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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.
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U.S. Small Business Administration.
Correcting amendments.
The U.S. Small Business Administration (SBA) is correcting amendments to regulations governing SBA's Small Business Innovation Research (SBIR) Program and its Historically Underutilized Business Zone (HUBZone) Program. These regulations addressed Employee Stock Ownership Plans, or ESOPs, but incorrectly referred to the ESOP as an Employee Stock Option Plan.
These corrections are effective on November 30, 2006.
Carl Jordan, Office of Size Standards, (202) 205-6618 or by e-mail at
The SBA published a final rule in the December 3, 2004
SBA published in the May 24, 2004
Administrative practice and procedure, Government procurement, Government property, Grant programs—business, Loan programs—business, Reporting and recordkeeping requirements, Small businesses.
Administrative practice and procedure, Government procurement, Reporting and recordkeeping requirements, Small businesses.
15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, and 662(5); and Pub. L. 105-135, sec. 401
(a) * * *
(2) If an Employee Stock Ownership Plan owns all or part of the concern, SBA considers each stock trustee and plan member to be an owner.
15 U.S.C. 632(a), 632(j), 632(p) and 657a.
* * * If an Employee Stock Ownership Plan owns all or part of the concern, SBA considers each stock trustee and plan member to be an owner. * * *
Federal Aviation Administration (FAA), DOT.
Final special conditions.
These special conditions are issued for the Airbus A380-800 airplane. This airplane will have novel or unusual design features when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. Many of these novel or unusual design features are associated with the complex systems and the configuration of the airplane, including its full-length double deck. For these design features, the applicable airworthiness regulations do not contain adequate or appropriate safety standards regarding ground turning loads. These special conditions contain the additional safety standards that the Administrator considers necessary to
The effective date of these special conditions is November 9, 2006.
Holly Thorson, FAA, International Branch, ANM-116, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (425) 227-1357; facsimile (425) 227-1149.
Airbus applied for FAA certification/validation of the provisionally-designated Model A3XX-100 in its letter AI/L 810.0223/98, dated August 12, 1998, to the FAA. Application for certification by the Joint Aviation Authorities (JAA) of Europe had been made on January 16, 1998, reference AI/L 810.0019/98. In its letter to the FAA, Airbus requested an extension to the 5-year period for type certification in accordance with 14 CFR 21.17(c). The request was for an extension to a 7-year period, using the date of the initial application letter to the JAA as the reference date. The reason given by Airbus for the request for extension is related to the technical challenges, complexity, and the number of new and novel features on the airplane. On November 12, 1998, the Manager, Aircraft Engineering Division, AIR-100, granted Airbus' request for the 7-year period, based on the date of application to the JAA.
In its letter AI/LE-A 828.0040/99 Issue 3, dated July 20, 2001, Airbus stated that its target date for type certification of the Model A380-800 has been moved from May 2005, to January 2006, to match the delivery date of the first production airplane. In a subsequent letter (AI/L 810.0223/98 issue 3, dated January 27, 2006), Airbus stated that its target date for type certification is October 2, 2006. In accordance with 14 CFR 21.17(d)(2), Airbus chose a new application date of April 20, 1999, and requested that the 7-year certification period which had already been approved be continued. The FAA has reviewed the part 25 certification basis for the Model A380-800 airplane, and no changes are required based on the new application date.
The Model A380-800 airplane will be an all-new, four-engine jet transport airplane with a full double-deck, two-aisle cabin. The maximum takeoff weight will be 1.235 million pounds with a typical three-class layout of 555 passengers.
Under the provisions of 14 CFR 21.17, Airbus must show that the Model A380-800 airplane meets the applicable provisions of 14 CFR part 25, as amended by Amendments 25-1 through 25-98. If the Administrator finds that the applicable airworthiness regulations do not contain adequate or appropriate safety standards for the Airbus A380-800 airplane because of novel or unusual design features, special conditions are prescribed under the provisions of 14 CFR 21.16.
In addition to the applicable airworthiness regulations and special conditions, the Airbus Model A380-800 airplane must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36. In addition, the FAA must issue a finding of regulatory adequacy pursuant to section 611 of Public Law 93-574, the “Noise Control Act of 1972.”
Special conditions, as defined in 14 CFR 11.19, are issued in accordance with 14 CFR 11.38 and become part of the type certification basis in accordance with 14 CFR 21.17(a)(2).
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, the special conditions would also apply to the other model under the provisions of 14 CFR 21.101(a)(1).
The A380 has a landing gear arrangement consisting of a nose gear, two wing mounted gears, and two body mounted gears. This is different from the conventional tricycle landing gear arrangement envisioned by 14 CFR 25.495. The simple load condition specified in § 25.495, while providing a realistic approximation for designing a tricycle landing gear arrangement, will give unrealistic results for the A380. Safe sizing of the A380 landing gears necessitates a rational ground turning analysis that considers the way the airplane as a whole responds to a turning maneuver.
Furthermore, recent studies of the current generation of transport category airplanes carried out in the U.S. and in Europe indicate a correlation between lower load factors in ground turns and higher gross weight of an airplane. This correlation was documented in the FAA-sponsored report, DOT/FAA/AR-02/129
Therefore, in lieu of the requirements of § 25.495, a special condition regarding ground turning loads is justified for the Model A380 airplane. The special condition would require the applicant to determine the loads on the airplane during ground turning in a rational manner and would allow the applicant to determine a limit turning lateral load factor—not less than 0.45 g's—for the A380 at maximum ramp weight.
Notice of Proposed Special Conditions No. 25-05-16-SC, pertaining to ground turning loads for the Airbus A380 airplane, was published in the
Boeing adds that the current safety standard for a four post gear
These special conditions are motivated primarily by the size and weight of the Model A380 airplane and the effect of these parameters on ground turning loads. Nevertheless, the FAA recognizes the importance of the multi-post landing gear configuration on the individual landing gear loads. (In separate special conditions for the A380, we have adopted the set of standards developed by ARAC for ground and landing conditions for multi-post landing gear arrangements, as Boeing suggests. Those special conditions, No. 25-324-SC, do not address ground turning loads.)
As discussed in the Notice of Proposed Special Conditions, pertaining to ground turning loads, the FAA concludes that, “Safe sizing of the A380 landing gear necessitates a rational ground turning analysis that considers the way the airplane as a whole responds to a turning maneuver,” and the proposed special condition contains provisions for such an analysis. The FAA considers these provisions to adequately to address the commenter's safety concern. The 747 Special Condition A-4 was not adopted for the A380, because it does not constitute a current safety standard for all four-post main landing gear.
The FAA concluded that “Based on this rationale, for the A380 at a maximum ramp weight—which is more than 30% heavier than any currently certificated airplane—the 0.5 g design turning load factor specified in § 25.495 is conservative.” However, the Boeing Company suggests that these conclusions from the operational data are broadly applicable to the current large/heavy fleet of transport airplanes and are not unique to the Model A380 configuration or design weights.
This is a reduction of the established standard, which will result in decreased gear strength relative to the existing fleet. We consider the current 0.5g side load factor as a 'book' case intended to provide relatively simple criteria to ensure adequate side strength in lieu of an all-inclusive rational analysis. The special condition does not consider supplementary criteria to maintain equivalence to existing safety standards.
Accordingly, the special conditions are adopted, as proposed, with a minor clarifying change to the text of subparagraph b.
As discussed above, these special conditions are applicable to the Airbus A380-800 airplane. Should Airbus apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design features, these special conditions would apply to that model as well under the provisions of § 21.101.
This action affects only certain novel or unusual design features of the Airbus A380-800 airplane. It is not a rule of general applicability.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for the Airbus A380-800 airplane.
In lieu of the requirements of § 25.495, the following special condition applies:
a. The airplane is assumed to execute a steady turn by steering of any steerable gear or by application of any differential power. The airplane limit vertical load factor must be 1.0, and, in the absence of a more rational analysis, the limit airplane lateral load factor must be 0.5.
b. The airplane is assumed to be in static balance, the lateral load factor being reacted by friction forces applied at the ground contact point of each tire. The lateral load must be shared between each individual tire in a rational or conservative manner. The distribution of the load among the tires must account at least for the effects of the factors specified in subparagraph c. (2) of this special condition.
c. At maximum ramp weight, a limit value of lateral center of gravity (cg) inertia load factor lower than specified in subparagraph a. but not less than 0.45g (wing axis) may be used, if it can be shown by a rational analysis that this lower value cannot be exceeded. The rational analysis must consider at least the following:
1. The maximum lateral load factor that can be reached during the full range of likely ground operations at maximum ramp weight, including ground turning, “fishtailing,” and high-speed runway exit. In each case, the full dynamic maneuver must be considered.
2. The rational analysis must include at least the following parameters:
(a) Landing gear spring curves and landing gear kinematics.
(b) Reliable tire friction characteristics.
(c) Airframe and landing gear flexibility when significant.
(d) Airplane rigid body motion.
(e) The worst combination of tire diameter, tire pressure, and runway. shapes, specified in §§ 25.511(b)(2), 25.511(b)(3), and 25.511(b)(4).
d. The limit lateral load factor at maximum landing weight is 0.5.
e. Details of the analysis and any assumptions used must be agreed to by the FAA. Any assumptions made in the analysis must be based on the intrinsic characteristics of the airplane and must be independent of airfield geometry. Other influences that cannot be controlled by the airplane design must be conservatively assessed.
Federal Aviation Administration (FAA), DOT.
Final special conditions.
These special conditions are issued for the Boeing Model 777 series airplanes. This airplane will have novel or unusual design features associated with overhead cross aisle stowage compartments. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for these design features. These special conditions contain the additional safety standards the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
November 15, 2006.
Jayson Claar, FAA, Airframe/Cabin Branch, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington, 98057-3356; telephone (425) 227-2194; facsimile (425) 227-1232.
On April 20, 2005, Boeing Commercial Airplane Group, Seattle, Washington, applied for a supplemental type certificate to permit installation of overhead cross aisle stowage compartments in Boeing 777 series airplanes. The Boeing Model 777 series airplanes are large twin engine airplanes with four or five pairs of Type A exits. The Boeing 777 airplanes can be configured with various passenger capacities and ranges.
The regulations do not address the novel and unusual design features associated with the installation of overhead cross aisle stowage compartments installed on the Boeing Model 777, making these special conditions necessary. Generally, the requirements for overhead stowage compartments are similar to stowage compartments in remote crew rest compartments (i.e., located on lower lobe, main deck or overhead) already in use on Boeing Model 777 and 747 series
Under the provisions of § 21.101, Boeing Commercial Airplane Group must show that the Boeing Model 777, as changed, continues to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. T00001SE or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference in Type Certificate No. T00001SE for the Boeing Model 777 series airplanes include Title 14 Code of Federal Regulations (CFR), part 25, as amended by Amendments 25-1 through 25-100, with exceptions, for various models. Refer to Type Certificate No. T00001SE, as applicable, for a complete description of the certification basis for this model, including certain special conditions that are not relevant to these special conditions.
If the Administrator finds the applicable airworthiness regulations (part 25 as amended) do not contain adequate or appropriate safety standards for the Boeing Model 777 because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.
In addition to the applicable airworthiness regulations and special conditions, the Boeing Model 777 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in § 11.19, under § 11.38, and they become part of the type certification basis under § 21.101.
Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a change to modify any other model included on the same type certificate to incorporate the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.
The Boeing Model 777 will incorporate the following novel or unusual design features: the installation of powered lift-enabled stowage compartments that rise into the overhead area and lower into the cabin.
The overhead cross aisle stowage compartments are configured to allow stowage of galley type standard containers as well as coats, bags, and other items typically stowed in closets or bins. These stowage compartments may be located above the emergency exit cross aisles of Boeing Model 777 series airplanes. Because the compartment is lowered into the main cabin, it could affect egress if it cannot be raised again. The overhead compartment may lower into a cross aisle as defined in § 25.813, but it may also lower into other potential egress paths. For the purposes of these special conditions, the same criteria apply, whether or not the egress path is required by § 25.813. Therefore, as used in these special conditions, the term “overhead cross aisle stowage compartment” addresses all such compartments.
Each stowage compartment is accessed from the main deck by a powered lift that lowers and raises the stowage compartment between the overhead and the main deck. In addition, the lift can be hand cranked down and up in the event of a power or lift motor failure. A smoke detection system will be provided in the overhead cross aisle stowage compartments.
In general, the requirements listed in these special conditions for overhead cross aisle stowage compartments are similar to those previously approved for overhead crew rest compartments in earlier certification programs, such as for the Boeing Model 777 and Model 747 series airplanes. These special conditions establish compartment access, power lift, electrical power, smoke/fire detection, fire extinguisher, fire containment, smoke penetration, and compartment design criteria for the overhead cross aisle stowage compartments. The overhead stowage compartments are not a direct analogy to stowage compartments in remote crew rest compartments installed and certified for Boeing Model 777 series airplanes, but the safety issues raised are similar. Features similar to those considered in the development of previous special conditions for fire protection will be included here also. The requirements provide an equivalent level of safety to that provided by other Boeing Model 777 series airplanes with similar overhead compartments.
The FAA's Aircraft Certification Service will administer these special conditions, which specify requirements for design approvals (that is, type design changes and supplemental type certificates) of overhead cross aisle stowage compartments.
The Aircraft Evaluation Group of the FAA's Flight Standards Service must evaluate and approve the operational use of overhead cross aisle stowage compartments prior to use. The Aircraft Evaluation Group must receive all instructions for continued airworthiness, including service bulletins, prior to the FAA accepting and issuing approval of the modification.
Appropriate placards, or other means, are required to address door access and locking to prohibit or prevent passenger access, and operation of the overhead storage compartment. There must also be a means to preclude anyone from being trapped inside the stowage compartment, if it is large enough for a person to enter. If there is more than one door providing access, each door must be equipped with these means.
The power lift must be designed so the overhead stowage compartment will not jam in the down position, even if lowered on top of a hard structure. The lift must operate at a speed, and stop above the floor at such a height, that allows anyone underneath the compartment to move clear without injury. The lift controls must be placed clear of the compartment door and must be pressed continuously for lift operation. Training on power lift operation procedures must be added to appropriate manuals.
There must be a means to manually operate the lift that is independent of the electrical drive system. The lift must be operable by a range of occupants, including a fifth percentile female. The manual means must be capable of lowering the overhead stowage compartment quickly to the main deck to fight a fire. The manual system must be capable of raising the compartment quickly so the cross aisle or other egress path (if applicable) is not blocked in an emergency. If electrical or manual power is removed, there must be a means, such as a brake, to prevent the compartment from unrestricted movement, i.e., falling. Training on
For compartments larger than 25 cubic feet, a handheld fire extinguisher appropriate to fight the kinds of fire likely to occur in the overhead stowage compartment must be provided. This handheld fire extinguisher must be adjacent to the overhead compartment. This extinguisher must be in addition to those required for the passenger cabin.
This special condition requires either the installation of a manually activated fire extinguishing system that is accessible from outside the overhead stowage compartment, or a demonstration that the crew could satisfactorily perform the function of extinguishing a fire under the prescribed conditions. A manually activated built-in fire extinguishing system would be required only if a crewmember could not successfully locate and get access to the fire during a demonstration where the crewmember is responding to the alarm. For the duration of the flight, the system must have adequate capacity to suppress any fire occurring in the stowage compartment considering the fire threat, volume of the compartment, and the ventilation rate.
The design of the compartment must provide means to exclude hazardous quantities of smoke or extinguishing agent originating in the compartment from entering other occupied areas. The means must take into account the time period during which the compartment may be accessed to manually fight a fire, if applicable.
Smoke entering any other compartment occupied by crewmembers or passengers, when access to the stowage compartment is opened to manually fight a fire, must dissipate within five minutes after the access to the stowage compartment is closed.
During the one-minute smoke detection time (see Special Condition No. 7), penetration of a small quantity of smoke (one that would dissipate within 3 minutes under normal ventilation conditions) from this overhead stowage compartment into an occupied area on this airplane configuration would be acceptable based on the limitations placed in this and other associated special conditions. These special conditions place sufficient restrictions in the quantity and type of material allowed in the overhead stowage compartment that threat from a fire in this remote area would be equivalent to that experienced on the main cabin.
If a built-in fire extinguishing system is used in lieu of manual fire fighting, then the fire extinguishing system must be designed so that no hazardous quantities of extinguishing agent will enter other compartments occupied by passengers or crew.
The material used to construct the overhead stowage compartment must meet the flammability requirements for compartment interiors in § 25.853 and be fire resistant. Depending on the size of the compartment, certain fire protection features of Class B cargo compartments are also required. Enclosed stowage compartments equal to or exceeding 25 ft
Enclosed stowage compartments equal to or greater than 57 ft
The overhead stowage compartment smoke or fire detection and fire suppression systems (including airflow management features which prevent hazardous quantities of smoke or fire extinguishing agent from entering any other compartment occupied by crewmembers or passengers) is considered complex in terms of paragraph 6d of Advisory Circular (AC) 25.1309-1A, “System Design and Analysis.” The FAA considers failure of the overhead stowage compartment fire protection system (that is, smoke or fire detection and fire suppression systems) in conjunction with an overhead stowage fire to be a catastrophic event. Based on the “Depth of Analysis Flowchart” shown in Figure 2 of AC 25.1309-1A, the depth of analysis should include both qualitative and quantitative assessments (reference paragraphs 8d, 9, and 10 of AC 25.1309-1A).
The requirements to enable crewmember(s) quick access to the overhead stowage compartment and to locate a fire source inherently places limits on the amount of baggage stowed and the size of the overhead stowage compartment. The overhead stowage compartment is limited to stowage of galley type standard containers as well as coats, bags, and other items typically stowed in closets or bins. It is not intended to be used for the stowage of other items. The design of such a system to include other items may require additional special conditions to ensure safe operation.
Notice of proposed special conditions No. 25-06-09-SC for the Boeing Model 777-200 series airplanes was published in the
These special conditions are applicable to the Boeing Model 777 series airplanes with overhead cross aisle stowage compartments. Should Boeing Commercial Airplane Group apply later for a change to Type Certificate No. T00001SE to include another model on the same type certificate incorporating the same novel or unusual design feature, the special conditions would apply to that model as well.
Under standard practice, the effective date of final special conditions would be 30 days after the date of publication in the
This action affects only certain novel or unusual design features on the Boeing Model 777 series airplanes. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Boeing Model 777 series airplanes. Each overhead cross aisle stowage compartment and the adjacent area, including the structural frame, mechanical system and drive motor, must meet the following requirements:
1.
2.
(a) The lift controls must be placed so the operator is clear of the lift and designed such that the controls must be pressed continuously for lift operation.
(b) The lift must raise and lower the stowage compartment at a slow enough rate, and stop above the floor at such a height, that anyone underneath can easily move clear without injury.
(c) Stowage compartment operation training procedures must be added to the appropriate flight attendant manuals.
3.
(a) This manual means must be independent of the electrical drive system
(b) The manual means must be accessible and operable by a range of occupants, including a fifth percentile female.
(c) The manual means must be capable of lowering the stowage compartment to the main deck quickly enough to fight a fire in the stowage compartment before overhead cross aisle stowage compartment fire containment is compromised.
(d) The manual means must be capable of quickly raising the stowage compartment such that the cross aisle, or other egress path is not blocked in the event of an emergency.
(e) Stowage compartment firefighting training procedures must be added to the appropriate manuals.
(f) The lift system must include a means, such as a brake, to retain the overhead cross aisle stowage compartment in any position of travel when the manual or electric drive force is removed.
4.
5.
6.
7.
(a)
(b)
Federal Aviation Administration (FAA), DOT.
Final rule; notice of effective date.
The FAA is announcing the effective date of the final rule, published July 14, 2005, that amended the regulations governing maintenance, preventive maintenance, and alterations performed on U.S. aeronautical products by certain Canadian persons. That revision removes specific regulatory references and other requirements and requires that the maintenance, preventive maintenance, and alterations be performed in accordance with a Bilateral Aviation Safety Agreement (BASA) between the United States and Canada and associated Maintenance Implementation Procedures (MIP). When the rule was published, the FAA announced the amendments would become effective concurrent with the date the MIP entered into force. The MIP was signed and entered into force on August 31, 2006; accordingly, the amendments became effective on that date.
The effective date of § 43.17 is August 31, 2006.
William D. Scott, Flight Standards, Aircraft Maintenance Division, AFS-300, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591; telephone (502) 753-4202; facsimile (502) 753-4232, e-mail:
On July 14, 2005, the FAA issued a final rule amending § 43.17 of Title 14 of the Code of Federal Regulations (CFR), Maintenance, preventive maintenance, and alterations performed on U.S. aeronautical products by certain Canadian persons. (70 FR 40872). The United States and Canada had entered into an international agreement called a Bilateral Aviation Safety Agreement (BASA) that was in line with BASAs negotiated with other countries. The FAA and its Canadian counterpart, Transport Canada Civil Aviation (TCCA) of the Department of Transport, were negotiating Maintenance Implementation Procedures (MIP) to accompany the BASA. The amendment to § 43.17 removes specific regulatory references that if not removed would have constrained development of a standardized MIP.
The amendment also makes other minor changes and requires that all maintenance, preventive maintenance, and alterations performed by Canadian Approved Maintenance Organizations (AMOs) and Aviation Maintenance Engineers (AMEs) on U.S. aeronautical products be done in accordance with a BASA between the United States and Canada and the associated MIP.
The MIP has been finalized. It was signed on August 31, 2006, and became effective immediately upon signing. In the preamble to the final rule the FAA stated, “These amendments become effective concurrent with the date the MIP accompanying the BASA between the United States and Canada enters into force.” Since the MIP is now final and entered into force on August 31, 2006, the FAA now sets the effective date for the above-referenced amendment to § 43.17 to be August 31, 2006.
The FAA has also prepared guidance material to assist maintenance providers in complying with the MIP. This guidance is contained in Advisory Circular (AC) AC 43-10B. A copy of the AC may be obtained by accessing the FAA's Regulatory and Guidance Library Web page at
In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to comply with International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these regulations.
In accordance with 5 U.S.C. 553(b)(3)(B), FAA finds good cause for issuing this rule without prior notice and comment. Seeking public comment
In consideration of the foregoing, the FAA announces the effective date of 14 CFR part 43, Amendment 43-40, published July 14, 2005. The amendments require that the maintenance, preventive maintenance, and alterations be performed in accordance with a Bilateral Aviation Safety Agreement (BASA) between the United States and Canada and associated Maintenance Implementation Procedures (MIP). The MIP was signed and entered into force on August 31, 2006; accordingly, the amendments became effective on that date.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action changes the name of the Eastman-Dodge County Airport to Heart of Georgia Regional Airport and establishes Class D airspace at Eastman, GA. On October 9, 1995, the Eastman-Dodge County Airport Authority adopted a name change for the airport. A non-Federal contract tower with a weather reporting system has been constructed at Heart of Georgia Regional Airport. Therefore, the airport meets criteria for Class D airspace. Class D surface area airspace is required when the control tower is open to contain Standard Instrument Approach Procedures (SIAPs) and other Instrument Flight Rules (IFR) operations at the airport. This action establishes Class D airspace extending upward from the surface to and including 2,500 feet MSL within a 4.1-mile radius of the airport.
0901 UTC, January 18, 2000. The Director of the Federal Register approves this incorporation by reference under 1 CFR part 51, subject to the annual revision of FAA Order 7400.9 and publication of conforming amendments.
Mark D. Ward, Group Manager, System Support, Eastern Service Center, Federal Aviation Administration, P.O. Box 20636, Atlanta, Georgia 30320; telephone (404) 305-5627.
On August 2, 2006, the FAA proposed to amend part 71 of the Federal Aviation Regulations (14 CFR part 71) by changing the name of the Eastman-Dodge City Airport and establishing Class D airspace at Eastman, GA (71 FR 43678). This action provides adequate Class D airspace for IFR operations at Heart of Georgia Regional Airport. Designations for Class D Airspace are published in FAA Order 7400.9P, effective September 16, 2006, which is incorporated by reference in 14 CFR part 71.1. The Class D airspace designation listed in this document will be published subsequently in the Order.
Interested parties were invited to participate in this rulemaking proceeding by submitting written comments on the proposal to the FAA. No comments objecting to the proposal were received.
This amendment to part 71 of the Federal Aviation Regulations (14 CFR part 71) changes the name of the Eastman-Dodge County Airport to Heart of Georgia Regional Airport and establishes Class D airspace at Eastman, GA.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Airspace, Incorporation by reference, Navigation (Air).
49 U.S.C. 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from the surface to and including 2,500 feet MSL within a 4.1-mile radius of the Heart of Georgia Regional Airport. This Class D airspace area is effective during the specific days and times established in advance by a Notice to Airmen. The effective days and times will thereafter be continuously published in the Airport/Facility Directory.
Office of Surface Mining Reclamation and Enforcement, Interior.
Final rule; approval of amendment.
The Secretary of the Interior (Secretary) is announcing the approval of an amendment to the New Mexico regulatory program (the “New Mexico program”) under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act) and the removal of the remaining condition of program approval. New Mexico proposed addition of rules and revision of a statute concerning the award of costs and expenses, including attorney fees, incurred in connection with the administrative and judicial appeals process.
New Mexico revised its program to be consistent with SMCRA and the corresponding Federal regulations.
November 30, 2006.
Willis Gainer, Telephone: (505) 248-5096, e-mail address:
Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its State program includes, among other things, “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of this Act * * *; and rules and regulations consistent with regulations issued by the Secretary pursuant to this Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary conditionally approved the New Mexico program on December 31, 1980. You can find background information on the New Mexico program, including the Secretary's findings, the disposition of comments, and conditions of approval in the December 31, 1980,
By letter dated November 18, 2005, New Mexico sent us an amendment to its program (Administrative Record No. 874) under SMCRA (30 U.S.C. 1201
We announced receipt of the proposed amendment in the February 13, 2006,
Following is the finding the Secretary made concerning the amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. The Secretary is approving the amendment as described below.
The Secretary required, as a condition of program approval (codified at 30 CFR 931.11(e)), that New Mexico implement regulations containing provisions which are the same as or similar to those in 43 CFR 4.1290-4.1296, relating to the award of costs, including attorney fees, in administrative proceedings, or otherwise amend its program to accomplish the same result.
OSM's current standard for approval of State program provisions concerning assessment of costs in administrative proceedings is that the State statutory and regulatory provisions must be in accordance with section 525(e) of SMCRA and consistent with 43 CFR Part 4. “Same or similar” is OSM's standard for approval of State program counterparts to the Federal provisions in section 518 of SMCRA concerning penalties, and section 521 of SMCRA concerning enforcement.
In response to the condition at 30 CFR 931.11(e), New Mexico proposes to (1) revise its statutory provision at NMSA, section 69-25A-29.F, concerning administrative review and the assessment of costs and expenses, including attorney fees, for a person's participation in administrative proceedings, including judicial review of agency actions, and (2) add newly-created rules at NMAC, section 19.8.12.1204, which contain provisions allowing for the award of appropriate costs and expenses, including attorney fees, reasonably incurred as a result of participation in an administrative review.
New Mexico proposes to revise NMSA, section 69-25A-29.F, concerning administrative review and the assessment of costs and expenses, including attorney fees, for a person's participation in administrative proceedings, including judicial review of agency actions, by deleting the provision stating that no such assessment shall be imposed upon the Director of the New Mexico program. With this revision, the Director of the New Mexico program has authority to determine whether expenses (that have been reasonably incurred for or in connection with participation in administrative proceedings, including any judicial review of agency actions) may be assessed against any party which would now include the Director.
Section 525(e) of SMCRA allows for an award of a sum equal to the aggregate amount of all costs, expenses, and attorney fees determined by the Secretary of the Interior to have been reasonably incurred by a person for or in connection with his participation in administrative proceedings, including any judicial review of agency actions.
New Mexico proposes addition of rules at NMAC, sections 19.8.12.1204A-G, which establish procedures, timeframes and standards for petitions for award of legal costs and expenses. New Mexico's proposed rules are intended to be consistent with the corresponding Federal regulations at 43 CFR 4.1290-4.1296, thereby satisfying the condition of State program approval at 30 CFR 931.11(e). With the exceptions discussed below, New Mexico's proposed revisions are substantively the same as the corresponding Federal regulations at 43 CFR 4.1290-4.1296.
New Mexico does not propose a counterpart regulation to 43 CFR 4.1294(a)(2) concerning the award of costs and expenses for alleged discriminatory acts. The regulations pertaining to the reporting and handling of such acts are found at 30 CFR Part 830 (now Part 865). These regulations were promulgated pursuant to section 703 of the Act. Because the provisions
New Mexico's proposed rule at NMAC, section 19.8.12.1204E(2), provides for awards from the Mining and Minerals Division (MMD) to a person other than the permittee who initiates or participates in a proceeding under the New Mexico program, prevails in whole or in significant part and achieves at least some degree of success on the merits. The award is contingent upon a finding that the person substantially contributed to the issues' full and fair determination, except that the contribution of the person who did not initiate the proceeding must be separate and distinct from the contribution made by the person initiating the proceeding. New Mexico's proposed rule differs from the Federal counterpart regulation at 43 CFR 4.1294(b) in that it requires that the person prevail in whole or in significant part where the Federal rule requires that the person prevail in whole or in part without the “significant” qualifier. New Mexico's proposed rule also distinguishes the contribution to a proceeding made by a participating person from the contribution made by an initiating party.
For the reasons discussion below, we believe that New Mexico's qualifying language adds reasonable clarification for administrative and judicial reviewers and is, therefore, not inconsistent with the Federal regulations.
In order to establish procedures governing petitions for the award of costs and expenses under section 525(e), the Secretary promulgated the regulations which appear at 43 CFR 4.1290-4.1296. The original regulations were published on August 3, 1978 (43 FR 34376). The 1978 regulations at 43 CFR 4.1294(b) provided that costs and expenses may be awarded from OSM to persons other than the permittee, if the person “made a substantial contribution to the full and fair determination of the issues.” They did not contain criteria with regard to the degree of success on the merits to be achieved for such awards.
After the Secretary conditionally approved the New Mexico Regulatory program, the 1978 regulations at 43 CFR 4.1294(b) were revised (50 FR 47222; November 15, 1985). The revision was prompted by the decision of the United States Supreme Court in
Subsequent court cases have held that plaintiffs may be considered “prevailing parties” for attorney fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought.
In the context of the above discussion, the Secretary finds that New Mexico's proposed NMAC, section 19.8.12.1204E(2), is consistent with and no less effective than the Act and counterpart Federal regulation at 43 CFR 4.1294(b).
Based on the above discussion, the Secretary (1) finds that New Mexico's proposed revision of NMSA, section 69-25A-29.F, and addition of NMAC, section 19.8.12.1204, satisfy the requirements of the program condition at 30 CFR 931.11(e) and (2) therefore, removes the condition.
We asked for public comments on the amendment (Administrative Record No. NM-876). We received one comment letter.
By letter dated February 2, 2006 (Administrative Record No. NM-879), we received comments from the Governor of the Zuni Tribe in Zuni, New Mexico. Our response to the Governor's comments regarding New Mexico's proposed rule revisions NMAC, section 19.8.12.1204, concerning the award of attorney fees, is discussed below.
The Governor raised concerns about a provision at proposed NMAC, section 19.8.12.1204.E(5), that allows attorney fees to be awarded to the New Mexico Minerals and Mining Division (MMD) by the Director of the New Mexico program. The Director of the New Mexico program is also the Director of MMD. The Governor expressed concern that the allowance for the agency to collect attorney fees would intimidate parties from challenging agency actions.
The authority for the Director of the New Mexico program to award attorney fees to any party, including MMD, has existed in New Mexico's statute at NMSA, section 69-25A-29.F, since 1979. New Mexico's proposed rules at NMAC, section 19.8.12.1204, are intended to provide counterpart provisions to the Federal regulations at 43 CFR 4.1290-1296, which restrict the right of certain parties, including the agency and the permittee, to collect fees from other parties.
As discussed in the Secretary's finding above, New Mexico's proposed rule at NMAC, section 19.8.12.1204.E(5), which allows the award of attorney fees to MMD is consistent with New Mexico's existing statute at NMSA, section 69-25A-29.F, and with the counterpart Federal regulations at 43 CFR 4.1290-1296. Both New Mexico's proposed rule and the Federal regulations limit an agency's right to collect attorney fees in either an administrative or judicial proceeding to situations where the agency can demonstrate that another party participated in the proceeding in bad faith and for the purpose of harassing or embarrassing the government. Furthermore, as discussed above, without the proposed revision at NMAC, section 19.8.12.1204.E(5), the agency could apply, under the existing statutory provision for attorney fees, on the same basis as other parties.
For the reasons discussed above, we are not requiring any revision of New Mexico's proposed rules in response to these comments.
Under 30 CFR 732.17(h)(11)(i) and section 503(b) of SMCRA, we requested comments on the amendment from various Federal agencies with an actual or potential interest in the New Mexico program (Administrative Record No. NM-876). We received no comments.
Under 30 CFR 732.17(h)(11)(i) and (ii), we are required to get concurrence from EPA for those provisions of the program amendment that relate to air or water quality standards issued under the authority of the Clean Water Act (33 U.S.C. 1251
None of the revisions that New Mexico proposed to make in this amendment pertains to air or water quality standards. Under 30 CFR 732.17(h)(11)(i), OSM requested comments on the amendment from EPA (Administrative Record No. NM-876). EPA did not respond to our request.
Under 30 CFR 732.17(h)(4), we are required to request comments from the SHPO and ACHP on amendments that may have an effect on historic properties. On December 20, 2005, we requested comments on New Mexico's amendment (Administrative Record No. NM-876). The SHPO responded on February 9, 2006, that it had no comments because the proposed amendments do no affect cultural resources (Administrative Record No. NM-881). We did not receive a response from the ACHP.
Based on the above findings, we approve New Mexico's November 18, 2005, proposed amendment, as revised on March 27, 2006.
We approve New Mexico's proposed statutory revisions as they were enacted by New Mexico (effective on June 17, 2005) and rule revisions as they were promulgated by New Mexico (effective on April 28, 2006).
To implement this decision, we are amending the Federal regulations at 30 CFR part 931, which codify decisions concerning the New Mexico program. We find that good cause exists under 5 U.S.C. 553(d)(3) to make this final rule effective immediately. Section 503(a) of SMCRA requires that the State's program demonstrate that the State has the capability of carrying out the provisions of the Act and meeting its purposes. Making this regulation effective immediately will expedite that process. SMCRA requires consistency of State and Federal standards.
This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulation.
This rule is exempted from review by the Office of Management and Budget (OMB) under Executive Order 12866 (Regulatory Planning and Review).
The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that this rule meets the applicable standards of subsections (a) and (b) of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments because each program is drafted and promulgated by a specific State, not by OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR Parts 730, 731, and 732 have been met.
This rule does not have Federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA.
In accordance with Executive Order 13175, we have evaluated the potential effects of this rule on Federally recognized Indian Tribes and have determined that the rule does not have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal government and Indian Tribes, or on the distribution of power and responsibilities between the Federal government and Indian Tribes. The rule does not involve or affect Indian Tribes in any way.
On May 18, 2001, the President issued Executive Order 13211 which requires agencies to prepare a Statement of Energy Effects for a rule that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required.
This rule does not require an environmental impact statement because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency decisions on proposed State regulatory program provisions do not constitute major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4321).
This rule does not contain information collection requirements that require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 3501
The Department of the Interior certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This rule is not a major rule under 5 U.S.C. 804(2), of the Small Business
a. Does not have an annual effect on the economy of $100 million.
b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.
c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.
This determination is based upon the fact that the State submittal which is the subject of this rule is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rule.
This rule will not impose an unfunded mandate on State, local, or tribal governments or the private sector of $100 million or more in any given year. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation did not impose an unfunded mandate.
Intergovernmental relations, Surface mining, Underground mining.
30 U.S.C. 1201
Federal Transit Administration (FTA), United States Department of Transportation.
Final rule.
This rule codifies existing FTA administrative guidance for safety-sensitive employees of ferryboat operations that are subject to the drug and alcohol (D&A) testing regulations of both FTA and the United States Coast Guard (USCG). This rule will provide regulatory relief to ferryboat operators who were previously subject to duplicative D&A testing regulations, and improve ferryboat operator compliance with FTA D&A testing regulations.
This rule does not adopt the proposed rule with respect to certain motor carrier operators who are subject to the D&A testing regulations of both FTA and the Federal Motor Carrier Safety Administration (FMCSA). FTA will retain its current guidance and interpretation with respect to these motor carrier operators.
This rule is effective January 2, 2007.
For program issues, Gerald Powers, Office of Safety and Security, (617) 494-2395 (telephone); (202) 366-7951 (fax); or
A copy of this rule and comments and material received from the public, as well as any documents indicated in the preamble as being available in the docket, are part of docket FTA-2006-24592, and are available for inspection or copying at the Docket Management Facility, U.S. Department of Transportation, Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
An electronic copy of this rule and comments are available online through the Document Management System (DMS) at:
Internet users may also download an electronic copy of this document by using a computer, modem and suitable communications software from the Government Printing Office's Electronic Bulletin Board Service at (202) 512-1661. Additionally, internet users may reach the Office of the Federal Register's home page at:
In 2001, FMCSA issued a rule that eliminated duplicative D&A testing regulations for holders of Commercial Drivers Licenses (CDLs) who provide public transportation services. This rule
Subsequently, FTA agreed with FMCSA's position with regard to holders of CDLs who provide public transportation services in its “Implementation Guidelines for Drug and Alcohol Regulations in Mass Transit” (Revised November, 2003) (Implementation Guidelines). The Implementation Guidelines provided that the FTA D&A testing regulations would cover transit agencies with safety-sensitive employees holding CDLs. In line with 49 CFR 382.103(d), FTA's Implementation Guidelines maintained FMCSA's determination that that these individual CDL holders be subject to FMCSA sanctions and other ramifications for FMCSA D&A testing regulation violations that were not included in FTA D&A testing regulations.
FTA undertook similar administrative steps to eliminate duplicative testing requirements for ferryboat operators by revising our policy for these operators in a Notice of Interpretation published in the
In response to Section 3030 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU, Pub. L. 109-59, August 10, 2005), FTA published a
Based on comments received and the safety requirements of FTA D&A testing regulations, we are partially adopting our proposal to amend the applicability section of 49 CFR 655.3 in this final rule.
FTA received five comments in response to the NPRM. FTA reviewed and considered all comments submitted. The following discussion summarizes our responses.
FTA proposed to eliminate duplicative testing requirements for ferryboat operators, and certain classes of motor carrier operators by amending the applicability section of FTA's D&A regulation at 49 CFR part 655.
One commenter supported FTA's efforts to eliminate duplicative requirements, and suggested that FTA also provide a graph or chart to guide the reader through the various D&A regulations for FTA, USCG, and FMCSA.
FTA proposed that private or nonprofit motor carrier operators regulated by both the FTA and FMCSA, who determines that a majority (more than 50 percent) its employees are regulated by FMCSA, may opt to only comply with FMCSA D&A testing regulations for that class of employees.
However, FTA proposed that its post-accident requirements in 49 CFR § 655.44 would continue to apply when an accident, as defined in 49 CFR § 655.4, occurred in the performance of public transportation activities. Further, the administrative requirements of subpart G, H, and I of 49 CFR part 655 would continue to apply to motor carrier operators receiving Federal transit funds.
FTA proposed that an employer exercising this option would have discretion to determine the timeframe and the manner in which it apportions the employees' safety-sensitive functions (i.e., daily, monthly, or annually). FTA proposed that the employer would make this determination annually, at the beginning of the calendar year, and that this determination would remain applicable throughout that calendar year.
One commenter, a State recipient responsible for administering the program for subrecipients, suggested that FTA provide further clarification regarding the applicability of FTA's proposed motor carrier exemption to contractor providers or recipients that receive Federal transit funds directly from the State.
This commenter also expressed concern as to how national contractors that provide local public transportation services would determine whether FMCSA regulated a majority of these employees. The commenter suggested that the employer make this determination on a location-by-location basis as opposed to on a national basis. This commenter further suggested that the employer determine which D&A regulations to follow based on the full-time equivalent number of employees as opposed to the total number of employees either at the national level or in the specific location.
Another commenter, representing an association, suggested that our proposal to retain oversight of “post-accident” testing would cause industry confusion and administrative errors. This commenter suggested that post accident testing under the same mode would eliminate potential risks of confusion and administrative error.
In addition to determining that codifying a similar exception in our regulation would cause confusion as to which testing scheme to apply, FTA has further determined, after further review of 49 CFR part 382 and consultation with FMCSA and the Office of Drug and Alcohol Control Compliance and Policy, that the existing regulatory framework of 49 CFR part 382 provides sufficient administrative relief by eliminating duplicative testing requirements for motor carrier operators. Specifically, 49 CFR 382.103(d) exempts from FMCSA testing those motor carrier operators who are also subject to the FTA D&A testing regulations. Therefore, we withdraw the proposals set out in the
FTA proposed to deem ferryboat operators who are subject to both FTA D&A regulations and USCG chemical and alcohol testing requirements, as in concurrent compliance with the testing requirements of FTA D&A regulations when they comply with the USCG chemical and alcohol testing requirements. FTA proposed, however, that those ferryboat operators would remain subject to FTA's random alcohol testing requirement because USCG does not have a similar requirement. Further, because FTA remains statutorily responsible for ensuring that recipients of public transportation funds comply with Federal regulations, it proposed that ferryboat operators remain subject to the administrative and oversight requirements of 49 CFR part 655.
FTA received four comments from representatives of associations on this issue.
One commenter indicated that there are differences between FTA and USCG testing requirements. It recommended that FTA identify and address each of the differences between FTA and USCG testing requirements. For instance, this commenter indicated that there are differences in the Medical Review Officer (MRO) reporting requirements under 49 CFR Part 40 and USCG guidance documents. This commenter also indicated that another difference exists between the USCG guidance and Substance Abuse Professional's duties prescribed in 46 CFR part 16, Subpart B.
Specifically, this commenter suggested that FTA inform all MROs currently processing test results for FTA that the MRO procedures for USCG do not follow 49 CFR part 40, Subpart G for reporting test results. It further suggested that USCG and FTA follow Part 40 reporting requirements “to the letter.”
Another commenter indicated that the proposed rule does not sufficiently address how it affects Management Information System (MIS) reports for each mode. It recommended that FTA provide clarification regarding MIS reports required by each mode.
The third commenter applauded FTA's efforts to codify the existing interpretation regarding ferryboat operators, and felt that this codification would streamline the D&A testing regulations. This commenter also indicated that this change would provide the same level of safety and oversight as the existing regime while saving time and money at the operational level.
The fourth commenter further welcomed FTA's decision to continue the administrative oversight of ferryboat operators. This commenter indicated that the continuation of administrative oversight of such operators standardizes and creates a stronger D&A program.
USCG did note that mariners are subject to additional testing requirements, such as the requirements for obtaining mariner credentials. As mariners, therefore, ferryboat operators are already subject to these additional requirements irrespective of FTA D&A testing regulations.
Moreover, we emphasize that this rule permits ferryboat operators to primarily follow the testing requirements of USCG, and thereby concurrently comply with FTA testing requirements. It does not impose additional requirements on MROs. The only testing exception this rule imposes is that ferryboat operators will remain subject to FTA random alcohol testing because USCG does not have a similar requirement. Since USCG follows Part 40 for D&A testing purposes, we have not amended the proposed rule language to address this comment.
With regard to the MIS report, the Department is working with USCG to mitigate potential confusion with MIS reporting for ferryboat operators. The Department has reconfigured its web-based reporting format. Specifically, FTA will identify FTA funded ferryboat employers, and provide a separate method for the rest of the transit systems that have no ferryboat operators, within the Drug & Alcohol Management Information System (DAMIS), the Department's internet-based reporting system. The industry already utilizes this system.
In DAMIS, these identified employers will receive a message upon clicking on the “Covered Employees” tab. This message will instruct them to separate the testing results of USCG/FTA covered employees from FTA-only covered employees. To separate the results, an additional employee category (Crewmembers) will appear on the screen. The message will instruct the employer to report the drug and alcohol testing results for USCG/FTA employees only within the Crewmember employee category, and not to duplicate the data within FTA defined employee categories.
Once the reporting process is complete and approved, USCG covered tests (all but random alcohol) will be provided electronically to the administrators of USCG testing program.
This rule is authorized under Section 3030 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU) (Pub. L. 109-59, August 10, 2005). This section amended Title 49 U.S.C. 5331(a)(3). This amendment provides for departmental discretion in determining whether public transportation safety-sensitive employees are adequately covered for drug and alcohol testing purposes by one agency, when those employees are subject to the drug and alcohol regulations of more than one agency within the Department of Transportation (DOT) or the Coast Guard.
Under Executive Order 12866, the Department must examine whether this rule is a “significant regulatory action.” A significant regulatory action is subject to OMB review and the requirements of the Executive Order. A “significant regulatory action” as one that is likely to result in a rule that may: (1) Have an annual effect on the economy of $120 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
This final rule codifies an existing agency interpretation, and, therefore, will not impose costs to the industry of $120 million or more annually, will not create an inconsistency, will not materially alter the Federal financial assistance from FTA, and does not raise new or novel legal or policy issues.
FTA has analyzed this final rule in accordance with the principles and criteria contained in Executive Order 13132 (Federalism). This final rule does not include any provisions that have substantial direct effect on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.
