statistics, data quality assurance and control measures, and separation of guide boats from charter and headboats in the statistical program.
8:30 a.m.--Convene Council.
8:45 a.m.--Appointment of Committee members.
9-9:45 a.m.--Receive a presentation on Coral Research on Middle Grounds.
9:45-12 noon--Receive public testimony on Secretarial Reef Fish Amendment 1.
1:30-3:30 p.m.--Receive the Reef Fish Management Committee report.
3:30-5 p.m.--Receive the Administrative Policy Committee report.
5-5:30 p.m.--(Closed Session) Receive the Personnel Committee report.
November 12, 2003
8:30-8:45 a.m.--Receive the Shrimp Management Committee report.
8:45-9 a.m.--Receive the Habitat Protection Committee report.
9-9:15 a.m.--Receive the Migratory Special Management Committee report.
9:15-9:30 a.m.--Receive the Data Collection Committee report.
9:30-9:45 a.m.--Receive a report of the Council Orientation Session.
9:45-10 a.m.--Receive the International Commission for the Conservation of Atlantic Tunas Advisory Committee report.
10-10:15 a.m.--Receive a report of the NMFS Highly Migratory Species Advisory Panel meeting.
10:15-10:30 a.m.--Receive a report of the Texas Shrimp Association Meeting.
10:30-11 a.m.--Receive Enforcement Reports.
11-11:15 a.m.--Receive the NMFS Regional Administrator's Report.
11:15-11:45 a.m.--Receive Director's Reports.
11:45-12 noon--Other Business
Although non-emergency issues not contained in the agenda may come before the Council for discussion, in accordance with the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), those issues may not be the subject of formal Council action during this meeting. Council action will be restricted to those issues specifically identified in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency. A copy of the Committee schedule and agenda can be obtained by calling 813-228-2815.
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Anne Alford at the Council (see
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Issuance of permit.
Notice is hereby given that Bob McLaughlin, P.O. Box 496, 339 Glenwood, Eastsound, Washington 98245, has been issued a permit to take several species of non-listed marine mammals for purposes of commercial/educational photography.
The permit and related documents are available for review upon written request or by appointment in the following office(s):
Permits, Conservation and Education Division, Office of Protected Resources,
Northwest Region, NMFS, 7600 Sand Point Way NE, BIN C15700, Bldg. 1, Seattle, WA 98115-0700; phone (206)526-6150; fax (206)526-6426;
Alaska Region, NMFS, P.O. Box 21668, Juneau, AK 99802-1668; phone (907)586-7221; fax (907)586-7249; and,
Southwest Region, NMFS, 501 West Ocean Blvd., Suite 4200, Long Beach, CA 90802-4213; phone (562)980-4001; fax (562)980-4018.
Jennifer Jefferies or Ruth Johnson, (301)713-2289.
On June 26, 2003, notice was published in the
The purpose of the proposed project is to film several species of non-listed marine mammals for an ongoing project that is tentatively titled “Death of an Ecosystem?”. While this project has been ongoing for several years, Mr. McLaughlin desires to film from a closer vantage point, i.e. within 100 yards of an individual animal. The closeness of filming would be considered Level B harrassment and therefore would require a permit under the MMPA. The photographers intend to attempt to document marine mammal movement and aggregation under varying conditions including the presence of boat traffic. This will be done using a fusion of passive acoustic recording equipment with different filming equipment, including still and video, as well as different filming platforms, including elevated filming platforms. The action area will include waters off the coasts of California, Oregon, Washington and Alaska. The resulting film footage will be dispensed in part for print and broadcast media, to researchers as well as for educational purposes. The Permit will expire on October 31, 2005.
National Telecommunications and Information Administration.
Notice, Request for Comments.
The General Accounting Office (GAO) in
Comments must be received no later than November 24, 2003.
The National Telecommunications and Information Administration invites the public to submit written comments in paper or electronic form. Comments may be mailed to Darlene A. Drazenovich, International Spectrum Plans and Policy Division, National Telecommunications and Information Administration, U.S. Department of Commerce, Room 4076, 1401 Constitution Avenue, NW., Washington, DC 20230 or e-mailed to
Darlene A. Drazenovich, (202) 482-3480,
The International Telecommunication Union (ITU) is an intergovernmental organization within the United Nations that specializes in the field of telecommunications. The ITU brings together international governments and private industries to coordinate the establishment and operation of global telecommunication networks and services. Every three to four years, the ITU convenes World Radiocommunication Conferences (WRCs)—an international forum for world agreement, to review and revise the International Radio Regulations. The Radio Regulations constitute an international treaty on radiocommunications covering the use of the radio-frequency spectrum by radiocommunication services. These conferences set the world stage for future technological development by allocating radio frequency spectrum to radio services, establishing spectrum use coordination methods, setting international rules for radio equipment operation, and identifying spectrum for specific uses such as Third Generation (3G) wireless systems.
The United States is a key player in this important global endeavor because it brings new and innovative technologies to the world community while balancing global security, national
The United States preparatory process for World Radiocommunication Conferences follows two related paths—technical and proposal/position preparation. The technical preparation are conducted in the International Telecommunications Union Radiocommunications Sector (ITU-R) Study Group process and includes Federal and Non-Federal Government participation. The U.S. International Telecommunication Advisory Committee (ITAC) is the mechanism by which the U.S. prepares technical studies for WRCs. The General Services Administration chartered this committee to the U.S. State Department as an advisory committee under the Federal Advisory Committee Act (FACA)
The Federal and non-Federal WRC positions and proposal preparation processes are independent. The Federal preparation process includes NTIA, which represents the views of the administration. NTIA is the President's principal adviser on telecommunications and information policy and manages the Federal Government's use of radio spectrum.
The Non-Federal Preparation is performed by the FCC. The FCC, an independent agency established by the Communications Act of 1934, manages the use of radio spectrum by state and local governments and the private sector. The FCC, as an independent agency, represents the views of its constituents and receives their input on WRC views, positions, and proposals.
To assist in the assessment, NTIA seeks public comment on any issue of fact, law, or policy that may inform the agency about improvements needed in the WRC preparatory process. Specific comments are requested on the questions below. These questions are designed to assist the public and should not be construed as a limitation on the issues on which public comments may be submitted. Please provide copies of any studies, research and other empirical data referenced in the comments.
A. How should NTIA as the President's advisor seek the views and inputs of the non-Federal entities?
B. How can NTIA better educate the commercial sector on the Federal agencies' radiocommunication requirements, and related policies and decisions that affect U.S. conference proposals?
A. The WAC is part of the FCC's WRC preparation process. How can the Federal agencies best participate in the WAC?
A. Should the Federal and non-Federal advisory processes remain independent? Why or why not?
B. Federal views and proposals sent to the FCC represent NTIA's review and modification of RCS inputs and thus the Administration's output, while the FCC sends WAC views and proposals directly to NTIA for consideration without bureau review. Would it improve the process to take a similar approach on both sides (circulation of RCS and WAC inputs, or circulation of NTIA and FCC outputs)?
C. Please specify how communications/coordination between the FCC processes and the Executive Branch processes under the purview of NTIA can be improved? Include in your discussion such topics as involvement of senior agency management, early agreements on WRC positions, NTIA-FCC reconciliation process and timeframes.
D. What steps can be taken to resolve difficult issues? Should timelines be developed in order to identify these issues early in the process?
A. Should the U.S. National Committee set objectives and policy regarding WRC studies?
B. Is closer coordination among various study groups required? If so, why and how can this be accomplished?
C. The U.S. Study Group consists of government and non-government participants who prepare for ITU meetings. Should the U.S. Study Group process be guided to align with U.S. WRC goals and objectives? If so why, and by what means?
D. Should a Federal government/non-government position on agenda items and supporting information/studies to pursue U.S. positions be developed, approved and disseminated?
E. To ensure success of U.S. objectives for WRC agenda items, technical studies must begin early in the process. Is it necessary to energize an agenda item and its associated studies by a certain point in the preparation process if no activity has occurred? If so, how can this be accomplished (
A. Is there a lack of continuity in leadership between WRC conferences? If so, how can this be better managed?
B. When in the preparation process should the core delegation group, vice-chairs, and principals be formed to begin work? How can these groups be better used to improve the effectiveness and efficiency of the United States' WRC agenda?
C. Agencies, companies, and organizations nominate representatives to be on the U.S. WRC delegation. Is the nominated delegation formed early enough in the process to develop and approve final positions in a timely manner? If not, how can this process be improved?
D. Is the accredited delegation formed early enough to develop and approve U.S. positions, strategy, and fallback positions? If not, how can this be improved?
E. At what point in the preparation process should delegation assignments be made and spokespersons identified?
F. How could the appointment and role of the U.S. Ambassador be improved?
G. Is the United States' negotiating strength improved or hindered by the use of an appointed political representative working with career spectrum managers and ITU experts from other countries?
H. Assuming the continued appointment of a WRC ambassador, at what point does the Ambassador's appointment need to be effective?
I. During conference preparatory meetings, administrations meet to agree on the final report of studies, which is used as the technical basis at a WRC. Is it important to bring the Ambassador on board in some capacity prior to the conference preparatory meeting? If so, how can this be accomplished?
A. Funding for the WRC Ambassador has been an ongoing concern. To ensure the Ambassador and the delegation staff are able to complete their missions, is it necessary to provide the Ambassador with an operational budget? Is so, how can representational funds best be used to conduct outreach efforts?
B. What facilities are critical to the functioning of the delegation and the Ambassador at the conference site?
C. Recognizing that agencies and companies send representatives to the delegation to participate in debates, negotiations, and outreach efforts, how should support be provided to cover the Editorial Committee of each WRC?
A. Are consultations with other administrations needed? If so, at what point in the process should they begin?
B. Is it important to work with other countries outside of the ITU study groups and the conference preparatory meeting? If so, why and how can this be improved?
C. Should the Country Contact/Outreach program that is developed and utilized at a conference be maintained between conferences? If so, how can this be accomplished? Who should lead this effort? What role can the private sector play?
D. Should WRC outreach activities be integrated with other international activities of the State Department, NTIA and FCC? If so, how?
E. How effective were the Delegation Consultations prior to WRC-03? Were they started in a timely manner?
A. Are trained and qualified Federal Government Spokespersons and issue coordinators available throughout the WRC preparatory process and especially at the Conference?
B. Are training programs needed for spokespersons and delegates? If so, what should they consist of?
C. Is preparatory training needed for general participation in ITU-R Study Groups in support of WRC activities? If so, what should it consist of?
D. What steps should be taken to maintain a cadre of experienced personnel in the Federal government in order for them to assume leadership and spokesperson roles at future WRCs?
A. In the past, the United States has been faced with challenges regarding the implementation of WRC decisions. What can be done to improve this process?
B. The GAO report noted that Federal agencies are concerned that WRC allocation decisions of primary interest to the Federal government go without action, how can the process be improved to ensure equal treatment of both government and private sector interests?
C. Should FCC/NTIA develop a plan and schedule to complete rulemaking for each WRC agenda item? If so, within what timeframe of WRC completion should the plan be executed?
A. In broad terms, what goals should the United States have for WRCs? How should these goals be established?
B. How effective has the United States been in the WRC process?
C. What have been the benefits and costs of regional preparation for WRCs?
D. How often should WRCs occur and what, if any, limitations should the U.S. support regarding WRC agendas.
E. Over the years, there has been concern among WRC participants (government and non-government) regarding staffing issues. Do NTIA and the Federal agencies have sufficient staff with appropriate expertise to support spectrum management activities in the WRC preparation process?
Uniformed Services University of the Health Sciences, DoD.
8 a.m. to 4 p.m., November 4, 2003.
Uniformed Services University of the Health Sciences, Board of Regents Conference Room (D3001), 4301 Jones Bridge Road, Bethesda, MD 20814-4799.
Open—under “Government in the Sunshine Act” (5 U.S.C. 552b(e)(3)).
Mr. Charles Mannix, Executive Secretary, Board of Regents, (301) 295-3981.
Department of Education.
The Leader, Regulatory Information Management Group, Office of the Chief Information Officer invites comments on the submission for OMB review as required by the Paperwork Reduction Act of 1995.
Interested persons are invited to submit comments on or before November 24, 2003.
Written comments should be addressed to the Office of Information and Regulatory Affairs, Attention: Lauren Wittenberg, Desk Officer, Department of Education, Office of Management and Budget, 725 17th Street, NW., Room 10235, New Executive Office Building, Washington,
Section 3506 of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) requires that the Office of Management and Budget (OMB) provide interested Federal agencies and the public an early opportunity to comment on information collection requests. OMB may amend or waive the requirement for public consultation to the extent that public participation in the approval process would defeat the purpose of the information collection, violate State or Federal law, or substantially interfere with any agency's ability to perform its statutory obligations. The Leader, Regulatory Information Management Group, Office of the Chief Information Officer, publishes that notice containing proposed information collection requests prior to submission of these requests to OMB. Each proposed information collection, grouped by office, contains the following: (1) Type of review requested,
This information collection is being submitted under the Streamlined Clearance Process for Discretionary Grant Information Collections (1890-0001). Therefore, the 30-day public comment period notice will be the only public comment notice published for this information collection.
Requests for copies of the submission for OMB review; comment request may be accessed from
Comments regarding burden and/or the collection activity requirements should be directed to Sheila Carey at her e-mail address
The Department is not bound by any estimates in this notice.
(1) A page is 8.5″ by 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
(2) Double space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions, as well as all text in charts, tables, figures, and graphs.
(3) Use a font that is either 12-point or larger or no smaller than 10 pitch (characters per inch).
The page limit does not apply to Part I, the cover sheet; Part II, the budget section, including the narrative budget justification; Part IV, the assurances and certifications; or the one-page abstract, the resumes, the bibliography, or the letters of support. However, you must include all of the application narrative in Part III.
We will reject your application if—
• You apply these standards and exceed the page limit; or
• You apply other standards and exceed the equivalent of the page limit.
The regulations in 34 CFR part 79 apply to all applicants except federally recognized Indian tribes.
The regulations in 34 CFR part 86 apply to institutions of higher education only.
Some of the procedures in these instructions for transmitting applications differ from those in the Education Department General Administrative Regulations (EDGAR) (34 CFR 75.102). Under the Administrative Procedure Act (5 U.S.C. 553) the Department generally offers interested parties the opportunity to comment on proposed regulations. However, these amendments make procedural changes only and do not establish new substantive policy. Therefore, under 5 U.S.C. 553(b)(A), the Secretary has determined that proposed rulemaking is not required.
We have been accepting applications electronically through the Department's e-Application system since FY 2000. In order to expand on those efforts and comply with the President's Management Agenda, we are participating as a partner in the new governmentwide Grants.gov Apply site in FY 2004. The Rehabilitation Continuing Education Programs (RCEP)—Regional Rehabilitation Continuing Education Projects (RRCEP), CFDA number 84.264A-1, is one of the programs included in this project. If you are an applicant under RCEP—RRCEP, you may submit your application to us in either electronic or paper format.
The project involves the use of the Grants.gov Apply site (Grants.gov). If you use Grants.gov, you will be able to download a copy of the application package, complete it offline, and then upload and submit the application via the Grants.gov site. You may not e-mail an electronic copy of a grant application to us. We request your participation in Grants.gov.
If you participate in Grants.gov, please note the following:
• Your participation is voluntary.
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation. We strongly recommend that you do not wait until the application deadline date to begin the application process through Grants.gov.
• To use Grants.gov, you, as the applicant, must have a D-U-N-S Number and register in the Central Contractor Registry (CCR). You should allow a minimum of five days to complete the CCR registration.
• You will not receive additional point value because you submit a grant application in electronic format, nor will we penalize you if you submit an application in paper format.
• You may submit all documents electronically, including all information typically included on the Application for Federal Education Assistance (ED 424), Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• Your application must comply with any page limit requirements described in this notice.
• After you electronically submit your application, you will receive an automatic acknowledgement from Grants.gov that contains a Grants.gov tracking number. The Department will retrieve your application from Grants.gov and send you a second confirmation, which will include a PR/Award number (an ED-specified identifying number) unique to your application.
• We may request that you give us original signatures on forms at a later date.
• If you experience technical difficulties on the application deadline date and are unable to meet the 4:30 p.m. (Washington, DC time) deadline, print out your application and follow the instructions included in the application package for the transmittal of paper applications.
You may access the electronic grant application for RCEP—RRCEP at:
Please note that you must search for the downloadable application package for this program by the CFDA number. Do not include the CFDA number's alpha suffix in your search.
You may also contact ED Pubs at its Web site:
Or you may contact ED Pubs at its e-mail address:
If you request an application from ED Pubs, be sure to identify this competition as follows: CFDA number 84.264A-1.
Individuals with disabilities may obtain a copy of the application package in an alternative format by contacting the Grants and Contracts Services Team, U.S. Department of Education, 400 Maryland Avenue, SW., room 3317, Switzer Building, Washington, DC 20202-2550. Telephone: (202) 205-8207. If you use a telecommunications device for the deaf (TDD), you may call the Federal Information Relay Service (FIRS) at 1-800-877-8339. However, the Department is not able to reproduce in an alternative format the standard forms included in the application package.
Christine Marschall, U.S. Department of Education, 400 Maryland Avenue, SW., room 3325, Switzer Building, Washington, DC 20202-2649. Telephone: (202) 205-8926 or via Internet:
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 (
You may view this document, as well as all other Department of Education documents published in the
To use PDF you must have 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
National Assessment Governing Board; Education.
Notice of open meeting and partially closed meetings.
The notice sets forth the schedule and proposed agenda of a forthcoming meeting of the National Assessment Governing Board. This notice also describes the functions of the Board. Notice of this meeting is required under section 10(a)(2) of the Federal Advisory Committee Act. This document is intended to notify members of the general public of their opportunity to attend. Individuals who will need special accommodations in order to attend the meeting (
November 13-November 15, 2003.
Munira Mwalimu, Operations Officer, National Assessment Governing Board, 800 North Capitol Street, NW., Suite 825, Washington, DC 20002-4233, Telephone: (202) 357-6938.
The National Assessment Governing Board is established under section 412 of the National Education Statistics Act of 1994, as amended.
The Board is established to formulate policy guidelines for the National Assessment of Educational Progress (NAEP). The Board's responsibilities include selecting subject areas to be assessed, developing assessment objectives, developing appropriate student achievement levels for each grade and subject tested, developing guidelines for reporting and disseminating results, and developing standards and procedures for interstate and national comparisons.
On November 13, the Assessment Development Committee will meet in closed session from 12:30 p.m. to 3 p.m. to review secure test items for the National Assessment of Educational Progress (NAEP) 2005 Math Pilot Test. The meeting must be conducted in closed session as disclosure of proposed test items from the 2005 NAEP Math Pilot Test would significantly impede implementation of the NAEP program, and is therefore protected by exemption 9(B) of section 552b(c) of Title 5 U.S.C.
The Executive Committee will meet in open session on November 13 from 4 p.m. to 5 p.m. The committee will then meet in closed session from 5 p.m. to 6 p.m. to discuss independent government cost estimates for contracts related to the National Assessment of Educational Progress (NAEP). This meeting must be conducted in closed session because public disclosure of this information would likely have an adverse financial effect on the NAEP program. The discussion of this information would be likely to significantly impede implementation of a proposed agency action if conducted in open session. Such matters are protected by exemption 9(B) of section 552b(c) of Title 5 U.S.C.
On November 14, the full Board will meet in open session from 8:30 a.m. to 10 a.m. The Board will approve the agenda, introduce new Board members, hear the Executive Director's report, and receive an update on the work of the National Center for Education Statistics (NCES) from the Associate Commissioner of NCES, Val Plisko.
From 10 a.m. to 12 p.m. on November 14, the Board's standing committees—the assessment Development Committee; the Committee on Standards, Design, and Methodology; and the Reporting and Dissemination Committee—will meet in open session.
The full Board will meet in closed session on November 14, 2003 from 12 p.m. to 1:30 p.m. to receive to receive independent cost estimates for contracts related to the National Assessment of Educational Progress (NAEP). This part of the meeting must be conducted in closed session because public disclosure of this information would likely have an adverse financial effect on the NAEP program. The discussion of this information would be likely to significantly impede implementation of a proposed agency action if conducted in open session. Such matters are protected by exemption 9(B) of section 552b(c) of Title 5 U.S.C.
The full Board will meet in open session on November 14 to receive an update on the 2009 NAEP Reading Framework Project at 1:30 p.m. followed by an update on the NAEP 12th Grade Commission by former vice Board Chair Michael Nettles from 2:45 p.m. to 3:30 p.m. This presentation will be followed by a briefing on the Grade 12 Mathematics achievement Levels contract from 3:30 p.m. to 4 p.m. Board members will receive Ethics Training from staff of the Office of General Counsel from 4 p.m. to 4:30 p.m., after
On November 15, the Nominations Committee will meet in open session from 7:45 a.m. to 8:45 a.m. Thereafter, the full Board will meet in open session from 9 a.m. to 12 p.m. The Board will discuss NAEP reports from 9 a.m. to 10 a.m. Board actions on policies and Committee reports are scheduled to take place between 10 a.m. and 12 p.m., when the November 15, 2003 session of the Board meeting will adjourn.
A final agenda of the November 13-15, 2003 Board meeting can be accessed after November 3, 2003 at
Department of Energy.
Notice of open meeting.
This notice announces a meeting of the DOE/NSF Nuclear Science Advisory Committee (NSAC). Federal Advisory Committee Act (Pub. L. 92-463, 86 Stat. 770) requires that public notice of these meetings be announced in the
Friday, November 7, 2003; 8:30 a.m. to 5 p.m.; and Saturday, November 8, 2003; 8:30 a.m. to 5 p.m.
Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland 20852-1699.
Brenda L. May, U.S. Department of Energy; SC-90/Germantown Building, 1000 Independence Avenue, SW., Washington, DC 20585-1290; Telephone: 301-903-0536.
• Reports from Department of Energy and National Science Foundation
• Perspectives from Department of Energy and National Science Foundation
• Presentation from Office of Management and Budget
• Perspective from the Office of Science and Technology Policy
• Presentation and Discussion on the Report from the Sub-Committee on Milestones
• Discussion of NSAC Response and Transmittal Letter on Milestones Charge
• Presentation and Discussion on the Report from the Sub-Committee on Nuclear Theory
• Discussion of NSAC Response and Transmittal Letter on Nuclear Theory
• Discussion on the Committee of Visitors
• Public Comment (10-minute rule)
Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Northern New Mexico. The Federal Advisory Committee Act (Pub. L. 92-463, 86 Stat. 770) requires that public notice of these meetings be announced in the
Wednesday, November 19, 2003; 6 p.m.-8:30 p.m.
Courtyard by Marriott, 3347 Cerrillos Road, Santa Fe, NM.
Menice Manzanares, Northern New Mexico Citizens' Advisory Board, 1660 Old Pecos Trail, Suite B, Santa Fe, NM 87505. Phone (505) 995-0393; fax (505) 989-1752 or e-mail:
This agenda is subject to change at least one day in advance of the meeting.
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. 92-463, 86 Stat. 770) requires that public notice of these meetings be announced in the
Wednesday, November 12, 2003; 6 p.m.-9 p.m.
Grant Sawyer State Office Building, 555 East Washington Avenue, Room 4412, Las Vegas, Nevada.
Kay Planamento, Navarro Research and Engineering, Inc., 2721 Losee Road, North Las Vegas, Nevada 89130, phone: 702-657-9088, fax: 702-295-5300, e-mail
1. The U.S. Department of Energy Nevada Site Office Environmental Management Program will update the community with a progress report on the Industrial Sites Program.
2. The CAB will discuss its recently developed FY 2004 work plan.
Copies of the final agenda will be available at the meeting.
Environmental Protection Agency (EPA).
Notice of availability.
EPA has developed guidelines for States' implementation of nonpoint source management programs under Section 319 of the Clean Water Act and for the award of Section 319 grants to States to implement those programs. These guidelines apply to grants appropriated by Congress in Fiscal Year 2004 and in subsequent years. The guidelines continue EPA's policy of focusing a significant portion of Section 319 funds ($100 million annually) to address watersheds where nonpoint source pollution has resulted in impairment of water quality. The remaining funds are to be used by States to assist in their implementation of their broad array of programs and authorities to address all of the water quality threats and impairments caused by nonpoint source pollution.
The guidelines are effective October 23, 2003.
Persons requesting additional information should contact Romell Nandi at (202) 566-1203;
These guidelines are built upon and replace the
Nonpoint source pollution continues to be, and is increasingly recognized by the public as, the largest remaining source of water quality impairments in the nation. State and Territory (hereinafter collectively referred to as “State”) nonpoint source programs, originally developed and approved under Section 319 of the Clean Water
In the intervening years since 1996, States have enhanced their technical tools and capabilities, strengthened and increased their partnerships, nurtured a vast network of community-based action on a watershed basis, and, in many cases, developed stronger financial bases and legal support for their upgraded programs. As a result, the nation is experiencing increasingly positive results in terms of both on-the-ground action and actual water quality improvements. Examples of these improvements are summarized in
Congress has also recognized the need for greater and more effective action to expedite our national efforts to control nonpoint source pollution and to focus our attention on sources of nonpoint pollution that contribute to impairment of waters. During the past four years of Congressional appropriations, Congress has increased its appropriations from $105 million in FY 1998 to $238.4 million in FY 2003 to help States focus more resources upon the restoration of impaired waters as well as to generally implement more robust programs.
Despite all of these program improvements, EPA, States, and all of our partners have continued to face daunting challenges in our efforts to implement nonpoint source programs that will protect both our good-quality and threatened waters and restore those that are impaired. To improve States' and EPA's ability to meet these remaining challenges, as well as to implement new directives or recommendations from Congress, EPA has in the past few years issued supplements to the May 1996 guidance. These have been particularly designed to focus increased attention on waters that are most in need of attention, especially those waters that remain impaired even after all required technology-based controls for point sources have been implemented (
EPA recognizes that these periodic issuances of supplemental guidance have made it more difficult to follow and comprehend the current national nonpoint source program, its central themes, and its priorities. For this reason, EPA is today publishing new guidelines that build upon and replace the
These new guidelines do not significantly modify the previous set of guidance documents. For the most part, they consolidate the pertinent portions of earlier guidance documents in a cohesive manner; eliminate or shorten discussion of program aspects that have reduced relevance to future activities (such as the upgrading of States' nonpoint source management programs, which all of the States have successfully completed), and clarify certain issues that States and Regions have raised from time to time with regard to the program's implementation during the past several years.
The concepts presented in these guidelines, such as the emphases on watershed-based planning and on restoring impaired waters through developing and implementing TMDLs, represent the current state of the art in fashioning watershed-based solutions to prevent and remedy water quality problems. These guidelines have benefitted significantly from a multi-year, evolving process working with States (
Our long-term vision, established by EPA and the States in 1996, remains: All States and territories implement dynamic and effective nonpoint source programs designed to achieve and maintain beneficial uses of water.
Congress enacted Section 319 of the Clean Water Act in 1987, establishing a national program to control nonpoint sources of water pollution. Nonpoint source pollution is caused by rainfall or snowmelt moving over and through the ground and carrying natural and human-made pollutants into lakes, rivers, streams, wetlands, estuaries, other coastal waters, and ground water. Atmospheric deposition and hydrologic modification are also sources of nonpoint pollution.
Under Section 319(a), all States and Territories (hereinafter collectively referred to as “States”) have addressed nonpoint source pollution by developing nonpoint source assessment reports that identify nonpoint source pollution problems and the nonpoint sources responsible for the water quality problems. Under Section 319(b), all States have also adopted management programs to control nonpoint source pollution. Since 1990, Congress has annually appropriated grant funds to States under Section 319(h) to help them to implement those management programs.
These guidelines are primarily directed towards nonpoint source management programs and grants administered by State lead nonpoint source agencies designated under Section 319 of the Clean Water Act. Indian Tribes that have approved nonpoint source assessments and management programs and also have “treatment-as-a-State” status may also administer nonpoint source management programs and grants under Section 319 of the Clean Water Act. Apart from providing a brief overview in Section VI below, these guidelines are not specifically directed to Tribal nonpoint source management. Because of differing statutory provisions that apply to Tribes, EPA publishes separate guidance for Tribal nonpoint source programs and grants.
For grants awarded in FY 2004 and subsequent years, these guidelines supersede and replace all of the following guidance documents: Nonpoint Source Program and Grants Guidance for Fiscal Year 1997 and Future Years (May 1996); Process and Criteria for Funding State and Territorial Nonpoint Source Management Programs in FY 1999 (August 18, 1998); Funding the Development and Implementation of Watershed Restoration Action Strategies under Section 319 of the Clean Water Act (December 4, 1998); Supplemental Guidance for the Award of Section 319 Nonpoint Source Grants in FY 2000 (December 21, 1999); Supplemental Guidelines for the Award of Section 319 Nonpoint Source Grants in FY 2001 (November 28, 2000; 65 FR 70899); Supplemental Guidelines for the Award of Section 319 Nonpoint Source Grants to States and Territories in FY 2002 and Subsequent Years (September 13, 2001; 66 FR 47653); and Supplemental Guidelines for the Award of Section 319 Nonpoint Source Grants to States and Territories in FY 2003 (August 26, 2002; 67 FR 54806). (While these superceded guidance documents will no longer directly apply to State programs, they contain useful background information and will remain available for reference at EPA's nonpoint source Web site at
These guidelines are intended to serve as the basis for a nationally consistent approach for State nonpoint source management programs and grants. Therefore, EPA Regions will not issue separate, supplemental guidelines specifically for State nonpoint source programs or grants. If particular Regional circumstances require additional clarifications on a particular issue, the Region will consult with the affected States and with EPA Headquarters on the appropriate next steps.
EPA has been working with the States to realign our programs to strengthen our support for watershed-based environmental protection, whereby local stakeholders join forces to develop and implement watershed-based plans that make good sense for the particular conditions found within their communities. The watershed approach is a coordinating framework for management that focuses public and private sector efforts to address the highest priority water-related problems within geographic areas, considering both surface and ground water flow. The watershed approach is commonly characterized by four principles: (a) Diverse, well integrated partnerships; (b) a specific geographic focus; (c) action driven by environmental objectives and by strong science and data; and (d) coordinated priority setting and integrated solutions.
These guidelines are intended to help advance the watershed approach as a means for resolving and preventing nonpoint source pollution problems and threats. In the initial stages of the national nonpoint source program, some States and EPA Regions focused their nonpoint source programs narrowly on demonstrations of particular technologies, supported by Federal Section 319 grants. In upgrading their nonpoint source programs during the last few years, many States have incorporated watershed-based approaches as a significant and sometimes central organizing theme of their programs. As a result, State nonpoint source programs have improved their capacity to solve nonpoint source pollution problems at the watershed scale. At the same time, EPA and the States have sharpened our focus upon waterbodies listed by States as impaired under Section 303(d) of the Clean Water Act. This is particularly critical, as nonpoint source pollution is reported by States and others to be responsible for the majority of remaining water pollution in the United States. The two key steps needed to solve nonpoint source problems within a watershed context are the development of a watershed-based plan that addresses a waterbody's water quality needs (including the incorporation of any TMDLs that have been developed) and the actual implementation of the plan.
These guidelines discuss the use of detailed watershed-based plans to help solve water quality problems at the watershed level. As discussed in more detail in Section III.D below, careful analysis of the sources of water quality problems, their relative contributions to the problems, and alternatives to solve those problems, provide the best basis for sound decision-making and implementation that will actually solve those water quality problems. For this reason, these guidelines emphasize using watershed-based planning and implementation processes to solve water quality problems using Section 319 funds.
Nonpoint source pollution continues to be, and is increasingly recognized as, the largest remaining threat to water quality and source of water quality impairments in the nation. State nonpoint source programs, originally developed and approved under Section 319 of the Clean Water Act in 1989-90, have developed and matured to meet this challenge. Pursuant to the May 1996 guidance, each State and Territory has upgraded its nonpoint source management program to address nine key elements that had been agreed to by the States and EPA in the May 1996 guidance. These nine elements include explicit short- and long-term goals, objectives, and strategies to protect and restore water quality; strengthened working partnerships with appropriate State, interstate, Tribal, regional and local entities, private sector groups, citizens groups, and Federal agencies; balanced approaches that emphasize both State-wide programs and on-the-ground management of individual watersheds where waters are impaired or threatened; focus on both abating existing problems and preventing new ones; and using a periodic feedback loop to evaluate progress and make appropriate program revisions.
Since 1996, States have enhanced their technical tools and capabilities, strengthened and expanded their partnerships, nurtured a vast network of community-based action on a watershed basis, and, in many cases, developed stronger financial bases and legal support for their programs. As a result, the nation is experiencing increasingly positive results in terms of both on-the-ground action and actual water quality improvements. Examples of these improvements are summarized in
In addition, to further strengthen our collective efforts to implement successful nonpoint source control programs, the States and EPA have been implementing since FY 2000 a new State/EPA Nonpoint Source Partnership. The purpose of this new cooperative process has been to identify, prioritize, and address the States' needs for technical, programmatic, and financial assistance to overcome any remaining obstacles to successfully implementing States' nonpoint source programs. The partnership consists of a State/EPA Steering Committee and workgroups to help identify and solve States' highest-priority nonpoint source needs, including: watershed planning and implementation; nonpoint source capacity building and funding; grants management; information transfer and outreach; monitoring; documenting nonpoint source results; rural nonpoint sources; and urban nonpoint sources.
While we and our partners are achieving considerable success nationwide, significant challenges remain. Since publication of the May 1996 guidance, EPA's and States' nonpoint source programs have continued to evolve to meet these challenges. Beginning in FY 1999, EPA and the States have increased our focus on solving water quality problems in those waterbodies that are most in need of attention, including those waters that remain impaired even after all point source technological controls have been implemented (
In FY 1999 and again in FY 2000, EPA asked Congress to double Section 319 funding from $100 million to $200 million. The purpose of the incremental $100 million was to develop and implement watershed restoration action strategies (WRASs) in high-priority “Category I” watersheds (sized at the 8-digit “hydrologic unit code” level). In FY 2001, EPA recognized the need to increasingly focus Section 319 grant dollars on implementing nonpoint source TMDLs or the nonpoint source components of mixed-source TMDLs (hereafter, both of these types of TMDLs will be referred to as “NPS TMDLs”). Based on this need, EPA directed that incremental funds be used to develop and implement approved NPS TMDLs for any 303(d)-listed waterbodies (whether or not these were located within a Category I watershed), as well as to develop and implement WRASs. In FY 2002 and 2003, EPA shifted the focus of the incremental funds entirely to developing NPS TMDLs, developing watershed-based plans to implement the TMDLs, and implementing the plans. The FY 2003 guidelines provided that where a NPS TMDL for the affected waters has already been developed and approved or is being developed, the watershed-based plan must be designed to achieve the load reductions called for in the NPS TMDL. The FY 2003 guidelines further recognized that where a NPS TMDL has not yet been developed and approved or is not yet being developed for the waters, the State may use these funds to develop a watershed-based plan in the absence of the TMDL. In such cases, the FY 2003 guidelines required that the plan be designed to reduce nonpoint source pollutant loadings that are contributing to non-attainment of water quality standards. Once the TMDL is completed and approved, the plan was required to be modified as appropriate to be consistent with the TMDL.
The guidelines published today for FY 2004 and future years maintain the approach of focusing $100 million of annual Section 319 funds on the development and implementation of watershed-based plans to achieve NPS TMDLs. NPS TMDLs, together with watershed-based plans designed to implement the NPS TMDLs, provide the necessary analytic link between actions on the ground and the water quality results to be achieved. In the absence of such an analytic framework, it is difficult to develop and implement a watershed project that will achieve water quality standards, or to determine causes of failure when that occurs. Therefore, EPA believes that continuing to focus on an analytic and implementation framework that integrates NPS TMDLs, watershed-based plans to implement these NPS TMDLs, and actual implementation of those plans, will provide the most effective means to accelerate achievement of water quality standards.
For these reasons, EPA will continue to implement the general approach that we have developed during the past few years and finalized in FY 2003, using the steps outlined below. These steps are designed to promote the development and implementation of NPS TMDLs based upon the TMDL regulations that have been published at 40 CFR 130.7 in 1985 and 1992, as well as guidance published by EPA to assist in the implementation of those regulations. (Currently applicable guidance as well as other technical and other resources concerning the TMDL program is available at
Each year, EPA will award Section 319 grants in accordance with the following four principles:
1. States may use the “base funds” (
In general, States have great flexibility as to how to use these base funds. They may use the watershed-based approaches discussed in greater detail in Section III.D below (“Watershed-Based Plans”). States may also choose to use these funds to implement technology-based approaches. In particular, EPA recommends that coastal States use these funds to assist in the implementation of both the technology-based and water-quality-based management measures contained in their coastal nonpoint pollution control programs under Section 6217 of the Coastal Zone Act Reauthorization Amendments of 1990 (“CZARA”).
2. States may use up to 20% of the base funds to develop NPS TMDLs (consistent with their TMDL development schedule) and watershed-based plans to implement NPS TMDLs; develop watershed-based plans in the absence of or prior to completion of TMDLs (incorporating the TMDL's load allocations once it has been completed and approved); develop watershed-based plans that focus on the protection of threatened waters, source water, or other high-priority unimpaired waters; and conduct other NPS monitoring and program assessment/development activities. (Monitoring the results of implementing a watershed project is not subject to this 20% limitation.)
3. Except as noted in the next paragraph, States must use $100 million of Section 319 funds (referred to as “incremental funds”) to develop and implement watershed-based plans that address nonpoint source impairments in watersheds that contain Section 303(d)-listed waters. (However, these plans may also include activities that address waterbodies within the watershed that are not currently impaired where appropriate to prevent future impairments within the watershed.) Regions will include in each grant a condition that provides that the State will use these funds to implement a watershed-based plan only after the State completes the development of a watershed-based plan that addresses each of the watershed planning elements (a) through (i) that are listed later in this section. (See Appendix F to these guidelines.)
Regions may authorize States to use a portion of incremental funds to address watersheds that do not include impaired waters in special circumstances where it is necessary to address a uniquely high-priority State need to protect waters that currently are not impaired by nonpoint source pollution to assure that they remain unimpaired. This particularly includes waters in which good water quality is threatened by such factors as changing land uses and the presence of unique aquatic resources that are especially valuable and at serious risk of irreparable harm and that therefore require a special focus on protection activities (
4. States may use up to 20% of the $100 million incremental funds to develop: NPS TMDLs; watershed-based plans to implement NPS TMDLs; and watershed-based plans in the absence of or prior to completion of TMDLs in Section 303(d)-listed waters (incorporating the TMDL's load allocations once it has been completed and approved). The Region may authorize the State to use over 20% of the incremental funding to develop watershed-based plans in Section 303(d)-listed waters, but the Region should assure that a proper balance exists between funding the development of watershed-based plans and the implementation of watershed-based plans. On one hand, funding should support the development of watershed plans at a sufficient pace to support implementation efforts that may be implemented through 319 funding; funding from a separate State or Federally-supported program (
As discussed in the preceding paragraph, these guidelines authorize Regions to increase the level of incremental funding that is available to develop watershed-based plans (previously limited to 20%) so long as a proper balance exists between funding the development of watershed-based plans and the implementation of watershed-based plans. Such an increase may well be warranted where non-319 resources may be available to help implement the plans. EPA encourages States to leverage funding from other environmental protection programs to support the implementation of these plans, as discussed below.
EPA wishes to particularly emphasize the significant benefits of working closely with the United States Department of Agriculture (USDA) to achieve our common goals of improving restoration and protection of water quality. This is especially important in light of the new Farm Security and Rural Investment Act of 2002 (Farm Bill), which presents tremendous opportunities for integrating funding and other resources and for creating partnerships to help achieve our common goals, including meeting water quality standards. Information about partnership opportunities through programs such as the Environmental Quality Incentives Program (EQIP) can be found on the internet at
It is important to consider how Section 319 funding can be used in a way that does not duplicate, but rather complements, these other programs. Section 319 funding is especially suitable to support activities that are either not eligible for or typically do not receive significant USDA funding, including: (1) Developing watershed-based plans in Section 303(d)-listed and other high priority watersheds; (2) monitoring water quality in high priority watersheds to design and assess the effectiveness of watershed-based plans; and (3) funding watershed coordinators to work with local
USDA's primary conservation funding programs (Environmental Quality Incentives Program, Conservation Reserve Program, and Wetlands Reserve Program) are particularly well-designed to support the implementation of both agricultural best management practices (BMPs) and a suite of conservation, restoration, and land retirement measures for wetlands, riparian areas, and other areas of critical importance to the success of watershed-based plans. States should strive to work with the agricultural community to accomplish win-win situations whereby Farm Bill funds are actively used to support the implementation of watershed-based plans developed under Section 319. Where this approach is successful, Section 319 funds could be focused (in addition to monitoring, planning, and providing coordination support for projects) on the implementation of agricultural BMPs that are not eligible for Farm Bill funding (
EPA recognizes that situations will arise where a State appropriately places a high priority on implementing agricultural components of a watershed-based plan for which Farm Bill funding is not being provided, or is available at only modest levels that require supplementation with Section 319 funds. State and watershed managers should certainly take advantage of whatever funding sources and mechanisms are the best available and most appropriate to accomplish their watershed goals. In most cases, the resources needed to implement an entire watershed-based plan will be significant, and success will depend greatly on enlisting and obtaining the support of all important stakeholders and the resources that they can provide, including especially the resources made available by Congress through the Farm Bill.
In addition to USDA-supported programs, many other programs that are implemented at the Federal and State level have common and overlapping areas with the Section 319 program. States' activities to upgrade their nonpoint source programs in recent years have strengthened their links with these various State and Federal programs. Today's guidelines particularly encourage the integration of State nonpoint source management programs with other environmental programs by providing for increased Section 319 funding support for the development and implementation of watershed-based plans. Such integration provides a vehicle for cooperative design and implementation of watershed-based plans in a coordinated manner that employ the resources, authorities, and expertise of all relevant programs.
A number of EPA/State programs are closely related to nonpoint source pollution control and to watershed protection. To maximize effectiveness, State nonpoint source programs need to continue to be well integrated with these other State programs to best meet States' water quality needs. These include:
• The National Pollutant Discharge Elimination System (NPDES) point source program, particularly with respect to urban runoff, construction, inactive and abandoned mines, concentrated animal feeding operations, and marinas;
• Coastal protection programs, including especially coastal nonpoint pollution control programs under Section 6217 of the Coastal Zone Act Reauthorization Amendments of 1990 (CZARA, co-administered by EPA and the National Oceanic and Atmospheric Administration and co-implemented by our State counterparts), as well as the National Estuary Program;
• Wetlands protection programs implemented under Section 404 of the Clean Water Act as well as pursuant to a variety of other Federal and State authorities and programs;
• Source water protection programs under the Safe Drinking Water Act;
• Clean Lakes programs and wetlands protection and restoration programs under the Clean Water Act;
• Watershed planning programs; and
• Ambient monitoring programs.
In addition to coordinating program implementation with these various programs, State NPS program mangers should coordinate their funding needs with other CWA sources of funding. Most significant is the Clean Water State Revolving Fund (SRF) under Title VI of the Clean Water Act. The SRF is currently providing over $200 million annually to control pollution from nonpoint sources and for estuary protection. However, most States have under-utilized this resource to date. EPA believes that the SRF is particularly well suited to assisting in the implementation of nonpoint source projects requiring capital investment. States are encouraged to increase their use of this copious financial resource to help implement their nonpoint source watershed-based plans and other nonpoint source projects. For more information on the SRF program, see
In addition to coordinating with these water quality programs, States should coordinate with programs administered by the Federal land management agencies (
Finally, two other Federal agencies whose policies and practices can greatly influence and/or protect riparian areas, wetlands, and other sensitive areas and corridors are the Department of Transportation and the Federal Emergency Management Agency. Both of these agencies have programs that can help protect these areas or mitigate potential impairment to these areas, and both have funding programs that can be used to benefit water quality. EPA strongly encourages States to work with these partner agencies to achieve common goals.
These guidelines promote the use of Section 319 funding for developing and implementing watershed-based plans to protect unimpaired waters and restore impaired waters. Watershed-based plans to restore impaired waters are required, as described above, for all projects implemented with incremental dollars. However, even for watershed projects implemented with base funds, EPA recommends that whenever feasible, watershed-based plans be developed
For projects funded with incremental dollars, where a NPS TMDL for the affected waters has already been developed and approved or is being developed, the watershed-based plan must be designed to achieve the load reductions called for in the NPS TMDL. However, where a NPS TMDL has not yet been developed and approved or is not yet being developed for the waters, the State may use Section 319 funds to develop a watershed-based plan in the absence of the TMDL. In such cases, the plan must be designed to reduce nonpoint source pollutant loadings that are contributing to water quality threats and impairments. Where feasible, the plan should be designed to meet water quality standards. In this way, progress towards achieving water quality standards continues even before a TMDL is established. Once the TMDL is completed and approved, the plan must be modified as appropriate to be consistent with the load allocation portion contained within the TMDL. Alternatively, through the course of implementing the plan, the State may find that water quality standards are met, obviating the need to establish the TMDL. EPA believes that improving the integration of TMDLs and watershed plans to implement nonpoint source management measures will provide the most effective means for accelerating achievement of water quality standards.
To ensure that Section 319 projects make good progress towards remediating waters impaired by nonpoint source pollution, a watershed-based plan must have been completed before a State implements a watershed-based plan funded with incremental Section 319 dollars. These watershed-based plans must include the information set forth in items (a)-(i) below. This information will help provide assurance that the nonpoint source load allocations identified in the NPS TMDL (and/or anticipated in NPDES permits for the watershed) will be achieved. Furthermore, this information is critical in any case for ensuring the development of realistic plans to achieve protection goals or water quality standards, while at the same time providing a significant degree of flexibility to work with stakeholders in the watershed to use a range of innovative approaches to implement the plan.
To the extent that necessary information already exists in other documents (
Beginning in FY 2004, the following information must be included in watershed-based plans to restore waters impaired by nonpoint source pollution using incremental Section 319 funds. These requirements are not retroactive to watershed plans developed in accordance with the FY 2002 or FY 2003 Section 319 guidelines; those plans may continue to be developed and implemented with funds available in FY 2004 and future years in accordance with the previously applicable requirements of the Section 319 guidelines.
a. An identification of the causes and sources or groups of similar sources that will need to be controlled to achieve the load reductions estimated in this watershed-based plan (and to achieve any other watershed goals identified in the watershed-based plan), as discussed in item (b) immediately below. Sources that need to be controlled should be identified at the significant subcategory level with estimates of the extent to which they are present in the watershed (
b. An estimate of the load reductions expected for the management measures described under paragraph (c) below (recognizing the natural variability and the difficulty in precisely predicting the performance of management measures over time). Estimates should be provided at the same level as in item (a) above (
c. A description of the NPS management measures that will need to be implemented to achieve the load reductions estimated under paragraph (b) above (as well as to achieve other watershed goals identified in this watershed-based plan), and an identification (using a map or a description) of the critical areas in which those measures will be needed to implement this plan.
d. An estimate of the amounts of technical and financial assistance needed, associated costs, and/or the sources and authorities that will be relied upon, to implement this plan. As sources of funding, States should consider the use of their Section 319 programs, State Revolving Funds, USDA's Environmental Quality Incentives Program and Conservation Reserve Program, and other relevant Federal, State, local and private funds that may be available to assist in implementing this plan.
e. An information/education component that will be used to enhance public understanding of the project and encourage their early and continued participation in selecting, designing, and implementing the NPS management measures that will be implemented.
f. A schedule for implementing the NPS management measures identified in this plan that is reasonably expeditious.
g. A description of interim, measurable milestones for determining whether NPS management measures or other control actions are being implemented.
h. A set of criteria that can be used to determine whether loading reductions are being achieved over time and substantial progress is being made towards attaining water quality standards and, if not, the criteria for determining whether this watershed-based plan needs to be revised or, if a NPS TMDL has been established, whether the NPS TMDL needs to be revised.
i. A monitoring component to evaluate the effectiveness of the implementation efforts over time, measured against the criteria established under item (h) immediately above.
EPA recognizes the difficulty of developing the information described above with precision and, as this guidance reflects, believes that there must be a balanced approach to address this concern. On one hand, it is absolutely critical that States make, at the subcategory level, a reasonable effort to identify the significant sources; identify the management measures that will most effectively address those sources; and broadly estimate the expected load reductions that will result. Without such information to provide focus and direction to the project's implementation, it is much less likely that the project can efficiently and effectively address the nonpoint sources of water quality impairments. On the other hand, EPA recognizes that even with reasonable steps to obtain and analyze relevant data, the available
The watershed-based plan must address a large enough geographic area so that its implementation will address all of the sources and causes of impairments and threats to the waterbody in question. These plans should include mixed ownership watersheds when appropriate to solve the water quality problems (
EPA recognizes that States already have in place or have been developing watershed plans and strategies of varying levels of scale, scope, and specificity that may contribute significantly to the process of developing and implementing watershed-based plans. We encourage States to use these plans and strategies, where appropriate, as building blocks for developing and implementing the watershed-based plans. In doing so, to the extent that other documents contain the information identified above in Section III.D, this information may be incorporated by reference into States' watershed-based plans. (Where these plans and strategies have been developed at a large geographic scale, they will in many cases need to be refined at a smaller watershed scale to provide the information needed to produce effective watershed-based plans.) In particular, we recommend that States use their continuing planning processes, water quality management plans (WQMPs), Watershed Restoration Action Strategies (WRASs), comprehensive conservation and management plans (CCMPs), CZARA programs, and other similar holistic watershed documents, to help guide their watershed-based approaches to watershed-based plan development and implementation.
EPA encourages States to develop NPS TMDLs or, where applicable, sets of NPS TMDLs on a watershed basis. We encourage States to implement watershed-based plans holistically, as this approach usually provides the most technically sound and economically efficient means of addressing water quality problems. Consistent with this approach, EPA encourages States to include in their watershed-based plans approaches that will address all of the sources and causes of impairments and threats to the watersheds in question. Thus, the watershed-based plans should address not only the sources of water quality impairment, but also any pollutants and sources of pollution that need to be addressed to assure the long-term health of the watershed, including both surface and ground water that serve as sources of drinking water. Finally, since watersheds with completed TMDLs have the best documentation of the load reductions needed to achieve water quality standards, EPA recommends that States assign the highest priority to implementing watershed-based plans for waters that have completed TMDLs.
We further recommend that States give their highest funding priority to projects that are supported by additional funding from other Federal, State, and local agencies (particularly USDA-supported programs), SRF, or private sector funding. Additionally, States should consult their SRF Program's Integrated Planning and Priority Setting System, if such system is in use, to address the highest priority water quality improvement projects (see
As States continue to strengthen their focus upon restoring waters that have been listed as impaired on their Section 303(d) lists, as well as to protect waters that are currently not impaired, it is critical that they monitor both: (1) the progress that they are making towards achieving and maintaining water quality standards; and (2) the implementation of their programs and projects to assure that they are successfully implemented. In Section IV.E below, we discuss the use of the Section 319 program's Grants Reporting and Tracking System (GRTS) to track implementation of programs and projects, estimate pollutant load reductions, and report the amount of acres of wetlands and feet of riparian areas protected or restored. In addition, EPA's Watershed Assessment, Tracking and Environmental Results (WATERS) Information System, which combines a variety of water quality information, including that which is developed by States in Section 305(b) reports and 303(d) lists, will provide information that indicates when an impaired waterbody achieves water quality standards. (For more general information on WATERS, and on the Consolidated Assessment and Listing Methodology (CALM) that supports the 305(b) and 303(d) processes, see
There are a variety of technical tools that can be used by States to monitor their progress at a program or project level. EPA strongly encourages States to enter their water quality monitoring data, for data collected in a waterbody pursuant to the implementation of a Section 319 project, into EPA's “storage and retrieval” (STORET) data system. States that are not yet prepared to use STORET for storage of data generated in the development and implementation of Section 319 watershed projects should in the interim store their assessment in an accessible electronic database.
We discuss some recommended tools and methods immediately below. In addition, States with approved CZARA programs are responsible under CZARA for monitoring and tracking progress through successful implementation of CZARA management measures. EPA has also published several detailed guidance documents to assist States and others in conducting monitoring programs to both track implementation and determine the success of on-the-ground projects in achieving water-quality-improvement goals. See Monitoring Guidance for Determining the Effectiveness of Nonpoint Source Controls (U.S.
States need to use several sets of measures to fully determine their success in implementing their nonpoint source programs. These include measures that indicate progress towards achieving and maintaining beneficial uses of water; towards other long-term goals of the State's program (
As discussed in Section IV.E of these guidelines, States must include in their annual reports at least the three measures of progress that are required by Section 319(h)(11), including implementation milestones, available information on reductions in nonpoint source pollutant loadings, and available information on improvements in water quality. Approaches that can be used to meet either short-term tracking or longer-term project evaluation needs include ambient water quality monitoring (
Appendix A of these guidelines contains an illustrative set of these and other indicators and measures, including those required to implement Section 319(h)(11) and TMDLs, that can help the States and the public gauge the progress and success of their programs. States may identify and use other indicators and measures that are most relevant to their particular nonpoint source problems, programs, and projects. However, States should in all cases use environmental indicators to the greatest extent feasible, so that the State and the public may best recognize the State's progress in addressing water quality problems in terms that are most relevant to the public's concerns.
Appropriate monitoring of watershed project implementation is an essential tool to enable States to identify nonpoint source pollution problems, develop effective watershed-based plans, evaluate the effectiveness of actions taken, and meet reporting requirements under Section 319(h)(11). All watershed projects designed to implement a watershed-based plan must describe how the plan's monitoring component will be used to evaluate the effectiveness of the implementation efforts over time, measured against the specific criteria that are established in the watershed plan. As described in Section III.D (“Watershed-Based Plans”), the criteria against which progress is being monitored should be designed to focus on whether loading reductions are being achieved over time and substantial progress is being made towards attaining or maintaining water quality standards. This can be achieved through watershed-scale monitoring to measure the impacts of multiple programs, projects, and trends over time (
While States may use Section 319(h) grant funds for monitoring activities for particular watershed projects, States are encouraged to also explore other cost-effective approaches to conducting monitoring. For example, the U.S. Geological Survey and the National Oceanic and Atmospheric Administration hold an array of ambient data and can provide support for various monitoring activities. In addition, volunteer monitoring programs are used by many States to obtain water quality data in a cost-effective manner.
To provide a national documentation of the feasibility of controlling and preventing pollution resulting from nonpoint sources, and to improve technical understanding of nonpoint source pollution and the effectiveness of nonpoint source control technology and approaches, EPA and many States have been implementing a more rigorous and standardized monitoring framework that can be used for a representative subset of watershed projects funded under Section 319. Monitoring for this subset of selected watershed projects is being conducted at appropriate frequency intervals and for appropriately long periods of time that include monitoring before, during, and following implementation to assure the accounting of various sources of variation. We encourage States to conduct intensive water quality monitoring of one or more of their projects as part of this national evaluation.
EPA has developed a framework for selecting national monitoring projects, issued guidelines for minimum monitoring activities, and developed software for managing and reporting data. To date, 23 high-quality national projects have been selected across the country through a rigorous but collaborative process involving the States, EPA Regions, and EPA Headquarters. Additional high-quality monitoring projects will be selected in future years using the same collaborative process. For all projects, EPA provides specialized technical support in project development, monitoring design, data management and analysis, and reporting. From time to time, and in close collaboration with relevant States and project managers, EPA will publish progress reports and results. The most recent report,
Section 319 grants are important resources available to States to restore impaired waters and to protect threatened and good-quality waters. These guidelines provide States with a framework to use Section 319 grant funds in a manner that will implement their nonpoint source management programs effectively to achieve the vision established at the beginning of these guidelines and to achieve the specific goals and objectives established in their upgraded State nonpoint source management programs. Moreover, EPA and States will continue to minimize administrative responsibilities to assure that the funds are being used effectively and in a legally appropriate manner.
While Section 319 funds are important resources, it remains critical for States to continue to build their existing partnerships and to develop
On January 9, 2001, EPA published rules to revise and update its grant regulations that apply to Section 319 and other EPA grants programs. (See 66 FR 1725-1747 (January 9, 2001), 40 CFR part 35, available at
EPA believes that the States' efforts to upgrade State nonpoint source programs during the past five years have much in common with goals and principles of the Performance Partnership Grants (PPG) program and the broader National Environmental Performance Partnership System (NEPPS) of which the PPG program is a part. These included promoting a focus upon improved environmental results by directing scarce public resources toward the States' highest priority, highest value activities; providing States with greater flexibility to achieve those results; improving public understanding of environmental conditions and choices; and enhancing accountability to the public and taxpayers.
These new guidelines have similarly been drafted to be consistent with the overall framework of the NEPPS and PPG. They focus on broad environmental goals (
EPA uses the allocation formula presented in Appendix D to determine the amount of funding to be awarded to each State. The factors used in the allocation formula, as well as the weights used in the formula, have remained the same as they have been since the Section 319 grants program began. Each year, the Congressional appropriation for Section 319 will be multiplied by the applicable percentage presented in Appendix E to determine each State's allocation for that year. As soon as the annual Section 319 appropriation is made by Congress, EPA Headquarters will immediately notify the EPA Regional offices of each State's allocation, and the Regions will immediately notify the States.
EPA will continue to award funds to States in two portions. EPA will first subtract $100 million from the total Section 319 appropriation. That portion is referred to as the “incremental funds” while the remaining portion is referred to as the “base” funds. Both of these portions are allocated to the States in accordance with the allocation formula discussed in the preceding paragraph. As discussed in Section III.B above, the base funds are to be used by the States to generally implement all aspects of their nonpoint source programs, while the incremental funds are to be primarily focused upon the implementation of watershed-based plans to restore waters impaired by nonpoint source pollution.
These guidelines present a six-step process for awarding Section 319 grants. EPA recognizes that there is a wide disparity among States as to their desired schedules (
States are strongly encouraged to begin their internal project development processes (such as identification of priority areas for funding and solicitation of project proposals) as early as possible to assure more time for the State and other project proponents to develop excellent projects in advance of the formal grant application process. States should reference their approved nonpoint source management programs (
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EPA Headquarters will strive to issue brief annual guidance, if any is needed, in the early Spring preceding the Fiscal Year for which the Section 319 funding will be applicable.
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States should expeditiously implement their processes to develop or solicit draft grant applications (
EPA strongly recommends that the State provide clear written or oral guidance to all project applicants to assure that the applicants are aware of Federal requirements for project eligibility and State criteria for project selection.
Each State will submit a draft grant application, including a draft work plan. EPA encourages States choosing to submit any voluminous materials do so
The work plan to develop a watershed-based plan must include, at a minimum: (1) An identification of the geographical extent of the watershed to be covered by the plan; (2) a schedule for developing the watershed plan; and (3) an estimate of the Section 319 funds that will be used for developing the watershed plan. All watershed-based plans that are developed with Section 319 funds must ultimately include all of the information identified in Section III.D above (“Watershed-Based Plans”).
States are not required to submit their detailed watershed-based plans for EPA approval. However, they must submit a brief work plan that: (1) Identifies the watershed-based plan that will be implemented; (2) provides a schedule for implementing the watershed-based plan; (3) includes a brief summary of the plan; and (4) provides an estimate of the Section 319 funds that will be used to implement the watershed plan. If a State requests funding to implement a watershed-based plan at the same time that it submits a request for funding to develop the plan, the State must make its best effort to provide the information regarding the implementation phase of the project. If the State believes that it does not yet have enough information to do so, the Region and State should discuss whether the State has enough information at this time to provide a reasonable basis for the State to make a request for implementation funding prior to completing the development of the watershed-based plan. When appropriate, the request for implementation funding may be regarded as premature and deferred to the following year.
In lieu of requiring States to submit their watershed-based plans to EPA for approval, EPA has chosen to defer to States' expertise and judgment in developing and implementing these plans. However, EPA recognizes that watershed-based plans are such critical components that the success of a State NPS management program rests significantly on States' success in developing good-quality plans and implementing them effectively. Therefore, EPA expects that Regional management and oversight of Section 319(h) grants (see Section V of these guidelines) will place a special emphasis on reviewing these activities from time to time and that Regions will therefore periodically review and discuss State progress in developing plans in conformity with these guidelines and implementing them effectively. Regions must include a condition in the grant that contains the language set forth in Appendix F to these guidelines. That language provides that, upon Regional request, the State will provide copies of any (
Work plans for all other projects and activities should include a brief and concise synopsis explaining the State's strategy for using Section 319 funds in the current fiscal year. This synopsis should outline the problem to be addressed; the project's goals and objectives; the lead implementing agency and other agencies that will be authorized to expend project funds; the types of measures or practices that will be implemented; the projected implementation schedule; the outputs to be produced by performance of the project; and the environmental indicators and/or other performance measures that will be used to evaluate the success of the project.
Outputs for activities should always be quantified whenever it is practicable to do so (
EPA encourages States to develop multi-year work plans for Section 319 grants. For example, the State may wish to present a three-year work plan which would guide the State's grant activities for the next three years. This work plan, when approved by EPA, would not have to be resubmitted and re-approved except to the extent that the State wishes to change it to address new circumstances. In addition to the information required above (as applicable), the work plan should include the interim milestones and final dates for completion of activities. The interim milestones should be sufficiently frequent to assure timely performance throughout the project period, so that the State can identify problems and correct them expeditiously.
EPA would like to clarify that the use of a multi-year work plan does not require the award of all project funds in a single year. It may rather be used to establish the State's and EPA's mutual intent to award funds over a several-year period to implement subsequent phases of the work plan. This may be particularly appropriate in the case of a watershed-based plan that will require multiple years to implement.
The multi-year planning approach will reduce paper work and will improve the State's ability to engage in long-term planning and implementation with respect to both programmatic activities and specific watershed projects. States will, however, retain the option of developing and modifying aspects of their programs or projects on an annual basis where they deem appropriate.
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The Region will review each State's draft application and meet or conduct a telephone conversation with each State to resolve any technical or administrative issues. Following this
The Regional response should include written comments on the State's draft application, paying particular attention to its consistency with applicable legal requirements; applicable guidelines and guidance; and the goals, objectives, and priorities established in the State management program. The Region will work with the State to jointly ensure that: The work plan is designed to help achieve the goals and objectives contained in EPA's guidelines and in the State's nonpoint source management program; the work plan has programmatic, technical, and/or scientific merit; the costs are reasonable and necessary; the work plan is well-coordinated with other State and Federal programs; gaps between program objectives and planned activities are identified and resolved; and the work plan clearly identifies the specific outcomes, outputs, and other results that are linked to funding and includes target dates and milestones for achieving them.
