[Federal Register Volume 71, Number 111 (Friday, June 9, 2006)]
[Rules and Regulations]
[Pages 33384-33387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-5232]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 200

[Release No. 34-53937; File No. S7-10-06]
RIN 3235-AJ56


Amendments to Plan of Organization and Operation Effective During 
Emergency Conditions

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'' or 
``SEC'') is adopting amendments to certain of its rules that operate in 
the event of emergency conditions to revise the provisions on 
delivering submittals, the line of succession to the Chairman in the 
event of the Chairman's incapacity or unavailability, and make 
conforming changes. These changes are intended to update these 
provisions.

DATES: Effective Date: June 9, 2006.

FOR FURTHER INFORMATION CONTACT: Stephen M. Jung, Assistant General 
Counsel for Legislation and Financial Services, Office of the General 
Counsel, at (202) 551-5162.

SUPPLEMENTARY INFORMATION:

I. Background

    Subpart G of Part 200 of Title 17 of the Code of Federal 
Regulations ``describes the plan of organization and operation which 
will be observed by the Securities and Exchange Commission in 
discharging its duties and responsibilities in the event of [specified 
emergency conditions].'' \1\ It includes provisions for designating the 
location of the offices of the Commission; delivering requests, 
filings, reports, or other submittals to the Commission; and 
designating the successor to the Chairman and the division and office 
heads in the event of their incapacity or unavailability during 
emergency conditions.
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    \1\ 17 CFR 200.200.
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II. Summary of Amendments

    The amendments provide guidance on certain terms used in subpart G; 
revise the provisions on delivering requests, filings, reports, or 
other submittals during emergency conditions; revise the line of 
succession to the Chairman in the event of the Chairman's incapacity or 
unavailability during emergency conditions; and make conforming 
changes.

A. Guidance on General Terms

    The amendments provide guidance on the terms ``unavailable or 
incapacitated'' and ``emergency conditions,'' as used in subpart G.
    1. Unavailable or Incapacitated. The amendments clarify that a 
person shall be considered unavailable or incapacitated in any 
situation and from any cause that prevents the person from assuming or 
performing on a timely basis his or her authorized duties, roles, or 
responsibilities of office, whether from a primary or alternate 
facility, or any other location. This language is intended to be a 
general statement of the concepts of unavailability and incapacity 
rather than an exhaustive definition of the terms. The statement is a 
flexible one that is intended to cover unforeseen, and perhaps novel, 
circumstances.
    2. Emergency Conditions. The amendments also provide that emergency 
conditions shall be deemed to commence upon the occurrence, or the 
imminent threat of the occurrence, of a natural or man-made disturbance

[[Page 33385]]

including, but not limited to, an armed attack against the United 
States, its territories or possessions, terrorist attack, civil 
disturbance, fire, pandemic, hurricane, or flood, that results in, or 
threatens imminently to result in, a substantial disruption of the 
organization or operations of the Commission. Such conditions shall be 
deemed to continue until the Commission shall, by notice or order, 
resume its normal organization and operations, whether at its 
headquarters in Washington, DC or elsewhere.
    The prior concept of emergency conditions contemplated that 
emergency conditions would ``commence at the time of an armed attack 
upon the United States, its territories and possessions, at the time of 
official notification of the likelihood or imminence of such attack, or 
at a time specified by authority of the President, whichever may first 
occur, and shall continue until official notification of cessation of 
such conditions.'' \2\ Recent global developments, however, have 
demonstrated the need for a broader concept of emergency conditions, 
one that encompasses all hazards that may substantially disrupt the 
normal organization or operations of the Commission. This broader 
concept is the basis for the revised definition of emergency 
conditions.
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    \2\ 17 CFR 220.201.
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    While the ``all hazards'' approach embodied in the new definition 
of emergency conditions is broad, not all disturbances that might 
affect the operations of the Commission will trigger the commencement 
of emergency conditions. For example, a number of events could require 
closure or evacuation of the Commission's headquarters in Washington, 
DC without substantially disrupting the Commission's operations. In 
most circumstances a snow emergency, water leak, disruption of water 
service, temporary power outage, localized fire, fire alarm, or other 
condition that might require the temporary closure or evacuation of all 
or a part of the headquarters would not trigger the commencement of 
emergency conditions.
    The ``all hazards'' approach in the new definition of emergency 
conditions also underlies the Commission's current Headquarters 
Continuity of Operations (``HQ COOP'') Plan, which establishes 
operational procedures to sustain the essential functions of the 
Commission during any emergency or situation that may disrupt normal 
operations. The Commission expects that, in most circumstances, the 
occurrence, or the imminent threat of the occurrence, of a disturbance 
that leads to full or partial activation of the HQ COOP Plan also will 
trigger the commencement of emergency conditions.
    Under the HQ COOP Plan, the Chairman is responsible for directing 
full or partial activation of the HQ COOP Plan. The Chairman may be 
unavailable or incapacitated, however, upon the occurrence, or the 
imminent threat of the occurrence, of a disturbance that likely will 
require activation of the HQ COOP Plan. In that situation, it would be 
useful to invoke the chairman succession provisions in 17 CFR 
200.203(c)(1), so that the Chairman's successor could determine whether 
or not to activate the HQ COOP Plan. Because the succession provisions 
become operative only during emergency conditions, however, a 
definition of emergency conditions that was limited to situations in 
which the Chairman already had activated the HQ COOP Plan would be 
problematic. Thus, the definition of emergency conditions contemplates 
that such conditions commence upon the occurrence, or the imminent 
threat of the occurrence, of certain disturbances, rather than upon an 
official response or reaction to the disturbance.\3\
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    \3\ In most circumstances, a Continuity of Operations message 
directing the Securities and Exchange Commission to assume a COGCON 
1 readiness posture will be issued as a result of an event that 
triggers the commencement of emergency conditions and also leads to 
activation of the HQ COOP Plan.
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B. Operation of Subpart G