FTA finalized this rule in accordance with the principles and criteria of Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments). This rule does not have tribal implications, and does not impose direct compliance costs. Therefore, the funding and consultation requirements of Executive Order 13175 do not apply.
Section 603 of the Regulatory Flexibility Act requires a Federal agency to conduct an initial regulatory flexibility analysis describing impacts to small entities when developing a Notice of Proposed Rulemaking in accordance with 5 U.S.C. 553. Currently, approximately 3000 employers are subject to FTA D&A testing regulations. Of this number, a small percentage is also subject to the D&A testing regulations of FMSCA or the USCG. This final rule would have the effect of eliminating the administrative burden on those few employers who are subject to multiple testing requirements by permitting them to comply with the testing requirements of only one Federal agency.
FTA analyzed this rule to assess its impact on small businesses and other small entities to determine whether this rule will have a significant economic impact on a substantial number of small entities. This rule imposes no new costs because it merely permits jointly regulated entities to comport with the drug and alcohol testing procedures of only one agency. FTA hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities.
Under the provisions of the Paperwork Reduction Act, FTA may not conduct or sponsor, and a person is not required to respond to or may not be penalized for failing to comply with, a collection of information unless it displays currently valid OMB control number.
This rule has information collection requirements that are covered by the Office of the Secretary of Transportation (OST) paperwork collection number 2105-0529. OST applied to renew that collection number on August 4, 2006. (71 FR 44345, August 4, 2006).
This rule it will not result in costs of $100 million or more (adjusted annually for inflation), in the aggregate, to any of the following: State, local, or Native American tribal governments, or the private sector.
The National Environmental Policy Act of 1969, (42 U.S.C. 4321-4347) as amended), requires Federal agencies to consider the consequences of major federal actions and prepare a detailed statement on actions significantly affecting the quality of the human environment. There are no significant environmental impacts associated with this rule.
Alcohol abuse, Drug abuse, Drug testing, Grant programs—transportation, Mass transportation, Reporting and recordkeeping requirements, Safety, Transportation.
49 U.S.C. 5331; 49 CFR 1.51.
(a) Except as specifically excluded in paragraphs (b), and (c) of this section, this part applies to:
(c) A recipient operating a ferryboat regulated by the United States Coast Guard (USCG) that satisfactorily complies with the testing requirements of 46 CFR Parts 4 and 16, and 33 CFR Part 95 shall be in concurrent compliance with the testing requirements of this part. This exception shall not apply to the provisions of section 655.45, or subparts G, or H of this part.
(d) FTA may determine that a recipient, who fails to comply with the USCG chemical and alcohol testing requirements, shall be in noncompliance with the alcohol misuse and controlled substances testing requirements of this part. A finding of noncompliance by FTA may lead to the suspension of eligibility for Federal public transportation funding.
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments regarding (a) 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; (b) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (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 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 should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB),
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
Forest Service, USDA.
Notice; intent to prepare supplemental environmental impact statement.
The Forest Service will prepare a supplemental environmental impact statement (EIS) for the Fishtrap project. The original Fishtrap Record of Decision, signed on November 22, 2005, was litigated in May 2006. The primary issue of the lawsuit was related to treatments intended to maintain and/or enhance old growth stands. As a result of a Court-ordered settlement agreement with Plaintiffs, the Lolo National Forest Supervisor agreed to: (a) Withdraw the project decision; (b) monitor past maintenance/restorative treatments within old growth stands and evaluate the effects of these activities; and (c) prepare a supplemental environmental impact statement (SEIS), incorporating this new information, before proceeding with the project. Over the last several months, Lolo National Forest personnel have been monitoring the effects of past maintenance/restorative treatments in old growth stands and are currently evaluating the information they collected. The Fishtrap SEIS will incorporate the results of this monitoring work.
The project proposes to implement timber harvest, pre-commercial thinning, prescribed burning, herbicide treatment of noxious weeds, temporary road construction, road improvement work, and road decommissioning in the Fishtrap Creek drainage, Lolo National Forest, Plains/Thompson Falls Ranger District, Sanders County, Montana.
Randy Hojem, District Ranger (406-826-4308), or Pat Partyka, Team Leader (406-826-4314), at the Plains/Thompson Falls Ranger District, Lolo National Forest, P.O. Box 429, Plains, Montana 59859.
The Fishtrap analysis area of approximately 36,400 acres is located approximately 20 air miles north of Thompson Falls, Montana, Sanders County, in T23N, R28W; T23N, R29W; T24N, R27W; T24N, R28W; T24N, R29W; and T25N, R28W; PMM. Within this area, the Lolo National Forest proposes: (1) Approximately 2260 acres of timber harvest; (2) approximately 437 acres of pre-commercial thinning; (3) approximately 984 acres of prescribed burning; (4) approximately 0.75 miles of temporary road construction to access two harvest units; (5) approximately 151 miles of road decommissioning; (6) approximately 36 miles of road reconstruction; (7) approximately 40 miles of road maintenance of existing roads that would be used for timber
The Lolo National Forest Plan provides overall guidance for land management activities in the project area. The purposes for these actions are to: (1) Improve water quality, fish habitat and fish passage. (2) Improve grizzly bear habitat within the Cabinet-Yaak Grizzly Bear Recovery Zone. (3) Restore, maintain or enhance native “at risk” vegetative communities. (4) Provide for ecological sustainability and community stability through the use of forest products. (5) Improve and maintain big game winter range. (6) Provide for a transportation system that better reflects current access and resource concerns and reduces economic burdens associated with maintaining unneeded roads.
Issues currently identified for analysis in the SEIS include potential effects on old growth, soils, wildlife (particularly grizzly bear), water quality, fisheries, and forest access.
The Forest Service will consider a range of alternatives. A No Action alternative and other alternatives, which respond to significant issues, will be analyzed and compared to the Draft SEIS.
The Draft SEIS is expected to be filed with the Environmental Protection Agency (EPA) and available for public review in June 2007. Comments on the Draft SEIS will be considered and responded to in the Final SEIS, scheduled to be completed by October 2007.
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 environmental 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 an agency to the reviewer's position and contentions.
To assist the Forest Service in identifying and considering issues and concerns on the proposed action, comments on the draft 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.
Rural Telephone Bank, USDA.
Notice of 2006 fiscal year interest rate determination.
In accordance with 7 CFR 1610.10, the Rural Telephone Bank (Bank) cost of money rate has been established as 5.49% for all advances made during fiscal year 2006 (the period beginning October 1, 2005 and ending September 30, 2006). All advances made during fiscal year 2006 were under Bank loans approved on or after October 1, 1992. These loans are sometimes referred to as financing account loans.
The calculation of the Bank's cost of money rate for fiscal year 2006 is provided in Table 1. Since the calculated rate is greater than or equal to the minimum rate (5.00%) allowed under 7 U.S.C. 948(b)(3)(A), the cost of money rate is set at 5.49%. The methodology required to calculate the cost of money rates is established in 7 CFR 1610.10(c).
Jonathan P. Claffey, Deputy Assistant Governor, Rural Telephone Bank, STOP 1590—Room 5151, 1400 Independence Avenue, SW., Washington, DC 20250-1590. Telephone: (202) 720-9556.
The cost of money rate methodology develops a weighted average rate for the Bank's cost of money considering total fiscal year loan advances, debentures and other obligations, and the costs to the Bank of obtaining funds from these sources.
At its quarterly meeting on August 4, 2005, the Board of Directors (the “Board”) approved a resolution to dissolve the Bank. On November 10, 2005, the liquidation and dissolution process was initiated with the signing by President Bush of the 2006 Agriculture Appropriations bill, which contained a provision lifting the restriction on the retirement of more than 5 percent of the Class A stock held by the Government.
In accordance with the Board's resolution and the terms of the Loan Transfer Agreement between the Bank and the Government, dated August 4, 2005, the Bank's liquidating account loan portfolio (the portfolio of Bank loans approved before October 1, 1992) was transferred to the Government on October 1, 2005. As a result of that transfer, there are no more advances of liquidating account loan funds.
The dissolution of the Bank will not affect future advances of financing account loan funds. Requests for financing account advances will continue to be processed by employees of USDA Rural Development's Telecommunications Program, just as they were while the Bank remained in operation. The terms and conditions of the financing account loans will not change, nor will the method for determining the interest rates, including the determination of the cost of money rates after the end of each fiscal year. The only significant change to the financing account advances is that beginning October 1, 2005, Class B stock in the Bank is no longer being
Due to the ongoing dissolution of the Bank, no stock of any kind was issued during fiscal year 2006. Issuance of debentures or any other obligations related to advances from the financing account during the fiscal year were $66,496,919 at an interest rate of 5.494%. The Bank's cost of money rate for advances from the financing account is provided in Table 1.
Pursuant to its authority under the Foreign-Trade Zones Act, of June 18, 1934, as amended (19 U.S.C. 81a-81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a-81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
On September 26, 2006, the Acting Executive Secretary of the Foreign-Trade Zones Board filed an application submitted by the Port of Tacoma (Washington), grantee of Foreign-Trade Zone (FTZ) 86, requesting temporary/interim manufacturing (T/IM) authority for Norvanco International Inc. (Norvanco) to process (kit) certain imported components into home theater systems on behalf of the company's client, Panasonic Consumer Electronics Co., within Site 6 of FTZ 86, at Norvanco's facility located in Sumner, Washington.
The application was processed in accordance with T/IM procedures, as authorized by FTZ Board Order 1347, including notice in the
An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Port of Tacoma (Washington), grantee of Foreign-Trade Zone (FTZ) 86, requesting authority on behalf of Panasonic Consumer Electronics Co. (PCEC) and its warehouse/FTZ operator, Norvanco International Inc. (Norvanco), for the manufacture (kitting) of home theater systems under FTZ procedures. (Norvanco/PCEC has already been approved for this activity through November 2008 under FTZ temporary/interim manufacturing procedures.) The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the Board (15 CFR part 400). It was formally filed on November 8, 2006.
Norvanco operates a facility (100 employees) in Sumner, Washington, within Site 6 of FTZ 86, that will be used for the kitting of home theater systems (HTSUS 8527.31). The finished products would enter the United States duty free. Imported components/inputs that may be admitted under FTZ procedures are subwoofers (HTSUS 8518.21) and speaker boxes (HTSUS 8518.22). Since submission of the application to the FTZ Board, the applicant has clarified that it is not seeking authority for a third listed input—packing materials—to be admitted to the FTZ other than as ancillary to the other listed components. Duty rates on the two proposed imported components are currently 4.9 percent
This application requests authority for Norvanco to conduct the kitting activity under FTZ procedures on behalf of PCEC, which would allow the company to choose the duty rate that applies to the finished product for the foreign components noted above. Norvanco/PCEC also anticipates realizing logistical savings. The application indicates that the proposed kitting activity is currently performed abroad and that FTZ-related savings would enable the shifting of that activity to Norvanco's Washington facility, thereby helping to improve the facility's international competitiveness.
In accordance with the Board's regulations, a member of the FTZ Staff has been designated examiner to investigate the application and report to the Board.
Public comment is invited from interested parties. Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at the address listed below. The closing period for their receipt is January 29, 2007. Rebuttal comments in response to material submitted during the forgoing period may be submitted during the subsequent 15-day period (to February 13, 2007).
A copy of the application and accompanying exhibits will be available for public inspection at each of the following locations: The Seattle U.S. Export Assistance Center, 2601 Fourth Avenue, Suite 320, Seattle, WA 98121; and Office of the Executive Secretary, Foreign-Trade Zones Board, Room 2814B, U.S. Department of Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230.
Import Administration, International Trade Administration, Department of Commerce
November 30, 2006.
The Department of Commerce (the “Department”) received a timely request to conduct a new shipper review of the antidumping duty order on brake rotors from the People's Republic of China (“PRC”). In accordance with 19 CFR 351.214(d)(1), we are initiating a review for Longkou Qizheng Auto Parts Co., Ltd. (“Qizheng”).
Frances Veith or Blanche Ziv, AD/CVD Operations, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-4295 and (202) 482-4207, respectively.
The Department received a timely request from Qizheng on October 31, 2006, pursuant to section 751(a)(2)(B) of the Tariff Act of 1930, as amended (“the Act”), and in accordance with 19 CFR 351.214(c), for a new shipper review of the antidumping duty order on brake rotors from the PRC.
Pursuant to 19 CFR 351.214(b)(2)(i), 19 CFR 351.214(b)(2)(iii)(A), and 19 CFR 351.214(b)(2)(iii)(B), in its request for a new shipper review, Qizheng certified that as a producing exporter it did not export brake rotors to the United States during the period of investigation (“POI”); that since the initiation of the investigation it has never been affiliated with any company that exported subject merchandise to the United States during the POI; and that its export activities were not controlled by the central government of the PRC.
In accordance with 19 CFR 351.214(b)(2)(iv), Qizheng submitted documentation establishing the following: (1) the date on which it first shipped brake rotors for export to the United States; (2) the volume of its first shipment; and (3) the date of its first sale to an unaffiliated customer in the United States.
In accordance with section 751(a)(2)(B) of the Act and 19 CFR 351.214(d)(1), and based on information on the record, we find that Qizheng's request meets the initiation threshold requirements and we are initiating a new shipper review for shipments of brake rotors produced and exported by Qizheng. See Memorandum to the File through Wendy J. Frankel, Director, New Shipper Initiation Checklist, dated, November 22, 2006. The Department will conduct this new shipper review according to the deadlines set forth in section 751(a)(2)(B)(iv) of the Act.
Pursuant to 19 CFR 351.214(g)(1)(i)(B), the period of review (“POR”) for a new shipper review, normally initiated in the month immediately following the semiannual anniversary month, will be the six-month period immediately preceding the semiannual anniversary month. Therefore, the POR for the new shipper review of Qizheng will be April 1, 2006, through September 30, 2006.
Pursuant to the Department's regulations, in cases involving non-market economies, the Department requires that a company seeking to establish eligibility for an antidumping duty rate separate from the country-
On August 17, 2006, the Pension Protection Act of 2006 (H.R. 4) was signed into law by Congress. Section 1632 of H.R. 4 temporarily suspends the authority of the Department to instruct U.S. Customs and Border Protection to collect a bond or other security in lieu of a cash deposit in new shipper reviews. Therefore, the posting of a bond or other security under section 751(a)(2)(B)(iii) of the Act in lieu of a cash deposit is not available in this case. Importers of brake rotors exported and produced by Qizheng must continue to post a cash deposit of estimated antidumping duties on each entry of subject merchandise (i.e., brake rotors) at the PRC-wide entity rate of 43.32 percent.
Interested parties that need access to proprietary information in this new shipper review should submit applications for disclosure under administrative protective order in accordance with 19 CFR 351.305 and 351.306.
This initiation and notice are issued in accordance with section 751(a)(2)(B) of the Act and 19 CFR 351.214 and 351.221(c)(1)(i).
Import Administration, International Trade Administration, Department of Commerce.
On August 25, 2006, the United States Court of International Trade (“Court”) sustained the final remand determination made by the Department of Commerce (“the Department”) pursuant to the Court's remand of the final results of the administrative review of Helical Spring Lock Washers (“HSLWs”) from the People's Republic of China.
September 4, 2006.
Marin Weaver or Charles Riggle, AD/CVD Operations, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-2336 or (202) 482-0650, respectively.
In
On May 15, 2006, the Department issued the draft results of redetermination pursuant to remand to Hangzhou and Shakeproof Assembly Components Division of Illinois Tool Works Inc. (“Shakeproof”) for comment. On May 18, 2006, we received comments on our draft redetermination from both parties. On June 2, 2006, the Department issued its final results of redetermination pursuant to remand to the Court. The remand redetermination explained that the Department found the Sudha Electroplaters price quote to be the most reliable information on the record with which to value zinc plating. Moreover, based on the information on the record, the Department found that this quote should be applied to the weight of the un-plated lock washers. Thus, the Department recalculated the antidumping duty margin for Hangzhou. On August 25, 2006, the Court sustained the final redetermination made by the Department pursuant to the Court's remand of the final results of the administrative review of HSLWs from the People's Republic of China.
In its decision in
This notice is issued and published in accordance with section 516A(c)(1) of the Act.
Department of Defense, Advisory Group on Electron Devices.
Notice.
The DoD Advisory Group on Electron Devices (AGED) announces a closed session meeting.
The meeting will be held at 0900, Tuesday, December 5, 2006.
The meeting will be held at ITS Noesis Business Unit, 4100 N. Fairfax Drive, Suite 800, Arlington, VA 22203.
Ms. Vicki Schneider, ITS Noesis Business Unit, 4100 N. Fairfax Drive, Suite 800, Arlington, VA 22203, 703-741-0300.
The mission of the Advisory Group is to provide advice to the Under Secretary of Defense for Acquisition, Technology and Logistics to the Director of Defense Research and Engineering (DDR&E), and through the DDR&E to the Director, Defense Advanced Research Projects Agency and the Military Departments in planning and managing an effective and economical research and development program in the area of electron devices.
The AGED meeting will be limited to review of research and development efforts in electronics and photonics with a focus on benefits to national defense. These reviews may form the basis for research and development programs initiated by the Military Departments and Defense Agencies to be conducted by industry, universities or in government laboratories. The agenda for this meeting will include programs on molecular electronics, microelectronics, electro-optics, and electronic materials. Due to unforeseen circumstances, this announcement does not give the standard 15-day notification.
In accordance with Section 10(d) of Pub. L. 92-463, as amended, (5 U.S.C. App. 2), it has been determined that this Advisory Group meeting concerns matters listed in 5 U.S.C. 552b(c)(1), and that accordingly, this meeting will be closed to the public.
Take notice that on November 16, 2006, Cheniere Creole Trail Pipeline, L.P. (Creole Trail Pipeline), 717 Texas Avenue, Suite 3100, Houston, Texas 77002, filed in Docket No. CP05-357-005, a motion to vacate the certificate authority granted on June 15, 2006, in Docket Nos. CP05-357-000, et al., to construct, own and operate one of the lines, referred to as Line 2, of the originally certificated 116.8-mile, dual 42-inch pipelines. Creole Trail Pipeline explains that construction of a single 42-inch pipeline, referred to as Line 1, is sufficient for it to satisfy its transportation service obligations.
The motion is on file with the Commission and open for public inspection. This motion is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Any questions regarding the application should be directed to Patricia Outtrim, Cheniere Creole Trail Pipeline, L.P., 717 Texas Avenue, Suite 3100, Houston, Texas 77002, (713) 659-1361 or Lisa Tonery, King & Spalding LLP, 1185 Avenue of the Americas, New York, NY 10036, (212) 556-2307.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date listed below, file with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 14 copies of this filing and all subsequent filings made with the Commission and must mail a copy of all filing to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, other persons do not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to this project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project, or in support of or in opposition to this project, should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the applicant. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests, and interventions via the Internet in lieu of paper. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site (
Take notice that on November 16, 2006, Cheniere Creole Trail Pipeline, L.P. (Creole Trail Pipeline), 717 Texas Avenue, Suite 3100, Houston, Texas 77002, filed in Docket No. CP05-357-004, an application to amend its pending amendment application filed on August 4, 2006, in Docket No. CP05-357-003. Creole Trail Pipeline explains that it was granted certificate authorization on June 15, 2006, in
The application is on file with the Commission and open for public inspection. This application is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
Any questions regarding the application should be directed to Patricia Outtrim, Cheniere Creole Trail Pipeline, L.P., 717 Texas Avenue, Suite 3100, Houston, Texas 77002, (713) 659-1361 or Lisa Tonery, King & Spalding LLP, 1185 Avenue of the Americas, New York, NY 10036, (212) 556-2307.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date listed below, file with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 14 copies of this filing and all subsequent filings made with the Commission and must mail a copy of all filing to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, other persons do not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to this project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project, or in support of or in opposition to this project, should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the applicant. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests, and interventions via the Internet in lieu of paper. See 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site (
Take notice that on November 14, 2006, East Kentucky Power Cooperative, Inc. filed amendments to its Open Access Transmission Tariff, pursuant to 18 CFR 35.28(e) (2006) and Rule 207 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission, 18 CFR 385.207(a)(2) (2006).
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. On or before the comment date, it is not necessary to serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on July 24, 2006, the Midwest Independent Transmission System Operator, Inc. (Midwest ISO) filed a request to amend its June 1, 2006 request for waiver of standards for business practices. In addition, on November 3, 2006, Midwest ISO, filed an Affidavit of James F. Pewarski in further support of the waiver request.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant and all the parties in this proceeding.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that, on November 21, 2006, the Commission received the 2006/2007 Winter Assessment prepared by the North American Electric Reliability Council (NERC).
Section 39.11 of the Commission's regulations provides that the Electric Reliability Organization (ERO) shall conduct assessments of, among other things, the adequacy of the Bulk-Power System in North America and report its findings to the Commission, the Secretary of Energy, each Regional Entity, and each Regional Advisory Body annually or more frequently if so ordered by the Commission. According to NERC, the 2006/2007 Winter Assessment is the second assessment filed by NERC in its capacity as the ERO.
This assessment is filed under Docket No. RM05-30-000 and is accessible on-line at
Take notice that on November 16, 2006, PowerSmith Cogeneration Project Limited Partnership filed a request for a limited waiver of the operating standards, pursuant to 18 CFR 292.205(a)(2), and efficiency standards, pursuant to 18 CFR 292.205(a)(1), for a topping-cycle cogeneration facility located in Oklahoma City, Oklahoma, for calendar years 2007 and 2008.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant and all the parties in this proceeding.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that the Commission received the following electric rate filings.
Any person desiring to intervene or to protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214) on or before 5 p.m. Eastern time on the specified comment date. It is not necessary to separately intervene again in a subdocket related to a compliance filing if you have previously intervened in the same docket. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant. In reference to filings initiating a new proceeding, interventions or protests submitted on or before the comment deadline need not be served on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 14 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First St. NE., Washington, DC 20426.
The filings in the above proceedings are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive e-mail notification when a document is added to a subscribed dockets(s). For assistance with any FERC Online service, please e-mail
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
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of
Board of Governors of the Federal Reserve System, November 27, 2006.
Office of the Secretary, HHS.
Notice.
The Federal Medical Assistance Percentages and Enhanced Federal Medical Assistance Percentages for Fiscal Year 2008 have been calculated pursuant to the Social Security Act (the Act). These percentages will be effective from October 1, 2007 through September 30, 2008. This notice announces the calculated “Federal Medical Assistance Percentages” and “Enhanced Federal Medical Assistance Percentages” that we will use in determining the amount of Federal matching for State medical assistance (Medicaid) and State Children's Health Insurance Program (SCHIP) expenditures, and Temporary Assistance for Needy Families (TANF) Contingency Funds, the federal share of Child Support Enforcement collections, Child Care Mandatory and Matching Funds of the Child Care and Development Fund, Foster Care Title IV-E Maintenance payments, and Adoption Assistance payments.
The table gives figures for each of the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. Programs under title XIX of the Act exist in each jurisdiction; programs under titles I, X, and XIV operate only in Guam and the Virgin Islands; while a program under title XVI (Aid to the Aged, Blind, or Disabled) operates only in Puerto Rico. Programs under title XXI began operating in fiscal year 1998. The percentages in this notice apply to State expenditures for most medical services and medical insurance services, and assistance payments for certain social services. The statute provides separately for Federal matching of administrative costs.
Sections 1905(b) and 1101(a)(8)(B) of the Act require the Secretary of Health and Human Services to publish the Federal Medical Assistance Percentages each year. The Secretary is to calculate the percentages, using formulas in sections 1905(b) and 1101(a)(8)(B), from the Department of Commerce's statistics of average income per person in each State and for the Nation as a whole. The percentages are within the upper and lower limits given in section 1905(b) of the Act. The percentages to be applied to the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands are specified in statute, and thus are not based on the statutory formula that determines the percentages for the 50 states.
The “Federal Medical Assistance Percentages” are for Medicaid. Section 1905(b) of the Act specifies the formula for calculating Federal Medical Assistance Percentages as follows:
“Federal medical assistance percentage” for any State shall be 100 per centum less the State percentage; and the State percentage shall be that percentage which bears the same ratio to 45 per centum as the square of the per capita income of such State bears to the square of the per capita income of the continental United States (including Alaska) and Hawaii; except that (1) the Federal medical assistance percentage shall in no case be less than 50 per centum or more than 83 per centum, (2) the Federal medical assistance percentage for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa shall be 50 per centum.
Section 4725 of the Balanced Budget Act of 1997 amended section 1905(b) to provide that the Federal Medical Assistance Percentage for the District of Columbia for purposes of titles XIX and for the purpose of calculating the enhanced FMAP under title XXI shall be 70 percent. For the District of Columbia, we note under the table of Federal Medical Assistance Percentages the rate that applies in certain other programs calculated using the formula otherwise applicable, and the rate that applies in certain other programs pursuant to section 1118 of the Social Security Act.
Section 2105(b) of the Act specifies the formula for calculating the Enhanced Federal Medical Assistance Percentages as follows:
The “enhanced FMAP”, for a State for a fiscal year, is equal to the Federal medical assistance percentage (as defined in the first sentence of section 1905(b)) for the State increased by a number of percentage points equal to 30 percent of the number of percentage points by which (1) such Federal medical assistance percentage for the State, is less than (2) 100 percent; but in no case shall the enhanced FMAP for a State exceed 85 percent.
The “Enhanced Federal Medical Assistance Percentages” are for use in the State Children's Health Insurance Program under Title XXI, and in the Medicaid program for certain children for expenditures for medical assistance described in sections 1905(u)(2) and 1905(u)(3) of the Act. There is no specific requirement to publish the Enhanced Federal Medical Assistance Percentages. We include them in this notice for the convenience of the States.
These percentages are being announced today to provide States with advance notice of Fiscal Year 2008 changes in their FMAP percentages and to allow States to make any necessary preparations. However, these percentages may change for Titles XIX and XXI of the Social Security Act, pending comments received on the implementation of Section 6053 (b) of the Deficit Reduction Act (DRA) of 2005, Public Law 109-171. Section 6053 (b) relates to any state(s) affected by an influx of a significant number of evacuees as a result of Hurricane Katrina as of October 1, 2005. HHS plans to soon release a notice and seek comments on proposed adjustments to the FMAP percentages based on Section 6053 (b). The final percentages may change from those in this notice for affected states pending receipt and review of those comments.
The percentages listed will be effective for each of the four (4)
Thomas Musco or Robert Stewart, Office of Health Policy, Office of the Assistant Secretary for Planning and Evaluation, Room 447D—Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201, (202) 690-6870.
Part C (Centers for Disease Control and Prevention) of the Statement of Organization, Functions, and Delegations of Authority of the Department of Health and Human Services (45 FR 67772-76, dated October 14, 1980, and corrected at 45 FR 69296, October 20 1980, as amended most recently at 17 FR 50065, dated August 24, 2006) is amended to reflect the title change for the Division of Hereditary Blood Disorders, National Center on Birth Defects and Developmental Disabilities, Coordinating Center for Health Promotion, Centers for Disease Control and Prevention.
Section C-B, Organization and Functions, is hereby amended as follows:
Delete in its entirety the title for the
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 Donald W. Jehn or Pearline K. Muckelvene at least 7 days in advance of the meeting.
FDA regrets that it was unable to publish this notice 15 days prior to the December 14, 2006, Blood Products Advisory Committee meeting. Because the agency believes there is some urgency to bring this issue to public discussion and qualified members of the Blood Products Advisory Committee were available at this time, the Commissioner of Food and Drugs concluded that it was in the public interest to hold this meeting even if there was not sufficient time for the customary 15-day public notice.
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C.,
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meetings.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy
This notice is being published less than 15 days prior to the meeting due to the urgent need to meet timing limitations imposed by the intramural research review cycle.
This notice is being published less than 15 days prior to the meeting due to the urgent need to meet timing limitations imposed by the intramural research review cycle.
This notice is being published less than 15 days prior to the meeting due to the urgent need to meet timing limitations imposed by the intramural research review cycle.
Coast Guard, DHS.
Notice.
This notice is to inform the public that on January 25, 2005, the U.S. Embassy in London deposited a declaration with the International Maritime Organization stating that the express approval of the U.S. Government will be necessary before Regulations 19, 20, and 21 of the revised Annex I of the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78) would enter into force for the U.S.
For information concerning this notice, contact Mr. David A. Du Pont, Project Manager, Office of Standards Evaluation and Development, Project Development Division (CG-3PSR-2), telephone 202-372-1497 or via e-mail at
Comments and material received from the public, as well as documents mentioned in this preamble as being available in the docket, are part of docket USCG-2006-26267 and are available for inspection or copying at the Docket Management Facility, U.S. Department of Transportation, room PL-401, 400 Seventh Street SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the Internet at
The International Convention for the Prevention of Pollution from Ships (MARPOL 73/78), implemented by the Act to Prevent Pollution from Ships at 33 U.S.C. 1901
• Regulation 19 of revised Annex I, “Double hull and double bottom requirements for oil tankers delivered on or after 6 July 1996,” establishes design requirements for double hull oil tank vessels delivered on or after July 6, 1996.
• Regulation 20 of revised Annex I, “Double hull and double bottom
• Regulation 21 of revised Annex I, “Prevention of oil pollution from oil tankers carrying heavy grade oil as cargo,” bans the carriage of heavy grade oil in certain single hull tank vessels.
Through its January 25, 2005 declaration, which is available in the docket, the U.S. advised the IMO that the express approval of the U.S. will be necessary before these amendments will be applied in place of existing U.S. law. As a result, the U.S. has reaffirmed with the IMO that the Oil Pollution Act of 1990 (OPA 90) continues to be the national governing design standard for tank vessels operating in U.S. waters.
This January 25, 2005, declaration is fully consistent with prior actions by the U.S. in this area. In each of the three past instances, the U.S. deposited an instrument with IMO and published a notice in the
Copies of these notices are available in the docket.
33 U.S.C. 1231, 33 U.S.C. 1321, E.O. 12777, Department of Homeland Security Delegation No. 0170.1.
60-Day Notice of Information Collection Under Review: Application for Advance Permission To Return to Unrelinquished Domicile, Form I-191, OMB Control Number 1615-0016.
The Department of Homeland Security, U.S. Citizenship and Immigration Services (USCIS) has submitted the following information collection request for review and clearance in accordance with the Paperwork Reduction Act of 1995. The information collection is published to obtain comments from the public and affected agencies. Comments are encouraged and will be accepted for sixty days until January 29, 2007.
Written comments and suggestions regarding items contained in this notice, and especially with regard to the estimated public burden and associated response time should be directed to the Department of Homeland Security (DHS), USCIS, Director, Regulatory Management Division, Clearance Office, 111 Massachusetts Avenue, NW., Suite 3008, Washington, DC 20529.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information should address one or more of the following four points:
(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 the agencies estimate of the burden of the 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; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
(1)
(2)
(3)
(4)
(5)
(6)
If you have additional comments, suggestions, or need a copy of the proposed information collection instrument, please contact USCIS, Regulatory Management Division, 111 Massachusetts Avenue, NW., Suite 3008, Washington, DC 20529, telephone 202-272-8377.
Fish and Wildlife Service, Interior.
Notice of availability and receipt of application.
The Oakmont Industrial Group (Applicant) has applied to the Fish and Wildlife Service (Service) for an incidental take permit pursuant to section 10(a)(1)(B) of the Endangered Species Act (Act) of 1973, as amended. The Service is considering issuing a 5-year permit to the Applicant that would authorize take of the federally endangered Delhi Sands flower-loving fly (
The permit application includes the proposed Habitat Conservation Plan (Plan), which describes the proposed action and the measures that the Applicant will undertake to minimize and mitigate the impact of the take of the DSF.
We must review any written comments on or before January 29, 2007.
Send written comments to Mr. Jim Bartel, Field Supervisor, Fish and Wildlife Service, Carlsbad Fish and Wildlife Office, 6010 Hidden Valley Road, Carlsbad, CA 92011. You also may send comments by facsimile to (760) 918-0638. To review the permit application and plan, see “Availability of Documents” under
Ms. Karen Goebel, Assistant Field Supervisor (see
You may obtain copies of these documents for review by contacting the office under
Section 9 of the Act (16 U.S.C. 1531
The Applicant is proposing development of commercial facilities on 19 acres of land in the City of Ontario, San Bernardino County, California. The project site is located south of Greystone Drive, north of Brentstone Street, and west of Stanford Avenue. The proposed project site is bordered by existing commercial facilities to the east and west, State Route 60 to the south, and approximately 13 acres of open space to the north. Over the past several years, the site has experienced heavy use by off-highway vehicles.
Approximately 10 acres of the site are considered occupied by the DSF. The Service has determined that the proposed development would result in incidental take of the DSF. No other federally listed species are known to utilize the site.
To mitigate take of DSF on the project site, the Applicant proposes to purchase credits towards conservation in perpetuity of 10 acres of occupied DSF habitat at the Colton Dunes Conservation Bank in eastern San
The Service's Environmental Assessment considers the environmental consequences of three alternatives, including: (1) The Proposed Project Alternative, which consists of issuance of the incidental take permit and implementation of the Plan; (2) the Alternative Site Layout, which would consist of DSF conservation on the project site and no offsite conservation; and (3) the No Action Alternative, which would result in no impacts to DSF and no conservation.
Proposed permit issuance triggers the need for compliance with the National Environmental Policy Act (NEPA). Accordingly, a draft NEPA document has been prepared. The Service is the Lead Agency responsible for compliance under NEPA. As the NEPA lead agency, the Service is providing notice of the availability and is making available for public review the Environmental Assessment.
The Service invites the public to review the Plan and Environmental Assessment during a 60-day public comment period (see
This notice is provided pursuant to section 10(a) of the Act and the regulations for implementing NEPA, as amended (40 CFR 1506.6). We will evaluate the application, associated documents, and comments submitted thereon to determine whether the application meets the requirements of NEPA regulations and section 10(a) of the Act. If we determine that those requirements are met, we will issue a permit to the Applicant for the incidental take of the DSF. We will make our final permit decision no sooner than 60 days after the date of this notice.
Information from the public and interested groups is desired so that all pertinent issues and concerns which should be addressed in the conservation planning and environmental impact analysis for the CSP may be identified. At this time, the preliminary range of issues and public concerns deemed necessary to consider include the following:
Sunrise atop Haleakala is one of the most promoted tourist activities offered by the visitor industry on Maui. The Summit area of the park frequently receives over 1,300 visitors at sunrise. The concentration of visitor use has resulted in trampling of threatened and endangered plant species, increased social trailing resulting in accelerated erosion, and introduction of non-native species. Sunrise visitation has increased over the past decade to a point that visitors in private vehicles are turned away from parking areas filled beyond capacity on a regular basis by commercial vehicles. Members of the park's Kipuna Groups on Maui indicated that the sacredness of the Haleakala Summit area is diminished by too many people visiting the site, and opportunities to conduct cultural practices in peace are limited. More than one in five visitors to the Haleakala Visitor Center before 8 a.m. felt moderately or more crowded; more than one third of the visitors surveyed before 8 a.m. saw more people than they think the park should allow.
Throughout the day, there are other significant peaks of visitation that result in facilities at many park destinations being filled beyond capacity by visitors arriving in private vehicles or on commercial tours (often with simultaneous arrival of several commercial operators). When the parking areas are filled, health and safety concerns result due to inability of emergency vehicles (ambulance, law enforcement, and fire apparatus) to rapidly access these areas.
Other NPS concerns include degradation of various park trails resulting partially from commercial horse tour activities. In the Summit Area, trails are used jointly by hikers and by horse riders. The trails are located in fragile ecosystems where the
Presently commercial use activities in the Kipahulu area includes guided and unguided hikes along the park's existing visitor trails and horse tour guided trips on a separate trail designated for horses only. Commercial tours typically leave from the same pick-up points and arrive at generally the same time at Kipahulu; this combined with tour vans and buses of various sizes crowd into the parking area causing traffic congestion and crowded hiking (which in turn prompts trampling of vegetation and unsafe off-trail use). Visitor injuries and deaths have occurred in these stream areas and the park discourages visitors from entering these pools and narrow areas.
Privately guided hiking activities in the Kipahulu area may also be contributing to formation of social (unauthorized) trails that follow the stream corridor and lead to upstream pools. All park visitors and service providers should be using NPS authorized and maintained trail to minimize resource; the deep trail substrate combined with very high average rainfall causes erosion, deep trenching, and very slippery and dangerous conditions.
All respondents to this Notice will be included in a mailing list to be used to invite review and comment on the subsequent environmental document. The public scoping period for the commercial services plan has been initiated—all written comments must be postmarked or transmitted not later than 60 days from the date of publication of this Notice (as soon as this date can be confirmed it will be announced on the park's Web site). Interested individuals, organizations, and agencies wishing to provide written comments may respond by regular mail to Commercial Services Plan, c/o Superintendent, Haleakala National Park, P.O. Box 369, Makawao, Maui, HI 96768 (or via e-mail c/o
Our practice is to make comments, including names, home addresses, home phone numbers, and e-mail addresses of respondents, available for public review. Individual respondents may request that we withhold their names and/or home addresses, etc., but if you wish us to consider withholding this information you must state this prominently at the beginning of your comments. In addition, you must present a rationale for withholding this information. This rationale must demonstrate that disclosure would constitute a clearly unwarranted invasion of privacy. Unsupported assertions will not meet this burden. In the absence of exceptional, documentable circumstances, this information will be released. We will always make submissions from organizations or businesses, and from individuals identifying themselves as representatives of or officials of organizations or businesses, available for public inspection in their entirety.
U.S. International Trade Commission.
Notification of Distribution of Administrative Protective Order Documents in Electronic Format via CD or DVD.
January 9, 2007.
The U.S. International Trade Commission (ITC, or Commission) has determined that, beginning January 9, 2007, it will distribute Administrative Protective Order (APO) Release documents in electronic format on either a compact disc (CD) or digital versatile disc (DVD) to parties on the APO service list for Title VII and Safeguard investigations. Parties requiring paper copies will be accommodated based on receipt of a request made to the Secretary to the Commission. The request may be made at the time the party files its application for disclosure of business proprietary information (BPI) or confidential business information (CBI) under APO. It may also be made subsequent to filing of the application at which point it will be accommodated within three (3) business days of receipt of the request.
Each CD/DVD will include APO Release documents in PDF format. In addition, it will include an ASCII text file with a table of contents listing all document files included on the CD/DVD, as well as the investigation number and phase of the investigation for which the documents were submitted. Each CD/DVD will be color coded and clearly marked as containing BPI or CBI. It will also be labeled with the investigation number, phase of the investigation, and date of release. Multiple CDs or DVDs will be used when the cumulative size of all document files exceeds the amount of space available on an individual CD or DVD.
The ITC is instituting this practice as a means of addressing several cost and resource issues with paper distribution, including increasing paper costs, greater storage and handling requirements, and higher postal costs for mailing the documents. In addition, feedback from the Service List community also indicated a preference for receiving APO Release documents in electronic form via CD/DVD.
All obligations imposed on recipients of APO releases by Commission rules and APOs continue in force with respect to the releases made on CD and DVD.
Correspondence on this matter should be directed to Marilyn R. Abbott, Secretary to the Commission, U.S. International Trade Commission, 500 E Street, SW., Washington, DC 20436.
Technical questions or comments regarding this change may be directed to Joel Moeller, E-Business Division Manager, Office of Information Technology Services, U.S. International Trade Commission, 500 E Street, SW., Washington, DC 20436 (telephone 202-205-2220; e-mail
By order of the Commission.
Bureau of International Labor Affairs, U.S. Department of Labor
The U.S. Department of Labor (USDOL), Bureau of International Labor Affairs (ILAB), intends to obligate up to approximately U.S. $3.5 million through a Cooperative Agreement to organization(s) to improve access to and quality of education programs as a means to combat exploitive child labor in Angola. The project(s) funded under this award should address gaps and challenges to basic education found in Angola.
ILAB intends to solicit cooperative agreement applications through a limited competition of organizations qualified to implement a project that focuses on innovative ways to provide educational services to children engaged, or at risk of engaging, in exploitive labor in Angola. Qualified organizations include any commercial, international, educational, or non-profit organization that is capable of successfully developing and implementing education projects in Angola and that meets the following criteria—qualified organizations must have (1) an established presence in Angola (i.e., one or more offices and employees) and be legally recognized and permitted to operate by the Government of Angola, and (2) direct and current experience implementing technical cooperation programs for children-in-need in Angola that aim to combat exploitive child labor and/or promote educational and training opportunities for children-in-need who are under the age of 18 years. Among the organizations deemed eligible based on this criteria are the Christian Children's Fund, Save the Children—UK, and World Vision.
Other organizations wishing to be considered under this limited competition must submit to USDOL, at the contact address provided below and within 10 working days of this announcement, a formal request for funding consideration, providing verifiable evidence that the aforementioned criteria are met. Such requests will be evaluated by USDOL, which will add any additional organizations found eligible to the list of those organizations to be considered under this limited competition.
This limited competition involves the re-granting of funds remaining from SGA 05-05 for “Combating Exploitive Child Labor through Education in Angola,” published in the
A specific solicitation for cooperative agreement applications will be provided to those organizations deemed eligible for the limited competition within 20 working days of this announcement. The solicitation will remain open for at least 30 calendar days.
USDOL's Child Labor Education Initiative seeks to nurture the development, health, safety, and enhanced future employability of children around the world by increasing access to basic education for children removed from child labor or at risk of entering it. Eliminating child labor depends, in part, on improving access to, quality of, and relevance of educational and training opportunities for children less than 18 years of age. Without improving such opportunities, children withdrawn from exploitive forms of labor may not have viable alternatives to child labor and may be more likely to return to such work or resort to other hazardous means of subsistence.
In addition to increasing access to education and eliminating exploitive child labor through direct withdrawal and prevention services to children, the Child Labor Education Initiative has the following four strategic goals:
1. Raise awareness of the importance of education for all children and mobilize a wide array of actors to improve and expand education infrastructures;
2. Strengthen formal and transitional education systems that encourage working children and those at risk of working to attend school;
3. Strengthen national institutions and policies on education and child labor; and
4. Ensure the long-term sustainability of these efforts.
When working to increase access to quality basic education, USDOL strives to complement existing efforts to eradicate the worst forms of child labor, to build on the achievements of and lessons learned from these efforts, to expand impact and build synergies among actors, and to avoid duplication of resources and efforts.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden conducts a pre-clearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) [44 U.S.C. 3506(c)(2)(A)]. This program 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. The Employment and Training Administration (ETA) is soliciting comments regarding an extension of a current Office of Management and Budget (OMB) clearance for a series of quick turnaround surveys in which data will be collected from state workforce agencies and local workforce investment areas.
Submit comments on or before January 29, 2006.
Send comments to Richard Muller, Employment and Training Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5637, Washington, DC 20210; (202) 693-3680 (this is not a toll-free number); e-mail:
The Employment and Training Administration (ETA) is soliciting comments regarding an extension of a current Office of Management and Budget (OMB) clearance for a series of quick turnaround surveys in which data will be collected from state workforce agencies and local workforce investment areas. The surveys will focus on issues relating to the governance, administration, funding, service design, and delivery structure of workforce programs authorized by the Workforce Investment Act (WIA). Enacted in 1998, WIA has sought to redesign the workforce development system by linking over a dozen separately funded Federal programs and streamlining services, and establishing new accountability requirements.
ETA has developed quick turnaround surveys on several aspects of WIA services and outreach to businesses, under the current OMB clearance. Other surveys are also under consideration at this time.
The agency has a continuing need for information on WIA operations and is seeking a further extension of the clearance for conducting a series of eight (8) to twenty (20) separate surveys over the next three years. Each survey will be relatively short (10-30 questions) and, depending on the nature of the survey, may be administered to state workforce agencies, local workforce boards, One-Stop Centers, employment service offices, or other local-area WIA partners. Each survey will be designed on an ad hoc basis and will focus on emerging topics of pressing policy interest. Each survey will either cover the universe of respondents (for state level information) or a properly drawn random sample (for local level information). Examples of broad topic areas include:
• Local management information system developments
• New processes and procedures
• Services to different target groups
• Integration and coordination with other programs
• Local workforce investment board membership and training
Quick turnaround surveys are needed for a number of reasons. The most pressing concerns the need to understand key operational issues in light of challenges deriving from the Administration's policy priorities and from the coming reauthorization of WIA and of other partner programs.
Timely information, that identifies the scope and magnitude of various practices or problems, is needed for ETA to fulfill its obligations to develop high quality policy, administrative guidance, regulations, and technical assistance.
The data that will be requested in the quick turnaround surveys is not otherwise available. Other research and evaluation efforts, including case studies or long-range evaluations, either cover only a limited number of sites or take many years for data to be gathered and analyzed. Administrative information and data are too limited: The five-year Workforce Investment Plans, developed by states and local areas, are too general in nature to meet ETA's specific informational needs and are updated infrequently. Quarterly or annual data reporting by states and local areas do not provide information on key operational practices and issues. Thus, ETA has no alternative mechanism for collecting information that both identifies the scope and magnitude of emerging WIA implementation issues and provides the information on a quick turnaround basis.