In addition to commenting on the consistency of the State program with applicable requirements, guidelines, guidance, and State program goals, objectives, and priorities, Regions may also provide technical comments to the State on ways in which particular proposed projects or programs could be clarified, improved, or otherwise modified to result in a better project or program. These comments should be offered as technical suggestions and should not be regarded by the Region or State as a prerequisite to grant award unless they raise significant concerns that a proposed project may fail for technical reasons.
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States are encouraged to submit final work plans and grant applications to EPA Regions as quickly as possible. States should contact EPA to discuss any questions and the intended responses to EPA comments and concerns, and the final work plan must provide a response to all comments. Good communication between the States and EPA will help assure work plan approval will occur as quickly as possible and reduce the need for additional rounds of comment from EPA.
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Each Region will review its States' final work plans. If the State's work programs meet all applicable legal requirements, guidelines and guidance, and the goals, objectives, and priorities established in the State management program, the Region will award the final grant as quickly as possible. Regions will strive to conduct final reviews and award the grant to the State within 60 days of receipt of the final work plans. Where issues remain, the Region will elevate discussions to more senior management levels quickly to achieve a satisfactory resolution of the problem. In the event that funds cannot be fully awarded to a particular State within a reasonable time, the Region may reallocate the funds to another State. However, the Region and State should make all reasonable efforts to avoid such an unsatisfactory result.
The grant award is contingent upon the Region determining in writing that the State has made “satisfactory progress” in the preceding fiscal year in meeting the schedule specified in the State's Section 319 nonpoint source management program (as discussed further below in Section IV.D).
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States will obligate the awarded funds as quickly as possible and conduct funded activities according to the schedules contained in the approved work plan. EPA has interpreted Section 319(h)(6) to provide that Section 319(h) funds granted to a State shall remain available for obligation by the State for one year from the grant award. For example, grant funds awarded to a State on December 1, 2003, remain available for obligation until December 1, 2004. The amount of any such funds that cannot be obligated by one year from the grant award shall, under Section 319(h)(6), be available to EPA for granting to other States. Regions should include in each grant a condition requiring the grant recipient to award all proposed contracts and interagency agreements within one year after the grant award.
EPA recognizes that each State has a different process, often governed or influenced by State laws, regulations, or control mechanisms, that result in varying time periods for the award of State sub-grants or sub-contracts to implement the projects. States should make every effort, including modifying State procedures if appropriate, to assure that the funds are made available to project implementers as soon as possible after the grant is awarded to the State. Projects often depend upon the active cooperation of private individuals, many of whom are not professional nonpoint source personnel; it is important to be responsive to their needs to assure that credibility of the State's program is maintained and that participation in the program continues to grow.
The term “obligate” does not mean to “expend.” As defined in 40 CFR Section 31.3, “obligations” means “the amounts of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a given period of time that will require payment by the grantee during the same or a future period.”
EPA believes that it is important that funds appropriated by Congress do not languish unused for significant amounts of time. Generally speaking, it is in the public interest for States to expend appropriated and awarded funds as rapidly as practicable upon receipt by the State. Where States are implementing multi-year watershed projects, the preferred approach may be to award the funds gradually over a period of years rather than to award all of the funds at one time. Regions and States are encouraged to work together to assure that funds awarded are sufficient to support any implementation activities in the watershed that may occur within a reasonable time, while agreeing that additional funds would be made available in future funding years to enable the project to be fully implemented over a period of years. EPA intends to engage in dialogue with the States during the coming year to assure that we meet the dual goals of putting the public's funds to work expeditiously while at the same time providing assurance to the States that they will receive enough funds to carry implementation efforts to successful completion.
Section 319 grant funds are to be directed towards the States' and EPA's common vision that all States implement dynamic and effective programs designed to achieve and maintain beneficial uses of water. Approved State nonpoint source management programs provide the framework for determining what activities are eligible for funding under Section 319(h). While these guidelines emphasize the use of Section 319 funds for the development and implementation of watershed-based plans to restore priority waters, States may also use Section 319 base funds for other activities that will generally support these goals, as well as water quality protection goals, including nonregulatory or regulatory programs
As in the past, EPA's policy will be to award all Section 319 grants under Section 319(h), in lieu of awarding separate grants under Section 319(i). Thus, these guidelines apply to all Section 319 grants. This approach will encourage integration of ground-water activities with overall State nonpoint source control programs, while maximizing State flexibility to consider and prioritize all causes and effects of nonpoint sources of water pollution.
Ground-water activities are eligible for Section 319(h) grants to the extent that they are identified directly in the State's nonpoint source management program or through incorporation in the management program by reference to the State's Ground-Water Protection Strategy, Comprehensive State Ground-Water Protection Program, or Source Water Protection Program. If such activities are not currently included in the State's nonpoint source management program, the program should be amended to include them.
EPA encourages States to coordinate their nonpoint source management programs with their source water protection programs. This will assure that programs, authorities, and funding sources to protect sources of drinking water from nonpoint source pollution are appropriately coordinated to maximize the effectiveness and efficiency of both programs’ efforts.
Section 319 funds may be used to fund any urban storm water activities that are not specifically required by a draft or final NPDES permit. EPA has issued several “phases” of regulations defining what activities are subject to the NPDES permit requirements of Section 402(p)(2) of the Clean Water Act. Phase I, in place since 1990, requires operators of medium and large municipal separate storm sewer systems (MS4s) located in incorporated places and counties with populations of more than 100,000, certain industrial activities, and construction activities disturbing 5 acres of land or more to obtain an NPDES permit to discharge storm water runoff (see 55 FR 47990, November 1990). In 1999, EPA expanded the Federal storm water program with the promulgation of the “Phase II” rule (see 64 FR 68722, December 8, 1999). Phase II requires operators of small MS4s (non-Phase I regulated MS4s) in “urbanized areas” and small construction activities disturbing between 1 and 5 acres of land to obtain an NPDES permit.
States may use section 319(h) funds for those urban storm water discharges that are not addressed by Phase I and Phase II stormwater program requirements. These include aspects of Phase I and II activities that support but do not directly implement activities required by Phase I or Phase II permits.
EPA and the States recognize the benefits of integrating nonpoint source funds and storm water activities as much as is legally allowable. Listed below are a variety of urban runoff management activities that could be eligible for Section 319(h) funding:
• Technical assistance to State and local storm water programs;
• Monitoring needed to design and evaluate the effectiveness of implementation strategies;
• Best management practices for pollution prevention and runoff control (except for BMPs required by a draft or final NPDES permit);
• Information and education programs;
• Technology transfer and training; and
• Development and implementation of regulations, policies, and local ordinances to address storm water runoff. (These may apply to areas covered by NPDES permits, provided that the regulations, policies and ordinances apply to non-permitted areas as well.)
Historically, urban storm water management control efforts have focused on water drainage problems (i.e., water quantity). Now many storm water control BMPs are designed to control both water quantity and water quality. Section 319(h) funds may be used to assist in the incremental funding of certain water quality components of such practices, except as described below.
Section 319(h) nonpoint source control funds may not be used to implement specific requirements of draft or final NPDES storm water permits, nor to implement permit application requirements of EPA's storm water regulations. For example, Section 319(h) funds may not be used to meet permit application requirements such as mapping storm water systems, identifying illicit connections, characterizing storm water discharges, or monitoring required by permits. Section 319(h) grant funds may not be used to pay for BMPs or “end of pipe” treatments which are required as part of a draft or final NPDES permit.
These prohibitions are based on the statutory limitations on the use of Section 319 funds, including Congressional intent that these funds be used to address nonpoint sources, rather than permitted point sources. Congress determined that permitted point sources would generally comply with NPDES permit requirements without obtaining Federal grants. (However, EPA notes that “publicly owned treatment works,” which includes publicly owned methods or systems for preventing, abating, reducing, storing, treating, separating or disposing of “storm water runoff” are eligible to receive Federal loans under the State Revolving Loan Fund program.)
Abandoned mine land reclamation projects that are designed to restore water quality are eligible for Section 319 funding except where funds are used to implement specific requirements in a draft or final NPDES permit. For example, Section 319 funds cannot be used to build treatment systems required by an NPDES permit for an inactive mine, but they may be used to fund a variety of other remediation activities at the same mine. Examples of activities that could be eligible for funding include:
• Remediation of water pollution from abandoned mines that have not yet been issued a draft or final permit;
• Remediation of water pollution from portions of abandoned mine sites that are not covered by a draft or final permit;
• Mapping and planning remediation at abandoned mine land sites;
• Monitoring needed to design and evaluate the effectiveness of implementation strategies;
• Technical assistance to State and local abandoned mine land programs;
• Information and education programs;
• Technology transfer and training; and
• Development and implementation of policies to address abandoned mine lands.
The Natural Resources Conservation Service and local soil conservation districts have a vast array of on-the-ground experience in the area of rural abandoned mine lands. In addition, the Office of Surface Mining has a 10% set-aside from its Abandoned Mine Land program to address water quality problems from abandoned mines.
Section 319 funds may be used to support the implementation of a wide range of animal waste storage, treatment, and disposal options for animal feeding operations (AFO) that are not subject to NPDES permits requirements. The NPDES regulations, published on December 15, 2002, may be reviewed at
In March 1999, EPA and USDA published the Unified Animal Feeding Operation Strategy (AFO Strategy). (This Strategy is available at
The AFO Strategy includes a goal that all AFOs will have comprehensive nutrient management plans (“CNMP's”). USDA and EPA funding assistance programs such as the Environmental Quality Incentives Program and the Section 319 grants program are critical tools to help assure the development and implementation of several hundred thousand CNMP's for non-permitted AFOs in the United States. To this end, Regions must assure that all Section 319 grants that include programs or projects that assist AFOs include a provision (either as a grant condition or through a separate document such as a workplan or BMP implementation plan) to assure that any AFO that receives financial assistance pursuant to the grant has and will implement a CNMP. (Any aspect of a CNMP that is not directly related to water quality concerns—
USDA has developed a variety of practice standards, guidance documents, and other technical assistance tools to assist in the development and implementation of CNMP's. We recommend that any CNMP for Section 319-funded AFO projects be developed, reviewed, or approved by a person who has been certified through a certification program accepted by USDA or by another equivalent certification program. An “equivalent certification program” may include State programs for certifying private and public sector nutrient management planners.
Lake protection and restoration activities are eligible for funding under Section 319(h) to the same extent, and subject to the same criteria, as activities to protect and restore other types of waterbodies from nonpoint source pollution. Where a lake is listed as impaired on the Section 303(d) list, Section 319 funding can be used to develop and implement watershed-based plans that contain the information in Section III.D.
States are encouraged to use Section 319 funding for eligible activities that might have been funded in previous years under Section 314 of the Clean Water Act. Section 319 funds should not be used for in-lake work such as aquatic macrophyte harvesting or dredging, unless the sources of pollution have been addressed sufficiently to assure that the pollution being remediated will not recur. This policy is fully consistent with the Clean Lakes regulations at 40 CFR 35.1650-2 (5)(i) and (ii) which provide:
The project does not include costs for harvesting aquatic vegetation, or for chemical treatment to alleviate temporarily the symptoms of eutrophication, or for operating and maintaining lake aeration devices, or for providing similar palliative methods and procedures, unless these procedures are the most energy efficient or cost effective lake restorative method.
A recommendation by the Senate Appropriations Committee (see Senate Report 106-161) suggests that each State use at least 5 percent of its Section 319 funds for Clean Lakes activities to address the restoration and protection needs of priority lakes, ponds and reservoirs. We suggest that States give priority to funding:
LWQA projects are projects which are intended to compile a comprehensive statewide assessment of lake water quality, to enhance overall State lake management programs, and to increase public awareness and commitment to protecting lakes. Specific activities might include: developing a statewide lake monitoring program; developing an integrated Section 305(b) water quality report and Section 303(d) list of impaired waters; building and enhancing the State's lake-related public outreach and volunteer monitoring activities; and developing and enhancing state lakes programs including travel/training for program managers to attend the annual meeting on “Enhancing State Lake Management Programs.”
Phase 1 Diagnostic/Feasibility Studies are studies which are intended to: perform comprehensive studies of particular lakes included on State's priority lists including Section 303(d) lists; determine the causes, sources, and extent of pollution to the lake; evaluate possible solutions; and recommend the most feasible and cost-effective methods and measures for restoring and protecting lake resources.
The specific requirements for Phase 1 studies are listed in the Section 314 Clean Lakes Program regulations (40 CFR part 35, subpart H). The Clean Lakes Program regulations are still valid and provide a sound basis for the design of Phase 1 studies, and thus, we suggest that you consult these regulations when you develop work plans for Phase 1 projects. In many cases, Phase 1 studies should provide the basis for the development of a TMDL and watershed-based plan for a particular lake or reservoir.
Phase 2 Restoration/Implementation Projects are projects which are intended to implement lake protection and restoration measures recommended in Phase 1 studies. For lakes that are listed as impaired on the Section 303(d) list, such restoration measures should be integrated into a watershed-based plan that contains the information in Section III.D.
Phase 3 Post-Restoration Monitoring Studies are studies to determine the longevity and effectiveness of various restoration techniques and to advance the science of lake restoration. Funding priorities should support the primary purpose of these studies which is to assess the effectiveness of restoration techniques that have been applied through Phase 2 projects. Lower priority consideration should be given to projects that generally support activities to improve and advance the science of lake restoration and management but are
Section 319-funded Clean Lakes activities should be funded in the same manner as other parts of a State's Section 319 work program, and all operative Section 319 grant requirements and guidelines (including provisions for the use of incremental funds, and reporting on the amount of funding devoted to Clean Lakes activities) will apply to these projects as well. Please note that while a State may decide to fund a LWQA and several Phase 2 studies with Section 319 funds, such funds are included within the overall limitation allowing States to use no more than 20 percent of their entire Section 319 allocation to upgrade and refine their nonpoint source programs and assessments. Additionally, Clean Lakes activities should be funded only in lakes that are publicly owned and that have public access, consistent with the Clean Lakes regulations at 40 CFR 35.1605-3.
EPA has published additional, separate guidance for lakes and reservoirs. (See “Guidance on Use of Clean Water Act and Safe Drinking Water Act Authorities to Address Management Needs for Lakes and Reservoirs,” issued July 9, 1998, signed by Robert H. Wayland III, Director, Office of Wetlands, Oceans and Watersheds (available at:
As noted previously, Section 319 grants must meet certain statutory, regulatory and other administrative criteria that have been established to assure that Section 319 funds are used in a fiscally prudent manner. (A reference document produced by the State-EPA Nonpoint Source Partnership Grants Management Workgroup in March 2003 provides an overview of the Federal requirements for administering Section 319 grants. This document can be found at:
State nonpoint source program managers should note that EPA has most recently revised the grant regulations at 40 CFR part 35 on January 9, 2001. (See 66 FR 1725-1747.) These regulations contain new Sections 35.260—268, that address the purpose of nonpoint source management grants (Section 260); the maximum Federal share (Section 265); the maintenance of effort requirement (Section 266); and some of the award limitations contained in Section 319 (Section 268).
We discuss below some of the most significant criteria that apply to the award of Section 319 grants.
Section 319(h) of the Clean Water Act provides that Section 319(h) grants are to be made “for the purpose of assisting the State in implementing such management program.” The grant work program must therefore be designed to “implement” the approved nonpoint source management program. Each funded program activity or project must in fact lead to accomplishment of management program objectives that are identified in the State's approved and upgraded nonpoint source management program. Grant work plans must link the funded activities or projects to the relevant element or elements of the States nonpoint source management program.
All Section 319(h) grants must be awarded as continuing environmental program grants, consistent with 40 CFR, part 35. Section 319(h) grants have some unique administrative characteristics (i.e., multi-year vs. one-year budget and project periods), which are different from other EPA continuing environmental grant programs. Unlike most other continuing environmental grants, Section 319(h) grants are not required to be closed out annually. However, Regions are encouraged to award new continuing environmental program grants each year rather than to add funds to an existing State grant through amendments. This will allow for greater program accountability over the multi-year duration of these grants. The Regions must also ensure that all existing State grants are properly closed out at the conclusion of the project period.
Section 319(h)(3) provides: “The Federal share of the cost of each management program implemented with Federal assistance * * * in any fiscal year shall not exceed 60 percent of the cost incurred by the State in implementing such management program and shall be made on the condition that the non-Federal share is provided from non-Federal sources.” The match need not be on an item-by-item basis; rather, a single figure that covers the entire non-Federal share of the costs of implementing a State's Section 319 program. The non-Federal match does not need to be contributed at the time of the grant award, but the funds must be contributed in a timely manner as needed to meet the schedules established in the work plan milestones. EPA Regions must verify that grantees have satisfied the match requirements upon review and submittal of the grantee's final financial status report.
Nonpoint source program managers should be aware that recycled State Revolving Funds under Title VI of the CWA can be used to provide a match for Section 319 grants. These are funds that have been loaned by the State and subsequently repaid by the borrower to the State. The repaid funds are then recycled by the State Revolving Fund program to provide loans that fund other water quality projects. These recycled funds are regarded as State monies and therefore are eligible to be used as match for Section 319 funds, provided that they, like any other Section 319 match funds, are used to implement the State's approved Section 319 management program.
Section 319(h)(7) provides that States may use Section 319(h) funds to provide financial assistance to “persons” only if the costs are related to implementing “demonstration projects.” EPA does not interpret this provision to mean that a BMP or management measure may be funded in only one location. A successful or potentially successful approach may need to be assessed and demonstrated in many locations to indicate its widespread utility in a variety of hydro-geological and sociological settings. Moreover, projects should be implemented in a variety of locations within each State so that they may in fact provide education, information, and outreach to others who may wish to avail themselves of the same approaches used in the projects.
In particular, EPA does not believe that Congress intended to preclude the funding of demonstration watershed projects that may require the State to share the cost of a particular practice or set of practices at a number of sites within the watershed in order to demonstrate the overall effectiveness of the adopted approach in solving the water quality problem. EPA's and the States' experiences during the past decade have demonstrated that watershed problems cannot generally be solved without implementing a comprehensive plan with appropriate measures and practices at appropriate sites throughout the watershed.
Although there have now been an increasing number of nonpoint source success stories that have improved water quality on a very small geographic scale, our nation has generally not yet achieved success in abating or preventing nonpoint source pollution at a scale that achieves the restoration or protection of entire watersheds to meet water quality standards. Thus, at this early stage in our collective attempts to protect and restore watersheds by abating nonpoint source pollution, each State needs to implement watershed-scale projects that demonstrate how to successfully implement nonpoint source watershed-based plans to restore and protect watersheds. For this reason, as discussed earlier in Section III.B of this guidance, EPA is focusing incremental Section 319 funds upon the development and implementation of watershed-based plans to implement NPS TMDLs that will restore water quality.
To ensure widespread implementation of BMPs in demonstration projects in high-priority watersheds, we encourage States to supplement Section 319 cost-share to individuals with additional cost-share from State funds, as well as to work with other funding authorities and persons that can contribute resources. Where such an approach is followed, the total cost-share to an individual from Section 319, State and other Federal (
Section 319(h)(8) of the Clean Water Act provides that no Section 319 grant may be made to a State in any fiscal year unless the Administrator “determines that such State made satisfactory progress in such preceding fiscal year in meeting the schedule specified by such State under subsection (b)(2).” Section 319(b)(2) in turn provides that States' approved Section 319 management programs shall include:
A schedule containing annual milestones for (i) utilization of the program implementation methods identified in subparagraph (B), and (ii) implementation of the best management practices identified in subparagraph (A) by the categories, subcategories, or particular nonpoint sources designated under paragraph (1)(B). Such schedule shall provide for utilization of the best management practices at the earliest practicable date.
The Region must determine, based on an examination of State activities, reports, reviews, and other documents and discussions with the State in the previous year, whether the State's progress for the previous fiscal year in meeting the schedule set forth in its nonpoint source management program was satisfactory. A very high level of significance should be assigned to the State's development and implementation of watershed-based plans in accordance with these guidelines and in accordance with any schedules that have been established. In addition, for States with approved CZARA programs, successful implementation of CZARA management measures can assist Regions in determining satisfactory progress.
Regions must include in each Section 319 grant (or in a separate document, such as the grant-issuance cover letter, that is signed by the same EPA official who signs the grant), a written determination that the State has made satisfactory progress during the previous fiscal year in meeting the schedule of milestones specified by the State in its nonpoint source management program. The Regions must include brief explanations that support their determinations.
We discuss States' grants reporting requirements in Section IV.E below. These reports can, if appropriately done, provide much of the written information needed by the Regions to determine whether the States have made satisfactory progress.
Section 319(h)(9) of the Clean Water Act requires any State applying for Section 319 grants to establish and maintain its aggregate annual level of State nonpoint source pollution control expenditures for improving water quality at the average level of such expenditures in FY 1985 and 1986. This is referred to as the State's “Maintenance of Effort” (MOE) requirement. States should establish their FY 1985 and 1986 levels and annual levels based on expenditures by the lead State agency or agencies responsible for the State's nonpoint source pollution control activities. Federal funds may not be included in calculating the MOE base level.
• Calculation of expenditures is based on activities of the State lead nonpoint source agency or agencies responsible for the State's nonpoint source pollution control activities, not on what might be termed related activities of other State agencies with primary missions other than nonpoint source control. For example, if the State water quality agency and agricultural agency both have specific nonpoint source water quality control programs, these should be counted in the MOE. State soil conservation programs having water quality improvement or maintenance as a primary objective also should be included in a State's MOE.
• The MOE base level or annual level cannot include the MOE or matching expenditures for other Federal programs, such as Sections 106, 319, 205(j)(5), 314, and 117.
• Determination of whether the State expenditures meet the MOE level for purposes of awarding a Section 319(h) grant will be based on the grantee expenditures projected in the grant application. (The State will report whether it has met its MOE requirements in its final Financial Status Report at the end of the budget year.)
Pursuant to Section 319(h)(12), administrative costs in the form of salaries, overhead, or indirect costs for services provided and charged against activities and programs carried out with the grant shall not exceed 10 percent of the grant award. The costs of implementing enforcement and regulatory activities, education, training, technical assistance, demonstration projects, and technology transfer are not subject to this limitation.
Each Section 319 grant must contain a condition requiring that the State assure that any management practices implemented for the project be properly operated and maintained for the intended purposes during its life span. Operation includes the administration, management, and performance of non-
The condition must require the State to assure that any sub-award of Section 319 funds similarly include the same condition in the sub-award. Additionally, such condition must reserve the right of EPA and the State, respectively, to periodically inspect a practice during the life span of the project to ensure that operation and maintenance are occurring, and shall state that, if it is determined that participants are not operating and maintaining practices in an appropriate manner, EPA or the State, respectively, will request a refund for that practice supported by the grant.
The life span of a project will be determined on a case-by-case basis, tailored to the types of practices expected to be funded in a particular project, and should be specified in the grant condition. For assistance in determining the appropriate life span of the project, States may wish to consult with colleagues implementing similar programs, such as USDA's conservation programs. For example, for conservation practices, it may be appropriate to construct the life span consistent with the life span for similar conservation practices as determined by the Commodity Credit Corporation (pursuant to the implementation of the Environmental Quality Incentives Program). Following the approach used in many State and Federal funding programs, practices will generally be operated and maintained for a period of at least five to ten years.
A sub-awardee and the State may agree to transfer a grant to another party. The transferee must be determined by the State to be eligible to participate in the administration of the Section 319 grant and must assume full responsibility under the grant, including operation and maintenance of those practices already installed and to be installed as a condition of the grant. The State should require a participant to refund all or a portion of the grant if the participant sells or loses control of the land under the grant and the new owner or controller is not eligible to participate in the program or refuses to assume responsibility under the contract.
All Section 319(h) grants are subject to EPA's general grant regulations in 40 CFR parts 31 and 35, which specify a variety of basic grant reporting requirements for awarding grants to States and localities. The grant regulations outline a range of administrative reporting requirements, including performance and financial reports.
In addition to the broad rules specified in 40 CFR parts 31 and 35, section 319 contains two significant provisions that are specifically focused upon reporting for the Section 319 program:
1. Section 319(h)(10) authorizes EPA to request information, data and reports as necessary to determine a State's continuing eligibility to receive Section 319 grants.
2. Section 319(h)(11) requires States to report annually on their progress in meeting the schedule of milestones contained in their nonpoint source management programs, and to report available information on reductions of nonpoint source pollutant loadings and on improvements to water quality resulting from implementation of nonpoint source management programs.
Regions and States should work together to assure that appropriate reporting requirements are incorporated into each grant, either through specific grant conditions, or within the work program document (see Appendix B for generic grant condition language). The specific reporting requirements reflected in that language are discussed immediately below. The Regions and States are encouraged to assess the effectiveness of the reporting process and determine annually if adjustments or modifications are necessary and mutually beneficial.
In general, reporting should be sufficiently detailed to enable a reviewer to ascertain whether outputs and milestones are being achieved on schedule, to identify any problems that may be developing in carrying out tasks in the grant work plan, to identify corrective actions to address such problems expeditiously, and to adequately account for all Federal funds expended.
Recipients of funds awarded under Section 319(h) are required by applicable laws and regulations to provide information to EPA under the following reporting categories, each of which is further described below: (a) Grantee performance reports; (b) nonpoint source annual reports; and (c) financial status reports.
a.
Performance reports should include at a minimum:
• Performance/Milestone Summary: A listing of major program and project accomplishments for the period (based on the project and program milestones or commitments contained within approved work plans, grant agreements, or special conditions/agreements), as well as progress made toward meeting future milestones. (The State may accomplish some or all of this reporting requirement through its annual report, as discussed below.)
• Slippage Reports: Provide reasons for delays in meeting scheduled milestones/commitments and discuss what actions (State, Federal or other) will be taken to resolve any current or anticipated problems.
• Additional pertinent information including, when appropriate, analysis and explanation of cost overruns, unanticipated events/consequences, etc.
b.
1. A brief summary of progress in meeting approved milestones and the short- and long-term goals and objectives identified in the State nonpoint source management program.
2. A matrix displaying milestones from the current year for the approved State program with the following information for each milestone:
a. Applicable project or program
b. Scheduled project completion date
c. Percent completed
3. A discussion of the extent to which Federal agencies, lands and activities within the State are supporting the State in meeting approved milestones.
4. A summary of the available information on the extent of reductions in nonpoint source loadings achieved as a result of nonpoint source program implementation. (More detailed information would be provided through
5. A summary of the available information on the amount of improvement in water quality (including aquatic habitat quality) as the result of nonpoint source program implementation. (More detailed information would be provided through the Grants Reporting and Tracking System, discussed below.)
6. Where information is not yet available under items 4 and 5 above for waters or watersheds where implementation is being assisted, surrogate measures of environmental progress (such as environmental indicators) should be used and progress should be reported in terms of the degree or percentage of completion of the project.
In the past, some States have chosen to include additional information in their annual report, using the report as a means of assessing progress to date and the need to modify the program; providing case studies of particular projects; and conveying information to a broader audience on the activities being conducted by the State. States may continue to include such additional information, as a supplement to the basic information required by law. States may wish to include the following types of information in their reports, or to include such information on their Web sites and refer to the information in their reports:
1. Listing of further actions necessary to achieve the goals of the Clean Water Act, including any recommendations for future State or national programs to control nonpoint source pollution.
2. Brief case studies of any particularly successful nonpoint source control efforts.
3. Information on increases in public awareness of nonpoint source pollution and public involvement in addressing it.
4. Copies of products produced by the State program (
The Results Workgroup of the State/EPA Nonpoint Source Partnership has discussed ways in which annual reports can be written and presented in a manner that (analogous to contemporary corporate reports) promotes greater public knowledge and understanding of nonpoint source pollution and of States' efforts to prevent and reduce nonpoint source pollution. Several States have begun to do so, and the results are promising to improve communication with both the public and decision-makers about nonpoint source pollution. Possible outputs of that workgroup include guidance, suggested formats, and examples of such annual reports. Another option may be to do a separate shorter, reader-friendly annual report that is designed specifically for public education. EPA encourages all States to consider how their annual reports can be improved in terms of content, format, presentation, and style to enhance public support for their programs.
c.
EPA has developed a computerized system, which States and EPA Regions may now access directly on the World Wide Web, to manage and report data on Section 319 grants. This system, known as Section 319 Grant Reporting and Tracking System (GRTS), provides States with the capability to fulfill grant reporting requirements and has created a database of nonpoint source program information which can be used to enhance State, Regional, and national understanding of nonpoint source projects and programs.
States are required to use GRTS to report the specific nationally mandated data elements listed in Appendix C. This list consists of information needed by EPA and the States to account successfully to Congress, State legislatures, and the public for our accomplishments in implementing the national nonpoint source program. A memorandum,
The most important new features of the modified GRTS are: (1) Precisely geo-locating Section 319 projects; (2) including a concise summary of each project; (3) using common geo-locational information to link funded projects to improvements in waters quality over time, which will be reported through EPA's WATERS database (which includes States' 305(b) and 303(d) information); and (4) providing information on reductions in nonpoint pollutant loads. The new GRTS assists the States in meeting the load reduction reporting requirements of Section 319(h)(11) by providing computer-based tools and formats that have been designed to simplify the effort as much as possible.
In addition to these mandated elements, GRTS has the capacity to accept a great deal of additional information on State programs and projects. States can, if they choose, include detailed project descriptions or project implementation plans, and attach maps, tables, photographs, and spreadsheets. In fact, States can attach appropriate portions of their Section 319(h)(11) annual report to GRTS. Similarly, States can provide much or all of the information needed by EPA Regions to make annual “satisfactory progress” determinations as required by Section 319(h)(8). Finally, due to its Web-enabled format, States may allow sub-State organizations that receive Section 319 funds to directly enter data into the system, thereby reducing the States' own reporting burdens.
Regions are encouraged to work with their States to design reporting procedures utilizing GRTS that will promote efficiency and eliminate duplication of work. In particular, States are encouraged to use GRTS to submit grantee performance reports pursuant to 40 CFR 31.40(b)(1). States are also encouraged to use GRTS' project description, project evaluation, and other data fields for more complete data management and project reporting purposes. In addition, the Regions should explore ways to coordinate and synchronize the submittal of performance reports of other EPA programs managed within the same State office (
Since GRTS is an official reporting vehicle for programs or projects conducted by States under Section 319(h) grants, a State's cost to enter data and otherwise utilize GRTS is itself eligible for funding under Section 319. Regions and States should work together to ensure that the States are provided sufficient resources in their Section 319 grants to meet these reporting requirements and management support needs. Examples of GRTS support needs include: providing adequate staff support; purchasing necessary equipment, materials, and supplies (including high-speed data switches or other links that enable fast and efficient transfer of data to and from GRTS); and attending GRTS conferences and training.
In March 2003, EPA published “Elements of a State Water Monitoring and Assessment Program” (available at
In the future, EPA will require that all States use STORET either directly or indirectly (
EPA's goal is that, as soon as possible, all States will use STORET to store data generated in the development and implementation of Section 319 watershed projects. STORET broadly contains water quality data with actual concentrations of pollutants that are measured in the water or other similar parameters that may be used, such as macroinvertebrate counts. Because STORET is publicly accessible and utilized on a large scale, it is critical that monitoring data from all EPA-funded projects be entered into STORET so that the information can be available to all interested practitioners. Over the past decade EPA has developed a modernized STORET system that has improved the quality of entered data (including adding biological data) and is fully interactive and more user friendly. For more information on STORET, see
Just as the grant agreement specifies outputs and milestones to be achieved by the States, States should assure that agreements with sub-State organizations specify outputs, milestones, and reporting and record keeping requirements in memoranda of agreement, contracts or other appropriate documents. As indicated in the preceding section, States may, where appropriate, include in these agreements a provision requiring the sub-State organization to enter data into STORET and GRTS reporting worksheets for entry into GRTS.
Where a sub-grantee provides a portion of the State's match, the State should ensure that adequate records are kept with respect to that portion. 40 CFR section 31.41(a)(2) specifies that grantees shall not impose more burdensome requirements on sub-grantees than they are subject to themselves.
EPA's oversight approach will emphasize cooperative partnerships based upon EPA's and the States' mutual goal of implementing dynamic and effective national nonpoint source programs designed to achieve and maintain beneficial uses of water. The guidelines established in a new joint performance evaluation process will promote continuous monitoring throughout the life of projects to help ensure the mutual understanding of expectations and outputs of particular grants (see 40 CFR 35.115 and EPA Order 5700.6).
In conducting its oversight activities, EPA will rely to a significant extent on information and reports provided by the State as well as data entered by the State into STORET and GRTS. EPA will review this information and then contact the States if EPA needs additional information. In addition to reviewing the State's reports, EPA or the State should endeavor to meet at least annually to discuss the State's progress in implementing its program.
Of primary importance is the discussion of State progress in developing and implementing watershed-based plans and achieving results from these implementation activities. To the extent relevant and appropriate to fully evaluating this progress, Regions should review at least some of the State's watershed-based plans and discuss both their strengths and weaknesses with the State. Regions should also review and discuss with the State the rate of progress in successfully implementing these plans.
EPA and the State should also discuss ways in which EPA can better assist the State during the forthcoming year in implementing the State's program. Types of assistance to be considered include: support for State efforts to assess water quality problems; support for State design and implementation of watershed-based plans; technical assistance to help the State monitor the progress and results of watershed projects; and assistance in the development of outreach tools.
When evaluation results show that grant and contract provisions have not been substantially achieved, the State and Region should work cooperatively to take corrective action. If performance or the results achieved by the State are poor, the Region may be required to determine that the State has not made “satisfactory progress” under Section 319(h)(8) and to deny the State's grant application the following year. As discussed above, one particular area of importance for Regional determination is whether States have made satisfactory progress in addressing their impaired waters through the development and implementation of watershed-based plan. Other forms of corrective action are described at 40 CFR 31.43.
When a State lead nonpoint source agency is providing EPA grant funds to other State or local agencies to carry out the terms of a nonpoint source grant, the lead agency remains responsible for all outputs in its Section 319(h) work program. Thus, if a local agency has difficulties performing particular funded activities, the Region should work with the State lead agency to resolve the problem.
Using its “feedback loop” established in States” upgraded nonpoint source management programs, the State should periodically review and evaluate its nonpoint source management program (
These guidelines are not specifically directed to Tribal nonpoint source management programs. Given the differing statutory provisions and approaches applicable to Tribal programs, EPA publishes separate nonpoint source guidance for Tribes. However, we present a brief overview below. For detailed information about Tribal nonpoint source programs, we recommend referring to the
Tribes, like States, must have EPA-approved nonpoint source assessments and management programs (as well as approval for treatment in a similar
Section 518(f) states that the Administrator may reserve for Indian Tribes treated similarly to States not more than one-third of one percent of the amount appropriated for any fiscal year under Section 319(j) for Sections 319(h) and (i). In each of the Fiscal Years 2000-2003, Congress has authorized EPA to exceed the 1/3% limitation and EPA has done so. EPA will annually inform the Tribes as to the amount of funding that is available for the forthcoming year. To be eligible for Section 319 nonpoint source grants, Tribes must meet the requirements in Section 518(e) of the Clean Water Act, as well as applicable provisions of EPA's general grant regulations in 40 CFR parts 31 and 35.
Indian Tribes are required to meet the 40 percent matching and maintenance-of-effort requirements under Section 319(h); however, if a Tribe can demonstrate financial cause, its match requirement may be reduced to 10 percent, with the Federal share of Section 319(h) funds increased to 90 percent. In addition, Tribes, like States, may use in-kind contributions to meet matching requirements.
Circumstances may arise in which a State believes it is required to develop and submit a work plan for a particular year that fails to meet one or more requirements in these guidelines. If such circumstances arise, and the State believes the circumstances justify a waiver from one or more requirements in these guidelines, the State may submit a request for a waiver to EPA's Regional Water Division Director. The request should identify the requirement from which a waiver is requested; the circumstances requiring the waiver; a description of the activities and projects that the State will be implementing in lieu of those required by these guidelines; and a commitment to adhere to the guidelines to the greatest extent possible. The Regional Division Director may approve the waiver for the year requested with the concurrence of the Director of the Assessment and Watershed Protection Division (a division of the Office of Water in EPA Headquarters).
This waiver process applies only to the requirements established by these guidelines; it does not apply to any statutory or regulatory requirements reiterated in these guidelines. In addition, this process is not required for any Regional authorization of the use of more than 20% of incremental funds to develop watershed-based plans as discussed earlier in these guidelines in Section III.B.
To measure the progress and success of their nonpoint source programs, States will generally need to use at least three sets of measures. These include measures to indicate progress towards: (1) The State's overall water quality vision of achieving and maintaining beneficial uses of water; (2) the long-term goals set by the State in its program (
The following list illustrates measures and indicators which States may choose from or add to that will help the States and the public measure the progress and success of their programs. States may identify and use other measures and indicators that are most relevant to their nonpoint source problems, programs, and projects. However, States must report on at least the three measures of progress that are identified in Section 319(h)(11) (i.e., implementation milestones, available information on reductions in nonpoint source pollutant loadings, and available information on improvements in water quality).
Well-designed State programs will usually include several appropriate measures and indicators from each of the categories set forth below for each of their projects or program activities. For overall program status and trends, States will generally include measure 1.A. below as part of their Section 305(b) reports.
The categories below are approaches which have been successfully used as water-quality and implementation measures and indicators, as well as measures of enhanced public education, awareness and action. They are presented as examples, not requirements, and should be used as starting points for discussion.
a. Number (or percentage) of river/stream miles, lake acres, and estuarine and coastal square miles that fully meet all water quality standards.
b. Number (or percentage) of river/stream miles, lake acres, and estuarine and coastal square miles that come into compliance with one or more designated uses (
c. Demonstrable improvements in relevant surface and ground water quality parameters.
d. Demonstrable improvements in biological or physical parameters (
e. Opening of previously closed shellfish beds.
f. Lifting of fish consumption advisories.
g. Prevention of new impairments (
a. Reductions in pollutant loadings (
b. Reductions in pollutant loadings (
c. State-wide reduction in pollutant loadings from nonpoint sources.
d. In the case of nonpoint source pollution which may result from activities conducted in the future, prevention or minimization of new loadings, and/or offset of new loadings by reductions from existing sources.
e. Reductions in frequencies, or prevention of increases, of peak flows in developing or developed areas.
a. Number of measures implemented in watersheds of impaired/threatened waters (
b. Percentage of “needed” measures implemented in watersheds of impaired/threatened waters (
c. Combination of 2.b and 3.b.
d. Number of approved or certified plans (
e. Percent of the watershed(s) covered by plans described in item 3d.
f. Percent of facilities covered by plans described in item 3d.
g. Statistically-based survey of implementation rates (
h. Percent of priority ground water addressed by nonpoint source controls.
a. Participation rates in education programs specifically directed to solving particular nonpoint source pollution problems.
b. Statistically-based survey of public awareness, knowledge, and action to measure changes in attitudes and action over time.
c. Participation rates in various nonpoint source activities, such as citizen monitoring and watershed resource restoration activities.
d. Participation rates in various public awareness and education efforts.
The recipient (name of State lead nonpoint source agency) agrees to comply with all reporting requirements required by EPA regulation and Sections 319(h)(10) and (11) of the Clean Water Act. All reporting information will be submitted according to the schedule(s) required in 40 CFR parts 31 and 35 regulations and in the “Nonpoint Source Program and Grants Guidelines” or as subsequently amended. The three basic reporting categories include: Grantee Performance Reports [40 CFR, part 31.40(b)(1)]; Nonpoint Source Progress Reports [CWA, Section 319(h)(11)]; and Financial Status Reports [40 CFR, part 31.41(b)].
The recipient agrees to use the Agency's Grants Reporting and Tracking System (GRTS) to provide all nationally mandated data elements listed in Appendix C of the nonpoint source program and grants guidelines.
Failure to comply with the above referenced reporting requirements may result in a disruption of grantee funding and/or early termination of the grant agreement in accordance with 40 CFR part 31.43.
Following is a list of mandated reporting elements for State Section 319 Programs:
This Appendix sets forth, for each State, its percentage of the total allocation of Section 319 dollars each year. To calculate the allocation provided to a particular State in a particular year, do the following:
1. Begin with the total 319 funding appropriated by Congress for the year in question.
2. Subtract at least 1/3% of the total 319 appropriation for distribution to Indian Tribes. (The Clean Water Act allows EPA to provide only up to one-third of one percent of the total 319 appropriation to Tribes. However, for each of the past several years, Congress has removed that limitation for the year in question, and EPA has provided that $6 million of the total 319 appropriation should be distributed to eligible Tribes. Since this depends on annual congressional appropriations language, the annual allocation of Section 319 funds to Indian Tribes cannot be reliably predicted.)
3. Multiply the funds remaining after step #2 by the applicable State percentage below.
The recipient [name of State lead nonpoint source agency] has received a grant to implement one or more watershed-based plans. The recipient shall complete the development of a watershed-based plan, including all of the information required by elements (a)—(i) in Section III. D of these guidelines (“Watershed-Based Plans”), prior to beginning to implement it with Section 319 funds.
Upon request by EPA, the recipient [name of State lead nonpoint source agency] shall provide a copy of any watershed-based plan funded under Section 319 as well as any available information regarding the status of implementation activities and results, including but not limited to any reports on BMP's implemented; 319 funds expended; contributions of funds by other sources to assist in implementation of the watershed-based plans (to the extent this information is readily available to the State); results achieved; and other relevant and appropriate information.
Export-Import Bank of the United States.
Notice and request for comments.
The Export-Import Bank, as a part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on the proposed information collection, as required by the Paperwork Reduction Act of 1995.
Written comments should be received on or before November 24, 2003 to be assured of consideration.
Direct requests for additional information to Angela Beckman, Export-Import Bank of the U.S., 811 Vermont Avenue, NW., Washington, DC 20571, (202) 565-3418. Direct comments to David Rostker, Office of Management and Budget, Office of Information and Regulatory Affairs, NEOB Room 10202, Washington, DC 20503, (202) 395-3897.
Farm Credit Administration.
Notice; reopening of comment period.
The Farm Credit Administration (FCA or we) is reopening the comment period on our request for public comment on an inquiry by a Farm Credit System (System or FCS) institution for approval to offer farm management and agricultural trust services as authorized “Related Services.” We are reopening the comment period so all interested parties have more time to respond to our questions.
Please send your comments to the FCA by December 22, 2003.
You may send comments by electronic mail to
Lori Markowitz, Policy Analyst, Office of Policy and Analysis, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4498, TTY (703) 883-4434; or Joy Strickland, Senior Counsel, Regulatory Enforcement Division, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020.
On August 19, 2003, FCA published a notice in the
Federal Accounting Standards Advisory Board.
Respondents are encouraged to comment on any part of the exposure drafts. Written comments are requested by December 17, 2003, and should be sent to: Wendy M. Comes, Executive Director, Federal Accounting Standards Advisory Board, 441 G Street, NW, Suite 6814, Washington, DC 20548.
Copies of the Exposure Drafts can be obtained by contacting FASAB at 202-512-7350. Additionally, the Exposure Drafts will be available on FASAB's Home page
Wendy Comes, Executive Director, 441 G St., NW, Mail Stop 6K17V, Washington, DC 20548, or call (202) 512-7350.
Federal Advisory Committee Act. Pub. L. No. 92-463.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board’s Regulation Y (12 CFR 225.41) to acquire a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the office of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than November 6, 2003.
Board of Governors of the Federal Reserve System, October 17, 2003.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States. Additional information on all bank holding companies may be obtained from the National Information Center website at www.ffiec.gov/nic/.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than November 17, 2003.
Board of Governors of the Federal Reserve System, October 17, 2003.
Section 7A of the Clayton Act, 15 U.S.C. 18a, as added by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, requires persons contemplating certain mergers or acquisitions to give the Federal Trade Commission and the Assistant Attorney General advance notice and to wait designated periods before consummation of such plans. Section 7A(b)(2) of the Act permits the agencies, in individual cases, to terminate this waiting period prior to its expiration and requires that notice of this action be published in the
The following transactions were granted early termination of the waiting period provided by law and the premerger notification rules. The grants were made by the Federal Trade Commission and the Assistant Attorney General for the Antitrust Division of the Department of Justice. Neither agency intends to take any action with respect to these proposed acquisitions during the applicable waiting period.
Sandra M. Peay, Contact Representative or Renee Hallman, Legal Technician, Federal Trade Commission, Premerger Notification Office, Bureau of Competition, Room H-303, Washington, DC 20580, (202) 326-3100.
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 November 13, 2003.
Comments filed in paper form should be directed to: FTC/Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW.,
Jonathan Klarfeld, FTC, Bureau of Competition, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 326-3187.
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) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for October 15, 2003), on the World Wide Web, at “
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 email messages directed to the following email box:
The Federal Trade Commission (“Commission”) has accepted, subject to final approval, an Agreement Containing Consent Orders (“Consent Agreement”) from GenCorp Inc. (“GenCorp”), which is designed to remedy the anticompetitive effects resulting from GenCorp's acquisition of the propulsion business of Atlantic Research Corporation (“ARC”), a subsidiary of Sequa Corporation (“the Acquisition”). The Consent Agreement includes a proposed Decision and Order (“Order”) that would require GenCorp to divest ARC's in-space liquid propulsion business within six (6) months after the date the Acquisition is consummated. The Consent Agreement also includes an Order to Hold Separate and Maintain Assets that requires GenCorp to preserve the ARC in-space liquid propulsion business as a viable, competitive, and ongoing operation until the divestiture is achieved.
The proposed 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 proposed Consent Agreement and the comments received and will decide whether it should withdraw from the Consent Agreement or make final the Consent Agreement's proposed Order.
On May 2, 2003, Aerojet-General Corporation (“Aerojet”), a subsidiary of GenCorp, entered into an asset purchase agreement with ARC (which was subsequently amended on August 29, 2003) to acquire substantially all of the assets of ARC, as well as the shares of ARC UK Limited, for $133 million in cash. The Commission's Complaint alleges that the Acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45, by lessening competition in the U.S. markets for the research, development, manufacture and sale of monopropellant thrusters, bipropellant apogee thrusters, dual mode apogee thrusters, and bipropellant attitude control thrusters—four different types of in-space propulsion thrusters.
GenCorp is a technology-based manufacturing company headquartered in Rancho Cordova, California. Its businesses are concentrated in three areas: aerospace and defense, fine chemicals and automotive. Through its Aerojet subsidiary, GenCorp researches, develops, manufactures and sells propulsion products and systems for space and defense applications, as well as armament systems for precision tactical weapon systems. Aerojet produces a full range of in-space propulsion thrusters at its facility located in Redmond, Washington.
Sequa Corporation (“Sequa”) is a diversified industrial company that produces a broad range of products through operating units in five business segments: aerospace, propulsion, metal coating, specialty chemicals and other products. The propulsion segment of Sequa's business consists of the ARC business. ARC, headquartered in Gainesville, Virginia, is a leading supplier of liquid and solid fuel propulsion products and systems for military, commercial and civil applications. ARC produces a full range of in-space propulsion thrusters at its liquid propulsion facilities in Niagara, New York, and Westcott in the United Kingdom.
In-space propulsion thrusters (which are, essentially, engines) are used to maneuver spacecraft, such as satellites and interplanetary vehicles, through space after a launch vehicle delivers them to the upper atmosphere. In-space propulsion thrusters are essential components of in-space propulsion systems, which include valves, fuel tanks, fuel lines and other parts necessary to generate the thrust needed to move spacecraft in space.
In-space propulsion thrusters are used primarily to either place spacecraft into their intended orbits, or maintain their proper position while in orbit. The process of transferring a spacecraft to its intended orbit after it has been dropped off by a launch vehicle is referred to as “apogee insertion,” and the space propulsion thrusters that perform apogee insertion are known as “apogee thrusters.” Apogee thrusters typically generate between 90 pounds and 140 pounds of force.
Attitude control thrusters are used to provide gentle pushes that allow spacecraft to control their angular position while in orbit so that sensors, transponders or other hardware on the spacecraft are properly oriented with respect to the Earth (or other target) to perform their functions. Attitude control thrusters can also perform a function called “station-keeping,” which refers to a spacecraft's ability to maintain its position in an assigned orbital slot, in its proper orientation. Because attitude control and station-keeping functions require only small, short bursts of thrust to perform, attitude control thrusters typically produce five pounds of thrust or less.
There are two primary types of in-space propulsion thrusters: monopropellant thrusters and
A bipropellant in-space propulsion system typically consists of separate attitude control and apogee thrusters. As with other apogee thrusters, bipropellant apogee thrusters generally produce thrust that ranges between 90 to 140 pounds of force. Bipropellant attitude control thrusters provide thrusts comparable to monopropellant thrusters, which are usually 5 pounds of force or less. Bipropellant in-space propulsion systems are more fuel efficient, as well as more expensive, than monopropellant propulsion systems.
Dual mode apogee thrusters are specialized bipropellant apogee thrusters that operate using hydrazine, the same fuel used by monopropellant thrusters, in combination with an oxidizer. A dual mode propulsion system affords spacecraft manufacturers the option of using monopropellant thrusters and a bipropellant apogee thruster on a single spacecraft without having to use two separate fuel systems. As a result, a spacecraft can attain the benefit of using highly reliable and accurate monopropellant thrusters for attitude control while at the same time utilizing bipropellant apogee thrusters. Dual mode apogee thrusters are more fuel efficient, as well as more expensive, than traditional bipropellant apogee thrusters.
The determination by customers of the appropriate type of propulsion thruster to put on a satellite or spacecraft is based on the satellite's or spacecraft's mission and encompasses a variety of factors. Those factors can include the nature of the mission, the length of the mission, the orbit(s) in which the spacecraft will operate, the mass and volume of the spacecraft itself, the launch vehicle it will be placed on, other equipment that will be on the spacecraft, and the price of the thrusters. An engineering decision is made, based on all of these factors, as to which type of propulsion thruster(s) is best suited for a particular satellite or spacecraft. Although the price of an in-space propulsion thruster is a factor that customers take into consideration when selecting an in-space propulsion thruster, it is rarely the most important factor. For these reasons, customers for one type of in-space propulsion thruster—monopropellant, bipropellant apogee, dual mode apogee, or bipropellant attitude control—would not be likely to switch to any of the other types of thrusters for use on a particular satellite or spacecraft, if the price of the first type of thruster were to increase by five to ten percent.
The relevant geographic market for each in-space propulsion market is the United States. Although there are a handful of foreign suppliers of in-space propulsion thrusters, they are not effective competitors in the U.S. in-space propulsion markets. The principal reason for this is that U.S. export regulations, in particular the International Traffic in Arms Regulations, make it very burdensome and time consuming for U.S. commercial, civil and defense customers to procure foreign thrusters, making foreign suppliers an unattractive option. In addition, on many U.S. Department of Defense as well as other U.S. governmental spacecraft programs, foreign-supplied thrusters are not an option at all due to national security issues. Accordingly, for the vast majority of in-space propulsion applications, only U.S. manufacturers are effective competitors.
The U.S. markets for the research, development, manufacture and sale of monopropellant, bipropellant apogee, and dual mode apogee thrusters are all highly concentrated. Aerojet and ARC are the only viable suppliers of these thrusters to commercial, civil and defense customers in the United States for most programs. Even for customers where other suppliers (such as foreign manufacturers) are potential options, Aerojet and ARC are each other's closest competitors and the other suppliers are substantially less attractive options. Prior to the acquisition, Aerojet and ARC frequently competed against each other for U.S. monopropellant, bipropellant apogee, and dual mode apogee thruster business, and this competition benefitted customers of these products. By eliminating competition between the only two viable competitors for most customers and by far the two best options for other customers in these highly concentrated markets, the proposed acquisition would create a virtual monopoly in each of these markets. As a result, the combined firm would be able to exercise market power unilaterally. It is thus likely that as a result of the acquisition purchasers of monopropellant, bipropellant apogee and dual mode apogee thrusters would be forced to pay higher prices and that innovation, service levels, and product quality in these markets would decrease.
The U.S. market for the research, development, manufacture and sale of bipropellant attitude control thrusters is also highly concentrated. In fact, ARC is the only firm with recent sales of bipropellant attitude control thrusters to U.S. customers. For many customers, including the vast majority of U.S. governmental customers, ARC essentially has a monopoly position in the bipropellant attitude control thruster market. Although Aerojet does not currently produce bipropellant attitude control thrusters, it has substantial existing expertise and technology in this area, has produced these thrusters in the recent past, and is a likely potential entrant into the market. Aerojet's acquisition of the ARC in-space liquid propulsion business eliminates the most likely potential competitor in this market and for many customers, including the vast majority of U.S. governmental customers, leaves the market with a single supplier for the foreseeable future.
There are significant impediments to new entry into each in-space propulsion market. A new entrant into any one of these markets would need to undertake the difficult, expensive and time-consuming process of researching and developing a viable in-space propulsion thruster, acquiring the necessary production and testing assets, obtaining the appropriate environmental permits, and developing the expertise needed to successfully design, manufacture, and market these products. Finally, a new entrant would need to establish what is commonly referred to as “heritage” for each new thruster, which is a successful track record of use in space. It would take a new entrant over two years to accomplish these steps and achieve a significant market impact. Additionally, new entry into the in-space propulsion market is unlikely to occur because the sunk costs and economies of scale necessary to enter the market and effectively produce in-space propulsion thrusters are extremely high relative to the limited sales opportunities available to new entrants.
The Consent Agreement effectively remedies the acquisition's anticompetitive effects by requiring GenCorp to divest ARC's in-space liquid
If GenCorp has not divested the ARC In-Space Liquid Propulsion Assets within the time and in the manner required by the Consent Agreement, the Commission may appoint a trustee to divest these assets, subject to Commission approval. The trustee will have the exclusive power and authority to accomplish the divestiture within six (6) months, subject to any necessary extensions by the Commission. The Consent Agreement requires GenCorp to provide the trustee with access to information related to the ARC in-space liquid propulsion business as necessary to fulfill his or her obligations.
The proposed Order to Hold Separate and Maintain Assets that is also included in the Consent Agreement requires that GenCorp hold separate and maintain the viability of the ARC In-Space Liquid Propulsion Assets as a viable and competitive operation until the business is transferred to the Commission-approved acquirer. Furthermore, it contains measures designed to ensure that no material confidential information is exchanged between GenCorp and the ARC in-space liquid propulsion business (except as otherwise provided in the Order or in the Order to Hold Separate and Maintain Assets) and provisions designed to prevent interim harm to competition in each in-space propulsion market pending divestiture. The Order to Hold Separate and Maintain Assets provides for the Commission to appoint a Hold Separate Trustee who is charged with the duty of monitoring GenCorp's compliance with the Order to Hold Separate and Maintain Assets. Pursuant to that Order, the Commission has appointed Charles L. Wilkins of KPMG LLP as Hold Separate Trustee to oversee the In-Space Liquid Propulsion Assets prior to their divestiture and to ensure that GenCorp complies with its obligations under the Consent Agreement regarding the In-Space Liquid Propulsion Assets. Mr. Wilkins has more than 35 years of experience both inside the aerospace and defense industry and as a professional advisor. He has held several key management positions in the aerospace and defense industry, including senior corporate auditor, controller and chief financial officer, and during his professional consulting career has assisted most of the larger defense contractors in the United States in a wide array of services including litigation and dispute resolution, compliance matters and profit maximization.
The proposed Order requires GenCorp to provide the Commission, within thirty (30) days from the date the Order becomes final, a verified written report setting forth in detail the manner and form in which GenCorp intends to comply, is complying, and has complied with the provisions relating to the proposed Order and the Order to Hold Separate and Maintain Assets. The proposed Order further requires GenCorp to provide the Commission with a report of compliance with the Order every thirty (30) days after the date of that initial compliance report until the divestiture has been completed.
The purpose of this analysis is to facilitate public comment on the Consent Agreement, and it is not intended to constitute an official interpretation of the Consent Agreement, the proposed Decision and Order, or the Order to Hold Separate and Maintain Assets, or to modify their terms in any way.
By direction of the Commission.
Part F, of the Statement of Organization, Functions, and Delegations of Authority of the Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS), 49 FR 35247, dated September 6, 1984, is amended to include the following delegations of authority from the Secretary to the Administrator, CMS, with the authority to redelegate, to carry out the following administrative and enforcement activities vested in the Secretary of the Department of Health and Human Services under part C, of title XI of the Social Security Act, as amended.
• Section F.30., Delegations of Authority, is amended to include the following delegations of authority for certain provisions under part C, of title XI of the Social Security Act.
WW. 1. The authority under section 262 of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191, as amended, to administer and to make decisions regarding the interpretation, implementation and enforcement of the regulations adopting standards and general administrative requirements under 45 CFR, parts 160, 162 and 164 (except to the extent that these actions pertain to the “Standards for Privacy of Individually Identifiable Health Information”).
2. The authority under section 262 of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended, except to the extent that these actions pertain to the Standards for Privacy of Individually Identifiable Health Information, to:
A. Impose civil monetary penalties, under section 1176 of the Social Security Act, including any settlement thereof, for a covered entity's failure to comply with certain requirements and standards.
B. Make exception determinations, under section 1178(a)(2)(A) of the Social Security Act, concerning when provisions of State laws that are contrary to the Federal standards are not preempted by the Federal provisions.
All actions under Part C, of Title XI that pertain to Standards for Privacy of Individually Identifiable Health Information, were delegated by the Secretary to the Director, Office for Civil Rights, and are excluded from this delegation. This delegation to the Administrator also excludes the authority to issue regulations and to hold hearings and issue final determinations if the respondent has requested a hearing on the imposition of civil monetary penalties. This delegation should be exercised under the Department's existing delegation of authority and policy on issuance of regulations. In addition, I hereby affirm and ratify any actions taken by the Administrator, CMS, or any
This delegation of authority is effective immediately (October 7, 2003).
Agency for Healthcare Research and Quality, HHS.
Notice.
This notice announces the intention of the Agency for Healthcare Research and Quality (AHRQ) to request that the Office of Management and Budget (OMB) allow the proposed information collection project: “Surveys of Employee Benefit Managers of Large National Employers Concerning Dissemination Effectiveness of Health Services Research Information (SEBM)”. In accordance with the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(a)), AHRQ invites the public to comment on this proposed information collection.
This proposed information collection was previously published in the
Comments on this notice must be received by November 24, 2003.
Written comments should be submitted to: Allison Eydt, Human Resources and Housing Branch, Office of Information and Regulatory Affairs, OMB, New Executive Office Building, Room 10235, Washington, DC 20503.
Cynthia D. McMichael, AHRQ, Reports Clearance Officer, (301) 427-1651.
“Surveys of Employee Benefit Managers of Large National Employers Concerning Dissemination Effectiveness of Health Research Information (SEBM)”
The SEBM is a series of two questionnaires and one telephone interview to learn the extent of awareness, use of, and satisfaction with the content of health services research information by employee benefits managers of large national employers.
The surveys will also measure the effectiveness of the methods used to disseminate health services research information. The initial survey will serve as a benchmark against which the remaining two surveys in this study will be measured. Subsequent to the initial survey, AHRQ will initiate two interventions: (1) Placing AHRQ-sponsored information on a website and (2) making personal contact with employee benefits managers; a survey will follow each intervention to measure the extent to which each intervention makes employee benefit managers aware of AHRQ and its health research information. With this knowledge, AHRQ will be able to make changes to its information dissemination efforts to make them more effective and responsive to employee benefit managers.
Data collected by the contractor and the contractor's draft analyses will be retained for one year after final acceptance of all contract deliverables, unless longer retention is requested by the agency for audit purposes. All agency documents pertaining to the contract will be archived after the contract is completed and retained in accordance with a Federal Records Act retention schedule.
The data will be collected using a combination of web-based and telephone surveys.
In accordance with the above cited legislation, comments on AHRQ's information collection are requested with regard to any of the following: (a) Whether the proposed collection of information is necessary for the proper performance of functions of AHRQ, including whether the information will have practical utility; (b) the accuracy of AHRQ's estimate of 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 upon the respondents, including the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and included in the request for OMB approval of the proposed information collection. All comments will become a matter of public record.
Agency for Toxic Substances and Disease Registry (ATSDR), Department of Health and Human Services (HHS).
Notice of availability.
The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), section 104(i)(3) [42 U.S.C. 9604(i)(3)] directs the Administrator of ATSDR to prepare toxicological profiles of priority hazardous substances and to revise and publish each updated toxicological profile as necessary. This notice announces the availability of the 17th set of toxicological profiles, which consists of one new draft and seven updated drafts, prepared by ATSDR for review and comment.
In order to be considered, comments on these draft toxicological profiles must be received on or before February 24, 2004. Comments received after the close of the public comment period will be considered at the discretion of ATSDR based upon what is deemed to be in the best interest of the general public.
Requests for printed copies of the draft toxicological profiles should be sent to the attention of Ms. Yulandia Jordan, Division of Toxicology, Agency for Toxic Substances and Disease Registry, Mailstop E-29, 1600 Clifton Road, NE., Atlanta, Georgia 30333. Electronic access to these documents is also available at the ATSDR Web site:
Comments regarding the draft toxicological profiles should be sent to the attention of Dr. Marie Socha, Division of Toxicology, Agency for Toxic Substances and Disease Registry, Mailstop E-29, 1600 Clifton Road, NE, Atlanta, Georgia 30333.
Requests for printed copies of the draft toxicological profiles must be in writing, and must specifically identify the hazardous substance(s) profile(s) that you wish to receive. ATSDR reserves the right to provide only one copy of each profile requested, free of charge. In case of extended distribution delays, requestors will be notified.
Written comments and other data submitted in response to this notice and the draft toxicological profiles should bear the docket control number ATSDR-197. Send one copy of all comments and three copies of all supporting documents to Dr. Marie Socha at the above stated address by the end of the comment period. Because all public comments regarding ATSDR toxicological profiles are available for public inspection, no confidential business information or other confidential information should be submitted in response to this notice.
Ms. Yulandia Jordon, Division of Toxicology, Agency for Toxic Substances and Disease Registry, Mailstop E-29, 1600 Clifton Road, NE., Atlanta, Georgia 30333, telephone 1-888-422-8737 or (404)498-0261.
The Superfund Amendments and Reauthorization Act (SARA) (Pub. L. 99-499) amends the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) (42 U.S.C. 9601
Section 104(i)(3) of CERCLA [42 U.S.C. 9604(i)(3)] outlines the content of these profiles. Each profile will include an examination, summary and interpretation of available toxicological information and epidemiologic evaluations. This information and these data are to be used to identify the levels of significant human exposure for the substance and the associated health effects. The profiles must also include a determination of whether adequate information on the health effects of each substance is available or in the process of development. When adequate information is not available, ATSDR, in cooperation with the National Toxicology Program (NTP), is required to assure the initiation of research to determine these health effects.