    Prior 17 CFR 200.201 included language that indicated when the 
provisions of subpart G would be operative. Specifically, the language 
stated that subpart G would become operative ``as at the commencement 
of emergency conditions and continue until cessation of those 
conditions, or until the Commission shall by notice or order resume its 
normal operations.'' This language is no longer necessary, because of 
all of the provisions in subpart G are contingent upon the existence of 
emergency conditions,\4\ and the revised definition of ``emergency 
conditions'' specifies that emergency conditions will continue until 
the Commission shall, by notice or order, resume its normal 
organization and operations.
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    \4\ Prior 17 CFR 200.204 was not explicitly contingent on the 
existence of emergency conditions. However, as discussed below, the 
amendments make a conforming change to this section to clarify that 
it operates only under such conditions.
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C. Delivery of Documents

    The amendments also revise the provision on delivering requests, 
filings, reports, or other submittals during emergency conditions. The 
revised provision specifies that, during emergency conditions, all 
formal or informal requests, filings, reports, or other submittals 
shall be submitted to the Commission as permitted in non-emergency 
conditions, unless the Chairman or his or her successor specifies 
another means or location for submission of such requests, filings, 
reports, or other submittals, by a notice that is disseminated through 
a method (or combination of methods) that is reasonably designed to 
provide broad distribution of the information to the public.
    The prior provision contemplated that all submittals would be 
``delivered to the Commission at designated offices'' or addressed to 
an address no longer used by the Commission. The reference to 
``designated offices'' was a reference to the requirement in 17 CFR 
200.20(a) that the Chairman, or his or her successor, designate, during 
emergency conditions, the location of headquarters and, if different 
from the normal location, each Regional and District office.\5\ The new 
provision provides the Chairman with greater flexibility to designate a 
location for submission of formal or informal requests, filings, 
reports, or other submittals during emergency conditions. For example, 
the Chairman may find it appropriate, during emergency conditions, to 
designate a location geographically remote from headquarters, whether 
at its normal location or a new location, for the submission of filings 
that ordinarily would be submitted to the headquarters. The new 
provision also enables the Chairman to specify a different means for 
the submission of requests, filings, reports, or other submittals 
during emergency conditions. In this regard, the new provision 
accommodates the fact that many filings now are required or permitted 
to be submitted to the Commission in electronic format.
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    \5\ In the absence of communication with the Chairman, 17 CFR 
200.20(a) specifies that, during emergency conditions, the Regional 
Director or District Administrator for an office, or his acting 
successor, will designate the location of the office, if different 
from the normal location.
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    During emergency conditions, persons may experience difficulties 
submitting requests, filings, reports, or other submittals to the 
Commission, whether by normal means or by means otherwise specified by 
the Chairman. These difficulties could arise from disruptions at the 
location of the person seeking to