ETA will make every effort to coordinate the quick turnaround surveys with other research it is conducting, in order to ease the burden on local and state respondents, to avoid
Currently, ETA is soliciting comments, concerning the proposed extension of the Quick Turnaround Surveys of WIA, that:
(a) 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;
(b) 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;
(c) Enhance the quality, utility and clarity of the information to be collected; and
(d) 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, e.g., permitting electronic submissions of responses.
A copy of the proposed information collection request (ICR) can be obtained by contacting the office listed above in the addressee section of this notice. It can also be accessed at
Comments submitted in response to this comment request will be summarized and/or included in the request for OMB approval of the information collection request; they will also become a matter of public record.
Tuesday, December 5, 2006, at 2 p.m.; and Wednesday, December 6, 2006, at 8:30 a.m. and 10:30 a.m.
Washington, DC, at U.S. Postal Service Headquarters, 475 L'Enfant Plaza, SW., in the Benjamin Franklin Room.
December 5-2 p.m.—Closed; December 6-8:30 a.m.—Open; December 6-10 a.m.— Closed
Tuesday, December 5 at 2 p.m. (Closed)
1. Strategic Planning.
2. Rate Case Update.
3. Labor Negotiations Update.
4. Financial Update.
5. Personnel Matters and Compensation Issues.
6. Negotiated Service Agreement.
1. Minutes of the Previous Meeting, November 14-15, 2006.
2. Remarks of the Postmaster General and CEO Jack Potter.
3. Committee Reports.
4. Consideration of Postal Service Fiscal Year 2006 Annual Report.
5. Consideration of Final Fiscal Year 2008 Appropriation Request.
6. Capital Investment.
a. Flats Sequencing System—Phase I Program.
7. Tentative Agenda for the January 9-10, 2007, meeting in Washington, DC.
1. Continuation of Tuesday;s closed session agenda.
Wendy A. Hocking, Secretary of the Board, U.S. Postal Service, 475 L'Enfant Plaza, SW., Washington, DC 20260-1000. Telephone (202) 268-4800.
Department of State.
Notice.
A determination has been made to terminate sanctions imposed pursuant to Section 3 of the Iran Nonproliferation Act of 2000 on a Russian entity (71 FR 5483).
November 21, 2006.
On general issues: J. Christian Kessler, Office of Conventional Arms Threat Reduction, Bureau of International Security and Nonproliferation, Department of State (202-647-2718). On U.S. Government procurement ban issues: Gladys Gines, Office of the Procurement Executive, Department of State (703-516-1691).
Pursuant to Section 4 of the Iran Nonproliferation Act of 2000 (Pub. L. 106-178), the U.S. Government determined on November 17, 2006 that the sanctions imposed effective July 28, 2006 (71 FR 5483), on the Russian entity Sukhoy, are terminated.
This notice announces meetings of the International Telecommunication Advisory Committee (ITAC) to prepare advice on U.S. positions for the Study Group 7 meetings of the International Telecommunication Union—Radiocommunication Sector (ITU-R), for a Rapporteur Group meeting for Study Group 2 of the ITU Telecommunication Development Sector, and for the ITU Telecommunication Sector Advisory Group (TSAG), Study Group 4 (Telecommunication Management) and Study Group 2 (Operational aspects of
The ITAC will meet to prepare advice on U.S. positions to be taken at the February meeting of ITU-R Study Group 7 (Science services) on January 11, 2007 from 1:30 to 4 p.m. Eastern Time at NASA Headquarters, 300 E St., SW., Washington, DC 20546, Room 7H45 (also known as MIC 7A). For access to NASA HQ use 4th St. entrance and contact Ron Carbery (202-358-0985) at visitor station. A conference badge will be provided: 888-550-9509 (from within U.S.); 203-692-0779 (from outside U.S..); Passcode—221181#. For further information on this meeting, contact Wayne Whyte, Chairman U.S. SG-7 at
The ITAC will meet to prepare advice on U.S. positions to be taken at the March meeting of ITU-D Study Group 2 Question 22 “Utilization of ICT for disaster management and active and passive sensing systems as they apply to disaster prediction, detection and mitigation” on December 19, 2006, and January 23, 2007, both 10 a.m.-noon. The meetings will both be held in the offices of TerreStar, 1050 Connecticut Avenue, NW., Suite 1000, Washington, DC 20036. TerreStar is located a block from Farragut North (red line metro) and 3 blocks from Farragut West (orange and blue lines). For further information on TerreStar's offices, call Kelly O'Keefe at 202-772-1873. A telephone bridge will be provided: Call-in: 866-917-3767, Passcode: 1729853.
The ITAC will meet to prepare advice on U.S. positions to be taken at the March meeting of the Telecommunication Sector Advisory Group (TSAG) on December 18 and January 18. Times and locations of these meetings may be obtained by calling the secretariat below.
The ITAC will meet to prepare advice on U.S. positions to be taken at ITU-T Study Groups 4 and 2 on January 17, 2006 at the offices of Verizon Communications, 1300 Eye Street, Washington, DC from 9:30-noon. Study Group 4 agenda items will be considered before Study Group 2 items. A conference bridge will be provided: Call in: 866-259-6272, Passcode: 3552338.
These meetings are open to the public. Further information may be obtained from the secretariat
The Department of the Treasury has submitted the following public information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Copies of the submission(s) may be obtained by calling the Treasury Bureau Clearance Officer listed. Comments regarding this information collection should be addressed to the OMB reviewer listed and to the Treasury Department Clearance Officer, Department of the Treasury, Room 11000, 1750 Pennsylvania Avenue, NW., Washington, DC 20220.
The Department of Treasury has submitted the following public information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Copies of the submission(s) may be obtained by calling the Treasury Bureau Clearance Officer listed. Comments regarding this information collection should be addressed to the OMB reviewer listed and to the Treasury Department Clearance Officer, Department of the Treasury, Room 11000, 1750 Pennsylvania Avenue, NW., Washington, DC 20220.
Written comments should be received on or before January 2, 2007 to be assured of consideration.
Title: Monthly Consolidated Foreign Currency Report of Major Market Participants.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains.
Written comments should be received on or before January 29, 2007 to be assured of consideration.
Direct all written comments to Glenn Kirkland, Internal Revenue Service, room 6516, 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 6516, 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.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form 13614NR, Nonresident Alien Intake and Interview Sheet.
Written comments should be received on or before January 29, 2007 to be assured of consideration.
Direct all written comments to Glenn Kirkland, Internal Revenue Service, room 6516, 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 6516, 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.
Millennium Challenge Corporation.
Notice.
In accordance with Section 610(b)(2) of the Millennium Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium Challenge Corporation (MCC) is publishing a summary and the complete text of the Millennium Challenge Compact between the United States of America, acting through the Millennium Challenge Corporation, and the Government of the Republic of Mali. Representatives of the United States Government and the Government of the Republic of Mali executed the Compact documents on November 13, 2006.
The five-year, approximately $460 million Millennium Challenge Compact aims to support policy reform and the development of key infrastructure for productive sectors, by addressing Mali's constraints to growth and capitalizing on two of the country's major assets, the Bamako-Sénou International Airport (the “Airport”), a gateway for regional and international trade and the Niger River Delta for irrigated agriculture. These investments will create a platform for increased production and productivity of agriculture and small- and medium-sized enterprises, as well as expand Mali's access to markets and trade.
The MCC investments will be strengthened by policy reforms and institutional support, such as formal land titles for the rural poor, demand-driven rural advisory services, an improved business environment, and increased access to markets and trade. These institutional and infrastructure investments will impact the poor in Mali, particularly Malian farmers and small- and medium-sized entrepreneurs, not only in project intervention zones but, over time, on a regional and national scale.
The projects under the Compact are as follows:
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The Airport Improvement Project is intended to remove constraints to air traffic growth and increase the Airport's efficiency in both passenger and freight handling through airside and landside infrastructure improvements, as well as the establishment of appropriate institutional mechanisms to ensure effective management, security, operation, and maintenance of the Airport facilities over the long term.
The Airport Improvement Project includes the following activities:
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The Industrial Park Project, located within the Airport domain, will develop a platform for industrial activity (initially 100 hectares (ha)) to meet the high and growing demand for well managed and serviced industrial land. The 100 ha industrial park (the “
The Industrial Park Project includes the following activities:
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The Alatona Irrigation Project is focused on increasing production and productivity, increasing farmer incomes, improving land tenure security, modernizing irrigated production systems and mitigating the uncertainty from subsistence rain-fed agriculture. This project seeks to develop 16,000 ha of newly irrigated lands in the Alatona production zone of the Office du Niger (the “ON”), representing an almost 20 percent increase of “drought-proof” cropland. The Alatona Irrigation Project will introduce innovative agricultural, land tenure, and water management practices, as well as policy and organizational reforms aimed at realizing the ON's potential to serve as an engine of rural growth for Mali.
The Alatona Irrigation Project includes the following activities:
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The table below outlines the estimated MCC contribution to the program by year and category over the term of the Compact.
The Airport Improvement Project will expand Mali's access to markets and trade through improvements in the transportation infrastructure at the Airport, as well as better management of the national air transport system. Evidence suggests that economic growth and poverty reduction depend on enhanced access to markets and trade. However, Mali's access is severely constrained. Mali is landlocked and heavily dependent on inadequate rail and road networks. Mali depends on freight transport through ports in unstable countries, such as Conakry, Guinea (Bamako's closest port, which is 1000 km away) and Abidjan, Cote d'Ivoire. In the last few years, the instability in Cote d'Ivoire has dramatically limited Mali's market access. Before the outbreak of the Ivorian crisis, 70 percent of Malian exports were leaving via the port of Abidjan. In 2003, this amount dwindled to less than 18 percent. Mali cannot control overland routes to international and regional markets. Therefore, air traffic has become Mali's lifeline for transportation of both passengers and export products.
Malian exports are predominantly agriculture based and depend on rural
The Industrial Park Project will leverage national reforms in the business sector, reducing the cost and time to register a business, and enhance management and planning of the industrial sector. The existing, heavily congested, poorly managed, and degraded “industrial zone” is inappropriately located, lacks basic utilities and services, and has no room for expansion. The proposed Industrial Park would become the anchor for a growing industrial sector in Mali and alleviate a key constraint to value-added production and economic growth. Businesses in the agro-processing sector, where Mali has a comparative advantage, are likely to install in the Industrial Park. Growth generated by the Industrial Park will generally be poverty reducing due to the link to small-scale agricultural production.
The Alatona Irrigation Project focuses on a high-potential geographical zone in one of the poorest areas of central Mali. The Alatona Irrigation Project will develop 16,000 ha of irrigable agricultural land in the Alatona zone of the ON resulting in increased productivity and production, as well as diversification of high-value crops. MCC's investments will include construction of a road, irrigation infrastructure, and social infrastructure, such as schools, clinics, and water and sanitation facilities. This project will provide social services, access to credit, and agricultural extension and will help establish and empower rural producer organizations by giving them access to information and productive assets. The Alatona Irrigation Project will leverage policy reforms expected to have a broad impact on the agricultural landscape throughout Mali.
Together, the three projects will result in increased industrial growth in the urban area, increased agricultural production and productivity in the ON and improved access to national, regional, and international markets.
The accountable entity (the “MCA-Mali”) will be organized under the laws of Mali as a
The program strongly supports the third pillar of Mali's Poverty Reduction Strategy Paper (“PRSP”)—development of infrastructure and key support for productive sectors. The participatory process of the PRSP is characterized as having “breadth” and being “systematic.” The PRSP identifies the following as top constraints to economic growth in its consultative process:
• Climatic risks affecting the rural sector with consequences on the national economy.
• High cost of factors of production.
• Fluctuations in prices of principal import and export products.
• Isolation/landlocked nature of the country.
The Compact was designed to address these constraints. Priorities were defined by the national PRSP structure and refinement occurred in consultation with civil society and the private sector. This consultative process enriched and helped form the GOM proposal and its development. The insistence on rural land ownership and titling derived from dialogue with civil society and private sector actors. The need for inclusion of a strong component of social services for the Alatona zone was also reinforced through the consultative process.
Members of the GOM, private sector, and civil society (Malian and U.S. non-governmental organizations (“NGOs”)) played an active role in developing the Compact proposal. Local NGOs, including village-level women's associations, were directly involved in the process through numerous on-site workshops and meetings in the ON region. Consultations also took place with private sector and civil society actors around Bamako, as well as communities surrounding the Airport domain, who emphasized the need for improved infrastructure and increased economic activity to reduce poverty. In addition, the consultative process involved participation of the U.S. NGO community, which has a strong presence in Mali, working on health, education, agriculture, governance, and economic development programs throughout the country.
MCC and GOM have been in discussions over the following policy and institutional reforms that will reinforce the implementation and sustainability of the program. Relevant reforms will serve as conditions precedent in the disbursement agreement. Below is a list of policy and institutional reforms that have been adopted or are pending:
• GOM is in the process of restructuring several aspects of the civil aviation sector to reflect the recommendations of international organizations such as the International Civil Aviation Organization (“ICAO”) and the U.S. Federal Aviation Administration (“FAA”). Among these reforms:
○ GOM recently (December 2005) created an independent and financially autonomous civil aviation agency, the Agence Nationale de l'Aéronautique Civile (ANAC). Implementation of the new agency is considered by GOM to be a high priority and a proposal has been made to include approximately $5 million in the national budget of Mali over the next three years for this purpose.
○ A new law is expected to be approved before the end of 2006 that will modernize the operations and management of Ae
• Law 05-019 was ratified by Parliament in September 2005 establishing API-Mali, a new investment promotion agency. This agency will encourage and sustain foreign direct and national investment, improve the business climate, and
• In response to the Doing Business Indicators and the Multilateral Investment Guarantee Agency benchmarking study, GOM has developed a short-term action plan to improve Mali's performance. Recently, the Ministry of Investment Promotion has engaged the International Finance Corporation to develop a legal regulatory framework, in addition to frameworks relating to land allocation and taxation for industrial zone activities in the country.
• Among the various efforts that GOM is undertaking to address weaknesses in the Malian business climate, an important and innovative measure includes the establishment of the Presidential Investors' Council (“PIC”) in September 2004. The purpose of the PIC is to introduce a global business perspective into policy formulation and implementation. In response to one of its recommendations, GOM is targeting early 2007 to put in place a one-stop shop for business registration housed in the newly established API-Mali.
• GOM has expressed its high-level commitment to increase land-tenure security, to secure property rights and to increase issuance of land titles in the Alatona zone. This represents a major policy departure for GOM. Although Alatona will not be the first experiment with land titles in the rural area, the Alatona Irrigation Project is on an unprecedented scale.
• GOM reforms have included (a) the restructuring of the National Directorate of Public Works to create the National Directorate of Roads, including the establishment of a unit for emergency road works and (b) the establishment of a Road Authority (as a successor to the old Road Fund) with sole responsibility for managing the financing of road maintenance activities. The initial steps to create a specialized autonomous contracting agency for road maintenance, the AGEROUTE, have also been made. These steps provide assurance to MCC of GOM's commitment to a sustainable road maintenance program.
The Mali program is embedded in the institutional framework of Mali with the limited creation of parallel structures. It reinforces GOM's approach and commitment to democracy, decentralization, and empowerment of local communities. MCC-supported interventions will complement and reinforce national strategies for poverty reduction and economic growth. The program objectives draw from the following national development strategies: PRSP, National Food Security Strategy, ON Master Plan, and Agriculture Orientation Law.
Airport Improvement Project. Under the present division of jurisdictions, a number of entities have responsibility for the civil aviation sector in Mali in general and the regulation, oversight, management, operation, and development of the Airport in particular. In response to ICAO safety and security audits and FAA assessments, GOM is in the process of restructuring and consolidating this institutional framework. One major result has been the establishment of ANAC in December 2005, which now has financial and administrative independence.
The Airport Improvement Project will reinforce the new civil aviation regulatory and oversight agency (ANAC) by providing technical assistance to establish a new organizational structure, administrative and financial procedures, staffing and training, and provision of equipment and facilities. Additionally, the project will rationalize and reinforce the Airport's management and operations agency (AdM) by providing technical assistance to establish a model for the management of the Airport and the long-term future status and organizational structure of AdM.
Industrial Park Project. In 1999, GOM passed Decree 99-252 declaring the 7,194 ha of land encompassing the Airport and the proposed Industrial Park as public domain land. Based on this decree, the Ministry of Public Works and Transportation and Ministry of Territorial Administration were named the responsible parties for the management of the Airport domain. Although AdM is viewed as the asset holding agency, GOM intends to enter into a management contract with a private operator for the Industrial Park. Under the World Bank Mali Growth Support Project, API-Mali will serve as the public-sector regulator for the Industrial Park, while day-to-day management will be assigned to a private entity (the “
To ensure the creation of new SMEs, the Industrial Park Project will help these SMEs access financial and market information, as well as export facilitation services. In addition, the project will focus on how to ensure coordination in operations and maintenance of shared utilities between the Airport and Industrial Park operators.
Alatona Irrigation Project. The Alatona perimeter is located at the “tail end” of the ON gravity-fed irrigation system. Long term success hinges on effective and efficient management of the entire system. The project addresses this issue by financing additional capacity on the main conveyance structures, as well as supporting the ON to achieve sustainable management of its entire stock of assets. In addition, the Alatona Irrigation Project will address the need to update the existing ON Master Plan, which is based on scenarios and assumptions developed in 2001, and upon which current expansion plans are based. Maintenance of the main system and structures is the financial responsibility of GOM, which delegates this to the ON. Through a two-tiered system of joint ON-farmer committees, the ON also maintains the distributors and secondary canals within the five regional zones, while farmer organizations manage the tertiary canals. The water fees collected would seem adequate to cover the operations and maintenance cost of the major distribution systems within the zones.
The Niono-Goma Coura road is part of GOM's annual routine maintenance program. Current allocations should ensure routine maintenance on this road. Periodic maintenance funding (about every 10 years) is considered a major challenge, although it is anticipated that EU and World Bank efforts to increase user fees will over time ensure such funding.
The financial services activity will provide microfinance institutions and banks with training in agricultural credit and other aspects of managing the delivery of financial services to the inhabitants of Alatona. The project will create a new legal entity—the Revenue Authority—to collect and manage the revenues generated through land payments. MCC funding will support the costs of structuring this entity and facilitate some initial capacity building. Following this, the Revenue Authority will support itself through the land revenues collected. This structure has the potential to encourage local institutions to organize themselves around project design and implementation, thereby building local capacity for community planning and service delivery and helping to strengthen nascent decentralized government.
Research and extension are considered public goods and are funded by GOM. Over the life of the Compact, demand-driven and fee-based research and extension techniques will be tested. It is expected that the financially self-sufficient Alatona producers' organization as well as farmers' groups and village associations will play a key role in demanding and paying for these services.
Airport Improvement Project. A Category A environmental impact assessment (“EIA”), following MCC Environmental Guidelines and Malian law, will be required. The recommended wastewater treatment, expanded water supply and distribution, solid and hazardous waste disposal, power supplies, drainage and other infrastructure are currently conceived and sized to serve both the Airport and the Industrial Park. Therefore, the Airport and the Industrial Park will be treated together for purposes of the EIA and the resettlement action plan (“
Industrial Park Project. The Industrial Park will be assessed in the joint Airport/Industrial Park EIA. In this context, the RAP will address compensation for those cultivating and using land in the Industrial Park and in other locations, both on and off the Airport domain. The approach and issues discussed above for the Airport Improvement Project with respect to common infrastructure construction impacts, the EIA, and the RAP remain the same.
Alatona Irrigation Project. Irrigation-related activities of the Alatona Irrigation Project, including activities external to the Alatona zone (such as presettlement activities and expansion and enhancement of the overall conveyance capacity of the ON's main canal system) will require a full Category A EIA, under MCC Environmental Guidelines and Malian law. The Niono-Goma Coura road's Category B environmental and social assessment will be prepared in advance of the irrigation EIA to expedite implementation of road improvements. The Environmental Assessment (2003) and updated Environmental Management Plan (2005), which already exist for road rehabilitation of a much longer stretch of the national route, will be supplemented and updated for the 80-kilometer section to be funded under the Compact. Cumulative impacts of the road as well as the irrigation activities will be addressed in the Alatona EIA. Both documents will include HIV/AIDS mitigation plans. Two RAPs consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement will also be needed, one for the road activity and another for the irrigation activities. A prerequisite to preparing the Alatona EIA is preparation of an overall land use and natural resources management plan to address the sustainability of the Alatona large-scale land development and population increase of about 60,000.
All three projects complement and leverage other donors' efforts in Mali. The World Bank is also investing in activities to improve the Airport, Industrial Park, and business climate. Due to the World Bank's funding gap, GOM requested additional funds from the MCC to support the larger and more costly infrastructure improvements. For the Alatona Irrigation Project, the Dutch Development Agency, French Development Agency (“
U.S. Department of Transportation (USDOT) Safe Skies for Africa (SSFA): The SSFA program is intended to promote sustainable improvements in aviation safety and security, air navigation, and to support Africa's integration into the global economy. The SSFA program coordinates activities of other agencies, such as the FAA, the Transportation Security Administration and the National Transportation Safety Board, to improve the capacities of African aviation organizations. MCC has signed a Memorandum of Understanding with USDOT to collaborate on projects such as the present effort in Mali and discussions regarding the coordination of our respective projects have already taken place.
This Millennium Challenge Compact (the “Compact”) is made between the United States of America, acting through the Millennium Challenge Corporation, a United States Government corporation (“MCC”) and the Government of the Republic of Mali (the “Government”) (referred to herein individually as a “Party” and collectively, the “Parties”). A compendium of capitalized terms defined herein is included in Exhibit A attached hereto.
Whereas, MCC, acting through its Board of Directors, has selected the Republic of Mali (“Mali”) as eligible to present to MCC a proposal for the use of Millennium Challenge Account (“MCA”) assistance to help facilitate poverty reduction through economic growth in Mali;
Whereas, the Government has carried out a consultative process with the country's private sector and civil society to outline the country's priorities for the use of MCA assistance and developed a proposal, which final proposal was submitted to MCC on October 28, 2005 (the “
Whereas, the Proposal focused on, among others, increasing farmer incomes through modernizing Mali's agricultural sector, together with investments in developing transportation infrastructure and rural institutions, all designed to dismantle obstacles to realizing Mali's agricultural potential as an engine of economic growth;
Whereas, MCC has evaluated the Proposal and related documents to determine whether the Proposal is consistent with core MCA principles and includes projects and related activities that will advance the progress of Mali towards achieving poverty reduction through economic growth; and
Whereas, based on MCC's evaluation of the Proposal and related documents and subsequent discussions and negotiations between the Parties, the Government and MCC determined to enter into this Compact to implement a program using MCC Funding to advance Mali's progress towards poverty reduction through economic growth (the “Program”);
Now, Therefore, in consideration of the foregoing and the mutual covenants and agreements set forth herein, the Parties hereby agree as follows:
The goal of this Compact is to reduce poverty through economic growth in Mali by increasing production and productivity of agriculture and small and medium-sized enterprises, as well as expanding Mali's access to markets and trade (the “Compact Goal”). The key to advancing the Compact Goal is through the development of critical infrastructure and policy reform for productive sectors and addressing Mali's constraints to growth by capitalizing on two of its major assets, the Bamako-Sénou International Airport (the “Airport”), the gateway for regional and international trade, and the agricultural potential of the Niger River (collectively, the “Program Objective”). The Parties have identified the following project-level objectives (each, a “Project Objective”) of this Compact to advance the Program Objective, and thus the Compact Goal, each of which is described in more detail in the Annexes attached hereto:
(a) Establish an independent and secure link to the regional and global economy through infrastructure investments at the Airport and policy reform of the national air transport system (the “Bamako-Sénou Airport Improvement Project Objective”);
(b) Develop a platform for industrial activity to be located within the Airport domain in response to the growing demand for well managed and serviced industrial land (the “Industrial Park Project Objective”); and
(c) Increase the agricultural production and productivity in the Alatona zone of the Office du Niger (“ON”) through the construction of a road, irrigation infrastructure, social infrastructure, agricultural services, land allocation and increased access to credit (the “Alatona Irrigation Project Objective”).
The Government expects to achieve, and shall use its best efforts to ensure the achievement of, the Compact Goal, Program Objective and Project Objectives during the Compact Term. The Program Objective and the individual Project Objectives are collectively referred to herein as “Objectives” and each individually as an “Objective.”
The Annexes attached hereto describe the specific projects, the policy reforms and other activities related thereto (each, a “Project”) that the Government will carry out, or cause to be carried out, in furtherance of this Compact to achieve the Objectives and the Compact Goal.
This Compact shall enter into force on the date of the last letter in an exchange of letters between the Principal Representatives of each Party confirming that each Party has
(a) MCC's Contribution. MCC hereby grants to the Government, subject to the terms and conditions of this Compact, an amount not to exceed Four Hundred Sixty Million and Eight Hundred Eleven Thousand One Hundred Sixty Four United States Dollars (US$ 460,811,164) (“MCC Funding”) during the Compact Term to enable the Government to implement the Program and achieve the Objectives.
(i) Subject to Sections 2.1(a)(ii), 2.2(b) and 5.4(b), the allocation of MCC Funding within the Program and among and within the Projects shall be as generally described in Annex II or as otherwise agreed upon by the Parties from time to time.
(ii) If at any time MCC determines that a condition precedent to an MCC Disbursement has not been satisfied, MCC may, upon written notice to the Government, reduce the total amount of MCC Funding by an amount equal to the amount estimated in the applicable Detailed Budget for the Program, Project, Project Activity or sub-activity for which such condition precedent has not been met. Upon the expiration or termination of this Compact, (A) any amounts of MCC Funding not disbursed by MCC to the Government shall be automatically released from any obligation in connection with this Compact and (B) any amounts of MCC Funding disbursed by MCC to the Government as provided in Section 2.1(b)(i), but not re-disbursed as provided in Section 2.1(b)(ii) or otherwise incurred as permitted pursuant to Section 5.4(e) prior to the expiration or termination of this Compact, shall be returned to MCC in accordance with Section 2.5(a)(ii).
(iii) Notwithstanding any other provision of this Compact and pursuant to the authority of Section 609(g) of the Millennium Challenge Act of 2003, as amended (the “Act”), upon the conclusion of this Compact (and without regard to the satisfaction of all of the conditions for Entry into Force required under Section 1.3), MCC shall make available up to Nine Million Two Hundred Thousand United States Dollars (US$ 9,200,000) (“Compact Implementation Funding”) to facilitate certain aspects of Compact implementation as described in Schedule 2.1(a)(iii) attached hereto;
(b) Disbursements.
(i) Disbursements of MCC Funding. MCC shall from time to time make disbursements of MCC Funding (each such disbursement, an “MCC Disbursement”) to a Permitted Account or through such other mechanism agreed by the Parties under and in accordance with the procedures and requirements set forth in Annex I, the Disbursement Agreement or as otherwise provided in any other Supplemental Agreement.
(ii) Re-Disbursements of MCC Funding. The release of MCC Funding from a Permitted Account (each such release, a “Re-Disbursement”) shall be made in accordance with the procedures and requirements set forth in Annex I, the Disbursement Agreement or as otherwise provided in any other Supplemental Agreement.
(c) Interest. Unless the Parties agree otherwise in writing, any interest or other earnings on MCC Funding that accrue (collectively, “Accrued Interest”) shall be held in a Permitted Account and accrue in accordance with the requirements for the accrual and treatment of Accrued Interest as specified in Annex I or any Supplemental Agreement. On a quarterly basis and upon the termination or expiration of this Compact, the Government shall return, or ensure the return of, all Accrued Interest to any United States Government account designated by MCC.
(d) Currency; Conversion. The Government shall ensure that all MCC Funding that is held in any Permitted Account shall be denominated in the currency of the United States of America (“United States Dollars,” “US$” or “$”) prior to Re-Disbursement. To the extent that any amount of MCC Funding held in United States Dollars must be converted into the currency of Mali for any purpose, including for any Re-Disbursement or any transfer of MCC Funding into a Local Account, the Government shall ensure that such amount is converted consistent with the requirements of the Bank Agreement or any other Supplemental Agreement between the Parties.
(e) Guidance. From time to time, MCC may provide guidance to the Government through Implementation Letters on the frequency, form and content of requests for MCC Disbursements and Re-Disbursements or any other matter relating to MCC Funding. The Government shall apply such guidance in implementing this Compact.
(a) The Government shall provide or cause to be provided such Government funds and other resources, and shall take or cause to be taken such actions, including obtaining all necessary approvals and consents, as are specified in this Compact or in any Supplemental Agreement to which the Government is a party or as are otherwise necessary and appropriate effectively to carry out the Government Responsibilities or other responsibilities or obligations of the Government under or in furtherance of this Compact during the Compact Term and through the completion of any post-Compact Term activities, audits or other responsibilities.
(b) If at any time during the Compact Term, the Government materially reallocates or reduces the allocation in its national budget or any other governmental authority of Mali at a departmental, municipal, regional or other jurisdictional level materially reallocates or reduces the allocation in its respective budget of the normal and expected resources that the Government or such other governmental authority, as applicable, would have otherwise received or budgeted, from external or domestic sources, for the activities contemplated herein, the Government shall notify MCC in writing within fifteen (15) days of such reallocation or reduction, such notification to contain information regarding the amount of the
(c) The Government shall use its best efforts to ensure that all MCC Funding is fully reflected and accounted for in the annual budget of Mali on a multi-year basis.
(a) Abortions and Involuntary Sterilizations. The Government shall ensure that MCC Funding shall not be used to undertake, fund or otherwise support any activity that is subject to prohibitions on use of funds contained in (i) paragraphs (1) through (3) of section 104(f) of the Foreign Assistance Act of 1961 (22 U.S.C. 2151b(f)(1)-(3)), a United States statute, which prohibitions shall apply to the same extent and in the same manner as such prohibitions apply to funds made available to carry out Part I of such Act; or (ii) any provision of law comparable to the eleventh and fourteenth provisos under the heading “Child Survival and Health Programs Fund” of division E of Public Law 108-7 (117 Stat. 162), a United States statute.
(b) United States Job Loss or Displacement of Production. The Government shall ensure that MCC Funding shall not be used to undertake, fund or otherwise support any activity that is likely to cause a substantial loss of United States jobs or a substantial displacement of United States production, including:
(i) Providing financial incentives to relocate a substantial number of United States jobs or cause a substantial displacement of production outside the United States;
(ii) Supporting investment promotion missions or other travel to the United States with the intention of inducing United States firms to relocate a substantial number of United States jobs or a substantial amount of production outside the United States;
(iii) Conducting feasibility studies, research services, studies, travel to or from the United States, or providing insurance or technical and management assistance, with the intention of inducing United States firms to relocate a substantial number of United States jobs or cause a substantial displacement of production outside the United States;
(iv) Advertising in the United States to encourage United States firms to relocate a substantial number of United States jobs or cause a substantial displacement of production outside the United States;
(v) Training workers for firms that intend to relocate a substantial number of United States jobs or cause a substantial displacement of production outside the United States;
(vi) Supporting a United States office of an organization that offers incentives for United States firms to relocate a substantial number of United States jobs or cause a substantial displacement of production outside the United States; or
(vii) Providing general budget support for an organization that engages in any activity prohibited above.
(c) Military Assistance and Training. The Government shall ensure that MCC Funding shall not be used to undertake, fund or otherwise support the purchase or use of goods or services for military purposes, including military training, or to provide any assistance to the military, police, militia, national guard or other quasi-military organization or unit.
(d) Prohibition of Assistance Relating to Environmental, Health or Safety Hazards. The Government shall ensure that MCC Funding shall not be used to undertake, fund or otherwise support any activity that is likely to cause a significant environmental, health, or safety hazard. Unless MCC and the Government agree otherwise in writing, the Government shall ensure that activities undertaken, funded or otherwise supported in whole or in part (directly or indirectly) by MCC Funding comply with environmental guidelines delivered by MCC to the Government or posted by MCC on its Web site or otherwise publicly made available, as such guidelines may be amended from time to time (the “Environmental Guidelines”), including any definition of “likely to cause a significant environmental, health, or safety hazard” as may be set forth in such Environmental Guidelines.
(e) Taxation.
(i) Taxes. The Government shall ensure that the Program, MCC Funding and Accrued Interest, and any other Program Asset, shall be free from any taxes imposed under the laws currently or hereafter in effect in Mali during the Compact Term. This exemption shall apply to any use of MCC Funding and Accrued Interest, and any other Program Asset, including any Exempt Uses, and to any work performed under or activities undertaken in furtherance of this Compact by any person or entity (including contractors and grantees) funded by MCC Funding, and shall apply to all taxes, tariffs, duties, and other levies (each a “Tax” and collectively, “Taxes”), including:
(1) To the extent attributable to MCC Funding, income taxes and other taxes on profit or businesses imposed on organizations or entities, other than nationals of Mali, receiving MCC Funding, including taxes on the acquisition, ownership, rental, disposition or other use of real or personal property, taxes on investment or deposit requirements and currency controls in Mali, or any other tax, duty, charge or fee of whatever nature, except fees for specific services rendered; for purposes of this Section 2.3(e), the term “national” refers to organizations established under the laws currently or hereafter in effect in Mali, other than MCA-Mali or any other entity established solely for purposes of managing or overseeing the implementation of the Program or any wholly-owned subsidiaries, divisions, or Affiliates of entities not registered or established under the laws currently or hereafter in effect in Mali;
(2) Customs duties, tariffs, import and export taxes, or other levies on the importation, use and re-exportation of goods, services, or the personal belongings and effects, including personally-owned automobiles, for Program use or the personal use of individuals who are neither citizens nor permanent residents of Mali and who are present in Mali for purposes of carrying out the Program or their family members, including all charges based on the value of such imported goods;
(3) Taxes on the income or personal property of all individuals who are neither citizens nor permanent residents of Mali, including income and social security taxes of all types and all taxes on the personal property owned by such individuals, to the extent such income or property are attributable to MCC Funding; and
(4) Taxes or duties levied on the last transaction for the purchase of goods or services funded by MCC Funding, including sales taxes, tourism taxes, value-added taxes or other similar charges. For purposes of this Section 2.3(e)(i)(4), the term “last transaction” refers to the last transaction by which
(ii) This Section 2.3(e) shall apply, but is not limited, to (A) any transaction, service, activity, contract, grant or other implementing agreement funded in whole or in part by MCC Funding; (B) any supplies, equipment, materials, property or other goods (referred to herein collectively as “goods”) or funds introduced into, acquired in, used or disposed of in, or imported into or exported from, Mali by MCC, or by any person or entity (including contractors and grantees) as part of, or in conjunction with, MCC Funding or the Program; (C) any contractor, grantee, or other organization carrying out activities funded in whole or in part by MCC Funding; and (D) any employee of such organizations (the uses set forth in clauses (A) through (D) are collectively referred to herein as “Exempt Uses”).
(iii) If a Tax has been levied and paid contrary to the requirements of this Section 2.3(e), whether inadvertently, due to the impracticality of implementation of this provision with respect to certain types or amounts of taxes, or otherwise, the Government shall refund promptly to an account designated by MCC the amount of such Tax in the currency of Mali, within thirty (30) days (or such other period as may be agreed in writing by the Parties) after the Government is notified in writing of such levy and tax payment, in accordance with procedures agreed by the Parties, whether by MCC or otherwise;
(iv) At MCC's request, the Parties shall memorialize in a mutually acceptable Supplemental Agreement, Implementation Letter or other suitable document the mechanisms for implementing this Section 2.3(e), including (A) a formula for determining refunds for Taxes paid, the amount of which is not susceptible to precise determination; (B) a mechanism for ensuring the tax-free importation, use, and re-exportation of goods, services, or the personal belongings of individuals (including all Providers) described in Section 2.3(e)(i)(2) above; (C) a requirement for the provision by the Government of a tax-exemption certificate which expressly includes, inter alia, the thirty (30) day refund requirement of Section 2.3(e)(iii) above; and (D) any other appropriate Government action to facilitate the administration of this Section 2.3(e).
(f) Alteration. The Government shall ensure that no MCC Funding, Accrued Interest or other Program Asset shall be subject to any impoundment, rescission, sequestration or any provision of law now or hereafter in effect in Mali that would have the effect of requiring or allowing any impoundment, rescission or sequestration of any MCC Funding, Accrued Interest or other Program Asset.
(g) Liens or Encumbrances. The Government shall ensure that no MCC Funding, Accrued Interest or other Program Asset shall be subject to any lien, attachment, enforcement of judgment, pledge, or encumbrance of any kind (each a “Lien”), except with the prior approval of MCC in accordance with Section 3(c) of Annex I. In the event of the imposition of any Lien not so approved, the Government shall promptly seek the release of such Lien and, if required by final non-appealable order, shall pay any amounts owed to obtain such release;
(h) Other Limitations. The Government shall ensure that the use or treatment of MCC Funding, Accrued Interest, and other Program Assets shall be subject to and in conformity with such other limitations (i) as required by the applicable law of the United States of America now or hereafter in effect during the Compact Term, (ii) as advisable under or required by applicable United States Government policies now or hereafter in effect during the Compact Term, or (iii) to which the Parties may otherwise agree in writing.
(i) Utilization of Goods, Services and Works. The Government shall ensure that any Program Assets and any services, facilities or works funded in whole or in part (directly or indirectly) by MCC Funding, unless otherwise agreed by the Parties in writing, shall be used solely in furtherance of this Compact.
(j) Notification of Applicable Laws and Policies. MCC shall notify the Government of any applicable United States law or policy affecting the use or treatment of MCC Funding, whether or not specifically identified in this Section 2.3, and shall provide to the Government a copy of the text of any such applicable law and a written explanation of any such applicable policy.
(a) The Government shall include, or ensure the inclusion of, all of the requirements set forth in Section 2.3 in all Supplemental Agreements (except for Supplemental Agreements with Providers defined in Section 2.4(b)(ii) below) to which MCC is not a party.
(b) The Government shall ensure notification of all of the requirements set forth in Section 2.3 to any Provider and all relevant officers, directors, employees, agents, representatives, Affiliates, contractors, sub-contractors, grantees and sub-grantees of any Provider. The term “Provider” shall mean (i) MCA-Mali, (ii) any Government Affiliate or Permitted Designee (other than MCA-Mali) that receives or utilizes any Program Asset in carrying out activities in furtherance of this Compact, or (iii) any third party who receives at least US$ 50,000 in the aggregate of MCC Funding (other than employees of MCA-Mali) during the Compact Term or such other amount as the Parties may agree in writing, whether directly from MCC, indirectly through Re-Disbursements, or otherwise.
(c) In the event the Government or any Provider requires clarification from MCC as to whether an activity contemplated to be undertaken in furtherance of this Compact violates or may violate any provision of Section 2.3, the Government shall notify MCC in writing and provide in such notification a detailed description of the activity in question. In such event, the Government shall not proceed, and shall use its best efforts to ensure that no relevant Provider proceeds, with such activity, and the Government shall ensure that no Re-Disbursements shall be made for such activity, until MCC advises the Government or such Provider in writing that the activity is permissible. MCC shall use good faith efforts to respond timely to such notification for clarification.
(a) Notwithstanding the availability to MCC, or exercise by MCC, of any other remedies, including under international law, this Compact or any Supplemental Agreement:
(i) If any amount of MCC Funding, Accrued Interest or any other Program Asset is used for any purpose prohibited under this Article II or otherwise in violation of any of the terms and
(ii) Upon the termination or suspension of all or any portion of this Compact or upon the expiration of this Compact, the Government shall, subject to the requirements of Sections 5.4(e) and 5.4(f), refund, or ensure the refund of, to such account designated by MCC the amount of any MCC Funding, plus any Accrued Interest, promptly, but in no event later than thirty (30) days after the Government receives MCC's request for such refund;
(b) Notwithstanding any other provision in this Compact or any other agreement to the contrary, MCC's right under this Section 2.5 for a refund shall continue during the Compact Term and for a period of (i) five (5) years thereafter or (ii) one (1) year after MCC receives actual knowledge of such violation, whichever is later.
(c) If MCC determines that any activity or failure to act violates, or may violate, any Section in this Article II, then MCC may refuse any further MCC Disbursements for or conditioned upon such activity, and may take any action to prevent any Re-Disbursement related to such activity.
All MCC Funding shall be considered United States assistance under the Economic and Technical Assistance Agreement by and between the Government of the United States of America and the Government, dated January 4, 1961, as amended from time to time (the “Bilateral Agreement”). If there are conflicts or inconsistencies between any parts of this Compact and the Bilateral Agreement, as either may be amended from time to time, the provisions of this Compact shall prevail over those of the Bilateral Agreement.
This Compact shall be implemented by the Parties in accordance with this Article III and as further specified in the Annexes and in relevant Supplemental Agreements.
(a) The Government shall have principal responsibility for oversight and management of the implementation of the Program (i) in accordance with the terms and conditions specified in this Compact and relevant Supplemental Agreements, (ii) in accordance with all applicable laws then in effect in Mali, and (iii) in a timely and cost-effective manner and in conformity with sound technical, financial and management practices (collectively, the “Government Responsibilities”). Unless otherwise expressly provided, any reference to the Government Responsibilities or any other responsibilities or obligations of the Government herein shall be deemed to apply to any Government Affiliate and any of their respective directors, officers, employees, contractors, sub-contractors, grantees, sub-grantees, agents or representatives.
(b) The Government shall ensure that no person or entity shall participate in the selection, award, administration or oversight of a contract, grant or other benefit or transaction funded in whole or in part (directly or indirectly) by MCC Funding, in which (i) the entity, the person, members of the person's immediate family or household or his or her business partners, or organizations controlled by or substantially involving such person or entity, has or have a direct or indirect financial or other interest, or (ii) the person or entity is negotiating or has any arrangement concerning prospective employment, unless such person or entity has first disclosed in writing to the Government the conflict of interest and, following such disclosure, the Parties agree in writing to proceed notwithstanding such conflict. The Government shall ensure that no person or entity involved in the selection, award, administration, oversight or implementation of any contract, grant or other benefit or transaction funded in whole or in part (directly or indirectly) by MCC Funding shall solicit or accept from or offer to a third party or seek or be promised (directly or indirectly) for itself or for another person or entity any gift, gratuity, favor or benefit, other than items of
(c) The Government shall not designate any person or entity, including any Government Affiliate, to implement, in whole or in part, this Compact or any Supplemental Agreement between the Parties (including any Government Responsibilities or any other responsibilities or obligations of the Government under this Compact or any Supplemental Agreement between the Parties) or to exercise any rights of the Government under this Compact or any Supplemental Agreement between the Parties, except as expressly provided herein or with the prior written consent of MCC;
(d) The Government shall, upon a request from MCC, execute, or ensure the execution of, an assignment to MCC of any cause of action which may accrue to the benefit of the Government, a Government Affiliate or any Permitted Designee, including MCA-Mali, in connection with or arising out of any activities funded in whole or in part (directly or indirectly) by MCC Funding.
(e) The Government shall ensure that (i) no decision of MCA-Mali is modified, supplemented, unduly influenced or rescinded by any governmental authority, except by a non-appealable judicial decision, and (ii) the authority of MCA-Mali shall not be expanded, restricted, or otherwise modified, except in accordance with this Compact, any Governing Document or any other Supplemental Agreement between the Parties.
(f) The Government shall ensure that all persons and individuals that enter into agreements to provide goods, services or works under the Program or in furtherance of this Compact shall do so in accordance with the Procurement Guidelines and shall obtain all necessary immigration, business and other permits, licenses, consents and approvals to enable them and their personnel to fully perform under such agreements.
The Government shall proceed, and cause others to proceed, in a timely manner to deliver to MCC all reports, notices, certificates, documents or other deliveries required to be delivered by the Government under this Compact or any Supplemental Agreement between the Parties, in form and substance as set forth in this Compact or in any such Supplemental Agreement.
The Government hereby provides the following assurances to MCC that as of the date this Compact is signed:
(a) The information contained in the Proposal and any agreement, report, statement, communication, document or otherwise delivered or communicated to MCC by or on behalf of the Government on or after the date of the submission of the Proposal (i) are true, correct and complete in all material respects and (ii) do not omit any fact known to the Government that if disclosed would (1) alter in any material respect the information delivered, (2) likely have a material adverse effect on the Government's ability to effectively implement, or ensure the effective implementation of, the Program or any Project or to otherwise carry out its responsibilities or obligations under or in furtherance of this Compact, or (3) have likely adversely affected MCC's determination to enter into this Compact or any Supplemental Agreement between the Parties.
(b) Unless otherwise disclosed in writing to MCC, the MCC Funding made available hereunder is in addition to the normal and expected resources that the Government usually receives or budgets for the activities contemplated herein from external or domestic sources.
(c) This Compact does not conflict and will not conflict with any international agreement or obligation to which the Government is a party or by which it is bound.
(d) No payments have been (i) received by any official of the Government or any other Governmental Affiliate in connection with the procurement of goods, services or works to be undertaken or funded in whole or in part (directly or indirectly) by MCC Funding, except fees, taxes, or similar payments legally established in Mali (subject to Section 2.3(e)) and consistent with the applicable requirement of the laws of Mali or (ii) made to any third party, in connection with or in furtherance of this Compact, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. 78a
(a) MCC may, from time to time, issue one or more letters to furnish additional information or guidance to assist the Government in the implementation of this Compact (each, an “Implementation Letter”). The Government shall apply such guidance in implementing this Compact.