Although key studies for each of the substances were considered during the profile development process, this
The following draft toxicological profiles will be made available to the public on or about October 17, 2003.
All profiles issued as “Drafts for Public Comment” represent ATSDR's best efforts to provide important toxicological information on priority hazardous substances. We are seeking public comments and additional information which may be used to supplement these profiles. ATSDR remains committed to providing a public comment period for these documents as a means to best serve public health and our clients.
The Department of Health and Human Services policy on consultation with American Indian/Alaska Native (AI/AN) Governments and Organizations requires each Operating Division to meet with AI/AN Tribal Representatives. The Administration on Aging (AoA) will call three Tribal Listening Sessions that comply with the Department's tribal consultation policy and the Older Americans Act (OAA). The listening sessions will be held in conjunction with OAA Title VI training and technical assistance meetings in 2003 and 2004.
The Tribal Listening Sessions will give AI/AN Tribal representatives, Native Hawaiian representatives, Title VI Directors, and AI/AN elders an opportunity to discuss Native American elder issues. The Administration on Aging is interested in the following critical issues:
What can the Aging Services Network do to empower older people and their families to make the best decisions about their care options? How can tribes build on the early success of the Native American Family Caregiver Support Program and expand access to information, make services more consumer-friendly, and allow caregivers more choices? What innovations are occurring at the Tribe, State and local level related to access and service delivery that could serve as models for other Tribes and communities across the country?
Anyone interested in testifying must pre-register to obtain a time slot. To accommodate as many speakers and diverse opinions as possible, each person will have a maximum of 10 minutes. AoA will accept a copy of written remarks at the time of the Tribal Listening Session.
The Tribal Listening Sessions are from 1 to 4 pm on the following dates and locations:
Kaufmann and Associates at 425 West 1ST Avenue, Spokane, WA 99201, phone: (509) 747-4994, fax: (509) 747-5030. These are not toll-free numbers. Electronic mail address:
If you are unable to attend but wish to provide comments or Tribal Resolutions, these may be faxed to Kauffman & Associates, Inc at (509) 747-5030.
In accordance with the provisions of the Americans with Disabilities Act (ADA), it is requested that any special assistance requirements be requested when registering for a Tribal Listening Session.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995 (the PRA).
Fax written comments on the collection of information by November 24, 2003.
OMB is still experiencing significant delays in the regular mail, including first class and express mail, and messenger deliveries are not being accepted. To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: Fumie Yokota, Desk Officer for FDA, FAX: 202-395-6974.
JonnaLynn P. Capezzuto, Office of Management Programs (HFA-250), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-827-4659.
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
The statutory authority to collect this information is provided under sections 351 and 361 of the PHS Act (42 U.S.C. 262 and 264) and under the provisions of the Federal Food, Drug, and Cosmetic Act that apply to drugs (21 U.S.C. 301
The PHS guideline also recommends that certain specimens and records be maintained for 50 years beyond the date of the xenotransplantation. These include: (1) Records linking each xenotransplantation product recipient with relevant health records of the source animal, herd or colony, and the specific organ, tissue, or cell type included in or used in the manufacture of the product (3.2.7.1); (2) aliquots of serum samples from randomly selected animal and specific disease investigations (3.4.3.1); (3) source animal biological specimens designated for PHS use (3.7.1); animal health records (3.7.2), including necropsy results (3.6.4); and (4) recipients' biological specimens (4.1.2).
The retention period is intended to assist health care practitioners and officials in surveillance and in tracking the source of an infection, disease, or illness that might emerge in the recipient, the source animal, or the animal herd or colony after a xenotransplantation.
The recommendation for maintaining records for 50 years is based on clinical experience with several human viruses that have presented problems in human to human transplantation and are therefore thought to share certain characteristics with viruses that may pose potential risks in xenotransplantation. These characteristics include long latency periods and the ability to establish persistent infections. Several also share the possibility of transmission among individuals through intimate contact with human body fluids. Human immunodeficiency virus (HIV) and Human T-lymphotropic virus are human retroviruses. Retroviruses contain ribonucleic acid that is reverse-transcribed into deoxyribonucleic acid (DNA) using an enzyme provided by the virus and the human cell machinery. That viral DNA can then be integrated into the human cellular DNA. Both viruses establish persistent infections and have long latency periods before the onset of disease, 10 years and 40 to 60 years, respectively. The human hepatitis viruses are not retroviruses, but several share with HIV the characteristic that they can be transmitted through body fluids, can establish persistent infections, and have long latency periods, e.g., approximately 30 years for Hepatitis C.
In addition, the PHS guideline recommends that a record system be developed that allows easy, accurate, and rapid linkage of information among the specimen archive, the recipient's medical records, and the records of the source animal for 50 years. The development of such a record system is a one-time burden. Such a system is intended to cross-reference and locate relevant records of recipients, products, source animals, animal procurement centers, and nosocomial exposures.
Respondents to this collection of information are the sponsors of clinical studies of investigational xenotransplantation products under investigational new drug applications (INDs) and xenotransplantation product procurement centers, referred to as source animal facilities. Currently, there are 12 respondents who are sponsors of INDs that include protocols for xenotransplantation in humans. Other respondents for this collection of information are 18 source animal facilities which provide source xenotransplantation product material to sponsors for use in human xenotransplantation procedures. These 18 source animal facilities keep medical records of the herds/colonies as well as the medical records of the individual source animal(s). The total annual reporting and recordkeeping burden is estimated to be approximately 156 hours. The burden estimates are based on FDA's records of xenotransplantation-related INDs and estimates of time required to complete the various reporting and recordkeeping tasks described in the guideline. FDA does not expect the level of clinical studies using xenotransplantation to increase significantly in the next few years.
FDA is requesting an extension of OMB approval for the following reporting and recordkeeping recommendations in the PHS guideline:
In the
Because of the potential risk for cross-species transmission of pathogenic persistent virus, the guideline recommends that health records be retained for 50 years. Since these records are medical records, the retention of such records for up to 50 years is not information subject to the PRA (5 CFR 1320.3(h)(5)). Also, because of the limited number of clinical studies with small patient populations, the number of records is expected to be insignificant at this time.
Information collections in this guideline, not included in tables 1 through 4 of this document, can be found under existing regulations and approved under the OMB control numbers as follows: (1) “Current Good Manufacturing Practice for Finished Pharmaceuticals,” 21 CFR 211.1 through 211.208, approved under OMB control number 0910-0139; (2) “Investigational New Drug Application,” 21 CFR 312.1 through 312.160, approved under OMB control number 0910-0014; and (3) information included in a license application, 21 CFR 601.2, approved under OMB control number 0910-0338. (Although it is possible that a xenotransplantation product may not be regulated as a biological product (e.g., it may be regulated as a medical device), FDA believes, based on its knowledge and experience with xenotransplantation, that any xenotransplantation product subject to FDA regulation within the next 3 years will most likely be regulated as a biological product.) However, FDA recognized that some of the information collections go beyond approved collections; assessments for these burdens are included in tables 1 through 4 of this document.
In table 5 of this document, FDA identifies those collection of information activities that are already encompassed by existing regulations or are consistent with voluntary standards which reflect industry's usual and customary business practice.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) Center for Drug Evaluation and Research (CDER) is announcing the continuation of the Regulatory Project Management Site Tours and Regulatory Interaction Program. This training program was initiated in 1999, and it is intended to give CDER regulatory project managers an opportunity to tour pharmaceutical facilities and to exchange regulatory experiences with their industry counterparts. The Site Tours Program is intended to enhance review efficiency and quality by providing CDER staff with a better understanding of the pharmaceutical industry and its operations. Further, this program is intended to improve communication and cooperation between CDER staff and industry. The purpose of this notice is to invite pharmaceutical companies interested in participating in these programs to contact CDER.
Pharmaceutical companies may submit proposed agendas to the agency on or before December 22, 2003.
Patricia A. Stewart, Center for Drug Evaluation and Research (HFD-160), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-827-7496, FAX 301-480-6036.
An important part of CDER's commitment to make safe and effective drugs available to all Americans is optimizing the efficiency and quality of the drug review process. To support this primary goal, the center has initiated
In this program, over a 2- to 3-day period, small groups (five or less) of regulatory project managers, accompanied by a senior level regulatory project manager, may observe operations of pharmaceutical manufacturing, packaging facilities, pathology/toxicology laboratories, and regulatory affairs operations. Neither this tour nor any part of the program is intended as a mechanism to inspect, assess, judge, or perform a regulatory function, but is meant rather to improve mutual understanding and to provide an avenue for open dialogue. During the Site Tours Program, regulatory project managers will also participate in daily workshops with their industry counterparts, focusing on selective regulatory issues important to both CDER staff and industry. The primary objective of the daily workshops is to learn about the team approach to drug development, including drug discovery, preclinical evaluation, project tracking mechanisms, and regulatory submission operations.
The overall benefit to regulatory project managers will be exposure to project management team techniques and processes employed by the pharmaceutical industry. By participating in this program, the regulatory project manager will grow professionally by gaining a better understanding of industry processes and procedures.
All travel expenses associated with the site tours will be the responsibility of CDER, therefore, selection will be based on the availability of funds and resources for each fiscal year.
If your firm is interested in offering a site tour or learning more about this training opportunity, please respond within 60 days of this notice by submitting a proposed agenda to Patricia A. Stewart (see
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.
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 AnnMarie Williams, Conference Management Staff, at 301-594-1283, ext. 113, 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 entitled “Marketed Unapproved Drugs; Compliance Policy Guide.” This draft guidance describes how FDA intends to exercise its enforcement discretion with
Submit written or electronic comments on the draft guidance by December 22, 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 (CDER), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857. Send one self addressed adhesive label to assist the 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
Sakineh Walther, Center for Drug Evaluation and Research (HFD-316), Food and Drug Administration, 1451 Rockville Pike, Rockville, MD 20852, 301-827-8964.
In the United States, as many as several thousand drug products are marketed illegally without required FDA approval. The manufacturers of these drugs have neither received FDA approval to legally market their drugs, nor have the drugs been marketed in accordance with a final over-the-counter (OTC) monograph. The drug approval and OTC monograph processes play an essential role in ensuring that all drugs are both safe and effective. Manufacturers of new drugs that lack required approval, including those that are not marketed in accordance with an OTC monograph, have not provided FDA with evidence demonstrating that their products are safe and effective. Therefore, FDA has an interest in taking steps to either encourage the manufacturers of these products to obtain the required evidence and comply with the approval provisions of the Federal Food, Drug, and Cosmetic Act (the act), or to remove the products from the market. FDA recognizes that these goals need to be achieved without adversely affecting public health, imposing undue burdens on consumers, or unnecessarily disrupting the market.
In general, in recent years, FDA has employed a risk-based enforcement approach to marketed unapproved drugs that includes efforts to identify illegally marketed drugs, prioritization of those drugs according to potential public health concerns or other impacts on the public health, and subsequent regulatory followup. Some of the specific actions the agency has taken have been precipitated by evidence of safety or effectiveness problems that has either come to our attention during inspections or was brought to our attention by outside sources.
The goals of this draft guidance are to address the following issues: (1) Clarify for FDA personnel and the regulated industry how FDA intends to exercise its enforcement discretion regarding unapproved drugs and (2) emphasize that illegally marketed drugs must obtain FDA approval.
The draft guidance reflects the agency's desire to address this issue with policies that are predictable, reasonable, and supportive of the public health. The agency's approach encourages companies to comply with the drug approval process, but it also seeks to minimize disruption to the marketplace and to safeguard consumer health when there are potential safety risks. The draft guidance explains that FDA will continue to give priority to enforcement actions involving unapproved drugs: (1) with potential safety risks, (2) that lack evidence of effectiveness, and (3) that constitute health fraud. It also explains how the agency intends to address those situations in which a firm obtains FDA approval to sell a drug that other firms have long been selling without FDA approval.
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 this topic. 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
Persons with access to the Internet can obtain the guidance at
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability for comments of a draft guidance document for industry (#160) entitled “Studies to Evaluate the Safety of Residues of Veterinary Drugs in Human Food: Repeat-Dose (Chronic) Toxicity Testing” (VICH GL-37). This draft guidance has been developed for veterinary use by the International Cooperation on Harmonization of Technical Requirements for Registration of Veterinary Medicinal Products (VICH). This draft VICH guidance document establishes recommendations for internationally harmonized repeat-dose chronic toxicity testing.
Submit written or electronic comments on the draft guidance by November 24, 2003 to ensure their adequate consideration in preparation of the guidance document. General comments on agency guidance documents are welcome at any time.
Submit written requests for single copies of the draft guidance to the Communications Staff (HFV-12), Center for Veterinary Medicine (CVM), Food and Drug Administration, 7519 Standish Pl., Rockville, MD 20855. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Louis T. Mulligan, Center for Veterinary Medicine (HFV-153), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-6984, e-mail: lmulliga@cvm.fda.gov.
In recent years, many important initiatives have been undertaken by regulatory authorities, industry associations, and individual sponsors to promote the international harmonization of regulatory requirements. FDA has participated in efforts to enhance harmonization and has expressed its commitment to seek scientifically based harmonized technical procedures for the development of pharmaceutical products. One of the goals of harmonization is to identify and reduce the differences in technical requirements for drug development among regulatory agencies in different countries.
FDA has actively participated in the International Conference on Harmonization of Technical Requirements for Approval of Pharmaceuticals for Human Use for several years to develop harmonized technical requirements for the approval of human pharmaceutical and biological products among the European Union, Japan, and the United States. The VICH is a parallel initiative for veterinary medicinal products. The VICH is concerned with developing harmonized technical requirements for the approval of veterinary medicinal products in the European Union, Japan, and the United States, and includes input from both regulatory and industry representatives.
The VICH steering committee is composed of member representatives from the European Commission, European Medicines Evaluation Agency; European Federation of Animal Health, Committee on Veterinary Medicinal Products; the United States' FDA; the U.S. Department of Agriculture; the Animal Health Institute; the Japanese Veterinary Pharmaceutical Association; the Japanese Association of Veterinary Biologics; and the Japanese Ministry of Agriculture, Forestry and Fisheries.
Four observers are eligible to participate in the VICH steering committee: One representative from the Government of Australia/New Zealand, one representative from industry in Australia/New Zealand, one representative from the Government of Canada, and one representative from industry in Canada. The VICH Secretariat, which coordinates the preparation of documentation, is provided by the International Federation for Animal Health (IFAH). An IFAH representative also participates in the VICH steering committee meetings.
The VICH Steering Committee held a meeting on May 8, 2003, and agreed that the draft guidance document entitled “Studies to Evaluate the Safety of Residues of Veterinary Drugs in Human Food: Repeat-Dose (Chronic) Toxicity Testing” (VICH GL-37) should be made available for public comment. This draft VICH guidance is one of a series of guidances developed to facilitate the mutual acceptance of safety data necessary for the determination of acceptable daily intakes (ADIs) for veterinary drug residues in human food. This draft guidance was developed after consideration of the current practices for evaluating veterinary drug residues in human food in the European Union, Japan, United States, Australia, New Zealand, and Canada. It also took account of available data from subchronic and chronic toxicity studies.
FDA and the VICH Expert Working Group on Toxicity Safety will consider comments about the draft guidance document. Information collection is covered under Office of Management and Budget control number 0910-0032.
This draft document, developed under the VICH process, has been revised to conform to FDA's good guidance practices regulation (21 CFR 10.115).
The draft VICH guidance (#160) represents the agency's current thinking on the general approach to establish a microbiological ADI. This guidance does not create or confer any rights for or on any person and does not operate to bind FDA or the public. You may use an alternative method as long as it satisfies the requirements of the applicable statutes and regulations.
This draft guidance document is being distributed for comment purposes only and is not intended for implementation at this time. Interested persons may submit written or electronic comments regarding this draft guidance document. Written comments should be submitted to the Division of Dockets Management (see
Comments may be submitted electronically on the Internet at
Copies of the draft guidance may be obtained on the Internet from the CVM home page at
Indian Health Service, HHS.
Notice of Availability of Funds for Health Professions Preparatory, Pregraduate, and Indian Health Professions Scholarship Programs for Fiscal Year (FY) 2004.
The Indian Health Service (IHS) is publishing a Notice of Availability of Funds for Health Professions Preparatory, Pregraduate,
The IHS announces the availability of approximately $3,733,332 to fund scholarships for the Health Professions Preparatory and Pregraduate Scholarship Programs for FY 2004 awards. These programs are authorized by section 103 of the Indian Health Care Improvement Act (IHCIA), Pub. L. 94-437, as amended by Pub. L. 100-713, Pub. L. 102-573, and Pub. L. 104-313.
The Indian Health Scholarship (Professions), authorized by section 104 of the IHCIA, Pub. L. 94-437, as amended by Pub. L. 100-713, by Pub. L. 102-573, and by Pub. L. 104-313 has approximately $8,177,245 available for FY 2004 awards.
Full-time and part-time scholarships will be funded for each of the three scholarship programs.
The Indian Health Professions Preparatory Scholarship is listed as No. 93.123 in the Office of Management and Budget
The Public Health Service (PHS) is committed to achieving the health promotion and disease prevention objectives of
The application deadline for both new and continuing applicants is February 28, 2004. If February 28, falls on the week-end, the application will be due on the following Monday. Applications shall be considered as meeting the deadline if they are received by the appropriate Scholarship Coordinator on the deadline date or postmarked on or before the deadline date. (Applicants should request a legibly dated U.S. Postal Service postmark or obtain a legibly dated receipt from a commercial carrier or U.S. Postal Service. Private metered postmarks shall not be acceptable as proof of timely mailing.) Applications received after the announced closing date will be returned to the applicant and will not be considered for funding.
Application packets may be obtained by calling or writing to the addresses listed below. The application form number is IHS 856, 856-2 through 856-8, 815, 816, 818 (approved under OMB No. 0917-0006 (expires 12/31/2004)).
Please address application inquiries to the appropriate Indian Health Service Area Scholarship Coordinator. Other programmatic inquiries may be addressed to Mr. Jess Brien, Chief, Scholarship Branch, Indian Health Service, 801 Thompson Avenue, Suite 120, Rockville, Maryland, 20852; Telephone 301-443-6197. (This is not a toll free number.) For grants information, contact Mr. Bernard Covers Up, Grants Scholarship Coordinator, Grants Management Branch, Division of Acquisition and Grants Operations, Indian Health Service, 801 Thompson Avenue, Suite 120, Rockville, Maryland
These grants programs are intended to encourage American Indians and Alaska Natives to enter the health professions and to assure the availability of Indian health professionals to serve Indians.
1. The Health Professions Preparatory Scholarship awards are made to American Indians or Alaska Natives who meet the criteria in section 4(c) of the IHCIA, as amended, who have successfully completed high school education or high school equivalency and who have been accepted for enrollment in a compensatory, pre-professional general education course or curriculum. Support is limited to 2 years for full-time students and the part-time equivalent of 2 years not to exceed 4 years for part-time students.
2. The Health Professions Pregraduate Scholarship awards are made to American Indians or Alaska Natives who meet the criteria in section 4(c) of the IHCIA, as amended, who have successfully completed high school education or high school equivalency and who have been accepted for enrollment or are enrolled in an accredited pregraduate program leading to a baccalaureate degree in pre-medicine or pre-dentistry. Support is limited to 4 years for full-time students and the part-time equivalent of 4 years not to exceed 8 years for part-time students.
3. The Indian Health Scholarship (Professions) may be awarded only to an individual who is a member of a federally recognized tribe as provided by section 104, 4(c), and 4(d) of the IHCIA. Membership in a Tribe recognized only recognized only by a state does not meet this statutory requirement. To receive an Indian Health Scholarship (Professions) an otherwise eligible individual must be enrolled in an appropriately accredited school and pursuing course of study in a health profession as defined by section 4(n) of the IHCIA. Support is limited to 4 years for full-time students and the part-time equivalent of 4 years not to exceed 8 years for part-time students.
Awards for the Indian Health Scholarships (Professions) will be made in accordance with 42 CFR 36.330. Recipients shall incur a service obligation prescribed under section 338C of the Public Health Service Act (43 U.S.C. 244m) which shall be met by service:
(1) In Indian Health Service;
(2) In a program conducted under a contract or compact entered into under the Indian Self-Determination Act;
(3) In a program assisted under Title V of the Indian Health Care Improvement Act (Pub. L. 94-437) and its amendments; and
(4) In private practice of his or her profession, if the practice (a) is situated in a health professional shortage area, designated in regulations promulgated by the Secretary and (b) addresses the health care needs of a substantial number of Indians as determined by the Secretary in accordance with guidelines of the Service;
Pursuant to the Indian Health Amendments of 1992 (Pub. L. 104-313), a recipient of an Indian Health Professions Scholarship may, at the election of the recipient, meet his/her active duty service obligation prescribed under section 338c of the Public Health Service Act (42 U.S.C. 254m) by a program specified in options (1)-(4) above that:
(1) Is located on the reservation of the Tribe in which the recipient is entrolled; or
(ii) Serves the Tribe in which the recipient is entrolled.
In summary, all recipients of the Indian Health Scholarship (Professions) are reminded that recipients of this scholarship incur a service obligation. Moreover, this obligation shall be served at a facility determined by the Director, IHS, consistent with IHCIA, Pub. L. 94-437, as amended by Pub. L. 100-713, and Pub. L. 102-573.
Both part-time and full-time scholarship awards will be made ina ccordance with regulations at 42 CFR part 36.320, incorporated in the application materials, for Health Professions Preparatory Scholarship Program for Indians and 42 CFR part 36.370, incorporated in the application materials, for Health Professions Pregraduate Scholarship Program for Indians. Approximately 200 awards, 100 of which are continuing, will be made under the Health Professions Preparatory and Pregraduate Scholarship Programs for Indians. The awards are for 10 months induration and the average award to a full-time student is approximately $20,000. In FY 2004, approximately $1,500,000 is available for continuation awards and approximately $2,233,000 is available for new awards.
Approximately 340 awards, 179 of which are continuing, will be made under the Indian Health Scholarship (Professions) Program. Awards will be made to both full-time and part-time students. The awards are for 12 months in duration and the average award to a full-time student is for approximately $23,500. In FY 2004, approximately $3,551,000 is available for continuation awards, and $4,626,000 is available for new awards.
No more than 5% of available funds will be used for part-time scholarships this fiscal year. Students are considered part-time if they are enrolled for a minimum of 6 hours of instruction and are not considered in full-time status by their college/university. Documentation must be received from part-time applicants that their school and course curriculum allows less than full-time status.
Applications will be evaluated against the following criteria:
1. Needs of the IHS. Applicants are considered for scholarship awards based on their desired career goals and how these goals relate to current Indian health manpower needs. Applications for each health career category are reviewed and ranked separately.
2. Academic Performance. Applicants are rated according to their academic performance as evidenced by transcripts and faculty evaluations. In cases where a particular applicant's school has a policy not to rank students academically, faculty members are asked to provide a personal judgement of the applicant's achievement. Health Professions applicants with a cumulative GPA below 2.0 are not eligible to apply.
3. Faculty/Employer Recommendations. Applicants are rated according to evaluations by faculty members and current and/or former employers regarding the applicant's potential in the chosen health related professions.
4. Stated Reasons for Asking for the Scholarship and Stated Career Goals. Applicants must provide a brief written explanation of reasons for asking for the scholarship and of career goals. The applicant's narrative will be judged on how well it is written and content.
5. Applicants who are closest to graduation or completion are awarded first. For example, senior and junior applicants under the Health Professions Pregraduate Scholarship receive funding before freshmen and sophomores.
Regulations at 42 CFR part 36.304 provide that the IHS shall, from time to time, publish a list of health professions eligible for consideration for the award of Indian Health Professions Preparatory and Pregraduate Scholarships and
1. Health Professions Preparatory Scholarship Scholarships. (Below is the list of disciplines to be supported and priority is based on academic level)
2. Health Professions Pregraduate Scholarships. (Below is the list of disciplines to be supported and priority is based on academic level: Senior, Junior, Sophomore, Freshman)
3. Indian Health Scholarships (Professions). (Below is a list of disciplines to be supported and priority is based on academic level, unless specified: Graduate, Senior, Junior, Sophomore, Freshman)
Interested individuals are reminded that the list of eligible health and allied health professions is effective for applicants for the 2004-2005 academic year. These priorities will remain in effect until superseded. Applicants for health and allied health professions not on the above priority list will be considered pending the availability of funds and dependent upon the availability of qualified applicants in the priority areas.
Federal Emergency Management Agency (FEMA), Emergency Preparedness and Response Directorate, Department of Homeland Security.
Notice of extension of comment period.
On August 19, 2003, FEMA published a notice with request for comments on Radiological Emergency Preparedness: Planning and Preparing for a Fast-Breaking Event, 68 FR 49783. With this notice, FEMA extends the comment period until December 5, 2003.
This notice is effective October 23, 2003. FEMA must receive comments on or before December 5, 2003.
Please send your comments to the Rules Docket Clerk, Office of the General Counsel, FEMA, Room 840, 500 C Street, SW., Washington, DC 20472; or e-mail to
Vanessa E. Quinn, Chief, Radiological Emergency Preparedness Section, Nuclear and Chemical Hazards Division, FEMA, 500 C Street, SW., Washington, DC 20472; (phone) 202-646-3664; or e-mail
On August 19, 2003, FEMA published a notice with request for comments on Radiological Emergency Preparedness: Planning and Preparing for a Fast-Breaking Event, 68 FR 49783. With this notice, FEMA extends the comment period until December 5, 2003.
On the basis of the record
The Commission instituted these investigations effective September 13, 2002, following receipt of a petition filed with the Commission and Commerce by the North Dakota Wheat Commission (hard red spring wheat), Bismarck, ND; the Durum Growers Trade Action Committee (durum wheat), Bismarck, ND; and the U.S. Durum Growers Association (durum wheat), Bismarck, ND. The final phase of the investigations was scheduled by the Commission following notification of preliminary determinations by Commerce that imports of durum and hard red spring wheat from Canada were being subsidized within the meaning of section 703(b) of the Act (19 U.S.C. 1671b(b)) and were being sold at LTFV within the meaning of section 733(b) of the Act (19 U.S.C. 1673b(b)). Notice of the scheduling of the final phase of the Commission's investigations and of a public hearing to be held in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S. International Trade Commission, Washington, DC, and by publishing the notice in the
The Commission transmitted its determinations in these investigations to the Secretary of Commerce on October 16, 2003. The views of the Commission are contained in USITC Publication 3639 (October 2003), entitled
By order of the Commission.
United States International Trade Commission.
Notice and solicitation of written comments.
The United States International Trade Commission invites public input on specific ways in which it could improve its document management and electronic filing system, EDIS.
To be assured of consideration, written comments must be received in the Office of the Secretary to the Commission no later than 5:15 p.m. on or before November 6, 2003.
A signed original and 8 copies of each set of comments, along with a cover letter, should be submitted by mail or hand delivery to the Secretary, United States International Trade Commission, 500 E Street, SW., Room 112, Washington, DC 20436. The Commission's rules do not authorize filing of submissions with the Secretary by facsimile or electronic means, except to the extent permitted by § 201.8 of the Commission's Rules (19 CFR 201.8) (
Marilyn R. Abbott (202-205-2799), Secretary, or Ann Jones, Deputy Secretary (202-205-1801), United States International Trade Commission. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. The Commission's document management and electronic filing system, EDIS, may be viewed at
The Commission is an independent, quasi-judicial federal agency with a wide range of trade-related mandates. During the conduct of its work, the Commission collects, creates, and disseminates a large number of documents. These may include data from interested parties (such as domestic and foreign producers, U.S. importers, and purchasers); staff reports summarizing information collected concerning such indicators as imports, production, shipments, employment, profits and losses, and prices; hearings-related documents; and written opinions explaining the Commission's conclusions on factual and legal issues.
In 1996, the Commission established an electronic document imaging system to store and provide access to docket records in agency investigations. During FY 1999, the Commission made non-confidential official documents available online via the internally developed EDIS-Online (EOL) system as a pilot test of the feasibility of self-service access to its public records on the Web. In January 2003, the Commission implemented a new document management system (EDIS-II,
Section 335 of the Tariff Act of 1930 (19 U.S.C. 1335) authorizes the Commission to adopt such reasonable procedures, rules, and regulations as it deems necessary to carry out its functions and duties. The Commission is interested in comments concerning all aspects of its EDIS document management and electronic filing initiative. To this end, the Commission is seeking input from the public, including persons and entities that appear before the agency, regarding (1) what features of the EDIS-II system have proven to be beneficial; (2) what technical difficulties have arisen in connection with use of the system; (3) how the agency can improve upon existing features; (4) what additional features may improve EDIS; and (5) how the agency might implement electronic filing and search/retrieval of confidential business and business proprietary information on EDIS.
With respect to documents containing confidential business information (CBI) or business proprietary information (BPI), the Commission is considering permitting parties and other persons to file these documents with the agency electronically. In addition to technical considerations, such as the implementation of encryption, the Commission is interested in whether or how to provide notice to parties of a filing, and business policy and procedures that may need to be addressed.
The Commission is also considering allowing the search/retrieval of CBI/BPI material by interested parties to investigations. Comments regarding such issues as who should be granted search/retrieval permissions, controls over user IDs and passwords, and when access should be terminated, are encouraged.
Comments on the usability and intuitiveness of the functional design of EDIS are of interest to the Commission. The agency encourages comments focusing on enhancing the search/retrieval process, to display and download documents, and generally, whether and how to make EDIS more user-friendly.
By order of the Commission.
Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Department of Justice.
Notice of availability of funds for the Gang Resistance Education and Training Program.
Subject to the availability of appropriations, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) intends to enter into cooperative agreements with State and local law enforcement agencies to assist them in providing the Gang Resistance Education and Training (G.R.E.A.T.) Program to school students. This notice also sets forth the intended funding priorities and criteria, as well as the application procedures that ATF will use to select, and award Federal funds to, State and local law enforcement agencies to deliver the G.R.E.A.T. Program.
Applications must be received on or before November 30, 2003.
Send applications to the G.R.E.A.T. Branch; Bureau of Alcohol, Tobacco, Firearms and Explosives; Cooperative Agreement Section; 800 K Street, NW., Suite 735; Washington, DC 20001;
Charlene Lane, G.R.E.A.T. Branch; Bureau of Alcohol, Tobacco, Firearms and Explosives; 800 K Street, NW., Suite 735; Washington, DC 20001; telephone toll-free 1-800-726-7070, extension 7-3140. Or, send electronic mail (e-mail) to:
G.R.E.A.T. is a life-skills competency program designed to provide students with the skills they need to avoid gang pressure and youth violence. G.R.E.A.T.'s violence prevention curriculum helps students develop values and practice behaviors that will help them avoid destructive activities. G.R.E.A.T. functions as a cooperative program utilizing the skills of ATF, Federal, State, and local law enforcement personnel, as well as individuals from community and civic groups.
The G.R.E.A.T. Program trains law enforcement officers in a school-based curriculum in which the officers provide instruction to school-aged children in life skill competencies, gang awareness, and anti-violence techniques. Training will be provided to any State or local law enforcement agency to the extent allocated funds allow. G.R.E.A.T. consists of three major phases:
• Phase I—School-Based Education,
• Phase II—After School/Summer Education/Booster Classes, and
• Phase III—Family Component.
All funded agencies shall be subject to an audit of program expenditures and curriculum adherence. ATF will use the audit findings to alter funding levels if deemed necessary by ATF.
Applicants who receive over $100,000, and have been teaching the G.R.E.A.T. Program for over a year, will be required to develop programs tailored to their respective communities for phases II and III. Failure to develop and provide phases II and III by July 1st of the award year will result in a reduction in funding of up to 25% for the remainder of the year. In mid-year, funded agencies will be reviewed to ensure that funding requirements are being met. Agencies not meeting their funding obligations will have their monies reduced.
Agencies awarded $50,000 or more will be required to provide an officer (or officers) on a part-time basis to assist the G.R.E.A.T. Program as a National Training Team (NTT) member. NTT members serve as instructors for G.R.E.A.T. officer training sessions during the award period at the rate of two weeks per $50,000 of the award amount. Agencies in their first year of Federal funding are exempt from this requirement. However, the funded agency will be required to designate an officer to complete the NTT G.R.E.A.T. Management Training course.
Application for financial assistance must be made on ATF Form 6410.1 (Gang Resistance Education And Training Funding Application). Application forms may be obtained by contacting the Cooperative Agreement Section, G.R.E.A.T. Branch; Bureau of Alcohol, Tobacco, Firearms and Explosives; 800 K Street, NW., Suite 735; Washington, DC 20001; telephone toll-free1-800-726-7070. Or visit the G.R.E.A.T. Web site at
If your agency was funded during the last award period (1/16/2003 to 1/15/2004), you can have application forms sent or questions answered by your current G.R.E.A.T. Program Branch cooperative agreement point of contact.
In order to provide funding to a range of community sizes and locations, applicants will be divided into five categories based on population. The population categories are: (a) 1,000,000 and over; (b) 999,999-500,000; (c) 499,999-100,000; (d) 99,999-25,000; and (e) 24,999 or less. Each applicant is required to report its population figures using the Bureau of Census 2000 Population Report for its entire service area. Population figures may be obtained from the Bureau's Web site at:
Each application will be evaluated and scored on the basis of the following criteria:
(1) Juvenile crime statistics (25%);
(2) Percentage of eligible 6th, 7th, and 8th grade students the applicant proposes to teach, and the percentage of eligible students previously taught the G.R.E.A.T. core curriculum (35%);
(3) Presence of curriculum reinforcement programs (25%) (such as Elementary, After School/Summer Education/Booster Classes, and Family Component/Parent Involvement programs); and
(4) Support of National G.R.E.A.T. Program Training (15%).
In the event that an applicant does not provide annual data to the FBI for the UCR, the applicant should contact the G.R.E.A.T. Branch to determine how it can best submit information to measure its youth crime statistics.
•
•
ATF will consider past year awardees previous spending of G.R.E.A.T. funds when determining their future funding levels. Unless sufficient documentation and support is supplied, applicants will not be funded at higher levels if past year spending indicates funds were underutilized. In order to assure that G.R.E.A.T. funds are spent in a fiscally responsible manner, ATF will also consider the cost per child for an applicant to conduct the program when awarding funds. ATF defines an agency's cost-per-child as the number of children to be taught divided by the eligible awarded funds.
For the purpose of tracking Federal funds used in grants and cooperative agreements, the G.R.E.A.T. Program has been assigned CFDA number 21.053.
The collection of information contained in this notice has been approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. 3507(d)) under control number 1140-0048. 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.
This notice is issued pursuant to Office of Management and Budget Circular No. A-102 (Grants and Cooperative Agreements with State and Local Governments).
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. Sections 16(b) and (d), the United States hereby publishes below an additional written comment received on the proposed Final Judgment in
United States of America, 209 S. LaSalle Street, Suite 600, Chicago, IL 60604, Plaintiff, versus National Council on Problem Gambling, Inc., 208 G Street, NE., Washington, DC 20002, Defendant. Civil Action No.
Pursuant to the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (“APPA” or “Tunney Act”), the United States hereby responds to one additional public comment received regarding the Proposed Final Judgment in this case. This response supplements the Response to Public Comments filed by the United States on September 17, 2003.
On June 13, 2003, the United States filed a Complaint alleging that the National Council on Problem Gambling, Inc. (“NCPG”) had orchestrated an unlawful territorial allocation of problem gambling products and services along state lines in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. Simultaneously with the filing of the Complaint, the United States filed a Proposed Final Judgment. A Competitive Impact Statement (“CIS”) was also filed with the Court at that time, and published in the
Under the consent order, NCPG is prohibited from directly or indirectly initiating, adopting, or pursuing any agreement, program, or policy that has the purpose or effect of prohibiting or restraining any Problem Gambling Service Provider (“PGSP”) from: (1) Selling problem gambling services in any state or territory or to any customer; or (2) submitting competitive bids in any state or territory or to any customer. The NCPG is also prohibited from directly or indirectly adopting, disseminating, publishing, seeking adherence to or facilitating any agreement, code of ethics, rule, bylaw, resolution, policy, guideline, standard, certification, or statement made or ratified by an official that has the purpose or effect of prohibiting or restraining any PGSP from engaging in any of the above practices, or that states or implies that any of these practices are, in themselves, unethical, unprofessional, or contrary to the policy of the NCPG.
The consent order further provides that the NCPG is prohibited from adopting or enforcing any standard or policy that has the purpose or effect of: (1) Requiring that any PGSP obtain permission from, inform, or otherwise consult with another PGSP before selling problem gambling services or submitting bids for the provision of problem gambling services in any state or territory or to any customer; or (2) requiring that any PGSP contract with, provide a fee or a portion of revenues to, or otherwise remunerate any other PGSP as a result of selling problem gambling services in any state or territory or to any customer. Finally, the NCPG is prohibited from adopting or enforcing any standard or policy or taking any action that has the purpose or effect of: (1) Sanctioning, penalizing or otherwise retaliating against any PGSP for competing with any other PGSP; or (2) creating or facilitating an agreement not to compete between two or more PGSPs.
The sixty-day period for public comments expired on August 29, 2003. During the period for public comments, the United States was sent one additional comment which was not noted in its original Response to Public Comments filed on September 17, 2003. That comment was from Messrs. Nicholas Provenzo, Chairman, and S.M. Olivia, Senior Fellow, The Center for the Advancement of Capitalism (“CAC”). The United States has carefully considered the views expressed in that comment, but nothing in the comment has altered the United States' conclusion that the Proposed Final Judgment is in the public interest. Pursuant to Section 16(d) of the Tunney Act, the United States is now filing with this Court its response to the comment submitted by the CAC. Once this comment and this response are published in the
Among the issues the CAC has raised in its comment are: NCPG's status as a nonprofit corporation; the relationship of the antitrust laws to the First Amendment; and the Court's public interest determination. The CAC also noted the absence of a barrier to entry analysis. A copy of the CAC comment is attached as Exhibit A.
The CAC argues that, as a nonprofit organization, the NCPG is exempt from the authority of the antitrust laws. Section 1 of the Sherman Act specifically states that “[e]very person” who acts in restraint of trade or commerce falls within its scope. 15 U.S.C. 1. The Supreme Court has consistently held that nonprofit organizations are not exempt from Section 1 of the Sherman Act.
The CAC also argues that the Proposed Final Judgment violates the First Amendment by “the shackling of NCPG's future speech and assembly” and that this amounts to “overt censorship by the United States.” A horizontal agreement to allocate territories, whether by spoken or written word, is conduct within the reach of the Sherman Act.
. . . [I]t has never been deemed an abridgement of freedom of speech or press to make a course of conduct illegal merely because the conduct was in part initiated, evidenced, or carried out by means of language, either spoken, written, or printed . . . Such an expansive interpretation of the constitutional guarantees of speech and press would make it practically impossible ever to enforce laws against agreements in restraint of trade as well as many other agreements and conspiracies deemed injurious to society.
With respect to the public interest determination, the CAC suggests the availability of other remedies in lieu of the Proposed Final Judgment. The territorial allocation alleged in the Complaint was a horizontal agreement among state affiliates, effectuated by the NCPG, the sole purpose and effect of which was to reduce competition for the sale of problem gambling products and services between and among state affiliates. The Proposed Final Judgment addresses the violation alleged in the Complaint—an unlawful territorial allocation of problem gambling products and services along state lines in violation of Section One of the Sherman Act. Nothing in the CAC's comment changes the view of the United States that the Proposed Final Judgment is in the public interest. In making its determination whether the Proposed Final Judgment is “in the public interest,” the “court is without authority to ‘reach beyond the complaint to evaluate claims that the government did not make and to inquire as to why they were not made’”
Finally, the CAC also expressed concern about the absence of a barrier to entry analysis. However, the Division took into account all relevant economic and legal factors in its investigation of NCPG's practices.
After careful consideration of this public comment, the United States has concluded that entry of the Proposed Final Judgment will provide an effective and appropriate remedy for the antitrust violation alleged in the Complaint, and is therefore in the public interest. Pursuant to Section 16(d) of the APPA, the United States is submitting this public comment and this response to the
I hereby certify that I served a copy of the foregoing Supplemental Response to Public Comments via First Class United States Mail, this ____ day of ____, 2003, on:
United States of America, Plaintiff, v. National Council on Problem Gambling, Inc., Defendant. Civil Action No. 1:03CV01278. Before: Judge Henry H. Kennedy.
Pursuant to the United States' publication of a Proposed Final Judgment (PFJ) in the above-captioned action,
On June 13, 2003, the United States filed a complaint against the National Council on Problem Gambling, Inc. (NCPG), a nonprofit corporation headquartered in Washington, DC. According to NCPG, its mission is to “public awareness of pathological gambling, ensure the widespread availability of treatment for problem gamblers and their families, and to encourage research and programs for prevention and education.”
The United States alleges that from 1995 to 2001, NCPG enforced a policy restricting individual state affiliates from offering problem gambling services—such as counseling and educational programs—in a state served by another NCPG affiliate. For example, the United States alleges NCPG “asked” its Minnesota affiliate to cease efforts to contract with the State of Nebraska, and instead support that the state's NCPG affiliate.
The United States further claims NCPG maintained ethical guidelines designed to support the organization's illegal anticompetitive conduct. In 1996 and 1999, for instance, NCPG's directors and affiliates adopted an “ethics resolution” which codified the non-competition policy. According to the Government, NCPG could sanction a member internally, with “fines or revocation of NCPG membership,” for offering services in a state served by another affiliate without the incumbent affiliate's permission.
The PFJ now before the Court resolves the Government's concerns by restricting NCPG's future conduct. The PFJ prevents NCPG from “prohibiting or restraining” any state affiliate from selling problem gambling services to any customer in any state. The PFJ further prohibits NCPG from declaring such competition “unethical, unprofessional, or contrary to the policy of the NCPG.” The PFJ will expire 10 years from the date of entry by the Court.
The major flaw in the Government's case is their complete failure to demonstrate, or even allege, that NCPG's actions created a barrier to competition in the market for “problem gambling services.” The United States typically alleges in antitrust cases that the defendant's actions create a de facto barrier to entry because of the relative difficulty in entering the marketplace. Here there is no such allegation. All the United States argues is that NCPG restrained competition among its own membership. This is not a sufficient basis to find entry of the PFJ is in the public interest.
In the first place, the “problem gambling services” market does not possess any substantial natural barriers to entry. The United States itself defines the market in very general terms:
“Problem gambling services” means all services relating to the treatment or prevention of problem or compulsive gambling, including dissemination of information regarding problem gambling, telephonic hot-line or help-line services, training of problem gambling counselors, certification of various problem gambling training programs, and provision of any product or service aimed at assisting problem gamblers.
It is unclear from the Government's definition how many or much of these services one must offer to be considered part of the market, but it is fairly clear that entry itself is not difficult. Any individual or organization could disseminate information on compulsive gambling and operate a hotline for gambling addicts. NCPG is not a monopolist in this market, but rather a successful group of experienced problem gambling service providers.
The United States presents no evidence that NCPG created, or attempted to create, any barriers to prevent any interested party from entering the market. From all accounts, NCPG's policies and actions were limited to governing the voluntary association among its own affiliates. Furthermore, NCPG and its affiliates are all nonprofit organizations. They are not organized to compete with each other, but rather to provide beneficial services to the public without regard for maximizing profit or paying dividends to stockholders. For the United States to hold NCPG to the same antitrust standards as a for-profit corporation or association both misconstrues the intent of antitrust laws, and imposes an unreasonable burden on NCPG's operations.
The most disturbing aspect of the PFJ is the shackling of NCPG's future speech and assembly. Section IV(B) of the PFJ prohibits NCPG from adopting or making any statement that “states or implies” intrastate competition of the type at issue in this case is “unethical, unprofrofessional, or contrary to the policy of NCPG.” This requirement does nothing to enhance competition, and in fact is overt censorship by the United States. The Government is not content to simply restrict NCPG's commercial conduct; they also seek to prevent NCPG from expressing, or even holding, ethical views that contrast those of the United States.
The First Amendment forbids the federal government from “abridging the freedom of speech.” The PFJ's restrictions on NCPG's future speech plainly violate this constitutional commandment. The United States possesses no authority, under either the Constitution or the Sherman Act, to prevent private associations from declaring conduct “unethical” or “unprofessional”. Indeed, if the Government had such power, it could easily prohibit individuals, under color of antitrust enforcement, from making
The First Amendment also protects the right of individuals to “peaceably” assemble and “petition the Government for a redress of grievances”. The PFJ imposes restraints on these rights. By forbidding NCPG from expressing views that disagree with the United States' position on competition, NCPG is arguably prohibited from lobbying other branches of the government, such as Congress, to alter or abolish the policy set forth by the Department of Justice in this matter. The United States is trying to prevent any future dissent or discussion of the merits of NCPG's policies with respect to competition among its affiliates. This not only violates the plain meaning of the First Amendment, but it usurps the potential role of Congress and the judiciary in making future assessmens arising from this case. Such drastic measures bear no relation to the stated objectives of the PFJ, namely to prevent allegedly anticompetitive conduct. The Constitution makes a clear distinction between punishing speech and punishing actual illegal conduct. The United States failed to make this distinction in formulating the PFJ.
Finally, the entire PFJ unreasonably interferes with the free association and assembly rights of NCPG and its members. For all the Government's complaining over alleged restraints of trade, this case arises solely from the voluntary actions of NCPG's members. The state affiliates agreed to participate in, and abide by, NCPG's collective decision-making process. They agreed to restrict their competitive conduct, as was their right. A key element of contract law is that a party may agree not to do something in exchange for consideration, which in this case was continued membership in NCPG. These rights should not be impugned upon by the United States for no better reason than certain consumers might be temporarily inconvenienced. Consumers, in this context, have no right to demand NCPG act a certain way or promulgate certain rules. There is a right to contract; there is no corresponding right to demand a service from certain producers, as the United States erroneously argues.
The United States does not identify any specific “private” customers that were allegedly injured by NCPG's policies, only a few state governments. It is odd for the United States to contend state governments are powerless to direct the procurement of particular services as the result of a private association's “anticompetitive” actions. For instance, the United States contends Nebraska was denied the benefits of competition when the Minnesota NCPG affiliate was barred under the organization's rules from bidding for Nebraska's business. If this were the case, and Nebraska was unhappy with the options presented, why then didn't Nebraska simply create another option? If NCPG is getting in the way, a state could easily create its own agency to provide problem gambling services. Alternatively, the state could impose licensing or other professional requirements to ensure problem gambling services are provided on terms deemed acceptable to the state's interests.
For the numerous independent grounds discussed above, the Court should reject the PFJ as inconsistent with the public interest under the Tunney Act. The Government has not alleged facts sufficient to warrant any antitrust relief, and the remedies contained in the PFJ unreasonably restrain NCPG's First Amendment rights, as well as the right of NCPG members to voluntarily contract.
Dated: August 25, 2003.
60-Day emergency notice of information collection under review: reinstatement, with change, of a previously approved collection for which approval has expired; claim for death benefits.
The U.S. Department of Justice, Office of Justice Programs, Bureau of Justice Assistance has submitted the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with emergency review procedures of the Paperwork Reduction Act of 1995. OMB approval has been requested by October 30, 2003. The proposed information collection is published to obtain comments from the public and affected agencies. If granted, the emergency approval is only valid for 180 days. Comments should be directed to OMB, Office of Information and Regulation Affairs, Attention: Department of Justice Desk Officer (202) 395-5806, Washington, DC 20503. Comments are encouraged and will be accepted for 60 days until December 22, 2003.
During the first 60 days of this same review period, a regular review of this information collection is also being undertaken. All comments, suggestions, or questions regarding additional information, including requests for copies of the proposed information collection instrument with instructions, should be directed to Sharon Williams via e-mail at
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Comments should address one or more of the following four points:
(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, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected;
(4) Minimize the burden of the collection of information on those who
(1)
(2)
(3)
(4)
(5)
(6)
The U.S. Department of Justice, Office of Justice Programs, Bureau of Justice Assistance has submitted the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with emergency review procedures of the Paperwork Reduction Act of 1995. OMB approval has been requested by October 30, 2003. The proposed information collection is published to obtain comments from the public and affected agencies. If granted, the emergency approval is only valid for 180 days. Comments should be directed to OMB, Office of Information and Regulation Affairs, Attention: Department of Justice Desk Officer (202) 395-5806, Washington, DC 20503. Comments are encouraged and will be accepted for 60 days until December 22, 2003.
During the first 60 days of this same review period, a regular review of this information collection is also being undertaken. All comments, suggestions, or questions, or questions regarding additional information, including requests for copies of the proposed information collection instrument with instructions, should be directed to Sharon Williams at
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Comments should address one or more of the following four points:
(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, including the validity of the methodology and assumptions used
(3) Enhance the quality, utility, and clarity of the information to be collected
(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 (
Overview of this information:
(1)
(2)
(3)
(4)
(5) An estimate of the total number of respondents and the amount of time estimated for an average respondent to respond/reply: It is estimated that each of the 320 respondents will complete the application in approximately 2.5 hours.
(6)
If additional information is required contact: Brenda E. Dyer, Deputy Clearance Officer, Planning and Policy Staff, Justice Management Division, U.S. Department of Justice, Patrick Henry Building, 601 D Street, NW, Suite 1600, Washington, DC 20530.
60-day emergency notice of information collection under review: reinstatement, with change, of a previously approved collection for which approval has expired, report of public safety officer's permanent and total disability.
The U.S Department of Justice, Office of Justice Programs, Bureau of Justice Assistance has submitted the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with emergency review procedures of the Paperwork Reduction Act of 1995. OMB approval has been requested by October 31, 2003. The proposed information collection is published to obtain comments from the public and affected agencies. If granted, the emergency approval is only valid for 180 days. Comments should be directed to OMB, Office of Information and Regulation Affairs, Attention: Department of Justice Desk Officer, Washington, DC 20503. Comments are encouraged and will be accepted for 60 days until December 22, 2003.
During the first 60 days of this same review period, a regular review of this information collection is also being undertaken. All comments, suggestions, or questions regarding additional information, including requests for copies of the proposed information collection instrument with instructions, should be directed to Sharon Williams at
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Comments should address one or more of the following four points:
(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, including the validity of the methodology and assumptions used.
(3) Enhance the quality, utility, and clarity of the information to be collected.
(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 (
Overview of this information:
(1) Type of information collection: Reinstatement, with Change, of a Previously Approved Collection for which Approval has Expired.
(2) The title of the form/collection: Report of Public Safety Officer's Permanent and Total Disability.
(3) The agency form number, if any, and the applicable component of the department sponsoring the collection: Form Number: OJP ADMIN FORM 3650/7. Bureau of Justice Assistance, Office of Justice Programs, Department of Justice.
(4) Affected public who will be asked or required to respond, as well as a brief abstract: Primary: Individuals or Households. Other: Federal, State, Local, or Tribal Government. The Report of Public Safety Officer's Permanent and Total Disability form is required to carry out the functions of the Public Safety Officers' Benefits Program. The information collected is pursuant to the Public Safety Officers' Benefits Act of 1976. Benefits are provided to claimant public safety officers found to have been permanently and totally disabled as the direct result of a catastrophic line of duty injury sustained on or after November 29, 1990. The form includes information necessary to determine that the circumstances that lead to the disability meet the requirements prescribed in 42 U.S.C. 3796.
(5) An estimate of the total number of respondents and the amount of time estimated for an average respondent to respond/reply: It is estimated that each of the 45 respondents will complete the application in approximately 2 hours.
(6) An estimate of the total public burden (in hours) associated with the collection: The estimated total public burden associated with this application is 90 hours.
If additional information is required contact: Brenda E. Dyer, Deputy Clearance Officer, Planning and Policy Staff, Justice Management Division, U.S. Department of Justice, Patrick Henry Building, 601 D Street, NW., Suite 1600, Washington, DC 20530.
Department of Labor.
Notice of proposed amendment to PTE 81-6 and proposed restatement and redesignation of PTE 82-63.
This document contains a notice of pendency before the Department of Labor (the Department) of a proposed amendment to PTE 81-6 and a proposed restatement of PTE 82-63. If granted, the proposed exemption would amend and replace Prohibited Transaction Exemption (PTE) 81-6 (46 FR 7527, January 23, 1981) which exempts the lending of securities by employee benefit plans to certain banks and broker-dealers, and would replace PTE 82-63 (47 FR 14804, April 6, 1982), which exempts certain compensation arrangements for the provision of securities lending services by a plan fiduciary to an employee benefit plan. The class exemption proposed in this notice, if granted, would incorporate PTEs 81-6 and 82-63 and expand those class exemptions to additional parties, subject to modified conditions. If granted, the proposed exemption would affect participants and beneficiaries of employee benefit plans, persons who lend securities on behalf of such plans, and parties in interest who engage in securities lending transactions with such plans.
Written comments and requests for a public hearing must be received by the Department on or before December 8, 2003. The replacement exemption and the revocation of PTEs 81-6 and 82-63 would be effective 60 days following publication of the final grant.
All written comments and requests for a public hearing (preferable three copies) should be addressed to: U.S. Department of Labor, Office of Exemption Determinations, Employee Benefits Security Administration, Room N-5649, 200 Constitution Avenue, NW., Washington, DC 20210 (Attention: Application No. D-10365.) Interested
Allison Padams Lavigne, Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor, (202) 693-8540 (This is not a toll-free number.)
Notice is hereby given of the pendency before the Department of a proposed class exemption that would amend and incorporate PTEs 81-6 and 82-63 into a new class exemption and would expand the existing relief from the restrictions of sections 406(a)(1)(A) through (D) and 406(b)(1) of ERISA and the taxes imposed by section 4975(a) and (b) of the Code by reason of section 4975(c)(1)(A) through (E) of the Code to additional parties under modified conditions.
The proposed exemption was requested in two applications. One was submitted by the American Bankers Association (ABA) (D-08295)
PTE 81-6 provides relief from section 406(a)(1)(A) through (D) of ERISA and Code section 4975(c)(1)(A) through (D) for the lending of securities by employee benefit plans to banks and broker-dealers registered under the Securities Exchange Act of 1934, who are parties in interest with respect to such plans. The exemption was amended in 1987 to include broker-dealers exempted from registration as dealers in exempted government securities, provided that all other conditions of the exemption are met.
Securities lending transactions generally operate in the following manner. An institutional investor, such as a plan, lends securities from its portfolio to a broker-dealer or bank in order to augment the return on those securities while continuing to enjoy the benefits of owning the securities (
PTE 82-63 exempts certain compensation arrangements for the provision of securities lending services by a plan fiduciary to an employee benefit plan, provided that: the loan of securities is not prohibited by section 406(a); the lending fiduciary is authorized to engage in lending transactions on behalf of the plan; the compensation is reasonable and is paid in accordance with terms of a written instrument; the compensation arrangement is approved by an independent fiduciary; and the authorization is provided only after the independent fiduciary has received all information necessary to approve the arrangement with the lending fiduciary.
Currently, relief under PTE 81-6 is limited to securities lending transactions in which a plan loans securities to a U.S. broker-dealer or U.S. bank which is a party in interest to the plan. Moreover, only collateral consisting of cash, securities issued or guaranteed by the United States Government or its agencies or instrumentalities, or irrevocable bank letters of credit may be accepted by the plan. As discussed more fully below, the applicant(s) have asked the Department to extend relief to foreign broker-dealers and banks and to allow plans to accept additional forms of collateral.
The application contains facts and representations with regard to the requested exemption which are summarized below. Interested persons are referred to the application on file with the Department for the complete representations of the applicant.
The RMA is the primary association of securities lending professionals. RMA's membership is composed of approximately 2800 member institutions consisting of banks and regulatory agencies. RMA states that its purpose as an association is to foster standards and performance in the practice and management of lending and credit activities in its members and other institutions which comprise the financial service industry.
According to RMA, securities lending activities in the international business context have increased greatly. Securities commonly loaned now include U.S. and foreign corporate and government securities. Lenders are continuing to expand their global securities lending networks by becoming familiar with and lending securities located in new markets and by lending to borrowers located in new jurisdictions. The applicant represents that plans are effectively prevented from participating in securities lending transactions in foreign markets because of the limitations contained in PTE 81-6.
In its original submission, RMA requested an exemption to permit employee benefit plans to lend securities to U.S. banks and broker-dealers and “exempted foreign banks and broker-dealers.” RMA proposed to define “exempted foreign banks and broker-dealers” as either those subject to the laws and regulations of a country which is a member of the Organization for Economic Cooperation and Development or those which are rated with respect to their long-term creditworthiness as at least “A” by Standard & Poors or “A3” by Moody's Investors Services, Inc. RMA also requested that the permissible collateral
The Department requested additional information relating to the operation and regulatory environment of these foreign countries. The Department notes that the relief provided in PTE 81-6 was based, in part, on the regulatory oversight of banks and broker-dealers located in the United States. This regulatory framework and the conditions contained in PTE 81-6 were integral to the Department's determination that the exemption was administratively feasible, in the interests of the plan and of its participants and beneficiaries, and protective of the rights of the participants and beneficiaries of such plan.
In response to the Department's questions, RMA amended its request to narrow the definition of exempted foreign bank or broker-dealer to include those entities regulated under the laws of the United Kingdom (the UK). Banks and broker-dealers in the UK which engage in securities lending activities of the type contemplated by the proposed exemption are subject to extensive regulation under the Financial Services and Markets Act 2000 (FSMA) which governs “the conduct of investment business”
The duties of the FSA fall into the following categories: (1) Authorization of firms; (2) establishing standards for firms; (3) oversight of firms; (4) enforcement of [investment] laws and rules in the UK; (5) reducing financial crime; and (6) providing consumer service. Before a firm may conduct investment business, it must be authorized by the FSA. Only those firms which demonstrate to the FSA that they satisfy threshold criteria (which relate to the firms' honesty, competence and financial soundness) are authorized to engage in investment. The FSA ensures that financial business is not being carried out by unauthorized firms. In addition, the FSA collects and maintains information about the authorized firms. Any investment agreement entered into without such authorization is unenforceable, and the counterparty to such agreement is entitled to restitution and compensation for any loss incurred.
The FSA also establishes “prudence” standards for the firms it regulates. These standards include capital requirements which are designed to ensure that firms are able to meet financial obligations. Firms are also required to meet FSA standards relating to management, accounting and auditing practices. Further, the FSA sets the conduct of business standards relating to the firms' relationships with consumers. This involves overseeing a firm's dealings with investors to ensure, for example, that information is understandable, fair and not misleading.
The FSA has responsibility for overseeing the integrity of the UK investment markets. Specifically, it oversees the exchanges, clearing and settlement houses, and conducts market surveillance and transaction monitoring. The FSA also supervises the soundness of banks. In so doing, the aim is, among other things, to protect depositors.
In its enforcement capacity, the FSA investigates and, if appropriate, disciplines and prosecutes those responsible for conducting financial business outside of the rules. Under the FSMA, the FSA has the statutory authority to revoke a firm's authorization, discipline firms and individuals by public statements and financial penalties, seek injunctions, prosecute for offenses and require money to be returned as compensation for consumers.
According to RMA, the FSA's oversight of the securities markets in the UK provides a sufficient level of safeguards to protect the interests of the plans that would be lending securities to UK banks and broker-dealers under this exemption, if granted.
The RMA requested that the Department expand the types of collateral permitted to be used in securities lending arrangements to include currency denominated in UK pounds or Euros, securities issued or guaranteed by the government of the UK or one of its agencies or instrumentalities, the sovereign debt of the member countries of the European Monetary Union denominated in UK pounds or in Euros, or irrevocable letters of credit denominated in UK pounds or Euros and issued by a bank which is regulated under the laws of the UK.
With respect to the Euro, RMA represents that, although it is a relatively new form of currency, it is closely monitored and regulated in connection with the implementation of the European Monetary Union (EMU). The EMU
The RMA proposed that, if letters of credit are used as collateral, they must be issued by a bank whose long-term deposit rating is investment grade or higher, as determined by a nationally recognized independent statistical rating organization. Upon further consideration of this issue, RMA suggested that the “counterparty credit rating” of a bank is a more appropriate measure with respect to these transactions. Counterparty credit ratings take into account factors that focus on the bank's capacity to meets its financial
RMA has also requested that plans be allowed to accept collateral that is denominated in a different currency than the securities lent. RMA notes that, because plans are currently not permitted under PTE 81-6 to accept foreign government debt as collateral for borrowed securities, plans are not able to fully participate in the overseas securities lending markets and are prevented from enjoying revenue opportunities that are available to other lenders. RMA further states that most broker-dealers who are active in the international securities lending area are active in several markets. Thus, a broker-dealer may have a relatively large position in the currency of one country (
Another request of RMA relates to the level of collateral that must be provided to a lender. RMA suggests that the market value of the collateral offered to the plan be not less than 100 percent of the then market value of the securities lent, if the collateral is denominated in the same currency as the securities, and 102 percent of the then market value of the securities lent if the collateral is denominated in a different currency. However, after consideration of the issue, the Department believes that it would be more protective of the plan to require that the market value of the collateral be 105 percent of the then market value of the securities lent where the collateral offered by a borrower is denominated in a different currency than that of the securities.
RMA states in its application that under standard securities lending practices in the UK, title to the collateral given to the lender in exchange for borrowed securities, passes to the lender. According to RMA, this practice is reflected in the standard lending agreements used in the UK RMA represents that the securities lending transactions contemplated by the proposed exemption would be carried out in accordance with standard securities lending practices in the United Kingdom. Because the lending plan will have title to the collateral in these transactions, such plans will not be restricted in their ability to apply the collateral towards the cost of replacing the borrowed securities or to replace the collateral with cash in the event the borrower were to default.
To further protect the plan's interests in the event of a borrower's default, RMA proposes that, in the securities lending agreement, the borrower will agree to submit to the jurisdiction of the courts of the United States. Once a plan receives a judgment against a borrower in a U.S. court, the plan would then enforce the judgment in a UK court. RMA states that the enforcement of U.S. judgments in the UK courts is governed by common law. A basic principle of such common law is that any judgment of a court of a foreign country which is for a debt or a definite sum of money which is final and conclusive on the merits, and as to which the foreign court had jurisdiction over the defendant, is enforceable at common law in the absence of fraud. Under UK common law, a foreign court is considered to have jurisdiction over the defendant if the defendant agreed to submit to the jurisdiction of the foreign court prior to the commencement of the proceedings.
To enforce a U.S. judgment under common law, a claimant must commence an action in a UK court by writ. If a claimant obtains a favorable judgment in a U.S. court following a summary judgment action or a trial, the judgment is enforceable in the UK like any other UK judgment.
As an alternative to submission to the jurisdiction of the United States courts, if the lending agent is domiciled in the United States, the lending agent may agree to indemnify and hold harmless each plan against any shortfall in the value of the collateral as compared to the value of the loaned securities.