[[Page 33386]]

make the submittal, disruptions in the means of transmittal (for 
example, breakdowns in mail services, electronic transmission 
facilities, or courier services), or disruptions at the location of the 
Commission office to which the submittal is attempted to be made. In 
such cases, the person could seek,\6\ or the Commission on its own 
initiative could provide, appropriate relief. Of course, the ability to 
seek or provide relief may be hindered by disruptions in communications 
between persons seeking to make submittals and the Commission.
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    \6\ For example, if a submittal is required to be transmitted to 
the Commission electronically, but electronic transmission is 
disrupted at the time the submittal is due, the filer could seek 
appropriate relief, including pursuant to 17 CFR 232.13(b), 232.201, 
or 232.202.
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    Because the nature of any relief would be dictated by the specific 
circumstances of any disruptions, and the Commission has broad 
authority to provide relief in appropriate circumstances, the amended 
provision does not address directly the consequences of a disruptions 
in the ability to submit requests, filings, reports, or other 
submittals during emergency conditions. The provision, however, does 
provide some flexibility for responding to disruptions in the ability 
to transmit requests, filings, reports, or other submittals by allowing 
the Chairman to specify the means and/or location for submission during 
emergency conditions.

D. Succession Provisions

    The amendments revise the line of succession to the Chairman in the 
event of the Chairman's incapacity or unavailability during emergency 
conditions. Specifically, the amendments revise the current order of 
succession within the categories of Division Directors, Regional 
Directors, and District Administrators so that that the order of 
succession in each category will be as designated by the Chairman in 
the most recent designation prior to the commencement of emergency 
conditions, or if no such designation has occurred, in order of 
seniority. The current order of succession within these categories is 
based on seniority. The change would give the Chairman the flexibility 
to accommodate the fact that, at any given time, there may be 
particular areas of expertise that might militate in favor of an order 
not based strictly on seniority. In addition, the amendments eliminate 
the Executive Director and the Executive Assistant to the Chairman from 
the line of succession.

E. Other Provisions

    The amendments also revise 17 CFR 200.203(e), which currently 
provides for a line of succession to a division or office head in the 
event of his or her absence or incapacity during emergency conditions. 
The amendments make a conforming change and specify that a successor to 
a division or office head is delegated all of the authority that the 
Commission has delegated to the division or office head. Currently, a 
successor to a division or office head may discharge all of the duties 
of the division or office head, but is not explicitly delegated all of 
the authority that the Commission has delegated to the division or 
office head. In addition, the amendments make a conforming change to 17 
CFR 200.204, which sets forth the line of succession for certain 
administrative staff, to clarify that the provision applies only during 
emergency conditions.

III. Related Matters

A. Administrative Procedure Act and Other Administrative Laws

    The Commission has determined that these amendments to its rules 
relate solely to the agency's organization, procedure, or practice. 
Therefore, the provisions of the Administrative Procedure Act (``APA'') 
regarding notice of proposed rulemaking and opportunity for public 
participation are not applicable.\7\ For the same reason, and because 
these amendments do not substantially affect the rights or obligations 
of non-agency parties, the provisions of the Small Business Regulatory 
Enforcement Fairness Act are not applicable.\8\ In addition, the 
provisions of the Regulatory Flexibility Act, which apply only when 
notice and comment are required by the APA or other law, are not 
applicable.\9\ Finally, these amendments do not contain any collection 
of information requirements as defined by the Paperwork Reduction Act 
of 1995, as amended.\10\
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    \7\ 5 U.S.C. 553(b).
    \8\ 5 U.S.C. 804.
    \9\ 5 U.S.C. 601-612.
    \10\ 44 U.S.C. 3501-3520.
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B. Cost-Benefit Analysis

    The Commission is sensitive to the costs and benefits imposed by 
its rules. The Commission believes that the amendments to its rules 
that it is adopting today will produce the benefit of providing greater 
clarity to the plan of organization and operation that will be observed 
by the Commission in discharging its duties and responsibilities during 
certain emergency conditions. The Commission also believes that these 
rules will not impose any costs on non-agency parties, or that if there 
are any such costs, they are negligible.

C. Consideration of Burden on Competition

    Section 23(a)(2) of the Securities Exchange Act of 1934 (``Exchange 
Act'') requires the Commission, in making rules pursuant to any 
provision of the Exchange Act, to consider among other matters the 
impact any such rule would have on competition. The Commission does not 
believe that the amendments that the Commission is adopting today will 
have any impact on competition.

Statutory Authority

    The amendments to the Commission's rules are adopted pursuant to 
the authorities set forth therein.

List of Subjects in 17 CFR Part 200

    Administrative practice and procedure, Authority delegations 
(Government agencies), Organization and functions (Government 
agencies).

Text of Amendments

0
For reasons set out in the preamble, Title 17, Chapter II, subpart G, 
of the Code of Federal Regulations is amended as follows:

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION 
REQUESTS

Subpart G--Plan of Organization and Operation Effective During 
Emergency Conditions

0
1. The general authority citation for part 200, subpart G is revised 
and the subauthority is removed.
    The revision reads as follows:

    Authority: 15 U.S.C. 77s, 78d, 78d-1, 78w, 77sss, 80a-37, 80b-
11; Reorganization Plan No. 10 of 1950 (15 U.S.C. 78d nt).