(b) The details of any funding, implementing and other arrangements in furtherance of this Compact may be memorialized in one or more agreements or other instruments between (i) the Government (or any Government Affiliate or Permitted Designee) and MCC, (ii) MCC or the Government (or any Government Affiliate or Permitted Designee) and any third party, including any of the Providers or Permitted Designee, or (iii) Providers where neither MCC nor the Government is a party, before, on, or after the Entry into Force (each, a “Supplemental Agreement”). The Government shall deliver, or cause to be delivered, to MCC within five (5) days of its request, or such other period as may be specified in the Disbursement Agreement, the execution copy of any Supplemental Agreement to which MCC is not a party.
(a) The Government shall ensure that the procurement of all goods, services and works by the Government or any Provider in furtherance of this Compact shall be consistent with the procurement guidelines (the “Procurement Guidelines”) reflected in the Disbursement Agreement or other Supplemental Agreement between the Government (and a mutually acceptable Government Affiliate or MCA-Mali) and MCC, which Procurement Guidelines shall include the following requirements:
(i) Internationally accepted procurement rules with open, fair and competitive procedures are used in a transparent manner to solicit, award and administer contracts, grants, and other agreements and to procure goods, services and works;
(ii) Solicitations for goods, services, and works shall be based upon a clear and accurate description of the goods, services or works to be acquired;
(iii) Contracts shall be awarded only to qualified and capable contractors that have the capability and willingness to perform the contracts in accordance with the terms and conditions of the applicable contracts and on a cost effective and timely basis; and
(iv) No more than a commercially reasonable price, as determined, for example, by a comparison of price quotations and market prices, shall be paid to procure goods, services, and works.
(b) The Government shall maintain, and shall use its best efforts to ensure that all Providers maintain, records regarding the receipt and use of goods, services and works acquired in furtherance of this Compact, the nature and extent of solicitations of prospective suppliers of goods, services and works acquired in furtherance of this Compact, and the basis of award of contracts, grants and other agreements in furtherance of this Compact.
(c) The Government shall use its best efforts to ensure that information,
(d) The Government shall ensure that no goods, services or works that are funded in whole or in part (directly or indirectly) by MCC Funding are procured pursuant to orders or contracts firmly placed or entered into prior to the Entry into Force, except as the Parties may otherwise agree in writing.
(e) The Government shall ensure that MCA-Mali and any other Permitted Designee follows, and uses its best efforts to ensure that all Providers follow, the Procurement Guidelines in procuring (including soliciting) goods, services and works and in awarding and administering contracts, grants and other agreements in furtherance of this Compact, and shall furnish MCC evidence of the adoption of the Procurement Guidelines by MCA-Mali no later than the time specified in the Disbursement Agreement.
(f) The Government shall include, or ensure the inclusion of, the requirements of this Section 3.6 into all Supplemental Agreements between the Government, any Government Affiliate or Permitted Designee or any of their respective directors, officers, employees, Affiliates, contractors, sub-contractors, grantees, sub-grantees, representatives or agents, on the one hand, and a Provider, on the other hand.
In addition to the specific policy and legal reform commitments identified in Annex I and the Schedules thereto, the Government shall seek to maintain and to improve its level of performance under the policy criteria identified in Section 607 of the Act, and the MCA selection criteria and methodology published by MCC pursuant to Section 607 of the Act from time to time (“MCA Eligibility Criteria”).
(a) Reports and Information. The Government shall furnish to MCC, and shall use its best efforts to ensure that all Providers and any other third party receiving MCC Funding, as appropriate, furnish to the Government (and the Government shall provide to MCC), any records and other information required to be maintained under this Section 3.8 and such other information, documents and reports as may be necessary or appropriate for the Government to effectively carry out its obligations under this Compact, including under Section 3.12.
(b) Government Books and Records. The Government shall maintain, and shall use its best efforts to ensure that all Providers maintain, accounting books, records, documents and other evidence relating to this Compact adequate to show, to the satisfaction of MCC, without limitation, the use of all MCC Funding, including all costs incurred by the Government and the Providers in furtherance of this Compact, the receipt, acceptance and use of goods, services and works acquired in furtherance of this Compact by the Government and the Providers, agreed-upon cost sharing requirements, the nature and extent of solicitations of prospective suppliers of goods, services and works acquired by the Government and the Providers in furtherance of this Compact, the basis of award of Government and other contracts and orders in furtherance of this Compact, the overall progress of the implementation of the Program, and any documents required by this Compact or any Supplemental Agreement between the Parties or reasonably requested by MCC upon reasonable notice (“Compact Records”). The Government shall maintain, and shall use its best efforts to ensure that all Covered Providers maintain, Compact Records in accordance with generally accepted accounting principles prevailing in the United States, or at the Government's option and with the prior written approval by MCC, other accounting principles, such as those (i) prescribed by the International Accounting Standards Committee (an affiliate of the International Federation of Accountants) or (ii) then prevailing in Mali. Compact Records shall be maintained for at least five (5) years after the end of the Compact Term or for such longer period, if any, required to resolve any litigation, claims or audit findings or any statutory requirements.
(c) Access. Upon the request of MCC, the Government, at all reasonable times, shall permit, or cause to be permitted, authorized representatives of MCC, the Inspector General, the United States Government Accountability Office, any auditor responsible for an audit contemplated herein or otherwise conducted in furtherance of this Compact, and any agents or representatives engaged by MCC or a Permitted Designee to conduct any assessment, review or evaluation of the Program, the opportunity to audit, review, evaluate or inspect (i) activities funded in whole or in part (directly or indirectly) by MCC Funding or undertaken in connection with the Program, the utilization of goods and services purchased or funded in whole or in part (directly or indirectly) by MCC Funding, and (ii) Compact Records, including those of the Government or any Provider, relating to activities funded or undertaken in furtherance of, or otherwise relating to, this Compact. The Government shall use its best efforts to ensure access by MCC, the Inspector General, the United States Government Accountability Office or relevant auditor, reviewer or evaluator or their respective representatives or agents to all relevant directors, officers, employees, Affiliates, contractors, representatives and agents of the Government or any Provider.
(d) Audits.
(i) Government Audits. Except as the Parties may otherwise agree in writing, the Government shall, on at least a semi-annual basis, conduct, or cause to be conducted, financial audits of all MCC Disbursements and Re-Disbursements covering the period from signing of the Compact until the earlier of the following December 31 or June 30 and covering each six month period thereafter ending December 31 and June 30, through the end of the Compact Term, in accordance with the following terms. As requested by MCC in writing, the Government shall use, or cause to be used, or select or cause to be selected, an auditor named on the approved list of auditors in accordance with the “Guidelines for Financial Audits Contracted by Foreign Recipients” (the “Audit Guidelines”) issued by the Inspector General of the United States Agency for International Development (the “Inspector General”), and as approved by MCC, to conduct such annual audits. Such audits shall be performed in accordance with such Audit Guidelines and be subject to quality assurance oversight by the Inspector General in accordance with such Audit Guidelines. An audit shall be completed and delivered to MCC no later than ninety (90) days after the first period to be audited and no later than ninety (90) days after each June 30th and December 31st thereafter, or such other period as the Parties may otherwise agree in writing.
(ii) Audits of U.S. Entities. The Government shall ensure that Supplemental Agreements between the Government or any Provider, on the one hand, and a United States non-profit organization, on the other hand, state that the United States organization is subject to the applicable audit requirements contained in OMB
(iii) Audit Plan. The Government shall submit, or cause to be submitted, to MCC no later than twenty (20) days prior to the date of its adoption a plan, in accordance with the Audit Guidelines, for the audit of the expenditures of any Covered Providers, which audit plan, in the form and substance as approved by MCC, the Government shall adopt, or cause to be adopted, no later than sixty (60) days prior to the end of the first period to be audited (such plan, the “Audit Plan”).
(iv) Covered Provider. A “Covered Provider” is (1) a non-United States Provider that receives (other than pursuant to a direct contract or agreement with MCC) US$ 300,000 or more of MCC Funding in any MCA-Mali fiscal year or any other non-United States person or entity that receives, directly or indirectly, US$ 300,000 or more of MCC Funding from any Provider in such fiscal year, or (2) any United States Provider that receives (other than pursuant to a direct contract or agreement with MCC) US$ 500,000 or more of MCC Funding in any MCA-Mali fiscal year or any other United States person or entity that receives, directly or indirectly, US$ 500,000 or more of MCC Funding from any Provider in such fiscal year.
(v) Corrective Actions. The Government shall use its best efforts to ensure that Covered Providers take, where necessary, appropriate and timely corrective actions in response to audits, consider whether a Covered Provider's audit necessitates adjustment of its own records, and require each such Covered Provider to permit independent auditors to have access to its records and financial statements as necessary.
(vi) Audit Reports. The Government shall furnish, or use its best efforts to cause to be furnished, to MCC an audit report in a form satisfactory to MCC for each audit required by this Section 3.8, other than audits arranged for by MCC, no later than ninety (90) days after the end of the period under audit, or such other time as may be agreed by the Parties from time to time.
(vii) Other Providers. For Providers who receive MCC Funding pursuant to direct contracts or agreements with MCC, MCC shall include appropriate audit requirements in such contracts or agreements and shall, on behalf of the Government, unless otherwise agreed by the Parties, conduct the follow-up activities with regard to the audit reports furnished pursuant to such requirements.
(viii) Audit by MCC. MCC retains the right to perform, or cause to be performed, the audits required under this Section 3.8 by utilizing MCC Funding or other resources available to MCC for this purpose, and to audit, conduct a financial review, or otherwise ensure accountability of any Provider or any other third party receiving MCC Funding, regardless of the requirements of this Section 3.8.
(e) Application to Providers. The Government shall include, or ensure the inclusion of, at a minimum, the requirements of:
(i) Paragraphs (a), (b), (c), (d)(ii), (d)(iii), (d)(v), (d)(vi), and (d)(viii) of this Section 3.8 into all Supplemental Agreements between the Government, any Government Affiliate, any Permitted Designee or any of their respective directors, officers, employees, Affiliates, contractors, sub-contractors, grantees, sub-grantees, representatives or agents (each, a “Government Party”), on the one hand, and a Covered Provider that is not a non-profit organization domiciled in the United States, on the other hand;
(ii) Paragraphs (a), (b), (c), (d)(ii), and (d)(viii) of this Section 3.8 into all Supplemental Agreements between a Government Party and a Provider that does not meet the definition of a Covered Provider; and
(iii) Paragraphs (a), (b), (c), (d)(ii), (d)(v) and (d)(viii) of this Section 3.8 into all Supplemental Agreements between a Government Party and a Covered Provider that is a non-profit organization domiciled in the United States.
(f) Reviews or Evaluations. The Government shall conduct, or cause to be conducted, such performance reviews, data quality reviews, environmental and social audits, or program evaluations during the Compact Term or otherwise and in accordance with the M&E Plan or as otherwise agreed in writing by the Parties.
(g) Cost of Audits, Reviews or Evaluations. MCC Funding may be used to fund the costs of any audits, reviews or evaluations required under this Compact, including as reflected on Exhibit A to Annex II, and in no event shall the Government be responsible for the costs of any such audits, reviews or evaluations from financial sources other than MCC Funding.
The Government shall, to MCC's satisfaction, insure or cause to be insured all Program Assets and shall obtain or cause to be obtained such other appropriate insurance and other protections to cover against risks or liabilities associated with the operations of the Program, including by requiring Providers to obtain adequate insurance and post adequate performance bonds or other guarantees. MCA-Mali or the Implementing Entity or Contractor, as applicable, shall be named as the payee on any such insurance and the beneficiary of any such guarantee, including performance bonds, to the extent permissible under applicable laws unless otherwise agreed by the Parties. MCC, and to the extent it is not named as the insured party, MCA-Mali shall be named as additional insureds on any such insurance or other guarantee, to the extent permissible under applicable laws unless otherwise agreed by the Parties. The Government shall ensure that any proceeds from claims paid under such insurance or any other form of guarantee shall be used to replace or repair any loss of Program Assets or to pursue the procurement of the covered goods, services, works, or otherwise;
The Government shall proceed in a timely manner to seek ratification of this Compact as necessary or required by the laws of Mali, or similar domestic requirement, in order that (a) this Compact (and any Supplemental Agreement to which MCC is a party) shall be given the status of an international agreement; (b) no laws of Mali (other than the Constitution of
The Government undertakes not to enter into any agreement in conflict with this Compact or any Supplemental Agreement during the Compact Term.
The Government shall provide, or cause to be provided, to MCC at least on each anniversary of the Entry into Force (or such other anniversary agreed by the Parties in writing) and otherwise within thirty (30) days of any written request by MCC, or as otherwise agreed in writing by the Parties, the following information:
(a) The name of each entity to which MCC Funding has been provided;
(b) The amount of MCC Funding provided to such entity;
(c) A description of the Program and each Project funded in furtherance of this Compact, including:
(i) A statement of whether the Program or any Project was solicited or unsolicited; and
(ii) A detailed description of the objectives and measures for results of the Program or Project;
(d) The progress made by Mali toward achieving the Compact Goal and Objectives;
(e) A description of the extent to which MCC Funding has been effective in helping Mali to achieve the Compact Goal and Objectives;
(f) A description of the coordination of MCC Funding with other United States foreign assistance and other related trade policies;
(g) A description of the coordination of MCC Funding with assistance provided by other donor countries;
(h) Any report, document or filing that the Government, any Government Affiliate or any Permitted Designee submits to any government body in connection with this Compact;
(i) Any report or document required to be delivered to MCC under the Environmental Guidelines, any Audit Plan, or any Implementation Document; and
(j) Any other report, document or information requested by MCC or required by this Compact or any Supplemental Agreement between the Parties.
As conditions precedent to the Entry into Force, the Parties shall satisfy the conditions set forth in this Section 4.1.
(a) The Government (or a mutually acceptable Government Affiliate), a Permitted Designee, and MCC shall execute a disbursement agreement (the “Disbursement Agreement”), which agreement shall be in full force and effect as of the Entry into Force.
(b) The Government (or a mutually acceptable Government Affiliate), a Permitted Designee, and MCC shall execute a governance agreement (the “Governance Agreement”), which agreement shall be in full force and effect as of the Entry into Force.
(c)(i) The Government shall deliver one or more of the Supplemental Agreements or other documents identified on Exhibit B attached hereto, which agreements or other documents shall be fully executed by the parties thereto and in full force and effect, or (ii) the Government (or a mutually acceptable Government Affiliate), a Permitted Designee, and MCC shall execute one or more term sheets that set forth the material and principal terms and conditions that will be included in any such Supplemental Agreement or other documents that have not been entered into or effective as of the Entry into Force (the “Supplemental Agreement Term Sheets”).
(d) The Government shall deliver a written statement as to the incumbency and specimen signature of the Principal Representative and each Additional Representative of the Government executing any document under this Compact, such written statement to be signed by a duly authorized official of the Government other than the Principal Representative or any such Additional Representative.
(e) The Government shall deliver a certificate signed and dated by the Principal Representative of the Government, or such other duly authorized representative of the Government acceptable to MCC, that:
(i) Certifies the Government has completed all of its domestic requirements in order that, and attaches a legal opinion from the Supreme Court of Mali (or such other legal opinion as may be acceptable to MCC) to the effect that (1) this Compact (and any Supplemental Agreement to which MCC is a party) shall be given the status of an international agreement; (2) no laws of Mali (other than the Constitution of Mali) now or hereafter in effect shall take precedence or prevail over this Compact (or any Supplemental Agreement to which MCC is a party) during the Compact Term (or a longer period to the extent provisions of this Compact remain in force following the Compact Term pursuant to Section 5.13); and (3) each of the provisions of this Compact (and each of the provisions of any Supplemental Agreement to which MCC is a party) shall be valid, binding and in full force and effect under the laws of Mali; and
(ii) Attaches thereto, and certifies that such attachments are, true, correct and complete copies of all decrees, legislation, regulations or other governmental documents relating to its domestic requirements for this Compact to enter into force and the satisfaction of Section 3.10, which MCC may post on its Web site or otherwise make publicly available.
(f) MCC shall deliver a written statement as to the incumbency and specimen signature of the Principal Representative and each Additional Representative of MCC executing any document under this Compact such written statement to be signed by a duly authorized official of MCC other than the Principal Representative or any such Additional Representative.
(g) The Government has not engaged subsequent to the conclusion of this Compact in any action or omission inconsistent with the MCA Eligibility Criteria, as determined by MCC in its sole discretion.
Prior to, and as condition precedent to, any MCC Disbursement or Re-Disbursement, the Government shall satisfy, or ensure the satisfaction of, all applicable conditions precedent in the Disbursement Agreement.
Unless otherwise expressly stated in this Compact or otherwise agreed in writing by the Parties, any notice, certificate, request, report, document or other communication required, permitted, or submitted by either Party
Millennium Challenge Corporation, Attention: Vice President for Operations (with a copy to the Vice President and General Counsel), 875 Fifteenth Street, NW., Washington, DC 20005, United States of America, Facsimile: +1 (202) 521-3700, Phone: +1 (202) 521-3600, E-mail:
Prime Minister of the Republic of Mali, Primature, Bamako, Mali, Facsimile: +223 223-9595, Phone: +223 222-5534
At an address, and to the attention of the person, to be designated in writing to MCC by the Government.
Notwithstanding the foregoing, any audit report delivered pursuant to Section 3.8, if delivered by facsimile or electronic mail, shall be followed by an original in overnight express mail. This Section 5.1 shall not apply to the exchange of letters contemplated in Section 1.3 or any amendments under Section 5.3.
Unless otherwise agreed in writing by the Parties, for all purposes relevant to this Compact, the Government shall be represented by the individual holding the position of, or acting as, the Prime Minister of the Republic of Mali, and MCC shall be represented by the individual holding the position of, or acting as, Vice President for Operations (each, a “Principal Representative”), each of whom, by written notice to the other Party, may designate one or more additional representatives (each, an “Additional Representative”) for all purposes other than signing amendments to this Compact. The names of the Principal Representative and any Additional Representative of each of the Parties shall be provided, with specimen signatures, to the other Party, and the Parties may accept as duly authorized any instrument signed by such representatives relating to the implementation of this Compact, until receipt of written notice of revocation of their authority. A Party may change its Principal Representative to a new representative of equivalent or higher rank upon written notice to the other Party, which notice shall include the specimen signature of the new Principal Representative.
The Parties may amend this Compact only by a written agreement signed by the Principal Representatives of the Parties and subject to the respective domestic approval requirements to which this Compact was subject.
(a) Subject to Section 2.5, either Party may terminate this Compact in its entirety by giving the other Party thirty (30) days' written notice.
(b) Notwithstanding any other provision of this Compact, including Section 2.1, or any Supplemental Agreement between the Parties, subject to Section 2.5, MCC may suspend or terminate this Compact or MCC Funding, in whole or in part, and any obligation or sub-obligation related thereto, upon giving the Government written notice, if MCC determines, in its sole discretion, that:
(i) Any use or proposed use of MCC Funding or any other Program Asset or continued implementation of the Compact would be in violation of applicable law or United States Government policy, whether now or hereafter in effect;
(ii) The Government, any Provider, or any other third party receiving MCC Funding or using any other Program Asset is engaged in activities that are contrary to the national security interests of the United States;
(iii) The Government or any Permitted Designee has committed an act or omission or an event has occurred that would render Mali ineligible to receive United States economic assistance under Part I of the Foreign Assistance Act of 1961, as amended (22 U.S.C. 2151
(iv) The Government or any Permitted Designee has engaged in a pattern of actions or omissions inconsistent with the MCA Eligibility Criteria, or there has occurred a significant decline in the performance of Mali on one or more of the eligibility indicators contained therein;
(v) The Government or any Provider has materially breached one or more of its assurances or any covenants, obligations or responsibilities under this Compact or any Supplemental Agreement;
(vi) An audit, review, report or any other document delivered in furtherance of the Compact or any Supplemental Agreement or any other evidence reveals that actual expenditures for the Program, any Project or any Project Activity were greater than the projected expenditure for such activities identified in the applicable Detailed Budget or are projected to be greater than projected expenditures for such activities;
(vii) If the Government (1) materially reallocates or reduces the allocation in its national budget or any other Government budget of the normal and expected resources that the Government would have otherwise received or budgeted, from external or domestic sources, for the activities contemplated herein; (2) fails to contribute or provide the amount, level, type and quality of resources required to effectively carry out the Government Responsibilities or any other responsibilities or obligations of the Government under or in furtherance of this Compact; or (3) fails to pay any of its obligations as required under this Compact or any Supplemental Agreement, including such obligations which shall be paid solely out of national funds;
(viii) If the Government, any Provider, or any other third party receiving MCC Funding or using any other Program Asset, or any of their respective directors, officers, employees, Affiliates, contractors, sub-contractors, grantees, sub-grantees, representatives or agents, is found to have been convicted of a narcotics offense or to have been engaged in drug trafficking;
(ix) Any MCC Funding or Program Assets are applied, directly or indirectly, to the provision of resources and support to, individuals and organizations associated with terrorism, sex trafficking or prostitution;
(x) An event or condition of any character has occurred that; (1) Materially and adversely affects, or is likely to materially and adversely affect, the ability of the Government or any other party to effectively implement, or ensure the effective implementation of, the Program or any Project or to otherwise carry out its responsibilities or obligations under or in furtherance of this Compact or any Supplemental Agreement or to perform its obligations under or in furtherance of this Compact or any Supplemental Agreement or to exercise its rights thereunder; (2) makes
(xi) The Government, any Permitted Designee or Provider has taken any action or omission or engaged in any activity in violation of, or inconsistent with, the requirements of this Compact or any Supplemental Agreement to which the Government or any Permitted Designee or Provider is a party;
(xii) There has occurred a failure to meet a condition precedent or series of conditions precedent or any other requirements or conditions in connection with MCC Disbursement as set out in and in accordance with any Supplemental Agreement between the Parties; or
(xiii) Any MCC Funding, Accrued Interest or Program Asset becomes subject to a Lien without the prior approval of MCC, and the Government fails to obtain the release of such Lien (utilizing national funds and not with MCC Funding, Accrued Interest, or any other Program Asset) within thirty (30) days after the imposition of such Lien.
(c) MCC may reinstate any suspended or terminated MCC Funding under this Compact or any Supplemental Agreement if MCC determines, in its sole discretion, that the Government or other relevant party has demonstrated a commitment to correcting each condition for which MCC Funding was suspended or terminated.
(d) The authority under this Section 5.4 to suspend or terminate this Compact or any MCC Funding includes the authority to suspend or terminate any obligations or sub-obligations relating to MCC Funding under any Supplemental Agreement without any liability to MCC whatsoever.
(e) All MCC Disbursements and Re-Disbursements shall cease upon expiration, suspension, or termination of this Compact;
(f) Other than the payments permitted pursuant to Section 5.4(e), in the event of the suspension or termination of this Compact or any Supplemental Agreement, in whole or in part, the Government, shall suspend, at MCC's sole discretion, for the period of the suspension, or terminate, or ensure the suspension or termination of, as applicable, any obligation or sub-obligation of the Parties to provide financial or other resources under this Compact or any Supplemental Agreement, or to the suspended or terminated portion of this Compact or such Supplemental Agreement, as applicable. In the event of such suspension or termination, the Government shall use its best efforts to suspend or terminate, or ensure the suspension or termination of, as applicable, all such noncancelable commitments related to the suspended or terminated MCC Funding. Any portion of this Compact or any such Supplemental Agreement that is not suspended or terminated shall remain in full force and effect.
(g) Upon the full or partial suspension or termination of this Compact or any MCC Funding, MCC may, at its expense, direct that title to Program Assets be transferred to MCC if such Program Assets are in a deliverable state;
(h) Prior to the expiration of this Compact or upon termination of this Compact, the Parties shall consult in good faith with a view to reaching an agreement in writing on (i) the post-Compact Term treatment of MCA-Mali, (ii) the process for ensuring the refunds of MCC Disbursements that have not yet been released from a Permitted Account through a valid Re-Disbursement or otherwise committed in accordance with Section 5.4(e), or (iii) any other matter related to the winding up of the Program and this Compact.
MCC is an agency of the Government of the United States of America and its personnel assigned to Mali will be notified pursuant to the Vienna Convention on Diplomatic Relations as members of the mission of the Embassy of the United States of America. The Government shall ensure that any personnel of MCC so notified, including individuals detailed to or contracted by MCC, and the members of the families of such personnel, while such personnel are performing duties in Mali, shall enjoy the privileges and immunities that are enjoyed by a member of the United States Foreign Service, or the family of a member of the United States Foreign Service so notified, as appropriate, of comparable rank and salary of such personnel, if such personnel or the members of the families of such personnel are not a national of, or permanently resident in, Mali.
Any annex, schedule, exhibit, table, appendix or other attachment expressly attached hereto (collectively, the “Attachments”) is incorporated herein by reference and shall constitute an integral part of this Compact.
(a) Conflicts or inconsistencies between any parts of this Compact shall be resolved by applying the following descending order of precedence:
(i) Articles I through V, and
(ii) Any Attachments.
(b) In the event of any conflict or inconsistency between this Compact and any Supplemental Agreement between the Parties, the terms of this Compact shall prevail. In the event of any conflict or inconsistency between any Supplemental Agreement between the Parties and any other Supplemental Agreement, the terms of the Supplemental Agreement between the Parties shall prevail. In the event of any conflict or inconsistency between Supplemental Agreements between any parties, the terms of a more recently executed Supplemental Agreement between such parties shall take precedence over a previously executed Supplemental Agreement between such parties. In the event of any inconsistency between a Supplemental Agreement between the Parties and any Implementation Document, the terms of the relevant Supplemental Agreement shall prevail.
The Government shall indemnify and hold MCC and any MCC officer, director, employee, Affiliate, contractor,
The Section and Subsection headings used in this Compact are included for convenience only and are not to be considered in construing or interpreting this Compact.
(a) Any reference to the term “including” in this Compact shall be deemed to mean “including without limitation” except as expressly provided otherwise.
(b) Any reference to activities undertaken “in furtherance of this Compact” or similar language shall include activities undertaken by the Government, any Government Affiliate, any Permitted Designee, any Provider or any other third party receiving MCC Funding involved in carrying out the purposes of this Compact or any Supplemental Agreement, including their respective directors, officers, employees, Affiliates, contractors, sub-contractors, grantees, sub-grantees, representatives or agents, whether pursuant to the terms of this Compact, any Supplemental Agreement or otherwise.
(c) References to “day” or “days” shall be calendar days unless provided otherwise.
(d) Defined terms importing the singular also include the plural, and vice versa.
A signature to this Compact or an amendment to this Compact pursuant to Section 5.3 shall be delivered only as an original signature. With respect to all other signatures, a signature delivered by facsimile or electronic mail in accordance with Section 5.1 shall be deemed an original signature and shall be binding on the Party delivering such signature, and the Parties hereby waive any objection to such signature or to the validity of the underlying document, certificate, notice, instrument or agreement on the basis of the signature's legal effect, validity or enforceability solely because it is in facsimile or electronic form. Without limiting the foregoing, a signature on an audit report or a signature evidencing any modification identified in Section 2(a) and Section 4(a)(iv) of Annex I, Section 4 of Annex II, or Section 5(d) of Annex III shall be followed by an original in overnight express mail.
MCC may designate any Affiliate, agent, or representative to implement, in whole or in part, its obligations, and exercise any of its rights, under this Compact or any Supplemental Agreement between the Parties. MCC shall inform the Government of any such designation.
Any Government Responsibilities, covenants, or obligations or other responsibilities to be performed by the Government after the Compact Term shall survive the termination or expiration of this Compact and expire in accordance with their respective terms. Notwithstanding the termination or expiration of this Compact, the following provisions shall remain in force: Sections 2.2, 2.3, 2.5, 3.2, 3.3, 3.4, 3.5, 3.8, 3.9 (for one year), 3.12, 5.1, 5.2, 5.4(d), 5.4(e) (for one hundred and twenty (120) days), 5.4(f), 5.4(g), 5.4(h), 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12, this Section 5.13, 5.14, and 5.15.
Either Party may, at any time, request consultations relating to the interpretation or implementation of this Compact or any Supplemental Agreement between the Parties. Such consultations shall begin at the earliest possible date. The request for consultations shall designate a representative for the requesting Party with the authority to enter consultations and the other Party shall endeavor to designate a representative of equal or comparable rank. If such representatives are unable to resolve the matter within twenty (20) days from the commencement of the consultations, then each Party shall forward the consultation to the Principal Representative or such other representative of comparable or higher rank. The consultations shall last no longer than forty-five (45) days from date of commencement. If the matter is not resolved within such time period, either Party may terminate this Compact pursuant to Section 5.4(a). The Parties shall enter any such consultations guided by the principle of achieving the Compact Goal in a timely and cost-effective manner and by the principles of international law. Any dispute arising under or related to this Compact shall be determined exclusively through the consultation mechanism set forth in this Section 5.14.
MCC is a United States Government corporation acting on behalf of the United States Government in the implementation of this Compact. As such, MCC has no liability under this Compact, is immune from any action or proceeding arising under or relating to this Compact and the Government hereby waives and releases all claims related to any such liability. In matters arising under or relating to this Compact, MCC is not subject to the jurisdiction of the courts or other body of Mali or any other jurisdiction, and all disputes arising under or relating to this Compact shall be determined in accordance with Section 5.14.
This Compact is prepared in English and in the event of any ambiguity or conflict between this official English version and any other version translated into any language for the convenience of the Parties, this official English version shall prevail.
The Government shall give appropriate publicity to this Compact as a program to which the United States, through MCC, has contributed, including by posting this Compact, and any amendments thereto, on the Web site operated by MCA-Mali (“MCA-Mali Web site”), identifying Program activity sites, and marking Program Assets;
In Witness Whereof, the undersigned, duly authorized by their respective governments, have signed this Compact this 13th day of November 2006 and this Compact shall enter into force in accordance with Section 1.3.
Done at Washington, DC in English.
For the United States of America, acting through the Millennium Challenge Corporation, Name: John J. Danilovich, Title: Chief Executive Officer.
For the Government of the Republic of Mali, Name: Moctor Ouane, Title: Minister of Foreign Affairs and International Cooperation.
The following compendium of capitalized terms that are used herein is provided for the convenience of the reader. To the extent that there is a conflict or inconsistency between the definitions in this Exhibit A and the definitions elsewhere in the text of this Compact, the definition elsewhere in this Compact shall prevail over the definition in this Exhibit A.
MCC
1. Fiscal Agent Agreement.
2. Procurement Agent Agreement.
3. Bank Agreement.
4. Form of Implementing Entity Agreement.
The Compact Implementation Funding provided pursuant to Section 2.1(a)(iii) of this Compact shall support the following activities:
(a) Fiscal and procurement administration activities;
(b) Administrative activities including start-up costs such as staff salaries and administrative support expenses of MCA-Mali (or a mutually acceptable Government Affiliate) such as rent, computers and other information technology or capital equipment;
(c) Baseline surveys for M&E; and
(d) Additional work for feasibility studies.
The total amount of funds disbursed in accordance with Section 2.1(a)(iii) shall not exceed the amount set forth in Section 2.1(a)(iii).
This Annex I to the Compact (this “Program Annex”) generally describes the Program that MCC Funding will support in Mali during the Compact Term and the results to be achieved from the investment of MCC Funding. Prior to any MCC Disbursement or Re-Disbursement, including for the Projects described herein, MCC, the Government (or a mutually acceptable Government Affiliate) and MCA-Mali shall enter into the Disbursement Agreement, which agreement shall be in form and substance mutually satisfactory to the Parties, and signed by the Principal Representative of each Party (or in the case of a Government Affiliate, the principal representative of such Government Affiliate) and of MCA-Mali.
Except as specifically provided herein, the Parties may amend this Program Annex only by written agreement signed by the Principal Representative of each Party. Each capitalized term used but not defined in this Program Annex shall have the same meaning given such term elsewhere in this Compact. Unless otherwise expressly stated, each Section reference herein is to the relevant Section of the main body of this Compact.
(a) Background. Mali is a landlocked country of 1.24 million sq km that shares a border with seven West African countries. One of the world's poorest countries, Mali ranks 174 out of 177 on the United Nations Development Program's Human Development Index, with low levels of literacy (19%) and life expectancy of 47.9 years. Sixty-four percent of Mali's approximate 13 million people are poor, a third living in extreme poverty. MCC's investments will support the development of key infrastructure and policy reform for productive sectors, by addressing the country's constraints to growth and capitalizing on two of Mali's major assets, the Airport, gateway for regional and international trade, and the Niger River Delta for irrigated agriculture. As proposed by the Government, the Program will create a platform for increased production and productivity of agriculture and small and medium-sized enterprises, as well as expand Mali's access to markets and trade.
Investment in the Airport infrastructure will establish an independent and secure link to the regional and global economy, addressing the specific need of a landlocked, developing country. The investments in the industrial park to be located within the Airport domain (“Industrial Park”) will provide properly managed and serviced land for businesses and will leverage reforms that will decrease the cost of doing business in Mali. The investments in the Alatona zone of ON will be a catalyst for the transformation and commercialization of family farms. It will support Mali's national development strategy to increase the contribution of the rural sector to economic growth and help achieve national food security. These investments will be strengthened by policy reforms and institutional support such as formal land titles for the rural poor, demand-driven rural advisory services, an improved business environment, and increased access to markets and trade. These hard and soft investments will impact the poor in Mali, particularly Malian farmers and small and medium-size entrepreneurs, not only in Project zones but, over time, on a national and regional scale. The Program reinforces the Government's approach and commitment to democracy, decentralization, and empowerment of local communities. MCC-financed interventions will complement and reinforce national strategies for poverty reduction and economic growth.
(b) Consultative Process. The Program strongly supports the third pillar of the poverty reduction strategy paper (“PRSP”): Development of infrastructure and key support for productive sectors. The participatory process of the PRSP is characterized as having “breadth” and being “systematic.” The national structure for the implementation of the PRSP identified the following among the top constraints to economic growth in its consultative process:
(i) Climatic risks affecting the rural sector with consequences on the national economy;
(ii) High cost of factors of production;
(iii) Fluctuations in prices of principal import and export products; and
(iv) Isolation/landlocked nature of the country.
The Program was designed to address these constraints. Priorities were defined by the national PRSP structure and refinement occurred in consultation with civil society and the private sector.
Members of the Government, private sector, and civil society (national non-governmental organizations and U.S. non-governmental organizations) played an active role in developing the Millennium Challenge Account proposal. Local non-governmental organizations (“NGOs”), including village-level women's associations, were directly involved in the process through numerous on-site workshops and meetings in the ON region. Consultations also took place with private sector and civil society actors around Bamako, as well as communities surrounding the Airport domain, who emphasized the need for improved infrastructure and increased economic activity to reduce poverty. Lastly, the Consultative Process involved participation of the U.S. NGO community, that has a strong presence in Mali, working on health, education, agriculture, governance, and economic development programs throughout the country.
(a) Projects. The Parties have identified the Projects that the Government will implement, or cause to be implemented, using MCC Funding to advance each Objective. Each Project is described in the Schedules to this Program Annex. The Schedules to this Program Annex also identify one or more of the activities that will be undertaken in furtherance of each Project (each, a “Project Activity”), as well as the various activities within each Project Activity. Notwithstanding anything to the contrary in this Compact, the Parties may agree to modify, amend, terminate or suspend these Projects or to create a new project by written agreement signed by the Principal Representative of each Party without amending this Compact;
(b) Beneficiaries. The intended beneficiaries of each Project are described in the respective Schedule to this Program Annex and Annex III to the extent identified as of the date hereof. The intended beneficiaries shall be identified more precisely during the initial phases of implementation of the Program. The Government shall provide to MCC information on the population of the areas in which the Projects will be active, disaggregated by gender, income level and age. The Parties shall agree upon the description of the intended beneficiaries and the Parties will make publicly available a more detailed description of the intended beneficiaries of the Program, including publishing such description on the MCA-Mali Web site.
(c) Civil Society. Civil society shall participate in overseeing the implementation of the Program through its representation on the Board and the Advisory Councils, as provided in Section 3(d) and Section 3(e), respectively, of this Program Annex. In addition, ongoing consultations with the civil society regarding the manner in which each Project is being implemented will take place throughout the Compact Term.
(d) Monitoring and Evaluation. Annex III generally describes the plan to measure and evaluate progress toward achievement of the Compact Goal and the Objectives (the “M&E Plan”). As outlined in the Disbursement Agreement and other Supplemental Agreements, continued disbursement of MCC Funding under this Compact (whether as MCC Disbursements or Re-Disbursements) shall be contingent on, among other things, successful achievement of certain Targets as set forth in the M&E Plan.
The implementation framework and the plan for ensuring adequate governance, oversight, management, monitoring and evaluation (“M&E”) and fiscal accountability for the use of MCC Funding is summarized below and in the Schedules attached to this Program Annex, and as may otherwise be agreed in writing by the Parties.
(a) General. The elements of the implementation framework will be further described in the Supplemental Agreements and in a set of detailed documents for the implementation of the Program, consisting of (i) a Multi-Year Financial Plan, (ii) a Fiscal Accountability Plan, (iii) a Procurement Plan, (iv) an M&E Plan, and (v) a Work Plan (each, an “Implementation Document”). MCA-Mali shall adopt each Implementation Document in accordance with the requirements and timeframe as may be specified in this Program Annex, Annex II, Annex III, and the Disbursement Agreement or as may otherwise be agreed by the Parties from time to time. MCA-Mali may amend any Implementation Document without amending this Compact,
(b) Government.
(i) The Government shall promptly take all necessary and appropriate actions to carry out the Government Responsibilities and other obligations or responsibilities of the Government under and in furtherance of this Compact, including undertaking or pursuing such legal, legislative or regulatory actions or procedural changes and contractual arrangements as may be necessary or appropriate to achieve the Objectives, to successfully implement the Program, to designate any rights or responsibilities to any Permitted Designee, and to establish a legal entity, in a form mutually agreeable to the Parties (“MCA-Mali”), which shall be a Permitted Designee and shall be responsible for the oversight and management of the implementation of this Compact on behalf of the Government. The Government shall promptly deliver to MCC certified copies of any documents, orders, decrees, laws or regulations evidencing such legal, legislative, regulatory, procedural, contractual or other actions.
(ii) The Government shall ensure that MCA-Mali is duly authorized and organized, sufficiently staffed and empowered to carry out fully the
(c) MCC.
(i) Notwithstanding Section 3.11 of this Compact or any provision in this Program Annex to the contrary, and except as may be otherwise agreed upon by the Parties from time to time, MCC must approve in writing each of the following transactions, activities, agreements and documents prior to the execution or carrying out of such transaction, activity, agreement or document and prior to MCC Disbursements or Re-Disbursements in connection therewith:
(1) MCC Disbursements;
(2) Each Implementation Document (including each component thereto) and any material amendments and supplements thereto;
(3) Any Audit Plan;
(4) Agreements (i) between the Government and MCA-Mali, (ii) between the Government, a Government Affiliate, MCA-Mali or any other Permitted Designee, on the one hand, and any Provider or Affiliate of a Provider, on the other hand, which require such MCC approval under applicable law, the Disbursement Agreement, any Governing Document, or any other Supplemental Agreement, or (iii) in which the Government, a Government Affiliate, MCA-Mali or any other Permitted Designee appoints, hires, or engages any of the following in furtherance of this Compact:
(A) Auditor;
(B) Reviewer;
(C) Fiscal Agent;
(D) Procurement Agent;
(E) Bank;
(F) Implementing Entity (as required under Section 3(f) of this Program Annex); and
(G) A member of the Board (including any Observer), any Officer or any other key employee of MCA-Mali (including agreements involving the terms of any compensation for any such person).
(Any agreement described in clause (i) through (iii) of this Section 3(c)(i)(4) of this Program Annex and any amendments and supplements thereto, each, a “Material Agreement”);
(5) Any modification, termination or suspension of a Material Agreement, or any action that would have the effect of such a modification, termination or suspension of a Material Agreement;
(6) Any agreement that is (A) not at arm's length or (B) with a party related to the Government, MCA-Mali or any of their respective Affiliates;
(7) Any Re-Disbursement that requires such MCC approval under applicable law, any Governing Document, or any other Supplemental Agreement (each, a “Material Re-Disbursement”);
(8) Any pledge of any MCC Funding or any Program Assets, or any guarantee, directly or indirectly, of any indebtedness (each, a “Pledge”);
(9) Any decree, legislation, regulation, contractual arrangement (including the Governance Agreement), or other charter document establishing or governing MCA-Mali (each, a “Governing Document”);
(10) Any disposition, in whole or in part, liquidation, dissolution, winding up, reorganization or other change of (A) MCA-Mali, including any revocation or modification of or supplement to any Governing Document related thereto, or (B) any subsidiary or Affiliate of MCA-Mali;
(11) Any change in character or location of any Permitted Account;
(12) Formation or acquisition of any direct or indirect subsidiary, or other Affiliate, of MCA-Mali;
(13) (A) Any change of any member of the Board (including any Observer), of the member serving as the Chair or in the composition or size of the Board, and the filling of any vacant seat of any member of the Board (including any Observer), (B) any change of any Officer or other key employee of MCA-Mali or in the composition or size of the Management, and the filling of any vacant position of any Officer or other key employee of MCA-Mali, and (C) any material change in the composition or size of any Advisory Council;
(14) Any decision by MCA-Mali to engage, to accept or to manage any funds from any donor agencies or organizations in addition to MCC Funding during the Compact Term;
(15) Any decision to amend, supplement, replace, terminate, or otherwise change any of the foregoing; and
(16) Any other activity, agreement, document or transaction requiring the approval of MCC in this Compact, applicable law, any Governing Document, the Disbursement Agreement, or any other Supplemental Agreement between the Parties.
(ii) MCC shall have the authority to exercise its approval rights set forth in this Section 3(c) of this Program Annex in its sole discretion and independent of any participation or position taken by the MCC Representative at a meeting of the Board. MCC retains the right to revoke its approval of any matter, agreement, or action if MCC concludes, in its sole discretion, that its approval was issued on the basis of incomplete, inaccurate or misleading information furnished by the Government, any Government Affiliate, MCA-Mali or any other Permitted Designee. Notwithstanding any provision in this Compact or any Supplemental Agreement to the contrary, the exercise by MCC of its approval rights under this Compact or any Supplemental Agreement shall not (1) diminish or otherwise affect the Government Responsibilities or any other obligations or responsibilities of the Government under this Compact or any Supplemental Agreement, (2) transfer any such obligations or responsibilities of the Government, or (3) otherwise subject MCC to any liability.
(d) MCA-Mali.
(i) General. Unless otherwise agreed by the Parties in writing, MCA-Mali shall, as a Permitted Designee, be responsible for the oversight and management of the implementation of this Compact. MCA-Mali shall be governed by applicable law and the Governing Documents. Each Governing Document shall be in form and substance satisfactory to MCC and effective on or before the time specified in the Disbursement Agreement, and based on the following principles:
(1) The Government shall ensure that MCA-Mali shall not assign, delegate or contract any of the Designated Rights and Responsibilities without the prior written consent of the Government and MCC. MCA-Mali shall not establish any Affiliates or subsidiaries (direct or indirect) without the prior written consent of the Government and MCC.
(2) Unless otherwise agreed by the Parties in writing, MCA-Mali shall consist of (A) an independent board of directors (the “Board”) to oversee MCA-Mali's responsibilities and obligations under this Compact (including any Designated Rights and Responsibilities) and (B) a management unit to have overall management (the “Management”) responsibility for the implementation of this Compact.
(3) The Government shall ensure that the Governing Documents comply with the requirements set forth in this Program Annex.
(ii) Board.
(1) Formation. The Government shall ensure that the Board shall be formed, constituted, governed and operated in accordance with the terms and conditions set forth in the Governing Documents and any Supplemental Agreement.
(2) Composition. Unless otherwise agreed by the Parties in writing, the Board shall consist of no more than eleven (11) voting members and two (2) non-voting observers identified below.
(A) The Board shall initially be composed of eleven (11) voting members as follows,
(i) Representative from the Prime Minister's Office, appointed as the chair (“Chair”) as provided in the Governing Documents;
(ii) Representative from the Ministry of Equipment and Transport;
(iii) Representative from the Ministry of Economy and Finance;
(iv) Representative from the Ministry for Investment Promotion and Small and Medium-Size Industries;
(v) Representative from the Ministry of Agriculture;
(vi) Representative from the Ministry of Territorial Administration;
(vii) Representative from the National Committee for Business Owners;
(viii) Representative from the Chamber of Commerce and Industry;
(ix) Representative from the Chamber of Agriculture;
(x) Representative from civil society organizations representing youth, selected by the relevant national NGOs and civil society organizations and based on selection criteria agreed upon by the Parties; and
(xi) Representative from civil society organizations representing women, selected by the relevant national NGOs and civil society organizations and based on selection criteria agreed upon by the Parties.
(B) The non-voting observers of the Board (each, an “Observer”) shall be:
(i) A representative designated by MCC (the “MCC Representative”); and
(ii) A representative of environmental NGOs, selected by the relevant national NGOs and civil society organizations and based on selection criteria agreed upon by the Parties.
(C) Each Government Member position (other than the Chair) shall be filled by the individual, during the Compact Term, holding the office identified, and all Government Members (including the Chair) shall serve in their capacity as the applicable Government officials and not in their personal capacity.
(D) Each Civil Member shall serve a two (2) year term.