In dealing with the indicia of ownership of the collateral offered to the plan in return for the securities lent to Foreign Banks and Foreign Broker-Dealers, RMA has represented that the indicia of ownership of the collateral for the borrowed securities will be maintained within the jurisdiction of the district courts of the United States as required by section 404(b) of ERISA, or if held outside the U.S., in a central clearing facility.
Thus, if a Foreign Bank or Foreign Broker-Dealer offers Foreign Collateral to the plan, under regulation 29 CFR 2550.404b-1, the indicia of ownership of the collateral must be held within the jurisdiction of the district courts of the United States
Section I of the proposal describes the transactions which are covered by the exemption. Section I(a) tracks the language of PTE 81-6 by permitting the lending of securities that are assets of an employee benefit plan to a U.S. Broker-Dealer or U.S. Bank, if the general conditions set forth in section II are met. However, the conditions contained in
Under the proposal, U.S. Banks and U.S. Broker-Dealers would now be permitted to give plans Foreign Collateral for securities loans. Section V(f) defines Foreign Collateral as the currency of the United Kingdom or Euros, securities issued or guaranteed by the government of the United Kingdom or one of its agencies or instrumentalities, sovereign debt of the member countries of the EMU denominated in Euros or irrevocable letters of credit issued by a Foreign Bank, other than the borrower, which has a counter-party rating of investment grade or better as determined by a nationally recognized statistical rating organization. Further, section II(b) requires that the plan receive from the borrower: (a) U.S. Collateral having, as of the close of business on the preceding business day, a market value or, in the case of letters of credit, a stated amount, equal to not less than 100 percent of the then market value of the securities lent, or (b) Foreign Collateral having, as of the close of the preceding business day, a market value or, in the case of letters of credit, a stated amount, equal to not less than: (1) 102 percent of the then market value of the securities lent on a recognized securities exchange (as defined in section V(j)) or an automated trading system (as defined in section V(k)) on which the securities are primarily traded if the collateral posted is denominated in the same currency as the securities lent; or (2) 105 percent of the then market value of the securities lent on a recognized securities exchange or an automated trading system on which the securities are primarily traded if the collateral posted is denominated in a different currency than the securities lent. The Department notes that, after consideration of the applicant's suggestion for an appropriate level of Foreign Collateral, it was determined that the plan's interests will be better protected if the amount of collateral is increased when Foreign Collateral is offered to the plan.
The securities lending agreement also must describe any fees to be received by a plan in connection with the lending of securities, whether the payment will be made in the same currency as the collateral, in the currency of the securities lent or in U.S. dollars. Lastly, the securities lending agreement must give the plan a continuing security interest in, title to, or the rights of a secured creditor with respect to the collateral received by the plan.
As an additional safeguard, the Department is requiring that when the plan receives Foreign Collateral or U.S. Collateral from a foreign bank or broker-dealer, the collateral itself must be maintained on behalf of the plan at an “Eligible Securities Depository” as defined in Rule 17f-7 of the Investment Company Act of 1940 [15 U.S.C. 80a]. Rule 17f-7 governs the custody of assets of registered management investment companies with custodians outside the United States. Rule 17f-7 permits a fund to maintain assets with a foreign securities depository if, among other things, the depository is an eligible securities depository. The term “Eligible Securities Depository” is defined in section [17 CFR Part 270] 2710.17f-7(b)(1) as a system for the central handling of securities that:
(i) Acts as or operates a system for the central handling of securities or equivalent book-entries in the country where it is incorporated, or a transnational system for the central handling of securities or equivalent book-entries;
(ii) Is regulated by a foreign financial regulatory authority as defined under section 2(a)(50) of the Act (15 U.S.C. 80a-2(a)(50))
(iii) Holds assets for the custodian that participates in the system on behalf of the Fund under safekeeping conditions no less favorable than the conditions that apply to other participants;
(iv) Maintains records that identify the assets of each participant and segregates the system's own assets from the assets of participants;
(v) Provides periodic reports to its participants with respect to its safekeeping of assets, including notices of transfers to or from any participant's account; and
(vi) Is subject to periodic examination by regulatory authorities or independent accountants.
The Department notes that the proposed exemption also permits collateral to be physically delivered to the Plan. In addition, where the borrower is a U.S. Bank or Broker-Dealer, the current requirements (with respect to where the collateral must be held on behalf of the plan) of PTE 81-6 have been incorporated into the proposal.
The Department also notes that section II(c) requires that, in the case of a Foreign Broker-Dealer or Foreign Bank, the borrower shall have furnished the Lending Fiduciary with its most recent available audited statement of its financial condition as audited by a firm which is eligible for appointment as a company auditor under the laws of the United Kingdom.
For purposes of this proposed class exemption, section V(c) defines the term “Foreign Broker-Dealer” as a broker-dealer registered and regulated under the laws of the Financial Services Authority in the United Kingdom that has as of the last day of its most recent fiscal year, equity capital which is equivalent of no less than $200 million. Section V(d) defines the term “Foreign Bank” as an institution having substantially similar powers to a bank which is described in section 202(a)(2) of the Investment Advisers Act, is subject to authorization by the Financial Services Authority in the United Kingdom and has as of the last day of its most recent fiscal year, equity capital which is equivalent of no less than $200 million.
The Department notes that, the proposed relief for Foreign Broker-Dealers and Foreign Banks is limited to UK Broker-Dealers and UK Banks as RMA has requested. Nevertheless, this proposal does not foreclose consideration by the Department of extending relief to broker-dealers and
Section III of the proposed exemption contains additional conditions that are applicable to securities lending transactions with Foreign Broker-Dealers and Foreign Banks. Section III(a) requires that the lending fiduciary maintain the situs of the loan agreement in accordance with the indicia of ownership requirements under section 404(b) of ERISA and the regulations promulgated under 29 CFR 2550.404(b)-1. Further, section III(b) requires that a foreign borrower agree to submit to the jurisdiction of the district courts or the United States, and agree that the plan may in its sole discretion enforce the agreement in a U.S. court. It is the Department's understanding, that in the event the borrower were to default, the plan generally would be able to secure a judgment in the United States which would be enforceable in a UK court.
As an alternative to the Foreign Broker-Dealer or Foreign Bank agreeing to submit to the jurisdiction of the United States courts, the lending fiduciary may, if domiciled in the United States, agree to indemnify and hold harmless each plan against any shortfall in the collateral or losses incurred by the plan arising from a borrower's default.
The Department has received an inquiry regarding whether the relief provided by the proposed exemption would apply to securities loaned by plans pursuant to “exclusive securities lending arrangements.” Under these exclusive arrangements, a lender (in this case, a plan) agrees to make a specific portfolio of securities (that are owned by the plan) available exclusively to a specific borrower for a specific period of time. The borrower is given exclusive access to all of the securities in the portfolio and can borrow such securities as and when the borrower determines that it wishes to do so. The securities may not be lent to another person. However, the existence of an exclusive arrangement will not have any impact on the investment management decisions of the portfolio. Thus, the securities in the portfolio may continue to be purchased and sold without regard to the exclusive arrangement. Neither the borrower nor any of its affiliates has any discretionary authority or control with respect to the management of the portfolio, or with respect to the decision to cause the plan to enter into an exclusive arrangement or to negotiate the terms of such arrangement on behalf of the plan. The exclusive arrangement will be negotiated on behalf of the lending plan by a fiduciary who is independent of the borrower. However, under the terms of an exclusive arrangement, the borrower has a contractual right to borrow any of the securities included in the portfolio at any time during the agreed upon period. In exercising this right, the borrower is acting as a counterparty pursuant to the written loan agreement and not as a fiduciary.
Under these exclusive arrangements, compensation is paid by the borrower to the plan and may consist of one or more components. The first component generally is a fee paid by the borrower to the plan for the exclusive right to borrow the securities in the portfolio and may consist of either a flat fee (which may be equal to a percentage of the value of the total securities in the portfolio), or a periodic payment that is equal to a percentage of the value of the total balance of outstanding borrowed securities or a combination of both. A second component of the fees may include the plan's right to (a) retain a portion of the investment earnings generated by its investment of cash collateral received from the borrower and rebate the remaining earnings to the borrower, (b) retain all the investment earnings generated by its investment of the cash collateral and pay a rebate fee to the borrower; or (c) receive a lending fee paid by the borrower with respect to securities loans collateralized with non-cash collateral (based on the value of the borrowed securities and the duration of the particular loan.) The fees may be different for different securities or different groups of securities subject to the exclusive arrangement. These two types of fees may be both paid to the plan, or offset against amounts due to the lender.
The Department is of the view that such exclusive securities lending arrangements would be covered by the relief provided in the proposed exemption, and, accordingly, has clarified section II(e)(1) of the proposal to more explicitly encompass a variety of compensation methods.
The Department notes that ERISA's general standards of fiduciary conduct also would apply to any proposed securities lending arrangements. Section 404 requires a fiduciary, among other things, to discharge his or her duties respecting a plan solely in the interest of the plan's participants and beneficiaries and in a prudent fashion. Accordingly, the plan's fiduciary, in deciding to approve the lending of securities to a Foreign Bank or Foreign Broker-Dealer, should fully understand the risks involved in this particular type of securities lending. The fiduciary should understand, for example, the additional risks involved in lending securities which are plan assets to a foreign financial institution, as well as, the risk associated with the receipt of collateral consisting of foreign currency or securities issued by a foreign country. In connection with the foregoing, the plan fiduciary should take into account any additional expenses and legal issues that may arise if a foreign borrower defaults and the plan fiduciary has to enforce and collect on a judgement in a foreign court.
As part of its continuing effort to reduce paperwork and respondent burden, the Department of Labor conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed.
Currently, the Department is soliciting comments concerning the proposed revision of the information collection request (ICR) included in this Notice of Proposed Amendment to PTE 81-6 and Proposed Restatement and Redesignation of PTE 82-63. A copy of the ICR may be obtained by contacting Gerald B. Lindrew, Office of Policy and Research, U.S. Department of Labor, Employee Benefits Security Administration, 200 Constitution Avenue, NW, Room N-5647, Washington, DC 20210. Telephone (202) 693-8410; Fax: (202) 219-4745. These are not toll-free numbers.
The Department has submitted a copy of the proposed information collection to OMB in accordance with 44 U.S.C. 3507(d) for review of its information collections. The Department and OMB are particularly interested in comments that:
• 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;
• Evaluate the accuracy of the agency's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• 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,
Comments should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503; Attention: Desk Officer for the Employee Benefits Security Administration. Although comments may be submitted through December 22, 2003 OMB requests that comments be received within 30 days of publication of the Notice of Proposed Rulemaking to ensure their consideration.
The proposed amendment and restatement of existing exemptions was requested in two applications, one submitted by the ABA and a second submitted by RMA. The applicants requested that PTE 81-6, which currently provides exemptive relief from section 406(a)(1)(A) through (D) of ERISA and Code section 4975(c)(1)(A) through (D) for the lending of securities by employee benefit plans to banks and broker-dealers registered under the Securities Exchange Act of 1934, or broker-dealers exempted from registration under section 15(a)(1) of the 1934 Act as a dealer in exempted government securities that are parties in interest with respect to such plans, be broadened to exempt certain foreign banks and broker-dealers and to permit additional forms of collateral. In response to the applications, and provided that certain conditions outlined in the proposed exemption are met, the Department proposes to amend PTE 81-6 to also exempt the lending of securities by employee benefit plans to foreign banks and broker dealers and to provide for the receipt of additional forms of collateral.
PTE 82-63, used in conjunction with PTE 81-6, exempts certain compensation arrangements for the provision of securities lending services by a plan fiduciary to an employee benefit plan provided that the lending fiduciary is authorized to engage in lending transactions on behalf of the plan and the other conditions of the exemption are met. The Department has amended PTE 81-6 and incorporated PTE 82-63 in this proposed exemption. The Department also gives notice of its revocation of PTE 81-6 and PTE 82-63. The ICR for the proposed exemption re-states and combines existing ICRs previously approved
The Department estimates that there are approximately 13,913 borrowers that might take advantage of the class exemption. Generally, a plan is authorized to lend securities to two groups of broker dealers and banks as these are defined in the proposed amended and restated exemption—U.S. Broker-Dealers and reporting dealers
The proposed exemption provides that before a plan can lend securities: the borrower must provide the plan with a financial statement; the transaction or series of transactions must be described in a written agreement; and, the compensation for the Lending Fiduciary must be described in a written agreement.
Furnishing a financial statement to the plan. The Department has not accounted for an hour or cost burden for preparing financial statements because borrowers of securities will have already prepared the statements required under the exemption in order to comply with SEC and FSA rules. It is assumed that borrowers will incur costs of $1 per mailing and 2 minutes of administrative time to distribute financial statements quarterly in order to comply with the conditions of the proposed exemption. This provision is expected to require 1,855 hours and $56,000 annually.
For both the lending and compensation agreements, the hour burden for U.S. broker-dealers and U.S. banks, at 32 minutes per agreement, is 14,827 hours; for UK broker-dealers and UK banks, at 122 minutes per agreement, the hour burden is 53 hours. The total hour burden for the lending and compensation agreements is 14,880 hours.
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 ERISA and the Code. These provisions include any prohibited transaction provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of ERISA 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 ERISA; 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 any exemption may be granted under section 408(a) of ERISA and section 4975(c)(2) of the Code, the Department must find that the exemption is administratively feasible, in the interests of the plan(s) and of its participants and beneficiaries, and protective of the rights of the participants and beneficiaries of the plan;
(3) This proposed exemption, if granted, will be supplemental to, and not in derogation of, any other provisions of ERISA and 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) If granted, the pending class exemption will be applicable to a particular ransaction only if the transaction satisfies the conditions specified in the class exemption.
All interested persons are invited to submit written comments or requests for a hearing on the proposed exemption to the address and within the time period set forth above. All comments and requests for a hearing will be made a part of the record. Comments and requests for a hearing should state the reasons for the writer's interest in the proposed exemption. Comments received will be available for public inspection with the application for exemption at the address set forth above.
On the basis of the facts and representations set forth in the application, the Department proposes to grant the following exemption under the authority of section 408(a) of 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, August 10, 1990).
(a) Effective (60-days after the date of publication of the final class exemption in the
(b) Effective (60-days after the date of publication of the final class exemption in the
(c) Effective (60-days after the date of publication of the final class exemption in the
(a) Neither the borrower nor any affiliate of the borrower has or exercises discretionary authority or control with respect to the investment of the plan assets involved in the transaction, or renders investment advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to those assets;
(b)(1) The plan receives from the borrower by the close of the Lending Fiduciary's business on the day in which the securities lent are delivered to the borrower:
(A) “U.S. Collateral” having, as of the close of business on the preceding business day, a market value or, in the case of bank letters of credit, a stated amount, equal to not less than 100 percent of the then market value of the securities lent, or
(B) “Foreign Collateral” having as of the close of business on the preceding business day, a market value or, in the case of bank letters of credit, a stated amount, equal to not less than:
(i) 102 percent of the then market value of the securities lent as valued on
(ii) 105 percent of the then market value of the securities lent as valued on a recognized securities exchange (as defined in section V(j)) or an automated trading system (as defined in V(k)) on which the securities are primarily traded if the collateral posted is denominated in a different currency than the securities lent;
(2) If the borrower is a U.S. Bank or U.S. Broker-Dealer, the Plan receives such U.S. Collateral or Foreign Collateral from the borrower by the close of the Lending Fiduciary's business on the day in which the securities are delivered to the borrower. Such collateral is received by the plan either by physical delivery, wire transfer or by book entry in a securities depository located in the United States;
(3) If the borrower is a Foreign Bank or Foreign Broker-Dealer, the plan receives U.S. Collateral or Foreign Collateral from the borrower by the close of the Lending Fiduciary's business on the day in which the securities are delivered to the borrower. Such collateral is received by the plan either by physical delivery, wire transfer or by book entry in a securities depository located in the United States or held on behalf of the plan at an Eligible Securities Depository. The indicia of ownership of such collateral shall be maintained in accordance with ERISA section 404(b) and regulation 29 CFR 2550.404b-1.
(c) Prior to making of any such loan, the borrower shall have furnished the Lending Fiduciary with:
(1) The most recent available audited statement of the borrower's financial condition, as audited by a United States certified public accounting firm or in the case of a Foreign Broker-Dealer or Foreign Bank, a firm which is eligible for appointment as a company auditor under the laws of the United Kingdom;
(2) The most recent available unaudited statement of its financial condition (if the unaudited statement is more recent than such audited financial statement); and
(3) A representation that, at the time the loan is negotiated, there has been no material adverse change in its financial condition since the date of the most recent financial statement furnished to the plan that has not been disclosed to the Lending Fiduciary. Such representations may be made by the borrower's agreeing that each such loan shall constitute a representation by the borrower that there has been no such material adverse change;
(d) The loan is made pursuant to a written loan agreement, the terms of which are at least as favorable to the plan as an arm's-length transaction with an unrelated party would be. Such loan agreement identifies the currency in which the payment of any fees described in section II(e) below, will be made to the plan, and states that the plan has a continuing security interest in, title to, or the rights of a secured creditor with respect to the collateral. Such agreement may be in the form of a master agreement covering a series of securities lending transactions;
(e) In return for lending securities, the plan:
(1) receives a reasonable fee (in connection with the securities lending transaction) and/or
(2) Has the opportunity to derive compensation through the investment of the currency collateral. Where the plan has that opportunity, the plan may pay a loan rebate or similar fee to the borrower, if such fee is not greater than the plan would pay in a comparable transaction with an unrelated party.
The combined total of all fees and other consideration received by the plan in connection with securities lending transactions is reasonable.
(f) The plan receives the equivalent of all distributions made to holders of the borrowed securities during the term of the loan including, but not limited to, dividends, interest payments, shares of stock as a result of stock splits and rights to purchase additional securities;
(g) If the market value of the collateral at the close of trading on a business day is less than the applicable percentage (described in section II b(1) of the exemption) of the market value of the borrowed securities at the close of trading on that day, the borrower shall deliver, by the close of business on the following business day, an additional amount of U.S. Collateral or Foreign Collateral the market value of which, together with the market value of all previously delivered collateral, equals at least the applicable percentage of the market value of all the borrowed securities as of such preceding day.
Notwithstanding the foregoing, part of the U.S. Collateral or Foreign Collateral may be returned to the borrower if the market value of the collateral exceeds the applicable percentage (described in section II(b)(1) of the exemption) of the market value of the borrowed securities, as long as the market value of the remaining U.S. Collateral or Foreign Collateral equals at least the applicable percentage of the market value of the borrowed securities;
(h) The loan may be terminated by the plan at any time, whereupon the borrower shall deliver certificates for 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 the lesser of:
(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.
(i) In the event that the loan is terminated, and the borrower fails to return the borrowed securities or the equivalent thereof within the applicable time described in section II(h) above, the plan may, under the terms of the loan agreement:
(1) 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 agreement, and any expenses associated with the sale and/or purchase, and
(2) The borrower is obligated, under the terms of the loan agreement, to pay, and does pay to the plan the amount of any remaining obligations and expenses not covered by the collateral, including reasonable attorney's fees incurred by the plan for legal action arising out of default on the loans, plus interest at a reasonable rate.
Notwithstanding the foregoing, the borrower may, in the event the borrower fails to return borrowed securities as described above, replace collateral, other than U.S. currency, with an amount of U.S. currency that is not less than the then current market value of the collateral, provided such replacement is approved by the Lending Fiduciary.
If the borrower fails to comply with any provision of a loan agreement which requires compliance with this exemption, the plan fiduciary who 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 borrower's failure to comply with the conditions of the exemption.
(a) The Lending Fiduciary maintains the written documentation for the loan agreement at a site within the
(b) Prior to entering into a transaction involving a Foreign Broker-Dealer or Foreign Bank either:
(1) The Foreign Broker-Dealer or Foreign Bank agrees to submit to the jurisdiction of the United States; agrees to appoint an agent for service of process in the United States, which may be an affiliate (the Process Agent); consents to service of process on the Process Agent; and agrees that any enforcement by a plan of its rights under the securities lending agreement will, at the option of the plan, occur exclusively in the United States courts; or
(2) The Lending Fiduciary, if domiciled in the United States, agrees to indemnify and hold harmless each plan against any shortfall in the collateral, (as clearly set forth in the applicable lending agreement), plus interest and any transaction costs incurred (including attorney's fees of the plan arising out of the default on the loans or the failure to indemnify properly under this provision) which the plan may incur or suffer directly arising out of the lending of securities of such plan to a Foreign Broker-Dealer or Foreign Bank.
(a) The loan of securities is not prohibited by section 406(a) of ERISA or otherwise satisfies the conditions of this exemption.
(b) The Lending Fiduciary is authorized to engage in securities lending transactions on behalf of the plan.
(c) The compensation is reasonable and is paid in accordance with the terms of a written instrument, which may be in the form of a master agreement covering a series of securities lending transactions.
(d) Except as otherwise provided in section IV(f), the arrangement under which the compensation is paid: (1) is subject to the prior written authorization of a plan fiduciary (the “authorizing fiduciary”), who is (other than in the case of a plan covering only employees of the Lending Fiduciary or any affiliates of such fiduciary) independent of the Lending Fiduciary and of any affiliate thereof, and (2) may be terminated by the authorizing fiduciary within (A) the time negotiated for such notice of termination by the plan and the Lending Fiduciary, or (B) five business days, whichever is less, in either case without penalty to the plan.
(e) No such authorization is made or renewed unless the Lending Fiduciary shall have furnished the authorizing fiduciary with any reasonably available information which the Lending Fiduciary reasonably believes to be necessary to determine whether such authorization should be made or renewed, and any other reasonably available information regarding the matter that the authorizing fiduciary may reasonably request; and
(f) (Special Rule for Commingled Investment Funds) In the case of a pooled separate account maintained by an insurance company qualified to do business in a state or a common or collective trust fund maintained by a bank or trust company supervised by a state or federal agency, the requirements of section IV(d) of this exemption shall not apply, provided that:
(1) The information described in section IV(e) (including information with respect to any material change in the arrangement) shall be furnished by the Lending Fiduciary to the authorizing fiduciary described in section IV(d) with respect to each plan whose assets are invested in the account or fund, not less than 30 days prior to implementation of the arrangement or material change thereto, and, where requested, upon the reasonable request of the authorizing fiduciary;
(2) In the event any such authorizing fiduciary submits a notice in writing to the Lending Fiduciary objecting to the implementation of, material change in, or continuation of the arrangement, the plan on whose behalf the objection was tendered is given the opportunity to terminate its investment in the account or fund, without penalty to the plan, within such time as may be necessary to effect such withdrawal in an orderly manner that is equitable to all withdrawing plans and to the non-withdrawing plans. In the case of a plan that elects to withdraw pursuant to the foregoing, such withdrawal shall be effected prior to the implementation of, or material change in, the arrangement; but an existing arrangement need not be discontinued by reason of a plan electing to withdraw; and
(3) In the case of a plan whose assets are proposed to be invested in the account or fund subsequent to the implementation of the compensation arrangement and which has not authorized the arrangement in the manner described in sections IV(f)(1) and IV(f)(2), the plan's investment in the account or fund shall be authorized in the manner described in section IV(d)(1).
For purposes of this exemption:
(a) The term “U.S. Broker-Dealer” means a broker-dealer registered under the Securities Exchange Act of 1934 (the 1934 Act) or exempted from registration under section 15(a)(1) of the 1934 Act as a dealer in exempted government securities (as defined in section 3(a)(12) of the 1934 Act).
(b) The term “U.S. Bank” means a bank as defined in section 202(a)(2) of the Investment Advisers Act.
(c) The term “Foreign Broker-Dealer” means a broker-dealer registered and regulated under the laws of the Financial Services Authority in the United Kingdom that has as of the last day of its most recent fiscal year, equity capital which is equivalent of no less than $200 million.
(d) The term “Foreign Bank” means an institution having substantially similar powers to a bank as defined in section 202(a)(2) of the Investment Advisers Act, is subject to regulation by the Financial Services Authority in the United Kingdom and has as of the last day of its most recent fiscal year, equity capital which is equivalent of no less than $200 million.
(e) The term “U.S. Collateral” means U.S. currency, securities issued or guaranteed by the United States government or its agencies or instrumentalities, or irrevocable letters of credit issued by a U.S. Bank other than the borrower or an affiliate thereof, or any combination, thereof.
(f) The term “Foreign Collateral” means the currency of the United Kingdom, Euros, securities issued or guaranteed by the government of the United Kingdom or one of its agencies or instrumentalities, sovereign debt of a member country of the EMU that is denominated in Euros, or irrevocable letters of credit issued by a Foreign Bank, other than the borrower or an affiliate thereof, which has a counter-party rating of investment grade or better as determined by a nationally recognized statistical rating organization.
(g) The term “affiliate” of another person means: (1) Any person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with such person; (2) any officer, director, partner, employee, or relative (as defined in section 3(15) of ERISA) of such other person; and (3) any corporation or partnership of which such other person is an officer, director, partner or employee.
(h) The term “control” means the power to exercise a controlling influence over the management or policies of a person other than an individual.
(i) The term “Eligible Securities Depository” means an eligible securities depository as that term is defined under
(j) The term “recognized securities exchange” means a U.S. securities exchange that is registered as a “national securities exchange” under section 6 of the Securities and Exchange Act of 1934 (15 U.S.C. 78f) or a designated offshore securities market as defined in Regulation S of the Securities Act of 1933 [17 CFR part 230.902(B)], as such definition may be amended from time to time, which performs with respect to securities, the functions commonly performed by a stock exchange within the meaning of the definitions under the applicable securities laws (
(k) The term “automated trading system” means an electronic trading system that functions in a manner intended to simulate a securities exchange by electronically matching orders on an agency basis from multiple buyers and sellers such as an “alternative trading system” within the meaning of SEC's Reg. ATS [17 CFR part 242.300] as such definition may be amended from time to time, or an “automated quotation system” as described in section 3(a)(51)(A)(ii) of the Securities and Exchange Act of 1934 [15 U.S.C. 78c(a)(51)(A)(ii)].
Pursuant to the authority contained in Section 512 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1142, an open public meeting will be held Thursday, November 6, 2003, of the Advisory Council on Employee Welfare and Pension Benefit Plans Working Group assigned to study the issue of health care security, including consumer-directed health plans and self-insured plans.
The session will take place in Room N-4437 C-D, U.S. Department of Labor Building, 200 Constitution Avenue, NW., Washington, DC 20210. The purpose of the open meeting, which will run from 9:30 a.m. to approximately 12 p.m., is for Working Group members to conclude their report/recommendations for the Secretary of Labor.
Organizations or members of the public wishing to submit a written statement pertaining to the topic may do so by submitting 20 copies to Sharon Morrissey, Executive Secretary, ERISA Advisory Council, U.S. Department of Labor, Room N-5677, 200 Constitution Avenue, NW., Washington, DC 20210. Statements received on or before November 1, 2003 will be included in the record of the meeting. Individuals or representatives of organizations wishing to address the Working Group should forward their request to the Executive Secretary at the above address or via telephone at (202) 693-8668. Oral presentations will be limited to 20 minutes, but an extended statement may be submitted for the record. Individuals with disabilities who need special accommodations should contact Sharon Morrissey by November 1 at the address indicated in this notice.
Pursuant to the authority contained in Section 512 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1142, an open public meeting will be held Thursday, November 6, 2003, of the Advisory Council on Employee Welfare and Pension Benefit Plans Working Group assigned to study optional professional management for defined contribution plans.
The session will take place in Room N-4437 C-D, U.S. Department of Labor Building, 200 Constitution Avenue, NW., Washington, DC 20210. The purpose of the open meeting, which will run from 1:30 p.m. to approximately 4 p.m., is for Working Group members to conclude their report/recommendations for the Secretary of Labor.
Organizations or members of the public wishing to submit a written statement pertaining to the topic may do so by submitting 20 copies to Sharon Morrissey, Executive Secretary, ERISA Advisory Council, U.S. Department of Labor, Room N-5677, 200 Constitution Avenue, NW, Washington, DC 20210. Statements received on or before November 1, 2003 will be included in the record of the meeting. Individuals or representatives of organizations wishing to address the Working Group should forward their request to the Executive Secretary at the above address or via telephone at (202) 693-8668. Oral presentations will be limited to 20 minutes, but an extended statement may be submitted for the record. Individuals with disabilities who need special accommodations should contact Sharon Morrissey by November 1 at the address indicated in this notice.
Pursuant to the authority contained in Section 512 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1142, the 124th open meeting of the full Advisory Council on Employee Welfare and Pension Benefit Plans will be held on Friday, November 7, 2003.
The session will take place in Room S-2508, U.S. Department of Labor Building, 200 Constitution Avenue, NW., Washington, DC 20210. The purpose of the meeting, which will begin at 1:30 p.m. and end at approximately 3 p.m., is for the chairpersons of the three Advisory Council Working Groups to submit their reports on their individual study topics for the full Advisory Council's review and acceptance, following which the reports will be forwarded to the Secretary of Labor.
Organizations or members of the public wishing to submit a written statement pertaining to any topics under consideration by the Advisory Council may do so by submitting 20 copies to Sharon Morrissey, Executive Secretary, ERISA Advisory Council, U.S.
Pursuant to the authority contained in Section 512 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1142, an open public meeting will be held Friday, November 7, 2003, of the Advisory Council on Employee Welfare and Pension Benefit Plans Working Group assigned to study defined benefit plan funding and discount rate issues.
The session will take place in Room N-4437 C-D, U.S. Department of Labor Building, 200 Constitution Avenue, NW., Washington, DC 20210. The purpose of the open meeting, which will run from 9:30 a.m. to approximately 12 p.m., is for Working Group members to conclude their report/recommendations for the Secretary of Labor.
Organizations or members of the public wishing to submit a written statement pertaining to the topic may do so by submitting 20 copies to Sharon Morrissey, Executive Secretary, ERISA Advisory Council, U.S. Department of Labor, Room N-5677, 200 Constitution Avenue, NW., Washington, DC 20210. Statements received on or before November 1, 2003 will be included in the record of the meeting. Individuals or representatives of organizations wishing to address the Working Group should forward their request to the Executive Secretary at the above address or via telephone at (202) 693-8668. Oral presentations will be limited to 20 minutes, but an extended statement may be submitted for the record. Individuals with disabilities who need special accommodations should contact Sharon Morrissey by November 1 at the address indicated in this notice.
The Board of Directors' Search Committee for LSC President and Inspector General will meet on October 28, 2003. The meeting will begin at 9 a.m. and continue until conclusion of the Committee's agenda.
Strickland Brockington Lewis, LLP, Midtown Proscenium—Suite 2000, 1170 Peachtree Street NE, Atlanta, GA 30309.
Open, except that a portion of the meeting may be closed pursuant to a vote of the Board of Directors authorizing the Committee 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.
1. Approval of agenda.
2. Approval of the minutes of the
3. Consider and act on other business.
4. Review of resumes and other materials submitted by applicants for the position of LSC President.
5. Consider and act on the selection of applicants for personal interviews by the Committee.
6. Consider and act on adjournment of meeting.
Victor M. Fortuno, Vice President for Legal Affairs, General Counsel and Corporate Secretary, at (202) 295-1500.
Pursuant to delegation by the Commission,
The hearing will be conducted pursuant to 10 CFR part 2, subpart L, of the Commission's Regulations, “Informal Hearing Procedures for Adjudications in Materials and Operator Licensing Proceedings.” This proceeding concerns requests for hearing submitted (1) on September 29, 2003, by the State of Oklahoma; and (2) on October 2, 2003, by the Cherokee Nation and represented citizens. The requests were filed in response to an August 15, 2003 notice of receipt of a June 16, 2003 amendment request from Sequoyah Fuels Corporation (SFC) to approve a ground water corrective action plan at its Gore, Oklahoma facility site, and of opportunity for a hearing, which was published in the
The Presiding Officer in this proceeding is Administrative Judge Alan S. Rosenthal. Pursuant to the provisions of 10 CFR 2.722, 2.1209, Administrative Judge Anthony J. Baratta has been appointed to assist the Presiding Officer in taking evidence and in preparing a suitable record for review.
All correspondence, documents, and other materials shall be filed with Judges Rosenthal and Baratta in accordance with 10 CFR 2.1203. Their addresses are:
Pursuant to delegation by the Commission,
The hearing will be conducted pursuant to 10 CFR part 2, subpart L, of the Commission's Regulations, “Informal Hearing Procedures for Adjudications in Materials and Operator Licensing Proceedings.” This proceeding concerns requests for hearing submitted (1) on September 29, 2003, by the State of Oklahoma; and (2) on October 2, 2003, by the Cherokee Nation and represented citizens. The requests were filed in response to an August 15, 2003 notice of receipt of a June 12, 2003 amendment request from Sequoyah Fuels Corporation (SFC) to approve a ground water monitoring plan at its Gore, Oklahoma facility site, and of opportunity for a hearing, which was published in the
The Presiding Officer in this proceeding is Administrative Judge Alan S. Rosenthal. Pursuant to the provisions of 10 CFR 2.722, 2.1209, Administrative Judge Anthony J. Baratta has been appointed to assist the Presiding Officer in taking evidence and in preparing a suitable record for review.
All correspondence, documents, and other materials shall be filed with Judges Rosenthal and Baratta in accordance with 10 CFR 2.1203. Their addresses are:
Peace Corps.
Notice of public use form review request to the Office of Management and Budget (OMB Control Number 0420-0510).
Pursuant to the Paperwork Reduction Act of 1981 (44 U.S.C. Chapter 35), the Peace Corps has submitted to the Office of Management and Budget (OMB) a request for approval of an information collection, OMB Control Number 0420-0510, the Peace Corps Health Status Review form (PC-1789) and the Report of Medical and Dental Exam forms (PC-1790 S and PC-1790 Dental). This is a renewal of an active information collection and a revision. The current active renewal covers the Peace Corps Health Status Review form (PC-1789) and the Report of Medical Exam (PC-1790 S). The revision is to add an HIV Aids question to the PC-1789 form and to add the Report of Dental Exam form (PC-1790) to this collection for a total of three forms to make up the health applications for Peace Corps Volunteers. The purpose of this information collection is necessary to ensure that Volunteers meet this medical eligibility requirement, all applicants for service must undergo physical and dental examination prior to Volunteer service to provide the information needed for clearance, and to serve as a reference for any future Volunteer medical clearance, and to serve as a reference for any future Volunteer disability claims. The Health Status Review is used to review the medical history of individual applicants; the Report of Medical Exam and the Report of Dental Exam are used by the examining physician and dentist both for applicants and for currently serving Volunteers. The results of these examinations are used to ensure that applicants for Volunteer service will, with reasonable accommodation, be able to serve in the Peace Corps without jeopardizing their health.
The purpose of this notice is to allow for public comment on whether the proposed collection of information is necessary for the proper performance of the functions of the Peace Corps, including whether their information will have practical use; the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; ways to enhance the quality, utility and the clarity of the information to be collected; and, ways to minimize the burden of the collection of information on those who are to respond, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
A copy of the information collection may be obtained from Ms. Susan Bourse, Peace Corps, Office of Volunteer Support, 1111 20th Street, NW., Room 5106, Washington, DC 20526. Ms. Boorse may be contacted by telephone at 202-692-140. Ms. Boorse may be e-mailed at
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Form U-R-1 is filed under Rule 62 (17 CFR 250.62), which implements Sections 12(e) and 11(g) of the Public Utility Holding Company Act of 1935 (“Act”) 15 U.S.C. 79
Rule 62 prohibits the solicitation of authorization regarding any security of a registered holding company or any of its subsidiaries, in connection with any reorganization subject to Commission approval. Rule 62 also prohibits such solicitation regarding any transaction, which is the subject of an application or declaration filed with the Commission, except with respect to a solicitation, which has become effective pursuant to a declaration filed with the Commission. Every declaration under Rule 62, if in connection with any reorganization, is to be filed on Form U-R-1. Rule 62 exempts from the filing requirements solicitations to not more than 25 owners of securities or claims, and actions taken as a depositary or custodian of securities solicited by order.
Due primarily to subsequent enlargement of the scope of the Securities Exchange Act of 1934 (“34 Act”), the solicitations under the provisions of Rule 62 are now governed, as to both form and substance, by the provisions of the 34 Act. The filings specified by Rule 62 now consist merely of incorporating by reference the company's filing under Section 14 of the 34 Act as an exhibit to the application or declaration under the Act seeking authorization for the transaction to which the solicitation is ancillary. Rule 62 does govern the date of the commencement of the solicitation.
Form U-R-1 and Rule 62 allow the Commission to adequately enforce Sections 12(e) and 11(g) of the Act. Not requiring the information collection would seriously interfere with the Commission's efforts in this regard.
Respondents to the request for information in Form U-R-1 are registered public utility holding companies and their subsidiaries. We estimate the average time to prepare the information required by Form U-R-1 at 5 hours per response based on our informal questioning selected respondents. Since there are approximately 7 respondents who file each year, the total annual respondent reporting burden is 35 hours at $115 per hour. Every declaration under Rule 62, if in connection with any reorganization, must be filed on Form U-R-1. There is no possibility of unwarranted disclosure because these are public documents and there are no questions of a sensitive nature.
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number.
Written comments regarding the above information should be directed to the following persons: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget Room 10102, New Executive Office Building, Washington, DC 20503; and (ii) Kenneth A. Fogash, Acting Associate Executive Director/CIO, Office of Information Technology, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. Comments must be submitted to OMB within 30 days of this notice.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 26, part 250.26 [17 CFR 250.26] under the Public Utility Holding Company Act of 1935, as amended (“Act”), 15 U.S.C. 79,
The Commission estimates that the total annual reporting burden of Rule 26 is approximately one (1) hour.
The estimate of average burden hours is made for purposes of the Paperwork Reduction Act and is not derived from a comprehensive or representative survey or study of the costs of complying with the requirements of Commission rules and forms.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number.
Please direct general comments regarding the above information to the following persons: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, room 10102, New Executive Office Building, Washington, DC 20503; and (ii) Kenneth A. Fogash, Acting Associate Executive Director/CIO, Office of Information Technology, Securities and Exchange Commission, 450 Fifth Street, Washington, DC 20549. Comments must be submitted to OMB within 30 days of this notice.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Form U-7D is used to file the certificate required by rule 7(D)(5) (17 CFR 250.7), under the Public Utility Holding Company Act of 1935 (“Act”) 15 U.S.C. 79
Respondents to the request for information in Form U-7D are registered public utility holding companies and their financing subsidiaries. Respondents must file a Form U-7D in order to receive exempt status. We estimate the average time to prepare the information required by Form U-7D at 3 hours per response based on our informal questioning selected respondents. Since there are approximately 8 respondents who file each year, the total annual respondent reporting burden is 24 hours at $115 per hour. There is no possibility of unwarranted disclosure because these are public documents and there are no questions of a sensitive nature.
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number.
Written comments regarding the above information should be directed to the following persons: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, room 10102, New Executive Office Building, Washington, DC 20503; and (ii) Kenneth A. Fogash, Acting Associate Executive Director/CIO, Office of Information Technology, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. Comments must be submitted to OMB within 30 days of this notice.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Amex proposes to amend Rule 109(d) Commentary .02 to accommodate reporting of “at the close” orders in securities listed on the Nasdaq Stock Market, Inc. (“Nasdaq”) as “stopped stock” pursuant to Amex Rule 109(d). The text of the proposed rule change is set forth below. Proposed new language is in
(a) through (d) No change.
.01 No change.
.02 Paragraph (d) of this rule shall apply to at-the-close orders entered on the Exchange in Nasdaq National Market securities to which the Exchange has extended unlisted trading privileges, except that the Exchange shall [not] disseminate information regarding “pair off” transactions reported pursuant to paragraph (d)
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.
Amex Rule 109(d) requires that a member holding both buy and sell market on close (“MOC”) orders simultaneously must execute any imbalance against the prevailing Exchange bid or offer at the close, and then must “pair off” remaining buy and sell orders at the price of the immediately preceding sale. Amex Rule 109(d)(1) provides that the “pair off” transaction must be reported to the consolidated last sale reporting system as “stopped stock,” to inform the public that limit and limit on close (“LOC”) orders entered before the close may remain unexecuted.
The Commission previously approved the Exchange's proposal to exempt reporting “pair off” transactions as “stopped stock” on a pilot basis until the Nasdaq Unlisted Trading Privileges (“UTP”) Plan Securities Information Processor (“SIP”) could accommodate Amex's request to print a transaction in Nasdaq security as “stopped stock.”
The Exchange, therefore, is proposing to amend Commentary .02 to Rule 109 (“Stopping Stock”) to delete the reference to the exemption from disseminating information regarding “pair off” transactions as “stopped stock” pursuant to Rule 109(d). Following the enhancement to the Nasdaq UTP SIP on September 15, 2003, a “pair off” transaction would be printed as “stopped stock” for dissemination by the Nasdaq UTP SIP, in compliance with Rule 109(d).
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 burden on competition.
No written comments were solicited or received with respect to the proposed rule change.
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in
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”)
As discussed in detail in the BOX Proposing Release,
This AMENDED AND RESTATED OPERATING AGREEMENT is made as of July 25, 2003, by and among Bourse de Montreal Inc., a company incorporated in Quebec, Canada (the “
WHEREAS, on January 16, 2002 the Bourse, BSE and IB caused a Certificate of Formation (the “
WHEREAS, the Bourse, BSE, and IB formed BOX for the purpose of developing and operating an electronic market as a facility of the BSE for trading (i) options on Individual U.S. Equities, U.S. equity indices and U.S. Exchange traded funds and (ii) single stock futures; and
WHEREAS, subsequent to the execution of this Agreement, it is anticipated that BOX will enter into each of the Related Agreements;
WHEREAS, the Bourse, BSE, IB and BOX are parties to that certain Operating Agreement of BOX, dated as of January 17, 2002 ( the “
WHEREAS, the Members desire to amend and restate the Amended Operating Agreement upon the terms and conditions hereinafter set forth.
Accordingly, the parties hereby agree to amend and restate the Amended Operating Agreement as follows:
1.1
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The words “include,” “includes,” and “including” where used in this agreement are deemed to be followed by the words “without limitation.”
Any reference to “Dollars” or “$” in this Agreement refers to U.S. Dollars.
Except as otherwise provided in this Agreement or unless the context otherwise clearly requires, (a) terms used in this Agreement that are defined in the Act will have the meaning set forth in the Act; (b) all references in this Agreement to one gender also include, where appropriate, the other gender, the singular includes the plural and the plural includes the singular; and (c) references in this Agreement to the preamble, Sections, Schedules, and Exhibits shall be deemed to mean the preamble and sections of, and schedules and exhibits to, this Agreement.
2.1.
2.2.
2.3.
2.4.
2.5.
(a) Except as otherwise provided in this Agreement, all Units are identical to each other and accord the holders thereof the same obligations, rights and privileges as are accorded to each other holder thereof. Except as otherwise provided in this Agreement, BOX will not subdivide or combine any Units, or make or pay any distribution on any Units, or accord any other payment, benefit or preference to any Units, except by extending such subdivision, combination, distribution, payment, benefit or preference equally to all Units.
(b) Units have no par value. To the extent that any Units must be cancelled or any Units shall be issued, the amount of such Units shall be rounded to the nearest whole number, to the extent feasible, as determined by the Board.
2.6.
3.1.
3.2.
(a) Pursuant to the Regulatory Services Agreement, BSE will provide U.S. Securities and Exchange Commission approved self-regulatory organization (“
(b) [Business confidential]
(c) [Business confidential]
4.1.
(a) The Members shall establish a Board of Directors of BOX (the “
(b) IB, Bourse and the BSE shall initially be entitled to designate two (2) Directors each. Thereafter, if IB, Bourse or BSE maintains a Percentage Interest of [business confidential] or greater, it shall have the right to designate two (2) Directors. If IB, Bourse or BSE maintains a Percentage Interest of from [business confidential], it shall have the right to designate one (1) Director. Additionally, as long as BOX remains a facility of the BSE pursuant to Section 3(a)(2) of the Exchange Act of 1934, the BSE shall have the right to designate one (1) Director, whether or not the BSE maintains any Percentage Interest.
(c) Transferee Members [business confidential] who purchase and hold a Percentage Interest of [business confidential] or greater shall have the right to designate one (1) Director each.
(d) Each Director shall serve at the pleasure of the Member which designated such Director and may from time to time be replaced by such Member. Any such replacement must be a member of senior management or Board of Directors of the designating party or an Affiliate of such designating party or of its principal owner or owners. Each Member shall notify the other Members in writing of any person designated by it to serve as a Director and any replacement for such person promptly following such designation or replacement. A Director shall be terminated by the Board: (i) in the event such Director has violated any provision of this Agreement, or (ii) if the Board determines that such action is necessary or appropriate in the public interest or for the protection of investors.
(e) Subject to the provisions of paragraph (c) above, in the event of the addition of any New Members or the transfer of interest from a Member to a Transferee Member, the Board shall determine the number of Board seats, if any, to be held by the New or Transferee Member and will determine the disposition of the Board seats held by any Transferring Member.
4.2.
(a)
(b)
(c)
(d) [deleted]
(e)
(f)
(g)
4.3 (a)
(b)
4.4.
(b) For purposes of this Agreement, “
(i) Merger or consolidation of BOX with any other entity or the sale by BOX of any material portion of its assets;
(ii) Entry by BOX into any line of business other than the business described in Article 3;
(iii) Conversion of BOX from a Delaware limited liability company into any other type of entity;
(iv) Except as expressly contemplated by this Agreement and the Related Agreement, entering into any agreement, commitment, or transaction with the Bourse or any of its Affiliates, BSE or any of its Affiliates, or IB or any of its Affiliates or any other Member or any of its Affiliates other than transactions or agreements upon commercially reasonable terms that are no less favorable to BOX than BOX would obtain in a comparable transaction or agreement with a third party;
(v) Taking any action to effect the voluntary, or which would precipitate an involuntary, dissolution or winding-up of BOX;
(vi) Except as otherwise provided in the Technical and Operational Services Agreement, operating the BOX Market utilizing any other software system other than the System;
(vii) Except as otherwise provided in the Regulatory Services Agreement, operating the BOX Market utilizing any other Regulatory Services Provider other than BSE or an Affiliate of BSE;
(viii) Entering into any partnership, joint venture or other similar joint business undertaking;
(ix) Making any fundamental change in the market structure of BOX from that contemplated by the Members as of the date hereof;
(x) Subject to Article 8, the acquisition of any Percentage Interest by any Member that results in such Member, alone or together with any Affiliate of such Member, newly holding an aggregate Percentage Interest equal to or greater than twenty percent (20%);
(xi) [Business confidential]
(xii) Altering the provisions for Board membership for IB, BSE or Bourse, specified in Section 4.1(b); or
(xiii) Purchasing Units pursuant to Section 8.2.
(c) [Business confidential]
(d) [Business confidential]
4.5.
4.6.
4.7.
4.8.
4.9.
(a) The identity of the members of the Board, any officer or agent of BOX or any Member hereof;
(b) The existence or non-existence of any fact or facts which constitute a condition precedent to acts by the Board or in any other manner germane to the affairs of BOX;
(c) The Persons who are authorized to execute and deliver any agreement, instrument or document of or on behalf of BOX; or
(d) Any act or failure to act by BOX or any other matter whatsoever involving BOX or any Member.
5.1.
5.2.
5.3.
5.4.
5.5.
5.6.
5.7.
5.8.
5.9.
The Members have agreed on an initial budget (the “
7.1. [Business confidential]
7.2. [Business confidential]
7.3. [Business confidential]
7.4. [Business confidential]
7.5. [Business confidential]
7.6.
8.1.
(a) Except for (i) transfers among Members; (ii) transfers by IB permitted under Section 8.5 hereof; or (iii) transfers to Affiliates of a Member, including officers of a Member or such Member's Affiliates, no Member shall have the right to dispose of, sell, alienate, assign, participate, subparticipate, encumber, or otherwise transfer all or any portion of its Units (other than assignments by operation of law) unless prior to such transfer the transferee is approved by the Board. To be eligible for such Board approval, the proposed transferee must (i) be of high professional and financial standing, (ii) be able to carry out their duties as a Member hereunder, and (iii) be under no regulatory or governmental bar or disqualification. Notwithstanding the foregoing, registration as a broker-dealer or self-regulatory organization is not required to be eligible for such Board approval.
(b) In addition to the foregoing requirements, the admission of a transferee Member shall be conditioned upon the transferee's written acceptance of the terms and provisions of this Agreement and its written assumption of the obligations hereunder of its assignor. Whether or not a transferee who acquired any Units has accepted in writing the terms and provisions of this Agreement and assumed in writing the obligations hereunder of its predecessor in interest, such transferee shall be deemed, by the acquisition of such Units, to have agreed to be subject to and bound by all the obligations of this Agreement with the same effect and to the same extent as any predecessor in interest of such transferee.
(c) All costs incurred by BOX in connection with the admission to BOX of a substituted Member pursuant to this Article 8 shall be borne by the transferor Member (and if not timely paid, by the substituted Member), including, without limitation, costs of any necessary amendment hereof, filing fees, if any, and reasonable attorneys' fees.
(d) [Business confidential]
8.2. [Business confidential]
8.3 [Business confidential]
8.4.
(a) In no event shall a sale, transfer, assignment, exchange, or other disposition of any Member's Units take place if such sale, transfer, assignment, exchange, or other disposition is: (i) In the opinion of tax counsel to BOX, cause a termination of BOX within the meaning of Section 708 of the Code or, (ii) in the opinion of the Board, based on advice of tax counsel, that such transaction could cause a termination of BOX's status as a partnership or cause BOX to be treated as a publicly traded partnership for federal income tax purposes, (iii) prohibited by any state, federal or provincial securities laws, or (iv) prohibited by this Agreement.
(b) In no event shall all or any part of a Member's Units be assigned or transferred to a minor or incompetent.
(c) The Members may, in addition to any other requirement that the Members may impose, require as a condition of any sale, transfer, assignment, exchange, or other disposition of any Units that the transferor furnish to BOX an opinion of counsel satisfactory (both as to such opinion and as to such counsel) to counsel to BOX that such sale, transfer, assignment, exchange, or other disposition complies with applicable federal and state securities laws.
(d) Any sale, transfer, assignment, exchange, or other disposition in contravention of any of the provisions of this Article 8 shall be void and ineffectual and shall not bind or be recognized by BOX.
(e) Beginning after SEC approval of BOX, BOX shall provide the U.S. Securities and Exchange Commission with written notice ten (10) days prior to the Closing Date of any acquisition that results in a Member's Percentage Interest, alone or together with any Affiliate of such Member, meeting or crossing the threshold level of 5% or the successive 5% Percentage Interest levels of 10% and 15%.
(f) Beginning after SEC approval of BOX, in addition to the notice requirement in subsection (e), the following transfers are subject to the rule filing process pursuant to Section 19 of the Securities Exchange Act of 1934: (i) any transfer that results in the acquisition and holding by any Member, alone or together with any Affiliate of such Member, of an aggregate Percentage Interest level which meets or crosses the threshold level of 20% or any successive 5% Percentage Interest level (
(g) For purposes of this subsection (g): (i) a “controlling interest” shall be defined as the ownership by any Person, alone or together with any Affiliate of such Person, of a 25% or greater interest in a Member, and (ii) an “Acquirer” shall be defined as a Person who, alone or together with any Affiliate of such Person, acquires a controlling interest in a Member. An Acquirer shall be required to execute an amendment to this Agreement upon establishing a controlling interest in any Member who, alone or together with any Affiliate of such Member, holds a Percentage Interest in BOX equal to or greater than 20%. In such amendment the Acquirer shall agree to become a new party to this Agreement and shall agree to abide by all the provisions of this Agreement. Beginning after SEC approval of this Agreement, any amendment to this Agreement executed pursuant to this subsection (g) is subject to the rule filing process pursuant to Section 19 of the Securities Exchange Act of 1934. The rights and privileges of the Member under this Agreement shall be suspended until such time as the amendment executed pursuant to this subsection (g) has become effective pursuant to Section 19 of the Securities Exchange Act of 1934 or the Acquirer no longer holds a controlling interest in the Member.
(h) In the event that a Member, or any Affiliate of such Member, is approved by the BSE as an Options Participant on the BOX Market pursuant to the rules of the BSE, and such Member owns more than 20% of the Units, alone or together with any Affiliate of such Member, (Units owned in excess of 20% being referred to as “Excess Units”), the Member shall have no voting rights nor give any proxy in relation to a vote of the Members with respect to the Excess Units held by such Member; provided, however, that whether or not such
IB shall have a temporary exemption, not to extend past January 1, 2014, from the voting limitation on Excess Units contained in this subsection, but only with respect to any vote regarding any merger, consolidation or dissolution of BOX or any sale of all or substantially all of the assets of BOX.
8.5.
8.6. [Business confidential]
8.7.
8.8.
9.1.
(a) Within 10 days after the end of each fiscal quarter, BOX shall make distributions (“Tax Distributions”) to the Members of their respective Tax Amounts for such fiscal quarter (or, in the event that Distributable Cash is less than the total of all such Tax Amounts, BOX shall distribute the Distributable Cash in proportion to such Tax Amounts). If after the end of any fiscal year it is determined that a Member's Tax Amount for the fiscal year exceeds the sum of the Tax Distributions made to the Member hereunder and the distributions made to such member under Section 9.1(b) for such fiscal year (any such excess, a “Shortfall Amount”), then BOX shall, on or before the 75th day of the next fiscal year, make an additional Tax Distribution to the members of their respective Shortfall Amounts (or, in the event that Distributable Cash is less than the total of all such Shortfall Amounts, BOX shall distribute the Distributable Cash in proportion to such Shortfall Amounts). If the aggregate Tax Distributions to any Member pursuant to this subsection for a fiscal year exceed the Member's Tax Amount for such fiscal year, such excess shall be deducted from the Member's Tax Amount when calculating the Tax Distributions to be made to such Member for each subsequent fiscal year until the excess has been fully accounted for. All Tax Distributions to a Member shall be treated as advances against any subsequent distributions to be made to such Member under Section 9.1(b) or Section 11.2. Subsequent distributions made to the Member pursuant to Sections 9.1(b) and 11.2 shall be adjusted so that when aggregated with all prior distributions to the Member pursuant to those provisions, and with all prior Tax Distributions to the Member, the amount distributed shall be equal, as nearly as possible, to the aggregate amount that would have been distributable to such member pursuant to Section 9.1(b) and Section 11.2 if this Agreement contained no provision for Tax Distributions.
(b) After making the Tax Distributions described in subsection (a) hereof, the Board may distribute all or any portion of remaining Distributable Cash to the Members in proportion to their Percentage Interests, unless the distribution is a liquidating distribution, which shall be made in the manner set out in Section 11.1(b).
9.2.
9.3.
10.1.
10.2.
10.3.
10.4.
10.5.
10.6.
10.7.
10.8.
10.9.
10.10.
11.1. (a) BOX shall be dissolved and its affairs shall be wound up upon:
(i) The election to dissolve BOX made by the Board pursuant to Section 4.4(b)(v); or
(ii) The entry of a decree of judicial dissolution under § 18-802 of the Act; or
(iii) The resignation, expulsion, Bankruptcy or dissolution of a member, or the occurrence of any other event which terminates the continued membership of a Member in BOX, unless the business of BOX is continued by the consent of remaining Members holding a majority of the issued and outstanding Units given within ninety (90) days following the occurrence of any such event; or
(iv) The occurrence of any other event that causes the dissolution of a limited liability company under the Act.
The legal representatives, if any, of any Member shall succeed as assignee to such Member's interest in BOX upon the Bankruptcy, insolvency or
(b) Upon dissolution of BOX, the business of BOX shall continue for the sole purpose of winding up its affairs. The winding up process shall be carried out by all of the Members unless the dissolution is caused by an event of withdrawal by the sole remaining Member, in which case a liquidating trustee may be appointed for BOX by vote of a majority in Percentage Interest of the Members (the Members or such liquidating trustee is referred to herein as the “
11.2.
(a) [Business confidential]
(b) [Business confidential]
(c)
11.3.
11.4.
Subject to Section 19.1 of this Agreement, the separate legal existence of BOX shall terminate when all assets of BOX, after payment of or due provision for all debts, liabilities and obligations of BOX, shall have been distributed to the Members in the manner provided for in this Article 11, and a Certificate of Cancellation shall have been filed in the manner required by Section 18-203 of the Act.
12.1.
12.2.
12.3.
12.4.
12.6.
13.1. (a) All disputes, claims, or controversies between Members or between BOX and any Member(s) arising under or in any way relating to this Agreement shall be (x) settled by arbitration before a panel of three neutral arbitrators (the “
(b) The place of arbitration shall be Boston, Massachusetts and the language of the arbitral proceedings shall be English.
14.1.
14.2.
14.3.
BOX shall at all times (a) to the extent that any of BOX's offices are located in the offices of an Affiliate, pay fair market rent for its office space located therein, (b) maintain BOX's books, financial statements, accounting records and other partnership documents and records separate from those of any Affiliate or any other Person, (c) not commingle BOX's assets with those of any Affiliate or any other Person, (d) maintain BOX's books of account, bank accounts and payroll separate from those of any Affiliate, (e) act solely in its name and through its own authorized agents, and in all respects hold itself out as a legal entity separate and distinct from any other Person, (f) make investments directly or by brokers engaged and paid by BOX or its agents (provided that if any agent is an Affiliate of BOX it shall be compensated at a fair market rate for its services), (g) manage BOX's liabilities separately from those of any Affiliate and pay its own liabilities, including all administrative expenses and compensation to employees, consultants or agents, and all operating expenses, from its own separate assets, except that an Affiliate may pay the organizational expenses of BOX, and (h) pay from BOX's assets all obligations and indebtedness of any kind incurred by BOX. Notwithstanding the foregoing, the books, records, premises, officers, directors, agents and employees of BOX shall be deemed to be those of the Regulatory Services Provider and its Affiliates for purpose of and subject to oversight pursuant to the Securities Exchange Act of 1934, as amended. In addition, the books and records of BOX shall be subject at all times to inspection and copying by the Regulatory Services Provider and its Affiliates and the SEC without charge to such Persons. BOX shall abide by all Act formalities, including the maintenance of current records of BOX affairs, and BOX shall cause its financial statements to be prepared in accordance with generally accepted accounting principles in a manner that indicates the separate existence of BOX. BOX shall (i) pay all its liabilities, (ii) not assume the liabilities of any Affiliate unless approved by unanimous consent of the Board and (iii) not guarantee the liabilities of any Affiliate unless approved by unanimous consent of the Board. The Board shall make decisions with respect to the business and daily operations of BOX independent of and not dictated by any Affiliate.
16.1.
16.2.
(a) Each Member agrees that it will use BOX Confidential Information only in connection with the activities contemplated by this Agreement and the Related Agreements, and it will not disclose any BOX Confidential Information to any Person except as expressly permitted by this Section 16.2 and the Related Agreements.
(b) The Members may disclose BOX Confidential Information:
(i) To its directors, officers and employees who have a reasonable need to know the contents thereof;
(ii) On a confidential basis to those Advisors of the Member who have a reasonable need to know the contents thereof, so long as such disclosure is made pursuant to the procedures referred to in Section 16.4(b);
(iii) To the extent required by applicable statute, rule or regulation including, without limitation, any rules promulgated under the Securities Exchange Act of 1934, as amended; or in response to a valid request from the U.S. Securities and Exchange Commission pursuant to the Securities and Exchange Act of 1934 and the rules thereunder or the BSE (or Boston Options Exchange Regulation through delegated authority); or any court of competent jurisdiction;
(iv) To the extent such BOX Confidential Information has become generally available publicly through no fault of the Bourse or its directors, officers, employees or Advisors.
16.3.
16.4.
(a) In order to ensure that the parties hereto comply with their obligations in Article 16, representatives designated by the Members and BOX shall meet from time to time as required to discuss issues relating to confidentiality and disclosure and other matters addressed by this Article 16.
(b) With respect to any disclosure by any of the parties hereto to any of their Advisors pursuant to Article 16, the representatives referred to in paragraph (a) above will institute procedures
17.1. [Business confidential]
17.2.
Except as provided otherwise in the Related Agreements each of the Members shall retain all rights, title, and interests to all of its intellectual property. In addition to the Bourse License, the BSE License and the IB License, the parties shall enter into such other licenses involving the System and such other intellectual property of the Members as shall permit the use of such property by BOX in the manner intended by the Members.
19.1.
19.2.
19.3.
19.4.
19.5.
19.6.
(a) The Member acknowledges that to the extent they are directly related to BOX activities, the books, records, premises, officers, directors, agents, and employees of Members shall be deemed to be the books, records, premises, officers, directors, agents, and employees of the Regulatory Services Provider and its Affiliates for the purpose of and subject to oversight pursuant to the Securities Exchange Act of 1934, as amended.
(b) The Members, officers, directors, agents, and employees of Members irrevocably submit to the exclusive jurisdiction of the U.S. federal courts, U.S. Securities and Exchange Commission, and the Boston Stock Exchange, for the purposes of any suit, action or proceeding pursuant to U.S. federal securities laws, the rules or regulations thereunder, directly arising out of, or directly relating to, BOX activities or Section 19.6(a), and hereby waives, and agrees not to assert by way of motion, as a defense or otherwise in any such suit, action or proceeding, any claims that it is not personally subject to the jurisdiction of the U.S. Securities and Exchange Commission, that the suit, action or proceeding is an inconvenient forum or that the venue of the suit, action or proceeding is improper, or that the subject matter hereof may not be enforced in or by such courts or agency.
19.7.
19.8.
19.9.
19.10.
19.11.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of July __, 2003.
In its filing with the Commission, the BSE 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 BSE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
As discussed in detail in the BOX Proposing Release, the BSE proposes to establish rules for BOX, a new Exchange facility, as that term is defined in Section 3(a)(2) of the Act. BOX would be operated by BOX LLC. BOX would administer a fully automated trading system for standardized equity options intended for the use of Options Participants.
The BSE is a founding and controlling member of BOX LLC. In addition to its ownership stake in BOX LLC, the BSE has entered into various agreements with BOX LLC under which BOX LLC would operate BOX as a facility of the BSE. As discussed in detail in the BOX Delegation Plan Proposal,
In this filing, the BSE is submitting those provisions of the Operating Agreement specifically relating to the control and governance of BOX LLC that would ensure that the BSE has the authority within BOX LLC to maintain its responsibility for all regulatory functions related to the BOX facility. These sections of the BOX Operating Agreement would ensure that the Commission and the BSE would have regulatory authority over the owners and Directors of BOX LLC. The sections of the BOX Operating Agreement the Exchange deems relevant to its authority for all regulatory functions of its proposed BOX facility are set forth below, as well as a majority of the other provisions of the Agreement. Moreover, due to the fact that the purpose of this filing is to focus on only those provisions of the Operating Agreement which are directly related to the BSE's authority for all regulatory functions of its proposed BOX facility, the Exchange will herein likewise focus its discussion on only those provisions.