0
2. Section 200.200 is amended by:
0
a. Removing the authority citation following the section; and
0
b. Revising the phrase ``to read'' ``emergency conditions,''.

0
3. Section 200.201 is revised to read as follows:


Sec.  200.201  General provisions.

    (a) For purpose of this subpart, a person shall be considered 
unavailable or incapacitated in any situation and from any cause that 
prevents the person from assuming or performing on a timely basis his 
or her authorized duties, roles, or responsibilities of office, whether 
from a primary or alternate facility, or any other location.

[[Page 33387]]

    (b) For purpose of this subpart, emergency conditions shall be 
deemed to commence upon the occurrence, or the imminent threat of the 
occurrence, of a natural or man-made disturbance, including, but not 
limited to, an armed attack against the United States, its territories 
or possessions, terrorist attack, civil disturbance, fire, pandemic, 
hurricane, or flood, that results in, or threatens imminently to result 
in, a substantial disruption of the organization or operations of the 
Commission. Such conditions shall be deemed to continue until the 
Commission shall, by notice or older, resume its normal organization 
and operations, whether at its headquarters in Washington, DC or 
elsewhere.

0
4. Section 200.202 is amended by:
0
a. Removing the authority citation following the section; and
0
b. Revising paragraph (b) to read as follows:


Sec.  200.202  Offices, and information and submittals.

* * * * *
    (b) During emergency conditions, all formal or informal requests, 
filings, reports, or other submittals shall be submitted to the 
Commission as permitted in non-emergency conditions, unless the 
Chairman or his or her successor acting pursuant to Sec.  200.203(c)(1) 
of this subpart specifies another means or location for submission of 
such requests, filings, reports, or other submittals, by a notice that 
is disseminated through a method (or combination of methods) that is 
reasonably designed to provide broad distribution of the information to 
the public.

0
5. Section 200.203 is amended by:
0
a. Removing the authority citation following the section;
0
b. Revising paragraph (c)(1);
0
c. In the first sentence of paragraph (e), revising the phrase ``in the 
absence or incapacity of such person during the emergency conditions'' 
to read ``in the event of the unavailability or incapacity of such 
person during emergency conditions''; and
0
d. Adding a sentence to the end of paragraph (e).
    The revision and addition read as follows:


Sec.  200.203  Organization, and delegation of authority.

* * * * *
    (c) * * *
    (1) In the event of the unavailability or incapacity of the 
Chairman of the Commission during emergency conditions, the authority 
of the Chairman to govern the affairs of the Commission and to act for 
the Commission, as provided for by law and by delegation from the 
Commission, will pass to the available person highest on the following 
list, until such time as the Chairman is no longer unavailable or 
incapacitated, or a successor Chairman has assumed office pursuant to 
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) and 
Reorganization Plan No. 10 of 1950 (15 FR 3175, 64 Stat. 1265):
    (i) The Commissioners in order of seniority.
    (ii) The General Counsel.
    (iii) The Division Directors in the order designated by the 
Chairman in the most recent designation prior to the commencement of 
emergency conditions, or if no such designation has occurred, in order 
of seniority.
    (iv) The Regional Directors in the order designated by the Chairman 
in the most recent designation prior to the commencement of emergency 
conditions, or if no such designation has occurred, in order of 
seniority.
    (v) The District Administrators in the order designated by the 
Chairman in the most recent designation prior to the commencement of 
emergency conditions, or if no such designation has occurred, in order 
of seniority.
* * * * *
    (e) * * * A person who discharges or assumes the duties of the head 
of a division or office pursuant to this subsection is hereby 
delegated, throughout the period of the unavailability or incapacity of 
the head of the division or office during the emergency conditions, all 
of the functions that the Commission has delegated to the head of the 
division or office.


Sec.  200.204  [Amended]

0
6. Section 200.204 is amended by:
0
a. Removing the authority citation following the section; and
0
b. Revising the phrase ``In the absence of unavailability of the 
appropriate staff officer or his successor'' to read ``In the event of 
the unavailability or incapacity of the appropriate staff officer or 
his or her successor during emergency conditions''.


Sec.  200.205  [Amended]

0
7. Section 200.205 is amended by removing the authority citation 
following the section.

    Dated: June 5, 2006.

    By the Commission.
Nancy M. Morris,
Secretary.
[FR Doc. 06-5232 Filed 6-8-06; 8:45 am]
BILLING CODE 8010-01-M