(E) The Voting Members, by majority vote, may alter the size of the Board in accordance with the Governing Documents so long as the total does not exceed eleven (11) members.
(F) Each Observer shall have rights to attend all meetings of the Board, participate in the discussions of the Board, and receive all information and documents provided to the Board, together with any other rights of access to records, employees or facilities as would be granted to a member of the Board under the Governing Documents.
(G) The Voting Members shall exercise their duties solely in accordance with the best interests of MCA-Mali, the Program, the Compact Goal and the Objectives, and shall not undertake any action that is contrary to those interests or would result in personal gain or a conflict of interest.
(3) Roles and Responsibilities. The roles and responsibilities of the Board shall include the following:
(A) The Board shall oversee the Management, the overall implementation of the Program, and the performance of the Designated Rights and Responsibilities.
(B) Certain actions may be taken and certain agreements, documents or instruments executed and delivered, as the case may be, by MCA-Mali only upon the approval and authorization of the Board as provided under applicable law or as set forth in any Governing Document, including each MCC Disbursement Request, selection or termination of certain Providers and any Implementation Document.
(C) The Chair, unless otherwise provided in the applicable Governing Documents, shall certify any documents or reports delivered to MCC in satisfaction of the Government's reporting requirements under this Compact or any Supplemental Agreement between the Parties (the “Compact Reports”) or any other documents or reports from time to time delivered to MCC by MCA-Mali (whether or not such documents or reports are required to be delivered to MCC), and that such documents or reports are true, correct and complete.
(D) Without limiting the generality of the Designated Rights and Responsibilities that the Government may designate to MCA-Mali, and subject to MCC's contractual rights of approval as set forth in Section 3(c) of this Program Annex, elsewhere in this Compact or any Supplemental Agreement, the Board shall have the exclusive authority as between the Board and the Management for all actions defined for the Board in any Governing Document and which are expressly designated therein as responsibilities that cannot be delegated further.
(E) The Board shall meet with and exchange information with the Advisory Councils, as contemplated in Section 3(e) of this Program Annex. Without limiting the generality of the foregoing, the Board shall take each Advisory Council's suggestions into consideration in connection with any amendment to the M&E Plan, pursuant to Section 5(b) of Annex III.
(4) Indemnification of Civil Members, Observers, and Officers. The Government shall ensure, at the Government's sole cost and expense, that appropriate insurance is obtained and appropriate indemnifications and other protections are provided, acceptable to MCC and to the fullest extent permitted under the laws of Mali, to ensure that (A) the Civil Members and the Observers shall not be held personally liable for the actions or omissions of the Board or MCA-Mali and (B) Officers shall not be held personally liable for the actions or omissions of the Board, MCA-Mali or actions or omissions of the Officer so long as properly within the scope of Officer's authority. Pursuant to Section 5.5 and Section 5.8 of this Compact, the Government and MCA-Mali shall hold harmless the MCC Representative for any liability or action arising out of the MCC Representative's role as an Observer on the Board. The Government hereby waives and releases all claims related to any such liability and acknowledges that the MCC Representative has no fiduciary duty to MCA-Mali. In matters arising under or relating to this Compact, the MCC Representative is not subject to the jurisdiction of the courts or any other governmental body of Mali. MCA-Mali shall provide a written waiver and acknowledgement that no fiduciary duty to MCA-Mali is owed by the MCC Representative.
(iii) Management. Unless otherwise agreed in writing by the Parties, the Management shall report, through its chief executive officer (the “Director General”) or other Officer as designated in any Governing Document, directly to the Board and shall have the composition, roles and responsibilities described below and set forth more particularly in the Governing Documents.
(1) Composition. The Government shall ensure that the Management shall be composed of qualified experts from the public or private sectors, including such officers and staff as may be necessary to carry out effectively its responsibilities, each with such powers and responsibilities as set forth in the
(2) Appointment of Officers. The Director General shall be selected after an open and competitive recruitment and selection process, and appointed in accordance with the Governing Documents, which appointment shall be subject to MCC approval. Such appointment shall be further evidenced by such document as the Parties may agree. Unless otherwise specified in the Governing Documents, the Officers of MCA-Mali other than the Director General shall be selected and hired by the Board after an open and competitive recruitment and selection process, and appointed in accordance with the Governing Documents, which appointment shall be subject to MCC approval. Such appointment shall be further evidenced by such document as the Parties may agree.
(3) Roles and Responsibilities. The roles and responsibilities of the Management shall include:
(A) The Management shall assist the Board in overseeing the implementation of the Program and shall have principal responsibility (subject to the direction and oversight of the Board and subject to MCC's contractual rights of approval as set forth in Section 3(c) of this Program Annex or elsewhere in this Compact or any Supplemental Agreement) for the overall management of the implementation of the Program.
(B) Without limiting the foregoing general responsibilities or the generality of Designated Rights and Responsibilities that the Government may designate to MCA-Mali, the Management shall develop each Implementation Document, oversee the implementation of the Projects, manage and coordinate monitoring and evaluation, ensure compliance with the Fiscal Accountability Plan, and such other responsibilities as set out in the Governing Documents or otherwise delegated to the Management by the Board from time to time.
(C) Appropriate Officers as designated in the Governing Documents shall have the authority to contract on behalf of MCA-Mali under any procurement undertaken in accordance with the Disbursement Agreement (including the Procurement Guidelines) in furtherance of the Program.
(D) The Management shall have the obligation and right to approve certain actions and documents or agreements, including certain Re-Disbursements, MCC Disbursement Requests, Compact Reports, certain human resources decisions and certain other actions, as provided in the Governing Documents.
(e) Advisory Councils.
(i) Formation. The Government shall ensure the establishment of (1) an advisory council to the Board representing the beneficiaries of the Airport Improvement Project and the Industrial Park Project (“Airport Domain Advisory Council”); and (2) an advisory council to the Board representing the beneficiaries of the Alatona Irrigation Project (the “Alatona Zone Advisory Council,” together with the Airport Domain Advisory Council, the “Advisory Councils” and each an “Advisory Council”), which Advisory Councils shall be independent of MCA-Mali and shall be established to the satisfaction of MCC. The Government shall take all steps necessary to establish the Advisory Councils as soon as possible following the execution of this Compact.
(ii) Composition.
(1) Each Advisory Council shall consist of no more than fifteen (15) voting members and shall be composed of representatives of relevant banking organizations, microfinance institutions, farmer associations, women's associations, chambers of commerce, local government, anti-corruption associations and environmental and social organizations (“Civil Society Stakeholders”).
(2) The Government shall take all actions necessary and appropriate to ensure that each Advisory Council is established consistent with this Section 3(e) of this Program Annex and as otherwise specified in the Governing Documents or otherwise agreed in writing by the Parties. The composition of each Advisory Council may be adjusted by agreement of the Parties from time to time to ensure, among others, an adequate representation of the intended beneficiaries of the relevant Projects. Each member of an Advisory Council may appoint an alternate, approved by majority vote of the other members of such Advisory Council, to serve when the member is unable to participate in a meeting of the Advisory Council.
(iii) Roles and Responsibilities. Each Advisory Council shall be a mechanism to provide representatives of the private sector, civil society and local government the opportunity to provide advice and input to MCA-Mali regarding the implementation of this Compact. At the request of any Advisory Council, MCA-Mali shall provide such information and documents as it deems advisable, subject to appropriate treatment of such information and documents by the members of such Advisory Council. Specifically, during each meeting of an Advisory Council, MCA-Mali shall present an update on the implementation of this Compact and progress towards achievement of the Objectives. Each Advisory Council shall have an opportunity to provide regularly to MCA-Mali its views or recommendations on the performance and progress on the Projects and Project Activities, any Implementation Document, procurement, financial management or such other issues as may be presented from time to time to such Advisory Council or as otherwise raised by such Advisory Council.
(iv) Meetings. Each Advisory Council shall hold at least two general meetings per year as well as such other periodic meetings as may be necessary or appropriate from time to time. The members of each Advisory Council shall be provided timely advance notice of all such general meetings, invited to participate in all such meetings and afforded an opportunity during each such meeting to present their views or recommendations to such Advisory Council.
(v) Accessibility; Transparency. The members of each Advisory Council shall be accessible to the beneficiaries they represent to receive the beneficiaries' comments or suggestions regarding the Program. The notices for, and the minutes (including the views or recommendations of the Civil Society Stakeholders expressed) of all general meetings of, each Advisory Council shall be made public on the MCA-Mali Web site or otherwise (including television, radio and print) in a timely manner.
(f) Implementing Entities. Subject to the terms and conditions of this Compact and any other Supplemental Agreement between the Parties, MCA-Mali may engage one or more Government Affiliates to implement and
(g) Fiscal Matters.
(i) Fiscal Agent. The Government shall ensure that MCA-Mali engages a fiscal agent following an international competitive process (a “Fiscal Agent”), who shall be responsible for, among other things: (1) Assisting MCA-Mali in preparing the Fiscal Accountability Plan; (2) ensuring and certifying that Re-Disbursements are properly authorized and documented in accordance with established control procedures set forth in the Disbursement Agreement, the Fiscal Agent Agreement and other Supplemental Agreements; (3) Re-Disbursement from, and cash management and account reconciliation of, any Permitted Account established and maintained for the purpose of receiving MCC Disbursements and making Re-Disbursements (to which the Fiscal Agent has sole signature authority); (4) providing applicable certifications for MCC Disbursement Requests; (5) maintaining and retaining proper accounting, records and document disaster recovery system of all MCC-funded financial transactions and certain other accounting functions; (6) producing reports on MCC Disbursements and Re-Disbursements (including any requests therefor) in accordance with established procedures set forth in the Disbursement Agreement, the Fiscal Agent Agreement, the Fiscal Accountability Plan, or any other Supplemental Agreements; (7) assisting in the preparation of budget development procedures; and (8) internal management of the Fiscal Agent operations. Upon the written request of MCC, the Government shall ensure that MCA-Mali terminates the Fiscal Agent, without any liability to MCC, and the Government shall ensure that MCA-Mali engages a new Fiscal Agent, subject to approval by the Board and MCC. The Government shall ensure that MCA-Mali enters into an agreement with the Fiscal Agent, in form and substance satisfactory to MCC, that sets forth the roles and responsibilities of the Fiscal Agent and other appropriate terms and conditions, such as payment of the Fiscal Agent (a “Fiscal Agent Agreement”). Such Fiscal Agent Agreement shall not be terminated until MCA-Mali has engaged a successor Fiscal Agent or as otherwise agreed by MCC in writing.
(h) Auditors and Reviewers. The Government shall ensure that MCA-Mali carries out the Government's audit responsibilities as provided in Sections 3.8(d), (e) and (f) of this Compact, including engaging one or more auditors (each, an “Auditor”) required by Section 3.8(d) of this Compact. As requested by MCC in writing from time to time, the Government shall ensure that MCA-Mali also engages (i) an independent reviewer to conduct reviews of performance and compliance under this Compact pursuant to Section 3.8(f) of this Compact, which reviewer shall have the capacity to (1) conduct general reviews of performance or compliance, (2) conduct environmental audits, and (3) conduct data quality assessments in accordance with the M&E Plan, as described more fully in Annex III; and/or (ii) an independent evaluator to assess performance as required under the M&E Plan (each, a “Reviewer”). MCA-Mali shall select any such Auditor(s) and Reviewer(s) in accordance with any Governing Document or other Supplemental Agreement. The Government shall ensure that MCA-Mali enters into an agreement with each Auditor and each Reviewer, in form and substance satisfactory to MCC, that sets forth the roles and responsibilities of the Auditor or Reviewer with respect to the audit, review or evaluation, including access rights, required form and content of the applicable audit, review or evaluation and other appropriate terms and conditions such as payment of the Auditor or Reviewer (the “Auditor/Reviewer Agreement”). In the case of a financial audit required by Section 3.8(d) of this Compact, such Auditor/Reviewer Agreement shall be effective no later than one hundred and twenty (120) days prior to the end of the relevant period to be audited;
(i) Procurement Agent. The Government shall ensure that MCA-Mali engages one or more procurement agents through an international competitive process (each, a “Procurement Agent”) to carry out and certify specified procurement activities in furtherance of this Compact on behalf of the Government, MCA-Mali, or the Implementing Entity. The roles and responsibilities of each Procurement Agent and the criteria for selection of a Procurement Agent shall be as set forth in the applicable Implementation Letter or Supplemental Agreement. The Government shall ensure that MCA-Mali enters into an agreement with each Procurement Agent, in form and substance satisfactory to MCC, that sets forth the roles and responsibilities of the Procurement Agent with respect to the conduct, monitoring and review of procurements and other appropriate terms and conditions, such as payment of the Procurement Agent (each, a “Procurement Agent Agreement”). Any Procurement Agent shall adhere to the procurement standards set forth in the Disbursement Agreement and the Procurement Guidelines and ensure procurements are consistent with the procurement plan adopted by MCA-Mali pursuant to the Disbursement Agreement (the “Procurement Plan”), unless MCA-Mali and MCC otherwise agree in writing.
(a) Multi-Year Financial Plan; Detailed Budget.
(i) Multi-Year Financial Plan. The multi-year financial plan for the Program, showing the estimated amount of MCC Funding allocable to each Project (and related Project Activities), the administration of the Program (and its components) and the monitoring and evaluation of the Program (the “Multi-Year Financial Plan”) over the Compact Term on an annual basis, is summarized in Annex II to this Compact.
(ii) Detailed Budget. During the Compact Term, the Government shall ensure that MCA-Mali timely delivers to MCC a detailed budget, at a level of detail and in a format acceptable to MCC, for the administration of the Program, the monitoring and evaluation of the Program, and the implementation of each Project (the “Detailed Budget”). The Detailed Budget shall be a component of the Work Plan and shall be delivered by such time as specified in the Disbursement Agreement, or as may otherwise be agreed by the Parties.
(iii) Expenditures. Unless the Parties otherwise agree in writing, no financial commitment involving MCC Funding shall be made, no obligation of MCC Funding shall be incurred, and no Re-Disbursement shall be made or MCC Disbursement Request shall be submitted, for any activity or expenditure unless the expense for such activity or expenditure is provided for in the Detailed Budget, and unless uncommitted funds exist in the balance of the Detailed Budget for the relevant period.
(iv) Modifications to Multi-Year Financial Plan or Detailed Budget. Notwithstanding anything to the contrary in this Compact, MCA-Mali may amend the Multi-Year Financial Plan, the Detailed Budget, or any component thereof (including any amendment that would reallocate the funds among the Projects, the Project Activities, or any activity under Program administration or M&E as shown in Annex II), without amending this Compact so long as MCA-Mali requests in writing and receives the approval of MCC for such amendment and such amendment is consistent with the requirements of this Compact (including Section 4 of Annex II), the Disbursement Agreement and any other Supplemental Agreement between the Parties. Any such amendment shall (1) be consistent with the Objectives and the Implementation Documents; (2) shall not materially adversely impact the applicable Project, Project Activity (or any component thereof), or any activity under Program administration or M&E as shown in Annex II; (3) shall not cause the amount of MCC Funding to exceed the aggregate amount specified in Section 2.1(a) of this Compact; and (4) shall not cause the Government's obligations or responsibilities or overall contribution of resources to be less than as specified in Section 2.2(a) of this Compact, this Annex I or elsewhere in this Compact. Upon any such amendment, MCA-Mali shall deliver to MCC a revised Detailed Budget, together with a revised Multi-Year Financial Plan, reflecting such amendment, along with the next MCC Disbursement Request.
(b) Disbursement and Re-Disbursement. The Disbursement Agreement, as amended from time to time, shall specify the terms, conditions and procedures on which MCC Disbursements and Re-Disbursements shall be made. The obligation of MCC to make MCC Disbursements or approve Re-Disbursements is subject to the fulfillment, waiver or deferral of any such terms and conditions. The Government and MCA-Mali shall jointly submit the applicable request for an MCC Disbursement (the “MCC Disbursement Request”) as may be specified in the Disbursement Agreement. MCC will make MCC Disbursements in tranches to a Permitted Account from time to time as provided in the Disbursement Agreement or as may otherwise be agreed by the Parties, subject to Program requirements and performance by the Government, MCA-Mali and other relevant parties in furtherance of this Compact. Re-Disbursements will be made from time to time based on requests by an authorized representative of the appropriate party designated for the size and type of Re-Disbursement in accordance with any Governing Document and Disbursement Agreement; provided, however, unless otherwise agreed by the Parties in writing, no Re-Disbursement shall be made unless and until the written approvals specified herein and in any Governing Document and the Disbursement Agreement for such Re-Disbursement have been obtained and delivered to the Fiscal Agent.
(c) Fiscal Accountability Plan. By such time as specified in the Disbursement Agreement or as otherwise agreed by the Parties, MCA-Mali shall adopt, as part of the Implementation Documents, a plan that identifies the principles, mechanisms and procedures to ensure appropriate fiscal accountability for the use of MCC Funding provided under this Compact, including the process to ensure that open, fair, and competitive procedures will be used in a transparent manner in the administration of grants or cooperative agreements and the procurement of goods, works and services for the accomplishment of the Objectives (the “Fiscal Accountability Plan”). The Fiscal Accountability Plan shall set forth, among others, requirements with respect to the following matters: (i) Re-Disbursements, timely payment to vendors, cash management and account reconciliation; (ii) funds control and documentation; (iii) accounting standards and systems; (iv) content and timing of reports; (v) preparing budget development procedures and the Compact implementation budget; (vi) policies concerning records, document disaster recovery, public availability of all financial information and asset management; (vii) procurement and contracting practices; (viii) inventory control; (ix) the role of independent auditors; (x) the roles of fiscal agents and procurement agents; (xi) separation of duties and internal controls; and (xii) certifications, powers, authorities and delegations.
(d) Permitted Accounts. The Government shall establish, or cause to be established, such accounts (each, a “Permitted Account,” and, collectively, the “Permitted Accounts”) as may be agreed by the Parties in writing from time to time, including:
(i) A single, completely separate United States Dollar interest-bearing account (the “Special Account”) at a commercial bank, subject to MCC approval, that is procured through a competitive process to receive MCC Disbursements;
(ii) If necessary, an interest-bearing local currency of Mali account (the “Local Account”) at a commercial bank in Mali, subject to MCC approval, that is procured through a competitive process to which funds deposited in the Special Account will be transferred for the purpose of making Re-Disbursements; and
(iii) Such other interest-bearing accounts to receive MCC Disbursements in such banks as the Parties mutually agree upon in writing.
No other funds shall be commingled in a Permitted Account other than MCC Funding and Accrued Interest thereon. All MCC Funding held in an interest-bearing Permitted Account shall earn interest at a rate of no less than such amount as the Parties may agree in the applicable Bank Agreement or otherwise. MCC shall have the right, among others, to view any Permitted Account statements and activity directly on-line, where feasible, or at such other frequency as the Parties may otherwise agree. By such time as shall be specified in the Disbursement Agreement or as otherwise agreed by the Parties, the Government shall ensure that, for each Permitted Account, MCA-Mali enters into an agreement with the applicable Bank, satisfactory to MCC, that sets forth the signatory authority, access rights, anti-money laundering and anti-terrorist financing provisions, and other terms related to the Permitted Account (each, a “Bank Agreement”). For purposes of this Compact, the banks holding an account referenced in Sections 4(d) of this Program Annex are each a “Bank” and are collectively referred to as the “Banks.”
Transparency and accountability to MCC and to the beneficiaries are important aspects of the Program and the Projects. Without limiting the generality of the foregoing, and in an effort to achieve the goals of transparency and accountability, the
(a) Establishes an e-mail suggestion box as well as a means for other written comments that interested persons may use to communicate ideas, suggestions or feedback to MCA-Mali;
(b) Considers as a factor in its decisionmaking the recommendations of the Advisory Councils;
(c) Develops and maintains, in a timely, accurate and appropriately comprehensive manner, the MCA-Mali Web site that includes postings of information and documents in English and French;
(d) Posts on the MCA-Mali Web site, and otherwise makes publicly available via appropriate means (including television, radio and print), in the appropriate language the following documents or information from time to time:
(i) This Compact;
(ii) All minutes of the meetings of the Board and the meetings of the Advisory Councils, unless otherwise agreed by the Parties;
(iii) The M&E Plan, as amended from time to time, along with periodic reports on Program performance;
(iv) Such financial information as may be required by this Compact, the Disbursement Agreement or any other Supplemental Agreement, or as may otherwise be agreed from time to time by the Parties;
(v) All Compact Reports;
(vi) All audit reports by an Auditor and any periodic reports or evaluations by a Reviewer;
(vii) All relevant environmental impact assessments and supporting documents, and such other environmental documentation as MCC may request;
(viii) A copy of the Disbursement Agreement, as amended from time to time;
(ix) A copy of any document relating to the formation, organization and governance of MCA-Mali, including all Governing Documents, together with any amendments thereto; and
(x) A copy of the Procurement Guidelines, any procurement policies or procedures and standard documents, certain information derived from each Procurement Plan (as specified in the Disbursement Agreement), and all bid requests and notifications of awarded contracts.
(a) The Government shall ensure that MCA-Mali (or any other Permitted Designee) (i) undertakes and completes any environmental impact assessments (each, an “EIA”), any environmental assessment (each an “EA”), environmental management plans (each, an “EMP”) and resettlement action plans (each, a “RAP”), each in form and substance satisfactory to MCC, and as required under the laws of Mali, the Environmental Guidelines, this Compact or any Supplemental Agreement or as otherwise required by MCC; and (ii) undertakes to implement any environmental and social mitigation measures identified in such assessments or plans to MCC's satisfaction.
(b) The Government shall commit to fund all necessary costs of environmental mitigation (including costs of resettlement) not specifically provided for in the budget for any Project.
This Schedule 1 generally describes and summarizes the key elements of the project that the Parties intend to implement in furtherance of the Bamako-Sénou Airport Improvement Project Objective (the “Airport Improvement Project”). Additional details regarding the implementation of the Airport Improvement Project will be included in the Implementation Documents and in the relevant Supplemental Agreements.
Economic growth and poverty reduction depend on enhanced access to markets and trade, but Mali's access is severely constrained. The Airport Improvement Project will expand Mali's access to markets and trade through improvements to the transportation infrastructure at the Airport, and better management of the national air transport system. The Government recognizes the importance of improved air transportation infrastructure. Mali's PRSP for 2002 includes rehabilitation of Airport infrastructure to “promote access of Malian producers to domestic and international markets.”
Mali, a landlocked country, depends heavily on inadequate rail and road networks that result in high transportation costs, as well as on freight transport through seaports in neighboring countries, such as Conakry, Guinea (Bamako's closest port which is 1000 km away) and Abidjan, Cote d'Ivoire. In the last few years, the instability in Cote d'Ivoire has dramatically limited Mali's market access. Before the outbreak of the Ivorian crisis, 70% of Malian exports were transported via the port of Abidjan. In 2003, this amount dwindled to less than 18% due to the aforementioned crisis. Mali cannot control overland routes to international and regional markets. Therefore, air traffic has become Mali's lifeline for transportation of both passengers and export products.
The deteriorating conditions at the Airport will soon limit the Airport's capacity to handle air traffic growth if significant capital improvements are not made. The Airport's basic infrastructure dates from 1974, is in poor condition, and is inadequate to handle increased passenger and cargo traffic. On the airside, the runway is too short to accommodate large aircraft without take-off load penalties, the aeronautical pavements urgently need resurfacing and reinforcement, the air navigation aids are reaching the end of their useful life, and airfield security is deficient. On the landside, the passenger terminal building is too small to handle current traffic volumes at acceptable levels of service, and the facilities and equipment are in poor physical condition.
The Airport Improvement Project is intended to remove constraints to air traffic growth and increase the Airport's efficiency in both passenger and freight handling through airside and landside infrastructure improvements, as well as the establishment of appropriate institutional mechanisms to ensure effective management, operation, and maintenance of the Airport facilities over the long term. The Airport Improvement Project includes the following Project Activities:
• Airside Infrastructure. Improvements will include reinforcement overlay to, and expansion of, the runway, taxiway, and apron areas; replacement of deteriorating navigational equipment; and upgrades of Airport security systems.
• Landside Infrastructure. Improvements will be made to the existing passenger terminal and a new passenger terminal will be constructed, as well as support facilities, airport roads, and parking lots. Certain utilities, including water supply, solid waste disposal facilities, wastewater treatment, and power generation, are also planned to be constructed and designed as joint systems to support both the proposed investments at the Airport and the adjacent Industrial Park.
• Institutional Strengthening. Infrastructure improvements will be accompanied by the establishment of appropriate institutional mechanisms to ensure effective management, operation and maintenance of the Airport facilities over the long term. These measures will involve both the management of the
In connection with the Project Activities, MCA-Mali will assist and take all necessary steps to ensure that the joint EIA, EMP/EMS, including an HIV/AIDS awareness plan, and RAP (consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement) for all activities of the Airport Improvement Project and the Industrial Park Project are processed and permits delivered in accordance with Mali Decrét No. 03-594-P-RM on environmental impact studies and the Environmental Guidelines, all of which will be subject to MCC approval. MCC Funding will support implementation of the environmental and social mitigation measures identified in the EIA, EMP/EMS, and RAP, in a manner satisfactory to MCC, according to the conditions precedent set forth in the Disbursement Agreement.
The M&E Plan (described in Annex III) will set forth anticipated results and, where appropriate, regular benchmarks that may be used to monitor the progress of the implementation of the Airport Improvement Project. Performance against these benchmarks, as well as the overall impact of the Airport Improvement Project, will be assessed and reported at the intervals to be specified in the M&E Plan, or as otherwise agreed by the Parties, from time to time. The Parties expect that additional indicators will be identified during implementation of the Airport Improvement Project. The expected results from, and the key benchmarks to measure progress on, the Airport Improvement Project, as well as the Project Activities undertaken or funded thereunder, are set forth in Annex III.
Estimated amounts of MCC Funding for each Project Activity for the Airport Improvement Project are identified in Annex II. Conditions precedent to each Project Activity under the Airport Improvement Project, and the sequencing of such Project Activities, shall be set forth in the Disbursement Agreement, other Supplemental Agreements and the relevant Implementation Documents. The following summarizes each Project Activity under the Airport Improvement Project:
(a) Airside Infrastructure (the “Airside Infrastructure Activity”).
Although the existing aircraft pavements, runway, and parking apron surfaces are functional, they are more than thirty years old and detailed studies have indicated that they will deteriorate without near-term improvements. In addition to being in poor condition, the runway is also one of the shortest in West Africa, which has further constrained the Airport's ability to attract air services to Mali and retain them. This Project Activity will improve the design parameters (geometry and bearing strength) of the airside infrastructure and improve safety and security operations such that the Airport can more efficiently accommodate a greater volume of air traffic and heavier loads in the future. Specifically, MCC Funding will support the following:
(i) Resurfacing, reinforcement, and expansion of the runway, apron, and aircraft pavement areas through (1) a structural overlay to apron, taxiway, and runway areas; (2) an extension of the runway of at least 400 meters; and (3) an extension of the taxiway connector aircraft parking apron to provide a location for additional aircraft overnight staging and a back-up for smaller domestic and charter aircraft.
(ii) Replacement and upgrading of existing aging navigational aids to bring Airport facilities up to a “common level of service,” as the equipment has reached the end of its useful life. The extension of the runway will also require additions to the airfield lighting system.
(iii) Improvement to airfield security will include (1) a perimeter security road; (2) explosives detection, x-ray, and handheld metal detection equipment; (3) security identification/access and video surveillance systems; and (4) a central security control point and communications equipment.
(b) Landside Infrastructure (the “Landside Infrastructure Activity”).
Due to limited expansion over the past 32 years, the ability of the terminal to accommodate passenger traffic has steadily deteriorated to the point that it operates at IATA Level of Service “F” (chronic congestion and frequent system breakdown). The existing ground support equipment facilities are inefficient, outdated, and lacking in space for storage of materials; their current location separates passenger activities from Airport support operations, with a resulting negative impact on the functionality and security of the Airport. As passenger and cargo traffic increase over the next 10-15 years, significant utility infrastructure improvements will also be needed to meet projected demand. This Project Activity will expand the size, quality, and operational efficiency of the Airport's landside infrastructure so that it can accommodate significant increases in passenger and cargo traffic in the future. Specifically, MCC Funding will support the following:
(i) Upgrade of the passenger terminal facilities by (1) refurbishing the existing Terminal A's passenger ticketing, lounge, and passport control areas; (2) expanding the existing Terminal B's immigration and baggage areas; and (3) constructing a new passenger terminal building.
(ii) Enhancement of support facilities and equipment for ground support vehicles and materials, Airport maintenance and auxiliary equipment areas, and fire-fighting vehicles.
(iii) Provision for road and terminal parking improvements to improve current circulation areas and meet future projected needs.
(iv) Construction of supporting utility infrastructure, much of which will be shared with the Industrial Park Project, to handle the projected service requirements of the Airport. In particular, wastewater, water, solid waste, power, telecommunications, and drainage systems will be improved and enhanced.
(c) Project Activity: Institutional Strengthening (the “Institutional Strengthening Activity”).
Under the present division of jurisdictions, a number of entities have responsibility for the civil aviation sector in Mali in general and the regulation, oversight, management, operation, and development of the Airport in particular. The Ministry of Equipment and Transport has overall responsibility, with oversight and regulation of the civil aviation sector and airports delegated to a new independent agency, ANAC. The Airport's maintenance and operation responsibilities are split between the air navigation service provider, ASECNA, for airside facilities and the Airport operator, Aéroports du Mali (“AdM”), for landside facilities. ASECNA is responsible for the “technical” aspects of the Airport, including the runway, taxiways, apron, airfield lighting, navigational aids, control tower, telecommunications and fire fighting and rescue facilities. AdM, in turn, is responsible for the “commercial” aspects of the Airport, including the passenger terminal, landside roads and parking, cargo terminal, flight kitchen and freight forwarders' facilities. According to the existing institutional arrangements, both organizations operate and maintain facilities put at their disposal by the Government.
Specifically, MCC Funding will support the following:
(i) Reinforcement of the new civil aviation regulatory and oversight agency (ANAC) by providing technical assistance to establish a new organizational structure, administrative
(ii) Rationalization and reinforcement of the Airport's management and operations agency (AdM) by providing technical assistance to establish a model for the management of the Airport and the long-term future status and organizational structure of AdM, including provision for eventual private sector participation.
Improvements in the airside and landside facilities in the Airport are intended to support economic growth through (a) increased revenue generated by growth in passenger and aircraft traffic, and (b) increases in the value and volume of goods shipped through the Airport. Direct beneficiaries include passengers who spend less time going through Airport procedures prior to boarding, additional Airport services employees for Airport operations, baggage handling, and flight kitchen, as well as passenger terminal commercial concessions. An increase in foreign passengers implies additional substantial benefits for the tourism industry, both in terms of increased revenues to hotels and restaurants and additional employment and wages.
The indirect impact of the Airport Improvement Project through increased tourism and impact on the informal sector could have a significant effect on growth and poverty reduction. Increased demand for airline services should have significant additional long-term benefits for Mali as tourist facilities expand in tandem with increased tourism. Further, new business travelers may translate into additional foreign investment for Mali which could transform the economic profile of the country.
The informal sector active around the Airport will benefit from an expansion of Airport passenger and cargo traffic. Since unemployment and underemployment in the Bamako region are substantial, a proportion of new service employees are likely to transfer from low paying, sporadic informal activity to higher paying, steady work at the Airport, an additional important indirect benefit to the economy.
A majority of those impacted by the Airport Improvement Project are expected to be women since official Malian employment data indicate that 82% of hotel and restaurant workers in Bamako are women. Women also account for 56% of the informal sector and the majority of working women in Bamako are employed in the informal sector. Further analysis using data from specific surveys to be conducted, will provide more detailed and reliable data on employment and poverty in the Bamako area.
The Airport Improvement Project leverages and complements other donor, private sector and civil society activities in Mali as described below. Throughout implementation, MCC will continue to collaborate with these donors to strengthen the institutional reforms and broaden access to the Airport for passengers and goods.
The SSFA program is intended to promote sustainable improvements in aviation safety, security, and air navigation, and to support Africa's integration into the global economy. It is based on the premise that “Safe Skies” are a prerequisite for increased trade and investment and long-term economic development in Africa. Specific goals of the SSFA program include: (a) Increasing the number of sub-Saharan African countries that meet ICAO safety standards (based on Federal Aviation Administration (FAA) assessments); (b) improving airport security in the region; and (c) improving regional air navigation services. SSFA coordinates activities of other agencies such as the FAA, TSA and the National Transportation Safety Board to improve the capacities of African aviation organizations.
The World Bank is assisting in the funding of a regional program in West and Central Africa aimed at improving civil aviation safety and security as a key element of improving the performance and affordability of air transportation and optimizing its role as an engine of economic and social development. With respect to Mali, a country agreement under this program focuses on strengthening the oversight capacities of ANAC and improving Airport security and safety, including the provision of civil aviation authority equipment, Airport screening equipment, a crisis center to meet ICAO requirements, some Airport infrastructure and consulting services aimed at reform and capacity building.
The World Bank has also signed an agreement with the Government for the “Mali Growth Support Project” which includes, among other activities, loan financing for the development of Airport and industrial park facilities located within the Airport domain. It also includes assistance aimed at strengthening the management of the Airport and Industrial Park. The program is to be realized between 2006 and 2011.
Mali is a signatory of a recent agreement involving the West African Economic and Monetary Union (“WAEMU”) and Mauritania and ICAO, referred to as Cooperative Operational Safety and Continuing Airworthiness Project (“COSCAP”), with the goal of promoting the security and safety of aviation in the West African region. Under this agreement, a permanent community agency of safety and security is to be established, with the aim of achieving better efficiency and economy by means of the common use of resources on the part of the signatory countries.
Private sector and civil society participated in the consultative process that resulted in inclusion of the Airport Improvement Project in the Compact. This Project aims to leverage investment by businesses in the Airport, as well as through businesses that benefit from Airport traffic (including airlines, ground support operators, retail concessions, businesses exporting and importing through the Airport, tourism operators, etc.), so efforts will be made to continue to involve their feedback on the design and implementation of this Project. Both civil society and the private sector will be represented on the MCA-Mali Board of Directors and Advisory Councils. In addition, consultations on the EIA will be conducted with affected parties and other stakeholders, in accordance with the Environmental Guidelines, Mali Decrét No. 03-594-P-RM on environmental impact studies, and the draft Arrête Interministeriel on the procedure for public consultation on environmental impact studies. Also, consultations of persons affected by the Airport Improvement Project will be conducted for the RAP, consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement.
Both USAID-funded “Mali Finance” and “Mali Trade” projects have improved the value chains of agricultural products such as mangoes and green beans. These high value products have strong potential for increased exportation via air freight.
The Airport Improvement Project will build on recent Government efforts to
Public solicitations for proposals are anticipated to procure goods, works and services, as appropriate, to implement all Project Activities under the Airport Improvement Project. MCA-Mali will develop, subject to MCC approval, a process for consideration of all such proposals. Notwithstanding the foregoing, MCA-Mali may also consider, using a process developed subject to MCC approval, any unsolicited proposals it might receive.
The Government shall assure the provision of adequate financing for the rehabilitation and expansion of air cargo facilities.
This Schedule 2 generally describes and summarizes the key elements of the project that the Parties intend to implement in furtherance of the Industrial Park Project Objective (the “Industrial Park Project”). Additional details regarding the implementation of the Industrial Park Project will be included in the Implementation Documents and in the relevant Supplemental Agreements.
An adequate water supply, reliable power, wastewater treatment systems, and solid waste disposal are necessary to attract entrepreneurs and promote economic growth. Currently, Mali lacks the infrastructure to provide these services reliably. The Industrial Park Project will create this necessary infrastructure to respond to the pent-up demand for serviced industrial land. Through an MCC-funded demand study conducted in January 2006, Malian business owners strongly expressed a willingness to pay for good quality land with solid infrastructure and reliable services. The Industrial Park Project also aims to reduce the excessive cost and time of setting up and running businesses in Mali. Out of all manufacturing projects licensed by the CNPI, only a fraction are implemented. This poor implementation rate is a current concern of the Government and steps have been taken to improve the business climate and provide the necessary infrastructure through MCC's investment. In addition to contributing to the efforts toward policy and institutional reform, the Industrial Park Project will provide business services to support small- and medium-sized enterprises.
The Industrial Park Project, located within the Airport domain, will develop a platform for industrial activity (100 hectares (“ha”) initially) to meet the high and growing demand for industrial land. The Industrial Park is intended to be an anchor for a growing industrial sector in Mali, thereby alleviating a key constraint to value-added production and economic growth. Reliable provision of utility services, including electricity, water, and wastewater, will increase business productivity. This Project will leverage national reforms in the business sector, reducing the cost and time to register a business, and enhance management and planning of the industrial sector. The Industrial Park Project includes the following Project Activities:
• Primary and Secondary Infrastructure. The Industrial Park Project will fund primary and secondary infrastructure systems for the 100 ha Industrial Park, designed for potential expansion to a larger 200 ha industrial zone (as identified in the Proposal). The primary infrastructure will include major road systems and utilities such as water supply mains and pump stations. Secondary infrastructure will include roads leading into Industrial Park subzones as well as lateral water/drainage piping, etc. to service the smaller parcels. The tertiary (on-lot) infrastructure, including interior roads and parking, water supply taps/connections and fire protection, electrical and telecommunications, and wastewater collection (and possibly pretreatment), are all to be financed and built by the industries locating in the Industrial Park.
• Resettlement. Resettlement activities, which must be consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement, require compensation for loss of livelihoods as a result of both physical and economic displacement. The scope of this displacement is larger than the 200 ha acquisition of land and compensation of users for the Industrial Park. Common infrastructure facilities for wastewater treatment, power generation, water supply, conveyance and storage, and solid and hazardous waste disposal serve both the Industrial Park and the Airport. All of these infrastructure facilities require acquisition and clearing of land and rights of way outside the Industrial Park, both inside and outside the Airport domain. To compensate peri-urban cultivators who practice rain-fed agriculture in the Airport domain and whose lands are required for the Industrial Park Project and the Airport Improvement Project, the Industrial Park Project will develop serviced garden plots offered on a long-term (e.g., 40-year) lease on land elsewhere in the Airport domain. Acquisition of other land for infrastructure and rights of way located outside the Airport domain will also require compensation, the nature of which will be determined during the development of the RAP, which will cover the resettlement and compensation issues related to both the Industrial Park Project and the Airport Improvement Project.
• Institutional Strengthening. Infrastructure improvements will be accompanied by the establishment of appropriate mechanisms that will ensure effective management, operation and maintenance of the facilities over the long term. These mechanisms will involve the management of the Industrial Park itself, as well as administrative and regulatory reforms to alleviate current constraints to business development in Mali. To encourage the development of small- and medium-sized enterprises, the Industrial Park Project will provide business services such as access to financial and market information and export facilitation services. The Industrial Park Project will also focus on how to ensure
In connection with the Project Activities, MCA-Mali will assist and take all necessary steps to ensure that the joint EIA, EMP/EMS, including an HIV/AIDS awareness plan, and RAP (consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement) for all activities of the Industrial Park Project and the Airport Improvement Project are processed and permits delivered in accordance with Mali Decrét No. 03-594-P-RM on environmental impact study and the Environmental Guidelines, all of which will be subject to MCC approval. MCC Funding will support implementation of the environmental and social mitigation measures as identified in the EIA, EMP/EMS, and RAP, satisfactory to MCC, according to the conditions precedent set forth in the Disbursement Agreement.
The M&E Plan (described in Annex III) will set forth anticipated results and, where appropriate, regular benchmarks that may be used to monitor the progress of the implementation of the Industrial Park Project. Performance against these benchmarks, as well as the overall impact of the Industrial Park Project, will be assessed and reported at the intervals to be specified in the M&E Plan, or as otherwise agreed by the Parties, from time to time. The Parties expect that additional indicators will be identified during implementation of the Industrial Park Project. The expected results from, and the key benchmarks to measure progress on, the Industrial Park Project, as well as the Project Activities undertaken or funded thereunder, are set forth in Annex III.
Estimated amounts of MCC Funding for each Project Activity for the Industrial Park Project are identified in Annex II. Conditions precedent to each Project Activity under the Industrial Park Project, and the sequencing of such Project Activities, shall be set forth in the Disbursement Agreement, any other Supplemental Agreements and the relevant Implementation Documents. The following summarizes each Project Activity under the Industrial Park Project:
(a) Primary and Secondary Infrastructure (the “Primary and Secondary Infrastructure Activity”).
The Primary and Secondary Infrastructure Activity will involve the building of necessary infrastructure and the reliable provision of utility services for the Industrial Park. Consistent with international best practices, the Industrial Park Project's primary and secondary infrastructure has been sized to meet projected demand for land over a 20-year horizon (100 ha within a larger 200 ha zone). As plots are marketed and leased, the industries themselves will build the on-lot buildings and facilities to begin operations. This Project Activity will provide the backbone for the first modernly managed, serviced industrial park in Mali, meeting the significant immediate and projected need for industrial space in the country. Specifically, MCC Funding will support the following:
(i) Transportation improvements including construction of a primary road, adjustment and construction of traffic rotaries, and development of internal access roads and sidewalks, to handle the projected traffic for the Industrial Park. In addition, some earthworks (leveling and compacting) are required due to existing site topography.
(ii) Wastewater collection and treatment including construction of a wastewater treatment plant (to be shared with the Airport Improvement Project), pumping station, and collection system, as there is currently no adequate system available in the Airport domain.
(iii) Solid and hazardous waste treatment and disposal through the development of a Government landfill site located east of the Airport domain or an alternative incinerator facility. Solid and hazardous waste cells will be constructed to meet the projected waste arising from the Airport Improvement Project and Industrial Park Project.
(iv) Power generation and distribution by funding a 20 MW co-generation power plant to be shared with the Airport Improvement Project, along with high-tension lines, transformers, back-up emergency generators, and electric substations.
(v) Water treatment and supply through development of a water treatment plant and pump station west of the Airport domain, to be shared with the Airport Improvement Project. In addition, the Industrial Park Project will fund water storage tanks and an enhanced distribution network for the Airport domain.
(vi) Telecommunications improvements by installing backbone fiber-optic cable network.
(vii) Surface drainage improvements, including retention basins, drainage canal improvements, and stormwater collection drains, to control and retain storm water runoff, especially during the rainy season.
(viii) Security improvements such as a perimeter security fence will be required for the new Industrial Park.
(b) Resettlement (the “Resettlement Activity”).
The Resettlement Activity will involve resettlement compensation for all those economically or physically displaced as a result of the Industrial Park Project and related support infrastructure, which will be shared by the Industrial Park Project and the Airport Improvement Project. Specifically, MCC funding will support the following:
(i) Development of serviced garden plots on approximately 20 ha of the Airport domain, to be offered on a long-term (e.g., 40-year) lease to replace the loss of resources (physical or conomic displacement) of those cultivating or otherwise using the Industrial Park area or other parts of the Airport domain where land acquisition is required for the common infrastructure. The specific area needed will depend upon the cadastral mapping of lands and identification of rights holders, to be provided by the Government, for lands required by the Project Activities within the Airport domain.
(ii) Final design and implementation of siting and designs of serviced market gardening plots, based on consultation with those affected and agreement on the location.
(iii) Compensation, which could include serviced garden plots or other forms of compensation, for those physically or economically displaced in locations outside the Airport domain that are required for infrastructure construction and rights of way, based on the locations of the infrastructure and the analysis to be conducted in the RAP.
(c) Institutional Strengthening (the “Institutional Strengthening Activity”).
Currently, enterprises in the Bamako area have one major option for industrial land—Sotuba, located in the Bamako region and one of the few industrial zones in the country. Unfortunately, Sotuba is unsuitable for further industrial development. Roads are unpaved, narrow, and congested; water and electricity connections are inadequate; drainage is poor, with flooding common in the rainy season; and there is no control on the kind or location of uses in the industrial zone, so that slaughterhouses are located next to milk factories and residential areas have encroached into industrial spaces. The problems of Sotuba can be directly attributed to a lack of initial planning and the absence of an appropriate management structure to supervise the development and the ongoing operation of the industrial zone. Specifically, MCC Funding will support the following:
(i) Recruitment and start-up of a private operator, selected through
(ii) Support to businesses in the Industrial Park and other related organizations to the Industrial Park. This will involve limited support services to small- and medium-sized enterprises in areas such as access to financial and market information and export facilitation. As part of this sub-activity, the Industrial Park will also coordinate closely with and support organizations responsible for attracting and approving industrial projects, as well as with regulatory and licensing bodies.
(iii) Coordination in operations and maintenance of shared utilities between the Airport and Industrial Park operators. This will also involve coordination with utility companies and other Government agencies involved in approving, managing, and operating utilities that will serve the Industrial Park and Airport.
The industrial sector in Mali currently accounts for eight percent of GDP. The IMF projections suggest that industry (manufacturing, mining, energy, and construction) will continue to expand at more than a six percent annual rate through 2010. Manufacturing output accounts for about one-third of all industrial activity, with the majority of manufacturing firms located in the Bamako region.
The tenants of the Industrial Park would be start-up and relocated businesses—both attracted by a convenient site, good infrastructure, and support services. Existing firms will choose to relocate to the Industrial Park if the gains in efficiency more than compensate their relocation costs and higher expenses on utilities such as water and power. While the exact pattern of investments in the Industrial Park cannot be predicted, it is expected that the agro-processing, printing, packaging, and information technology-related firms will constitute the main sector of activities. Based on current trends, business ownership is most likely to be Malian, although there may also be joint ventures.