Under Section 4.1(b), as long as BOX remains a facility of the BSE pursuant to Section 3(a)(2) of the Act, the BSE would have the right to designate at least one (1) Director on the BOX Board, whether or not the BSE maintains any ownership interest in BOX LLC. The BSE currently owns an interest in BOX LLC of over 26%. Nevertheless, the BSE believes that this provision, in conjunction with other provisions discussed herein (
Under Section 4.1(d)(i) and (ii), a BOX LLC Director would be removed from the BOX Board in the event such Director (i) has violated any provision of the Operating Agreement, or (ii) if the BOX Board determines that such action is necessary or appropriate in the public interest or for the protection of investors. In addition, under Section 4.2(a), each Director must comply with the federal securities laws and the rules and regulations thereunder and cooperate with the Commission and the BSE pursuant to their regulatory authority, and shall take into consideration whether his or her actions as a Director would cause BOX to engage in conduct that fosters and does not interfere with BOX's ability to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest.
The BSE believes that these rules would require all BOX LLC Directors, regardless of the nature of their association with the BSE, to adhere to regulatory responsibilities in that they must comply with federal securities laws and the rules and regulations thereunder, and cooperate with the Commission and the BSE pursuant to their regulatory authority. In addition, all Directors would be required to take into consideration and facilitate the BSE's and BOX's responsibility to comply with the requirements under Section 6(b)(5) of the Act. Directors that do not adhere to these requirements face termination from the BOX Board and possible sanctions by regulatory authorities.
Moreover, under Section 4.3(b), the owners of BOX LLC (“Members”) are prohibited from entering into voting trust agreements with respect to their ownership interest. The BSE believes that this rule protects the ability of the BSE, as well as other Members, to exercise its full ownership rights. In addition, as set forth in Section 4.4(a), no action with respect to any Major
Each Member shall comply with the federal securities laws and the rules and regulations thereunder; cooperate with the Commission and the BSE pursuant to their regulatory authority and the provisions of these BOX Rules; and engage in conduct that fosters and does not interfere with BOX's ability to prevent fraudulent and manipulative acts and practices; promote just and equitable principles of trade; foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; remove impediments to and perfect the mechanism of a free and open market and a national market system; and, in general, protect investors and the public interest.
Under Section 5.9, after appropriate notice and opportunity for hearing, the BOX Board, by a two-thirds vote, including the affirmative vote of the BSE Directors and excluding the vote of the Directors of such Member subject to sanction, may suspend or terminate a Member's voting privileges or ownership in the event such Member: (i) has violated any provision of the Agreement, or (ii) if the BOX Board determines that such action is necessary or appropriate in the public interest or for the protection of investors. The BSE believes that these provisions would require Members, regardless of the nature of their association with the BSE, to adhere to regulatory responsibilities in that they must comply with federal securities laws and the rules and regulations thereunder, and cooperate with the Commission and the BSE pursuant to their regulatory authority or face severe consequences such as termination of voting rights or ownership. In addition, the Members would be required to take into consideration and facilitate the BSE's and BOX's ability to comply with the requirements under Section 6(b)(5) of the Act.
BOX LLC shall provide the Commission with written notice ten (10) days prior to the closing date of any acquisition that results in a Member of BOX LLC's percentage ownership interest, alone or together with any Affiliate
Under this Section, whenever a Person
Under Section 8.4(g), a “controlling interest” would be defined as the ownership by any Person, alone or together with any Affiliate of such Person, of a 25% or greater interest in a Member, and an “Acquirer” would be defined as a Person who, alone or together with any Affiliate of such Person, acquires a controlling interest in a Member. An Acquirer would be required to execute an amendment to the Agreement upon establishing a controlling interest in any Member who, alone or together with any Affiliate of such Member, holds a Percentage Interest in BOX equal to or greater than 20%. In such amendment, the Acquirer would agree to become a new party to the Operating Agreement and would agree to abide by all the provisions of the Agreement. Beginning after Commission approval of this filing, any amendment to the Agreement executed pursuant to this Section 8.4(g) would be subject to the rule filing process pursuant to Section 19 of the Act. The rights and privileges of the Member under the Agreement would be suspended until such time as the amendment has become effective pursuant to Section 19 of the Act or the Person no longer holds a controlling interest in the Member. For example, if Company XYZ owned a 20% interest in BOX LLC and Firm ABC acquired 25% of the shares of Company XYZ, then Firm ABC must sign an amendment to the Agreement whereby Firm ABC agrees to become a new party to the Agreement and abide by all the provisions of the Agreement. The amendment would be subject to the rule filing process pursuant to Section 19 of the Act.
The BSE believes that this provision provides the Commission with the authority to review and subject to public comment any substantial transfer of ownership that may effect the indirect control of BOX LLC and which the Commission may deem to have the potential to impact the Exchange's self-regulatory responsibilities regarding its proposed BOX facility.
Under Section 8.4(h) the BSE is specifically imposing a limit on voting rights (“voting collar”) on any Member who, alone or together with an Affiliate,
The BSE believes that this provision would specifically prevent any Member from exercising undue control over BOX LLC. By specifically imposing a voting collar on any Member who owns more than 20% of the Units of BOX LLC and who is also an Options Participant, the Exchange is ensuring that it is, in all cases, able to maintain proper control over the exercise of its regulatory functions in relation to BOX, and is not subject to influence that may be adverse to its regulatory responsibilities from a Member who may own a substantial number of the outstanding Units of BOX LLC. This provision, along with other related provisions relating to notice and rule filing requirements for any Member who acquires certain Percentage Interests in BOX LLC (
Additionally, the BSE is proposing to extend a temporary exemption, until January 1, 2014, for Interactive Brokers, a Founding Member who is also an Options Participant of BOX, from the voting limitation on Excess Units, but only with respect to any vote regarding any merger, consolidation or dissolution of BOX or any sale of all or substantially all of the assets of BOX. This exemption is substantially similar to an exemption permitted for holders of Class A Common Stock on the International Securities Exchange when that organization restructured from an LLC to a Corporation.
The Members of BOX LLC, officers, directors, agents, and employees of such Members, including non-U.S. entities, irrevocably submit to the exclusive jurisdiction of the U.S. federal courts, the Commission, and the BSE, for the purposes of any suit, action or proceeding pursuant to U.S. federal securities laws, the rules or regulations thereunder, directly arising out of, or directly relating to, BOX activities or this proposed Chapter XIV of the BOX Rules, and hereby waives, and agrees not to assert by way of motion, as a defense or otherwise in any such suit, action, or proceeding, any claims that it is not personally subject to the jurisdiction of the Commission, that the suit, action, or proceeding is an inconvenient forum or that the venue of the suit, action, or proceeding is improper, or that the subject matter hereof may not be enforced in or by such courts or agency.
The Exchange believes that this provision would serve as notice to Members that they will be subject to the jurisdiction of the U.S. courts, the Commission, and the BSE. While Members may represent a diverse group of business interests, the BSE believes that it is imperative that regulatory cooperation is assured from all Members, regardless of each Member's business location, country of domicile, or other circumstance which the Commission may deem to have the potential to be adverse to the regulatory responsibilities and interests of the Exchange, the Commission, or the U.S. courts. Accordingly, this proposed provision, as also set forth in the Operating Agreement and ratified by each Member, ensures that, should an occasion arise which requires regulatory cooperation or jurisdictional submission from a Member, it would be forthcoming and uncontested.
The Exchange believes that this filing is consistent with Section 6(b) of the Act, in general, and furthers the objectives of Section 6(b)(1),
The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were either solicited or received.
Within 35 days of the date of publication of this notice in the
(A) By order approve such proposed rule change; or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exhange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of
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”),
Nasdaq proposes to clarify the applicability of its corporate governance requirements during the listing review process.
The text of the proposed rule change is below. Proposed new language is in italics; proposed deletions are in brackets.
(a)-(d) No change.
(e) At each level of a proceeding under the Rule 4800 Series, the Listing Qualifications Panel, Listing Council, or NASD Board, as part of its respective review, may consider any failure to meet any quantitative standard or qualitative consideration set forth in the Rule 4000 Series, including failures previously not considered in the proceeding.
In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The NASD Rule 4800 Series sets forth the procedures for the independent review of a staff determination prohibiting the listing of an issuer's securities. These rules provide that an issuer may appeal a staff determination to the Listing Qualifications Panel (“Panel”). Following a hearing, the Panel will issue a written decision that the issuer may appeal to the Listing and Hearing Review Council (“Listing Council”). Following its deliberations, the Listing Council will also issue a written decision. Although an issuer may not appeal a Listing Council decision to the NASD Board of Governors (“NASD Board”), the NASD Board may call a Listing Council decision for review.
Nasdaq rules further provide that while an appeal to the Panel will stay the delisting of an issuer's securities until a written decision is issued by the Panel, an appeal of a Panel decision to the Listing Council generally does not stay a delisting. Therefore, an issuer's securities generally will not be listed on Nasdaq during the time of the Listing Council's or the NASD Board's review of an appeal. Although NASD Rule 4810 currently provides that an issuer's failure to meet any quantitative standard or qualitative consideration may be considered at each level of the review process, Nasdaq proposes to clarify this rule by explicitly stating that the Listing Council and the NASD Board have the authority to consider any action undertaken by an issuer during the review process that would have constituted a violation of Nasdaq's corporate governance requirements if the issuer had been listed on Nasdaq at that time.
In order to assist issuers that are in the listing review process comply with Nasdaq's corporate governance requirements, such issuers may contact Nasdaq staff to request any necessary corporate governance interpretations or financial viability waivers.
Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act,
Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments were neither solicited nor received.
Within 35 days of the date of publication of this notice in the
A. By order approve such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the NASD. All submissions should refer to file number SR-NASD-2003-23 and should be submitted by November 13, 2003.
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 NASD is proposing to amend Interpretative Material 9216 (IM-9216) and Schedule A of the NASD By-Laws (“Schedule A”) to clarify that a failure to timely file Schedule I, pursuant to Rule 17a-10 of the Act,
(a)-(k) No Change.
(l) (1) Unless a specific temporary extension of time has been granted, there shall be imposed upon each member required to file reports, as designated by this paragraph, a fee of $100 for each day that such report is not timely filed. The fee will be assessed for a period not to exceed 10 business days. Requests for such extension of time must be submitted to NASD at least three business days prior to the due date; and
(2) Any report filed pursuant to this Rule containing material inaccuracies or filed incompletely shall be deemed not to have been filed until a corrected copy of the report has been resubmitted.
(3) List of Designated Reports:
(A) SEC Rule 17a-5—Monthly and quarterly FOCUS reports and annual audit reports[.]
IM-9216. Violations Appropriate for Disposition Under Plan Pursuant to SEC Rule 19d-1(c)(2)
—Rules 2210(b) and (c) and Rules 2220(b) and (c)—Failure to have advertisements and sales literature approved by a principal prior to use, failure to maintain separate files of advertisements and sales literature containing required information, and failure to file communications with NASD within the required time limits.
—Rule 3360—Failure to timely file reports of short positions on Form NS-1.
—Rule 3110—Failure to keep and preserve books, accounts, records,
—Rule 8211, Rule 8212, and Rule 8213—Failure to submit trading data as requested.
—Article IV—Failure to timely submit amendments to Form BD.
—Article V—Failure to timely submit amendments to Form U-4.
—Rule 1120—Failure to comply with continuing education requirements (Firm Element).
—Rule 3010(b)(2)(vii)—Failure to timely file reports pursuant to the Taping Rule.
—Rule 3070—Failure to timely file reports.
—Rule 4619(d)—Failure to timely file notifications pursuant to SEC Regulation M.
—Rules 4632, 4642, 4652, 6240, 6420, 6620, 6650, and 6720—Transaction reporting in equity, convertible debt, and high yield securities.
—Rules 6130 and 6170—Transaction reporting to ACT.
—Rules 6954 and 6955—Failure to submit data in accordance with OATS.
—Rule 11870—Failure to abide by customer account transfer contracts.
—SEC Rule 11Ac1-4—Failure to properly display limit orders.
—SEC Rule 11Ac1-1(c)(5)—Failure to properly update published quotes in certain ECNs.
—SEC Exchange Act Rule 17a-5—Failure to timely file FOCUS reports and annual audit reports.
—
—MSRB Rule A-14—Failure to pay annual fee.
—MSRB Rule G-12—Failure to abide by uniform practice rules.
—MSRB Rule G-14—Failure to submit reports.
—MSRB Rule G-36—Failure to timely submit reports.
—MSRB Rule G-37—Failure to timely submit reports for political contributions.
—MSRB Rule G-38—Failure to timely submit reports detailing consultant activities.
In its filing with the Commission, the NASD 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 NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this proposed rule change is to clarify that a member's failure to timely file Schedule I, pursuant to Rule 17a-10 of the Act,
In 1984, the Commission adopted amendments to Rule 19d-1(c) of the Act
NASD Rule 9216(b) authorizes the NASD to impose a fine of $2,500 or less on any member or associated person of a member for a violation of any of the rules specified in NASD IM-9216. NASD staff reviews the number and seriousness of the violations, as well as the previous disciplinary history of the respondent to determine if a matter is appropriate for disposition under the Plan and to determine the amount of the fine. Once the NASD has brought a minor violation of a rule against an individual or member firm, the NASD may, at its discretion, issue progressively higher fines for all subsequent minor violations of rules within the next 24-month period or initiate more formal disciplinary proceedings.
The purpose of the MRVP is to provide for a meaningful sanction for the minor or technical violation of a rule when the initiation of a disciplinary proceeding through the formal complaint process would be more costly and time-consuming than would be warranted. Inclusion of a rule in the NASD's MRVP does not mean it is an unimportant rule; rather, a minor or technical violation of the rule may be appropriate for disposition under the MRVP. The NASD retains the discretion to bring full disciplinary proceedings.
One violation eligible for disposition under the MRVP is listed in IM-9216 as “SEC Exchange Act Rule 17a-5—failure to timely file FOCUS reports and annual audit reports.” Even though Schedule I is part of the FOCUS report, it is technically filed pursuant to Rule 17a-10 of the Act,
In 2001, the Commission also approved amendments to Schedule A of the NASD By-laws that provide for the
The NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
The NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments were neither solicited nor received.
The proposed rule change is effective pursuant to Section 19(b)(3)(A)(i) of the Act
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the NASD. All submissions should refer to file number SR-NASD-2003-148 and should be submitted by November 13, 2003.
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”)
Below is the text of the proposed rule change. Proposed new language is in
(a) No Change.
(b) “Associated Person”
[The term “Associated Person” means: (1) A natural person registered under the Rules of the Association; or (2) a sole proprietor, partner, officer, director, branch manager, or other natural person occupying a similar status or performing similar functions who will be or is anticipated to be
(c) through (n)—No Change.
(a) Standards for Admission
After considering the application, the membership interview, other information and documents provided by the Applicant, other information and documents obtained by the Department, and the public interest and the protection of investors, the Department shall determine whether the Applicant meets each of the following standards:
(1) through (2)—No Change.
(3) The Applicant and its Associated Persons are capable of complying with the federal securities laws, the rules and regulations thereunder, and [the]
(A) a state or federal authority or self-regulatory organization has taken permanent or temporary adverse action with respect to a registration or licensing determination regarding the Applicant or an Associated Person;
(B) an Applicant's or Associated Person's record reflects a sales practice event,
(C) an Applicant or Associated Person is the subject of a pending, adjudicated, or settled regulatory action or investigation by the Commission, the Commodity Futures Trading Commission, a federal, state, or foreign regulatory agency, or a self-regulatory organization; [a pending,]
(D) an Associated Person was terminated for cause or permitted to resign after an investigation of an alleged violation of a federal or state securities law, a rule or regulation thereunder, a self-regulatory organization rule, or industry standard of conduct;
(E) a state or federal authority or self-regulatory organization has imposed remedial action, such as special training, continuing education requirements, or heightened supervision, on an Associated Person; and
(F) a state or federal authority or self-regulatory organization has provided information indicating that the Applicant or an Associated Person otherwise poses a threat to public investors.
(4) The Applicant has established all contractual or other arrangements and business relationships with banks, clearing corporations, service bureaus, or others necessary to:
(A) initiate the operations described in the Applicant's business plan, considering the nature and scope of operations and the number of personnel; and
(B) comply with the federal securities laws, the rules and regulations thereunder, and [the]
(5) The Applicant has or has adequate plans to obtain facilities that are sufficient to:
(A) initiate the operations described in the Applicant's business plan, considering the nature and scope of operations and the number of personnel; and
(B) comply with the federal securities laws, the rules and regulations thereunder, and [the]
(6)-(7) No Change.
(8) The applicant has financial controls to ensure compliance with the federal securities laws, the rules and regulations thereunder, and [the]
(9) No Change.
(10) The Applicant has a supervisory system, including written supervisory procedures, internal operating procedures (including operational and internal controls), and compliance procedures designed to prevent and detect, to the extent practicable, violations of the federal securities laws, the rules and regulations thereunder, and [the] NASD Rules [of the Association]. In evaluating the adequacy of a supervisory system, the Department shall consider the overall nature and scope of the Applicant's intended business operations and shall consider whether:
(A) the number, location, experience, and qualifications of supervisory personnel are adequate in light of the number, location, experience, and qualifications of persons to be supervised; the Central Registration Depository record or other disciplinary history of supervisory personnel and persons to be supervised; and the number and locations of the offices that the Applicant intends to open and the nature and scope of business to the conducted at each office;
(B) the Applicant has identified specific Associated Persons to supervise and discharge each of the functions in
(C) the Applicant has identified the functions to be performed by each Associated Person and has adopted procedures to assure the registration with
(D) each Associated Person identified in the business plan to discharge a supervisory function has at least one year of direct experience or two years of related experience in the subject area to be supervised;
(E) the Applicant will solicit retail or institutional business;
(F) the Applicant will recommend securities to customers;
(G) the location or part-time status of a supervisor or principal will affect such person's ability to be an effective supervisor;
(H) the Applicant should be required to place one or more Associated Persons under heightened supervision pursuant to Notice to Members 97-19;
(I) any remedial action, such as special training or continuing education requirements or heightened supervision, has been imposed on an Associated Person by a state or federal authority or self-regulatory organization; and
(J) any other condition that will have material impact on the Applicant's ability to detect and prevent violations of the federal securities laws, the rules and regulations thereunder, and [the]
(11) No Change.
(12) The Applicant has completed a training needs assessment and has a written training plan that complies with the continuing education requirements imposed by the federal securities laws, the rules and regulations thereunder, and [the]
(13)
(14) The application and all supporting documents otherwise are consistent with the federal securities laws, the rules and regulations thereunder, and [the]
(b) Granting or Denying Application
(A) grant the application subject to one or more restrictions reasonably designed to address a specific financial, operational, supervisory, disciplinary, investor protection, or other regulatory concern based on the standards for admission in Rule 1014(a); or
(B) deny the application.
(c)-(d) No Change.
(e) Service and Effectiveness of Decision
The Department shall serve its decision and the membership agreement on the Applicant in accordance with Rule 1012. The decision shall become effective upon service and shall remain in effect during the pendency of any review until a decision constituting final action of
(f) No Change.
(g) Final Action
Unless the Applicant files a written request for a review under Rule 1015, the Department's decision shall constitute final action by
(a) Events Requiring Application
A member shall file an application for approval of any of the following changes to its ownership, control, or business operations:
(1) a merger of the member with another member, unless both are members of the New York Stock Exchange, Inc. or the surviving entity will continue to be a member of the New York Stock Exchange, Inc.;
(2) a direct or indirect acquisition by the member of another member, unless the acquiring member is a member of the New York Stock Exchange, Inc.;
(3)[a] direct or indirect acquisition
(4) a change in the equity ownership or partnership capital of the member that results in one person or entity directly or indirectly owning or controlling 25 percent or more of the equity or partnership capital; or
(5) a material change in business operations as defined in Rule 1011(i).
(b)-(f) No Change.
(g) Department Decision
(1) The Department shall consider the application, the membership interview, other information and documents provided by the Applicant or obtained by the Department, the public interest, and the protection of investors.
(A) In rendering a decision on an application for approval of a change in ownership or control, or an application for approval of a material change in business operations that does not involve modification or removal of a membership agreement restriction, the Department shall determine if the Applicant would continue to meet the standards in Rule 1014(a) upon approval of the application.
(B) In rendering a decision on an application requesting the modification or removal of a membership agreement restriction, the Department shall consider whether the maintenance of the restriction is appropriate in light of:
(i) the standards set forth in Rule 1014;
(ii) the circumstances that gave rise to the imposition of the restriction;
(iii) the Applicant's operations since the restriction was imposed;
(iv) any change in ownership or control or supervisors and principals; and
(v) any new evidence submitted in connection with the application.
(2)-(4) No Change.
(h) Service and Effectiveness of Decision
The Department shall serve its decision on the Applicant in accordance with Rule 1012. The decision shall become effective upon service and shall remain in effect during the pendency of any review until a decision constituting final action of
(i) Request for Review; Final Action
An Applicant may file a written request for review of the Department's decision with the National Adjudicatory Council pursuant to Rule 1015. The procedures set forth in Rule 1015 shall apply to such review, and the National Adjudicatory Council's decision shall be subject to discretionary review by the NASD Board pursuant to Rule 1016. If the Applicant does not file a request for review, the Department's decision shall constitute final action by
(j)-(k) No Change.
In its filing with the Commission, NASD 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. NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The membership application and membership continuation processes have played an important role in investor protection by helping to ensure that new members and members that make a material change to their business comply or continue to comply with rigorous standards. Rule 1014, which sets forth the standards used when reviewing new member and continuing member applications, specifically requires NASD to consider the public interest and protection of investors when reviewing applications.
Recently, there has been an increase in company restructurings, including the selling of company assets. Asset transfer applications filed pursuant to Rule 1017 are often time-sensitive and may be the first step in a member's withdrawal from the securities business. While asset transfers often serve legitimate business purposes, they also can raise customer protection issues. NASD has encountered several instances where the effect of a member attempting to restructure by transferring assets is to insulate the member and its owners from responsibility for payment of pending or unpaid arbitrations. Some firms may choose to transfer their assets without a corresponding transfer of their liabilities. Because the corporate format used by many firms insulates the owners from liabilities of the firm, a customer with an award or judgment against the firm may only be able to be paid from the firm's assets. Thus an asset transfer may transform the firm from an operating business that can generate value over time to a shell holding the firm's liquidated value, leaving behind customers with arbitration claims pending against, or arbitration awards unsatisfied by, a firm.
In light of the customer protection concerns raised in the application process, NASD is proposing a rule change that would clarify and expand NASD's authority to identify and respond to changes in a firm that may not account for pending arbitrations and customer claims.
Applications submitted pursuant to Rule 1017 provide NASD with the opportunity to review member transactions that can materially adversely affect current and former customers. Rule 1017(a)(3) requires a member to submit an application upon the acquisition of substantially all of the member's assets. However, this may potentially eliminate from NASD's review a member's piecemeal sale of its assets that, while not “substantially all” in amount, may nevertheless have a material impact on the operations or profitability of the selling member.
The proposed rule change would clarify that Rule 1017(a)(3) applies to transfers as well as to sales of a firm's assets, including sales and transfers of assets to an affiliated entity. The proposed rule change also would broaden the scope of Rule 1017(a)(3). In Notice to Members 02-54 (August 2002), which NASD issued to solicit comment on the proposed membership application rules, the proposal set forth in the Notice required members to submit applications prior to the transfer of a material amount of the member's assets or prior to the transfer of any asset, business or line of operation that generates revenues comprising a material portion of the selling member's earnings. Based on the comments received in response to the Notice, as discussed further in Item II C, below, NASD has revised the proposed rule change to include a more objective standard based on the percentage of assets transferred. The revised proposed rule change would require members to submit applications prior to the sale or transfer of 25% or more of the member's assets or any asset, business or line of operation that generates revenues of 25% or greater of the selling member's earnings over a rolling 36-month period. The 36-month period would be measured backwards from the date that the member initially notifies NASD of its intent to sell or transfer assets by submitting an application pursuant to Rule 1017.
Because of concerns that a selling member's customers may be left unprotected following an asset transfer, the seller's situation should be reviewed in connection with all such transactions. Rule 1017(a) currently exempts selling members from the requirement to submit applications if the acquiring firm is a member of the NYSE. The proposed rule change would require all non-NYSE selling members to submit an application regardless of whether the acquiring firm is a NYSE member. The proposed rule change is not intended to put applicants through duplicative approval processes where the transaction is otherwise subject to adequate customer protection safeguards. Rather, in requiring an application regardless of whether the acquirer is a member of the NYSE, NASD will be assured of receiving notice and will be in a position to target particular aspects of the transaction for additional review, if necessary.
To encourage compliance with the terms of arbitration and other adjudicated customer awards, the proposed rule change would amend Rule 1014(a)(3) to include as specific factors in the consideration of both new and continuing member applications unpaid arbitration awards, other adjudicated customer awards against an applicant and other persons that may have significant control or influence over the applicant, including its controlling persons, principals, registered representatives, other Associated Persons, any lender of 5% or more of the applicant's net capital, and any other member with respect to which these persons were a controlling person or a 5% lender of its net capital. Currently, NASD Rule 2110 would apply to efforts by a firm and its owners to unfairly prejudice customers seeking
NASD has seen instances where an applicant (both new member and change of ownership/control) has a disciplinary history of some concern that falls short of a statutory disqualification. Many of these cases involve applications from closely held firms where, even if the broker/dealer establishes heightened supervisory procedures, the influence of the control person on the small broker/dealer may overcome the supervisory structures. Rule 1014(a)(3) requires NASD to determine whether an applicant and its associated persons “are capable of complying with” federal securities laws and the rules of NASD. A variety of specific events, including past and current disciplinary actions and customer claims, are among the considerations referenced in the rule.
To further enhance NASD's authority under Rule 1014(a) to consider the impact of an applicant's past behavior, the proposed rule change would create a rebuttable presumption that the application should be denied when any of the events enumerated in Rule 1014(a)(3)(A) and (C) through (E) are present. An Applicant may overcome the presumption by demonstrating to the Department that it can meet each of the standards in Rule 1014(a). In determining whether an Applicant has overcome the presumption, NASD staff will consider the Applicant's submission in light of the specific standards of Rule 1014(a), the public interest, protection of investors, and NASD's responsibility to provide a fair procedure in accordance with its membership rules. The rebuttable presumption would not create new standards for admission, but would merely clarify that applicants with certain regulatory history must affirmatively demonstrate that they should be allowed admission.
The proposed rule change would amend Rule 1011 to amend the definition of “Associated Person” to, among other things, include a reference to non-natural controlling persons in light of the fact that NASD's current definition of “associated persons” does not encompass non-natural persons. The amended definition would apply to the entire Rule 1010 Series and provide for consistency in the membership application process. NASD may consider in the future whether to expand the definition of “associated persons” more generally to include non-natural persons.
NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.
The proposed rule change was published for comment in NASD Notice to Members 02-54 (August 2002). Seven comments were received in response to the Notice.
Five of the commenters supported the proposal to require firms to submit an application prior to the transfer of a material amount of the member's assets or prior to the transfer of any asset, business or line of operation that generates revenues comprising a material portion of the selling member's earnings.
All six commenters who responded to the question of whether materiality should be more clearly defined agreed that the Rules should include a more specific definition of materiality.
Of the six commenters who responded, five commenters thought that NASD should review other types of transactions not currently included in Rule 1014 or the rule proposal.
With respect to the proposal to require all non-NYSE selling members to submit an application to NASD regardless of whether the buyer is an NYSE member, a slight majority of the commenters supported the proposal. Of the six commenters who responded, four commenters supported the proposal.
All the commenters supported the proposal that applicants bear the burden of proof to demonstrate that they should be approved for membership despite the presence of a regulatory history. Six of the commenters also responded to whether it is appropriate to impose the burden of proof for pending matters such as pending investigations and arbitrations.
All six commenters who responded to the proposal to expand Rule 1014 to include non-natural persons supported the proposal.
Within 35 days of the date of publication of this notice in the
(A) by order approve such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the NASD. All submissions should refer to File No. SR-NASD-2003-07 and should be submitted by November 13, 2003.
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”),
NASD is proposing to amend NASD Rule 2710 to delete certain unnecessary rule language that was mistakenly proposed in amendments to Rule 2710 for which the Commission recently published notice of immediate effectiveness. The text of the proposed rule change, as amended, is set forth below. Proposed deletions are in [brackets].
(a) No Change.
(b) Filing Requirements
(1) through (5) No Change.
(6) Information Required to be Filed
(A) Any person filing documents that are required to be filed under paragraph (b)(4) above shall provide the following information with respect to the offering through NASD's electronic filing system:
(i) through (vi) No Change.
(vii) any other information required to be filed under this Rule[by NASD's electronic filing system].
(B) No Change.
(7) through (11) No Change.
(c) through (d) No Change.
In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change, as amended, 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. NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
On July 30, 2003, the Commission published notice of the filing and immediate effectiveness of amendments by NASD to NASD Rules 2710 and 6540, both of which address the submission of requests for Underwriting Activity Reports (“UARs”).
NASD believes that the proposed rule change, as amended, is consistent with the provisions of section 15A(b)(6) of the Act,
NASD believes that the proposed rule change, as amended, would not result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments were neither solicited nor received.
Because the foregoing proposed rule change, as amended, does not:
(i) significantly affect the protection of investors or the public interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to section 19(b)(3)(A) of the Act
NASD has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The proposed rule change, as amended, is technical in nature and acceleration of the operative date will allow NASD to make the technical correction to NASD Rule 2710 with immediate effect. For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission.
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
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend PCX Rule 6.24 regarding the manner in which a contrary exercise advice (“CEA”) is submitted to the Exchange and to extend by one hour the time for Members and Member Organizations to submit CEAs to the Exchange. Below is the text of the proposed rule change, as amended. Proposed new language is
Rule 6.24. (a) [Subject to the restrictions set forth in Rule 6.9 and to such restrictions as may be imposed pursuant to Rule 6.11 or pursuant to the Rules of the Options Clearing Corporation (“OCC”), an outstanding option contract may be exercised during the time period specified in the Rules of the OCC by the tender to the OCC of an exercise notice in accordance with the Rules of the OCC.]
(b) [The exercise cut-off time for all non-cash settled options shall be such hour on the business day immediately prior to the expiration date as may be fixed from time to time by the Exchange. The exercise cut-off time, as so fixed by a member organization or as established pursuant to the preceding sentence, shall also apply in respect of option contracts carried in any proprietary account of such member organization as the latest time at which such member organization, if it is a clearing member, shall tender exercise notices to the OCC, or if it is not a clearing member, shall issue exercise instructions to its clearing member. Notwithstanding the foregoing, member organizations may receive and members may submit exercise instructions and tender exercise notices after the exercise cut-off time but prior to expiration (i) in the case of option contracts carried in an account maintained for another member organization in which only positions of customers of such other member organization are carried, (ii) in order to remedy mistakes or errors made in good faith, (iii) to take appropriate action as the result of a failure to reconcile unmatched Exchange transactions, or (iv) where exceptional circumstances relating to a customer's ability to communicate exercise instructions to the member organization (or the member organization's ability to receive exercise instructions) prior to such cut-off time warrant such action. This subparagraph (b) is intended as a means of providing for relatively uniform procedures in respect of exercise instructions and not to alter or affect in any way the expiration times for an option contract which are fixed in accordance with the Rules of the OCC or any other provision of an option contract, and the exercise prior to expiration of an option contract in contravention of this subparagraph (b) shall neither affect the validity of such exercise nor modify or otherwise affect any right or obligation of any holder or writer of any option contract of such series of options. As used herein with respect to any member organization, the word “customer” shall mean every person other than the member organization.]
[.01 The exercise cut-off time pursuant to Rule 6.24(b) for option contracts shall be 2:30 P.M. (PT) on the business day immediately prior to the expiration date. In the event a member organization does not carry accounts for customers, it shall nevertheless be subject to such exercise cut-off time for the purposes of the third and fourth sentences of Rule 6.24(b).
.02 Each member organization shall prepare a memorandum of every exercise instruction received from a customer showing the time when such instruction was so received. Such memoranda shall be subject to the requirements of SEC Rules 17a-3(a)(6) and 17a-4(b).
.03 In the event a member submits an exercise instruction or tenders an exercise notice pursuant to an exception set forth in clause (ii), (iii) or (iv) of Rule 6.24(b), the member shall maintain a memorandum setting forth the circumstances giving rise to such
.04 Clearing Members must follow the procedures of the OCC when exercising expiring non-cash settled equity option contracts. Members must also follow the procedures set forth below with respect to the exercising of non-cash settled equity option contracts that would otherwise not be exercised, or the non-exercising of option contracts that otherwise would be exercised by operation of the OCC Rule 805.
(a) For all such contracts exercised or not exercised, a “contrary exercise advice” must be delivered by the member in such form or manner prescribed by the Exchange to a place designated by the Exchange no later than 2:30 p.m. (PT) on the business day immediately prior to the expiration date;
(b) Subsequent to the delivery of a “contrary exercise advice,” should the Market Maker, Floor Broker, customer or firm determine to act other than as reflected on the original advice form, the Member must also deliver an “advice cancel” in such form or manner prescribed by the Exchange to a place designated by the Exchange no later than 2:30 p.m. (PT) on the business day immediately prior to the expiration date;
(c) The preparation, time stamping or submission of a “contrary exercise advice” prior to the purchase of the contracts to be exercised or not exercised shall be deemed a violation of this Rule.
(d) All of the foregoing provisions of this Commentary .04 are in full force and effect whether or not the OCC waives the exercise-by-exception provisions of its Rule 805; in the event of such waiver, the procedures of this Commentary shall be followed as if such provisions of OCC Rule 805 were in full force and effect; and OCC rules may require the submission of an affirmative exercise notice even in circumstances where a contrary exercise advice is not required; and
(e) The failure of any Member to follow the provisions in this Commentary .04 may be referred to the Ethics and Business Conduct Committee and result in the assessment of a fine, which may include but is not limited to disgorgement of potential economic gain obtained or loss avoided by the subject exercise, as determined by the Committee.
.05 Members and member organizations shall properly communicate final exercise decisions to the Exchange in respect of positions for which they are responsible. Member organizations may establish a processing cut-off tune prior to the Exchange's exercise cut-off time at which it will no longer accept final exercise decisions in expiring options for customers.
.06 Submitting or preparing an exercise instruction after the exercise cut-off time in any expiring option on the basis of material information released after the cut-off time is actively inconsistent with just and equitable principals of trade.]
In its filing with the Commission, the PCX included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change, as amended. The text of these statements may be examined at the places specified in Item IV below and is set forth in sections A, B and C below, of the most significant aspects of such statements.
The Options Clearing Corporation (“OCC”), the issuer of all PCX-traded options contracts, has an established procedure for options holders wishing to automatically exercise in-the-money options
The Exchange states that the principal goal of PCX Rule 6.24 is to maintain a level playing field between persons holding long and short positions in expiring equity options. The PCX believes that after trading has ended on the final trading day before expiration, persons who are short in the option have no way to close out their short position. To put option holders on equal footing, PCX Rule 6.24 attempts to minimize the time period in which a holder can exercise the equity option after the close of trading on the last business day prior to expiration, generally known as “Expiration Friday.”
The current exercise cut-off time for an option holder to decide whether to exercise an equity option is 2:30 p.m. (PST) on the business day immediately prior to the expiration date.
The Exchange states that the proposed rule change was prompted by concerns expressed by clearing firms that the deadline for submitting CEAs is problematic for customer accounts,
Although many Members and Member Organizations have electronic submission procedures, the Exchange is concerned that those firms that manually submit CEAs could have an opportunity to improperly extend the 2:30 p.m. (PST) deadline for option holders to submit their exercise instructions. This concern on the part of the Exchange is based on the difficulty in monitoring a manual procedure that has different times for deciding whether to exercise an option and to submit a CEA.
Accordingly, in the case of non-customer accounts, the Exchange has proposed to limit the 3:30 p.m. (PST) deadline for submitting CEAs to those Members and Member Organizations that have an electronic submission procedure for option holders communicating their decisions whether to exercise an option. In connection with the use of an electronic submission procedure by Members and Member Organizations, the Exchange proposes the addition of new Commentary .05 to PCX Rule 6.24 to require Members and Member Organizations employing electronic submissions to establish procedures to secure time stamps in connection with their electronic systems.
OCC on occasion will suspend the use of its Ex-by-Ex procedure, such as when trading in the underlying stock has been halted or if accurate price data is unavailable for the determination of closing prices. When this occurs and there is no automatic exercise, all options contract holders must send an exercise notice to OCC if they wish to exercise an option, regardless of whether the option is in or out-of-the-money. Currently, when OCC suspends its Ex-by-Ex procedure for an option class, PCX Rule 6.24 requires the submission of a CEA. Thus, when OCC has waived the Ex-by-Ex procedure, option holders must determine what price would have been used, even though the only available price might be a stale last sale price (a price OCC did not feel comfortable using). Option holders then must determine whether a CEA needs to be submitted to the Exchange evidencing the intention to exercise or not exercise.
In the PCX's view, the options exchanges have long viewed this process as cumbersome and confusing to option holders. Therefore, the PCX proposes to amend PCX Rule 6.24(d) to eliminate the requirement that a CEA be submitted if the holder does not want to exercise the option when OCC has suspended its Ex-by-Ex procedure for that options class. As a result, when the Ex-by-Ex procedure has been
The proposed rule change would also permit the Exchange to establish different cut-off times as an exception to amended PCX Rule 6.24(c) to address situations where the Exchange has advance prior knowledge or warning of a modified trading session at expiration, or in the case of “unusual circumstances.”
Specifically, proposed PCX Rule 6.24(g) would apply when a different or modified close of trading is announced due to a market-wide event. In such cases, the Exchange would have forewarning of the event and would be required to provide notice of a change in cut-off times by 2:30 p.m. (PST) on the business day prior to the last trading day before expiration. For example, if the day after Thanksgiving is the last trading day prior to expiration with a close of trading of 10 a.m. (PST), then the Exchange would, with prior notice by 2:30 p.m. (PST) on the Wednesday before Thanksgiving, be able to establish the cut-off time for option holders to decide whether to exercise expiring options to 1 hour 28 minutes after the close of trading. With respect to the submission of CEAs by Members and Member Organizations, the cut-off time would be 2 hours and 28 minutes after the close of trading for customer accounts and non-customer accounts where the Members and Member Organizations employ an electronic procedure with time stamp for the submission of exercise instructions. Members and Member Organizations that do not employ an electronic submission procedure for exercise instructions would be required to submit a CEA within 1 hour and 28 minutes after the close of trading for its non-customer accounts. Accordingly, the normal exercise cut-off times would not apply and, similar to amended PCX Rule 6.24(c), the deadline for submitting CEAs to the Exchange for non-customer accounts would depend on the use of an electronic submission procedure for the submission of exercise instructions.
Proposed PCX Rule 6.24(h)(1) would permit the Exchange to extend the cut-off time periods for option holders to decide whether to exercise expiring options, as well as for Members to submit CEAs due to unusual circumstances. Situations that are deemed to be an “unusual circumstance” are set forth in revised Commentary .03 to PCX Rule 6.24. An “unusual circumstance” for purposes of proposed paragraph (h)(1) includes, but is not limited to, increased market volatility; significant order imbalances; significant volume surges and/or systems capacity constraints; significant spreads between the bid and offer in underlying securities; internal system malfunctions affecting the ability to disseminate or update market quotes and/or deliver orders; or other similar occurrences.
Proposed PCX Rule 6.24(h)(2) would permit the Exchange, with one (1) business day prior advance notice by 9 a.m. (PST), to establish a reduced cut-off time for option holders to decide whether to exercise expiring options as well as for Members to submit CEAs. The reduced cut-off time under this new paragraph for both exercise decisions and CEA submissions may not occur before the close of trading. The primary purpose of proposed paragraph (h)(2) is to permit the Exchange to reduce cut-off times because of an “unusual circumstance,” such as a significant news event occurring after the close. Revised Commentary .03 to PCX Rule 6.24 provides that, for purposes of subparagraph (h)(2), an “unusual circumstance” is a significant news announcement concerning the underlying security of an option contract that is scheduled to be released after the close on the last trading day prior to expiration. For example, a decision on whether a particular merger will be approved or whether a new product will receive regulatory approval that occurs after the close of trading would justify a reduced cut-off time so that persons holding short positions are not prejudiced by being unable to close out their positions. The Exchange believes that this would maintain a level playing field between persons holding long and short positions in expiring options.
The Exchange believes that the proposed rule change, as amended, is consistent with Section 6(b) of the Act
The Exchange does not believe that the proposed rule change, as amended, 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, as amended, were neither solicited nor received.
The proposed rule change, as amended, has been filed by the Exchange pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
The Commission believes that waiving the thirty-day operative date is consistent with the protection of investors and the public interest.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the PCX. All submissions should refer to File No. SR-PCX-2003-47 and should be submitted by November 13, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
On May 19, 2003, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
This order approves the proposed rule change.
The Exchange is proposing to delete the Rule, which prohibits the delivery of electronically generated orders,
In its letter supporting the proposal, IB urged the Commission to approve the proposal because IB believes the Rule
In its letter opposing the proposal, SIG stated that the concerns and conditions that prompted adoption of the Rule have not changed. SIG contended that removal of the Rule will “unfairly place specialists at a competitive disadvantage [vis-a-vis] professional customers and broker-dealers who generate and send orders electronically.” Further, SIG expressed the view that adoption of the proposal will discourage liquidity providers from quoting deep markets, “as occasional errors or delays in quote updates will be instantaneously met with economic loss from electronic pick-off orders of professionals.”
SIG stated that the likelihood that Phlx will adopt a hybrid trading system will further compound the problems arising from electronically generated orders. Specifically, SIG believes that increased quoting by market makers in a hybrid system will create more instances of quote errors and anomalies, which will increase the opportunities for professional traders to pick off liquidity providers. Accordingly, SIG believes that any withdrawal of the Rule should be accompanied by adoption of an effective decrementation feature or other means to address quote clogging once a hybrid system is introduced.
In addition, SIG believes that recent enhancements to Phlx's AUTOM and AUTO-X systems—such as a change to Auto-Quote that enables Phlx to disseminate a firm quote size of at least the sum of limit orders at Phlx's disseminated price—do not warrant removal of the Rule. Rather, SIG stated that the enhancements exacerbate the disadvantages to specialists and market makers from electronically generated orders.
Finally, SIG argued that the Rule should be bolstered rather than eliminated. Specifically, SIG believes that regulators should enforce the human intervention requirement of the Rule by categorizing “queue-trading” (which occurs when an off-floor system is programmed to identify a quoting error or quote delay and then queues an order on the screen to be sent to the exchange with the stroke of a key) as electronically generated.
In its response to the SIG Letter, the Phlx reiterated its belief that the systems changes it has made to AUTOM and AUTO-X have “narrowed the gap with respect to any actual or perceived advantage an off-floor customer or broker-dealer could have over a specialist * * *.” The Exchange also noted that it has developed and deployed new electronic technology that provides for the automatic execution of eligible inbound customer and off-floor broker-dealer limit orders against booked customer limit orders at the Exchange's disseminated price (called “Book Match”), and a new component of AUTOM, “Book Sweep,” designed to automatically execute limit orders on the book when the Exchange's electronic options pricing system, Auto-Quote, or a specialist's quote sent to the Exchange via specialized quote feed locks or crosses a limit order on the book. Phlx stated that as a result of its technology changes and as a competitive initiative, it proposed to delete the Rule. However, the Exchange also stated that it will continue to surveil for, and enforce, compliance with Exchange rules that help specialists and ROTs in managing their risk while making markets on the Exchange. In addition, the Exchange represented that it expects to monitor the effects of the deletion of this prohibition in order to readily ascertain its effects on the risk management activities of on-floor members and member organizations. If the Exchange determines that such effects are detrimental to the risk management activities of on-floor members and member organizations, the Exchange expects to take appropriate action, including the filing of appropriate rules and/or systems changes, to address such a situation.
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.
For the reasons discussed above, the Commission finds that the proposal is consistent with the Act and the rules and regulations thereunder.
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 Phlx proposes to amend Phlx Rule 1042 to simplify the manner in which a Contrary Exercise Advice (“CEA”)
Rule 1042. (a) Exercise Notices. [Subject to the restrictions established by the Exchange pursuant to Rule 1002 and to such other restrictions which may be imposed by the Exchange pursuant to Rules 1004 and 1005 or by the Options Clearing Corporation (“OCC”) pursuant to the OCC Rules, an outstanding option contract may be exercised during the time period specified in the OCC Rules by the tender to the OCC of an exercise notice in accordance with OCC Rules.]
(b) [Exercise Cut-Off]
(i) take no action and allow exercise determinations to be made in accordance with OCC's Rule 805 [exercise-by-exception]
(ii) submit a Contrary Exercise Advice
[Members and member organizations which maintain proprietary or public customer positions in expiring options shall take necessary steps to ensure that final exercise decisions are properly indicated to the Exchange on behalf of such positions. Member organizations who have accepted the responsibility to indicate final exercise decisions on behalf of another member or non-member firm shall take necessary steps to ensure that such decisions are properly indicated. Member organizations may establish a processing cut-off time prior to the Exchange's exercise cut-off time at which it will no longer accept final exercise decisions in expiring options from customers.]
(i) in order to remedy mistakes made in good faith[,]
(ii) to take appropriate action as the result of a failure to reconcile unmatched Exchange option transactions[,]
(iii) where exceptional circumstances
In the event a member or member organization does not timely submit a
(h)
.01
[.02]
[.03]
In its filing with the Commission, the Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below and is 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 amend Phlx Rule 1042 to simplify how CEAs are submitted to the Exchange in light of the Options Clearing Corporation's (“OCC”) Exercise-by-Exception (“Ex-by-Ex”) procedure and to provide additional time for members and member organizations to submit CEAs for certain accounts to the Exchange. The purpose is also to provide the Exchange with flexibility to modify the time to close options trading prior to expiration and the time by which decisions whether to exercise must be made. The proposal provides guidance to those member organizations that indicate final exercise decisions on behalf of others. Additionally, the proposal conforms the language of the various parts of the rule in light of the changes.
The OCC, issuer of all Phlx and other exchange-traded options contracts, has an established procedure pursuant to OCC Rule 805 for options holders wishing to exercise in-the-money options before they expire. Known as Ex-by-Ex, the procedure provides for the automatic exercise at expiration of any equity option contract that has an exercise price below (in the case of a call) or above (in the case of a put) the closing price of the underlying security by: “ of a point ($.75) or more if the option contract is carried in a customer account,
On occasion, OCC has had to waive or suspend its Ex-by-Ex procedure, such as when trading in the underlying stock has been halted, or where no accurate price was available to be used in the determination of the closing price. When this occurs and there is no automatic exercise per OCC Rule 805, all options holders must send exercise instructions to OCC if they wish to exercise an option regardless of whether the option is in or out-of-the-money. Currently, when OCC suspends its Ex-by-Ex procedure for an option class, Phlx Rule 1042 requires the submission of a CEA. Thus, when OCC has waived the Ex-by-Ex procedure, option holders must determine what price would have been used, even though the only available price might be a “stale” last sale price, and then determine whether a CEA needs to be submitted to the Exchange to indicate the option holder's intention to exercise or not exercise. Option holders and options exchanges have long viewed this process as cumbersome and confusing.
The Phlx proposes to amend Phlx Rule 1042 to eliminate the requirement that a CEA be submitted if the option holder does not want to exercise the option when OCC has waived its Ex-by-Ex procedure for that options class. As a result, the proposed rule change indicates that when Ex-by-Ex procedures have been waived by OCC, submission of instructions to exercise (CEAs) are only required when the options holder wants to exercise the option contract. If an options holder takes no action, the option will expire without being exercised.
Currently, Phlx Rule 1042 provides that option holders have until 5:30 p.m. (EST) on the business day immediately prior to the expiration date
To address unusual circumstances, the Exchange proposes in Rule 1042 (h) that it have the ability to establish different cut-off times for the option holder to make a decision to exercise or not exercise expiring options and for members and member organizations to submit CEAs. Proposed Phlx Rule 1042(h)(i) would permit the Exchange to extend the cut-off time for option holders to decide whether to exercise expiring options, as well as for members and member organizations to submit CEAs because of unusual circumstances. Unusual circumstances would include, for example, increased market volatility and significant order imbalances. Proposed Phlx Rule 1042(h)(ii) would likewise allow the Exchange to reduce the cut-off time for option holders to decide whether to exercise options as well as for members and member organizations to submit CEAs because of unusual circumstances that include a significant news announcement regarding the underlying security of an option contract that is scheduled to be released just after the close on the business day immediately prior to expiration.
In addition, proposed Phlx Rule 1042(g) provides customers and members and member organizations with added flexibility in connection with the delivery of CEAs or Advice Cancels if the Exchange announces a modified time for the close of trading in equity options prior to expiration. The Exchange proposes that, if the Exchange establishes a modified time for the close of trading in equity options on the day when expiration will occur and properly notifies its members about the modification, option holders would have 1 hour 28 minutes after the announced close of trading to make a final decision to exercise or not exercise an expiring option. The proposal would also give members and member organizations 2 hours 28 minutes after the close of trading to deliver CEAs for customer accounts and for non-customer accounts, as long as the submission were done electronically with an electronic time-stamp. However, members and member organizations that do not employ an electronic submission procedure for non-customer accounts would have to submit their CEAs within 1 hour 28 minutes following the close of trading.
Proposed Phlx Rule 1042 (e) provides that if a member organization has accepted the responsibility to indicate final exercise decisions on behalf of another member or non-member organization, it must take the necessary steps to ensure that such decisions are properly indicated to the Exchange. Such member organization may establish a processing cut-off time prior to the Exchange's exercise cut-off time after which it will not accept exercise decisions or other processing procedures.
The Exchange also proposes new Commentaries to Phlx Rule 1042. First, new Commentary .01 clarifies that for purposes of Phlx Rule 1042, the definitions of “customer” and “non-customer” in OCC's By-Laws are applicable. Second, new Commentary .03 clarifies that cut-off times for the submission of a CEA may be extended or reduced because of “unusual circumstances” and provides examples of such circumstances. Third, new Commentary .04 clarifies that the deadline for submission of CEAs for non-customer accounts will be 6:30 p.m. (EST) where they are submitted electronically with a timestamp indicating receipt of exercise instructions on or before 5:30 p.m. (EST), and will be 5:30 p.m. (EST) if submission is manual. Fourth, new Commentary .05 requires member and member organizations that employ an electronic submission method to adopt specific written procedures for the electronic submission of CEAs. Finally, new Commentary .08 provides that
The Exchange believes that its proposal 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 that is not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were either solicited or received.
The proposed rule change has been filed by the Exchange pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
The Commission believes that waiving the thirty-day operative date is consistent with the protection of investors and the public interest.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Phlx. All submissions should refer to File No. SR-Phlx-2003-65 and should be submitted by November 13, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Franklin County and the contiguous counties of Anderson, Henry, Owen, Scott, Shelby and Woodford constitute a disaster area due to damages caused by severe thunderstorms that occurred on August 22, 2003. Applications for loans for physical damage may be filed until the close of business on December 15, 2003 and for economic injury until the close of business on July 15, 2004 at the address listed below or other locally announced locations: U.S. Small Business Administration, Disaster Area 2 Office, One Baltimore Place, Suite 300, Atlanta, GA 30308.
The interest rates are:
The number assigned to this disaster for physical damage is 355411 and for economic injury the number assigned is 9X3200.
The Pre-Academic English Language Training and Academic Readiness Phase of the PLUS Program Grants Competition was announced on October 10, 2003 in the
The Office of English Language Programs, ECA/A/L, Room 304, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC 20547; Phone (202) 619-5886; E-mail
The Shipping Coordinating Committee (SHC) will conduct two open meetings between 10 a.m. and 12 p.m. in successive order on Wednesday, 12 November 2003, in Room 6103, at U.S. Coast Guard Headquarters, 2100 Second Street, SW, Washington, DC 20593-0001. The purpose of the first meeting, 10 a.m. to 11 a.m., is to finalize preparations for the 22nd Extraordinary Session of Council, the 91st Session of Council and the 23rd Session of the Assembly of the International Maritime Organization (IMO) which are scheduled to be held from the 21st of November to the 5th of December 2003, at the IMO Headquarters in London. Discussion will focus on the papers received for the sessions and draft U.S. positions.
Items of particular interest include:
• Reports of Committees;
• Reports on Diplomatic Conferences;
• Work Program and Budget for 2004-2005; and
• Election of Members of the Council.
Items of particular interest include:
• Consideration and adoption of amendments to MARPOL 73/78;
• Consideration of the report of the Committee.
Members of the public may attend these meetings up to the seating capacity of the room. Interested persons may seek information by writing: Director, International Affairs, U.S. Coast Guard Headquarters, Commandant (G-CI), room 2114, 2100 Second Street, SW, Washington, DC 20593-0001 or by calling: (202) 267-2280.
Tennessee Valley Authority (TVA), Forest Service, USDA (USDA-FS).
Notice of transfer agreement.
Pursuant to the Land Between The Lakes Protection Act of 1998, 16 U.S.C. 460 (Act), administrative jurisdiction over the Land Between The Lakes National Recreation Area transferred from TVA to USDA-FS on October 1, 1999. The Land Between the Lakes National Recreation Area consists of approximately 170,000 acres located in Lyon and Trigg Counties, Kentucky, and Stewart County, Tennessee, and rights appurtenant thereto. On September 7, 2001, TVA and the USDA-FS, Southern Region, executed an Agreement of Transfer to document the transfer of administrative jurisdiction over the Land Between The Lakes National Recreation Area that occurred by operation of law on October 1, 1999. A copy of the Agreement of Transfer is attached hereto and made a part hereof as Exhibit A.
The land transferred is described in the Agreement of Transfer and is generally depicted on a drawing which is available for public inspection in the Office of the Chief of the Forest Service, Washington, DC.
Michael Lange at 404-347-2990.
A copy of the Agreement of Transfer is attached hereto and made a part hereof as Exhibit A.
This Agreement of Transfer made and entered into this 7th day of September, 2001, by and between Tennessee Valley Authority, a corporation organized and existing under and by virtue of an Act of Congress known as the Tennessee Valley Authority Act of 1933, as amended (hereinafter called “TVA”), and the United States Department of Agriculture, for the use and benefit of the Forest Service of the Department of Agriculture (hereinafter called “USDA-FS”).
1. TVA, subject to the conditions, exceptions, and reservations herein contained, has assigned and transferred to USDA-FS the right of possession and all other right, title, or interest which TVA may have in and to LBL.
2. All of the interests and rights assigned and transferred by TVA to the USDA-FS under section 1 hereof are assigned and transferred subject to the following rights, which are hereby expressly reserved for the benefit of TVA, its agents, employees, successors and assigns:
(a) the perpetual right, in connection with and by virtue of the erection and operation of any dam or dams across the Tennessee River or its tributaries, to permanently flood the land described in Exhibit A that is below the 375-foot contour elevation (mean sea level) and temporarily and intermittently flood the land described in Exhibit A that is between the 375-foot contour elevation and the 378-foot contour elevation (mean sea level);
(b) the perpetual right to enter upon the land lying below the 378-foot contour elevation (mean sea level) for the purposes of law enforcement or enforcement of Section 26a of the TVA Act;
(c) permanent exclusive easements for itself, its successors and assigns, to maintain, operate, modify, and upgrade the existing electric power substation and communication facilities, which are an integral part of TVA's power system, in, on, over, and across the two parcels of land described in Exhibit B attached hereto and made a part hereof, including the right to fence all or part of the lands described in Exhibit B, and the perpetual right to use the existing means of access across the land described in Exhibit A for ingress to and egress from the lands described in Exhibit B;
(d) permanent easements and rights-of-way for itself, its successors and assigns, for the Kentucky Dam-Cadiz 69-kV Transmission Line (including the tap line from the Kentucky Dam-Cadiz 69-kV Transmission Line to the Lyon, Kentucky Substation) and the Kentucky Dam-Nashville 161-kV Transmission Line, which are integral parts of TVA's power system, and the permanent right to erect, operate, and maintain additional electric power circuits and lines within the existing rights-of-way for said transmission lines, which rights-of-way are described in Exhibit C attached hereto and made a part hereof, and the permanent right of reasonable access along the roads and/or other off-right-of-way routes across the land described in Exhibit A that historically have been used by TVA for ingress to and egress from said rights-of-way and said transmission lines, said easement rights consisting of the perpetual right to enter at any time and from time to time and to erect, maintain, repair, rebuild, operate, and patrol as many lines of poles or transmission line structures within said existing rights-of-way as TVA deems necessary or useful for electric power transmission purposes, with sufficient wires and cables for electric power circuits and communication circuits, and all necessary appurtenances in, on, over, and across said rights-of-way (and if deemed necessary by TVA to anchor guy wires outside said rights-of-way), together with the perpetual right to clear said rights-of-way and keep the same clear of all brush, trees, buildings, signboards, stored personal property, and fire hazards; to destroy or otherwise dispose of such trees and brush; and to remove, destroy, or otherwise dispose of any trees located outside said rights-of-way which in falling could come within ten (10) feet of any transmission line structure or conductor.
3. Included in TVA's reservation of rights in section 2(c) and (d) is the right to attach telecommunication facilities, including circuits, to transmission line structures and to authorize third parties to attach or underbuild electric distribution circuits or communications equipment to such structures or to the communication facilities; provided, however, that such third party uses may be subject to the imposition of fees by USDA-FS.
4. With respect to the reservation by TVA in section 2(c) and (d) of the rights to operate, maintain, construct, modify, and upgrade certain facilities, it is understood and agreed that any assignee of, or successor-in-interest to, TVA is permitted to operate, maintain, repair, and rebuild facilities in existence at the time of such transfer of interest but not build additional facilities without the prior written consent of USDA-FS. Further, before any assignee or successor-in-interest commences or engages in any construction, modification, or upgrading with respect to such facilities, the assignee or successor must first obtain USDA-FS's written authorization.
5. Any additional proposed power system or other TVA presence on LBL property beyond that reserved in this Agreement will be requested by TVA and considered by USDA-FS in accordance with USDA-FS's normal procedure.
6. TVA in no way warrants the extent of the United States' interests in LBL.
7. Nothing contained in this agreement shall be construed to affect the interests, if any, of the U.S. Army Corps of Engineers or any other third party in any portion of LBL.
Approved by:
I, DANIEL H. FERRY, Acting Manager, Realty Asset Services, as legal agent of the Tennessee Valley Authority, the Grantor herein, do hereby certify, pursuant to KRS Chapter 382, that the above-stated consideration in the amount of
I, ELIZABETH ESTILL, Regional Forester, as legal agent of the U.S. DEPARTMENT OF AGRICULTURE—FOREST SERVICE, the Grantee herein, do hereby certify, pursuant to KRS Chapter 382, that the above-stated
On the
WITNESS my hand and official seal of office in Chattanooga, Hamilton County, Tennessee, the day and year aforesaid.
On the
WITNESS my hand and official seal of office in
The Land Between The Lakes National Recreation Area (LBL), being all federally owned land, water, and interests in the land and water lying between Kentucky Lake and Lake Barkley, situated in Lyon and Trigg Counties, Kentucky, and in Stewart County, Tennessee, the boundary of which is described as follows:
The
The
The
The
Thence continuing Easterly along said centerline 2.6 miles to where it intersects the easterly boundary of LBL Tract 9RN:LBL-3, and being Corner 9RN-10; thence N 33° 33′ W 692 feet along said easterly boundary to Corner 9RN-9 at the northeast Corner of said tract; thence leaving the boundary of Tract 9RN:LBL-3 and with the boundary of Tract 9RN:LBL-2 the following nine (9) calls:
Thence leaving the boundary of Tract 9RN:LBL-2 and with the boundary of Tract 9PS:LBL-4 the following five (5) calls:
Thence leaving the boundary of Tract 9PS:LBL4 and with the boundary of Tracts 9PS:LBL-5 and 9PS:LBL-6 the following nine (9) calls:
Thence leaving the boundary of Tract 9PS:LBL-6 and with the boundary of Tract 10PS:LBL-1 the following eight (8) calls:
Thence leaving the boundary of Tract 10PS:LBL-2 and with the boundaries of Tracts 10PS:LBL-4, 6608, 6607, and 6606 the following eight (8) calls:
Thence leaving the centerline of road and Tract 6606 and with Tract 10PS:LBL-2 the following two (2) calls:
Thence leaving Tract 10PS:LBL-2 and with Tract 10PS:LBL-3 the following six (6) calls:
Course directions and coordinates for Corner positions are referenced to Tennessee NAD27 State Plane Coordinates, U.S. Survey Feet.
This description contained in Exhibit A prepared by the USDA-FS, Southern Region, from the maps and records of:
A parcel of land located in Lyon County, Commonwealth of Kentucky, on the southeast side of State Highway No. 58, approximately
Commencing at a point which is the intersection of the centerlines of State Highway No. 58 and State Highway No. 453; thence leaving the said intersection and with the meanders of the centerline of State Highway No. 58 in a northeasterly direction 907 feet to a point on a curve, the said point being a railroad spike and being the Point Of Beginning.
Thence leaving the point of beginning and with the centerline of the said road as it curves to the left, having a radius of 951.6 feet and arc length of 255.8 feet, forming a chord of N44°42′ E, 255.0 feet to the point of tangent, the said point being a railroad spike; thence leaving the said curve and continuing with the centerline of the said road N37°00′ E, 181.0 feet, crossing the centerline of the existing Kentucky Dam-Cadiz Transmission Line, as shown on sheet 6 of US-TVA drawing LW-3068, to a point on the northeast right-of-way line of the said existing transmission line, the said point being a railroad spike; thence leaving the centerline of the said road and with the said right-of-way line of the existing transmission line S67°14′ E, 300.0 feet to a point, the said point being a 1
The described land includes a portion of the present right-of-way of the Kentucky Dam-Cadiz Transmission Line.
A parcel of land located in the Eighth Civil District of Stewart County, State of Tennessee, as shown on sheet I of US-TVA drawing SC-92888, revision 1, entitled “Model, Tennessee Microwave Radio Repeater Station Site,” the said parcel being more particularly described as follows:
Beginning at a point in the centerline of an existing county road; thence leaving the centerline of the said road and with the west line of the herein described parcel N07°30′ E, 418.9 feet, crossing steel fence posts at 20.0 feet and at 388.9 feet, to a point; thence leaving the said west line and with the north line of the herein described parcel S82°30′ E, 420.0 feet to a point; thence leaving the said north line and with the east line of the herein described parcel S07°30′ W, 418.1 feet, crossing steel fence posts at 30.0 feet and at 398.1 feet, to a point on the aforementioned centerline of a road; thence leaving the said east line and with the centerline of the said road approximately along the following bearings and distances: N78°45′ W, 187.4 feet and N85°45′ W, 233.1 feet to the point of beginning and containing 3.98 acres, more or less.