Direct beneficiaries will be firms locating in the Industrial Park, especially small and medium enterprises with fewer alternatives, who will benefit from improved infrastructure and services. Employees of these firms also constitute direct beneficiaries of this Project. Firms that will supply the Industrial Park with goods and services will also benefit from the Project, adding to the employment impact.
It is expected that the indirect benefits will be considerably greater than the direct benefits, encouraging prospective entrepreneurs and investors through an improved business climate and better infrastructure. Shifting even a portion of Malian real estate investments to value-added activities would also contribute to poverty reduction.
The Industrial Park Project leverages and complements other donor, private sector and civil society activities in Mali as described below. This Project will continue to collaborate closely with these actors throughout implementation to support private management of, and attract new businesses to invest in, the Industrial Park.
Among other objectives, the World Bank “Mali Growth Support Project” aims to improve the investment climate to increase total factor productivity and growth; assist in the development of infrastructure with a focus on the Airport and Industrial Park; expand the telecommunications network; make various infrastructure improvements for tourism and mining; and increase term financing for micro-, small-, and medium-sized enterprises (“MSMEs”) and provide business development services (“BDS”). The Industrial Park Project also complements the World Bank Agriculture and Diversification Project which aims to increase agricultural productivity and diversification into higher value crops.
The Industrial Park Project complements other donors' programs, such as the Dutch Development Agency's activities in agricultural diversification and marketing, agricultural processing, improved water management, and institutional strengthening in the ON zone. The Dutch Development Agency has recently approved financing for a cold storage facility in Bamako that will be located in the Airport domain. This facility will be used for mangoes and other high value agricultural products, such as green beans and potatoes.
Private sector and civil society participated in the consultative process that resulted in inclusion of the Industrial Park Project in the Compact. The Industrial Park Project aims to leverage investment by the private sector in the Industrial Park, so efforts will be made to continue to seek private sector and civil society feedback on the design and implementation of the Industrial Park Project. Both the private sector and civil society will be represented on the Board and Advisory Councils. In addition, consultations on the EIA will be conducted with affected parties and other stakeholders, in accordance with the Environmental Guidelines, Mali Decrét No. 03-594-P-RM on environmental impact studies and the draft Arrête Interministeriel on the procedure for public consultation on environmental impact studies. Also, consultations of persons affected by the Industrial Park Project will be conducted for the RAP, consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement.
The Industrial Park Project will build on USAID's efforts during implementation and strengthen best practices in agricultural and financial support to farmers and capacity building of API-Mali.
• Mali Finance provides business development services through financial institutions and other partners, such as MSMEs and MFIs, especially in northern Mali. Through this project, USAID is supporting the establishment and start-up of API-Mali, the investment promotion agency, responsible for promoting, approving and regulating industrial activity in Mali.
• Trade Mali provides marketing support and targets six agricultural sectors: mango, potato, red meat, rice, shea butter, and sesame.
MCC will support the recruitment and start-up of a private operator to manage the Industrial Park and will finance limited business support services to tenants of the Industrial Park. To encourage the creation and growth of MSMEs, the Industrial Park Project will help MSMEs access financial and market information, as well as export facilitation services. In addition, the Industrial Park Project will focus on how to ensure coordination in operations and maintenance of shared utilities between the Airport and Industrial Park operators.
Environmental and social sustainability provisions for the Industrial Park will be similar to those for the Airport Improvement Project. In addition, agreement to adhere to pre-established site standards and requirements for pollution control, such as pre-treatment of effluents and appropriate management of waste, will be pre-requisites for installation by industry into the Industrial Park. Site
Public solicitations for proposals are anticipated to procure goods, works and services, as appropriate, to implement all Project Activities under the Industrial Park Project. MCA-Mali will develop, subject to MCC approval, a process for consideration of all such proposals. Notwithstanding the foregoing, MCA-Mali may also consider, using a process developed subject to MCC approval, any unsolicited proposals it might receive.
This Schedule 3 generally describes and summarizes the key elements of the project that the Parties intend to implement in furtherance of the Alatona Irrigation Project Objective (the “Alatona Irrigation Project”). Additional details regarding the implementation of the Alatona Irrigation Project will be included in the Implementation Documents and in the relevant Supplemental Agreements.
MCC's investments will support the development of key infrastructure and policy reform for productive sectors and capitalize on one of Mali's major assets, the Niger River Delta, for irrigated agriculture. The Alatona Irrigation Project will create a platform for increased production and productivity of agriculture and will be a catalyst for the transformation and commercialization of family farms. It will support Mali's national development strategy to increase the contribution of the rural sector to economic growth and help achieve national food security. Agriculture is a vital economic sector, contributing 40% to GDP. Eighty percent of the population earns a living from agriculture. MCC's investments in this sector will be strengthened by policy reforms and institutional support such as formal land titles for farmers, demand-driven rural advisory services, an improved business environment, and increased access to markets and trade. The hard and soft investments will impact the poor in Mali, particularly Malian farmers and small and medium-size entrepreneurs, not only in the Alatona zone but, over time, on a national and regional scale.
The Alatona zone is located in the ON. The term ON refers both to the geographical zone and the authority charged with the management of water resources and agricultural support in the zone. The ON comprises one million ha of a vast fossilized inland delta whose rich, alluvial soils can be irrigated via a gravity-fed system from the Niger River, the largest river in West Africa. Its waters are highly suitable for irrigation with low sediment and salt content, minimizing the risk of salinization. Recognized as a high potential agricultural zone, the French colonial administration established an extensive hydrological network of diversions, canals, and drains in the 1930s. Rice production has been the dominant agricultural activity since 1970, with some counter-season horticultural production. Approximately 77,000 ha are under production today, with the possibility for expansion to 200,000 ha, with further infrastructure investment.
The Alatona Irrigation Project is focused on increasing production and productivity, increasing farmer incomes, improving land tenure security, modernizing irrigated production systems and mitigating the uncertainty from subsistence rain-fed agriculture. It seeks to develop 16,000 ha of newly irrigated lands, representing an almost 20% increase of “drought-proof” cropland and a 7% increase of the country's total stock of fully or partially irrigated land. The Alatona Irrigation Project will introduce innovative agricultural, land tenure, and water management practices, as well as policy and organizational reforms aimed at realizing the ON's potential to serve as an engine of rural growth for Mali. The Project Activities that are funded under this Project are:
• Niono-Goma Coura Road. This Project Activity will upgrade an 81 km north-south road within the national highway network from its current earth/gravel condition to a paved standard. The investment will also include an additional access spur to the Alatona perimeter at the village of Dogofry.
• Irrigation Planning and Infrastructure. This Project Activity will involve main conveyance system expansion, Alatona irrigation system development, and support to the ON agency on water management.
• Land Allocation. The Alatona Irrigation Project will improve rural land tenure security in Mali by allocating newly developed, irrigated land to family farmers, women market gardeners, and farming companies in private ownership. These land recipients will purchase the land by making annual payments over a 15-20 year period. This Project Activity consists of land parcel creation, land rights education, registration system upgrade, land parcel allocation and titling, and management of land revenues.
• Resettlement, Social Infrastructure, and Social Services. This Project Activity will compensate families residing in the perimeter or with rights to land therein consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement by offering land in the irrigation perimeter or, if the land option is not chosen, other compensation alternatives. This Project Activity will provide social infrastructure, to serve these project-affected persons plus incoming settlers and other migrant families and also support social services (primarily education and health staff) during the last three years of the Compact Term.
• Agricultural Services. This Project Activity will support a range of agricultural, institutional and related services to strengthen capacity and improve agricultural practice through applied agricultural research, extension and farmer training, support to farmer organizations, and support to water users associations (“WUAs”).
• Financial Services. This Project Activity will encourage agricultural lending by reducing the risks of extending credit in this newly developed zone, improving transparency within the existing financial system, and strengthening the capabilities of local financial institutions through a credit risk sharing program, microfinance credit bureau strengthening, financial institution capacity building, and direct support to farmers.
In connection with the Project Activities (other than the Road Activity, except as provided in Section 2(a) below), MCA-Mali will assist and take all necessary steps to ensure that the EIA, EMP (including an HIV/AIDS awareness plan and a pest management plan), and RAP (consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement) for all irrigation activities of the Alatona Irrigation Project are processed and permits delivered in accordance with Mali Decrét No. 03-594-P-RM on environmental impact studies and the Environmental Guidelines, all of which will be subject to MCC approval. MCC funding will support implementation of the environmental and social mitigation measures as identified in the EIA, EMP, HIV/AIDS awareness plan, pest management plan and RAP, satisfactory to MCC, according to the conditions precedent set forth in the Disbursement Agreement.
The M&E Plan (described in Annex III) will set forth anticipated results and, where appropriate, regular benchmarks that may be used to monitor the progress of the implementation of the Alatona Irrigation Project. Performance against these benchmarks, as well as the overall impact of the Alatona Irrigation Project, will be assessed and reported at the intervals to be specified in the M&E Plan, or as otherwise agreed by the Parties. The Parties expect that additional indicators will be identified during implementation of the Alatona Irrigation Project. The expected results from, and the key benchmarks to measure progress on, the Alatona Irrigation Project, as well as the Project Activities undertaken or funded thereunder, are set forth in Annex III.
Estimated amounts of MCC Funding for each Project Activity for the Alatona Irrigation Project are identified in Annex II. Conditions precedent to each Project Activity under the Alatona Irrigation Project, and the sequencing of such Project Activities, shall be set forth in the Disbursement Agreement, any other Supplemental Agreements and the relevant Implementation Documents. The following summarizes each Project Activity under the Alatona Irrigation Project:
(a) Niono-Goma Coura Road (the “Road Activity”).
The Road Activity involves the upgrading of a key segment of the national highway network serving the Alatona zone, providing vital access to inputs, markets, and social services to the Alatona zone and other farmers in the northern sector. The Niono-Goma Coura road forms the first 81 km of a 450 km road from Niono to Tonka, recently reclassified as National Road 33. It is presently an earth road with laterite surface and varying width of 6-7 meters, which has been compromised by erosion of the embankment slopes. The laterite is worn away in numerous locations, leading to washouts and difficult driving conditions during the wet season. Specifically, MCC Funding will support the following:
(i) Double bitumen surface treatment paving of 81 km of National Road 33 (7 meter carriageway and 1.5 meter shoulders).
(ii) Construction of a small bridge and 2 km spur to the village of Dogofry to provide a direct access from the Alatona perimeter to the main road network.
(iii) Various social measures, such as parallel tracks to accommodate non-motorized traffic, of which there is a significant amount in and around the populated areas and safety measures for slowing traffic, as well as additional parking areas at the villages.
Additionally, in connection with the Road Activity, MCA-Mali will assist and take all necessary steps to ensure that the EA, EMP (including an HIV/AIDS awareness plan), and RAP (consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement) for the Road Activity of the Alatona Irrigation Project are processed and permits delivered in accordance with Mali Decrét No. 03-594-P-RM on environmental impact studies and the Environmental Guidelines, all of which shall be subject to MCC approval;
(b) Irrigation Planning and Infrastructure (the “Irrigation Activity”).
This Project Activity will increase the capacity of the ON's main conveyance structures (the Canal Adducteur, the Canal du Sahel and the Fala de Molodo) to ensure sufficient capacity to transport wet season water to all the developed perimeters. MCC Funding will support the ON in achieving physical capacity to realize its immediate development goals, improve and increase service, and to move toward a next generation of standards and operational water management procedures, based on best international practice. Specifically, MCC Funding will support the following:
(i) Alatona irrigation system development, which will involve the construction of a primary canal off the main system, a 63 km distributor canal, a network of secondary and tertiary canals and drainage structures, as well as land leveling and internal access roads. This will allow for an additional 16,000 ha of irrigated lands in the Alatona zone.
(ii) Main conveyance system expansion, which will increase the conveyance capacity of two main canals and an ancient riverbed that transport water from the Niger River to the ON irrigated zones. This will involve: (1) Removal of the central island separating the two branches of Canal Adducteur; (2) enlarging the main canal leading from the main conveyance canal (Canal du Sahel—23 km); and (3) raising the banks of the Fala de Molodo along approximately 8 km.
(iii) Support to ON Water Management, which will provide technical assistance and equipment to the ON for installing and operationalizing a communications-based water management system as well as improving overall system management to ensure more efficient and effective water management throughout the ON system. This system will also provide the basis for data analysis and permitting flow adjustments according to climatic fluctuations and other water demand factors and will establish incentive structures for better on-farm water efficiency.
(c) Land Allocation (the “Land Activity”).
Through the sale of irrigated land under the oversight of a selection commission, land will be allocated to small-, medium-, and large-scale farmers. A selection commission will select land recipients according to pre-defined criteria, and enforce safeguards designed to ensure transparency and fairness. The recipients will purchase the land at prices that are both affordable to farm families, yet high enough to discourage speculation. Land payments will be managed by private financial institutions, and land registration capacity will be bolstered. MCC Funding will support education and dissemination of information about land rights, benefits and responsibilities, and the allocation process in order to execute land allocation in an effective manner and for long term land management. In addition, the Alatona Irrigation Project will establish year-round market gardens for growing vegetables, to provide the women of the Alatona zone with an independent source of family income. This market garden opportunity supplements the opportunity women will have to receive larger land parcels though the selection commission process. Specifically, MCC Funding will support the following:
(i) Land Parcel Creation. Land will be divided into tertiary irrigation blocks, and the land contained therein will be subdivided into individual land parcels. This sub-activity will include land parcel platting, boundary surveying, and preparation of a technical description of each parcel.
(ii) Land Rights Education. A land-education effort will be carried out to provide the rural population of the Alatona zone and nearby areas with an understanding of private land ownership, the rights and responsibilities it entails, and the benefits it can bring. The effort also will inform people about the opportunity to acquire newly developed irrigated land, and work with land recipients on how
(iii) Registration System Upgrade. The Alatona Irrigation Project will support establishment of a temporary land registration office in the Alatona zone that will remain under the jurisdiction of the Sogou office of the National Directorate for State Property and Cadastre (a technical agency within the Ministry of State Property and Land). This temporary office will operate for the four-year period during which virtually all of the land will be allocated and titled. Once the initial wave of titling occurs, the Sogou office may choose to maintain the temporary office, or replace it with a more limited alternative depending upon demand and cost considerations.
(iv) Land Parcel Allocation and Titling. A selection commission consisting of government officials and private stakeholder group representatives (both men and women), will review people's applications for land and decide who will receive land based on pre-defined criteria. The criteria include various technical and other qualifications, are differentiated by farm size, and give special consideration to people already in the Alatona zone,
(v) Management of Land Revenues. This sub-activity will assure that land revenues are transparently managed and not co-mingled with other accounts and reinvested in locally responsive and appropriate ways in the Project area. This sub-activity will create a new entity (the “Revenue Authority”) to collect and manage the land purchase payments under Government oversight. Collection payment mechanisms will encourage the entry and participation of private financial institutions in the area. In cases when land owners fail to make the required payments, the Revenue Authority will manage resolution of the problem, up to and including executing a foreclosure action and public sale of the land to satisfy the debt.
(d) Resettlement, Social Infrastructure, Social Services (the “Community Activity”).
The Community Activity will provide funds to implement the RAP, build social infrastructure and support social services, primarily health staff and teachers, to ensure appropriate utilization of the social infrastructure.
Specifically, MCC Funding will support the following:
(i) Resettlement. This sub-activity will support implementation of the RAP previously developed in collaboration with the relevant Government agencies, to compensate approximately 800 families who lose land rights or access to resources, with land in the irrigated perimeter or, where the land option is refused, other compensation options. Physically relocated resettlers will be provided with construction materials or built houses. For reasons of social equity, this sub-activity will implement procedures to provide equitable access to both dry and rainy season water and additional supporting measures during the first year of farming to assist these agro-pastoralist families to take up irrigated rice cultivation successfully.
(ii) Social Infrastructure. This sub-activity will provide social infrastructure and social services sufficient to serve an anticipated total population of approximately 60,000, including the resettlers, new settlers and other migrants. Access roads, potable water, sanitation, schools, health centers, public markets, warehouses, literacy and youth centers, laundry facilities and solar electricity supply for health centers and schools will be constructed or existing facilities renovated in accordance with international and national norms.
(iii) Social Services. This sub-activity will support social services, primarily health staff and teachers, over the last three-year period of the Compact Term. Services will be provided according to population thresholds established by the Government on the basis of international and regional norms. This sub-activity will equip community health centers in the Alatona zone and health centers serving the larger area, as well as support a variety of health promotion and disease prevention activities related to obstetric care, nutrition, STIs, HIV/AIDs, malaria, schistosomiasis and intestinal worms. Limited support will be provided for maintenance of water supply and sanitation.
(e) Agricultural Services (the “Agriculture Activity”).
The Agriculture Activity will focus on the basics of irrigated farming and will support a range of interventions that target capacity building, support, and techniques for rice, shallots, livestock and crop integration, and women's vegetable garden production. During the first two years of the Alatona Irrigation Project, while the road and core irrigation infrastructure are designed and constructed (the pre-settlement phase), efforts will focus on building an institutional environment and testing agricultural, marketing, and water management practices focused on achieving farm profitability. The Project Activity will be conducted in pre-existing ON irrigated perimeters involving, to the extent feasible, collaboration with the ON, existing institutions, and entities. The pre-settlement phase will allow for the development, testing, and piloting of activities to be transferred and scaled up to the newly developed perimeter. Specifically, MCC Funding will support the following:
(i) Applied Agricultural Research. This sub-activity includes undertaking field-level, applied technology research on rice production and processing; water use, control and management; agronomic practices; livestock enterprises and integration with irrigation; improved equipment and technologies; commodity chains development, including strengthening the supply system for agricultural inputs and equipment; identifying, testing, and promoting improved conservation techniques; processing technologies, and improving marketing of crops; and natural resource management and wood supply.
(ii) Extension and Farmer Training. This sub-activity will include communication, extension, and training through a variety of low-cost, sustainable mechanisms and techniques that may include Farmer Field Schools, Training and Visit, farmer-to-farmer, stakeholder, and systems approaches. The focus of this sub-activity will include improving rice yields, production of dry season diversified crops, integrating crop and livestock production, improving water management, group promotion and formation, integrated pest management, organizational management, accounting and budgeting, and farmer rights and advocacy.
(iii) Support to Farmer Organizations. This sub-activity will provide intensive organizational development and management training to help selected service providers and farmer-controlled organizations (including women's groups) increase capacity. This may include training on the preparation of by-laws and business plans; election of officers, personnel and group management; management by objectives; financial sustainability and credit management; knowledge of rights, facilitation and advocacy; group procurement of inputs and marketing; and accounting and financial
(iv) Support to Water User Associations. This sub-activity will provide training to WUAs on organization management, cropping patterns and water requirements, secondary and tertiary canal maintenance planning, and establishing procedures for collecting and accounting for water fees.
(f) Financial Services (the “Finance Activity”).
The Finance Activity will support agricultural development in the Alatona zone by promoting a sustainable, inclusive financial system and improving farmers' access to credit. Interventions will be focused on encouraging local financial institutions to move into the Alatona zone and on building their capacity and willingness to meet the financial services needs emerging from activities supported by the Alatona Irrigation Project. The Finance Activity will encourage financial institutions to lend to clients that have good prospects of success but may lack sufficient collateral or a suitable record of transactions to prove creditworthiness. It will also provide support to the ON Credit Bureau to strengthen its capacity to increase transparency among MFIs in the region. Direct support will also be provided to farmers to improve access to credit for first-time borrowers. Specifically, MCC Funding will support the following:
(i) Credit risk sharing program. The credit risk sharing program will encourage eligible financial institutions to increase their lending to clients by reducing the risk of providing loans in the Alatona zone. MCC Funding will support risk sharing (up to 50%). Participating financial institutions will also be provided with technical assistance.
(ii) Credit bureau strengthening. This sub-activity will finance: (1) A study to identify recommended improvements to the ON Credit Bureau and to test their feasibility; (2) development and acquisition of hardware and software necessary to create an electronic database (pending satisfactory completion of the feasibility study); and (3) training for ON Credit Bureau staff, among other changes as identified in the needs assessment and feasibility study.
(iii) Financial institution capacity building. This sub-activity will provide training and technical assistance to financial institutions (banks and MFIs), focusing on areas such as risk analysis, portfolio management, and new product development in order to help financial institutions meet the needs of potential clients. In order to encourage MFIs to move rapidly into the Alatona zone, this sub-activity will also assist with a portion of the costs of setting up and staffing new offices.
(iv) Direct support to farmers. In addition to training and support to farmer organizations, the Alatona Irrigation Project will provide financial assistance to improve access to credit for first-time borrowers. This sub-activity will provide a grant to assist new clients with paying a portion of the initial mandatory deposit required by MFIs in order for the new clients to access their first loan.
As a result of the incremental agricultural production achieved through the Alatona Irrigation Project, incomes of farm owners, agricultural laborers in the Alatona, suppliers, transporters, processors, and traders will increase.
The upgrading of the existing Niono-Goma Coura road is anticipated to lower vehicle operating costs (“VOCs”) and to generate time savings for road users. It is anticipated that the reduction in VOCs will be passed on to populations located along the road in the form of reduced rates of cargo spoilage and lower charges for the transport of cargo goods, including the transport of agricultural produce from the Alatona zone to regional markets in Niono and potentially national markets in Bamako.
Finally, the Alatona Irrigation Project is also expected to generate non-quantified social, health, and education improvements through investment in social infrastructure in the Alatona zone and greater access through the Niono-Goma Coura road upgrade to existing health and social services facilities.
The Dutch Development Agency, French Development Agency, the World Bank, and USAID, in particular, have been working in the ON over the past several decades resulting in a more efficient, decentralized management structure, while increasing production and productivity of the Alatona zone. The Alatona Irrigation Project leverages and complements other donor, private sector and civil society activities in Mali as described below. Throughout implementation, MCC will continue to collaborate with these donors to ensure equitable water distribution, transfer of skills and knowledge in agriculture production, farm management and access to credit for the farmers. The Alatona Irrigation Project will involve close coordination with donors involved in strengthening the management of the ON agency to provide effective operations and maintenance of the irrigation infrastructure, as well as conformity with the established cropping calendar.
The Alatona Irrigation Project complements and reinforces several ongoing or recently launched World Bank programs as described below.
• National Project for Rural Infrastructure provides rural infrastructure for irrigation, transportation, clean water and sanitation, and institutional strengthening. In May 2005, this project launched a bid for small- and medium-scale farmers to purchase land in the pilot zone of Koumouna in the ON. This marked the ON's first experience of issuing land titles to individual farmers.
• Agricultural Competitiveness and Diversification Project aims to expand production and improve the productivity of diversified, high value commodities and to increase their export and market competitiveness; to remove logistical bottlenecks to increased exportation; to reinforce food security; and to promote rural credit and financing.
• Rural Community Development Project enhances the capacity of communities to propose and manage local development initiatives, including Communal Initiatives Funds and Local Productive Initiatives Funds.
Private sector and civil society participated in the consultative process that resulted in inclusion of the Alatona Irrigation Project in the Compact. The Alatona Irrigation Project aims to attract farmers to purchase land and increase the revenue of farmers and farming enterprises. Businesses along the value chain will be integral to the success of this Project. In addition, civil society will play an active role to ensure that land allocation is fair and transparent and that social services are provided in the Alatona zone in a fair and equitable manner. Lastly, both civil society and private sector will be represented on the MCA-Mali Board of Directors and Advisory Councils. In addition, consultations will be conducted with affected parties and other stakeholders on the EIA for all Project Activities (other than the Road Activity) and the EA (or EIA, as applicable) for the Road Activity, in accordance with MCC Environmental Guidelines, Mali Decrét No. 03-594-P-RM on environmental impact studies and the draft Arrête Interministeriel on the procedure for public consultation on environmental
The Alatona Irrigation Project builds on the USAID's Accelerated Economic Growth and Trade Development Project (2003-2012), which includes the following sub-projects:
• Program in Development of Agricultural Production (PRODEPAM) includes agricultural intensification activities, appropriate technologies, animal feed, and natural resource management activities.
• Program on Shared Governance includes capacity building, planning, and financial management in the communes of Diabaly and Dogofry (the two municipalities located in the Alatona zone).
The Alatona Irrigation Project will continue to build on these efforts during implementation and strengthen USAID best practices in agricultural support and capacity building in local governance within the Alatona zone.
• Sustainable Irrigation Management. To assure the long term success of the Alatona Irrigation Project, MCC will finance additional capacity on the main conveyance structures, as well as support the ON to achieve sustainable management of its entire stock of assets. A core element of this effort will be technical assistance to introduce a communications-based technology for real-time water monitoring and management on the main system. The Alatona Irrigation Project will collaborate with the ON to establish appropriate and equitable water allocation rules among the perimeters, optimum cropping calendars and practices (such as the adoption of short cycle varieties) and the gradual introduction of volumetric water charges, all aimed to make the most efficient use of scarce water during the critical months of the dry season. The MCC-financed technical assistance will assist the ON to develop revised expansion scenarios based on updated assumptions and practices, such that any further expansion does not jeopardize the minimum water requirements and functioning of the Alatona zone and other existing perimeters. In the existing ON irrigated perimeters, the water fees collected are adequate to cover approximately 90% of the operating and maintenance costs of the major distribution systems within the zones, with the Government assuming responsibility for the remaining costs. The Alatona Irrigation Project will address the utilization of revenues associated with land sales and water fees within the Alatona zone to fund the ongoing expenses of Alatona institutions during and beyond the Compact Term.
• Sustainable Road Maintenance. A new road maintenance agency, AGEROUTE, has recently been established with donor support. The major donors to the road sector (World Bank, European Union and African Development Bank) are promoting long term solutions to road maintenance, including more reliance on user fees to finance maintenance. The upgrading of the road to a double bituminous surface will result in estimated annual maintenance requirements falling within the range of the Government's current maintenance allocations for the road.
• Sustainable Rural Infrastructure Management. The Alatona Irrigation Project will finance initial recurrent costs of the social infrastructure so as to “kick-start” operations. Within the context of the country's decentralization program, the planning and implementation of these infrastructure and services will be carried out in close collaboration with the appropriate technical ministries and local authorities (in particular the communes), so as to ensure a smooth transition to sustainable provision of staffing, operations, and maintenance of all these facilities beyond the life of the Compact.
• Sustainable Access to Financial Services. The Finance Activity will provide MFIs and banks with training in agricultural credit and other aspects of managing the delivery of financial services to the inhabitants of the Alatona zone. This training should enable the financial institutions to better analyze the risks of extending credit in the Alatona zone and to better monitor and manage the repayment process. Meanwhile, the support to the ON Credit Bureau will promote transparency in the sector and provide institutions with better data from which to evaluate loan applications.
• Sustainable Management of Land Revenues. The Land Activity will create a new entity—the Revenue Authority—to collect and manage the revenues generated through land payments. MCC funding will support the costs of structuring this entity and providing some initial capacity building, until the Revenue Authority can support itself through the land revenues collected.
• Sustainable Agricultural Services. Skilled local institutions with proven capacity will be contracted to deliver services, and design and coordinate research activities. It will include on-station evaluation of varieties and/or technologies under development; on-farm confirmation and adaptation of existing research results; and participatory, farmer-led research. Eventually, involvement of farmers, farmer organizations, and a possible fee-for-service approach could make the research demand-driven and partly funded by users.
• Environmental and Social Sustainability. Sustainability is to be achieved through the implementation of a land use and natural resources management plan (a prerequisite planning tool for the EIA), the identification of institutions responsible for natural resources management over the long term, and the implementation of an EMP that will incorporate an HIV/AIDS awareness plan and a pest management plan. Pre-settlement activities will provide the opportunity to test the sustainability of practices to be applied in the Alatona zone. Resettlers will be eligible to receive agricultural inputs for the first year and all cultivators will be able to receive technical assistance in farming techniques and training to improve their ability to secure credit. The provision of social infrastructure will allow improvements in health care, education, potable water supply and sanitation and the funding of social services will provide for a transition to full government funding of these services after the Compact Term.
The Parties have identified the following policy, legal and regulatory reforms and actions that the Government shall pursue in support, and to reach the full benefits of the Alatona Irrigation Project, the satisfactory implementation of which will be conditions precedent to certain MCC Disbursements as provided in the Disbursement Agreement:
• The establishment of the Revenue Authority to manage the collection and use of land revenues generated through the Alatona Irrigation Project. The structure of the Revenue Authority and its operating guidelines will be subject to MCC approval.
• Within the Compact Term, and in any event no later than six to nine months prior to the end of the Compact Term, the identification of a fiduciary or liquidation agent to manage or liquidate
• The execution of a memorandum of understanding between MCA-Mali and the ON that ensures equitable allocation of dry-season water among the ON zones, measured at the headworks of primary canals, prior to initial MCC Disbursement for the Project Activities within the Alatona Irrigation Project, other than the Road Activity.
• The provision of evidence by the Government of an agreed allocation of land for dry season and wet season cultivation in the Alatona zone prior to approval of final design of the first tranche of the irrigation and planning infrastructure sub-activity of the Alatona Irrigation Project.
Public solicitations for proposals are anticipated to procure goods, works and services, as appropriate, to implement all Project Activities under the Alatona Irrigation Project. MCA-Mali will develop, subject to MCC approval, a process for consideration of all such proposals. Notwithstanding the foregoing, MCA-Mali may also consider, using a process developed subject to MCC approval, any unsolicited proposals it might receive.
This Annex II to the Compact (the “Financial Plan Annex”) summarizes the Multi-Year Financial Plan for the Program. Each capitalized term in this Financial Plan Annex shall have the same meaning given such term elsewhere in this Compact. Unless otherwise expressly stated, each Section reference herein is to the relevant Section of the main body of the Compact.
A multi-year financial plan summary (“Multi-Year Financial Plan Summary”) is attached hereto as Exhibit A. By such time as specified in the Disbursement Agreement, MCA-Mali will adopt, subject to MCC approval, a Multi-Year Financial Plan that includes, in addition to the multi-year summary of estimated MCC Funding and the Government's contribution of funds and resources, an estimated draw-down rate for the first year of the Compact Term based on the achievement of performance milestones, as appropriate, and the satisfaction or waiver of conditions precedent. Each year, at least 30 days prior to the anniversary of the Entry into Force, the Parties shall mutually agree in writing to a Detailed Budget for the upcoming year of the Program, which shall include a more detailed budget for such year, taking into account the status of the Program at such time and making any necessary adjustments to the Multi-Year Financial Plan.
The Multi-Year Financial Plan and each Detailed Budget shall be implemented by MCA-Mali, consistent with the approval and oversight rights of MCC and the Government as provided in this Compact, the Governing Documents and the Disbursement Agreement.
The Multi-Year Financial Plan Summary identifies the estimated annual contribution of MCC Funding for Program administration, M&E and each Project. The Government's contribution of resources to Program administration, M&E and each Project shall consist of (a) “in-kind” contributions in the form of Government Responsibilities and any other obligations and responsibilities of the Government identified in this Compact, and (b) such other contributions or amounts as may be identified in this Compact (including adequate funding for the rehabilitation and expansion of air cargo facilities, as specified in Section 8 of Schedule 1 of Annex I) and in relevant Supplemental Agreements between the Parties or as may otherwise be agreed by the Parties; provided, in no event shall the Government's contribution of resources be less than the amount, level, type and quality of resources required effectively to carry out the Government Responsibilities or any other responsibilities or obligations of the Government under or in furtherance of this Compact.
The Parties recognize that the anticipated distribution of MCC Funding between and among the various activities for Program administration, M&E, the Projects and the Project Activities will likely require adjustment from time to time during the Compact Term. In order to preserve flexibility in the administration of the Program, as provided in Section 4(a)(iv) of Annex I, the Parties may, upon agreement of the Parties in writing and without amending the Compact, change the designations and allocations of funds among the Projects, the Project Activities, or any activity under Program administration or M&E, or between a Project identified as of the Entry into Force and a new project, without amending this Compact;
MCC Funding will be disbursed in tranches. The obligation of MCC to approve MCC Disbursements and Material Re-Disbursements for the Program is subject to satisfactory progress in achieving the Objectives and on the fulfillment or waiver of any conditions precedent specified in the Disbursement Agreement for the relevant activity under the Program. The sequencing of Project Activities or sub-activities and other aspects of how the Parties intend the Program to be implemented will be set forth in the Implementation Documents, including the Work Plan for the applicable Program (and each component thereof), and MCC Disbursements and Re-Disbursements will be made consistent with such sequencing.
This Annex III to the Compact (the “M&E Annex”) generally describes the components of the M&E Plan for the Program. Except as defined in this M&E Annex, each capitalized term in this M&E Annex shall have the same meaning given such term elsewhere in this Compact.
MCC and the Government (or a mutually acceptable Government Affiliate or Permitted Designee) shall formulate, agree to and the Government shall implement, or cause to be implemented, an M&E Plan that specifies (a) how progress toward the Compact Goal, Objectives, and the intermediate results of each Project and Project Activity set forth in this M&E Annex (the “Outcomes”) will be monitored (the “Monitoring Component”); (b) a methodology, process and timeline for the evaluation of planned, ongoing, or completed Projects and Project Activities to determine their efficiency, effectiveness, impact and sustainability (the “Evaluation Component”); and (c) other components of the M&E Plan described below. Information regarding the Program's performance, including the M&E Plan, and any amendments or modifications thereto, as well as periodically generated reports, will be made publicly available on the MCA-Mali Web site and elsewhere.
To monitor progress toward the achievement of the Compact Goal, Objectives, and Outcomes, the Monitoring Component of the M&E Plan shall identify (a) the Indicators, (b) the party or parties responsible, the timeline, and the instrument for collecting data and reporting on each Indicator to MCA-Mali, and (c) the method by which the reported data will be validated.
(a) Indicators. The M&E Plan shall measure the impacts of the Program using objective and reliable information (“Indicators”). Each Indicator will have one or more expected values that specify the expected results and expected time for the impacts to be achieved (“Target”). The M&E Plan will measure and report on Indicators at four
(b) Data Collection and Reporting. The M&E Plan shall establish guidelines for data collection and a reporting framework, including a schedule of Program reporting and responsible parties. The Management shall conduct regular assessments of Program performance to inform MCA-Mali and MCC of progress under the Program and to alert these parties to any problems. These assessments will report the actual results compared to the Targets on the Indicators referenced in the Monitoring Component, explain deviations between these actual results and Targets, and in general, serve as a management tool for implementation of the Program. With respect to any data or reports received by MCA-Mali, MCA-Mali shall promptly deliver such reports to MCC along with any other related documents, as specified in the M&E Plan or as may be requested from time to time by MCC.
(c) Data Quality Reviews. As determined in the M&E Plan or as otherwise requested by MCC, the quality of the data gathered through the M&E Plan shall be reviewed to ensure that data reported are as valid, reliable, and timely as resources will allow. The objective of any data quality review will be to verify the quality and the consistency of performance data across different implementation units and reporting institutions. Such data quality reviews also will serve to identify where consistent levels of quality are not possible, given the realities of data collection. The data quality reviewer shall enter into an Auditor/Reviewer Agreement with MCA-Mali in accordance with Annex I.
The Program shall be evaluated on the extent to which the interventions contribute to the Compact Goal. The Evaluation Component of the M&E Plan shall contain a methodology, process and timeline for collecting and analyzing data in order to assess planned, ongoing, or completed Project Activities to determine their efficiency, effectiveness, impact and sustainability. The evaluations should use rigorous methods for addressing selection bias, as applicable. The Government shall implement, or cause to be implemented, surveys to collect baseline and follow-up data on both Beneficiaries and non-Beneficiaries. The Evaluation Component shall contain two types of reports: Final Evaluations and Ad Hoc Evaluations, and shall be finalized before any MCC Disbursement or Re-Disbursement for specific Program activities or Project Activities.
(a) Final Evaluation. MCA-Mali, in connection with MCC's request to the Government pursuant to Section 3(h) of Annex I, shall engage an independent evaluator to conduct an evaluation at the expiration or termination of the Compact Term (“
(b) Ad Hoc Evaluations. Either MCC or MCA-Mali may request ad hoc or interim evaluations or special studies of Projects, Project Activities, or the Program as a whole prior to the expiration of the Compact Term (each, an “
In addition to the Monitoring Component and the Evaluation Component, the M&E Plan shall include the following components for the Program, Projects and Project Activities, including, where appropriate, roles and responsibilities of the relevant parties and Providers:
(a) Costs. A detailed annual cost estimate for all components of the M&E Plan.
(b) Assumptions and Risks. Any assumptions and risks external to the Program that underlie the accomplishment of the Compact Goal, Objectives, and Outcomes;
(a) Approval and Implementation. The approval and implementation of the M&E Plan, as amended from time to time, shall be in accordance with the Program Annex, this M&E Annex, the Governing Documents, and any other relevant Supplemental Agreement.
(b) Advisory Councils. The completed portions of the M&E Plan will be presented to each Advisory Council at such Advisory Council's initial meeting, and any amendments or modifications thereto or any additional components of the M&E Plan will be presented to each Advisory Council at appropriate subsequent meetings of such Advisory Council. Each Advisory Council will have opportunity to present its suggestions to the M&E Plan, which the Board shall take into consideration in its review of any amendments to the M&E Plan during the Compact Term.
(c) MCC Disbursement and Re-Disbursement for a Project Activity. As a condition to each MCC Disbursement or Re-Disbursement there shall be satisfactory progress on the M&E Plan for the relevant Project or Project Activity, and substantial compliance with the M&E Plan, including any reporting requirements.
(d) Modifications. Notwithstanding anything to the contrary in the Compact, including the requirements of this M&E Annex, MCC and the Government (or a mutually acceptable Government Affiliate or Permitted Designee) may modify or amend the M&E Plan or any component thereof, including those elements described herein, without amending the Compact;
Federal Deposit Insurance Corporation (FDIC).
Final rule.
The FDIC is improving and modernizing its operational systems for deposit insurance assessments in 12 CFR Part 327 to make the deposit insurance assessment system react more quickly and more accurately to changes in institutions' risk profiles and to ameliorate several causes for complaint by insured depository institutions. Under the amendments set out in this final rule, deposit insurance assessments will be collected after each quarter ends—which will allow for consideration of more current information than under the prior rule. Ratings changes will become effective when the rating change is transmitted to the institution. Although the FDIC will retain the existing assessment base as applied in practice with only minor modifications, the computation of institutions' assessment bases will change in the following significant ways: institutions with $1 billion or more in assets will determine their assessment bases using average daily deposit balances; existing smaller institutions will have the option of using average daily deposits to determine their assessment bases; and the float deductions used to determine the assessment base will be eliminated. In addition, the rules governing assessments of institutions that go out of business will be simpler; newly insured institutions will be assessed for the assessment period in which they become insured; prepayment and double payment options will be eliminated; institutions will have 90 days from each quarterly certified statement invoice to file requests for review of their risk assignment and requests for revision of the computation of their quarterly assessment payment; and the rules governing quarterly certified statement invoices will be adjusted for a quarterly assessment system and for a three-year retention period rather than the former five-year period.
This final rule will become effective on January 1, 2007.
Munsell W. St. Clair, Senior Policy Analyst, Division of Insurance and Research, (202) 898-8967; Donna M. Saulnier, Senior Assessment Policy Specialist, Division of Finance, (703) 562-6167; or Christopher Bellotto, Counsel, Legal Division, (202) 898-3801.
On May 18, 2006, the FDIC published in the
Prior to passage of the Federal Deposit Insurance Reform Act of 2005 and the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 (collectively, the Reform Act),
Provisions in the Reform Act removed longstanding constraints on the deposit insurance assessment system and granted the FDIC discretion to revamp and improve the manner in which assessments are determined and collected from insured depository institutions. The FDIC was vested with discretion to set assessment rates, classify institutions for risk-based assessment purposes and collect assessments within a system and on a schedule designed to track more accurately the degree of risk to the deposit insurance fund posed by depository institutions. The Reform Act also eliminated any requirement that the assessment system be semiannual.
The FDIC's experience with the risk-based system over the past 13 years, and with approaches and arguments made by institutions that have filed requests for review with the FDIC's Division of Insurance and Research (DIR) and subsequent appeals to the FDIC's Assessment Appeals Committee (AAC), prompted some of the proposed revisions made to the FDIC's deposit insurance assessment system. For example, many appeals to the AAC involved assertions by insured institutions that the FDIC's system did not take into account their improved condition quickly enough. The final rules will ensure that assessment rates reflect changes in an institution's risk profile much nearer to the time the changes occur. The standard float deductions will be eliminated because they appear to be obsolete and arbitrary, and because actual float appears to be small and decreasing as the result of legal, technological, and payment system changes. The revisions will enhance the assessment process for institutions and should eliminate many of the bases for requests and appeals. The amendments to the FDIC's operational processes governing assessments affect 12 CFR 327.1 through 12 CFR 327.8.
Under the existing system, assessments are collected from insured institutions on a semiannual basis in two installments. The first collection is made at the beginning of the semiannual period; the second collection is made in the middle of the semiannual period.
Collecting quarterly assessments after each assessment period was expressly supported by five commenters and opposed by none. One commenter, a trade group, stated “[t]his should help banks better manage their risk positions and expected premiums during the quarter for which they will be assessed.” Similarly, another trade group observed that “banks should be able to predict at the end of each quarter what their assessment will be for that quarter.” In line with the comments received, the FDIC believes quarterly assessment collection after the period being insured will markedly improve the responsiveness and accuracy of the assessment system.
The final rule will take effect January 1, 2007. The last deposit insurance collection under the existing system (made on September 30, 2006, in the middle of the semiannual period before the new system becomes effective) represents payment for insurance coverage through December 31, 2006. The first deposit insurance collection under the new system (made on June 30, 2007, at the end of the second quarter under the new system) will represent payment for insurance coverage from January 1 through March 31, 2007. No deposit insurance assessments will be based upon September 30 or December 31, 2006 reported assessment bases. However, institutions will continue to make the scheduled quarterly Financing Corporation (“FICO”) payments on January 2, 2007 (or on the alternate payment date, December 30, 2006) and March 30, 2007, using, respectively, these two reported assessment bases. No changes to the way FICO payments are charged or collected are being made.
Invoices will continue to be presented using FDIC
The FDIC will set assessment rates for each risk category no later than 30 days before the date of the invoice for the quarter, which will give the FDIC's Board of Directors the option of setting rates before the beginning of a quarter or after its completion. The final rule will provide the FDIC with flexibility to set final rates for the first quarter of a year at any time up to May 16 of that year (30 days before the June 15 invoice date). However, the FDIC will not necessarily need to continually reconsider or update assessment rates. Once set, rates will remain in effect until changed by the FDIC's Board. Institutions will have at least 45 days notice of the applicable rates before assessment payments are due.
Under the present system, an insured institution retains its supervisory and capital group ratings throughout a semiannual period. Any change is reflected in the next semiannual period; in this way, an examination can remain the basis for an institution's assessment rating long after newer information has become available.
The FDIC proposed that changes to an institution's supervisory rating be reflected as of the date the examination or targeted examination began; if no such date existed, then an institution's supervisory rating would have changed as of the date the institution was notified of its rating change by its primary federal regulator (or state authority). In either case, if the FDIC, after taking into account other information that could affect the rating, did not agree with the classification implied by the examination, then the institution's rating would change as of the date that the FDIC determined that the change in the supervisory rating occurred.
Five commenters supported making ratings changes effective when they occur; no one opposed. One of the
The FDIC has decided to adopt the suggested approach. Under the final rule, changes to an institution's supervisory rating will be reflected as of the date that the rating change is transmitted to the institution. However, if the FDIC disagrees with the CAMELS composite rating assigned by an institution's primary federal regulator, and assigns a different composite rating, the supervisory change will be effective for assessment purposes as of the date that the FDIC assigns a rating. Disagreements of this type between the FDIC and the other federal regulators have been rare.
Using the transmittal date as the effective date for supervisory changes has a number of benefits. First, additional research after publication of the NPR in May revealed that the federal banking agencies do not all define and record an examination start date the same way.
Accordingly, under the final rule, supervisory ratings changes will become effective as of the date the institution is notified of its rating change by its primary federal regulator or state authority, assuming that the FDIC, after taking into account other information that could affect the rating, agrees with the assignment implied by the examination, or it will change as of the date that the FDIC determines that the change in the supervisory rating occurs.
At present, an institution's assessment base is principally derived from total domestic deposits. The current definition of the assessment base is detailed in 12 CFR 327.5. Generally, the definition is deposit liabilities as defined by section 3(
For example, banks are specifically instructed to exclude uninvested trust funds from deposit liabilities as reported on Schedule RC-E of their Reports of Condition and Income (Call Reports). However, these funds are considered deposits as defined by section 3(
The final rule will retain the current assessment base as applied in practice with minor modifications. The reworded definition will operate in concert with a proposed simplification of the associated reporting requirements on insured institutions' reports of condition.
Unposted debits will not reduce the assessment base and unposted credits will be excluded from the definition of the assessment base for institutions that report average daily balances because these debits and credits are captured in the next day's deposits (and thus reflected in the averages). For consistency, and because they should not materially affect assessment bases, unposted debits will not reduce the assessment base and unposted credits
The current definition of the assessment base, in 12 CFR 327.5, has been driven by reporting requirements that have evolved over time. These requirements have changed because of the evolving reporting needs of all of the federal regulators. As a result, the FDIC's regulatory definition of the assessment base has required periodic updates when reporting requirements in reports of condition are changed for other purposes.
Currently, an insured institution's assessment base is computed using quarter-end deposit balances. Most schedules of the Call Report and the TFR are based on quarter-end data, but there are drawbacks to using quarter-end balances for assessment determinations. Under the current system, deposits at quarter-end are used as a proxy for deposits for an entire quarter, but balances on a single day in a quarter may not accurately reflect an institution's typical deposit level. For example, if an institution receives an unusually large deposit at the end of a quarter and holds it only briefly, the institution's assessment base and deposit insurance assessment may increase disproportionately to the amount of deposits it typically holds. A misdirected wire transfer received at the end of a quarter can create a similar result. Using quarter-end balances creates incentives to temporarily reduce deposit levels at the end of a quarter for the sole purpose of avoiding assessments. Institutions of various sizes have raised these issues with the FDIC.
Under the final rule, instead of using quarter-end deposits, certain institutions will use average daily balances over the quarter, which will give a more accurate depiction of an institution's deposits. When combined with other operational changes to the assessment system, the use of average daily balances will provide a more realistic and timely depiction of actual events. The FDIC's proposal to use average daily balances was supported by all six commenters; however, three of those six suggested that the use of average daily balances be mandatory only for institutions of $1 billion or more in assets rather than $300 million as proposed. For example, one trade group suggested the higher cutoff because “the FDIC and other federal bank regulators use $1 billion in assets as the cutoff in other Call Report requirements and for other regulatory purposes.” Similarly, another trade group urged the higher cutoff because “[t]his increase would be consistent with other FDIC regulations and reporting requirements * * * and would affect only a very small proportion of insured deposits.” In addition, a third trade group urged the $1 billion cutoff “to not impose unnecessary paperwork burden on smaller institutions and to be consistent with the $1 billion threshold for other FDIC regulations * * *.” After consideration of these comments, the FDIC has changed the final rule to incorporate the higher cutoff amount.
Institutions do not at present report average daily balances on Call Reports and TFRs. Reporting average assessment bases will therefore necessitate changes to Call Reports and TFRs requiring the approval of the FFIEC and time to implement. Until these changes to the Call Report and TFR are made, institutions will continue to determine assessment bases using quarter-end balances.
Under the final rule, for one year after the necessary changes to the Call Report and TFR have been made, each existing institution will have the option of continuing to use quarter-end balances to determine its assessment base. Thereafter, institutions with $1 billion or more in assets will be required to report average daily balances. To avoid burdening smaller institutions, which might have to modify their accounting and reporting systems, existing institutions with less than $1 billion in assets will have the option of continuing to use quarter-end balances to determine their assessment bases.
If its assessment base is growing, an institution will pay smaller assessments if it reports daily averages rather than quarter-end balances, all else equal. Nevertheless, a smaller institution that elects to report quarter-end balances may continue to do so, so long as its assets, as reported in its Call Report or TFR, do not equal or exceed $1 billion in two consecutive reports. Otherwise, the institution will be required to begin reporting average daily balances for the quarter that begins six months after the end of the quarter in which the institution reported that its assets equaled or exceeded $1 billion for the second consecutive time. An institution with less than $1 billion in assets may switch from reporting quarter-end balances to reporting average daily balances for an upcoming quarter. Any institution, once having begun to report average daily balances, either voluntarily or because required to, may not switch back to reporting quarter-end balances.
Finally, one commenter, a trade group, urged that the $1 billion cutoff apply to newly insured institutions because those institutions “should not be treated differently in the assessment base calculation” and because “having the option to file using quarter-end balances is important as some banks believe the cost of the more involved General Ledger systems is excessive.” The FDIC believes that systems likely to be in place in newly insured institutions can generate average daily balances and will therefore impose no additional costs in doing so. In addition, this approach will encourage the transition to average daily balances throughout the industry, which will improve the accuracy of institutions' assessment base calculations. Accordingly, under the final rule, any institution that becomes insured after the necessary modifications to the Call Report and TFR have been made will be required to report average daily balances for assessment purposes.
The largest overall adjustments to the current assessment base are deductions for float, deposits reported as such for assessment purposes that were created by deposits of cash items (checks) for which the institution has not itself received credit or payment. The current float deductions are 16
Two basic rationales existed for allowing institutions to deduct float. First, without float deductions, institutions would be assessed for balances created by deposits of checks for which they had not actually been paid. Second, crediting an uncollected cash item (a check) to a deposit account can temporarily create double counting in the aggregate assessment base—once at the insured institution that credited the cash item to the deposit account, and again at the payee insured institution on which the cash item is drawn. Deducting float from deposits when calculating the assessment base reduced this double counting.
Before 1960, institutions computed actual float and deducted it from deposits when computing their assessment bases. This proved to be onerous at the time. In 1960, Congress by statute established the standardized float deductions in an effort to simplify and streamline the assessment base calculation. Section 7(b) of the FDI Act defined the deposit insurance assessment base until passage of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), which removed the statutory definition.
All six commenters addressed the float issue. Two opposed elimination of the float deductions. One supported retaining the standard float deductions and “if necessary, modifying them to recognize reduction in float due to technology advances” but opposed requiring banks to deduct actual float. Another urged the adoption of “rules that allow for the deduction of actual float—base assessments on collected balances” and opposed eliminating the standard float deductions because that would “increase in the premiums that corporate depositors pay.” Three other commenters generally supported elimination of the float deductions, but urged retention of the deductions for quarter-end filers, as opposed to institutions reporting average daily balances. A trade group noted that while float has declined, it has not gone away, and without the float deductions for quarter-end filers “the assessment base using quarter-end balances would be greater than appropriate and, therefore, the premium assessed would be higher than appropriate.” Two of the trade groups suggested revising the current float deductions for quarter-end filers and allowing such institutions to continue their use.
The FDIC has decided to eliminate the float deductions for all institutions on the grounds that, based on available information, the standard float deductions appear to be obsolete. Actual float appears to be small and decreasing as the result of legal, technological, and payment systems changes. The basis for the percentages in the standardized deductions chosen by Congress is not clear. However, even if the percentages were a realistic approximation of average bank float when they were selected over 40 years ago, legal, technological, and payment systems changes—such as Check 21—that have accelerated check clearing should have reduced float, everything else being equal, and made the existing standard float deductions obsolete.
Eliminating the float deductions will favor some institutions over others. Institutions with larger percentages of time and savings deposits will see smaller increases in their assessment bases; conversely, those with larger percentages of demand deposits will see greater increases in their assessment bases. However, eliminating the float deductions will only minimally affect the relative distribution of the aggregate assessment base among institutions of different asset sizes and between banks and thrifts (although it will have a greater effect on the assessment bases of some individual institutions). While eliminating the float deductions will increase assessment bases and affect the distribution of the assessment burden among institutions, it should not, in itself, increase assessments. The assessment rates that the FDIC will set in the new pricing system will take into account the elimination of the float deductions.
The FDIC has decided not to deduct actual float to arrive at the assessment base for a number of reasons. Deducting actual float would require that institutions report actual float; and institutions that determine their assessment base using average daily balances would be required to report average daily float. This would necessitate a new information requirement for float data.
Finally, the FDIC does not agree with the suggestion that the float deductions (or revised or adjusted float deductions) be retained for institutions reporting quarter-end balances, as three commenters urged. It is not clear that reporting quarter-end balances would result in a larger than appropriate assessment than reporting average daily balances, as one commenter suggested. Moreover, allowing standardized deductions for institutions that report quarter-end balances could provide institutions with incentives for retaining the quarter-end balance method. The FDIC believes that institutions will generally benefit from reporting average daily balances and believes the assessment system should generally be structured to encourage the bulk of institutions with less than $1 billion in assets to opt to use average daily
At present, complex rules apply to terminating transfers
The terminating transfer provision in the final rule will deal with a few remaining situations. If the terminating institution does not file a report of condition for the quarter prior to the quarter in which the terminating transfer occurred, calculation of its quarterly certified statement invoices for those quarters will be based on its assessment base from its most recently filed report of condition. For the quarter before the terminating transfer occurs, the terminating institution's assessment will be determined using its most recent rate; for the quarter in which the terminating transfer occurs, the acquirer's rate will apply, but the calculation will be different depending upon whether the acquiring institution reports its assessment base using average daily balances or quarter-end balances.
Under the final rule, once institutions begin reporting average daily deposits, the average assessment base of the acquiring institution will properly reflect the terminating transfer and will increase after the terminating transfer. When this happens, the terminating institution's assessment for the quarter in which the terminating transfer occurs will be reduced by the percentage of the quarter remaining after the terminating transfer and calculated at the acquirer's rate.
Three of the six commenters generally supported these changes to the terminating transfer rule, and none opposed them.
Under the final rule, an acquiring institution that reports quarter-end balances will have its assessment for the quarter in which the terminating transfer occurred calculated slightly differently from the language in the proposal. Because the acquiring institution is not averaging its assessment base, its assessment for the quarter in which the terminating transfer occurs will be its assessment base (which will include the acquired deposits) calculated at its assessment rate. Thus, for example, an institution that reports quarter-end balances might acquire another institution by merger one month (one-third of the way) into a quarter. Since the acquiring institution's assessment base for that quarter will include the acquired deposits, application of the acquirer's rate to that base will obviate the need to assess the terminating institution separately for that quarter. The final rule has been revised from the proposed rule to reflect this simpler calculation for acquiring institutions that use quarter-end balances.
At present, a newly insured institution is not liable for assessments for the semiannual period in which it becomes insured, but is liable for assessments for the following semiannual period. The institution's assessment base as of the day before the following semiannual period begins is deemed to be its assessment base for the entire semiannual period. These special rules were needed because assessments were based upon assessment bases that an institution reported in the past. Under the existing rules, a newly insured institution reports an assessment base at the end of the quarter in which it becomes insured but that assessment base is not used to calculate its assessment until the following semiannual period. Further, if an institution becomes insured in the second half of a semiannual period, it has no reported assessment base on which to calculate the first installment of its premium for the next semiannual period.
Under the final rules, each quarterly assessment will be based upon the assessment base that an institution reports at the end of that quarter. Since a newly insured institution will have reported an assessment base (using average daily balances) for the quarter in which it becomes insured, its assessment will be computed in the same manner as all other institutions. Three commenters generally supported elimination of the special rules for newly insured institutions, and none opposed it.
The current deadline for an institution to request a review of its assessment risk classification is 90 days from the invoice date for the first quarterly installment of a semiannual period. Under the final rule, each quarterly assessment will be separately computed. Consequently, the final rule will provide institutions with 90 days from the date of each quarterly certified statement invoice to file a request for review from its risk assignment. Institutions will also have 90 days from the date of any subsequent invoice that adjusted the assessment of an earlier assessment period to request a review. The final rule clarifies that an institution with between $5 billion and $10 billion in assets may request review if the FDIC denies its request to be assessed as a large bank; in addition, institutions may request review of an FDIC determination that they are new.
A parallel amendment will allow requests for revision of an institution's quarterly assessment payment computation to be filed within 90 days of the quarterly assessment invoice for which revision is requested (rather than the present 60 days). Three commenters generally supported these changes to the rules; none opposed them.
The Reform Act eliminated the requirement that the deposit insurance assessment system be semiannual and provided a new three-year statute of limitations for assessments. Accordingly, the FDIC has revised the provisions of 12 CFR 327.2 to clarify that the certified statement is the quarterly certified statement invoice and to provide for the retention of the quarterly certified statement invoice by insured institutions for three years, rather than five years under the prior law. Three commenters generally supported these changes; none opposed them.
When the present assessment system was proposed more than 10 years ago, the original quarterly dates for payment of assessments were: March 30; June 30;
The prepayment option is eliminated under the final rule. With implementation of the new assessment system, a transition period will be created in which institutions will not be subject to collection of deposit insurance assessments after the September 30, 2006 payment date until June 30, 2007. Consequently, reestablishing the original December 30 payment date should have no adverse consequences for institutions that use cash-basis accounting. No institution would make more than four insurance payments in calendar year 2006; those using the December 30, 2005 payment date would make only three payments in 2006. All institutions would make four payments annually thereafter. This change will keep all assessment payments within each calendar year.
In addition, insured institutions presently have the regulatory option of making double payments on any payment date except January 2. Under the final rule, this option is also eliminated. The double payment option originated in the 1995 amendment, when the payment date was modified from December 30, 1995 to January 2, 1996. The double payment option was adopted to provide cash-basis institutions the opportunity to pay the full amount of their semiannual assessment premium on December 30 so as to have the complete benefit of this modification. The transition period from September 30, 2006 to June 30, 2007 and four payments annually beginning in 2007 should eliminate the need for the double payment option, since the FDIC will no longer be charging semiannual premiums.
The final rule also makes clear that scheduled quarterly FICO payments will be collected from all institutions on January 2, 2007, and March 30, 2007, based upon, respectively, their September 30, 2006 and December 31, 2006 reported assessment bases (see 12 CFR 327.3(a)(3)). Institutions that elect to do so, however, will still be able to make prepayment of their first quarter 2007 FICO payment on December 30, 2006, as provided for under the existing rules at 12 CFR 327.3(c)(3). Institutions that do not choose this prepayment option will make their first quarter 2007 FICO payment on January 2, 2007, as the final rule will provide.
Section 722 of the Gramm-Leach-Bliley Act (GLBA), Public Law 106-102, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The proposed rules requested comments on how the rules might be changed to reflect the requirements of GLBA. No GLBA comments were received.
The Regulatory Flexibility Act (RFA) requires that each Federal agency either certify that a proposed rule would not, if adopted in final form, have a significant economic impact on a substantial number of small entities or prepare an initial regulatory flexibility analysis of the proposal and publish the analysis for comment. See 5 U.S.C. 603, 604, 605. Certain types of rules, such as rules of particular applicability relating to rates or corporate or financial structures, or practices relating to such rates or structures, are expressly excluded from the definition of “rule” for purposes of the RFA. 5 U.S.C. 601. The final rule provides operational procedures governing assessments and relates directly to the rates imposed on insured depository institutions for deposit insurance, by providing for the determination of assessment bases to which the rates will apply and providing the operational processes required for deposit insurance assessments. Consequently, no regulatory flexibility analysis is required. Nonetheless, the FDIC is voluntarily undertaking a regulatory flexibility analysis of the final rule.
The provisions dealing with determining assessment bases using average daily balances include an opt-out for insured institutions with assets of less than $1 billion, which would permit small institutions under the RFA (i.e., those with $165 million or less in assets) to continue (as they do now) reporting quarter-end balances. Newly insured institutions with $165 million or less in assets, however, will be required to report average daily balances. For the period from 2001 through 2005, the average number of small institutions that became insured each year was approximately 126. Most small, newly insured institutions will ordinarily implement systems permitting calculation of average daily balances and, therefore, will not be significantly burdened by this requirement.
Similarly, elimination of the float deduction in calculating assessment bases will not have a significant economic impact on a substantial number of small ($165 million in assets or less) insured depository institutions within the meaning of the RFA. Based on December 31, 2005 reports of condition, small institutions represented 5.09 percent of the total assessment base, with large institutions (i.e., those with more than $165 million in assets) representing 94.91 percent. Without the existing float deduction, those percentages would have been 5.14 and 94.86, respectively, a change of only 0.05 percent. By way of example, if a flat 2 basis point annual charge had been assessed on the December 31, 2005 assessment base without the float deduction (i.e., with the float deduction added back to the assessment base), the amount collected would have been approximately $1.267 billion. To collect the same amount from the industry on the same assessment base, but allowing the float deduction, approximately a 2.05 basis point charge would have been required, since the assessment base would have been smaller. The average difference in assessment charged a small institution for one year if the float deduction were eliminated (charging 2 basis points) versus allowing the float deduction (charging 2.05 basis points) would be about $110. The actual increase in assessments charged small institutions for one year if the float deduction were eliminated (charging 2 basis points) versus allowing the float deduction (charging 2.05 basis points) would be greater than or equal to $1,000 for only 38 out of 5,362 small institutions as of December 31, 2005.
Moreover, the final rule will not have a significant economic impact on a
Comments were sought regarding any information about the likely quantitative effects of the proposal on small insured depository institutions; no comments were received.
No collections of information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501
The FDIC has determined that the final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Public Law 105-277, 112 Stat. 2681).
The Office of Management and Budget has determined that the final rule is not a “major rule” within the meaning of the relevant sections of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (5 U.S.C. 801
Bank deposit insurance, Banks, banking, Savings associations.
12 U.S.C. 1441, 1813, 1815, 1817-1819, 1821; Sec. 2101-2109, Pub. L. 109-171, 120 Stat. 9-21, and Sec. 3, Pub. L. 109-173, 119 Stat. 3605.
(a)
(b)
(i) The time and manner of filing certified statements by insured depository institutions;
(ii) The time and manner of payment of assessments by such institutions;
(iii) The payment of assessments by depository institutions whose insured status has terminated;
(iv) The classification of depository institutions for risk; and
(v) The processes for review of assessments.
(2) Deductions from the assessment base of an insured branch of a foreign bank are stated in subpart B part 347 of this chapter.
(a)
(2) The quarterly certified statement invoice shall reflect the institution's risk assignment, assessment base, assessment computation, and assessment amount, for each quarterly assessment period.
(b)
(2) Insured depository institutions shall access their quarterly certified statement invoices via FDIC
(3) Institutions that do not have Internet access may request a renewable one-year exemption from the requirement that quarterly certified statement invoices be accessed through FDIC
(4) Each assessment period, the FDIC will provide courtesy e-mail notification to insured depository institutions indicating that new quarterly certified statement invoices are available and may be accessed on FDIC
(5) E-mail notification may be used by the FDIC to communicate with insured depository institutions regarding quarterly certified statement invoices and other assessment-related matters.
(c)
(d)
(e)
(1) Amend its report of condition, or other similar report, to correct any data believed to be inaccurate on the quarterly certified statement invoice; amendments to such reports timely filed under section 7(g) of the Federal Deposit
(2) Amend and sign its quarterly certified statement invoice to correct a calculation believed to be inaccurate and return it to the FDIC by the applicable payment date specified in § 327.3(b)(2).
(f)
(g)
(2) The assessment rate on the quarterly certified statement invoice shall be amended only if it is inconsistent with the assessment risk assignment(s) provided to the institution by the Corporation for the assessment period in question pursuant to § 327.4(a). Agreement with the assessment rate shall not be deemed to constitute agreement with the assessment risk assignment. An institution may request review of an assessment risk assignment it believes to be incorrect pursuant to § 327.4(c).
(a)
(2)
(3)
(b)
(2)
(i) In the case of the assessment payment for the quarter that begins on January 1, the payment date is the following June 30;
(ii) In the case of the assessment payment for the quarter that begins on April 1, the payment date is the following September 30;
(iii) In the case of the assessment payment for the quarter that begins on July 1, the payment date is the following December 30; and
(iv) In the case of the assessment payment for the quarter that begins on October 1, the payment date is the following March 30.
(c)
(d)
(e)
(f)
(i) The institution disagrees with the computation of the assessment base as stated on the quarterly certified statement invoice;
(ii) The institution determines that the rate applied by the Corporation is inconsistent with the assessment risk assignment(s) provided to the institution in writing by the Corporation
(iii) The institution believes that the quarterly certified statement invoice does not fully or accurately reflect adjustments provided for in paragraph (e) of this section.
(2)
(3)
(g)
(a)
(b)
(c)
(d)
(e)
(f)
(2) Changes to an insured institution's risk assignment resulting from a change in a long-term debt issuer rating become effective as of the date the change is announced by the rating agency.
(a)
(1) An institution that becomes newly insured after the first report of condition allowing for average daily balances shall have its assessment base determined using average daily balances;
(2) An insured depository institution (other than one covered in paragraph (a)(1) of this section) reporting assets of $1 billion or more on the first report of condition allowing for average daily balances, shall within one year after so reporting have its assessment base determined using average daily balances;
(3) An insured depository institution (other than one covered in paragraph (a)(1) of this section) that was insured prior to the first report of condition allowing for average daily balances, reporting less than $1 billion in assets on the first report of condition allowing for average daily balances—
(i) May continue to have its assessment base determined using quarter end balances; or
(ii) May opt permanently to have its assessment base determined using average daily balances after notice to the Corporation, but
(iii) Shall have its assessment rate determined using average daily balances for any quarter beginning six months after the institution reported that its assets equaled or exceeded $1 billion for two consecutive quarters and thereafter; and
(4) In any event, an insured depository institution that files its report of condition on a consolidated basis by including a subsidiary bank(s) or savings association(s) shall report its assessment base on an unconsolidated basis.
(b)
(1) Adding all deposit liabilities as defined in section 3(
(2) Subtracting the following allowable exclusions, in the case of any institution that maintains such records as will readily permit verification of the correctness of its assessment base—
(i) Any demand deposit balance due from or cash item in the process of collection due from any depository institution (not including a private depository institution, a foreign depository institution, a foreign office of another U.S. depository institution, or a U.S. branch of a foreign depository institution) up to the total of the amount of deposit balances due to and cash items in the process of collection due to such depository institution that are included in paragraph (b)(1) of this section;
(ii) Any outstanding drafts (including advices and authorization to charge deposit institution's balance in another bank) drawn in the regular course of business;
(iii) Any pass-through reserve balances;
(iv) Liabilities arising from a depository institution investment contract that are not treated as insured deposits under section 11(a)(5) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(5)); and
(v) Deposits accumulated for the payment of personal loans, which represent actual loan payments received by the depository institution from borrowers and accumulated by the depository institution in hypothecated deposit accounts for payment of the loans at maturity. Time and savings deposits that are pledged as collateral to secure loans are not “deposits accumulated for the payment of personal loans.”
(c)
(a)
(b)
(2)
(c)
(1)
(2)
(i) The transfer of cash funds in an amount sufficient to pay the unclaimed and unpaid deposits to the public official authorized by law to receive the same; or
(ii) If no law provides for the transfer of funds to a public official, the transfer of cash funds or compensatory assets to an insured depository institution in an amount sufficient to pay the unclaimed and unpaid deposits in consideration for the assumption of the deposit obligations by the insured depository institution.
(3)
(ii) If the unclaimed and unpaid deposits are disposed of as provided in paragraph (b)(2)(i) of this section, a certified copy of the public official's receipt issued for the funds shall be furnished to the Corporation.
(iii) If the unclaimed and unpaid deposits are disposed of as provided in paragraph (b)(2)(ii) of this section, an affidavit of the publication and of the mailing of the notice to the depositors, together with a copy of the notice and a certified copy of the contract of assumption, shall be furnished to the Corporation.
(4)
(d)
(a)
(2)
(3)
(ii) Interest on an amount specified in paragraph (a)(3)(i) of this section shall begin to accrue on the day following the regular payment date, as provided for in § 327.3(b)(2), for the amount so overpaid or underpaid, provided, however, that interest shall not begin to accrue on any overpayment until the day following the date such overpayment was received by the Corporation. Interest shall continue to accrue through the date on which the overpayment or underpayment (together with any interest thereon) is discharged.
(iii) The relevant interest rate shall be redetermined for each quarterly assessment interval. A quarterly assessment interval begins on the day following a regular payment date, as specified in § 327.3(b)(2), and ends on the immediately following regular payment date.
(b)
(2) The relevant interest rate for a quarterly assessment interval will apply to any amounts overpaid or underpaid on the payment date immediately prior to the beginning of the quarterly assessment interval. The relevant interest rate will also apply to any amounts owed for previous overpayments or underpayments (including any interest thereon) that remain outstanding, after any adjustments to such overpayments or underpayments have been made thereon, at the end of the regular payment date immediately prior to the beginning of the quarterly assessment interval. Interest will be compounded daily.
For the purpose of this part 327:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
By order of the Board of Directors.
Federal Deposit Insurance Corporation (FDIC).
Final rule.
The Federal Deposit Insurance Reform Act of 2005 requires that the Federal Deposit Insurance Corporation (the FDIC) prescribe final regulations, after notice and opportunity for comment, to provide for deposit insurance assessments under section 7(b) of the Federal Deposit Insurance Act (the FDI Act). In this rulemaking, the FDIC is amending its regulations to create a new risk differentiation system, to establish a new base assessment rate schedule, and to set assessment rates effective January 1, 2007.
Munsell W. St. Clair, Senior Policy Analyst, Division of Insurance and Research, (202) 898-8967; or Christopher Bellotto, Counsel, Legal Division, (202) 898-3801.
On February 8, 2006, the President signed the Federal Deposit Insurance Reform Act of 2005 into law; on February 15, 2006, he signed the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 (collectively, the Reform Act).
On July 24, 2006, the FDIC published in the
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) required that the FDIC establish a risk-based assessment system. To implement this requirement, the FDIC adopted by regulation a system that places institutions into risk categories
The Federal Deposit Insurance Act, as amended by the Reform Act, continues to require that the assessment system be risk-based and allows the FDIC to define risk broadly. It defines a risk-based system as one based on an institution's probability of causing a loss to the deposit insurance fund due to the composition and concentration of the institution's assets and liabilities, the amount of loss given failure, and revenue needs of the Deposit Insurance Fund (the fund).
At the same time, the Reform Act also restores to the FDIC's Board of Directors the discretion to price deposit insurance according to risk for all insured institutions regardless of the level of the fund reserve ratio.
The Reform Act leaves in place the existing statutory provision allowing the FDIC to “establish separate risk-based assessment systems for large and small members of the Deposit Insurance Fund.”
The final rule is set out in detail in ensuing sections, but is briefly summarized here.
The final rule consolidates the existing nine risk categories into four and names them Risk Categories I, II, III and IV. Risk Category I replaces the 1A risk category.
Within Risk Category I, the final rule combines supervisory ratings with other risk measures to differentiate risk. For most institutions, the final rule combines CAMELS component ratings with financial ratios to determine an institution's assessment rate. For large institutions that have long-term debt issuer ratings, the final rule differentiates risk by combining CAMELS component ratings with these ratings. For large institutions within Risk Category I, initial assessment rate determinations may be modified within limits upon review of additional relevant information.
The final rule defines a large institution as an institution that has $10 billion or more in assets. With certain exceptions, beginning in 2010, the final rule treats new institutions (those established for less than five years) in Risk Category I the same, regardless of size, and assesses them at the maximum rate applicable to Risk Category I institutions.
The final rule sets actual rates beginning January 1, 2007, as follows:
These rates are three basis points above the base rate schedule adopted in the final rule:
The final rule continues to allow the FDIC Board to adjust rates uniformly from one quarter to the next, except that no single adjustment can exceed three basis points. In addition, cumulative adjustments cannot exceed a maximum of three basis points higher or lower than the base rates without further notice-and-comment rulemaking.
The final rule consolidates the number of assessment risk categories from nine to four. The four new categories will continue to be defined based upon supervisory and capital evaluations, which are both established measures of risk. The consolidation creates four new Risk Categories as shown in Table 1:
Risk Category I contains all well-capitalized institutions in Supervisory Group A (generally those with CAMELS composite ratings of 1 or 2); i.e., those institutions that would be placed in the former 1A category. Risk Category II contains all institutions in Supervisory Groups A and B (generally those with CAMELS composite ratings of 1, 2 or 3), except those in Risk Category I and undercapitalized institutions.
No comments disagreed with the proposed reduction in the number of risk categories from nine to four. However, one comment recommended adding subcategories to Risk Category I to provide a warning to institutions that are moving toward Risk Category II if corrective action is not taken and giving an institution that slips from Risk Category I to Risk Category II an opportunity to show quick improvement. The FDIC does not believe that these subcategories are necessary. For an institution in Risk Category I, its assessment rate will provide the same information. The FDIC also does not believe that special treatment should be accorded an institution that slips from Risk Category I, as opposed to other institutions already in Risk Category II.
Some comments argued that, for CAMELS 3, 4 and 5-rated institutions in Risk Categories II and III, some provision for lower premiums should be made for institutions that augment and maintain strong capital, maintain adequate reserves for loan losses and have a plan for recovery approved by the FDIC. The FDIC does not see a need for special provisions for these institutions, as they have other incentives to improve capital and business operations.
Risk Category I, as of June 30, 2006, would include approximately 95 percent of all insured institutions. The final rule will further differentiate risk within this category using one of two methods. Both methods share a common feature, namely, the use of CAMELS component ratings. However, each method combines these measures with different sources of information on risk. For small institutions within Risk Category I and for large institutions within Risk Category I that do not have long-term debt issuer ratings, the final rule combines CAMELS component ratings with current financial ratios to determine an institution's assessment rate. For large institutions within Risk Category I that have long-term debt
The risk differentiation methods for institutions in Risk Category I measure levels of risk and result in rank orderings of risk within the category. Within Risk Category I, the final rule assesses those institutions that pose the least risk a minimum assessment rate and those that pose the greatest risk a maximum assessment rate that is two basis points higher than the minimum rate. An institution that poses an intermediate risk within Risk Category I will be charged a rate between the minimum and maximum that will vary by institution. Under the final rule, small changes in an institution's financial ratios, long-term debt issuer ratings or CAMELS component ratings should produce only small changes in assessment rates.
The final rule defines a large institution as an institution that has $10 billion or more in assets and a small institution as an institution that has less than $10 billion in assets. Also, as described below in Section VII, beginning in 2010, with certain exceptions, the final rule treats new institutions in Risk Category I the same, regardless of size, and assesses them at the maximum rate applicable to Risk Category I institutions.
As stated above, within Risk Category I, the final rule results in assessing those institutions that pose the least risk a minimum assessment rate and those that pose the greatest risk a maximum assessment rate that is two basis points higher. An institution that poses an intermediate risk within Risk Category I will be charged a rate between the minimum and maximum that will vary incrementally by institution.
In this regard, the final rule differs from the NPR in its application to large institutions. The NPR had proposed assessing large institutions that posed an intermediate risk within Risk Category I one of four rates between the minimum and maximum based on subcategory assignments. A number of comments expressed concern over the proposed use of assessment rate subcategories and the possibility that large increases (and decreases) in assessment rates could result from relatively small changes in risk. Some of these comments recommended using as few as three assessment rate subcategories, and some comments recommended using incremental pricing, as proposed in the NPR for small institutions. The FDIC has decided to adopt an incremental pricing framework for all institutions so that a small change in risk will produce a small change in assessment rates.
Under the final rule, as of June 30, 2006: (1) Approximately 45 percent of all institutions that would have been in Risk Category I (other than institutions less than 5 years old) would have been charged the minimum assessment rate; and (2) approximately 5 percent of all institutions that would have been in Risk Category I (other than institutions less than 5 years old) would have been charged the maximum assessment rate. In future periods, different percentages of institutions may be charged the minimum and maximum rates.
Chart 1 shows the cumulative distribution of assessment rates based on June 30, 2006 data, using base assessment rates for institutions in Risk Category I. The chart excludes Risk Category I institutions less than 5 years old.
Two comments expressed the view that the decision to place roughly 45 percent of large institutions in the minimum assessment rate subcategory and 5 percent in the maximum assessment rate subcategory was subjective and arbitrary. In one of these comments, it was suggested that large institutions might be restricted from the lowest premium rate by this decision. Several other comments also urged the FDIC to expand the availability of the minimum assessment rate to a larger proportion of large institutions. Some comments argued for the elimination of premiums altogether for the highest-rated large institutions.
The FDIC has found that small institutions with a probability of downgrade to a CAMELS 3 or worse that is equal to or less than the probability of downgrade for the 40th to 50th percentile as of June 30, 2006, had minimal risk of a CAMELS downgrade over time. The remainder of small institutions in the industry had increasing and distinguishable risk of CAMELS downgrades. The FDIC believes it is appropriate to initially assign roughly similar proportions of large and small institutions to the minimum assessment rate to achieve parity. While the initial proportions of large and small institutions being charged the minimum and maximum rates will be similar, the final rule does not fix the proportions for the future. Thus, in future periods, more or less than 45 percent of large (or small) institutions may pay the minimum rate and more or less than 5 percent may pay the maximum rate.
• The new risk differentiation system is untested and could lead to unintended consequences.
• Improvements in bank risk-management systems, improvements in supervisory evaluations and off-site monitoring, and enhanced supervisory powers enjoyed by the regulators have reduced risk.
• A narrower spread would reduce the adverse effect of changes in subcategories on large banks and the adverse effect of paying the maximum rate on new banks.
Other comments (including comments from some trade groups) recommended increasing the spread between minimum and maximum assessment rates for Risk Category I to 3 basis points. According to these comments, a wider spread would improve risk differentiation and could subject more institutions to incremental rates between the minimum and maximum rates.
The final rule strikes a balance between the arguments for a narrower spread and those for a wider spread. The two basis point spread adopted in the final rule is narrower than the historical loss data would suggest.
For all institutions in Risk Category I, supervisory ratings will be taken into account in setting assessment rates using a weighted average of an institution's CAMELS components. This weighted average will be created by combining the components as follows:
Almost every comment that discussed the use of CAMELS ratings to differentiate risk within Risk Category I supported their use. One comment questioned their use and a few comments opposed any differentiation within Risk Category I.
One trade group asserted that the FDIC should use a simple, rather than weighted, average of CAMELS components on the grounds that using financial ratios related to these components effectively weights the components. The trade group noted that capital, for example, is already reflected in an institution's risk category and as a CAMELS component. The trade group also asserted that asset quality is given extra emphasis in the proposed weighting scheme by including several asset quality financial ratios as well as the A rating in the CAMELS component average. With regards to the M component, the trade group asserted that:
Management—the most subjective of all the CAMELS components—must by necessity be involved in all the financial ratios and other examination components. In practice,
Several comments proposed different weighting schemes for large institutions, such as heavier weights for Liquidity, Capital, and Asset quality.
The final rule retains the weights proposed in the NPR to determine the weighted average CAMELS component rating. These weights reflect the view of the FDIC on the relative importance of each of the CAMELS components in differentiating risk among institutions in Risk Category I for deposit insurance purposes.
For small institutions and for large institutions without a long-term debt issuer rating, the final rule uses certain financial ratios, in addition to supervisory ratings, to differentiate risk. The final rule differs slightly from the proposal in the NPR with respect to the financial ratios being used and their definitions.
The financial ratios that will be used are:
• The Tier 1 Leverage Ratio;
• Loans past due 30-89 days/gross assets;
• Nonperforming assets/gross assets;
• Net loan charge-offs/gross assets; and
• Net income before taxes/risk-weighted assets.
The Tier 1 Leverage Ratio has the definition used for regulatory capital purposes. Appendix A defines each of the ratios.
Many comments (including comments from several industry trade groups) opposed including time deposits greater than $100,000 in the definition of volatile liabilities for a variety of reasons, including: (1) These deposits are core deposits or should be so considered; and (2) including them would have an effect on attracting municipal deposits. One comment opposed including brokered deposits in the definition of volatile liabilities on the grounds that they are less volatile than many core deposits. One trade group argued that deposits in excess of $100,000 that are insured by excess deposit insurance should not be included in the definition of volatile liabilities.
The final rule eliminates the basis for these concerns by excluding one of the financial ratios proposed in the NPR, the ratio of volatile liabilities to gross assets. The financial data used to compute volatile liabilities reported by thrifts in the Thrift Financial Reports (TFRs) and reported by banks in their Reports of Condition and Income (Call Reports) were not compatible and could not be made compatible without changes in reporting requirements.
The final rule also excludes the portion of loans and leases that is guaranteed by the U.S. Government, including government agencies and government-sponsored agencies, from the computation of loans past due 30-89 days and from the computation of non-performing assets. These types of guaranteed loans are treated as less risky than other loans for risk-based capital purposes. Moreover, the use of past due and nonaccrual loan measures that do not adjust for these guaranteed loans might overstate credit risk and result in assessment rates that are too high for some institutions.
Almost all comments (including comments from a trade group) on using financial ratios (in addition to CAMELS ratings) to determine assessment rates supported their use. However, some suggested that different financial ratios be used.
In the NPR, the definition of volatile liabilities did not include Federal Home Loan Bank advances, but the FDIC asked for comment on whether it should. The FDIC received 569 comments on this issue. All but one argued that the definition of volatile liabilities should not include Federal Home Loan Bank advances; one argued that the definition should include these advances. The final rule does not include the volatile liability ratio.
A trade group suggested excluding the loans past due 30-89 days to gross assets ratio on the grounds that loan delinquencies are already considered in two CAMELS components, A (Assets) and M (Management). The final rule retains the loans past due 30-89 days to gross assets ratio. Independent of the CAMELS components, this ratio is statistically significant and highly predictive of CAMELS downgrades and institution failures even when it is considered together with the nonperforming ratio.
A trade group commented that the risk weighting formula used to establish risk weighted assets is biased against residential mortgage lenders. It argued that, since they are secured by property liens, all 1-4 family, owner occupied residential mortgage loans with a loan-to-value ratio under 80 percent should be given a risk weighting of zero.
In the final rule, pre-tax earnings are divided by risk-weighted assets rather than by gross assets to avoid penalizing certain types of institutions, including those that hold low-risk and low-yielding assets. The FDIC's analysis shows that institutions specializing in mortgage lending are not charged a higher average assessment rate than other institutions under the final rule. Moreover, Call Reports and TFRs currently do not collect separate data on the loan-to-value ratio for 1-4 family, owner occupied residential mortgage loans; thus, it is not feasible to treat loans with a low loan-to-value ratio differently.
This trade group also requested that the FDIC study how mutual institutions are affected by including earnings in the financial ratios. The FDIC found that, while mutual institutions typically have a lower ratio of pre-tax earnings to risk-weighted assets, they typically have a higher Tier 1 leverage ratio and lower non-performing loan and charge-off ratios than other small institutions in Risk Category I. As a result, mutual institutions are not charged a higher average assessment rate than other institutions under the final rule.
Another trade group advocated averaging financial ratios over a period not less than four quarters, arguing that taking “a one-quarter snap shot” can be a misleading indicator of risk, since many financial institutions can experience seasonal variations. By averaging, these seasonalities would be removed.
The final rule uses a four-quarter sum for two of the five financial ratios—the pre-tax earnings and net charge-offs ratios—to reduce volatility related to seasonality. The final rule uses the values of the three other financial ratios as of each quarter-end for several reasons. First, the seasonality of these
One trade group supported the FDIC's use of a Tier 1 leverage ratio and suggested that it should be weighted heaviest among the financial ratios considered. However, several comments (including comments from other trade groups) stated that capital should be measured by a risk-adjusted capital ratio rather than the Tier 1 leverage ratio because a risk-adjusted capital ratio is a better measure of capital adequacy.
Several comments stated that the FDIC should not use a Tier 1 leverage ratio to determine assessment rates for large institutions, in particular. One of these comments argued that this ratio is not an accurate measure of risk, effectively penalizes institutions that invest in high quality short-term assets, such as U.S. government securities, and places U.S. banks at a competitive disadvantage with foreign banks. Another comment suggested that larger institutions might tend to be penalized by inclusion of a leverage ratio.
The final rule uses the Tier 1 leverage ratio. The Tier 1 leverage ratio is highly significant in predicting CAMELS downgrades and failures. Using a risk-based capital measure in place of the Tier 1 leverage ratio does not improve predictive accuracy. For the relatively few large Risk Category I institutions that do not have long-term debt issuer ratings, the FDIC's ability to adjust assessment rates based on consideration of other risk information, as discussed below, should ensure that these institutions are treated equitably.
Several comments (including comments from several trade groups) stated that the capital measure should include subordinated debt and stated or implied that subordinated debt should reduce assessment rates because it would reduce loss given failure. Several comments (including comments from some trade groups) argued that the statutes governing the risk-based pricing system require that the FDIC take loss given failure into account when determining assessments and that the proposed system does not do so. Because it does not do so, they argue, the assessment system is actuarially unfair. These issues are discussed in a subsequent section (Section IX).
One commenter explicitly argued that, for large institutions in Risk Category I, only CAMELS components should be used to differentiate risk. However, the comment also implied that only CAMELS components should be used for all Risk Category I institutions, including small institutions. The method adopted in the final rule, which combines financial ratios and supervisory ratings, predicts downgrades better than one without financial ratios. For this reason, the final rule does not adopt the method suggested in the comment.
For large institutions with long-term debt issuer ratings, the final rule uses these ratings, in addition to supervisory ratings, to differentiate risk. The final rule uses the current long-term debt issuer rating or ratings assigned by the major U.S. rating agencies.
A number of comments (including comments from some trade groups) supported the use of debt issuer ratings as an objective measure of risk in large institutions and as complementary to supervisory ratings. One trade group urged the FDIC to use ratings issued by any nationally recognized credit rating agency; a rating agency requested that its ratings be used. The rating agency also urged the FDIC to consider agency ratings for both small and large institutions when available.
While there is merit in considering ratings provided by other rating agencies, long-term debt issuer ratings issued by the three major U.S. rating agencies are widely accepted and used by market participants to gauge the relative risk of large financial institutions for many purposes, including the determination of required rates of return on institution-issued debt. They provide market-based views of risk that are complementary to supervisory views.
Other comments (including comments from other trade groups) either urged caution in the use of agency ratings on the grounds of bias in favor of large institutions or argued they should not be used. The FDIC's ability to adjust assessment rates for large institutions, discussed below, should alleviate these concerns.
Several comments urged the FDIC to use holding company debt issuer ratings to determine assessment rates. These comments noted that debt is often issued at the parent level, that holding companies are required to serve as a source of strength to their subsidiary institutions, and that holding company considerations apply to insured subsidiaries due to the cross guarantee liabilities of affiliated institutions.
The long-term debt issuer rating of an insured entity relates directly to the risk in that particular entity. As noted in the NPR, the risk profiles of affiliated institutions within a holding company can differ. Additionally, the value of a cross-guarantee in the future is uncertain because the financial condition of affiliated institutions may, in certain circumstances, weigh against the FDIC's invoking such cross-guarantee provisions.
Nevertheless, it is prudent to consider all available risk information in setting assessment rates. As discussed below, the FDIC will consider additional information, including any holding company debt issuer ratings, in determining whether the assessment rate for any large institution is appropriate.
For small institutions within Risk Category I and for large institutions within Risk Category I that do not have long-term debt issuer ratings, the final rule combines supervisory ratings and
To determine an institution's insurance assessment rate under the base assessment rate schedule, each of these risk measures (that is, each institution's financial ratios and weighted average CAMELS component rating) will be multiplied by the corresponding pricing multipliers. The sum of these products will be added to (or subtracted from) a uniform amount, 1.954.
To compute the values of the uniform amount and pricing multipliers shown above, the FDIC chose cutoff values for the predicted probabilities of downgrade such that, as of June 30, 2006: (1) 45 percent of smaller institutions that would have been in Risk Category I (other than institutions less than 5 years old) would have been charged the minimum assessment rate; and (2) 5 percent of smaller institutions that would have been in Risk Category I (other than institutions less than 5 years old) would have been charged the maximum assessment rate.
Table 2 gives assessment rates for three institutions with varying characteristics, assuming the pricing multipliers given above, using the base assessment rates for institutions in Risk Category I (which range between a minimum of 2 basis points to a maximum of 4 basis points).
The
Under the final rule, the FDIC will have the flexibility to update the pricing multipliers and the uniform amount annually, without further notice-and-comment rulemaking. In particular, the FDIC will be able to add data from each new year to its analysis and may, from time to time, exclude some earlier years from its analysis. For example, some time during 2007 the FDIC may include data in the statistical analysis covering the period 1984 to 2005, rather than 1984 to 2004. Because the analysis will continue to use many earlier years' data as well, pricing multiplier changes from year to year should usually be relatively small.
On the other hand, as a result of the annual review and analysis, the FDIC may conclude that additional or alternative financial measures, ratios or other risk factors should be used to determine risk-based assessments or that a new method of differentiating for risk should be used. In any of these events, changes would be made through notice-and-comment rulemaking.
Under the final rule, the financial ratios for any given quarter will be calculated from the report of condition filed by each institution as of the last day of the quarter.
Using the transmittal date of a ratings change for assessment purposes represents a change from the method proposed in the NPR. Under the NPR, transmittal dates would only have been used in the absence of an examination start date (for example, for a large institution with continuous on-site supervision). Otherwise, in almost all instances, the examination start date would have been used.
The final rule adopts a suggestion contained in a banking trade group comment and alters the proposed rule for several reasons discussed in more detail in the final rule on operational changes to the assessment system.
The final rule also differs from the NPR for large institutions without long-term debt issuer ratings. The NPR proposed determining assessment rates for these institutions from insurance scores using a weighted average CAMELS rating and a financial ratio factor, with each weighted 50 percent. While the supervisory ratings and financial ratios in the final rule are
The approach in the final rule is simpler because it uses one consistent method for all institutions other than those with at least $10 billion in assets that have long-term debt issuer ratings.
The FDIC has decided not to impose a cap on the contribution that supervisory ratings can make to an institution's assessment rate for two reasons. First, the final rule combining supervisory ratings and financial ratios does not use a weighting scheme or a risk score. The final rule uses pricing multipliers, which can be either positive or negative, based on a statistical model that relates financial ratios and component ratings to CAMELS downgrades. The pricing multipliers—including the multiplier for the weighted average CAMELS component rating—are based on the actual historical experience of how well financial ratios and weighted average CAMELS component ratings predict whether an institution will be downgraded to a CAMELS composite rating of 3 or worse at its next examination. Second, a cap on the contribution that supervisory ratings can make to an institution's assessment rate would affect only a small percentage of institutions and the effect would be very small.