The bearings given in the description for TVA Tract No. SNSRS-3 are based on Magnetic North.
These descriptions contained in Exhibit B prepared from the maps and records of: Tennessee Valley Authority, Haney Building 2A 1101 Market Street, Chattanooga, Tennessee 37402-2801
A strip of land located in Lyon and Trigg Counties, Commonwealth of Kentucky, as shown on sheet 3, revision 17; sheet 4, revision 4; sheet 5, revision 5; sheet 6, revision 7; sheet 7, revision 5; sheet 8, revision 6; and sheet 9, revision 13, of US-TVA drawing LW-3068, which sheets are incorporated herein by reference and made a part hereof, the said strip being 200-feet wide, the centerline of the location and the end boundaries of the strip being more particularly described as follows:
Beginning at point where the centerline of the location crosses the 354-foot contour elevation (mean sea level) as it lies along the southerly shore of Barkley Canal, which connects Kentucky Lake and Barkley Lake, the said point being at survey station 226+89.4 (approximately), the said strip being bounded on the northwest end by the said contour line; thence continuing with the centerline of the location S32°29′ E, 2,608.7 feet to an angle point in the centerline of the location at survey station 252+98.1; thence continuing with the centerline of the location S57°59′ E, 13,229.7 feet to an angle point in the centerline of the location at survey station 385+27.8; thence continuing with the centerline of the location S62°14′ E, 9,635.9 feet to an angle point in the centerline of the location at survey station 481+63.7; thence continuing with the centerline of the location S67°14′ E, 10,117.5 feet to an angle point in the centerline of the location at survey station 582+81.2; thence continuing with the centerline of the location S56°35′ E, 30,009.5 feet, crossing the line between Lyon and Trigg Counties at survey station 866+23, to an angle point in the centerline of the location at survey station 882+90.7; thence continuing with the centerline of the location S65°35′ E, 4,011.9 feet to an angle point in the centerline of the location at survey station 923+02.6; thence continuing with the centerline of the location N67°25′ E, 4,960.4 feet to a point where the centerline crosses the water's edge on the west side of the Cumberland River at survey station 972+63 (approximately), the said strip being bounded on the northeast end by the said water's edge.
The strip of land described above includes the centerline of the transmission line location for a net distance of 74,573.6 feet and contains 342.39 acres, more or less.
Furthermore, the permanent easement rights include the perpetual right to install, maintain, and replace guy wires and necessary appurtenances outside the right-of-way for the transmission line structures located at survey stations 252+98.1, 385+27.8, 481+63.7, 582+81.2, 882+90.7, and 923+02.6.
A strip of land located in the Third Magisterial District of Lyon County and the First Magisterial District of Trigg County, Commonwealth of Kentucky, and also located in the Eighth Civil District of Stewart County, State of Tennessee, as shown on sheet 2, revision 21; sheet 3, revision 12; sheet 4, revision 9; sheet 5, revision 11; sheet 6, revision 10; sheet 7, revision 10; sheet 8, revision 11; sheet 9, revision 8; sheet 10, revision 12; sheet 11, revision 7; sheet 12, revision 7; sheet 13, revision 8; sheet 14, revision 8; sheet 15, revision 8; sheet 16, revision 8; and sheet 17, revision 10, of US-TVA drawing LW-2171, which sheets are incorporated herein by reference and made a part hereof, the said strip being 250-feet wide from survey station 201+00.0 (approximately) to 1881+00 (structure 295) and widening to 350 feet from survey station 1881+00 (structure 295) to survey station 1909+40 (approximately), the centerline of the location and the end boundaries of the strip being more particularly described as follows:
Beginning at a point where the centerline of the location crosses the 354-foot contour elevation (mean sea level) as it lies along the southerly shore of Barkley Canal, which connects Kentucky Lake and Barkley Lake, the said point being at survey station 201+00 (approximately), the said strip being bounded on the northwest end by the said contour line; thence continuing with the centerline of the location S36°23′ E, 700 feet to an angle point in the centerline of the location at survey station 208+00; thence continuing with the centerline of the location S37°13′ E, 7,788.6 feet to an angle point in the centerline of the location at survey station 285+88.6; thence continuing with the centerline of the location S48°59′ E, 7,886.7 feet to an angle point in the centerline of the location at survey station 364+75.3; thence continuing with the centerline of the location
The strip of land described above includes the centerline of the transmission line location for a net distance of 171,042.4 feet and contains 988.17 acres, more or less.
Furthermore, the permanent easement rights include the perpetual right to install, maintain, and replace guy wires and necessary appurtenances outside the right-of-way for the transmission line structures located at survey stations 208+00, 285+88.6, 364+75.3, 462+49.8, 628+33.7, 887+00.0, 1070+35.9, 1282+24.6, 1573+73.7, and 1756+08.0 and for the transmission line structure located at a survey station with the equation 710+66.5 LB = 708+64.1 LA.
These descriptions contained in Exhibit C prepared from the maps and records of: Tennessee Valley Authority, Haney Building 2A, 1101 Market Street, Chattanooga, Tennessee 37402-2801.
Maritime Administration, Department of Transportation.
Invitation for public comments on a requested administrative waiver of the Coastwise Trade Laws for the vessel AR-DE.
As authorized by Pub. L. 105-383 and Pub. L. 107-295, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below. The complete application is given in DOT docket 2003-16336 at
Submit comments on or before November 24, 2003.
Comments should refer to docket number MARAD-2003-16336. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. DOT Dockets, Room PL-401, Department of Transportation, 400 7th St., SW., Washington, DC 20590-0001. You may also send comments electronically via the Internet at
Michael Hokana, U.S. Department of Transportation, Maritime Administration, MAR-830 Room 7201, 400 Seventh Street, SW., Washington, DC 20590. Telephone 202-366-0760.
As described by the applicant the intended service of the vessel AR-DE is:
By order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Invitation for public comments on a requested administrative waiver of the Coastwise Trade Laws for the vessel CRITERION.
As authorized by Pub. L. 105-383 and Pub. L. 107-295, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below. The complete application is given in DOT docket 2003-16337 at
Submit comments on or before November 24, 2003.
Comments should refer to docket number MARAD-2003-16337. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. DOT Dockets, Room PL-401, Department of Transportation, 400 7th St., SW., Washington, DC 20590-0001. You may also send comments electronically via the Internet at
Michael Hokana, U.S. Department of Transportation, Maritime Administration, MAR-830 Room 7201, 400 Seventh Street, SW., Washington, DC 20590. Telephone 202-366-0760.
As described by the applicant the intended service of the vessel
By order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Invitation for public comments on a requested administrative waiver of the Coastwise Trade Laws for the vessel EXPLORER.
As authorized by Public Law 105-383 and Public Law 107-295, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below. The complete application is given in DOT docket 2003-16335 at
Submit comments on or before November 24, 2003.
Comments should refer to docket number MARAD-2003 16335. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. DOT Dockets, Room PL-401, Department of Transportation, 400 7th St., SW., Washington, DC 20590-0001. You may also send comments electronically via the Internet at
Michael Hokana, U.S. Department of Transportation, Maritime Administration, MAR-830 Room 7201, 400 Seventh Street, SW., Washington, DC 20590. Telephone 202-366-0760.
As described by the applicant the intended service of the vessel EXPLORER is:
By order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Invitation for public comments on a requested administrative waiver of the Coastwise Trade Laws for the vessel SEA DRAGON.
As authorized by Public Law 105-383 and Public Law 107-295, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below. The complete application is given in DOT docket 2003-16338 at
Submit comments on or before November 24, 2003.
Comments should refer to docket number MARAD-2003 16338. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. DOT Dockets, Room PL-401, Department of Transportation, 400 7th St., SW., Washington, DC 20590-0001. You may also send comments electronically via the Internet at
Michael Hokana, U.S. Department of Transportation, Maritime Administration, MAR-830 Room 7201, 400 Seventh Street, SW., Washington, DC 20590. Telephone 202-366-0760.
As described by the applicant the intended service of the vessel SEA DRAGON is:
By order of the Maritime Administrator.
Surface Transportation Board, DOT.
Notice of exemption.
Under 49 U.S.C. 10502, the Board has: (1) Exempted BG & CM Railroad, Inc. (BG & CM) from the provisions of 49 U.S.C. Subtitle IV, subject to conditions, to allow reactivation of service on a rail line in Lewis, Nez Perce, and Idaho Counties, ID; (2) partially vacated a certificate of interim trail use (CITU) for 52 miles of this 66.8-mile line; and (3) granted a motion to dismiss a BG & CM notice of exemption to acquire and operate this line.
This exemption will be effective on October 27, 2003.
Joseph H. Dettmar (202) 565-1600. [Federal Information Relay Service (FIRS) for the hearing impaired: 1-800-877-8339.]
Additional information is contained in the Board's decision. To obtain a copy of the Board's decision, contact Da 2 Da Legal, 1925 K Street, NW., Room 405, Washington, DC 20006 (202-293-7776). Board decisions and notices are also available on our Web site at
By the Board, Chairman Nober.
Morristown & Erie Railway, Inc. (M&E), a Class III rail carrier, d/b/a Maine Eastern Railroad, has filed a verified notice of exemption under 49 CFR 1150.41
Consummation of this transaction was expected to occur on or after October 1, 2003. The lines to be operated by M&E have been operated by Safe Handling Rail Inc. (SHR) under a modified certificate of public convenience and necessity. Pursuant to an agreement between the State of Maine and SHR, SHR's service was due to terminate on September 30, 2003.
If the verified notice contains false or misleading information, the exemption is void
An original and 10 copies of all pleadings, referring to STB Finance Docket No. 34403, must be filed with the Surface Transportation Board, 1925 K Street, NW., Washington, DC 20423-0001. In addition, a copy of each pleading must be served on John K. Fiorilla, Watson, Stevens, Fiorilla & Rutter, LLP, 390 George Street, P.O. Box 1185, New Brunswick, NJ 08903.
Board decisions and notices are available on our Web site at
By the Board, David M. Konschnik, Director, Office of Proceedings.
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 an existing final regulation, REG-209322-82 (TD 8841), Return of Partnership Income (§ 1.6031(a)-1).
Written comments should be received on or before December 22, 2003 to be assured of consideration.
Direct all written comments to R. Joseph Durbala, Internal Revenue Service, room 6411, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the regulation should be directed to Allan Hopkins, at (202) 622-6665, or at Internal Revenue Service, room 6407, 1111 Constitution Avenue NW., Washington, DC 20224, or through the Internet, at
The burden is reflected in the burden estimate of Form 1065.
The following paragraph applies to all of the collections of information covered by this notice:
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.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (a) Whether the 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 collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (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; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
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 an existing final regulation, REG-209373-81 (TD 8797), Election to Amortize Start-Up Expenditures for Active Trade or Business (§ 1.195-1).
Written comments should be received on or before December 22, 2003 to be assured of consideration.
Direct all written comments to R. Joseph Durbala, Internal Revenue Service, room 6411, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the regulation should be directed to Allan Hopkins, at (202) 622-6665, or at Internal Revenue Service, room 6407, 1111 Constitution Avenue NW., Washington, DC 20224, or through the Internet, at
The following paragraph applies to all of the collections of information covered by this notice:
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.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on: (a) Whether the 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 collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (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; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
Internal Revenue Services (IRS), Treasury.
Correction to notice and request for comments.
This document contains a correction to a notice and request for comments, which was published in the
Allan Hopkins, (202) 622-6665 (not a toll free number).
The notice and request for comments that is the subject of this correction is required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506 (c)(2)(A)).
As published, the comment request for Form 1138 contains an error which may prove to be misleading and is in need of clarification.
Accordingly, the publication of the comment request for Form 1138, which was the subject of FR Doc. 23471, is corrected as follows:
On page 54052, column 2, under the caption
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 an existing final regulation, EE-81-88 (TD 8599), Deductions for Transfers of Property (§ 1.83-6(a)).
Written comments should be received on or before December 22, 2003 to be assured of consideration.
Direct all written comments to R. Joseph Durbala, Internal Revenue Service, room 6411, 1111 Constitution Avenue, NW., Washington, DC 20224.
Requests for additional information or copies of the information collection should be directed to Allan Hopkins, at (202) 622-6665, or at Internal Revenue Service, room 6407, 1111 Constitution Avenue, NW., Washington, DC 20224, or through the internet, at
Abstract Section 1.83-6(a) of the regulation provides that when property is transferred in connection with the performance of services, the recipient of service may claim a deduction for the amount included as compensation in the gross income of the service provider. The service provider will be deemed to have included an amount in gross income if the service recipient provides a timely Form W-2 or 1099, as appropriate.
The estimated annual burden of reporting will be reflected in the reporting requirements for Forms W-2 and 1099-MISC.
The following paragraph applies to all of the collections of information covered by this notice.
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.
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, Pub. L. 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form 8870, Information Return for Transfers Associated With Certain Personal Benefit Contracts.
Written comments should be received on or before December 22, 2003 to be assured of consideration.
Direct all written comments to R. Joseph Durbala, Internal Revenue Service, room 6411, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the form and instructions should be directed to Allan Hopkins, at (202) 622-6665, or at Internal Revenue Service, room 6407, 1111 Constitution Avenue NW., Washington, DC 20224, or through the Internet, at
The following paragraph applies to all of the collections of information covered by this notice:
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.
Approved: October 16, 2003.
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 an existing final regulation, FI-43-94 (TD 8649), Regulations Under Section 1258 of the Internal Revenue Code of 1986; Netting Rule for Certain Conversion Transactions (§ 1.1258-1).
Written comments should be received on or before December 22, 2003 to be assured of consideration.
Direct all written comments to R. Joseph Durbala, Internal Revenue Service, room 6411, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the information collection should be directed to Allan Hopkins, at (202) 622-6665, or at Internal Revenue Service, room 6407, 1111 Constitution Avenue NW., Washington, DC 20224, or through the Internet, at
The following paragraph applies to all of the collections of information covered by this notice:
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.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a
Office of Policy and Planning, Department of Veterans Affairs
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-21), this notice announces that the Office of Policy and Planning (OPPA), Department of Veterans Affairs, has submitted the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden and it includes the actual data collection instrument.
Comments must be submitted on or before November 24, 2003.
Denise McLamb, Records Management Service (005E3), Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, (202) 273-8030 or FAX (202) 273-5981 or e-mail:
Send comments and recommendations concerning any aspect of the information collection to VA's Desk Officer, OMB Human Resources and Housing Branch, New Executive Office Building, Room 10235, Washington, DC 20503 (202) 395-7316. Please refer to “OMB Control No. 2900-0524''.
Abstract: VA Form 0120 is used to document pre-employment screening and special background checks for police officer applicants. Prior to employment of a qualified applicant, each VA medical center is required to conduct a FBI arrest record inquiry and to contact listed former employers for information. The form is completed by each VA facility and serves as a record of pre-employment screening to determine the qualification and suitability of the applicant. It is the policy of VA that no person be employed as a VA police officer who has been convicted of a serious crime or whose history reflects a disregard for laws and regulations, questionable character, or a pattern of misconduct or poor work habits.
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
By direction of the Secretary.
National Cemetery Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-21), this notice announces that the National Cemetery Administration (NCA), Department of Veterans Affairs, has submitted the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden and it includes the actual data collection instrument.
Comments must be submitted on or before November 24, 2003.
Denise McLamb, Records Management Service (005E3), Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, (202) 273-8030, Fax (202) 273-5981 or e-mail
Send comments and recommendations concerning any aspect of the information collection to VA's OMB Desk Officer, OMB Human Resources and Housing Branch, New Executive Office Building, Room 10235, Washington, DC 20503, (202) 395-7613. Please refer to “OMB Control No. 2900-0571” in any correspondence.
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
Most customer satisfaction surveys will be recurring so that NCA and IG can create and maintain ongoing measures of performance and to determine how well VA meets customer service standards. Each collection of information will consist of the minimum amount of information necessary to determine customer needs
By direction of the Secretary.
Department of Veterans Affairs, Office of Research and Development.
Notice of intent.
Notice is hereby given that the Department of Veterans Affairs, Office of Research and Development, intends to grant to Recovery Pharmaceuticals, Inc., 25 Main Street, Wayland, MA 01778, U.S.A., an exclusive license to practice U.S. Patent Application Serial No.09/070,263, filed April 30, 1998, issuing as U.S. Patent 6,211,194, entitled “Solution Containing Nicotine”.
Comments must be received within fifteen (15) days from the date of this published Notice.
Send comments to: Robert W. Potts, Director of Technology Transfer, Department of Veterans Affairs; Attn: 122TT; 810 Vermont Avenue NW; Washington, DC 20420. Telephone: (202) 254-0260; Facsimile: (202) 254-0473; e-mail:
Copies of the published patent applications may be obtained from the U.S. Patent and Trademark Office at
It is in the public interest to so license this invention as Recovery Pharmaceuticals, Inc., submitted a complete and sufficient application for a license. The prospective exclusive license will be royalty-bearing and will comply with the terms and conditions of 35 U.S.C. 209 and 37 CFR 404.7. The prospective exclusive license may be granted unless, within fifteen (15) days from the date of this published Notice, the Department of Veterans Affairs Office of Research and Development receives written evidence and argument which establishes that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR 404.7.
Securities and Exchange Commission.
Proposed rule.
We are proposing new rules that would, under certain circumstances, require companies to include in their proxy materials security holder nominees for election as director. These proposed rules are intended to improve disclosure to security holders to enhance their ability to participate meaningfully in the proxy process for the nomination and election of directors. The proposed rules would not provide security holders with the right to nominate directors where it is prohibited by state law. Instead, the proposed rules are intended to create a mechanism for nominees of long-term security holders, or groups of long-term security holders, with significant holdings to be included in company proxy materials where there are indications that security holders need such access to further an effective proxy process. This mechanism would apply in those instances where evidence suggests that the company has been unresponsive to security holder concerns as they relate to the proxy process. The proposed rules would enable security holders to engage in limited solicitations to form nominating security holder groups and engage in solicitations in support of their nominees without disseminating a proxy statement. The proposed rules also would establish the filing requirements under the Securities Exchange Act of 1934 for nominating security holders.
Comments should be received on or before December 22, 2003.
To help us process and review your comments more efficiently, comments should be sent by one method—U.S. mail or electronic mail—only. Comments should be submitted in triplicate to Jonathan G. Katz, Secretary, U.S. Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Comments also may be submitted electronically at the following e-mail address:
Lillian C. Brown or Grace K. Lee, Division of Corporation Finance, at (202) 824-5250, or, with regard to investment companies, John M. Faust, Division of Investment Management, at (202) 942-0721, U.S. Securities and Exchange Commission, 450 Fifth Street, NW., Washington DC 20549-0402.
We are proposing new Rule 14a-11
On April 14, 2003, the Commission directed the Division of Corporation Finance to review the proxy rules and regulations and their interpretations regarding procedures for the nomination and election of corporate directors.
On July 15, 2003, after considering the views expressed by commenters, the Division of Corporation Finance provided to the Commission its report and recommended changes to the proxy rules related to the nomination and election of directors.
On August 14, 2003, we published for comment proposed rules that would implement the first of the Division's recommendations—new disclosure standards requiring more robust disclosure of the nominating committee processes of public companies, including the consideration of
Today, we are proposing rules that would implement the second of the Division's recommendations. These proposals would create a mechanism for nominees of long-term security holders, or groups of long-term security holders, with significant holdings to be included in company proxy materials where there are indications that the proxy process has been ineffective or that security holders are dissatisfied with that process.
The Commission first addressed the issue of security holder access to company proxy materials for the nomination of directors as early as 1942, when it requested that the staff review the proxy rules and submit to the Commission recommended changes.
In 1977, the Commission again focused on security holder access to company proxy materials regarding the nomination and election of directors during its broad review of security holder communications, security holder participation in the corporate electoral process, and corporate governance generally. In anticipation of public hearings held in September of 1977, the Commission, without formally proposing rule changes, requested comment on a number of issues, including whether “shareholders [should] have access to management's proxy soliciting materials for the purpose of nominating persons of their choice to serve on the board of directors.”
(a) what criteria should be applied to nominating security holders;
(b) what disclosures should be required of nominating security holders;
(c) whether security holder nominations are permissible under state law; and
(d) whether a meaningful distinction can be drawn between control and non-control nominations.
(a) whether security holders should have access to the company's proxy soliciting materials for the purpose of nominating directors;
(b) whether security holder nominations are permissible under state law and consistent with Congressional intent in enacting Exchange Act Section 14(a);
(c) what type of rule would be most appropriate and what criteria should be applied to nominating security holders;
(d) whether the proxy rules should apply to soliciting activities by a nominating security holder; and
(e) whether nominating security holders should be subject to the then-existing rules governing election contests.
After the 1977 hearings, the Commission proposed and adopted amendments to the proxy rules. These amendments did not relate directly to security holder access to company proxy materials regarding the nomination and election of directors. The Commission did adopt a requirement, however, that companies state whether they have a nominating committee and, if so, whether the nominating committee will consider security holder recommendations. Although the Commission stated its intent to address “some of the more complex questions which have been raised in this proceeding relating to corporate governance and the means by which corporations can best account to shareholders and the public” and determine “what further action, if any, is appropriate with respect to shareholder communications and shareholder participation in the corporate electoral process generally,”
In the broad proxy revisions adopted in 1992,
Proposals to require the company to include shareholder nominees in the company's proxy statement would represent a substantial change in the Commission's proxy rules. This would essentially mandate a universal ballot including both management nominees and independent candidates for board seats.
Rather than mandating a “universal ballot,” the Commission revised the bona fide nominee rule to allow security holders seeking minority board representation to “fill out” a partial or “short” slate with management nominees, thus making it easier for security holders to conduct an election contest in a non-control context. For example, if a security holder wishes to nominate only two candidates to a seven member board, Exchange Act Rule 14a-4(d) permits the security holder to choose five of management's nominees to fill out his or her ballot, provided that the security holder does not name those management nominees on his or her proxy card, but instead names only those management nominees that the security holder is opposing. Although the security holder still must disseminate and file a separate proxy statement and proxy card, he or she can now, in essence, allow security holders to vote for some of management's nominees on the non-management proxy card.
Section 14(a) of the Exchange Act
Based on the comments received in response to our solicitation of public input on the Division's review of the proxy rules relating to the election of directors, it is apparent that many of the issues raised in the Commission's 1977 review of the proxy rules merit reconsideration. In particular, because the disclosure requirements regarding nominating committees that were adopted in 1977 do not appear to have made the operation of those committees sufficiently transparent, we have proposed enhancements to those disclosure requirements. Further, it appears that the presence of nominating committees has not eliminated the concerns among some security holders with regard to the barriers to meaningful participation in the proxy process in connection with the nomination and election of directors.
Much of the public input that we have received suggests that including security holder nominees in company proxy materials would be the most direct and effective method of giving security holders a more effective role in the proxy process in connection with the nomination and election of directors.
Currently, a security holder or group of security holders that is dissatisfied with the leadership of a company generally must undertake a proxy contest, along with its related expenses, to put nominees before the security holders for a vote.
On the other hand, the business community and many of its legal advisors commented that giving security
After considering the range of views on this issue, we have determined to propose new rules that would, in certain circumstances, require companies to place security holder nominees for director in company proxy materials.
The security holder nomination procedure in proposed Exchange Act Rule 14a-11 would require any subject company to include information regarding a security holder's nominee or nominees for election as director in the company's proxy materials when the conditions of the rule are met.
In connection with the recent review of the proxy process, commenters discussed both significant benefits of a security holder nomination procedure and significant concerns regarding such a procedure and its potential consequences. The proposal is intended to address this broad range of procedural and substantive issues regarding the operation of the nominating procedure. While we believe that the basic concept behind the proposed procedure is simple, addressing the concerns of commenters results in a somewhat complex proposal. To assist those who wish to comment on the proposal, we have separated our description of the proposal into a number of discrete discussions. Specifically, the discussion of the proposal will address the following:
• To which companies would the proposed rule apply?
• For those companies to which the proposed rule would apply, what events must occur before the company would be required to include a security holder nominee in its proxy materials?
• What notice must a subject company give regarding the occurrence of an event that triggers operation of the proposed rule?
• Once a nomination procedure triggering event occurs at a subject company, which security holders or security holder groups may submit a nominee that the company would be required to include in its proxy materials?
• What are the eligibility requirements for a person whom a security holder or security holder group may nominate?
• What is the maximum number of security holder nominees that the company must include in its proxy materials?
• What notice must the security holder or security holder group provide to the company and file with the Commission?
• What must the company do after it receives such a notice?
• How would the liability provisions of the federal securities laws apply to statements made by the company and the nominating security holder or nominating security holder group?
• How do the other Exchange Act proxy rules apply to solicitations by the nominating security holder or nominating security holder group?
• How would the proposed rule apply to investment companies?
A.1. Should the Commission adopt revisions to the proxy rules to require companies to place security holder nominees in the company's proxy materials? Are the means that currently are available to security holders to address a company's perceived unresponsiveness to security holder concerns adequate?
A.2. What would be the cost to companies if the Commission adopted proxy rules requiring companies to include security holder nominees in company proxy materials?
A.3. What direct or indirect effect would this procedure have on companies' corporate governance policies relating to the election of directors? For example, will companies be more or less likely to adopt cumulative voting policies and/or elect directors annually?
Proposed Exchange Act Rule 14a-11 would apply to all companies that are subject to the Exchange Act proxy rules,
The regulation of proxy solicitations under the Exchange Act co-exists with state corporate law in a number of situations. For example, state corporate law allows shareholders, generally, to raise proposals at the company's annual meeting of security holders and Exchange Act Rule 14a-8 creates a procedure for inclusion of information regarding those proposals in company proxy materials. Consistent with a basic concept underlying Exchange Act Section 14(a)—that security holders be made aware of significant matters to be decided at security holder meetings—Exchange Act Rule 14a-8 requires companies to include in their proxy materials full disclosure about and the opportunity to vote on those matters, including qualifying security holder proposals, that management knows will be presented at the annual meeting.
Exchange Act Rule 14a-8 balances the costs to the company against the benefits to the company and its shareholders by including modest security holder eligibility standards, limitations on the number and types of proposals, and limitations on the number of words that the company is required to include as a discussion of the security holder proposal. Exchange Act Rule 14a-8 addresses its interaction with state corporate law by not requiring companies to include any proposal that would violate state law.
Proposed Exchange Act Rule 14a-11 has a similar underlying purpose as Exchange Act Rule 14a-8—to the extent management is aware of a security holder's intent to present a nominee for director at the company's annual meeting and state corporate law allows security holders to nominate candidates for election as director at the company's annual meeting of security holders, the proposal would establish a procedure pursuant to which a company would have to provide specified information regarding that nomination in its proxy materials. Similar to Exchange Act Rule 14a-8, proposed Exchange Act Rule 14a-11 addresses its interaction with state corporate law by premising the security holder nomination procedure upon the existence of a state law right of security holders to nominate candidates for election as directors. The proposed rule, like Exchange Act Rule 14a-8, also imposes conditions and limitations on the availability of the procedure in question.
We are considering as an additional element of the proposed rule, and seek comment on, whether proposed Exchange Act Rule 14a-11 should apply only to those companies that are subject to accelerated deadlines for filing Exchange Act periodic reports,
• The company's common equity public float was $75 million or more as of the last business day of its most recently completed second fiscal quarter;
• The company has been subject to the reporting requirements of Section 13(a)
• The company has previously filed at least one annual report pursuant to Section 13(a) or 15(d) of the Exchange Act; and
• The company is not eligible to use Exchange Act Forms 10-QSB and 10-KSB.
We believe that appropriate security holder participation in the nomination process is important for companies of all sizes. Given the new approach that the proposed rules represent, however, we are considering whether, at least as a first step in implementing the proposed rules, companies that are not accelerated filers should be excluded from their operation. Implementing the proposed rules in this fashion would avoid the disproportionate burdens of regulation that the proposed procedure may impose on smaller companies. It also would allow our staff and the markets to gain experience with the proposed rule in an initial stage in which the rule applied only to larger companies, while we would retain the ability to expand the rule's application to all companies after gaining this experience. In addition, the information available to us suggests that interest in the proxy process is, to a significant degree, concentrated within the universe of companies that are accelerated filers. For example, of the 266 companies that submitted letters to the Division of Corporation Finance during the 2002-2003 proxy season regarding their intention to exclude security holder proposals submitted under Exchange Act Rule 14a-8, only 26 had a common equity public float of less than the $75 million threshold as specified in the definition of “accelerated filer.”
B.1. As proposed, the security holder nomination procedure in Exchange Act Rule 14a-11 would apply to all companies subject to the proxy rules. Would this broad application have a disproportionate impact on smaller operating companies? Are there modifications that would accommodate the needs of small entities while
B.2. Should companies be able to take specified steps or actions that would prevent application of the proposed nomination procedure where such procedure would otherwise apply? If so, what such steps or actions would be appropriate? For example, should companies that agree not to exclude any security holder proposal submitted by an eligible security holder pursuant to Exchange Act Rule 14a-8 be exempted from application of the proposed nomination procedure for a specified period of time? Should a company that implements all security holder proposals that receive passing votes in a given year be exempted? Conversely, should companies subject to Exchange Act Rule 14a-11 be permitted to exclude certain security holder proposals that they would otherwise be required to include? If so, what categories of proposals? For example, should the company be able to exclude proposals that are precatory, proposals that relate to corporate governance matters generally, proposals that relate to the structure or composition of boards of directors, or other proposals?
B.3. Would adoption of this procedure conflict with any state law, Federal law, or rule of a national securities exchange or national securities association? To the extent you indicate that the procedure would conflict with any of these provisions, please be specific in your discussion of those provisions that you believe would be violated.
B.4. Is it appropriate to limit the availability of the proposed nomination procedure to those situations where state law permits security holders to nominate candidates for director? Is it appropriate to permit companies to limit the availability of the proposed procedure by limiting the right to nominate directors, when allowed by state law? Will the proposed procedure's reliance on the pre-existence of a state law right, combined with the possibility that companies may limit security holders' rights in this regard, adversely affect the effectiveness of the procedure? Is the proposed procedure's reliance on the pre-existence of a state law right of nomination a proper balance between federal law and state law? Regardless of the existence of a state law right to nominate candidates for director, should companies be subject to the proposed procedure?
B.5. Most companies currently use plurality voting in the election of directors; accordingly, proposed Exchange Act Rule 14a-11 is drafted assuming that in most cases plurality voting would apply to an election of directors in which the inclusion of a security holder nominee resulted in more nominees than available seats on the board of directors. What specific issues would arise in an election where state law or the company's governing instruments provided for other than plurality voting, (
In order to focus the impact of the proposed security holder nomination procedure on those companies where there are criteria showing that the proxy process may be ineffective, the procedure would become operative for a company only after the occurrence of one or both of the nomination procedure triggering events described below. The procedure would then remain operative for any annual meetings or special meetings held during:
• The remainder of the calendar year in which the triggering event occurs;
• The calendar year following the calendar year in which the triggering event occurs; and
• The portion of the second calendar year following the calendar year in which the triggering event occurs, up to and including the annual meeting (or special meeting in lieu of an annual meeting) held during that calendar year.
As proposed, the following events would trigger the nomination procedure:
• At least one of the company's nominees for the board of directors for whom the company solicited proxies received “withhold” votes
• A security holder proposal submitted pursuant to Exchange Act Rule 14a-8 providing that the company become subject to the security holder nomination procedure in proposed Exchange Act Rule 14a-11(a) was submitted for a vote of security holders at an annual meeting of security holders held after January 1, 2004 by a security holder or group of security holders that held more than 1% of the company's securities entitled to vote on the proposal for one year as of the date the proposal was submitted and provided evidence of such holding to the company;
To be a nomination procedure triggering event, a direct access security holder proposal under Exchange Act Rule 14a-8, providing that the company become subject to proposed Exchange Act Rule 14a-11, would therefore have to be submitted by a security holder or group having more than 1% beneficial ownership for one year.
In order to facilitate an informed security holder vote with regard to security holder proposals that could trigger the security holder nomination procedure set out in Exchange Act Rule 14a-11, we have proposed an amendment to Exchange Act Rule 14a-5 that would require the company, where a security holder proposal is submitted by a more than 1% security holder who has held their securities for at least one year, to advise security holders of this fact in the proxy statement relating to the meeting at which the security holder proposal will be presented. We recommend that, pending final action on that proposal, companies make such an identification, both in their interest and in the interest of their security holders. Companies also should consider whether failure to make such an identification has any implications under Exchange Act Rule 14a-9.
We recognize that the proposed procedure could include other nomination procedure triggering events, such as economic performance (
In determining the appropriate thresholds to propose, we considered the importance of using nomination procedure triggering events that would provide a meaningful opportunity for security holders to trigger operation of the security holder nomination procedure against the importance of ensuring that the process is used by security holders who represent a substantial and long-term interest in the subject company. The nomination procedure triggering events that we propose strike what we believe is an appropriate balance between these interests.
The first of the nomination procedure triggers that we propose relates to the level of withhold director votes. We have proposed that the trigger require a more than 35% security holder withhold vote, based on votes cast. Based on a sample of 2,227 director elections over the past 2 years, it appears that approximately 1.1% of companies had total withhold votes in excess of 35% of the votes cast;
With regard to the more than 1% threshold with a one-year holding period that would be required of a direct access security holder proponent to trigger operation of the nomination procedure, we estimate that most companies have at least one security holder that is eligible to submit a security holder proposal that would initiate the security holder nomination procedure in proposed Exchange Act Rule 14a-11. For instance, we estimate that, of companies listed on an exchange or quoted on the Nasdaq Stock Market, 84% have at least one institution that has maintained ownership of at least 1% of the shares outstanding for one year.
Conversely, at higher percentages and holding periods, we are concerned that the trigger could be too difficult to meet and, therefore, less effective. For example, at a 3% threshold with a one-year holding period, the percentage of companies with at least one institutional investor who is able to submit a security holder proposal that triggers the nomination procedure would drop to 72%, while at a 5% threshold with a one-year holding period the percentage of companies with at least one institutional investor who is able to submit a security holder proposal that triggers the nomination procedure would drop to 57%.
With regard to the requirement that a direct access security holder proposal submitted by an eligible security holder must receive a majority of the votes cast at the meeting, we considered the percentage of security holder proposals that have received majority votes in prior recent years, based on both votes cast and votes outstanding. Samples of security holder proposals submitted between 2000 and 2003
We are considering as an additional element of the procedure, and seek comment on, whether we should include a third nomination procedure triggering event that is premised upon a company's not implementing a security holder proposal submitted in accordance with Exchange Act Rule 14a-8, other than a direct access security holder proposal, that receives support from the majority of votes cast. As noted previously, the nomination procedure we propose today is premised upon the existence of evidence regarding the ineffectiveness of, or security holder dissatisfaction with, a particular company's proxy process. Accordingly, we seek comment on a third nomination procedure triggering event that would result in a company being subject to that procedure if:
• A security holder proposal submitted pursuant to Exchange Act Rule 14a-8, other than a direct access security holder proposal, was submitted for a vote of security holders at an annual meeting by a security holder or group of security holders that held more than 1% of the company's securities entitled to vote on the proposal for one year and provided evidence of such holdings to the company;
• The security holder proposal received more than 50% of the votes cast on that proposal; and
• The board of directors of the company failed to implement the proposal by the 120th day prior to the date that the company mailed its proxy materials for the annual meeting.
Any such nomination procedure trigger would apply to all security holder proposals, regardless of whether a proposal requires board action (a “mandatory” proposal) or requests board action (a “precatory” proposal). It would be necessary for any new rule implementing such a nomination procedure triggering event to provide guidance to companies and security holders with regard to the determination of whether a proposal has been implemented. While it seems clear that a company would be deemed to have implemented a security holder proposal if the board of directors of the company takes all steps required to be taken by the board to implement the proposal, the timing of implementation may not fit properly within annual meeting cycles. For example, there likely would be situations in which a company would not be able to implement the proposal before the next annual meeting, either because the proposal cannot legally be implemented in that time period or the company would be required to take further action to implement the proposal (for example, where the security holder proposal requests action that would require a security holder vote to implement). Further, a security holder proposal may grant discretion to the board of directors or the company as to the manner in which the proposal should be implemented, either by its terms or because implementation of the proposal otherwise requires such discretion. In this case, a determination by the board that it had implemented the proposal or
In addition to the issues regarding “implementation” discussed above, a nomination procedure triggering event premised upon the implementation of a security holder proposal would need to provide a means to inform security holders regarding the date by which implementation would be necessary and a discussion of the manner in which a proposal would be deemed to have been implemented. We believe that the most appropriate means for informing investors of a potential triggering event and its impact upon the proposed nomination procedure would be in the periodic report in which the company discloses the results regarding any matter that has been put to a vote of security holders.
We are concerned that the inclusion of this third possible triggering event may affect a board's determination of how to react to or implement a security holder proposal or how to evaluate that proposal under state law. We believe, however, that an argument can be made that where a majority of votes cast by security holders favor a proposal and the board exercises its judgment not to implement it, there is an indication of ineffectiveness in, or dissatisfaction with, the proxy process. On the other hand, we are concerned that the link between the possible ineffectiveness of, or dissatisfaction with, a company's proxy process and this possible nomination procedure triggering event is more indirect than in the case of the two nominating process triggering events proposed today. A disagreement between a company's security holders and the board regarding its judgment on a proposal is a less directly linked indication of ineffectiveness relating to the director nomination and election process than a withhold vote on a director or a direct vote by security holders to provide for compliance with the nomination procedure. This is particularly the case in light of the possible diversity of subjects that can be addressed in a security holder proposal. We also are concerned about the complexity and potential for dispute regarding whether proposals are implemented.
If we decide to adopt a nomination procedure that includes this third triggering event, non-implementation of a security holder proposal submitted as described above and adopted subsequent to January 1, 2004 could be a nominating procedure triggering event. Therefore, security holders and groups should be aware that, should we adopt a nomination procedure that includes a “non-implementation” trigger, they should provide evidence to the company that they satisfy the more than 1% and one-year thresholds when they submit their proposals.
C.1. As proposed, the new procedure would require a triggering event for security holders to be able to use the security holder nomination procedure. Is this appropriate? If so, are the proposed nomination procedure triggering events appropriate? Are there other events that should trigger the procedure? For example, should the following trigger the procedure: lagging a peer index for a specified number of consecutive years; being delisted by a market; being sanctioned by the Commission; being indicted on criminal charges; or having to restate earnings once or restate earnings more than once in a specified period? Should the election of a security holder nominee as a member of a company's board of directors be deemed a triggering event in itself that would extend the process by another year or longer period of time?
C.2. How long after a nomination procedure triggering event should security holders be able to use the nomination procedure, if not two years, as is proposed (
C.3. As proposed, the nomination procedure could be triggered by withhold votes for one or more directors of more than 35% of the votes cast. Is 35% the correct percentage? If not, what would be a more appropriate percentage and why? Is it appropriate to base this trigger on votes cast rather than votes outstanding? If not, please provide a basis for the recommendation, including numeric data, where available. Is the percentage of withhold votes the appropriate standard in all cases? For example, what standard is appropriate for companies that do not use plurality voting? If your comments are based upon data with regard to withhold votes for individual directors, please provide such data in your response.
C.4. Should the nomination procedure triggering event related to direct access security holder proposals trigger the procedure only where a more than 1% holder or group submits the proposal? If not, what would be a more appropriate threshold, if any? For example, should the standards otherwise applicable for inclusion of a proposal under Exchange Act Rule 14a-8 apply? Should the required holding period for the securities used to calculate the security holder's ownership be longer than one year? If so, what is the appropriate holding period? Should that holding period be shorter than one year? If so, what is the appropriate holding period?
C.5. Are the existing methods under Exchange Act Rule 14a-8 sufficient to demonstrate that a proposal was submitted by a more than 1% security holder? If not, what other methods would be appropriate?
C.6. As proposed, a direct access security holder proposal could result in a nomination procedure triggering event if it receives more than 50% of the votes cast with regard to that proposal. Is this the proper standard? Should the standard be higher (
C.7. Should direct access security holder proposals be subject to a higher resubmission standard than other Exchange Act Rule 14a-8 proposals? If
C.8. We have proposed that nomination procedure triggering events could occur after January 1, 2004. Is this the proper date? Should it be an earlier date? Should it be a later date?
C.9. What are the possible consequences of the use of nomination procedure triggering events? Will there be more expense and effort related to votes on direct access security holder proposals? Will there be more campaigns seeking “withhold” votes? How will any such consequences affect the operation and governance of companies?
C.10. Should companies be exempted from the security holder nomination procedure for any election of directors in which another party commences or evidences its intent to commence a solicitation in opposition subject to Exchange Act Rule 14a-12(c) prior to the company mailing its proxy materials? If so, should the period in which security holders in such companies may use the nomination procedure be extended to the next year (assuming that a nomination procedure triggering event is required)? What should be the effect if another party commences a solicitation in opposition after the company had mailed its proxy materials?
C.11. We have discussed our consideration of and requested public comment on the appropriateness of a triggering event premised upon the company's non-implementation of a security holder proposal that receives more than 50% of the votes cast on that proposal. Should such a triggering event be included in the nomination procedure? In responding to this question, please also consider the following questions:
a. Should a security holder proposal that receives more than 50% of votes cast operate as a nomination procedure triggering event regardless of the topic of the proposal, or would it be appropriate to instead require that the proposal relate to a specified category of topics (
b. Should a security holder proposal result in a nomination procedure triggering event if it receives more than 50% of the votes cast with regard to that proposal? Should the standard be higher (
Are there other or additional criteria that would be appropriate? Should the determination be made by the entire board of directors? Should the determination be made by the independent members of the board of directors? Should the board be given broader flexibility (
c. Should security holders that do not agree with a company's conclusion that a proposal had been implemented have the right to contest that conclusion through a judicial proceeding? Should they have a private right of action to do so? Is there any reason to believe that security holders would not have a private right of action to contest a company's determination that a proposal has been implemented? If so, what recourse, if any, should a security holder have with regard to a company's determination?
d. Should a company be required to file an Exchange Act Form 8-K stating whether or not it implemented a security holder proposal that is eligible to trigger the rule? Is it appropriate to require that companies make such a statement on Exchange Act Form 8-K? Would this impose unnecessary liability on companies that make a determination regarding implementation of a security holder proposal with which security holders may disagree?
Because the proposed security holder nomination procedure would operate only upon the occurrence of specified nomination procedure triggering events, it would be essential that the company make security holders aware when a nomination procedure triggering event has occurred. As such, the security holder nomination procedure in proposed Exchange Act Rule 14a-11 would require additional disclosures in a company's Exchange Act Form 10-Q, 10-QSB, 10-K or 10-KSB.
• Each company would be required to disclose the security holder vote with regard to either of the nomination procedure triggering events in its quarterly report on Exchange Act Form 10-Q or 10-QSB for the period in which the matter was submitted to a vote of security holders or, where the nomination procedure triggering event occurred during the fourth quarter of the fiscal year, on Exchange Act Form 10-K or 10-KSB;
• Each company would be required to include in that Exchange Act Form 10-Q, 10-QSB, 10-K or 10-KSB information disclosing that it would be subject to the security holder nomination procedure as a result of such vote, if applicable.
D.1. Will the proposed disclosure requirements in Exchange Act Forms 10-Q, 10-QSB, 10-K and 10-KSB provide adequate notice to security holders? Should additional notices be required? If so, what form should that notice take and at what time should it be made public?
D.2. Should the company's notice be filed and/or made public in some other manner?
If so, what manner would be appropriate?
To be eligible to submit a nomination in accordance with proposed Exchange Act Rule 14a-11, a security holder or group of security holders would be required to:
• Beneficially own, either individually or in the aggregate, more than 5% of the company's securities that are eligible to vote for the election of directors at the next annual meeting of security holders (or, in lieu of such an annual meeting, a special meeting of security holders), with each of the securities used for purposes of calculating that ownership having been held continuously for at least two years as of the date of the nomination;
• Intend to continue to own those securities through the date of that annual or special meeting;
• Be eligible, as to the security holder or each member of the security holder group, to report beneficial ownership on Exchange Act Schedule 13G, rather than Exchange Act Schedule 13D,
• Have filed an Exchange Act Schedule 13G or an amendment to Exchange Act Schedule 13G reporting their beneficial ownership as a passive or institutional investor (or group) on such schedule before or on the date of the submission of the nomination to the company, which Schedule must include a certification that the security holder or security holder group has held more than 5% of the subject securities for at least two years.
The appropriate eligibility ownership threshold generated a great deal of comment in response to our solicitation of public input on the Division's review of the proxy rules.
We have proposed an ownership threshold of more than 5% in an effort to balance security holders' interest in being able to access company proxy materials for the purpose of nominating directors against companies' concerns about the potential disruption that some contend may result from frequent use of the process by security holders who do not represent a significant ownership stake in the subject company. We believe that a threshold of more than 5% ownership for two years strikes an appropriate balance between these interests. Roughly 42% of filers have at least one security holder that can meet this threshold individually, while roughly 50% of filers have two or more security holders that each have held at least 2% of the shares outstanding for the appropriate period and, thus, could more easily aggregate their securities in order to meet the threshold ownership requirement.
E.1. Are the proposed thresholds for use of the proposed procedure appropriate? If not, should there be any restrictions regarding which security holder nominees for director would be required to be disclosed in the company proxy materials under the proposed procedure? If so, should those restrictions be consistent with the ownership requirements of Exchange Act Rule 14a-8? Should those restrictions be more extensive than the minimum requirements in Exchange Act Rule 14a-8?
E.2. Is it appropriate to include a restriction on security holder eligibility that is based on percentage of securities owned? If so, is the more than 5% standard that we have proposed appropriate? Should the standard be lower (
E.3. Should there be a restriction on security holder eligibility that is based on the length of time securities have been held? If so, is two years the proper standard? Should the standard be shorter (
E.4. As proposed, a nominating security holder would be required to represent its intent to hold the securities until the date of the election of directors. Is it appropriate to include such a requirement? Would it be appropriate to require the security holder to intend to hold the securities beyond the election of directors (
E.5. Is the eligibility requirement that a security holder or security holder group must file an Exchange Act Schedule 13G appropriate? Should there be a different mechanism for putting companies and other security holders on notice that a security holder or security holder group has ownership of more than 5% of the company's securities and intends to nominate a security holder? Is it appropriate to permit the filing to be on Exchange Act Schedule 13G rather than Exchange Act Schedule 13D? If not, why not?
E.6. Should the procedure include a provision that would deny eligibility for any nominating security holder or nominating security holder group that has had a nominee included in the company materials where that nominee did not receive a sufficient number of votes (
E.7. Should security holders be allowed to aggregate their holdings in order to meet the ownership eligibility requirement to nominate directors? If so, is it appropriate to require that all members of a nominating security holder group individually meet the minimum holding period? Is it appropriate to require that all members of the group be eligible to file on Exchange Act Schedule 13G?
E.8. As proposed, the beneficial ownership level of a nominating security holder or nominating security holder group would be established by the Exchange Act Schedule 13G filed by that security holder or security holder group, for companies other than open-end management investment companies (“mutual funds”). Is the filing of the Exchange Act Schedule 13G sufficient evidence of ownership? If not, what additional evidence would be appropriate? Should there be an additional procedure by which disputes regarding ownership levels are resolved?
A company would not be required to include a security holder nominee in its proxy materials if the nominee's candidacy or, if elected, board membership, would violate:
• Controlling state law;
• Federal law; or
• Rules of a national securities exchange or national securities association (other than rules of a national securities exchange or national securities association that set forth requirements regarding the independence of directors).
Because compliance with independence standards can depend on the overall make-up of a board, we have excluded independence standards from this requirement and have, instead, proposed a separate requirement regarding independence standards.
A number of commenters expressed concerns regarding the disruptive effect a security holder nomination procedure could have on board dynamics and board operation. A number of these comments related to the potential for “special interest” or “single issue” directors that would advance the interests of the nominating security holder over the interests of security holders as a group. While we recognize this concern, we believe that the procedure we propose today under Exchange Act Rule 14a-11 should afford a security holder or group meeting the proposed standards the ability to propose a candidate for director that, in the nominating security holder's view, is more qualified than those put forward by a nominating committee, board, management, or company. We therefore propose that, to be eligible to nominate a candidate under the proposal, a nominating security holder or nominating security holder group may not have specified relationships with the nominee. We believe that the proper procedures for nomination and solicitation of proxies for a candidate that would be an interested representative of a security holder, including a security holder meeting the proposed standards under Exchange Act Rule 14a-11, are those that otherwise exist under our current proxy rules. Therefore, as proposed, each person that is a security holder nominee would be required to meet the following standards of independence from the security holder or each member of the security holder group that has nominated such person:
• If the nominating security holder or any member of the nominating security holder group is a natural person, the nominee is not the nominating security holder, a member of the nominating security holder group, or a member of the immediate family of the nominating security holder or any member of the nominating security holder group;
• If the nominating security holder or any member of the nominating security holder group is an entity, neither the nominee nor any immediate family member of the nominee has been an employee of the nominating security holder or any member of the nominating security holder group during the then-current calendar year nor during the immediately preceding calendar year;
• Neither the nominee nor any immediate family member of the nominee has, during the year of the nomination or the immediately preceding calendar year, accepted directly or indirectly any consulting, advisory, or other compensatory fee from the nominating security holder or any member of the group of nominating security holders or any affiliate of any such holder or member, provided that compensatory fees would not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with such holder or any such member (provided that such compensation is not contingent in any way on continued service);
• The nominee is not an executive officer, director (or person fulfilling similar functions) of the nominating security holder or any member of the nominating security holder group, or of an affiliate of the nominating security holder or any such member of the nominating security holder group; and
• The nominee does not control the nominating security holder or any member of the nominating security holder group (or in the case of a holder or member that is a fund, an interested person of such holder or any such member as defined in Section 2(a)(19) of the Investment Company Act).
A number of commenters expressed concerns regarding the effect of a nomination procedure on a company's compliance with requirements that certain of its directors be “independent.” Other commenters addressed the potential use of the process by nominating security holders that were acting merely as a surrogate for the company. To balance the benefits of a security holder nomination procedure against these concerns, we propose that the nominating security holder or nominating security holder group be required to include a representation regarding relationships between the nominee and the company and between the nominating security holder or nominating security holder group and the company.
• The nominee submitted under the proposed rule by that nominating security holder or group of nominating security holders satisfies the applicable standards of a national securities exchange or national securities association regarding director independence, if any, except that, where a rule imposes a standard regarding independence that requires a subjective determination by the board or a group or committee of the board (for example, requiring that the board of directors or any group or committee of the board of directors make a determination regarding the existence of factors material to a determination of a nominee's independence), this element of an independence standard would not have to be satisfied;
• Neither the nominee nor the nominating security holder (or any member of the nominating security holder group, if applicable) has a direct or indirect agreement with the company regarding the nomination of the nominee.
Commenters have expressed concern that the use of the proposed security holder nomination procedure, by itself, may be deemed to establish a relationship between the nominating security holder or nominating security holder group and the company that would result in that holder or group being deemed an “affiliate” of the company for purposes of the federal securities laws. It is our view that the mere use of the proposed procedure should not have such an effect. Accordingly, proposed Exchange Act Rule 14a-11(a) would include an instruction making clear that a nominating security holder will not be deemed an “affiliate” of the company under the Securities Act of 1933
F.1. Should there be any other or additional limitations regarding nominee eligibility? Would any such limitations undercut the stated purposes of the proposed process? Are any such limitations necessary? If so, why?
F.2. Is it appropriate to use compliance with state law, federal law, and listing standards as a condition for eligibility?
F.3. Should there be requirements regarding independence from the
F.4. How should any independence standards be applied? Should the nominee and the nominating security holder or nominating security holder group have the full burden of determining the effect of the nominee's election on the company's compliance with any independence requirements, even though those consequences may depend on the outcome of any election and may relate to the outcome of the election with regard to nominees other than security holder nominees?
F.5. Are the proposed standards with regard to independence appropriate? If not, what standards would be appropriate? If these limitations generally are appropriate, are there instances where they should not apply?
F.6. Where a company is subject to an independence standard of a national securities exchange or national securities association that includes a subjective component (
F.7. As proposed, a nominating security holder or nominating security holder group would be required to represent that the security holder nominee satisfies applicable standards of a national securities exchange or national securities association regarding director independence, except where a rule imposes a standard regarding independence that requires a subjective determination by the board or a group or committee of the board. What independence requirements should be used if the company is listed on more than one market with such independence requirements? Should the nominating security holder or nominating security holder group have the discretion to choose the applicable standards? Should the company have discretion to choose the applicable standards? Should all the standards of all markets on which shares are traded apply? Should the more stringent standards apply?
F.8. Should there be requirements regarding independence of the nominee from the nominating security holder, nominating security holder group, or the company? If so, are the proposed limitations appropriate? What other or additional limitations would be appropriate? If these limitations generally are appropriate, are there instances where they should not apply?
F.9. Should there be any standards regarding separateness of the nominee and the nominating security holder or nominating security holder group? Would such a limitation unnecessarily restrict access by security holders to the proxy process? If such standards are appropriate, are the proposed standards the proper standards? Should other standards be included? Should any of the proposed standards be eliminated?
F.10. Should there be a prohibition, as is proposed, on any affiliation between nominees and nominating security holders or nominating security holder groups? If so, are the proposed rules appropriate? For example, we have proposed a definition of “immediate family” that is consistent with the existing disclosure requirement under Item 401(d) of Regulation S-K. Is this the appropriate definition for purposes of addressing relationships between the nominee and the nominating security holder or nominating security holder group? If not, what definition would be more appropriate?
F.11. Should there be exceptions to the prohibition on any affiliation between nominees and nominating security holders or nominating security holder groups? If so, what exceptions would be appropriate?
F.12. Is the two-year prohibition on payments from nominating security holders to nominees appropriate? Should it be longer (
F.13. Is the prohibition on direct or indirect agreements between companies and nominating security holders appropriate? Would such a prohibition inhibit desirable negotiations between security holders and boards or nominating committees regarding nominees for directors? Should the prohibition provide an exception to permit such negotiations? If so, what should the relevant limitations be?
F.14. Should there be a nominee eligibility criterion that would exclude an otherwise eligible nominee or nominating security holder or nominating security holder group where that nominee (or a nominee of that security holder or security holder group) has been included in the company's proxy materials as a candidate for election as director but received a minimal percentage of the vote? If so, what would be the appropriate standard (
F.15. As proposed, the rule includes a safe harbor providing that nominating security holders will not be deemed “affiliates” solely as a result of using the security holder nomination procedure. This safe harbor would apply not only to the nomination of a candidate, but also where that candidate is elected, provided that the nominating security holder or nominating security holder group does not have an agreement or relationship with that director otherwise than relating to the nomination. Is it appropriate to provide such a safe harbor for security holder nominations? Should the safe harbor continue to apply where the nominee is elected?
We do not intend the security holder nomination procedure in proposed Exchange Act Rule 14a-11 to be available for any security holder or security holder group that is seeking control of a company. The existing procedures regarding contested elections of directors are intended to continue to fulfill that purpose.
As proposed, a company would be required to include one security holder nominee if the total number of members of the board of directors is eight or fewer, two security holder nominees if the number of members of the board of directors is greater than eight and less than 20 and three security holder nominees if the number of members of the board of directors is 20 or more. The proposal would have a separate standard for companies with classified or “staggered” boards of directors. Where a company has a director (or directors) currently serving on its board of directors who was elected as a security holder nominee, and the term of that director extends past the date of the meeting of security holders for which the company is soliciting proxies, the company would not be required to include on its proxy card more security holder nominees than could result in the total number of directors serving on the board that were elected as security holder nominees being greater than one if the total number of members of the board of directors is eight or fewer, two if the number of members of the board of directors is greater than eight and less than 20 and three if the number of
The proposed security holder nomination procedure would address situations where more than one security holder or group of security holders would be eligible to nominate a person or persons to a company's board of directors pursuant to the proposed rule. In those situations, the company would be required to include in its proxy statement and form of proxy the nominee or nominees of the security holder or security holder group with the largest beneficial ownership (as reported on Exchange Act Schedule 13G) at the time of the delivery of the nominating security holder's notice of intent to nominate a director pursuant to the rule, up to and including the total number required to be included by the company.
G.1. Is it appropriate to include such a limitation on the number of security holder nominees? If not, how would the proposed rules be consistent with our intention not to allow the proposed procedure to become a vehicle for changes in control?
G.2. If there should be a limitation, is the proposed limitation appropriate? Should the number of security holder nominees be higher or lower? Should the limitation instead be based on the total percentage of the board that the security holder nominees would comprise? Should the limitation be the greater or lesser of the number or a specified percentage, rather than a set number, as proposed? Is it appropriate to permit more than one security holder nominee regardless of the size of the company's board of directors?
G.3. Should the number increase during the second year of the proposed procedure? Should the number decrease during the second year of the proposed procedure?
G.4. The proposal contemplates taking into account incumbent directors in the case of classified or “staggered” boards for purposes of determining the maximum number of security holder nominees. Is that appropriate? Should there be a different procedure to account for such incumbent directors? Also with regard to staggered boards, should the procedure address situations in which, due to a staggered board, fewer director positions are up for election than the maximum permitted number of security holder nominees? If so, how?
G.5. We have proposed a limitation that permits the security holder or security holder group with the largest beneficial ownership to include its nominee(s) where there is more than one eligible nominating security holder or nominating security holder group. Is this proposed procedure appropriate? If not, should there be different criteria for selecting the security holder nominees (
G.6. Rather than a limitation on the maximum number of security holder nominees, should there be only a limitation on the number of security holder nominees that may be elected?
To have a nominee included in the company's proxy statement and form of proxy, we propose that the nominating security holder or nominating security holder group be required to provide notice to the company of its intent to require that the company include that security holder's nominee on the company's proxy card no later than 80 days before the date that the company mails its proxy materials for the annual meeting.
• A representation that the nominating security holder is eligible to submit a nominee under the security holder nomination procedure;
• A statement that, to the knowledge of the nominating security holder or group, the candidate's nomination or service on the board, if elected, would not violate controlling state law, federal law, or listing standards (other than a standard relating to independence);
• A representation that the nominee meets the objective criteria for independence from the company that are set forth in applicable rules of a national securities exchange or national securities association;
• Representations regarding the absence of a prohibited relationship between the nominee and the nominating security holder or nominating security holder group;
• A representation that neither the nominee nor the nominating security holder (or any member of the nominating security holder group, if applicable) has a direct or indirect agreement with the company regarding the nomination of the nominee;
• A copy of the nominating security holder's or nominating security holder group's filed Exchange Act Schedule 13G indicating ownership of more than 5% of the appropriate class of the company's securities;
• A representation that the nominating security holder or each member of the nominating security holder group was eligible to report its security ownership on Exchange Act Schedule 13G in reliance on Exchange Act Rule 13d-1(b) or (c);
• A representation that more than 5% of the appropriate class of the company's securities, as reflected in the Exchange Act Schedule 13G of the nominating security holder or nominating security holder group, have been held continuously for at least two years and that the nominating security holder or nominating security holder group intends to continue to own those securities through the date of the subject election of directors;
• A statement from the nominee that the nominee consents to be named in the company's proxy statement and to serve on the board if elected, for inclusion in the company's proxy statement;
• Disclosure about the nominee complying with the requirements of Item 7(a), (b) and (c) and, for investment companies, Item 22(b) of Exchange Act Schedule 14A, for inclusion in the company's proxy statement;
• Any of the following information with regard to each nominating security holder or member of a nominating security holder group that is not included in the Exchange Act Schedule 13G, for inclusion in the company's proxy statement:
• The methods by which the nominating security holder or nominating security holder group may solicit security holders, including any Web site address on which the nominating security holder or nominating security holder group may publish soliciting materials.
The nominating security holder or the nominating security holder group would be required to file the notice described in the preceding section, excluding the already-filed Exchange Act Schedule 13G, with the Commission. This notice would be viewed as soliciting material of the nominating security holder or nominating security holder group, in that much of the information included in the notice would ultimately be disseminated to security holders in the company's proxy statement. Accordingly, the notice as filed with the Commission would be subject to the provisions of Exchange Act Rule 14a-9. We contemplate that this solicitation would be made in accordance with the exemption set out in proposed Exchange Act Rule 14a-11(f)(2). The notice would be filed with the Commission in the following manner:
• The filing would include a cover page in the form set forth in Exchange Act Schedule 14A, as proposed to be amended, with the appropriate box on the cover page marked;
• The filing would be made under the subject company's Exchange Act file number;
• The nominating security holder or nominating security holder group would be required to make the filing no later than two business days after providing the notice to the company.
H.1. Are the proposed content requirements of the notice appropriate? Are there matters included in the notice that should be eliminated? Are there additional matters that should be included? For example, is there additional information that should be included with regard to the nominating security holder or nominating security holder group (
H.2. Are the required representations appropriate? Should there be additional representations? Should any of the proposed representations be eliminated?
H.3. Is it appropriate to require that the notice (other than the copy of the Exchange Act Schedule 13G included in that notice) be filed with the Commission? Should additional or lesser information be filed with the Commission and be made publicly available? Is the proposed filing requirement appropriate? For example, should the notice be filed as an exhibit
H.4. When should the notice be required to be filed with the Commission? Should it be required to be filed at the time it is provided to the company? Should it be required to be filed within a specified period of time, such as two business days, after it is provided to the company, as is proposed? Should the information in the notice that is included in the company's proxy statement instead be filed on or about the date that the company releases its proxy statement to security holders?
H.5. What should be the consequence to the nominating security holder or nominating security holder group of submitting the notice to the company after the deadline? Should such a late submission render the nominating security holder or nominating security holder group ineligible to use the nomination procedure, as is currently proposed under the rule? What should be the consequence to the nominating security holder or nominating security holder group of filing the notice with the Commission late? Should such late filing be viewed exclusively as a violation of Exchange Act Rule 14a-6 or should it affect eligibility to use the nomination procedure? Should the failure of a nominating security holder or nominating security holder group to file the notice with the Commission be viewed exclusively as a violation of Exchange Act Rule 14a-6 or should it affect eligibility to use the nomination procedure?
H.6. The proposed notice requirements address both regularly scheduled annual meetings and circumstances where a company may not have held an annual meeting in the prior year or has moved the date of the meeting more than 30 days from the prior year. Under these circumstances, what is the appropriate date by which a nominating security holder must submit their notice to the company? We have proposed a standard similar to that currently used in connection with the Exchange Act Rule 14a-8 security holder proposal process. Is such a standard appropriate? If not, what standard would be more appropriate?
H.7. As proposed, Exchange Act Rule 14a-11 includes a number of notice and other timing requirements. Should these timing requirements incorporate or otherwise address any advance notice provisions under state law or a company's governing instruments? If so, should any advance notice provisions govern? Should they instead be provided as an alternative to the timing provisions set out in the rule?
We propose that a company that receives a nominee from a nominating security holder or nominating security holder group under the security holder nomination procedure in Exchange Act Rule 14a-11 would determine whether the nominating security holder or nominating security holder group has complied with proposed Exchange Act Rule 14a-11 and whether the nominee satisfies each of the requirements of the proposed procedure. Unless a company determines that it is not required to include a nominee from a nominating security holder or nominating security holder group in its proxy materials, the company would be required to include information regarding the security holder nominee in the company's proxy statement that it sends to its security holders, including the Web site address on which the nominating security holder or nominating security holder group intends to solicit in favor of its nominee, and include the name of the nominee on the company's proxy card that is included in those materials.
In addition to required disclosures related to each director candidate, companies may wish to include statements in the proxy statement supporting company nominees and/or opposing the nominating security holder or nominating security holder group nominee or nominees. While we believe that companies should be able to include such disclosure in the proxy statement, provided that it complies with Exchange Act Rule 14a-9, we also are of the view that nominating security holders or nominating security holder groups should be afforded the same opportunity, if the company chooses to include such a statement. Accordingly, we are proposing that if the company includes any such statement in its proxy materials, other than a mere recommendation to vote in favor of or withhold votes from specified candidates, a nominating security holder or nominating security holder group would be given the opportunity to include in the company's proxy statement a statement of support for the security holder nominee or nominees, of a length not to exceed 500 words.
With regard to the company's proxy card, similar to the current practice with regard to security holder proposals submitted pursuant to Exchange Act Rule 14a-8, the company could identify any security holder nominees as such and recommend that security holders vote against, or withhold votes from, those nominees and in favor of the management nominees on the form of proxy. The company must otherwise present the nominees in an impartial manner in accordance with Exchange Act Rule 14a-4. Under the current rules, a company may provide security holders with the option to vote for or withhold authority to vote for the company's nominees as a group, provided that security holders also are given a means to withhold authority for specific nominees. In our view, this option would not be appropriate where the company's proxy card includes security holder nominees, as grouping the company's nominees may make it easier to vote for all of the company's nominees than to vote for the security holder nominees in addition to some of the company nominees. Accordingly, the proposed rules would not permit a company to provide security holders the option of voting for or withholding authority to vote for the company nominees as a group, but would instead
A company may determine that it is not required to include a nominee from a nominating security holder or nominating security holder group in its proxy materials if it determines any of the following:
• The security holder nomination procedure in proposed Exchange Act Rule 14a-11 is not applicable to the company;
• The nominating security holder or nominating security holder group has not complied with the requirements of the procedure;
• The nominee does not meet the requirements of the procedure;
• Any representation required to be included in the notice to the company is false in any material respect; or
• The company has received more nominees than it is required to include by proposed Exchange Act Rule 14a-11 and the nominating security holder or nominating security holder group is not entitled to have its nominee included in that situation.
The nominating security holder or nominating security holder group would need to be made aware of the company's determination whether or not to include the security holder nominee in sufficient time to consider the validity of any determination to exclude the nominee. As such, the company would be required to notify the nominating security holder or nominating security holder group, in writing, of its determination. As proposed, the company would have to provide this notice promptly, but in no case less than 30 calendar days before the date of the company's proxy statement released to security holders in connection with the previous year's annual meeting and, where the company did not hold an annual meeting in the previous year, or if the date of this year's annual meeting has been changed by more than 30 days from the date of the previous year's meeting, then the notice must be provided a reasonable time before the company mails its proxy materials for the current year. If the company determines that it is entitled to exclude the nominee, the notice must include the following information regarding the company's determination:
• A description of the determination made by the company's board of directors, including an affirmative statement of its determination not to include that specific nominee;
• A discussion of the specific requirement or requirements of Exchange Act Rule 14a-11 that the company's board of directors has determined permit the company not to include that specific nominee; and
• A discussion of the specific basis for the belief of the company's board of directors that the company is permitted to not include that specific nominee.
The company would be required to include in its proxy statement for the meeting for which the nominee was submitted a statement that it has made such a determination as well as disclosure of the information relating to that determination that the company included in the notice to the nominating security holder.
If the company determines that it must include the security holder nominee, it would be required to advise the nominating security holder or nominating security holder group of this determination and state whether the company intends to include in its proxy statement disclosure opposing the security holder nominee and/or supporting company nominees. If the company intends to include such a statement, it must advise the nominating security holder or nominating security holder group that it may submit a statement of not more than 500 words supporting the security holder nominee(s). The company also must advise the nominating security holder or nominating security holder group of the date by which this statement must be provided to the company, which could not be less than 10 business days from the date of the company's notice to the security holder. The nominating security holder or nominating security holder group's supporting statement would be viewed as soliciting material and would therefore be required to be filed as such by the nominating security holder in accordance with proposed Exchange Act Rule 14a-11(f)(2) and proposed Exchange Act Rule 14a-6(p), on or about the date that the company's proxy statement is first released to security holders.
I.1. Is it appropriate to require that the company include in its proxy statement a supporting statement by the nominating security holder or nominating security holder group? If so, is it appropriate to limit this requirement to instances where the company wishes to make a statement opposing the nominating security holder's nominee or nominees and/or supporting company nominees? Is it appropriate to limit the supporting statement to 500 words? If not, what limit, if any, is more appropriate? Is it appropriate to require filing of the statement on the date that the company releases its proxy statement to security holders? If not, what filing requirement would be appropriate?
I.2. Is it appropriate for the company to make the specified determinations regarding the basis on which a nominee would not be included? By what means should a company's determination be subject to review? By the courts? Should there be an explicit statement by the Commission regarding this review? Should any determination by the company be subject to review by the Commission or its staff? Should there be an explicit provision for such review, as, for example, with security holder proposals under Exchange Act Rule 14a-8?
I.3. Proposed Exchange Act Rule 14a-11(a)(3) provides that a company is not required to include a security holder nominee where either: (a) The nominee's candidacy or, if elected, board membership, would violate controlling state law, federal law or rules of a national securities exchange or national securities association, (b) the nominating security holder's notice is not adequate, (c) any representation in the nominating security holder's notice is false in any material respect, or (d) the nominee is not required to be included in the company's proxy materials due to the proposed limitation on the number of nominees required to be included. Instruction 4 to proposed Exchange Act Rule 14a-11(a)(3) provides that the company shall determine whether any of these events have occurred. Should the nomination procedure include a procedure for a company to gather information additional to that included in the notice that is reasonably necessary for the company to make its determination in this regard? If so, please respond to the following additional questions.
a. Should the company be provided with a maximum amount of time to request specific information (
b. Should nominating security holders and/or nominees be provided with a maximum amount of time to respond to such a request (
c. Should the procedure prescribe the type of information that a company may request from a nominating security holder or nominee? Should the
d. Should the procedure include a method for a company to obtain follow-up information after a nominating security holder or nominee submits an initial response? If so, should that follow-up method have similar time frames and informational standards to those related to the initial request and response?
e. Should the rule explicitly state that a nominee may be excluded from a company's proxy materials if the nominating security holder or nominee does not provide the requested information in the required timeframe, or if the information does not confirm the representations included in the notice to the company, or is it sufficient to rely on the proposed provision that permits the exclusion of nominees when a representation is false in any material respect? In order to facilitate reliance on this proposed provision if a nominating security holder or nominee fails to provide requested information, would it be appropriate to require that a nominating security holder represent that the nominating security holder or nominee will respond to a request by the company for information that is reasonably necessary to confirm the accuracy of representations of the nominating security holder?
f. Should this procedure be the same for operating companies, registered investment companies, and business development companies? Should there be unique procedures for different types of entities? If so, what is unique to a particular type of entity that would require a unique procedure?
I.4. As proposed, the company must provide the nominating security holder or nominating security holder group with notice of its determination whether to include in its proxy statement the security holder nominee by a date that will generally fall approximately 30 days prior to the date the company will mail its proxy statement. Does this requirement allow the nominating security holder or nominating security holder group adequate time to contest a company's determination with regard to a potential security holder nominee? If not, what timing would be more appropriate? Is the timing requirement with regard to the nominating security holder's submission of its statement of support to the company appropriate? If not, what timing would be appropriate?
I.5. As proposed, the rule would not provide a mechanism by which a nominating security holder or nominating security holder group could “cure” a defective notice. Would such a “cure” period, similar to that currently provided under Exchange Act Rule 14a-8, be appropriate? If so, how and by what date should a company be required to notify a nominating security holder or nominating security holder group of a defect in the notice? How long should the nominating security holder or nominating security holder group have to cure any defects? Are there any defects that would not require notice by the company, for example, where a defect could not be remedied?
I.6. As proposed, inclusion of a security holder nominee in the company's proxy materials would not require the company to file a preliminary proxy statement provided that the company was otherwise qualified to file directly in definitive form. In this regard, the proposed rules make clear that inclusion of a security holder nominee would not be deemed a “solicitation in opposition.” Is it appropriate to view the inclusion of a nominee in this manner or should the inclusion of a nominee instead be viewed as a solicitation in opposition that would require a company to file its proxy statement in preliminary form? Should we view inclusion of a security holder nominee as a solicitation in opposition for other purposes (
I.7. As proposed, the rule would prohibit companies from providing security holders the option of voting for the company's slate of nominees as a whole. Should we allow companies to provide that option to security holders? Are any other revisions to the form of proxy appropriate?
It is our intent that the nominating security holder or nominating security holder group be liable for any false or misleading statements included in the notice provided to the company by the nominating security holder or nominating security holder group. The proposed rules contain express language, modeled on Exchange Act Rule 14a-8(
As proposed, the security holder nomination procedure would provide that any information that is provided to the company in the notice from the nominating security holder or nominating security holder group (and, as required, filed with the Commission by the nominating security holder or nominating security holder group) and then included in the company's proxy materials would not be incorporated by reference into any filing under the Securities Act or the Exchange Act unless the company determines to incorporate that information by reference specifically into that filing.
J.1. Is it appropriate to characterize the statements in the nominating security holder's notice as the nominating security holder's representations and not the company's? Does the proposal make clear that the nominating security holder would be responsible for the information submitted to the company? Should the proposal characterize these statements differently? If so, please explain in what manner.
J.2. Does the proposal make clear the company's responsibilities when it includes such information in its proxy materials? Should the proposal include language otherwise addressing a company's responsibility for repeating statements that it knows are not accurate?
J.3. Should information provided by nominating security holders or nominating security holder groups be deemed incorporated by reference into Securities Act or Exchange Act filings? Why?
As proposed, Exchange Act Rule 14a-11 would permit security holders to form groups that would aggregate their securities in order to meet the minimum ownership threshold of more than 5% to nominate a director candidate under the rule. Accordingly, we anticipate that security holders would, in many instances, engage in communications with other security holders in an effort to form these nominating security holder groups that would be deemed solicitations under the proxy rules. In an effort to facilitate these types of communications, we are proposing a limited exemption from certain of the proxy rules that would enable security holders to communicate for the limited purpose of forming a nominating security holder group without filing and disseminating a proxy statement. To qualify for the exemption, security holders would have two options. The communications would be made either to a limited number of security holders or, in the alternative, to an unlimited number of security holders, provided that the communication is limited in content, as described below, and filed with the Commission.
As proposed, Exchange Act Rules 14a-3 to 14a-6(o),
• The total number of persons solicited is not more than 30; or
• Each written communication includes no more than:
• Any soliciting material published, sent or given to security holders in accordance with this paragraph is filed with the Commission by the nominating security holder, under the company's Exchange Act file number, no later than the date the material is first published, sent or given to security holders.
Both the nominating security holder or nominating security holder group and the company may wish to solicit in favor of their nominees for director by various means, including U.S. mail, electronic mail, and Web site postings. While the company ultimately would file a proxy statement and could therefore rely on the existing proxy rules to solicit outside the proxy statement,
• The soliciting party does not, at any time during such solicitation, seek directly or indirectly, either on its own or another's behalf, the power to act as proxy for a security holder and does not furnish or otherwise request, or act on behalf of a person who furnishes or requests, a form or revocation, abstention, consent or authorization;
• Each written communication includes:
• Any soliciting material published, sent or given to security holders in accordance with this paragraph must be filed by the nominating security holder or nominating security holder group with the Commission, under the company's Exchange Act file number, no later than the date the material is first published, sent or given to security holders.
K.1. What requirements should apply to soliciting activities conducted by a nominating security holder? In particular, what filing requirements and specific parameters should apply to any such solicitations? For example, we have proposed that certain solicitations by security holders seeking to form a nominating security holder group be limited to no more than 30 security holders. Is this limitation appropriate? If not, what limitation would be appropriate, if any (
K.2. Should communications in connection with a direct access security holder proposal, for example by security holders seeking to form a more than 1% group to submit a security holder proposal, be included in the exemption provided for communications between security holders seeking to form a nominating security holder group? Would such an exemption be necessary and/or appropriate? If so, what parameters should apply?
K.3. Should all soliciting materials be filed with the Commission on the date of first use? For example, as proposed, security holder communications that are limited to no more than 30 security holders would be filed with the Commission. Would such filing render the limitation unworkable in that the communication would be readily accessible to security holders on EDGAR?
K.4. We contemplate that solicitations in connection with elections involving Exchange Act Rule 14a-11 could involve electronic means. We have
We are proposing to apply the security holder nomination procedure in proposed Exchange Act Rule 14a-11 to funds. Funds currently are required to comply with the proxy rules under the Exchange Act when soliciting proxies, including proxies relating to the election of directors.
As in the case of operating companies, the proposed nomination procedure would become operative for a fund only after the occurrence of one or both of the nomination procedure triggering events described above.
As with operating companies, if the fund did not hold an annual meeting during the prior year, or if the date of the meeting has changed more than 30 days from the prior year, then the nominating security holder would be required to provide notice a reasonable time before the fund mails its proxy materials for the current year, as specified by the fund in an Exchange Act Form 8-K filed pursuant to proposed Item 13.
The proposals would require any nominating security holder or group of security holders to represent that its nominee to the board of a fund is not an “interested person” of the fund as defined in Section 2(a)(19) of the Investment Company Act, rather than independent under the listing standards of a national securities exchange or national securities association, as in the case of operating companies.
Because security holders of a mutual fund are not required to file Exchange Act Schedule 13G, the proposals would require a nominating security holder or security holder group for a mutual fund to include the following information, similar to certain information that would otherwise be required on Exchange Act Schedule 13G, as part of the notice to the fund of the security holder's intent to require its nominee on the company's proxy card:
• The percentage of each class of securities of the fund that the individual owns beneficially, directly or indirectly, and the number of shares as to which the person has:
• A certification, signed by each person on whose behalf the notice is filed or his or her authorized representative, that the securities have been held continuously for at least three years.
This information would be in addition to the information required to be included in the security holder notice by any nominating security holder or member of a nominating security holder group.
We note that the proposed security holder nomination procedure is consistent with the provisions in several of our exemptive rules under the Investment Company Act that require independent directors of funds relying on those rules to select and nominate any other independent directors.
L.1. Should the proposed security holder nomination procedure apply to funds? If so, to which funds should it apply? Are there any aspects of the proposed nomination procedure that should be modified in the case of funds?
L.2. Should we apply the “interested person” standard of Section 2(a)(19) of the Investment Company Act with respect to the representation that a security holder nominee be independent from a company that is a fund? Should the “interested person” standard also apply to security holder nominees for election to the board of directors of a business development company? Should we instead apply a different independence standard to funds or business development companies, such as the definition of independence in Exchange Act Rule 10A-3?
L.3. Is it appropriate to require a nominating security holder or group of security holders of a mutual fund to provide disclosure of its 5% beneficial ownership of the fund's securities in its notice to the fund of its intent to require its nominee on the fund's proxy card? If so, what requirements from Exchange Act Schedule 13G (or other information) should be required to be included in the notice? Should such a security holder or group instead be required to file on Exchange Act Schedule 13G upon reaching the 5% beneficial ownership threshold, in order to provide the fund with notice in advance that the security holder or group has reached this threshold? If so, are there any requirements of Exchange Act Schedule 13G that should be modified for this purpose?
L.4. Are the triggering events proposed for use of the security holder nomination procedure appropriate for funds? Are there other nomination procedure triggering events that should be used?
L.5. Should a fund be required to provide disclosure on Form N-CSR of whether it would be subject to the security holder nomination procedure as a result of a security holder vote with regard to any of the nomination procedure triggering events, and the required disclosure regarding such a nomination procedure triggering event? Will this disclosure allow sufficient time for a security holder to effectively exercise the nomination procedure? Should this disclosure instead be required on a different form?
L.6. We are proposing to delete as duplicative Item 77C of Form N-SAR, which currently requires disclosure regarding matters submitted to a vote of security holders similar to that required by Item 4 of Part II of Exchange Act Form 10-Q, and move this disclosure to Form N-CSR. Should this disclosure remain in Form N-SAR?
L.7. Should a fund be required to disclose on Exchange Act Form 8-K the date by which a security holder or security holder group must submit the notice to the fund of its intent to require its nominees on the fund's proxy card? Should funds instead be permitted to provide this disclosure in a different manner?
Any person who is directly or indirectly the beneficial owner of more than 5% of a class of equity securities registered under Section 12 of the Exchange Act must report that ownership by filing an Exchange Act Schedule 13D with the Commission.
Two of the eligibility requirements for a nominating security holder or nominating security holder group under proposed Exchange Act Rule 14a-11 relate to that security holder or group filing an Exchange Act Schedule 13G to report their ownership. The first is that the security holder or group would have to be eligible to report their ownership on Exchange Act Schedule 13G, rather than Exchange Act Schedule 13D. The second is that the security holder or group would be required to have filed an Exchange Act Schedule 13G to report their ownership by the date that the nominating security holder or nominating security holder group submits its notice of intent to nominate a director to the company.
Central to Exchange Act Schedule 13G eligibility is that the security holder be a passive investor that has acquired the securities without the purpose nor with the effect of changing or influencing control of the company. In addition, security holders who are filing as qualified institutional investors must have acquired the securities in the ordinary course of their business. We believe that the formation of a security holder group solely for the purpose of nominating a director pursuant to proposed Exchange Act Rule 14a-11, the nomination of a director, soliciting activities in connection with such a nominee, or having a nominee elected as a director under the proposed procedure, should not be viewed as having a purpose or effect of changing or influencing control of the company. We therefore believe that beneficial owners who engage in these activities should be permitted to report on Exchange Act Schedule 13G, rather than Exchange Act Schedule 13D. Accordingly, we are proposing to add an instruction to the description of the first and second categories of persons who may report their ownership on Exchange Act Schedule 13G to make clear our belief that a beneficial owner who acquires or holds a company's securities in connection with a nomination, soliciting activities, or election of a nominee under Exchange Act Rule 14a-11 should not be deemed to have a purpose or effect of changing or influencing the control of the company solely by virtue of making the nomination or engaging in such activities. Any activity other than those provided for under Exchange Act Rule
To enable the functioning of the proposed procedure, we also propose to amend Exchange Act Schedule 13G to require that the security holder or group certify that they have owned at least the required more than 5% amount of the securities for the minimum time period of two years required in proposed Exchange Act Rule 14a-11. A security holder or group of security holders that previously had filed an Exchange Act Schedule 13G would be required to amend that Schedule to provide the required certification to make a nomination under proposed Exchange Act Rule 14a-11.
M.1. The proposal would provide that a security holder or security holder group would not, solely by virtue of nominating a director under proposed Exchange Act Rule 14a-11, soliciting on behalf of that candidate, or having that candidate elected, be viewed as having acquired securities for the purpose or effect of changing or influencing the control of the company. This provision would then permit those holders or groups of holders to report their ownership on Exchange Act Schedule 13G, rather than Exchange Act Schedule 13D. Is this approach appropriate? Should other conditions be required to be satisfied? If so, what other conditions?
M.2. Should nominating security holders, including groups, be deemed to have a “control” purpose that would create additional filing and disclosure requirements under the Exchange Act beneficial ownership reporting standards?
M.3. As proposed, security holders that intend to nominate a director pursuant to Exchange Act Rule 14a-11 would be required to disclose this intent on Exchange Act Schedule 13G. Those filers who originally filed an Exchange Act Schedule 13G without an Exchange Act Rule 14a-11 intent would be required to amend their Exchange Act Schedule 13G to disclose such intent if it exists. Is it appropriate to require such an amendment by existing filers? If not, how should such filers indicate their intent to make a nomination pursuant to Exchange Act Rule 14a-11? Are the security holder notice requirements of Exchange Act Rule 14a-11(c) sufficient for this purpose? Intent to use the nomination procedure would be evidenced in both new filings and amendments to already-filed Schedules by the beneficial owner checking the box on the cover page of the Schedule to identify the filing as having been made in connection with a nomination under the procedure and by making the proposed new certification regarding ownership of the required amount of company securities. Is this sufficient notice of the beneficial owner's intent to use the nomination procedure? Should we also require new disclosure related to such intent in a new item requirement to the Schedule? Would this be appropriate in light of the fact that Exchange Act Schedule 13G currently does not require such “purpose” disclosure?
M.4. As proposed, nominating security holders and nominating security holder groups would be required to amend their Exchange Act Schedule 13G filings in accordance with the existing timing requirements for qualified institutional investors and passive investors. Should we instead require that such filers amend on a more expedited basis? For example, should such filers be required to report changes in the information reported previously promptly after such change or within another, specified period of time? Should amendments be limited to material changes in the information reported if such an expedited requirement is used? Should the election as director of a nominating security holder group's nominee be deemed the termination of that group (provided that the group does not have an agreement to act together for some other purpose)? Should such an election require an amendment to the nominating security holder or nominating security holder group's Exchange Act Schedule 13G?
M.5. Are there any qualified institutional investors under Exchange Act Rule 13d-1(b) that would be qualified to file on Exchange Act Schedule 13G but should not be included in the category of filers who may nominate a director using the proposed procedure? If so, please explain why.
M.6. A related issue with regard to beneficial ownership reporting is whether the withhold votes nomination procedure trigger may result in increased numbers of “vote no” campaigns by security holders who are attempting to trigger the nomination procedure. The possibility of triggering Exchange Act Schedule 13D reporting requirements currently may have a chilling effect on security holders who otherwise would organize such an effort. With regard to this concern, do the current rules under Exchange Act Regulation 13D have such a chilling effect?
Are the current rules sufficient to determine when such activities should require additional security holder filings? Should security holders who organize such a campaign be deemed to have a control purpose or effect that would necessitate filing on Exchange Act Schedule 13D rather than Exchange Act Schedule 13G? Should we issue specific guidance with regard to these “vote no” campaigns and the beneficial ownership reporting requirements generally? Should any such guidance be limited to circumstances where the security holder engaging in the “vote no” campaign does so solely to trigger the security holder nomination procedure?
Eligible security holder groups under proposed Exchange Act Rule 14a-11 may be concerned that using the proposed nomination procedure will subject them to Section 16 of the Exchange Act.
• Exchange Act Section 16(a) requires an insider to file an initial report with the Commission disclosing his or her beneficial ownership of all equity securities of the issuer upon becoming an insider. To keep this information current, Exchange Act Section 16(a) also requires insiders to report changes in such holdings, in most cases within two business days following the transaction.
• Exchange Act Section 16(b) provides the issuer (or security holders suing on behalf of the issuer) a private right of action to recover from an insider any profit realized by the insider from any purchase and sale (or sale and purchase) of any equity security of the issuer within any period of less than six months.
• Exchange Act Section 16(c) makes it unlawful for an insider to sell any equity security of the issuer if the insider: (1) does not own the security sold; or (2) owns the security, but does not deliver it against the sale within specified time periods.
We do not believe that a group formed solely for the purpose of nominating a director pursuant to proposed Exchange Act Rule 14a-11, soliciting in connection with the election of that nominee, or having that nominee elected as a director, would be the type of group that should be viewed as being aggregated together for purposes of Exchange Act Section 16. Their actions are fully disclosed and are not for a “control” purpose, and they clearly do not have presumed “insider” status. Moreover, we believe it would be a disincentive to using the proposed security holder nomination procedure if security holders forming a group to nominate a director could become subject to Exchange Act Section 16 once the group owned over 10% of the company's equity securities. Accordingly, we are proposing an amendment to Exchange Act Rule 16a-1(a)(1), the rule that defines who is a 10% owner for Exchange Act Section 16 purposes, to exclude an Exchange Act Rule 14a-11 nominating security holder group from the definition.
Some security holders, particularly institutions and other entities, may be concerned that successful use of the proposed nomination procedure to elect a director may result in the nominating person also being deemed a director under the “deputization” theory developed by courts in Exchange Act Section 16(b) short-swing profit recovery cases.
Proposed Exchange Act Rule 14a-11 includes standards for establishing the independence of the nominee from the nominating security holder, or members of the nominating security holder group, as applicable. We believe that, given these independence standards the “deputization” theory, whereby the beneficial ownership of a security holder or group is imputed to a “deputized” director (and director status imputed to the security holder or group), should not apply. In considering the proposed independence standards, discussed in Section II.A.8, above, commenters also should consider the director by “deputization” theory, and whether the proposed standards should be modified in any way to make it less likely that in Exchange Act Section 16(b) cases courts would find nominating security holders to be “deputized” directors in circumstances where liability should not apply.
N.1. Would the proposed Exchange Act Rule 16a-1(a)(1) amendments address nominating security holders and nominating security holder groups appropriately? Should the proposed exclusion be based on any additional or different conditions?
N.2. If the Commission adopts a security holder nomination rule with an eligibility threshold of 10% or greater, would Exchange Act Section 16 reporting and short swing profit liability deter the formation of nominating security holder groups?
We request and encourage any interested person to submit comments regarding:
• The proposed amendments that are the subject of this release;
• Additional or different changes; or
• Other matters that may have an effect on the proposals contained in this release.
We request comment from the point of view of companies, investors and other market participants. With regard to any comments, we note that such comments are of great assistance to our rulemaking initiative if accompanied by supporting data and analysis of the issues addressed in those comments.
The proposed amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995.
(1) “Proxy Statements—Regulation 14A (Commission Rules 14a-1 through
(2) “Information Statements—Regulation 14C (Commission Rules 14c-1 through 14c-7 and Schedule 14C)”
(3) “Securities Ownership—Regulation 13D and 13G (Commission Rules 13d-1 through 13d-7 and Schedules 13D and 13G)” (OMB Control No. 3235-0145);
(4) “Form 10-K” (OMB Control No. 3235-0063);
(5) “Form 10-KSB” (OMB Control No. 3235-0420);
(6) “Form 10-Q” (OMB Control No. 3235-0070);
(7) “Form 10-QSB” (OMB Control No. 3235-0416);
(8) “Form 8-K” (OMB Control No. 3235-0060);
(9) “Form N-CSR under the Investment Company Act of 1940 and Securities Exchange Act of 1934, Certified Shareholder Report” (OMB Control No. 3235-0570);
(10) “Form N-SAR under the Investment Company Act of 1940, Semi-Annual Report for Registered Investment Companies” (OMB Control No. 3235-0330); and
(11) “Rule 20a-1 under the Investment Company Act of 1940, Solicitations of Proxies, Consents, and Authorizations” (OMB Control No. 3235-0158).
These regulations, rules and forms were adopted pursuant to the Exchange Act and the Investment Company Act and set forth the disclosure requirements for securities ownership reports filed by investors and proxy and information statements,
The proposed rules would, under certain limited circumstances, require companies to include in their proxy materials security holder nominees for election as director. Specifically, the proposed rules would create a mechanism for nominees of long-term security holders, or groups of long-term security holders, with significant holdings to be included in company proxy materials where security holders are permitted under state law to nominate directors and where evidence suggests that the company has been unresponsive to security holder concerns as they relate to the proxy process. For purposes of the PRA, we estimate the total annual incremental paperwork burden for operating companies, funds and security holders that would be required under our proposed rules to be approximately 1,793 hours of personnel time for operating companies, funds and security holders and a cost of approximately $409,000 for the services of outside professionals.
The proposed rules would apply only where the company's security holders are permitted under state law to nominate a candidate or candidates for election as a director. We do not know the precise number of states that prohibit security holders from nominating a candidate or candidates for election as director or the number of companies that are permitted to and do/or (would) include a prohibition against nominating a candidate or candidates in their articles of incorporation or bylaws. We request comment and supporting empirical data, for purposes of the PRA, on any existing, applicable state law provisions that would prohibit security holders or security holder groups from nominating a candidate or candidates for election as director.
The proposed security holder nomination procedure would become operative for the company only after the occurrence of one or both of the following two nomination procedure triggering events:
• At least one of the company's nominees for the board of directors for whom the company solicited proxies received “withhold” votes from more than 35% of the votes cast at an annual meeting of security holders held after January 1, 2004, at which directors were elected (provided, that this event may not occur in the case of a contested election to which Exchange Act Rule 14a-12(c) applies or an election to which the proposed security holder nomination procedure in Exchange Act Rule 14a-11 applies); or
• A security holder proposal submitted pursuant to Exchange Act Rule 14a-8 providing that the company become subject to the security holder nomination procedure in proposed Exchange Act Rule 14a-11(a) was submitted for a vote of security holders at an annual meeting of security holders held after January 1, 2004 by a security holder or group of security holders that held more than 1% of the company's securities entitled to vote on the proposal for one year as of the date the proposal was submitted and provided evidence of such holding to the company; and (b) that “direct access” proposal received more than 50% of the votes cast on that proposal at that meeting.
Exchange Act Schedule 14A prescribes the information that a company must include in its proxy statement to ensure that security holders are provided material information relating to voting decisions. Exchange Act Schedule 14C prescribes the information that a company that is registered under Section 12 of the Exchange Act must include in its information statement in advance of a security holders' meeting when it is not
For purposes of the PRA, we estimate the total annual incremental paperwork burden for operating companies and security holders or security holder groups to prepare the disclosure that would be required under this portion of the proposed rules to be approximately 648 hours of personnel time and a cost of approximately $64,800 for the services of outside professionals.
We believe that the annual incremental PRA burden due to the triggering events is likely to arise from the submission of Exchange Act Rule 14a-8 security holder proposals by holders of 1% or more of a company's securities providing that the company become subject to the security holder nomination procedure in proposed Exchange Act Rule 14a-11. We estimate that the number of such proposals would be 54.
We do not believe that there would be any increased paperwork burden under this portion of the proposed rules for the triggering event related to company nominees for directors who receive over 35% “withhold” votes.
We estimate that this total burden of 864 hours would result in 648 hours of internal time and $64,800 of outside costs.
Proposed Exchange Act Rule 14a-11 would require each company to disclose the following:
• Each company would be required to disclose the security holder vote with regard to any of the nomination procedure triggering events in its quarterly report on Exchange Act Form 10-Q or 10-QSB for the period in which the matter was submitted to a vote of security holders; where the nomination procedure triggering event occurred during the fourth quarter of the fiscal year, on Exchange Act Form 10-K or 10-KSB; or semi-annually on Investment Company Act Form N-CSR, in the case of a fund;
• Each company would be required to include in that Exchange Act Form 10-Q, 10-QSB, Exchange Act Form 10-K or 10-KSB, or Investment Company Act Form N-CSR, information disclosing that it would be subject to the security holder nomination procedure as a result of such vote, if applicable.
If the company did not hold an annual meeting during the previous year, or if the date of the current year's annual meeting has been changed by more than 30 days from the previous year's annual meeting, the company would be required to disclose the date by which security holders must submit their notice to require that the company include the security holder's nominee on the company's proxy card.
For purposes of the PRA, we estimate the annual incremental paperwork burden for companies to prepare the disclosure that would be required under this portion of the proposed rules to be approximately 86 hours of company personnel time and a cost of approximately $8,700 for the services of outside professionals.
As noted above, we estimate that 54 companies would receive a direct access security holder proposal, which we estimate would average approximately 0.5 hours burden hours, for a total of 27 hours. We estimate that 73 companies would need to disclose that they are subject to the security holder nomination procedure, which we estimate would average approximately 1 burden hour, for 73 hours annually.
This total burden of 115 hours corresponds to 86 hours of internal time and $8,700 in outside costs.
To be eligible to submit a nomination in accordance with proposed Exchange Act Rule 14a-11, a security holder or group of security holders would be required to:
• Beneficially own, either individually or in the aggregate, more than 5% of the company's securities that are eligible to vote for the election of directors at the next annual meeting of security holders (or, in lieu of such an annual meeting, a special meeting of security holders), with each of the securities used for purposes of calculating that ownership having been held continuously for at least two years as of the date of the nomination and intend to continue to own those securities through the date of that annual or special meeting;
• Be eligible, as to the security holder or each member of the security holder group, to report beneficial ownership on Exchange Act Schedule 13G and have filed an Exchange Act Schedule 13G or an amendment to Exchange Act Schedule 13G reporting their beneficial ownership as a passive or institutional investor (or group), which Schedule must include a certification that the security holder or security holder group has held more than 5% of the subject securities for at least two years;
• Provide notice to the company of its intent to require that the company include that security holder's nominee(s) on the company's proxy card and make certain representations and provide information about the candidate or candidates.
Unless the company determines that it is not required to include a nominee from a nominating security holder or nominating security holder group in its proxy materials, the company would be required to include information regarding the security holder nominee in the company's proxy statement. In addition, if the company chooses to include statements supporting company nominees and/or opposing the nominating security holder's nominees, nominating security holders would be afforded the same opportunity. If the company determines that it is not required to include a nominee in its proxy materials, it must provide notice of its determination.
For purposes of the PRA, we estimate the total annual incremental paperwork burden for operating companies and security holders or security holder groups to prepare the disclosure that would be required under this portion of the proposed rules to be approximately 668 hours of personnel time and a cost of approximately $282,600 for the services of outside professionals.
We estimate that the proposed access rule would be triggered in 73 companies, and in 45 of these companies at least one security holder or security holder group would make a nomination.
In order to conservatively estimate the PRA burden, we estimate that 49 nominees would be excluded from the proposed Exchange Act Rule 14a-11 nomination procedure.
We estimate that this total burden of 1,610 hours would result in 668 hours of internal time and $282,600 of outside costs.
All of the figures above are estimates because there is no reliable way to predict how many more security holder proposals would be submitted based on the proposed amendments, how often the events would be triggered or how many security holders would be able to meet the applicable requirements (
Table 1 below illustrates the incremental annual compliance burden of the collection of information in hours and in cost for securities ownership reports filed by investors and proxy and information statements, periodic reports and current reports under the Exchange Act.
Pursuant
The incremental burden estimate for Rule 20a-1 includes the disclosure that would be required on Exchange Act Schedule 14A, discussed above, with respect to funds. We estimate that the burden associated with these disclosure requirements would be 546 hours (224 hours + 322 hours) or 22.75 hours per response (546 hours/24 responses) as a result of the required disclosure in this proposed rulemaking.
Persons submitting comments on the collection of information requirements should direct the comments to the Office of Management and Budget, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and should send a copy to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609, with reference to File No. S7-19-03. Requests for materials submitted to OMB by the Commission with regard to these collections of information should be in writing, refer to File No. S7-19-03, and be submitted to the Securities and Exchange Commission, Records Management, Office of Filings and Information Services, 450 Fifth Street, NW., Washington, DC 20549. OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication of this release. Consequently, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication.
On April 14, 2003, the Commission directed the Division of Corporation Finance to review the proxy rules and regulations and their interpretations regarding procedures for the nomination and election of corporate directors
Under the existing structure, security holders generally can have input in the director nomination procedure in two ways: Undertake an election contest and recommend candidates to the nominating committee. In the broad proxy revisions adopted in 1992, the Commission eased the requirements for security holders conducting an election contest in a non-control context when it revised Exchange Act Rule 14a-4(d) to allow security holders seeking minority board representation to “fill out” a partial or “short” slate with management nominees. Under the current proxy rules, these security holders still must disseminate and file a separate proxy statement. Although commenters noted the availability of this existing alternative, many other commenters noted the prohibitive expense in conducting an election contest.
After reviewing the existing proxy rules and comments from the public, we are proposing rules that would create a mechanism for nominees of long-term security holders, or groups of long-term security holders, with significant holdings to be included in company proxy materials. The intent of the proposed amendments is to improve the ability of security holders to participate meaningfully in the nomination and election of directors where evidence suggests that the company has been unresponsive to security holder concerns as they relate to an effective proxy process. Greater security holder involvement also may increase director accountability and responsiveness to security holders and their concerns.
The Commission has considered a variety of reforms to achieve its regulatory objectives. As one possible approach, we considered requiring companies to include a separate security holder proxy card in the company mailing. Alternatively, we considered amending Exchange Act Rule 14a-8(i)(8)
The proposed amendments may serve to align the interests of the board and security holders, thereby giving investors greater confidence that the board is serving the interest of security holders, even if the provisions of the rule are rarely used.
The security holder nomination procedure would become operative only if one or both of the following triggering events occur:
• At least one of the company's nominees for the board of directors for whom the company solicited proxies received “withhold” votes from more than 35% of the votes cast at an annual meeting of security holders; or
• A security holder proposal submitted pursuant to Exchange Act Rule 14a-8 providing that the company become subject to the security holder nomination procedure in proposed Exchange Act Rule 14a-11 (a) was submitted for a vote of security holders at an annual meeting of security holders by a security holder or group of security holders that held more than 1% of the company's securities entitled to vote on the proposal for one year as of the date the proposal was submitted and provided evidence of such holding to the company; and (b) that “direct access” proposal received more than 50% of the votes cast on that proposal at that meeting.
Allowing security holders access to company proxy materials in these two circumstances would limit the use of proposed Exchange Act Rule 14a-11 to companies where there is evidence indicating ineffectiveness of or dissatisfaction with the proxy process. In addition, the triggering events may serve to make boards more responsive to security holder concerns and security holder dissatisfaction with directors in cases where companies wish to avoid triggering the procedure in proposed Exchange Act Rule 14a-11.
Under the proposed rules, a company would be required to disclose the security holder vote with respect to either of the triggering events and whether the company would be subject to proposed Exchange Act Rule 14a-11. These proposed notice requirements may benefit security holders by providing greater transparency of the level of security holder discontent with the company's nominees and the degree to which security holders believe a company is responsive to security holder concerns.
In those cases where proposed Exchange Act Rule 14a-11 is triggered, requiring companies to include nominees of larger, long-term security holders or groups of security holders may benefit security holders by allowing them to have greater input in the nomination procedure where there is evidence indicating that the proxy process may be ineffective. Greater security holder input may lead to better performing boards whose interests are better aligned with security holders. When a security holder nominee is elected to a board, commenters were also of the opinion that this may lead to a more diverse board that could offer a
The proposed rules may impose additional direct costs. For purposes of the PRA, we estimate that the annual incremental burden to prepare the required disclosure would be approximately 1,828 hours of personnel time for operating companies, funds, and security holders, which translates into an estimated cost of $155,400 ($1,200 per company affected).
As we noted above, under the current rules, security holders generally can participate in the director nomination procedure only by recommending candidates to the nominating committee or by undertaking an election contest. As previously noted, commenters have found the first alternative to be largely ineffective and the latter to be too costly. Given the high costs associated with undertaking an election contest, many of the costs of the proposed rules to companies would be offset by the cost to security holders of undertaking an election contest.
For example, companies may incur additional printing and mailing costs if there is an increase in the number of security holder proposals seeking direct access that companies receive and must include in their proxy materials. Companies also may incur incremental printing and mailing costs to include the name and background information of security holder nominees in their proxy materials. In 1998, when the Commission last sought comment on a proxy rule amendment, companies reported that the average cost of printing and mailing security holder proposals was approximately $50,000.
The additional incremental cost of printing and mailing security holder proposals seeking direct access and including security holder or security holder nominees in the company's proxy material would likely represent costs that would otherwise be borne by security holders to print and mail their own complete proxy statement when a security holder undertakes an election contest.
There also may be increased costs associated with additional solicitations by both companies and security holders. Companies may increase solicitations to vote against security holder proposals or to vote for their slate of directors. Security holders may also increase solicitations to vote for security holder proposals or to withhold votes for a company's directors. Similarly, companies may also increase their costs for solicitations if security holders or security holder groups undertake election contests. For the purposes of the PRA, we estimate that the proposed Exchange Act Rule 14a-11 nomination procedure would occur in 41 incidences for operating companies and 9 incidences for funds.
There also may be a cost if the proposed rules serve to influence corporate behavior. Commenters argued that there is no evidence that security holder access would lead to better managed companies.
In those cases where proposed Exchange Act Rule 14a-11 would be triggered, commenters also were concerned that security holder access may discourage qualified board members from running.
Although the proposed rules apply to small business issuers, we do not anticipate any significant impact on them. Small businesses historically have received fewer security holder proposals than larger issuers.
We are sensitive to the costs and benefits imposed by our rules, and have identified certain costs and benefits imposed by these proposals. We request comment on all aspects of this cost-benefit analysis, including identification of any additional costs and benefits. We encourage commenters to identify and supply relevant data concerning the costs and benefits of the proposed amendments. We also request comment on the following specific concerns:
O.1. We solicit quantitative data to assist our assessment of the benefits and costs of enhanced security holder access to company proxy materials when there has been a demonstrated failure in the proxy process. Will proposed Exchange Act Rule 14a-11 increase director accountability and responsiveness? If so, what costs would be incurred in instituting responsive policies and procedures? Will more accountability and responsiveness lead to better managed boards? What effects, if any, would increased accountability and responsiveness have on the board's time spent in its duties overseeing management?
O.2. We solicit quantitative data on the potential increases, if any, of security holder proposals under Exchange Act Rule 14a-8 as a result of these proposed rules. We also solicit quantitative data on how often the two triggering events that would activate proposed Exchange Act Rule 14a-11 would occur.
O.3. We solicit quantitative date on the time and cost spent in preparing a no-action request to exclude a proposal under Exchange Act Rule 14a-8, the incremental cost spent to print and mail such a security holder proposal and to include a security holder nominee and his/her background information in the proxy materials, and the cost borne by both companies and security holders to solicit security holders regarding a direct access security holder proposal and election of a nominee or nominees to the board.
Section 23(a)(2) of the Exchange Act
The notice requirements of the proposed rules would enable investors to compare companies' responsiveness to security holder proposals and compare security holders' general level of satisfaction with companies' nominees for director. Investors may place a premium on companies that are more responsive to security holder concerns and whose boards' interests are more closely aligned with those of security holders.
In addition, if a company is required to include a security holder nominee in its proxy materials, there may be increased competition for board positions. To the extent that this would discourage less-qualified candidates from running or, alternatively, would increase the quality of board members due to increased competition, investors may be more or less willing to invest in those companies where proposed Exchange Act Rule 14a-11 has been triggered.
We request comment regarding the degree to which our proposed disclosure requirements would create competitively harmful effects upon public companies, and how to minimize those effects. We also request comment on any disproportionate cross-sectional burdens among the firms affected by our proposals that could have anti-competitive effects.
Section 3(f) of the Exchange Act
One possible adverse impact on efficiency, competition and capital formation is that boards may devote less time to overseeing the management of companies because they are spending more time on security holder relations. We believe, however, that the proposed rules may increase director accountability and responsiveness, which would lead to better corporate governance and better-managed boards. As a result, we believe that these measures ultimately may serve to enhance investors' value. In addition, we believe that investors may be able to evaluate a company's board of directors more effectively and make more informed investment decisions. We believe that, as a consequence of these developments, there may be some positive impact on the efficiency of markets and capital formation. The possibility of these effects, their magnitude if they were to occur and the extent to which they would be offset by the costs of the proposals are difficult to quantify. We request comment on these matters and how the proposed amendments, if adopted, would affect efficiency and capital formation. Commenters are requested to provide empirical data and other factual support to the extent possible.
This Initial Regulatory Flexibility Act Analysis has been prepared in accordance with 5 U.S.C. 603. It relates to proposed revisions to the rules and forms under the Exchange Act and the Investment Company Act that would, under certain limited circumstances, require companies to include in their proxy materials security holder nominees for election as director. The
On April 14, 2003, the Commission directed the Division of Corporation Finance to review the proxy rules and regulations and their interpretations regarding procedures for the nomination and election of corporate directors
On August 14, 2003, we published for comment proposed rules that would implement the first of the Division's recommendations—new disclosure standards requiring more robust disclosure of the nominating committee processes of public companies, including the consideration of candidates recommended by security holders, as well as more specific disclosure of the processes by which security holders may communicate with the directors of the companies in which they invest.
The proposed amendments have two primary objectives. The first objective is to improve the ability of security holders to participate meaningfully in the nomination and election of directors. The second objective is to meet the first objective without unduly burdening companies. We seek to limit the cost and burden on companies by limiting the proposed security holder nomination procedure to only those companies:
• Where the company's security holders are permitted under state law to nominate a candidate or candidates for election as directors;
• Where there are criteria showing that the proxy process may be ineffective—specifically, only after the occurrence of one or both of the following triggering events:
• Where the nominating security holder or group of security holders demonstrate continuous beneficial ownership of more than 5% of the company's securities for at least two years as of the date of the nomination.
These limitations would lower the cost to companies while still improving the ability of security holders to participate meaningfully in the nomination and election of directors. This increased participation may improve corporate governance by increasing director accountability and responsiveness and aligning the interests of the board and security holders, thereby, giving investors greater confidence that the board is serving the interest of security holders. This may, in turn, enhance the value of security holders' investments.
We are proposing amendments to the forms and rules under the authority set forth in Sections 3(b), 10, 13, 14, 15, 16, 23(a) and 36 of the Securities Exchange Act of 1934, as amended, and Sections 10, 20(a) and 38 of the Investment Company Act of 1940, as amended.
The proposals would affect companies that are small entities. Exchange Act Rule 0-10(a)
As noted above, the number of security holder proposals that receive a majority vote, the number of directors that receive 35% withhold votes, and the percentage of nominating security holders that meet the ownership threshold and holding periods may be more infrequent for small entities because insiders may hold a larger percentage of shares in such entities.
We request comment on the number of small entities that would be impacted by our proposals, including any available empirical data.
The proposed rules are expected to impact a limited number of companies because the nomination procedure would be triggered only where there are criteria showing that the proxy process may be ineffective. For purposes of the PRA, we estimate that the proposed nomination procedure would be triggered at only 73 operating companies and 14 funds and that only 41 operating companies and 9 funds would be subject to that procedure. Given the limited number of security holder proposals received by small entities and the ownership makeup of smaller entities, the proposed rules are likely to have virtually no impact on small entities.
For purposes of the PRA, we estimate that the highest hourly burden for the company and the security holder to disclose the required information would be 43.5 if the nomination procedure is triggered, notice by the company that the nomination procedure is triggered is provided, notice that the upcoming annual meeting has changed by more than 30 days is provided, notice by the security holder or security holder group that it is seeking to use the procedure is provided, an Exchange Act Schedule 13G is filed and is provided, the company determines to include the proposal and the company provides a statement opposing the security holder nominee or nominees and/or supporting the company nominees, and the security holder also provides such a statement. This translates to a cost of $2,300, as a monetization of burden, to be carried by the company internally and a cost of $5,100 to be paid by a third party. A cost of $7,400 per small entity may not constitute a significant economic impact. That conclusion is based on our analysis of 1,245 small entities available on the Compustat database. We found that the average revenue of those small entities is $2.07 million per company. Therefore, among larger “small entities,” the estimated $7,400 compliance expense would constitute approximately 0.003% of a small entity's revenues. If small entities are impacted, there may be a greater impact on smaller “small entities.”
We encourage written comments regarding this analysis. We solicit comments as to whether the proposed changes could have an effect that we have not considered. We request that commenters describe the nature of any impact on small entities and provide empirical data to support the extent of the impact. We also note that we are considering as an additional element of the proposed rule, and seek comment on, whether proposed Exchange Act Rule 14a-11 should apply only to those companies that are subject to the accelerated deadlines for filing Exchange Act periodic reports, and investment companies registered under Section 8 of the Investment Company Act.
We believe that there are no rules that conflict with or completely duplicate the proposed rules.
The Regulatory Flexibility Act directs us to consider significant alternatives that would accomplish the stated objective, while minimizing any significant adverse impact on small entities. In connection with the proposed amendments, we considered the following amendments:
1. The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities;
2. The clarification, consolidation or simplification of disclosure for small entities; and
3. An exemption for small entities from coverage under the proposals.
The Commission has considered a variety of reforms to achieve its regulatory objectives. As one possible approach, we considered requiring companies to include the security holder's proxy card in the company mailing. Alternatively, we considered amending Exchange Act Rule 14a-8(i)(8)
In addition, an exemption or separate requirements for small entities may not address issues of corporate accountability and security holder rights that may affect small entities as much as they would affect large companies. Accordingly, it may be more appropriate to allow for the nomination procedure at small entities, where there has been evidence indicating ineffectiveness in the proxy process. The establishment of any differing compliance or reporting requirements or timetables or any exemptions for small business issuers may not be in keeping with the objectives of the proposed rules.
We encourage comments with respect to any aspect of this Initial Regulatory Flexibility Analysis. In particular, we request comments regarding: (i) The number of small entities that may be affected by the proposals; (ii) the existence or nature of the potential impact of the proposals on small entities discussed in the analysis; and (iii) how to quantify the impact of the proposed rules. Commenters are asked to describe the nature of any impact and provide empirical data supporting the extent of the impact. Such comments will be considered in the preparation of the Final Regulatory Flexibility Analysis, or, in the alternative, a certification under Section 605(b) of the Regulatory Flexibility Analysis, if the proposals are adopted, and will be placed in the same public file as comments on the proposed amendments themselves.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996,
• An annual effect on the economy of $100 million or more;
• A major increase in costs or prices for consumers or individual industries; or
• Significant adverse effects on competition, investment or innovation.
We request comment on whether our proposals would be a “major rule” for purposes of SBREFA. We solicit comment and empirical data on: (a) The potential effect on the U.S. economy on an annual basis; (b) any potential increase in costs or prices for consumers or individual industries; and (c) any potential effect on competition, investment or innovation.
The amendments are proposed pursuant to Sections 3(b), 10, 13, 14, 15, 16, 23(a) and 36 of the Securities Exchange Act of 1934, as amended, and Sections 10, 20(a) and 38 of the Investment Company Act of 1940, as amended.
Reporting and recordkeeping requirements, Securities.
Investment companies, Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, the Securities and Exchange Commission proposes to amend Title 17, chapter II of the Code of Federal Regulations as follows:
1. The authority citations for Part 240 continues to read, in part, as follows:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78
2. The authority citations following §§ 240.13d-1, 240.13d-102, 240.14a-4 and 240.14a-5 are removed.
3. Section 240.13a-11 is amended by revising paragraph (b) to read as follows:
(b) This section shall not apply to foreign governments, foreign private issuers required to make reports on Form 6-K (17 CFR 249.306) pursuant to § 240.13a-16, issuers of American Depositary Receipts for securities of any foreign issuer, or investment companies required to file reports pursuant to § 270.30b1-1 of this chapter under the Investment Company Act of 1940, except where such an investment company is required to file:
(1) Notice of a blackout period pursuant to § 245.104 of this chapter; or
(2) Disclosure pursuant to Instruction 5 to § 240.14a-11(a) of the date by which a security holder or security holder group must submit the notice required pursuant to § 240.14a-11(c).
4. By amending § 240.13d-1 by adding an Instruction after paragraph (c)(3) to read as follows:
(c)(3) * * *
5. By amending § 240.13d-102 to:
a. Add a box on the cover page after the box titled “[ ] Rule 13d-1(d)”; and
b. Add paragraph (c) to Item 10 before the “Signature” section.
The additions read as follows:
(a) * * *
(c) The following certification shall be included, in addition to the certification required under paragraph (a) or (b) of this Item, as applicable, if the statement is filed in connection with a security holder nomination pursuant to § 240.14a-11:
By signing below, I further certify that _% of the securities referred to above have been held continuously for at least 2 years.
The percentage of securities listed above shall be used both for the purpose of determining eligibility to submit a security holder nomination pursuant to § 240.14a-11 and, where more than one eligible security holder or security holder group provides notice of its intention to submit a nomination pursuant to § 240.14a-11, for the purpose of determining the security holder or security holder group with the largest percentage of subject securities.
6. By amending § 240.14a-4 to:
a. Revise the first sentence of paragraph (b)(2); and
b. Add a sentence to the end of the paragraph following paragraph (b)(2)(iv), immediately preceding the Instructions.
The revision and addition read as follows:
(b) * * *
(2) A form of proxy that provides for the election of directors must set forth the names of persons nominated for election as directors, including any person whose nomination by a security holder or security holder group satisfies the requirements of § 240.14a-11. * * *
(iv) * * * Means to grant authority to vote for any nominees as a group or to withhold authority for any nominees as a group may not be provided if the proxy card includes one or more security holder nominees in accordance with § 240.14a-11.
7. By amending § 240.14a-5 to add paragraphs (g) and (h) to read as follows:
(g) If the proxy statement includes a security holder proposal providing that the registrant become subject to the security holder nomination procedure in § 240.14a-11 that was submitted pursuant to § 240.14a-8 by any security holder or group of security holders that has held more than 1% of the securities entitled to vote on that proposal for at least one year as of the date of the nomination and has provided evidence of such holding to the registrant, the registrant must disclose that the security holder vote on that proposal may determine whether the registrant will become subject to the security holder nomination procedure pursuant to § 240.14a-11 for the annual (or, in lieu of annual, special) meetings at which directors are elected during the remainder of the calendar year in which the subject vote was held, the following calendar year and the portion of the next calendar year up to and including the annual meeting (or special meeting held in lieu of an annual meeting) during that calendar year.
(h) If the registrant received a security holder nomination that indicated that it was submitted pursuant to § 240.14a-11 and the registrant determined that it was not required to include that nominee in its proxy materials, describe the determination made by the registrant's board of directors (including an affirmative statement of its determination not to include that specific nominee), discuss the specific provisions of § 240.14a-11 that the registrant's board of directors relied upon to exclude the nominee, and discuss the specific basis for the belief of the registrant's board of directors that the registrant is permitted to not include that nominee in its proxy materials.
8. By amending § 240.14a-6 to:
a. Redesignate paragraphs (a)(4), (a)(5) and (a)(6) as paragraphs (a)(5), (a)(6) and (a)(7) respectively;
b. Add new paragraph (a)(4);
c. Add a sentence at the end of Note 3; and
d. Add paragraphs (p) and (q).
The additions read as follows:
(a) * * *
(4) The name of a security holder nominee is included pursuant to § 240.14a-11.
(p)
(q)
9. By amending § 240.14a-8 to:
a. Revise paragraph (i)(8); and
b. Add an Instruction to paragraph (i)(11).
The revision and addition read as follows:
(i) * * *
(8)
(11) * * *
10. By adding § 240.14a-11 to read as follows:
(a)
(1) Applicable state law does not prohibit the registrant's security holders from nominating a candidate or candidates for election as a director;
(2) One or more of the following events has occurred during the calendar year in which the meeting that is the subject of the proxy statement is being held or during either of the preceding two calendar years:
(i) At least one of the registrant's nominees for the board of directors for whom the registrant solicited proxies received “withhold” votes from more than 35% of the votes cast at an annual meeting of security holders (or, in lieu of an annual meeting, a special meeting) held after January 1, 2004, at which directors were elected (provided, that this event will be deemed not to occur with regard to any contested election to which § 240.14a-12(c) applies or an election to which this section applies); or
(ii) A security holder proposal providing that the registrant become subject to § 240.14a-11 that was submitted pursuant to § 240.14a-8 by a security holder or group of security holders that held more than 1% of the securities entitled to vote on that proposal for at least one year as of the date the proposal was submitted and provided evidence of such holding to the registrant, received more than 50% of the votes cast on that proposal at an annual meeting of security holders (or, in lieu of an annual meeting, a special meeting) held after January 1, 2004; and
(3) No security holder nominee is required to be included on the registrant's proxy card, and no disclosure regarding such nominee is required to be included in the registrant's proxy statement, in the event of one or more of the following:
(i) The nominee's candidacy or, if elected, board membership, would violate controlling state law or federal law or rules of a national securities exchange or national securities association applicable to the registrant (other than rules of a national securities exchange or national securities association regarding director independence);
(ii) Any information required to be included in the notice to the registrant required pursuant to paragraph (c) of this section is not so included;
(iii) Any representation required to be included in the notice to the registrant required pursuant to paragraph (c) of this section is false in any material respect; or
(iv) A nominee is not required to be included pursuant to the provisions of paragraph (d) of this section limiting the number of nominees required to be included.
1. For purposes of paragraph (a)(2)(ii) of this section, the amount of a person's security ownership and the duration of that ownership shall be calculated as of the date that person submits the proposal to the registrant.
2. For purposes of paragraph (a)(2)(ii) of this section, only votes for and against a proposal shall be included in the calculation of the security holder vote on that proposal. Accordingly, abstentions and broker non-votes will not be included in this calculation.
3. A nominating security holder will not be deemed an “affiliate” of the registrant under the Securities Act of 1933 (15 U.S.C 77a
4. The registrant shall determine whether any of the events permitting exclusion of a security holder nominee has occurred and shall notify the nominating security holder or nominating security holder group whether the registrant will include or exclude the security holder nominee. In the event that a registrant determines that it shall exclude the nominee, the registrant shall provide such notice promptly, but in no case less than 30 calendar days before the date of the registrant's proxy statement released to security holders in connection with the previous year's annual meeting and, where the registrant did not hold an annual meeting in the previous year, or if the date of this year's annual meeting has been changed by more than 30 days from the date of the previous year's meeting, the notice must be provided a reasonable time before the registrant mails its proxy materials for the current year. If the registrant determines that it is entitled to exclude the nominee, the notice must include (a) A description of the determination made by the registrant's board of directors, including an affirmative statement of its determination not to include that specific nominee; (b) a discussion of the specific requirement or requirements of § 240.14a-11 that the registrant's board of directors have determined permit the registrant not to include that specific nominee; and (c) a discussion of the specific basis for the belief of the registrant's board of directors that the registrant is permitted to not include that specific nominee. The registrant also must include in its proxy statement for the meeting for which the nominee was submitted a statement that it has made such an exclusion and provide the information included in the notice to the nominating security holder with regard to the basis for its determination to exclude the nominee. The exclusion of a security holder nominee by a registrant where that exclusion is not permissible under § 240.14a-11(a)(3) shall be a violation of this section. If the registrant determines that it must include the security holder nominee, it must advise the nominating security holder or nominating security holder group of this determination and state whether the registrant intends to include in its proxy statement disclosure supporting the registrant's nominees and/or opposing the security holder nominee. If the registrant intends to include such a supporting statement and/or opposing statement, it must advise the nominating security holder or nominating security holder group that it may submit a statement of no more than 500 words supporting the security holder nominee. The registrant also must advise the nominating security holder or nominating security holder group of the date by which this statement must be provided to the registrant, which shall be not less than 10 business days from the date of the registrant's notice to the security holder. A statement by the registrant that it recommends a vote for its nominees and/or against the nominating security holder or nominating security holder group's nominee or nominees will not be deemed an opposing or supporting statement for purposes of this requirement.
5. If any of the events described in paragraph (a)(2) of this section occur, and the registrant did not hold an annual meeting the previous year, or if the date of the current year's annual meeting has been changed by more than 30 days from the date of the previous year's annual meeting, the registrant must disclose pursuant to Item 13 of Form 8-K (§ 249.308 of this chapter) the date by which a security holder or security holder group must submit the notice required pursuant to paragraph (c) of this section, which date shall be a reasonable time prior to the date the registrant mails its proxy materials for the meeting.
(b)
(1) The security holder individually, or the security holder group in the aggregate, must beneficially own more than 5% of the registrant's securities that are eligible to vote for the election of directors at that annual meeting of securities (or, in lieu of such an annual meeting, a special meeting of security holders);
(2) The security holder or each member of the security holder group must have held the securities that are used for purposes of determining the more than 5% ownership threshold required by paragraph (b)(1) of this section continuously for at least two years and intend to continue to hold those securities through the date of the subject election of directors;
(3) In the case of a registrant that is not an open-end investment company registered under the Investment Company Act of 1940, the security holder or each member of the security holder group must meet the requirements set out in § 240.13d-1(b) or (c) to file on Schedule 13G (§ 240.13d-102); and
(4) In the case of a registrant that is not an open-end investment company registered under the Investment Company Act of 1940, the nominating security holder or the nominating security holder group must have reported its beneficial ownership on Schedule 13G (§ 240.13d-102), including the certification required by Item 10(c) of Schedule 13G, or have amended a previously filed Schedule 13G to include the certification required by Item 10(c) of Schedule 13G, before or on the date of sending the notice specified in paragraph (c) of this section. Notwithstanding the provisions of Schedule 13G, the Schedule 13G filed in satisfaction of this requirement must set forth information demonstrating compliance with the requirements of paragraphs (b)(1) and (b)(2) of this section and disclose the filing person's intention to nominate one or more directors under § 240.14a-11.
(c)
(1) A representation that, to the knowledge of the nominating security holder or group, the nominee's candidacy or, if elected, board membership, would not violate controlling state law or federal law or rules of a national securities exchange or national securities association applicable to the registrant (other than rules of a national securities exchange or national securities association regarding director independence);
(2) A representation that the nominating security holder or nominating security holder group satisfies the conditions in paragraph (b) of this section;
(3) A representation that:
(i) If the nominating security holder or any member of the nominating security holder group is a natural person, the
(ii) If the nominating security holder or any member of the nominating security holder group is an entity, neither the nominee nor any immediate family member of the nominee has been an employee of the nominating security holder or any member of the nominating security holder group during the then-current calendar year nor during the immediately preceding calendar year;
(iii) Neither the nominee nor any immediate family member of the nominee has accepted during the then-current calendar year or during the immediately preceding calendar year directly or indirectly any consulting, advisory, or other compensatory fee from the nominating security holder or any member of the nominating security holder group or any affiliate of any such holder or any such member, provided that compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the nominating security holder or nominating security holder group member (provided that such compensation is not contingent in any way on continued service); and
(iv) Such nominee:
(A) Is not an executive officer or director (or person performing similar functions) of the nominating security holder or any member of the nominating security holder group, or of an affiliate of such holder or any such member; and
(B) Does not control the nominating security holder or any member of the nominating security holder group (or in the case of a holder or member that is an investment company, an interested person of such holder or any such member as defined in section 2(a)(19) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(19));
(4) In the case of a registrant other than an investment company, a representation that the nominee meets the objective criteria for “independence” of the national securities exchange or national securities association rules applicable to the registrant, if any, and, in the case of a registrant that is an investment company, a representation that the nominee is not an “interested person” of the registrant as defined in section 2(a)(19) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(19));
(5) A representation that neither the nominee nor the nominating security holder or, where there is a nominating security holder group, the members of the nominating security holder group, has a direct or indirect agreement with the registrant regarding the nomination of the nominee;
(6) In the case of a registrant that is not an open-end investment company registered under the Investment Company Act of 1940, a copy of the Schedule 13G (§ 240.13d-102) filed by the nominating security holder or nominating security holder group in satisfaction of the requirement in paragraph (b)(4) of this section;
(7) A statement from the nominee that the nominee consents to be named in the registrant's proxy statement and form of proxy and, if elected, to serve on the registrant's board of directors, for inclusion in the registrant's proxy statement;
(8) Disclosure about the nominee providing all of the information necessary to comply with the disclosure requirements of Item 7(a), (b) and (c) and, for investment companies, Item 22(b) of Schedule 14A (§ 240.14a-101), as applicable, for inclusion in the registrant's proxy statement;
(9) Any of the following information with regard to each nominating security holder or member of a nominating security holder group that is not included in the Schedule 13G (§ 240.13d-102), for inclusion in the registrant's proxy statement:
(i) Name and business address;
(ii) Present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is carried on;
(iii) The amount of each class of securities of the registrant that the individual owns beneficially, directly or indirectly, determined in accordance with § 240.13d-3; and
(iv) Whether or not, during the past ten years, the individual has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, the dates, the nature of the conviction, the name or other disposition of the case; and whether the individual has been involved in any other legal proceeding during the past five years, as specified in Item 401(f) of Regulation S-K (§ 229.10 of this chapter);
(10) The methods by which the nominating security holder or nominating security holder group may solicit security holders, including, at the election of the nominating security holder or nominating security holder group, any Web site address on which the nominating security holder or nominating security holder group may publish soliciting materials; and
(11) In the case of a registrant that is an open-end investment company registered under the Investment Company Act of 1940, the following information with regard to each nominating security holder or member of a nominating security holder group, in addition to the information required by paragraph (c)(9) of this section:
(i) The percentage of each class of securities of the registrant that the individual owns beneficially, directly or indirectly, determined in accordance with § 240.13d-3, and the number of shares as to which the person has:
(A) Sole power to vote or to direct the vote;
(B) Shared power to vote or to direct the vote;
(C) Sole power to dispose or to direct the disposition of such shares; and
(D) Shared power to dispose or to direct the disposition of such shares; and
(ii) The following certification and signature, signed by each person on whose behalf the notice is filed or his or her authorized representative. If the notice is signed on behalf of a person by his or her authorized representative other than an executive officer or general partner of the filing person, evidence of the representative's authority to sign on behalf of such person shall be filed with the notice, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name and any title of each person who signs the notice shall be typed or printed beneath his or her signature:
By signing below, I certify that __% of the securities referred to above have been held continuously for at least 2 years.
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
(d)
(1) The registrant is not required to include in its proxy statement and form of proxy more than:
(i) One security holder nominee where the total number of members of the registrant's board of directors is eight or fewer;
(ii) Two security holder nominees where the total number of members of the registrant's board of directors is greater than eight and less than 20; and
(iii) Three security holder nominees where the total number of members of the registrant's board of directors is 20 or more;
(2) Provided that, where the registrant has one or more directors currently serving on its board of directors who were elected as a security holder nominee pursuant to this section, and the term of that director or directors extends past the date of the meeting of security holders for which it is soliciting proxies, the registrant will not be required to include in the proxy statement or form of proxy more security holder nominees than could result in the total number of directors who were elected as security holder nominees pursuant to § 240.14a-11 and serving on the board being greater than:
(i) One where the total number of members of the board of directors is eight or fewer;
(ii) Two where the total number of members of the board of directors is greater than eight and less than 20; and
(iii) Three where the total number of members of the board of directors is 20 or more; and
(3) In the event that more than one security holder or group of security holders is otherwise permitted to nominate a person or persons to a registrant's board of directors pursuant to § 240.14a-11, the registrant shall include in the proxy statement and form of proxy the nominee or nominees of the security holder or security holder group with the largest two-year beneficial ownership at the time of the delivery of the notice specified in paragraph (c) of this section, as specified in the filed Schedule 13G (§ 240.13d-102), up to and including the total number required to be included by the registrant.
1. If a nominee, a nominating security holder or any member of a nominating security holder group has any direct or indirect agreement with the registrant or any affiliate of the registrant regarding the nomination of a candidate for election as a member of the registrant's board of directors, any such nominee or any nominee of such nominating security holder or nominating security holder group shall not be included in calculating the number of nominees required under this section.
2. For purposes of paragraph (d)(3) of this section, the registrant must rely on the beneficial ownership percentage reported in the nominating security holder's filed Schedule 13G, except where the registrant has reason to believe that the beneficial ownership reported in the Schedule 13G is inaccurate.
(e)
(f)
(1) Any solicitation by or on behalf of any security holder in connection with the formation of a nominating security holder group pursuant to § 240.14a-11, provided that:
(i) The total number of persons solicited is not more than 30; or
(ii) Each written communication includes no more than:
(A) A statement of each soliciting security holder's intent to form a nominating security holder group in order to nominate a director under § 240.14a-11;
(B) The percentage of securities that each soliciting security holder beneficially owns or the aggregate percentage owned by any group to which the security holder belongs; and
(C) The means by which security holders may contact the soliciting party; and
(iii) Any soliciting material published, sent or given to security holders in accordance with this paragraph is filed with the Commission by the soliciting party, under the registrant's Exchange Act file number, or, in the case of a registrant that is an investment company registered under the Investment Company Act of 1940, under the registrant's Investment Company Act file number, no later than the date
(2) Any solicitation by or on behalf of a nominating security holder or nominating security holder group in support of a nominee placed on the registrant's proxy card in accordance with § 240.14a-11, provided that:
(i) The soliciting party does not, at any time during such solicitation, seek directly or indirectly, either on its own or another's behalf, the power to act as proxy for a security holder and does not furnish or otherwise request, or act on behalf of a person who furnishes or requests, a form of revocation, abstention, consent or authorization;
(ii) Each written communication includes:
(A) The identity of each nominating security holder and a description of his or her direct or indirect interests, by security holdings or otherwise;
(B) A prominent legend in clear, plain language advising security holders that a security holder nominee is or will be included in the registrant's proxy statement and to read the registrant's proxy statement when it becomes available because it includes important information (or, if the registrant's proxy statement is publicly available, advising security holders of that fact and encouraging security holders to read the registrant's proxy statement because it includes important information). The legend also must explain to security holders that they can find the registrant's proxy statement, and any other relevant documents, at no charge on the Commission's Web site; and
(iii) Any soliciting material published, sent or given to security holders in accordance with this paragraph must be filed by the nominating security holder with the Commission, under the registrant's Exchange Act file number, or, in the case of a registrant that is an investment company registered under the Investment Company Act of 1940, under the registrant's Investment Company Act file number, no later than the date the material is first published, sent or given to security holders. Three copies of the material must at the same time be filed with, or mailed for filing to, each national securities exchange upon which any class of securities of the registrant is listed and registered. The soliciting material must include a cover page in the form set forth in Schedule 14A (§ 240.14a-101) and the appropriate box on the cover page must be marked.
11. By amending § 240.14a-12 to add Instruction 3 to read as follows:
3. Solicitations by a nominating security holder or nominating security holder group that are made in connection with a § 240.14a-11 nomination will not be deemed a solicitation in opposition subject to § 240.14a-12(c).
12. Amend § 240.14a-101 by:
a. Adding on the cover page two boxes before the box “Soliciting Material under § 240.14a-12”;
b. Adding paragraph (i) to Item 7; and
c. Revising the reference “paragraphs (d)(3), (f) and (g)” in the introductory text of paragraph (b) of Item 22 to read “paragraphs (d)(2), (d)(3), (f), (g), (h), and (i)”.
The additions and revision read as follows:
(i) If a security holder nominee or nominees are submitted to the registrant and the registrant is not permitted to exclude the nominee or nominees pursuant to the provisions of § 240.14a-11, the registrant must include the disclosure required from the nominating security holder under § 240.14a-11(c)(7), (c)(8), (c)(9), (c)(10) and (c)(11), with regard to the nominee and the nominating security holder. In addition, if the registrant includes a statement supporting the registrant nominee(s) and/or opposing the security holder nominee, the registrant must also include, at the election of the nominating security holder or nominating security holder group, a statement of support for the security holder nominee, of a length not to exceed 500 words, in accordance with § 240.14a-11.
13. Section 240.15d-11 is amended by revising paragraph (b) to read as follows:
(b) This section shall not apply to foreign governments, foreign private issuers required to make reports on Form 6-K (17 CFR 249.306) pursuant to § 240.15d-16, issuers of American Depositary Receipts for securities of any foreign issuer, or investment companies required to file reports pursuant to § 270.30b1-1 of this chapter under the Investment Company Act of 1940, except where such an investment company is required to file:
(1) Notice of a blackout period pursuant to § 245.104 of this chapter; or
(2) Disclosure pursuant to Instruction 5 to § 240.14a-11(a) of the date by which a security holder or security holder group must submit the notice required pursuant to § 240.14a-11(c).
14. By amending § 240.16a-1 to revise paragraph (a)(1) and add “Note to Paragraph (a)(1)(ii)(K)” to read as follows:
(a) * * *
(1) (i) Solely for purposes of determining whether a person is a beneficial owner of more than ten percent of any class of equity securities registered pursuant to section 12 of the Act (15 U.S.C. 78
(A) That are acquired by such institutions or persons without the purpose or effect of changing or influencing control of the issuer or engaging in any arrangement subject to § 240.13d-3(b); and
(B) With respect to the institutions or persons specified in paragraphs (a)(1)(ii)(A) through (a)(1)(ii)(J) of this section, that are held for the benefit of third parties or in customer or fiduciary accounts in the ordinary course of business (or in the case of an employee benefit plan specified in paragraph (a)(1)(ii)(F) of this section, that are allocated to plan participants where participants have voting power).
(ii) (A) A broker or dealer registered under section 15 of the Act (15 U.S.C. 78o);
(B) A bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c(a)(6));
(C) An insurance company as defined in section 3(a)(19) of the Act (15 U.S.C. 78c(a)(19));
(D) An investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8);
(E) Any person registered as an investment adviser under section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) or under the laws of any state;
(F) An employee benefit plan as defined in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. 1001
(G) A parent holding company or control person, provided the aggregate amount held directly by the parent or control person, and directly and indirectly by their subsidiaries or affiliates that are not persons specified in paragraphs (a)(1)(ii)(A) through (J) of this section, does not exceed one percent of the securities of the subject class;
(H) A savings association as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(I) A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(14);
(J) A group, provided that all the members are persons specified in § 240.16a-1(a)(1)(ii)(A) through (I); and
(K) Members of a nominating security holder group formed in accordance with § 240.14a-11.
15. The authority citation for Part 249 continues to read in part as follows:
15 U.S.C. 78a
16. By amending Form 8-K (referenced in § 249.308) to:
a. Add a sentence at the end of General Instruction B.1; and
b. Add Item 13 before the “Signature” section.
The additions read as follows:
The text of Form 8-K does not, and this amendment will not, appear in the Code of Federal Regulations.
1. * * * A report pursuant to Item 13 is to be filed promptly after the registrant determines the anticipated meeting date.
If any of the events described in § 240.14a-11(a)(2) occur, and the registrant did not hold an annual meeting the previous year, or if the date of this year's annual meeting has been changed by more than 30 days from the date of the previous year's meeting, then the registrant is required to disclose the date by which a security holder or security holder group must submit the notice required pursuant to § 240.14a-11(c), which date shall be a reasonable time before the registrant mails its proxy materials for the meeting.
17. By amending Item 4 to “Part II—Other Information” of Form 10-Q (referenced in § 249.308a) to:
a. Revise paragraph (d); and
b. Add paragraph (e).
The revision and addition read as follows:
The text of Form 10-Q does not, and this amendment will not, appear in the Code of Federal Regulations.
(d) A description of the terms of any settlement between the registrant and any other participant (as defined in Instruction 3 to Item 4 of Schedule 14A (§ 240.14a-101) of Regulation 14A under the Act) terminating any solicitation subject to § 240.14a-12(c), including the cost or anticipated cost to the registrant.
(e) If the meeting involved the election of directors or a vote on a security holder proposal under § 240.14a-8 and, as a result of that vote, the registrant will become subject to the security holder nomination procedure in § 240.14a-11, provide disclosure of that result and disclose that the registrant will be subject to § 240.14a-11 for the annual (or, in lieu of annual, special) meetings at which directors are elected during the remainder of the calendar year in which the subject vote was held, the following calendar year and the next calendar year up to and including the annual meeting (or special meeting in lieu of an annual meeting) during that calendar year, and state the date by which security holders must submit their nominations.
18. By amending Item 4 to “Part II—Other Information” of Form 10-QSB (referenced in § 249.308b) to:
a. Revise paragraph (d); and
b. Add paragraph (e).
The revision and addition read as follows:
The text of Form 10-QSB does not, and this amendment will not, appear in the Code of Federal Regulations.
(d) A description of the terms of any settlement between the registrant and any other participant (as defined in
(e) If the meeting involved the election of directors or a vote on a security holder proposal under § 240.14a-8 and, as a result of that vote, the registrant will become subject to the security holder nomination procedure in § 240.14a-11, provide disclosure of that result and disclose that the registrant will be subject to § 240.14a-11 for the annual (or, in lieu of annual, special) meetings at which directors are elected during the remainder of the calendar year in which the subject vote was held, the following calendar year and the next calendar year up to and including the annual meeting (or special meeting in lieu of an annual meeting) during that calendar year, and state the date by which security holders must submit their nominations.
19. By amending Item 4 to Part I of Form 10-K (referenced in § 249.310) to:
a. Revise paragraph (d); and
b. Add paragraph (e).
The revision and addition read as follows:
The text of Form 10-K does not, and this amendment will not, appear in the Code of Federal Regulations.
(d) A description of the terms of any settlement between the registrant and any other participant (as defined in Instruction 3 to Item 4 of Schedule 14A (§ 240.14a-101) of Regulation 14A under the Act) terminating any solicitation subject to § 240.14a-12(c), including the cost or anticipated cost to the registrant.
(e) If the meeting involved the election of directors or a vote on a security holder proposal under § 240.14a-8 and, as a result of that vote, the registrant will become subject to the security holder nomination procedure in § 240.14a-11, provide disclosure of that result and disclose that the registrant will be subject to § 240.14a-11 for the annual (or, in lieu of annual, special) meetings at which directors are elected during the remainder of the calendar year in which the subject vote was held, the following calendar year and the next calendar year up to and including the annual meeting (or special meeting in lieu of an annual meeting) during that calendar year, and state the date by which security holders must submit their nominations.
20. By amending Item 4 to Part I of Form 10-KSB (referenced in § 249.310b) to:
a. Revise paragraph (d); and
b. Add paragraph (e).
The revision and addition read as follows:
The text of Form 10-KSB does not, and this amendment will not, appear in the Code of Federal Regulations.
(d) A description of the terms of any settlement between the registrant and any other participant (as defined in Instruction 3 to Item 4 of Schedule 14A (§ 240.14a-101) of Regulation 14A under the Act) terminating any solicitation subject to § 240.14a-12(c), including the cost or anticipated cost to the registrant.
(e) If the meeting involved the election of directors or a vote on a security holder proposal under § 240.14a-8 and, as a result of that vote, the registrant will become subject to the security holder nomination procedure in § 240.14a-11, provide disclosure of that result and disclose that the registrant will be subject to § 240.14a-11 for the annual (or, in lieu of annual, special) meetings at which directors are elected during the remainder of the calendar year in which the subject vote was held, the following calendar year and the next calendar year up to and including the annual meeting (or special meeting in lieu of an annual meeting) during that calendar year, and state the date by which security holders must submit their nominations.
21. The authority citation for Part 274 continues to read, in part, as follows:
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78
22. By amending Form N-SAR (referenced in §§ 249.330 and 274.101) by:
a. Removing and reserving sub-item 77C;
b. Removing and reserving the Instruction to sub-item 77C in Instructions to Specific Items (referenced in §§ 249.330 and 274.101); and
c. Revising the Instruction to sub-item 102B in Instructions to Specific Items.
The revision reads as follows:
The text of Form N-SAR does not, and this amendment will not, appear in the Code of Federal Regulations.
If any matter has been submitted to a vote of security holders during the period covered by this report, through the solicitation of proxies or otherwise, furnish the following information:
(a) The date of the meeting and whether it was an annual or special meeting.
(b) If the meeting involved the election of directors, the name of each director elected at the meeting and the name of each other director whose term of office as a director continued after the meeting.
(c) A brief description of each matter voted upon at the meeting and state the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes, as to each such matter, including a separate tabulation with respect to each nominee for office.
(d) A description of the terms of any settlement between the registrant and any other participant (as defined in Instruction 3 to Item 4 of Schedule 14A (§ 240.14a-101) of Regulation 14A under the 1934 Act) terminating any solicitation subject to Rule 14a-12(c) under the 1934 Act (17 CFR 240.14a-12(c)), including the cost or anticipated cost to the registrant.
(e) If the meeting involved the election of directors or a vote on a security holder proposal under § 240.14a-8 under the 1934 Act (17 CFR 240.14a-8) and, as a result of that vote, the registrant will become subject to the security holder nomination procedure
1. If any matter has been submitted to a vote of security holders otherwise than at a meeting of such security holders, corresponding information with respect to such submission shall be furnished. The solicitation of any authorization or consent (other than a proxy to vote at a stockholders' meeting) with respect to any matter shall be deemed a submission of such matter to a vote of security holders within the meaning of this item.
2. Paragraph (a) need be answered only if paragraph (b) or (c) is required to be answered.
3. Paragraph (b) need not be answered if (i) proxies for the meeting were solicited pursuant to Regulation 14A under the 1934 Act, (ii) there was no solicitation in opposition to the management's nominees as listed in the proxy statement, and (iii) all of such nominees were elected. If the registrant did not solicit proxies and the board of directors as previously reported to the Commission was re-elected in its entirety, a statement to that effect in answer to paragraph (b) will suffice as an answer thereto.
4. Paragraph (c) must be answered for all matters voted upon at the meeting, including both contested and uncontested elections of directors.
5. If the registrant has furnished to its security holders proxy soliciting material containing the information called for by paragraph (d), the paragraph may be answered by reference to the information contained in such material.
6. If the registrant has published a report containing all of the information called for by this item, the item may be answered by a reference to the information contained in such report.
23. By amending Form N-CSR (referenced in §§ 249.331 and 274.128) by adding text to Item 8 to read as follows:
The text of Form N-CSR does not, and this amendment will not, appear in the Code of Federal Regulations.
If any matter has been submitted to a vote of security holders during the period covered by this report, through the solicitation of proxies or otherwise, furnish the following information:
(a) The date of the meeting and whether it was an annual or special meeting.
(b) If the meeting involved the election of directors, the name of each director elected at the meeting and the name of each other director whose term of office as a director continued after the meeting.
(c) A brief description of each matter voted upon at the meeting and state the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes, as to each such matter, including a separate tabulation with respect to each nominee for office.
(d) A description of the terms of any settlement between the registrant and any other participant (as defined in Instruction 3 to Item 4 of Schedule 14A (§ 240.14a-101) of Regulation 14A under the Exchange Act) terminating any solicitation subject to Rule 14a-12(c) under the Exchange Act (17 CFR 240.14a-12(c)), including the cost or anticipated cost to the registrant.
(e) If the meeting involved the election of directors or a vote on a security holder proposal under § 240.14a-8 under the Exchange Act (17 CFR 240.14a-8) and, as a result of that vote, the registrant will become subject to the security holder nomination procedure in Rule 14a-11 under the Exchange Act (17 CFR 240.14a-11), provide disclosure of that result and disclose that the registrant will be subject to Rule 14a-11 under the Exchange Act for the annual (or, in lieu of annual, special) meetings at which directors are elected during the remainder of the calendar year in which the subject vote was held, the following calendar year and the next calendar year up to and including the annual meeting (or special meeting in lieu of an annual meeting) during that calendar year, and state the date by which security holders must submit their nomination.
1. If any matter has been submitted to a vote of security holders otherwise than at a meeting of such security holders, corresponding information with respect to such submission shall be furnished. The solicitation of any authorization or consent (other than a proxy to vote at a stockholders' meeting) with respect to any matter shall be deemed a submission of such matter to a vote of security holders within the meaning of this item.
2. Paragraph (a) need be answered only if paragraph (b) or (c) is required to be answered.
3. Paragraph (b) need not be answered if (i) proxies for the meeting were solicited pursuant to Regulation 14A under the Exchange Act, (ii) there was no solicitation in opposition to the management's nominees as listed in the proxy statement, and (iii) all of such nominees were elected. If the registrant did not solicit proxies and the board of directors as previously reported to the Commission was re-elected in its entirety, a statement to that effect in answer to paragraph (b) will suffice as an answer thereto.
4. Paragraph (c) must be answered for all matters voted upon at the meeting, including both contested and uncontested elections of directors.
5. If the registrant has furnished to its security holders proxy soliciting material containing the information called for by paragraph (d), the paragraph may be answered by reference to the information contained in such material.
6. If the registrant has published a report containing all of the information called for by this item, the item may be answered by a reference to the information contained in such report.
By the Commission.
Office of Special Education and Rehabilitative Services, Department of Education.
Notice of final priorities.
The Assistant Secretary for the Office of Special Education and Rehabilitative Services announces priorities under the Rehabilitation Continuing Education Programs. The Assistant Secretary may use these priorities for competitions in fiscal year (FY) 2004 and in later years.
We take this action to focus on training in areas of national need. The purpose of these priorities is to select entities to provide leadership for the Institute on Rehabilitation Issues (IRI) topic study groups and to plan and conduct the National IRI Forum. We intend these priorities to meet the needs of our customers by improving the responsiveness of the IRI study process to changes in the field of vocational rehabilitation (VR).
These priorities are effective November 24, 2003.
Christine Marschall, U.S. Department of Education, 400 Maryland Avenue, SW., room 3325, Switzer Building, Washington, DC 20202-2649. Telephone: (202) 205-2779 or via Internet:
If you use a telecommunications device for the deaf (TDD), you may call the TDD number at (202) 205-8133.
Individuals with disabilities may obtain this document in an alternative format (
The Institute on Rehabilitation Issues (IRI) has operated for over 55 years, bringing together subject experts from across the field of disability to form Primary Study Groups (PSG) to research, study, and prepare a written summary on a nationally selected topic of interest. Each PSG's project is presented for final feedback, commentary, and editing suggestions at the National IRI Forum, an annual meeting held annually in Washington, DC, to solicit input from rehabilitation constituents, professionals and interested others. The final documents produced through the IRI are used widely throughout the field of public rehabilitation.
We published a notice of proposed priorities for this program in the
Except for minor editorial and technical revisions, there are no differences between the notice of proposed priorities and this notice of final priorities.
In the notice of proposed priorities, we invited comments on the proposed priorities. We did not receive any comments.
This notice does
This priority funds projects to lead a PSG on a topic selected by the IRI Planning Committee. Projects must demonstrate the ability to provide leadership to members of the PSG that results in the production of a high quality document in the assigned topic area. Projects must ensure that documents are relevant to the public rehabilitation system and to the work of VR counselors and accurately interpret and integrate the current body of knowledge of the selected topic contained in published professional research and demonstrations.
Specifically, projects must demonstrate an in-depth knowledge of and understanding of relevant current and emerging issues in the public rehabilitation system, the public VR program, and the continuing education needs of VR personnel and related professionals. Projects must have the demonstrated ability to direct a rehabilitation research investigation in cooperation with a variety of experienced participants.
Projects must provide leadership to all phases of the IRI process, including assisting PSG members to define the areas of focus for the designated topic, to identify and address the continuing education needs of personnel of the public rehabilitation system, and to plan and write the project document. Projects must ensure that the group product meets the expectation of the IRI Planning Committee in terms of content areas and depth of review. At the conclusion of the National IRI Forum, projects must submit the final version of the IRI document to the Rehabilitation Services Administration for approval. Projects must distribute the approved document to State VR agencies and to others in an accessible format on request for use in staff development, training, and service planning.
Projects must include a plan to meet the communication, coordination, logistical, and budgetary requirements necessary to conduct at least three in-person meetings of the PSG, one of which must take place at the National IRI Forum in Washington, DC, at the end of the project year.
This priority funds projects to plan and to lead the annual National IRI Forum of PSG members and other stakeholders in each year of the project period. Projects must demonstrate in-depth knowledge of current, relevant issues in the public rehabilitation system and of methods to facilitate professional development and continuing education activities. Project staff, in cooperation with the IRI Planning Committee, must identify and solicit key stakeholders to provide input and feedback on selected IRI topics, and facilitate discussion and input sessions of diverse individuals with a wide variety of backgrounds so that each of the two IRI PSGs receives feedback on its draft document in a collaborative and positive manner.
Projects must provide a detailed plan for all aspects of the planning and coordination of the meeting, including, but not limited to, facilitation of document feedback sessions, site planning, coordination of accommodations and travel for PSG members funded by the project, coordination of accommodations
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 actions 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 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
29 U.S.C. 772.
(a) Train newly employed State agency staff at the administrative, supervisory, professional, paraprofessional, or clerical levels in order to develop needed skills for effective agency performance;
(b) Provide training opportunities for experienced State agency personnel at all levels of State agency practice to upgrade their skills and to develop mastery of new program developments dealing with significant issues, priorities, and legislative thrusts of the State and Federal vocational rehabilitation program; and
(c) Develop and conduct training programs for staff of—
(1) Private rehabilitation agencies and facilities that cooperate with State vocational rehabilitation units in providing vocational rehabilitation and other rehabilitation services;
(2) Centers for independent living; and
(3) Client assistance programs.
For FY 2004, the competition for new awards focuses on projects designed to meet the priorities we reference in the PRIORITIES section of this application notice.
The Department is not bound by any estimates in this notice.
(1) A page is 8.5″ by 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
(2) Double space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions, as well as all text in charts, tables, figures, and graphs.
(3) Use a font that is either 12-point or larger or no smaller than 10 pitch (characters per inch).
The page limit does not apply to Part I, the cover sheet; Part II, the budget section, including the narrative budget justification; Part IV, the assurances and certifications; or the one-page abstract, the resumes, the bibliography, or the letters of support. However, you must include all of the application narrative in Part III.
We will reject your application if—
• You apply these standards and exceed the page limit; or
• You apply other standards and exceed the equivalent of the page limit.
The regulations in 34 CFR part 79 apply to all applicants except federally recognized Indian tribes.
The regulations in 34 CFR part 86 apply to institutions of higher education only.
This competition focuses on projects designed to meet the priorities in the notice of final priorities for this program, published elsewhere in this issue of the
For FY 2004, these priorities are absolute priorities. Under 34 CFR
Some of the procedures in these instructions for transmitting applications differ from those in the Education Department General Administrative Regulations (EDGAR) (34 CFR 75.102). Under the Administrative Procedure Act (5 U.S.C. 553) the Department generally offers interested parties the opportunity to comment on proposed regulations. However, these amendments make procedural changes only and do not establish new substantive policy. Therefore, under 5 U.S.C. 553(b)(A), the Secretary has determined that proposed rulemaking is not required.
We have been accepting applications electronically through the Department's e-Application system since FY 2000. In order to expand on those efforts and comply with the President's Management Agenda, we are participating as a partner in the new governmentwide Grants.gov Apply site in FY 2004. The Rehabilitation Continuing Education Programs (RCEP)—Institute on Rehabilitation Issues (IRI), CFDA number 84.264A-3, is one of the programs included in this project. If you are an applicant under RCEP—IRI, you may submit your application to us in either electronic or paper format.
The project involves the use of the Grants.gov Apply site (Grants.gov). If you use Grants.gov, you will be able to download a copy of the application package, complete it offline, and then upload and submit the application via the Grants.gov site. You may not e-mail an electronic copy of a grant application to us. We request your participation in Grants.gov.
If you participate in Grants.gov, please note the following:
• Your participation is voluntary.
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation. We strongly recommend that you do not wait until the application deadline date to begin the application process through Grants.gov.
• To use Grants.gov, you, as the applicant, must have a D-U-N-S Number and register in the Central Contractor Registry (CCR). You should allow a minimum of five days to complete the CCR registration.
• You will not receive additional point value because you submit a grant application in electronic format, nor will we penalize you if you submit an application in paper format.
• You may submit all documents electronically, including all information typically included on the Application for Federal Education Assistance (ED 424), Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• Your application must comply with any page limit requirements described in this notice.
• After you electronically submit your application, you will receive an automatic acknowledgement from Grants.gov that contains a Grants.gov tracking number. The Department will retrieve your application from Grants.gov and send you a second confirmation, which will include a PR/Award number (an ED-specified identifying number) unique to your application.
• We may request that you give us original signatures on forms at a later date.
• If you experience technical difficulties on the application deadline date and are unable to meet the 4:30 p.m. (Washington, DC time) deadline, print out your application and follow the instructions included in the application package for the transmittal of paper applications.
You may access the electronic grant application for RCEP—IRI at:
Please note that you must search for the downloadable application package for this program by the CFDA number. Do not include the CFDA number's alpha letter in your search.
You may also contact ED Pubs at its Web site:
Or you may contact ED Pubs at its e-mail address:
If you request an application from ED Pubs, be sure to identify this competition as follows: CFDA number 84.264A-3.
Individuals with disabilities may obtain a copy of the application package in an alternative format by contacting the Grants and Contracts Services Team, U.S. Department of Education, 400 Maryland Avenue, SW., room 3317, Switzer Building, Washington, DC 20202-2550. Telephone: (202) 205-8207. If you use a telecommunications device for the deaf (TDD), you may call the Federal Information Relay Service (FIRS) at 1-800-877-8339. However, the Department is not able to reproduce in an alternative format the standard forms included in the application package.
Christine Marschall, U.S. Department of Education, 400 Maryland Avenue, SW., room 3325, Switzer Building, Washington, DC 20202-2649. Telephone: (202) 205-8926 or via Internet:
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 (
You may view this document, as well as all other Department of Education documents published in the
To use PDF you must have 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
29 U.S.C. 772.
Federal Aviation Administration (FAA), DOT.
Final rule.
This final rule continues the existing safety requirements in Special Federal Aviation Regulation No. 71 (SFAR 71) and eliminates the termination date for SFAR 71. The procedural, operational, and equipment safety requirements of SFAR 71 will continue to apply to Parts 91, 121, and 135 air tour operators in Hawaii. SFAR 71 does not apply to operations conducted under part 121 in airplanes with a passenger-seating configuration of more than 30 seats and a payload capacity of more than 7,500 pounds or to flights conducted in gliders or hot air balloons.
This final rule is effective October 26, 2003.
Alberta Brown, Aviation Safety Inspector, Air Transportation Division, AFS-200, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591; Telephone (202) 267-8321, or by e-mail at
You can download an electronic copy of this final rule through the Internet by:
(1) Searching the Department of Transportation's (DOT) electronic Docket Management System (DMS) Web page (
(2) Visiting the Office of Rulemaking's Web page at
(3) Accessing the
You also can get a copy by submitting a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make sure you put docket number FAA-2003-14830 on your request, to identify this rulemaking.
You may review the public docket containing this final rule, any comments received, and any final disposition, in person in the Docket Management System office (
Anyone is able to search the electronic form of all comments received into 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 Statement in the
The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) requires the FAA to comply with small entities requests for information or advice about compliance with statutes and regulations within its jurisdiction. Internet users can find additional information on SBREFA on the FAA's Web page at
On August 8, 2003, the FAA published a notice of proposed rulemaking (NPRM) that would continue the safety requirements of SFAR 71 and eliminate its termination date. (68 FR 47269) The FAA omitted the Regulatory Flexibility Analysis from the final document. Therefore, on August 20, 2003, the FAA published a correction to the proposed rule including the Regulatory Flexibility Analysis (68 FR 50085).
“Petitioners” as used in this summary of comments refers to the 15 petitioners who filed a petition for rulemaking to operate helicopters at 300 feet above uncongested terrain, dated October 15, 2002, Docket FAA-2002-13959. The petition may also be reviewed in Docket FAA-2003-14830. All material and relevant comments have been reviewed. Most of the comments raised issues that the FAA has already addressed in prior rulemakings regarding this SFAR.
Some commenters want SFAR 71 eliminated completely. They maintain that the air tour operators in Hawaii should be allowed to operate under parts 91 and 135 like the rest of the air tour operators in the United States. They claim that the SFAR's additional requirements have not reduced the accident rate, or fatalities, and may have contributed to accidents and fatalities. These commenters believe that restrictions are unnecessary because SFAR 71 adds to pilot workload and fatigue. These commenters argue that pilot judgment should dictate altitude and standoff distances, not the SFAR, in accordance with regulatory practices and flight conditions. Some individual pilots state that the SFAR's 1500-foot altitude minimum has forced them into controlled airspace to maintain cloud clearance. They also state the SFAR's minimum altitude requirements increase the possibility of flying inadvertently into instrument meteorological conditions.
The issues from the comments summarized above have been addressed in prior rulemakings concerning SFAR 71. Commenters have provided no new information.
Some commenters continue to refer to SFAR 71 as a noise abatement regulation and ask the FAA to continue the rule or enhance it. Others maintain that SFAR 71 was issued to address noise and environmental issues, not safety, and want the SFAR eliminated. Elected officials and environmental groups characterize SFAR 71 as reducing noise pollution in Hawaii's national parks, forests, and scenic wildlife areas and ask for its continuation or enhancement.
In 1994, the FAA issued SFAR 71 as an emergency final rule because of the increase in the number of fatal accidents involving air tour aircraft during the period 1991-1994 and the causes of those accidents. The FAA extended the SFAR in 1997 and 2000 to keep the SFAR's safety requirements in place. There were Congressional concerns that noise could be addressed at the same time, but noise was not the reason for issuing the rule. The FAA's mandate for this rulemaking was safety. The comments regarding noise, noise impacts, and noise benefits are speculative.
Elected officials, the Sierra Club, and some commenters seek elimination of the SFAR's 500-foot deviations or “exemptions” from the minimum altitude requirements. They believe that eliminating the deviations would mean less noise and less impact on the human environment, forests, and plants of Hawaii.
Elected officials and other commenters oppose petitioners' request that the FAA amend the SFAR to allow tour helicopter flights at 300 feet above uncongested terrain because they believe noise would increase.
Still other elected officials and commenters want to raise the SFAR's minimum altitudes because they believe air tour operations at higher altitudes would generate less noise.
Still other commenters request that overflights of national parks in Hawaii be eliminated.
The petitioners and some commenters want to lower minimum altitudes and standoff distances for helicopters because that would allow helicopters to fly comfortably in the rainforest and away from populated noise-sensitive areas. They claim it would greatly reduce air traffic in the SFAR's flight corridors.
SFAR 71 continues to serve a safety purpose. The FAA chooses to continue the altitude minimums and the deviation authority of SFAR 71 for safety reasons. The minimum altitude and standoff distances provide pilots with more time to make decisions, to recover in the event of an error, or land in the event of an emergency. Because the FAA maintains control of deviations, they reduce the potential for congestion over a particular site at the SFAR's 1500-foot altitude while still allowing for a safe landing in the event of engine failure. The SFAR's regulatory safety requirements were promulgated based on NTSB safety recommendations. We disagree that the minimum altitudes and stand off distances should be increased, or decreased, for alleged noise benefits. Noise abatement is beyond the scope of this rulemaking.
Overflights of the national parks are part of the national airspace system. The National Parks Air Tour Management Act of 2000 (the Act) was enacted on April 5, 2000. The Act applies to any person who conducts a commercial air tour operation over a unit of the National Park System, over tribal lands that are within or abutting a unit of the National Park System, or any area within
The national parks in Hawaii will be subject to the development of an ATMP under 14 CFR Part 136 (67 FR 65667; October 25, 2002). The FAA encourages persons interested in the development of these ATMPs to visit the Web site at
Commenters' concerns on the potential for mid-air collisions can be divided into four categories:
(1) The mix of airplanes and helicopters;
(2) Congestion at the same altitude;
(3) The use of different frequencies; and
(4) Weather-related factors.
(1) Commenters state that helicopters should not be flown in an airplane environment. A helicopter pilot's initial reaction to unforecasted poor weather, and/or a mechanical problem, is to immediately descend to a lower altitude with slower airspeed. Fixed-wing aircraft do not have this option.
(2) A commenter states that the primary routes for small commuter and private fixed wing aircraft around the Hawaiian Islands are around the coastal shorelines 1000-2500 MSL. This commenter maintains that SFAR 71 places Hawaii air tour helicopters at the same altitudes, in opposite directions, and at points of no two-way communications with commuter and general aviation aircraft.
Petitioners and commenters state that because of SFAR 71's altitude requirement and the normal orographic cloud ceiling that forms along the windward sides of the Hawaiian islands, helicopter tours are often forced to fly over, or close to, coastal communities. In these circumstances, general aviation airplanes fly low to stay below the helicopters. Commenters maintain that the practice is contrary to safe practices and increases the potential risk of midair collisions as well as noise exposure.
(3) Commenters find that because one aircraft may be on a common frequency and another on an airport frequency, they may not be able to talk to each other. If these aircraft are at the same altitude, this could be a problem.
Another individual comments that the present route structures tend to concentrate air traffic too densely in certain areas presenting greater midair accident potential. Examples are the Pahoa NDM and the “Mill” in Hilo. At these points a pilot must fly between frequencies or off communication frequencies to monitor STID in very critical areas.
(4) Commenters also state that in marginal weather, SFAR 71 concentrates air traffic along specific routes, which is not conducive to a safe flight environment. Pilots have come close to mid-air collisions in the valleys and open areas because the SFAR requires them to maintain the same altitudes in the same areas. Pilots are forced to fly over noise sensitive areas at 1,500 feet above the surface when they could have avoided the areas if they could have flown lower and not had such cloud restriction rules.
The FAA is not aware of any safety issue with allowing helicopters and airplanes to operate in the same airspace in Hawaii. The air tour environment in Hawaii is “see and be seen.” There has been no identified problem with mid-air accidents in Hawaii; the preponderance of accidents involve weather factors and engine shutdowns with the pilot having insufficient time to recover or no place to land.
The SFAR has never prescribed routes, and this rulemaking did not propose doing so. If the FAA were to propose routes, to include frequencies, it would have to be done in a separate rulemaking.
The FAA is aware of areas all over the country where certain aircraft operate safely on different frequencies. If air tour operators have identified an issue that needs to be brought to the attention of the local flight standards district office or air traffic control facility, then those offices will work with the operators to develop a common frequency format for the areas of concern. Through their own organizations, operators can develop common frequency monitoring procedures, and in an emergency, a guard channel can be used. The FAA is not aware of any reason to develop rules that will regulate the routes in these areas, and a proposal was not included in this document.
Commenters suggest that complying with the SFAR's 1,500-foot standoff
We disagree. The FAA did not propose to make changes to the standoff distances in this rulemaking. The FAA does not agree that the SFAR's standoff distances should be reduced or eliminated for valleys for the reasons discussed in this and prior rulemakings. The commenters have not presented a compelling safety argument for reducing the rule's baseline standoff distance. Generally speaking, the greater the standoff distance, the greater the chances that the pilot can avoid a collision with steep rugged terrain. The FAA has granted deviations from the baseline standoff distance after making safety assessments on a location-by-location basis.
A commenter states that to codify the flawed SFAR instead of designing a national air tour policy is unsound. A proposed national rule would force the FAA to provide a competent safety analysis. A national rule would eliminate the “improper and extraordinary impact on the rulemaking process heretofore enjoyed by the Hawaii Congressional delegation.”
In a related comment, an air tour operator argues that the FAA's policy of “equivalent level of safety” should move the agency to either eliminate SFAR 71 or to get Part 135 in line with it, if the agency is not going to issue a national rule anytime soon.
Another commenter states that the FAA should present a new version of SFAR 71 or replace it with a national rule.
Numerous pilots state that the rule is inherently unfair. If air tour operators under Part 135 can fly at a 300-foot altitude over congested areas in the United States mainland, why should Hawaii pilots be restricted to 1,500 feet?
The FAA is not certain what the commenters are attempting to say in its discussion of the advantage enjoyed by Congressional interest of Hawaii, so it will not discuss that portion of the comment.
The SFAR has been in effect without substantive change since 1994, and it has been successful in reducing the rate of air tour accidents in Hawaii. This final rule continues SFAR 71 with no changes other than the elimination of the expiration date; it allows SFAR 71 to continue until further notice from the FAA. The FAA continues to work on a proposed national air tour safety rule that could, if adopted, supersede the SFAR.
To the extent that any commenter believes that it is only fair to have the altitude restriction and standoff distances in SFAR 71 apply to all part 135 air tour operators nationally, the FAA responds as follows: First, the existing SFAR and the SFAR adopted today apply to all air tour operators in Hawaii regardless of whether they are conducting tours under parts 91, 121 or 135. Second, as we have previously stated, the FAA is considering whether aviation safety requires that the longstanding air tour safety rules in Hawaii should be applied nationally and whether Part 91 commercial air tour operators should be required to operate under part 135.
The FAA disagrees with some commenters' argument that the Hawaii SFAR should be set aside until the national rule is developed. The FAA received a series of recommendations from the NTSB, which it acted on, and the resulting regulatory effort was SFAR 71. Those rules have been effective, they have withstood court challenge, and the FAA will not rescind the SFAR while it considers whether to issue a national rule.
More than 100 individuals, residents of Hawaii or persons who enjoy the environment there, filed almost identical comments to support maintaining or increasing the 1500-foot altitude, eliminating the lower altitudes exceptions (deviations), and giving the state of Hawaii and the National Park Service (NPS) the ability to restrict tour overflights of state and national parks and wilderness areas. They would like the SFAR's minimum altitude increased. Further, they object to petitioners' request for an amendment that would permit a 300-foot above the surface altitude for helicopters over uncongested areas. In support, they state that “government studies” have demonstrated that higher minimum altitudes save lives, constant noise adversely impacts human health and can ruin the wilderness experience for hikers and campers, and overflights disrupt Hawaii's wildlife. They also note that the vibration from helicopters flying close to cliffs and precarious rock structures may cause landslides or rock falls.
In this rulemaking, the FAA proposed only to eliminate the expiration date. Comments regarding changing the altitude restriction or eliminating deviations are beyond the scope of this rulemaking and will not be considered.
In response to commenters who wish to give sole authority to regulate the airspace of parks to the National Park Service (NPS) or State governments, the FAA has sole and exclusive jurisdiction and control over the navigable airspace. That power cannot be delegated to the NPS or a State absent express Congressional legislation. The comments are also beyond the scope of this rulemaking. As to national parks, the FAA is working cooperatively with the NPS on development of certain air tour management plans, as required by 14 CFR part 136, National Parks Air Tour Management. This work is being conducted independently of SFAR 71, and when appropriate, public participation will be invited.
One individual comments that many pilots have discontinued the practice of reporting position, altitude, and direction of flight or report only the legal details required by SFAR 71.
The SFAR does not require any special reporting by pilots. However, since the purpose of the comment is unclear, the FAA offers the following. As a matter of general practice, the FAA allows operators to develop standard procedures as to how they operate in the scenic areas. As long as the operating procedures are not in conflict with the regulations, the FAA generally will not be involved. If the commenter is saying that pilots are ignoring operating procedures that have been approved by the FAA as part of the operator's manual, then the FAA urges the commenter to provide the necessary information to the Flight Standards District Office for investigation and appropriate action.
Another commenter recommends that, to the extent there is an increased risk of midair collisions, a system of common frequency and reports over landmarks should be used.
Development and implementation of a procedures manual for pilots does not require regulatory action. Incorporation of landmarks and common frequencies are issues that the operators and pilots
The FAA continues to be puzzled by comments it has received on this rule proposal. On the one hand, commenters are demanding that SFAR 71 needs to be rescinded, while on the other hand, commenters seem to want more procedural regulation. The FAA is more than willing to provide additional guidance and, as a result of recent accidents and the comments received in this rulemaking, the FAA has decided to hold a series of safety meetings to discuss these issues with pilots and operators. Additional procedural guidance may result from these meetings.
A commenter requests that the Administrator produce for public comment and inspection in the FAA docket all rulemaking documents related to the promulgation of SFAR 71. This commenter believes that this action would disclose the “deficient safety analysis” of SFAR 71 and also would highlight the Congressional pressure to limit helicopter operations in Hawaii.
Commenters should be aware that the FAA rulemaking process is a public process, and issues involved with the rule are in a public docket open for all persons to review. The Congressional record and NTSB recommendations are also public documents that are readily available through the Internet.
However, deliberative material and internal FAA working documents used in the development of an NPRM or rule are not subject to public scrutiny and do not belong in the public docket. These documents are predecisional and are exempt from public review under the Freedom of Information Act. Moreover, they are not helpful to anyone since the decision of the FAA to issue a proposal may change as issues are discussed internally within the FAA.
During the development of this proposal and disposition of comments in this final rule, it has become apparent that many commenters believe SFAR 71 is a noise rule and is not related to safety. The FAA cannot change what commenters believe, nor will it try since neither this commenter nor any other commenter has provided any evidence that the FAA should support their opinions instead of the NTSB and the FAA's aviation safety expertise.
In support of commenters, it is a matter of public record that the Hawaii Congressional delegation believes low flying aircraft are causing serious noise pollution. They have written numerous pieces of correspondence to the FAA concerning this issue. Air tour operators do not need to receive copies of internal FAA documents in order to know what their delegation thinks because their public position is very clear. On the other hand, the FAA has not been directed by any act of Congress to regulate air tour operators in Hawaii for noise with the exception of the recently passed the National Parks Air Tour Management Act. That act has been codified as part 136 and its provisions were developed by a National Parks Overflights Working Group (NPOWG), which included an air tour operator from Hawaii.
A commenter states that although accident statistics show that a compelling argument can be made for the life vest requirement in SFAR 71, just the opposite is true of the altitude restriction. This commenter notes that 77% of the accidents attributable to engine failures occurred before the SFAR was issued; 23% occurred afterward. The engines used in the pre-SFAR timeframe are no longer in use. The engines used predominantly in the post-SFAR timeframe have proven very reliable.
The decrease in engine failures is encouraging; however, in-flight engine failures (
To the extent that commenters are suggesting that the altitude restriction and associated increases in weather minimums are not necessary, the FAA disagrees. The SFAR's life vest and altitude requirements have been analyzed in the regulatory evaluation and each measure provides a safety benefit. The altitude baseline in the SFAR, which is higher than those altitudes suggested by some commenters, gives a pilot a better opportunity to make a safe landing should an engine failure occur. The FAA has granted deviations from the baseline altitude of 1,500 feet to lower altitudes based on numerous factors, including whether the terrain permits a safe landing and the performance capabilities of the aircraft.
A commenter states that given the unique terrain and climate features of Hawaii, if the FAA is really concerned about safety, it should mandate additional training instead of imposing artificial altitudes. Another commenter credits the Tour Operators Program of Safety (TOPS), that has been in effect since the mid-1990's, with providing great benefits to the safety of air tour operations in Hawaii.
The FAA considered the uniqueness of Hawaii when it issued SFAR 71 in 1994. Additional training may be necessary in the future but the FAA does not consider such measures necessary at this time.
Operators are always free to provide additional training; the regulations contain only minimum requirements. The FAA encourages programs such as TOPS that can provide pilots additional training benefits and help develop a culture of compliance.
Some commenters believe that the altitude restriction has not been the contributing cause to the decrease in accidents, but rather cite three factors: (1) Efforts of air tour operators and pilots to increase training and standards; (2) the replacement of helicopters with engines that had a high failure rate with helicopters with reliable engines; and (3) a number of safety devices, such as the use of flotation devices, that were mandated by the SFAR. This commenter states that it is the operators' opinion that the altitude restriction may have added to the accident potential.
Other commenters state that the intent of the SFAR was to reduce accidents and fatalities/injuries due to loss of power in cruise.
The FAA agrees that the overall decrease in the accident rate may be due to a number of unquantifiable factors. However, as stated previously, the altitude restrictions in SFAR 71 are needed. The reasons the FAA issued the SFAR, with the altitude restriction, are articulated in the 1994 final rule and discussed in the extensions. The stated intent of the 1,500-foot altitude provision is not to prevent accidents solely due to loss of power in cruise. Comments that the SFAR increases the potential for accident have been addressed in prior rules, and the FAA disagrees with such comments.
Using the figures that supported the original promulgation of SFAR 71, a commenter concludes that the accident rate for helicopters was one-fourth that of airplanes. Between 1982 and 1994, air tour airplanes had an accident rate of over 24 per million flights, and helicopters had a rate of 5.9 per million flights. This commenter maintains that the accident rates for helicopters in Hawaii were lower than many other states. Further, the commenter posits that the drop in the accident rate for helicopters is due to better equipment, not the SFAR, and that the majority of the accidents from 1982 to 1994 were because of mechanical failures.
The commenter is incorrect; the analysis addresses the benefits of the rule to airplanes and helicopters separately. While the commenter correctly cites information in the FAA's 1994 regulatory evaluation (which are also incorporated in the evaluation for this rulemaking) regarding airplane and helicopter accident rates, the cited accident rates only apply to accidents attributable to weather and flying low, and are not a comprehensive rate for all accidents which the commenter apparently assumes. The FAA's estimate of accidents avoided is only based on accidents rates related to specific provisions of the rule and are not related to accidents due to mechanical failures. Since accidents attributed to mechanical failures are not included, the helicopter accident rate is not misleading.
A commenter notes that the FAA stated that the drop in business since the enactment of the SFAR was due to the nature of tourism. This commenter claims that the majority of helicopter services have lost a great deal of income due to a lack of repeat customers because of the altitude and standoff distances. The claim is that prior to SFAR 71 almost 25% of the air tour business was made up of returning tourists.
The FAA cannot use this cost estimate because the information is insufficient and undocumented. It is also at odds with a comment by a large helicopter operator that the helicopter tour industry in Hawaii “has flown well over 80,000 hours per year in every year since 1985.”
A commenter contests “the elusive cost-benefit analysis” because no real analysis, statistics, or time parameters are provided. This commenter claims that the FAA promised, both in 1997 and 2000, that such an analysis would be provided in a final rule, which has not been forthcoming. The commenter further remarked that the estimated number of fatalities avoided lacked sufficient detail and another commenter questioned the basis for the accident rate referenced in the NPRM.
The regulatory evaluation provided a list of all Hawaii air tour accidents related to the provisions of SFAR 71 from 1982 to June 30, 2003. The commenters included a listing of helicopter accidents in Hawaii covering the period from November 19, 1985—July 23, 2003 based on NTSB data. The FAA used the same database but for the time period of 1982-June 30, 2003 and with some differences in the results. The commenters included three helicopter accidents that the NTSB narratives do not indicate were sightseeing or air tours and therefore are not incorporated in the FAA's analysis.
The FAA continues the safety requirements of SFAR 71 without a termination date because of the regulation's continuing success in reducing the air tour accident rate in Hawaii and the proven effectiveness of the SFAR's requirements.
The FAA finds that good cause exists under 5 U.S.C. 553(d) for this final rule to become effective upon issuance. The FAA notes that this final rule does not change the long-standing requirements of SFAR 71 for air tour operators in Hawaii; it only eliminates the termination date.
In accordance with FAA Order 1050.1D, the FAA has determined that this amendment is categorically excluded from environmental review under section 102(2)(C) of the National Environmental Policy Act. In 1994 the original SFAR 71 established procedural, operational, and equipment safety requirements for air tour aircraft in the state of Hawaii. This amendment will maintain those requirements and is part of an ongoing action. The continuation of SFAR 71 will not involve any significant impacts to the human environment and the FAA has determined that there are no extraordinary circumstances. This rule does not change the existing environment and is not likely to effect listed, endangered or threatened species. Comments requesting that the FAA ban overflights from critical habitat are beyond the scope of this rule.
Proposed changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 directs that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (19 U.S.C. sections 2531-2533) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, this Trade Act requires agencies to consider
In conducting these analyses, FAA has determined this rule: (1) Has benefits that justify its costs, is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and is not “significant” as defined in DOT's Regulatory Policies and Procedures; (2) will have a significant economic impact on a substantial number of small entities; (3) will not constitute a barrier to international trade; and (4) will not impose an unfunded mandate on state, local, or tribal governments, or on the private sector. The FAA has placed these analyses in the docket and summarized them below.
The FAA estimates the total cost of this rule at $29.8 million or $20.9 million, discounted. The costs reflect maintenance and operating costs attributable to flotation devices and life vests, operating costs required for calculating helicopter performance plans and providing a passenger briefing for emergency egress in the event of a water landing. Lost opportunity costs will also be incurred due to the minimum weather provisions.
The rule requires single-engine helicopters conducting air tours beyond the shore of any island to be either amphibious or equipped with flotation devices. The capital costs associated with this provision are reflected in the maintenance costs. In addition, there are operating costs from increased fuel consumption. The cost for required float inspections is estimated at $4.0 million over a 10-year period, $2.8 million, discounted. The helicopters will incur an operating penalty from increased fuel consumption due to the extra weight of the floats. The FAA estimates the 10-year weight-related costs at $4.6 million or $3.2 million, discounted. The total operating costs of these provisions over a 10-year period are estimated at $8.6 million or $6.0 million, discounted.
Each person on board an air tour helicopter is required to wear a life vest. Air tour operators in Hawaii had provided life vests aboard helicopters prior to the issuance of SFAR 71 in 1994 and thus already complied with the equipment requirement so there are no acquisition costs associated with this provision. Prior to SFAR 71, the life vests were stowed under the passenger's seat. Since the issuance of SFAR 71, passengers have to wear a life vest during the helicopter air tour. This results in additional continuing maintenance costs associated with these life vests since the rule requires the vests to be worn as well as a weight penalty. The 10-year cost totals $485,000 or $341,000, discounted.
Each helicopter air tour operator must develop and comply with a performance plan. The development costs have already been incurred but each pilot must complete the performance plan before each flight. The 10-year cost of preparing the performance plans are estimated at $4.9 million or $3.5 million, discounted.
The pilot in command must ensure each passenger is briefed on water ditching procedures, use of required life vests, and emergency egress from the aircraft in event of a water landing. The 10-year cost of this provision is estimated at $8.1 million or $5.7 million, discounted.
Opportunity costs will also be incurred due to the minimum weather provisions. The total lost net revenue due to cancelled air tours is estimated at $7.6 million or $5.3 million, discounted.
The FAA has quantified the benefits of the life vests and minimum altitude provisions and estimates the monetary benefits of these provisions at $125.3 million. An estimated 39 fatalities will be avoided, if the rule is 100 percent effective. This rule would be cost beneficial if it were only 24 percent effective. The benefits of the briefing provision are reflected in the life vest provision. The benefits of the performance plan have not been quantified.
Between 1982 and 1994 there were 3 helicopter water-landing accidents in which 8 persons drowned. These 3 accidents occurred in the course of an estimated 1.176 million flights or 2.55 accidents per million helicopter air tour flights. Applying this accident rate to the forecast of 1.157 million flights over the next 10-years results in 8 fatalities averted and a monetary benefit of $24 million.
There were 7 helicopter accidents between 1982 and 1994 related to weather or flying low. These accidents resulted in 11 fatalities, 9 serious and 12 minor injuries. The helicopter air tour accident rate related to weather equaled 5.95 accidents per million flights. Between 1995 and 2002 there were 2 helicopter accidents resulting in 13 fatalities and a weather related accident rate of 2.43 accidents per million flights. The difference in accident rates was 3.514 accidents per million flights. Based on a forecast of 1.16 million helicopter tours over the next 10-years, applying this accident rate results in 4 accidents avoided and 11 fatalities averted and monetary benefits of $38.8 million.
Airplane air tour operators experienced 5 weather related accidents between 1982 and 1994 (24.04 weather-related accidents per million operations) but only 1 weather-related accident between 1995 and 2002 (6.9 weather-related accidents per million operations). These 6 accidents resulted in 39 fatalities and 4 serious injuries. The difference in accident rates was 17.14 per million operations. Applying this accident rate differential to the forecast of 183,000 flights over the next 10-years results in 3 accidents avoided and 20 fatalities averted and a monetary benefit of $62.5 million.
The Regulatory Flexibility Act of 1980 (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objective of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the business, organizations, and governmental jurisdictions subject to regulation.” To achieve that principle, the RFA requires agencies to solicit and consider flexible regulatory proposals and to explain the rationale for their actions. The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations and small governmental jurisdictions.
Agencies must perform a review to determine whether a proposed or final rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.
However, if an agency determines that a proposed or final rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.
The FAA conducted the required review of this rule and determined that it will have a significant economic impact on a substantial number of small entities. Accordingly, pursuant to Section 603 of the Regulatory Flexibility Act, the Federal Aviation Administration has prepared the following final regulatory flexibility analysis.
The FAA will continue the existing safety standards in SFAR 71 without a termination date as a result of the reduction in accidents and incidents involving air tour operators in Hawaii and NTSB recommendations. The rationale for the major provisions of the rule are summarized below:
The FAA received four comments related to economic evaluation issues, and the FAA has determined none of the comments were significant. One comment mistakenly interpreted accident rate data presented in the economic analysis to support removing the altitude restriction on helicopters. Another comment questioned the basis for the accident rate referenced in the NPRM, and a third claimed a lack of detail on the estimated number of fatalities avoided. The FAA has provided a detailed response to these comments and determined the analysis questioned is accurate and complete. A fourth comment claimed the rule has resulted in a loss of income due to a lack of repeat customers, which prior to 1994 accounted for almost 25 percent of tour business. The comment was not supported by any documentation and was contrary to a comment by a small, but well-known operator, that the helicopter tour industry in Hawaii “has flown well over 80,000 hours per year in every year since 1985”.
The objective of this rule is to continue a higher level of safety for Hawaii air tours. Under the United States Code, the FAA Administrator is required to consider the following matter, among others, as being in the public interest: assigning, maintaining, and enhancing safety and security as the highest priorities in air commerce. [See 49 U.S.C. § 40101(d)(1).] Additionally, it is the FAA Administrator's statutory duty to carry out her responsibilities “in a way that best tends to reduce or eliminate the possibility or recurrence of accidents in air transportation.” [See 49 U.S.C. § 44701(c).] Accordingly, this rule will amend Title 14 of the Code of Federal Regulations to continue the safety requirements of air tour operations in Hawaii, without a termination date.
The FAA concludes that all of the entities affected by the rule are small according to thresholds established by the Small Business Administration (
The annualized cost for completing the performance plan and conducting the passenger briefing will impose average annualized costs per operator of approximately $43,500.
The rule will not overlap, duplicate, or conflict with existing Federal Rules.
Affected operators and helicopter air tour pilots have petitioned the FAA to amend SFAR 71. They argue that SFAR 71's 1,500 feet minimum altitude requirement is cumbersome and lacks flexibility in dynamic circumstances. The petitioners also maintain that allowing air tour flights as low as 300 feet above the surface would make SFAR 71 safer in certain circumstances.
The FAA has considered the petitioners' views in formulating this rule. The issues raised are similar to comments received by the agency during the three SFAR rulemaking preceding this rule. The FAA concludes that 1,500 feet provides a pilot with more distance, and thus time, to avoid an accident or to deal with an error. An altitude of 300 feet provides 80 percent less distance and thus, much less reaction time.
The FAA lacks reliable revenue and profit data on the individual entities affected by this rule, but the estimated cost to each of these small entities is approximately 5.3 percent of the average revenue of non-scheduled air transportation firms with fewer than 500 employees based on the SBA's Census data. Hawaii air tour operators have been subject to the provisions of this rule since 1994.
The FAA estimates that none of the operators currently providing air tour flights will elect to stop providing the service. These operators have been complying with these provisions since 1994. While there are fewer operators today than in 1994, the cause cannot be directly attributed to SFAR 71, but rather the vagaries and nature of the tourism market. New air tour operators have entered the market after making the business decision to accept the provisions of this rule.
All Hawaiian entities in the air tour market are small. Accordingly, the costs imposed by this rule will be borne almost entirely by small businesses. The estimated costs are proportional to the frequency of operations and thus the burden is not disproportionate. Air tour safety in Hawaii has been significantly improved, and the FAA believes that the only way to continue this is to maintain these higher standards on these entities.
The FAA has made several conservative assumptions in this analysis, which may have resulted in an overestimate of the costs of the rule. For example, the revenue loss resulting from tour cancellations due to the minimum flight altitude provision has been partially offset by the FAA's issuance of “deviations” allowing lower minimum altitudes and thus fewer tour cancellations. In addition, the FAA assumes that the pilot in command will conduct all pre-flight briefings but the provision only requires the pilot to “ensure that each passenger has been briefed”. The briefing could be recorded or provided by a lower paid employee. Also, the helicopter life vest costs may be overestimated since there is a voluntary industry standard to which 13 helicopter tour operators subscribe that requires occupants to wear a personal flotation device.
The Trade Agreement Act of 1979 prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards.
In accordance with the above statute, the FAA has assessed the potential effect of this final rule and has determined that it would have only a domestic impact and therefore no affect on any trade-sensitive activity.
SFAR 71 contains information collection requirements. OMB approval (No. 2120-0620) has been extended through January 31, 2004.
The Unfunded Mandates Reform Act of 1995 (the Act) is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local and tribal governments. Title II of the Act requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in the expenditure of $100 million or more (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.”
This final rule does not contain such a mandate. The requirements of Title II do not apply.
The regulations herein will not have substantial direct effects on the State, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 12612, the FAA certifies that this regulation will not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.
Aircraft, Airmen, Aviation safety.
Air carriers, Aircraft, Airmen, Aviation safety, Charter flights, Safety, Transportation.
Air taxi, Aircraft, Airmen, Aviation safety.
49 U.S.C. 106(g), 40103, 40113, 40120, 44101, 44111, 44701, 44709, 44711, 44712, 44715, 44716, 44717, 44722, 46306, 46315, 46316, 46502, 46504, 46506-46507, 47122, 47508, 47528-47531.
49 U.S.C. 106(g), 40113, 40119, 41706, 44101, 44701-44702, 44705, 44709-44711, 44713, 44716-44717, 44722, 44901, 44903-44904, 44912, 46105.
49 U.S.C. 106(g), 40113, 44701-44702, 44705, 44709, 44711-44713, 44715-44717, 44722.
Section 8.