For large institutions that have long-term debt issuer ratings, a combination of these ratings and supervisory ratings will determine assessment rates, using equal weighting for each. The base assessment rate will be derived as follows: (1) CAMELS component ratings will be weighted to derive a weighted average CAMELS rating;
The conversion of long-term debt issuer ratings into numerical values in the final rule differs slightly from the conversion proposed in the NPR. Specifically, the final rule assigns the lowest conversion value of “1” to the best possible long-term debt issuer rating rather than to double A ratings or better (Aa2 or better for Moody's ratings), and the highest conversion value of “3” to triple B or worse ratings (Baa2 or worse for Moody's ratings), rather than to double B plus or worse ratings (Ba1 or worse for Moody's ratings). This revised conversion methodology takes better advantage of the possible range of ratings for large Risk Category I institutions, which are concentrated primarily in the triple B rating range and higher.
Pricing multipliers and the uniform amount for large institutions with debt ratings were derived using cutoff values of the combination of weighted average CAMELS ratings and converted long-term debt issuer ratings (weighted 50 percent each) such that, as of June 30, 2006: (1) Approximately 44 percent of large institutions with long-term debt issuer ratings that would have been in Risk Category I (other than institutions less than 5 years old) would have been charged the minimum assessment rate; and (2) approximately 6 percent of the large institutions with long-term debt issuer ratings that would have been in Risk Category I (other than institutions less than 5 years old) would have been charged the maximum assessment rate.
Under the final rule, the base assessment rate for an institution with CAMELS component ratings of “222111,” a Moody's long-term debt issuer rating of “A1,” and a Standard and Poor's long-term debt issuer rating of “A” would be 2.06 basis points. This rate is calculated as follows:
• The weighted average CAMELS rating is computed by multiplying each component rating by its associated weight to produce values of 0.50, 0.40, 0.50, 0.10, 0.10, and 0.10, respectively. The sum of these values, the weighted average CAMELS rating, is 1.70.
• The Moody's and Standard and Poor's long-term debt issuer ratings are converted to numerical values and averaged. The average of the two long-term debt issuer ratings, converted to numerical values of 1.50 and 1.80, respectively, is 1.65.
• The weighted average CAMELS rating and converted long-term debt
The final rule also differs from the NPR in that it does not use financial ratios to determine assessment rates for any large institution that has long-term debt issuer ratings, and does not use varying weights for long-term debt issuer ratings for institutions with between $10 billion and $30 billion in assets. The final rule simplifies the derivation of assessment rates by applying the same weight to weighted average CAMELS component ratings and long-term debt issuer ratings (when they exist) regardless of an institution's size.
Several trade groups commented that the proposed risk differentiation methodology for large banks was too complex, in part because of the varying weights given risk factors for institutions between $10 billion and $30 billion in assets. These comments noted that an institution's assessment rate could change simply because of an increase or decrease in assets even when the institution's risk profile remained unchanged. After considering comments, the FDIC concluded that this simpler approach for all large institutions with debt issuer ratings achieves the objective of differentiating risk in these large institutions without the need to introduce further complexity in the form of varying weights for large institutions in different size categories.
One trade group expressed concern that dissimilar methods for differentiating risk in large and small institutions could lead to possible inequity among institutions due solely to size. This comment expressed the view that agency and supervisory ratings tend to favor larger institutions, possibly because of diversification considerations.
The FDIC notes that the distribution of current supervisory ratings for large and small institutions does not support this view. Agency debt issuer ratings do take diversification into account, and the FDIC believes that it is appropriate to reflect these considerations in assessment rates. The final rule ensures, as required by statute, that no institution is precluded from the lowest assessment rate solely because of size. This statutory requirement underlies, in part, the FDIC's decision to initially include roughly similar proportions of large and small institutions in Risk Category I that would be charged minimum and maximum assessment rates. As discussed later, the FDIC will have the ability to adjust an institution's assessment rate when this rate is inconsistent with assessment rates of other large institutions with similar risk profiles.
This comment further noted that financial ratios also could be applied to all large institutions. Another trade group argued that the financial ratios should not be phased out in importance as institutions increase in size and should be used for all large institutions. This comment argued that measurements other than the financial ratios that are combined with supervisory ratings might be necessary to assess the off-balance sheet, securitization, trading, and securities processing activities engaged in by large institutions and to serve as a quality control check on long-term debt issuer ratings.
The FDIC believes that consideration of additional risk information (including financial performance and condition measures), discussed below, will be sufficient to ensure that the range of activities engaged in by banking organizations are fully considered and that debt issuer ratings are appropriately considered in assessment rates.
One comment suggested that business diversification should be more explicitly taken into account in determining deposit insurance premiums. This comment also recommended that the FDIC consider lowering or even eliminating premium rates for institutions that adopt the advanced approaches under the Basel II framework or whose actual capital sufficiently exceeds their Basel II required capital, since these institutions will have demonstrated capital levels and risk management practices that virtually eliminate risk to the deposit insurance fund. The FDIC believes that, in most cases, diversification, capital adequacy, and risk management considerations are reflected in supervisory or agency ratings or in financial ratios and the consideration of additional factors (in Appendix C) ensures that they are taken into account in all cases.
One comment argued that the large institution methodology proposed in the NPR was overly subjective because cutoff values to determine the percentage of institutions that would be charged the minimum and maximum rates would be set quarterly by the FDIC. In fact, under the final rule, minimum and maximum assessment rate cutoff values will be established using data as of June 30, 2006. No change will be made to these cutoff values without further notice and opportunity for comment.
To ensure consistency, fairness, and consideration of all available information, the FDIC will determine, in consultation with the primary federal regulator, whether or not to adjust the assessment rates for large institutions derived from either a combination of long-term debt issuer ratings and supervisory ratings or financial ratios and supervisory ratings (when no long-term debt issuer rating is available). The FDIC will make these determinations by evaluating additional risk information including current financial performance and condition information and trends, current market information, information pertaining to an institution's ability to withstand financial adversity, and information pertaining to severity of losses in the event of failure.
Any adjustments to assessment rates will be limited to 0.50 basis points (higher or lower). Upward adjustments will not take effect without notification to and consideration of responses from both the primary federal regulator and the institution. Downward adjustments will not take effect without notification to and consideration of responses from the primary federal regulator. No rate will be adjusted below the minimum rate for Risk Category I institutions in effect for an assessment period or above the maximum rate for Risk Category I institutions in effect for the period. Rate adjustments in Risk Category I are not meant to (and will not) override supervisory evaluations.
Examples of additional risk factors that will be considered are enumerated in Appendix C. Evaluating this additional risk information on an ongoing basis will help the FDIC ensure that relative levels of risk posed by large
• Current financial performance indicators such as capital levels, profitability measures, and asset quality measures of each large institution will be compared to those of institutions that are ranked similarly in terms of their assessment rates.
• Current market indicators such as subordinated debt spreads and holding company market indicators of each institution will be compared to market indicators of institutions that are ranked similarly in terms of their assessment rates.
• Recent information pertaining to an institution's ability to withstand financial stress will be evaluated by comparing this information to that of institutions ranked similarly in terms of their assessment rates. This information includes the internal risk characteristics of an institution's credit portfolios and other business lines as well as information from internal stress-test models.
• Current loss severity indicators of institutions will be evaluated by comparing this information to that of institutions ranked similarly in terms of their assessment rates. This information includes funding structure considerations such as the extent of priority and subordinated claims, as well as the availability of sufficient information (e.g., information pertaining to the level of insured deposits and qualified financial contracts) to resolve an institution in an orderly and cost-efficient manner.
• Evaluations of financial performance, market information, information pertaining to an institution's ability to withstand financial stress, and loss severity indicators will focus on: first, identifying those institutions that exhibit significantly different risk profiles, as indicated by risk indicators such as those enumerated above, than institutions with similar assessment rates; and second, where inconsistencies between assessment rates and these risk indicators are identified, determining the assessment rate adjustment that would be necessary to bring an institution's assessment rate into better alignment with those of other institutions that pose similar levels or risk.
Some comments (including comments from trade groups) indicated that the FDIC should consider certain information pertaining to losses that might be sustained by the insurance fund in the event of failure. For example, some comments indicated the FDIC should explicitly incorporate information about the relative level of subordinated claims into the determination of assessment rates for large institutions. The FDIC believes the final rule does consider loss given failure by explicitly incorporating consideration of this information into decisions of whether or not to adjust an institution's assessment rate.
In addition to ongoing consultations with the primary federal regulator on whether or not to make assessment rate adjustments, the FDIC will formally notify an institution's primary federal regulator when it decides to recommend an adjustment in assessment rates and will consider the primary federal regulator's response to this notification. The FDIC will also notify an institution in advance when the FDIC intends to increase its assessment rate because of the FDIC's consideration of additional risk information. This notice will include the reasons for the adjustment and when the adjustment will take effect, and provide the institution an opportunity to respond. An institution will, of course, have the right to request a review of any assessment rate that is adjusted in this manner.
After considering an institution's response to the notice, the FDIC will determine whether an adjustment to an institution's assessment rate is warranted, taking into account any revisions to weighted average CAMELS component ratings, long-term debt issuer ratings, and financial ratios, as well as any actions taken by the institution to respond to the FDIC's concerns described in the notice. The FDIC will evaluate the need for the adjustment each subsequent assessment period, until it determines that an adjustment is no longer warranted. The amount of adjustment will in no event be larger than that contained in the initial notice without further notice to, and consideration of responses from, both the primary federal regulator and the institution.
Any downward adjustment in assessment rates will remain in effect for subsequent assessment periods until the FDIC determines that an adjustment is no longer warranted. However, the FDIC will provide advance notice to an institution and its primary federal regulator and give them an opportunity to respond before removing a downward adjustment. Of course, the FDIC may raise an institution's assessment rate without notice if the institution's supervisory or agency ratings or financial ratios (for an institution without long-term debt issuer ratings) deteriorate.
The FDIC acknowledges the need to clarify its processes for making any adjustments to ensure fair treatment and accountability and plans to propose and seek comment on additional guidelines for evaluating whether assessment rate adjustments are warranted and the size of the adjustments. The FDIC will not adjust assessment rates until the guidelines are approved by the FDIC's Board.
Under the final rule, a large institution's risk category will change as of the date the institution is notified of its rating change by its primary federal regulator (or state authority). If the supervisory rating change results in a large institution moving from Risk Category I to Risk Category II, III, or IV, the institution's assessment rate for the portion of the quarter it was in Risk Category I will be based on its assessment rate for the prior quarter. The assessment rate for that portion of the quarter it was in Risk Category II, III, or IV will be based on the assessment rate for these risk categories.
When a large institution is moved from Risk Category II, III, or IV to Risk Category I during a quarter because of a supervisory rating change, the FDIC will determine the associated assessment rate (subject to adjustment as described above) for that portion of the quarter that the institution was in Risk Category I. The assessment rate for that portion of the quarter it was in Risk Category II, III, or IV will be based on the assessment rate for these risk categories.
When an institution remains in Risk Category I during a quarter, but a CAMELS component or long-term debt issuer rating change during the quarter would affect its assessment rate, the FDIC will determine an assessment rate for each portion of the quarter before and after the change. A long-term debt issuer rating change will be effective as of the date the change is announced by the rating agency. Changes in supervisory ratings will be effective as of the date the institution is notified by its primary federal regulator (or state authority).
The timing of changes in assessment rates due to changes in supervisory or long-term debt issuer ratings described above differs only slightly from the proposal in that it uses, in all cases, the date of transmittal of a supervisory rating change by the primary federal regulator to the institution. The reasons
One trade group expressed concern about the possibility of retroactive changes in assessment rates and the prospects for accounting restatements. This comment pointed out that CAMELS rating changes often occur one and even two quarters after the start date of an examination. The use of the transmittal date of examination findings rather than start date of an examination to effect changes in assessment rates should alleviate this concern about retroactive accounting adjustments.
Another comment expressed a similar concern that institutions would not be able to plan for the financial impact of assessment rate changes if they were applied retroactively, either because of a change in supervisory or long-term debt issuer ratings, or because of a decision by the FDIC to adjust an institution's assessment rate. The FDIC believes that the final rule sufficiently addresses this concern since: (1) the transmittal of revised CAMELS ratings or the announcement of revised long-term debt issuer ratings will provide sufficient notice to the institution that a change in assessment rates will occur; and (2) assessment rate changes caused by a decision by the FDIC to adjust an institution's assessment rate will not become effective before the institution is duly notified and has had an opportunity to respond to the proposed change.
• Adjustments would override the evaluations of the primary federal regulator;
• The FDIC should not be allowed to unilaterally override CAMELS ratings assigned by the primary federal regulator since they are viewed to have better information than the FDIC about the risks posed by these institutions;
• The need for more timely information is not necessary since many large institutions are supervised on a continuous basis;
• Supervisory ratings incorporate all relevant risk information and therefore consideration of additional information is not necessary;
• The application of the FDIC's discretion over pricing decisions has not been sufficiently described; and
• Many of the additional risk indicators identified in Appendix C of the proposal are vaguely defined and not necessarily aligned with risk.
Several comments specifically criticized the proposal's use of additional stress consideration factors. For example, some comments stated that these factors were not well developed and expressed concern about the possibly conflicting role such information would play in evaluations by the primary federal regulators and the FDIC.
One trade group supported the FDIC's consideration of additional risk information to ensure that assessment rates were consistently assigned, that risk information was incorporated into the assessment rate in a timely manner, and that assessment rates reflected consideration of all relevant risk information.
For the reasons described earlier, the FDIC has decided to retain its ability to adjust assessment rates based upon consideration of additional risk factors.
A number of comments supported providing institutions with prior notification relating to any possible increase in assessment rates. However, many of these comments were made in the context of the proposed risk “bucket” or subcategory pricing approach. Given the adoption of an incremental pricing approach for institutions in the incremental pricing range, the FDIC believes advance notice is only needed in two cases based on consideration of additional risk information: (1) Where the FDIC intends to make an upward adjustment to a large institution's assessment rate above that derived from supervisory and long-term debt issuer ratings (or from supervisory ratings and financial ratios); and (2) where it intends to remove a previously made downward adjustment to an institution's assessment rate.
Under a companion final rule making operational changes to the FDIC's assessment regulations, a Risk Category I institution will be defined as large if it has $10 billion or more in assets and small if it has assets of less than $10 billion. This determination will initially be made as of December 31, 2006. Thereafter, a small Risk Category I institution will be reclassified as a large institution when it reports assets of $10 billion or more for four consecutive quarters. Similarly, a large Risk Category I institution will be reclassified as a small institution when it reports assets under $10 billion for four consecutive quarters. Any reclassification will remain effective for subsequent quarters, unless an institution reports assets that would change its size category (from large to small or vice versa) for four consecutive quarters.
The definition of large and small institutions for Risk Category I institutions in the final rule is the same as that contained in the proposal. One trade group commented that the $10 billion cutoff point for categorizing institutions as either large or small was appropriate given the tendency of larger institutions to have more available risk information. This same comment indicated that large institutions should be evaluated using more information than current financial ratios and CAMELS component ratings given the types of complex activities engaged in by the largest institutions, such as securitization, derivatives, and trading.
As described in the NPR, the final rule makes an exception to the $10 billion size threshold for Risk Category I institutions with between $5 billion and $10 billion in assets that request treatment as a large institution. The FDIC will grant such requests if it determines that it has sufficient information to evaluate the institution's risk profile adequately under the risk differentiation methods used for large institutions. The absence of long-term debt issuer ratings alone will not preclude the FDIC from granting a request. The assessment rate for an institution without a long-term debt issuer rating would still be derived from supervisory ratings and financial ratios, but would be subject to adjustment. Once a request has been granted, an institution could again request treatment under a different approach after three years, subject to FDIC approval.
As discussed in the NPR, small institutions that are affiliated with large institutions will be evaluated separately under the final rule. Specifically, assessment rates for small institutions will be determined using supervisory ratings and financial ratios, whether or
An institution that disagrees with the FDIC's determination that it is small or large may request review of the determination pursuant to 12 CFR 327.4(c).
One comment supported the proposal to allow institutions with between $5 billion and $10 billion in assets to request treatment as a large institution. This comment noted that the proposal will allow flexibility for small institutions that are transitioning to large institutions and want to be evaluated using long-term debt issuer ratings.
Some comments supported: (1) Assigning the same assessment rate to all affiliated institutions, possibly by strengthening cross guarantees; (2) assigning the assessment rate of the largest institution in a holding company to all institutions in the holding company; or (3) applying the same method of calculating assessment rates to all institutions in a holding company regardless of size to avoid different assessment rate approaches for institutions within the same holding company. The FDIC acknowledges that often each institution in a holding company derives managerial, operational, and financial support from the parent holding company. However, financial condition and operating performance can and does vary among banks within a holding company. Consequently, the FDIC believes it is necessary to evaluate risk at each insured institution individually. Any modifications to current cross guarantee provisions are outside the scope of this proposal.
The final rule for insured foreign branches (insured branches) is substantially similar to the proposed rule. The main difference is the use of incremental pricing for insured branches whose assigned assessment rates fall between the minimum and maximum assessment rates.
Insured branches that are assigned to Risk Category II, III or IV, based on their asset pledge and asset maintenance ratios and supervisory ratings, will be treated in the same manner as other insured institutions in these risk categories. For insured branches that are assigned to Risk Category I, assessment rates will be determined from the supervisory ROCA component ratings assigned to the insured branch.
As with the large institution risk differentiation approach, the FDIC may adjust these assessment rates up or down by 0.50 basis points after consideration of the additional risk factors described in Appendix C. The same process for making adjustments described to large institution rates, including advance notification and consultation with the primary federal regulator, will apply to insured foreign branches.
The FDIC received no comments on the proposed treatment of insured foreign branches.
Under the final rule, beginning in 2010, new institutions in Risk Category I generally will be assessed at the same rate, which will be the highest rate charged any other institution in this Risk Category. For this purpose, the final rule on operational changes defines a new institution as one that is not an established institution.
Where an established institution merges or consolidates with a new institution, the surviving or resulting institution will be new unless:
1. The assets of the established institution, as reported in its report of condition for the quarter ending immediately before the merger, exceeded the assets of the new institution, as reported in its report of condition for the quarter ending immediately before the merger; and
2. Substantially all of the management of the established institution continued as management of the resulting or surviving institution.
However, where a new institution merges into an established institution and the merger agreement was entered into on or before July 11, 2006, the final rule contains a grandfather clause under which the surviving institution will be deemed to be an established institution.
This exception to the definition of a new institution represents a change from the proposed rule. The NPR proposed that, when an established institution merged into or consolidated with a new institution, the surviving or resulting institution would be new, but would be allowed to request that the FDIC determine that it was established. The NPR also proposed that, when a new institution merged into an established institution or when an established institution acquired a
The final rule differs from the NPR in this regard. By specifying the particular circumstances that will allow an institution to be considered established, the final rule will give institutions greater certainty regarding the effects of mergers and consolidations and should reduce the necessity of filing requests for review. The final rule should not result in denying an exception to any institution that would have been considered established under the proposed rule, while still achieving the purpose of the proposed rule.
The second exception was raised in comment letters in response to the FDIC's specific request for comment on its proposed definition of a new institution.
1. A company that is a “bank holding company” under the Bank Holding Company Act of 1956 or a “savings and loan holding company” under the Home Owners” Loan Act, and:
a. At least one “eligible” depository institution (as defined in 12 CFR 303.2(r)) that is owned by the holding company has been chartered as a bank or thrift for at least five years as of the date that the otherwise new institution was established; and
b. The holding company has a composite rating of at least “2” for bank holding companies or an above average or “A” rating for thrift holding companies and at least 75 percent of its depository institution assets are assets of “eligible” depository institutions, as defined in 12 CFR 303.2(r);
(1) Received an FDIC-assigned composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (UFIRS) as a result of its most recent federal or state examination;
(2) Received a satisfactory or better Community Reinvestment Act (CRA) rating from its primary federal regulator at its most recent examination, if the depository institution is subject to examination under part 345 of this chapter;
(3) Received a compliance rating of 1 or 2 from its primary federal regulator at its most recent examination;
(4) Is well-capitalized as defined in the appropriate capital regulation and guidance of the institution's primary federal regulator; and
(5) Is not subject to a cease and desist order, consent order, prompt corrective action directive, written agreement, memorandum of understanding, or other administrative agreement with its primary federal regulator or chartering authority.
2. An “eligible” insured depository institution, as defined in 12 CFR 303.2(r), that has been chartered as a bank or thrift for at least five years as of the date that the otherwise new institution was established.
Several comments (including comments from trade groups) argued that, at a minimum, new institutions in a bank holding company should be charged at the same rate as other institutions in the holding company. Arguments for this position included:
• Assessing new institutions at a higher rate will affect a holding company's decision to charter a new institution or to branch; in the context of mergers and acquisitions, the deal structure could be influenced to retain the seasoned banks post-consolidation solely for the purpose of avoiding high assessments, even though a different structure would otherwise be more appropriate.
• The articles referenced by the FDIC in support of assessing all “new” institutions at a higher rate did not take into account holding company support or enhancements in supervision.
• Holding companies often have considerable banking experience, so that the institution is not really new. Institutions in a holding company typically share management.
The FDIC is persuaded that a new institution within an established holding company structure does not necessarily pose a higher risk than established institutions, in part because of the banking experience within the holding company, and has created an exception from the new bank definition for these institutions. However, the assessment rate for a new institution subsidiary of an insured depository institution or holding company that qualifies for the exception will not necessarily be the same rate charged an affiliate. As with any established institution in Risk Category I, its assessment rate will be determined based upon the risk it poses.
The third exception was also raised in comment letters in response to the FDIC's specific request for comment on its proposed definition of a new bank.
These institutions have a seasoned loan portfolio, experienced leaders, and an established business history. They have been carefully screened by their new banking regulator.
The final rule takes into account the period that a credit union has been federally insured as a credit union in determining whether it is new or established.
The final rule also differs from the NPR in its definition of a new institution. Under the NPR, a new institution would have been defined as an institution that had not been chartered as a bank or thrift for at least seven years as of the last day of any quarter for which it was being assessed (subject to the exceptions above).
Several comments (including comments from trade groups) suggested that charging the maximum Risk Category I assessment rate to new institutions for 7 years was too long and
• Higher failure rates for new institutions occurred in earlier periods, but not in recent periods, partly because supervision has been enhanced.
• The banking industry uses three years as an estimate of banking maturity; banking supervisors use the same period when reviewing new bank applications.
The FDIC's decision to assess new institutions separately from established institutions is based on the difficulty of assessing new institutions' risk with the same risk measures used to assess the risk of established institutions. New institutions undergo rapid changes in the scale and scope of operations for a period of time after being chartered and these changes can make new institutions' financial condition and performance measures volatile. Moreover, new institutions' loan portfolios are unseasoned, and their management is often untested, making it difficult to assess loan quality through standard financial performance measures.
These differences between new and established institutions' financial characteristics could lead to mis-measurement of risk when new institutions are evaluated by the same financial risk measurement model used to evaluate established institutions' risk. More specifically, the FDIC finds that new institution risk is, in general, underestimated by the manner in which supervisory ratings are combined with financial ratios; however, the degree of underestimation of risk declines with bank age.
Under the final rule, all new institutions in Risk Category I will be assessed at the same rate and this rate will be the highest rate charged any other institution in Risk Category I. The FDIC finds that the failure rates of institutions that have been in existence for less than 5 years are greater than those of established institutions that would have historically paid the highest assessment rate in Risk Category I (the riskiest Risk Category I established institutions). Historical failure rates among institutions that have been in existence between 5 and 7 years, however, are somewhat lower than those of the riskiest Risk Category I established institutions. For this reason, for purposes of setting assessment rates, the final rule defines new institutions as those institutions that have been in existence less than 5 years.
Some comments expressed concern that a combination of factors could result in inequitable treatment for new institutions. These factors included the need to initially charge more than the base rates, the lack of credits for most new institutions, and charging the maximum rate to these institutions. The FDIC recognizes that during the transition from the existing system to the new system, this combination of factors could significantly increase assessment rates for new institutions. Consequently, the final rule delays the effective date of the provisions subjecting new Risk Category I institutions to the maximum Risk Category I rate until January 1, 2010.
Before 2010, a Risk Category I institution that has no CAMELS component ratings shall be assessed at one basis point above the minimum rate applicable to Risk Category I institutions until it receives CAMELS component ratings. If an institution has less than $10 billion in assets or has at least $10 billion in assets and no long-term debt issuer rating, once it receives CAMELS component ratings, its assessment rate will be determined under the supervisory ratings and financial ratios method. The assessment rate will be determined by annualizing, where appropriate, financial ratios obtained from the reports of condition that have been filed, until the earlier of the following two events occurs: (1) The institution files four reports of condition; or (2) if it has at least $10 billion in assets, it receives a long-term debt issuer rating.
• New institutions are scrutinized by examiners more intently and more frequently.
• There is an inherent bias against new institutions in CAMELS ratings.
• Capital is usually higher in new institutions.
• Many new institutions are started by experienced bankers or are spin-offs of established institutions.
• A separate rule for new institutions will undermine public confidence in these institutions.
• A single rate for new institutions does not adequately differentiate risk.
• A new institution has no incentive to reduce its risk because it will not reduce its assessment rate.
The final rule changes the new institution period from seven to five years, but assesses new institutions separately for the reasons described. However, the final rule does delay the effective date of the provisions governing new institutions for three years.
An institution that disagrees with the FDIC's determination that it is new or established may request review of the determination pursuant to 12 CFR 327.4(c).
The FDIC has simplified the final rule in response to comments. The final rule allows the FDIC to review the surviving or resulting institution in a merger or consolidation involving both a new and an established institution to determine whether the surviving or resulting institution is new or established based on the criteria previously discussed without, in general, requiring that the institution file a request for review.
Beginning on January 1, 2007, assessment rates will be as shown in the following table:
All institutions in any one risk category, other than Risk Category I, will be charged the same assessment rate. For all institutions in Risk Category I, annual assessment rates will range between 5 and 7 basis points.
The final rule also adopts the base schedule of rates proposed in the NPR:
The assessment rates that take effect January 1, 2007, will be uniformly 3 basis points higher than the base rate schedule. Under the present assessment system, the Board has adopted a base assessment schedule where it can uniformly adjust rates up to a maximum of five basis points higher or lower than the base rate schedule without the necessity of further notice-and-comment rulemaking, provided that any single adjustment cannot move rates more than five basis points.
Table 3 shows projected reserve ratios assuming different average annual growth rates for insured deposits if the actual rate schedule (as opposed to base rate schedule) adopted in this rule remains in effect through the year in which the reserve ratio first reaches or exceeds the designated reserve ratio (DRR) of 1.25 percent.
In summary, the Board bases its decision to adopt this rate schedule on the following:
• The Reform Act gives the Board flexibility to achieve the DRR within a time frame that it believes appropriate, rather than treat the DRR as a “hard” annual target. In the Board's view, reaching the DRR within the third year of the new assessment system would be a reasonable goal, which this rate schedule would facilitate, given the FDIC's assumptions regarding insured deposit growth.
• An objective of the Reform Act is to allow the fund to increase under favorable conditions so that it can decline under adverse conditions without sharp increases in assessments. The outlook for economic conditions affecting banks remains generally favorable, industry conditions remain strong, and projected reserve ratios under the rate schedule assume very low insurance losses.
• During the next few years, the rate schedule is likely to prevent the reserve ratio from declining below the 1.15 percent statutory lower bound for the DRR and unlikely to raise the reserve ratio above the 1.35 percent threshold that could trigger the payment of dividends.
• It is reasonable to plan for future annual insured deposit growth in the 4-to-6 percent range, down from higher rates observed last year and estimated for this year. Reaching the DRR within three years under this rate schedule assumes that insured deposit growth will be in this range.
• Assessment credits authorized under the Reform Act will limit assessment revenue in the near term.
• Implementation of the rate schedule is unlikely to have a materially adverse effect on the earnings and capital of insured institutions.
As required by statute, the FDIC's Board of Directors considered the following factors in setting rates:
(i) The estimated operating expenses of the Deposit Insurance Fund.
(ii) The estimated case resolution expenses and income of the Deposit Insurance Fund.
(iii) The projected effects of the payment of assessments on the capital and earnings of insured depository institutions.
(iv) The risk factors and other factors taken into account pursuant to 12 U.S.C section 1817(b)(1) under the risk-based assessment system, including the requirement under 12 U.S.C section 1817(b)(1)(A) to maintain a risk-based system.
(v) Other factors that the Board of Directors determined to be appropriate.
(i) the probability that the Deposit Insurance Fund will incur a loss with respect to the institution, taking into consideration the risks attributable to—
(I) different categories and concentrations of assets;
(II) different categories and concentrations of liabilities, both insured and uninsured, contingent and noncontingent; and
(III) any other factors the Corporation determines are relevant to assessing such probability;
(ii) the likely amount of any such loss; and
(iii) the revenue needs of the Deposit Insurance Fund. 12 U.S.C. 1817(b)(1)(C).
These factors, including those determined by the Board to be appropriate, are discussed in more detail below.
Table 4 shows projected changes to the fund balance over the next two years under the rate schedule adopted in this rule. Future changes to the fund balance depend, in turn, on projections and assumptions for insurance losses (case resolution expenses), operating expenses, assessment revenue, and investment contributions. These components of fund balance changes are discussed below.
a.
Banks in general appear to be well positioned to withstand considerable financial stress from unlikely economic shocks.
In Table 3, the reserve ratio projections based on the rate schedule adopted also assume that annual operating expenses remain flat over the next few years, at approximately $1 billion.
b.
The use of expert forecasts for interest rates next year, as detailed in the Blue Chip Financial Forecasts, would yield similar projections for 2007 investment contributions. Since May of this year, short-term Treasury yields have increased slightly as the Federal Reserve raised the target for the federal funds rate to 5.25 percent. Long-term Treasury yields declined by over 35 basis points over the same period, resulting in a modestly inverted yield curve since late July. Low longer-term interest rates reflect historically low and stable long-term inflationary expectations, heightened global demand for low-risk, long-term assets and, potentially, expectations of slower economic growth ahead. The economy is forecast to grow below its long-run average level for the remainder of 2006, and the futures market places little chance of any further federal funds rate increases. Many economic forecasters expect long-term interest rates and the yield curve to remain steady through 2007.
c.
Projected gross assessment revenue is derived by assigning each insured institution to a Risk Category, and assigning each institution in Risk Category I to the minimum rate, maximum rate, or rate in between, using the most recently available supervisory and debt issuer ratings, and June 30, 2006, financial data. Table 6 shows the distribution of institutions and assessment bases among the Risk Categories using the most recently available data.
Assessment revenue projections reflect the use of assessment credits authorized under the Reform Act and distributed in accordance with the recent final rule adopted for assessment credits.
Chart 2 shows levels of insured deposits and corresponding four-quarter growth rates since 1990, including forecasts through 2007. Over the 1990-2005 period, annual growth rates in insured deposits ranged between −2.8 percent and 7.4 percent. After three consecutive annual declines in insured
Based on the results of a statistical forecast model, insured deposits are predicted to increase by 6.6 percent in 2006 and 5.0 percent in 2007.
Beyond 2007, while not relying on a statistical forecast model, the FDIC believes that it is reasonable to plan for average annual insured deposit growth in the 4 percent-to-6 percent range. Table 3 shows that, with an average annual growth rate between 4 percent and 6 percent beginning next year, implementation of a rate schedule 3 basis points above the base rate schedule has a reasonable chance of raising the reserve ratio to the 1.25 percent DRR in the third year (2009) of the new assessment system. That table also indicates that average annual growth of 7 percent or higher would make it unlikely to achieve a reserve ratio of 1.25 percent within three years. Yet, while insured deposits rose by more than 7 percent in 2005, the historical data suggest that it is very unlikely that insured deposits will increase at an average annual rate as high as 7 percent for three consecutive years.
Assuming insured deposit growth of 5 percent per year beginning in 2007, projections for year-end 2006 and the first three years under the new rate schedule are as follows:
The table indicates that the reserve ratio is expected to decline slightly next year as the use of assessment credits prevents the fund balance from rising in pace with insured deposits. However, with two-thirds of credits drawn down by the end of 2007, assessment revenue should accelerate in 2008 and help the fund meet the DRR during 2009.
Appendix 3 contains an analysis of the projected effects of the payment of assessments under the actual (as opposed to base) rate schedule adopted in this rule on the capital and earnings of insured depository institutions. In sum, the actual rate schedule is not expected to impair the capital or earnings of insured institutions materially.
As permitted by law, the FDIC Board considered other factors in establishing the rate schedule adopted in this rule:
a.
As of June 30, 2006, the reserve ratio stood at 1.23 percent, and is expected to decline to 1.21 percent by year-end. Returning the fund to the DRR within a 12-month period, as had been required when the DRR was treated as a “hard” target, would require charging a minimum rate of 10.5 basis points (assuming insured deposit growth of 5 percent next year, as well as low losses and flat operating expenses). The FDIC does not believe that this steep an increase is advisable or consistent with the Reform Act's objective of providing for greater premium stability. Therefore,
b.
Nonetheless, it is difficult to predict how long such favorable conditions will last. Areas of concern already visible include the compression in net interest margins, weakening housing markets, and the uncertainty over energy prices, among other risks. In the FDIC's view, it would be prudent not to stretch out too long the time to raise the fund to the 1.25 percent DRR and risk encountering a worsening of industry conditions before the fund is at the desired level.
c.
On the other hand, if the FDIC Board sets rates equal to the base rate schedule, Table 8 below shows that it would be highly unlikely for the fund to reach the 1.25 percent DRR within five years. Furthermore, there would be a significantly greater chance that insured deposit growth would push the fund below the 1.15 percent lower bound.
The NPR itself notes that, at least with respect to Risk Category IV, the base rate is substantially lower than the historical analysis would suggest is needed to recover costs from failures. The lower rate is intended to decrease the chance of assessments being so large that they cause these institutions to fail.
When losses due to fraud are taken into account by prorating among all risk categories, the base rates for Categories II and III and for the riskier institutions in Risk Category I are slightly lower than the historical analysis would suggest and the base rates for the less risky institutions in Risk Category I are slightly higher than the historical analysis would suggest.
• The FDIC is not likely to set actual rates below the base rates.
• Institutions in Risk Category I do not present much, if any, risk.
• The FDIC's data does not support charging the least risky institutions 2 basis points.
• Over certain periods in the past, average rates for Risk Category I required to maintain a given reserve ratio have been lower than 2 basis points.
• 2 basis points would unfairly penalize those institutions that could qualify for an assessment of less than 2 basis points under the proposed small institution method.
• The base rates do not take into account loss given default.
As discussed earlier, the historical analysis of costs attributable to each risk category can only be a guide to rates. The base rates take into account the FDIC's estimate of its long-term revenue needs. Moreover, the base rates do not in any sense represent a floor below which rates cannot be set. If these rates prove to generate too much revenue over time, the FDIC's Board can reduce actual rates.
That some institutions appear to qualify for an assessment of less than 2 basis points using the method that combines supervisory ratings with financial ratios is largely an artifact of the statistical method used to estimate an institution's probability of downgrade. Had the FDIC employed the more commonly used logit model rather than an ordinary least squares (OLS) model, this artifact would have nearly disappeared.
The issue of loss given default is discussed in a subsequent section (XI(C)).
• The FDIC is no longer required to raise rates when the reserve ratio falls below the designated reserve ratio; therefore, the FDIC no longer needs to be able to raise rates quickly and drastically.
• If the FDIC must raise rates quickly, it can do so on an expedited basis or on an emergency basis, subject to subsequent notice and comment.
• Notice-and-comment rulemaking will allow banks time to plan for higher rates.
Arguments in support of allowing the FDIC to increase rates above the base rate schedule a maximum of 2 basis points without further notice-and-comment rulemaking included:
• Given historical longer-term insured deposit growth rates, an increase above the base rates of more than 2 basis points is unnecessary.
• An increase above the base rates of more than 2 basis points would affect institutions' earnings and their ability to lend in ways that cannot be justified given the present size of the DIF.
• Limiting the increase in this way should make assessment rates more stable from quarter to quarter.
Congress has granted the FDIC broad authority to establish a risk-based assessment system. 12 U.S.C. 1817(b)(1). Maintaining the ability to adjust rates within limits without notice and comment rulemaking is consistent with our well established practice and will allow the FDIC to act expeditiously to adjust rates in the face of constantly changing conditions, subject to the statutory factors we are required to consider. The NPR gave institutions notice that rates may be significantly higher than the base rates temporarily, partly because of the ongoing trend of high insured deposit growth and partly because the use of one-time credits will limit assessment revenue. For this reason, the final rule continues to allow the FDIC to adjust rates within limits without further notice-and-comment rulemaking. However, in light of the comments, the FDIC has decided to limit its ability to adjust rates without further notice-and-comment rulemaking to three basis points, as discussed above.
One comment opposed making uniform increases from the base rate schedule in determining actual rates and argued that any increase above the base rate schedule that was uniform would not reflect actual risk:
Any basis point “surcharge” should be risk-weighted, so that an institution with a lower risk profile would be charged a lower “surcharge” (
The FDIC believes that this comment contains a valid point. In the event that revenue needs increase or decrease greatly and variations in risk among institutions suggest non-uniform rate changes, the FDIC will consider whether to increase or decrease the range of assessment rates between risk categories and within Risk Category I. Any such change would only be made pursuant to further rulemaking.
Currently, fraud cannot be predicted. When it does appear, it can cause the failure of very large institutions. Keystone Bank, which was a relatively large bank, failed as the result of massive fraud. The Bank of Credit and Commerce International and Barings Brothers, Inc., were both very large banks that failed as a result of fraud. Outside of the banking industry, many failures have resulted as the result of fraud.
• The Reform Act eliminates the requirement that the reserve ratio reach any particular level within any particular time period.
• There should be a period of transition to allow banks to gradually use up their one-time assessment credits and adjust to paying premiums again under the new risk-based assessment system.
• High rates would be a burden on all institutions and would particularly and unnecessarily burden institutions without one-time credits, harming their competitive position and discouraging the formation of new banks.
• Insured deposit growth rates are not likely to be high over the long term; in
• The banking industry is extremely healthy because of improved risk management policies and procedures in the banking industry, and legislation that has equipped the federal bank regulatory agencies with additional supervisory and enforcement tools and the increased sophistication of the supervisory process.
• The risk of failure for Category I institutions is extremely low, and the risk of loss to the FDIC is even lower.
• Bank customers, particularly corporate customers, actually bear the burden of assessments.
The FDIC has decided on actual rates based upon the analysis described earlier. In sum, the FDIC is using the flexibility afforded under the Reform Act to raise the reserve ratio more gradually than if the 1.25 percent DRR remained a “hard” annual target. Nonetheless, consistent with the legislation's objectives, the FDIC believes that rates should currently be set to build up the fund while economic conditions are generally favorable and the industry remains strong. Absent persistent high insured deposit growth, the FDIC expects that future assessment rates should be able to decline toward the base rate schedule once the reserve ratio reaches the DRR. Rates could be set below the base rate schedule if insured deposit growth slows considerably. Finally, the rates adopted in this rule (including rates charged new institutions when the provisions regarding new institutions become effective) remain well below rates that were charged during periods of both economic and industry stress and are not expected to have material adverse effects on established or new institutions.
Some trade groups proposed imposing an additional premium for institutions (or new institutions) that have rapid deposit growth to offset dilution of the reserve ratio. Other trade groups proposed such a premium for large institutions that have rapid deposit growth.
The FDIC has decided against imposing a specific growth premium, primarily for two reasons. First, Congress has already considered and resolved the issue of rapid growth during the past 10 years, when most institutions have paid nothing for deposit insurance, by awarding a one-time credit to those institutions that helped build the deposit insurance funds before 1996. Second, assessments under the final rule take future growth into account. An institution's assessment equals the product of its assessment rate times its assessment base (which, under a final rule adopted simultaneously with this final rule, will be identical or nearly identical with its domestic deposits). Thus, any growth in domestic deposits will proportionally increase an institution's assessment.
In addition, in the FDIC's view, it is not practicable to define or impose such a premium. One difficult issue with defining an appropriate level of growth as a trigger is that a relatively small dollar increase in deposits at a small institution could represent a significant percentage of growth while a very large increase in deposits at a large institution might result in a small increase in the institution's percentage of growth. Additionally, rapid growth alone may or may not warrant an additional premium. Finally, it would be very difficult—and probably impossible—to specify a rule for triggering a specific growth premium that could not be circumvented by some institutions.
Several comments (including comments from trade groups) asserted that the FDIC cannot accurately differentiate risk amongst Category I institutions (or at least accurately enough for incremental pricing in small banks and/or six sub-categories for large banks) and, therefore, all institutions in Risk Category I should be charged the same assessment rate. These comments argued that subcategories and incremental pricing introduce unnecessary complexities. These comments claim that this additional complexity creates confusion and undermines confidence in the assessment system. One comment added that looking beyond three years when analyzing Category I institutions' risk is unnecessary, since failing institutions would still be placed in a higher risk category well before failure.
The FDIC has found significant differences in risk among institutions in Risk Category I. To illustrate these differences in risk, consider differences in failure rates between CAMELS 1-rated and CAMELS 2-rated institutions that make up Risk Category I. The historical failure rate for CAMELS 2-rated institutions is 2.5 times that of CAMELS 1-rated institutions for both three-and five-year horizons. Moreover, for a two-year horizon, CAMELS 2-rated institutions fail three times more often than do CAMELS 1-rated institutions.
In the FDIC's view, while the analysis that produced the risk differentiation and pricing methodology underlying the final rule is complex, its application is not. Moreover, in general, the simpler a system is, the less able it is to capture differences in risk. The statistical analysis used may be complex, but it produces meaningful distinctions in risk.
One commenter also stated that the proposal makes assessment rates most risk sensitive for those banks that are least likely to fail. The FDIC recognizes that institutions in Risk Category I are less likely to fail than institutions in Risk Categories II, III and IV. These differences are reflected in assessment rates. Base assessment rates for Category IV institutions are 10 to 20 times higher than rates for the riskiest Category I institutions.
One trade group argued that the FDIC's model is not well calibrated to economic cycles because “the percentage of institutions that would qualify for the floor rate is greater than the 45 percent for every year since 1992, except one.” The inference apparently intended to be drawn from this argument is that, because the industry is healthier now than it has been for almost all years since 1992, the percentage of institutions that would qualify for the floor rate should be greater now than in the past. However, this argument overlooks two important points. First, the profitability of the banking industry in this decade compared to the 1990s has resulted, in part, from increased risk. From the mid-1990s to the present, earnings did not grow as fast as risk-weighted assets. As shown in Chart 3 below, the median ratio of earnings before taxes to risk-weighted assets has declined steadily since the early 1990s. The risk differentiation methods adopted in the final rule are designed to capture this increased risk. Second, not all institutions are prospering as much as they were in the past. In 2005, the pre-tax return on assets for institutions with under $100 million in assets was 1.29 percent, which was less than in any year between 1992 and 1999.
Several comments (including comments from trade groups) stated that the capital measure should include subordinated debt and stated or implied that subordinated debt should reduce assessment rates. For example, one comment recommended that institutions with subordinated liabilities and equity in excess of 25 percent of assets be placed in the minimum assessment rate subcategory. Several comments (including comments from trade groups) argued that the statutes governing the risk-based pricing system require that the FDIC take loss given default into account when determining assessments and that the proposed system fails to do so. This failure, they argue, makes the system actuarially unfair.
The FDIC recognizes that the Federal Deposit Insurance Act requires that the FDIC take the likely amount of any loss from failure into account in the assessment system. The final rule takes loss given failure (and expected loss pricing in general) into account in several ways. For a large institution, the FDIC will consider loss given failure (through the loss severity indicators enumerated in Appendix C) in determining whether to make an adjustment to an institution's assessment rate. The final rule also takes loss given failure into account in the historical analysis that informed the base rate schedule and in each institution's assessment base. However, the FDIC's ability to take loss given failure into account in determining the assessment rate for some institutions, particularly small institutions, is somewhat limited for several reasons.
Thus, as the NPR noted, the FDIC is using an alternative to expected loss pricing to differentiate risk and set assessment rates. The FDIC hopes to refine its treatment of loss given failure (and expected loss pricing) in the future. As part of any refinement, the FDIC plans to consider whether, for example, to factor the composition of liabilities into loss given failure.
One comment also argued that the proposed risk differentiation and pricing system is unfair because institutions are assessed on deposits that are not insured, which “results in institutions with larger-than-average uninsured deposits (as a fraction of total deposits) subsidizing other institutions.” This argument is inconsistent with studies that show that, as an institution approaches failure, uninsured deposits tend to be replaced by insured deposits and secured liabilities, which increases the FDIC's
Some comments expressed concern over potential disclosure of an institution's assessment rate or amount, and changes to that rate or amount, through which third parties could determine an institution's confidential CAMELS component ratings. Concern also was expressed that disclosure of an institution's assessment rate or amount could create funding problems for an institution. Finally, the question was raised whether an institution can disclose its assessment rate because an element of that rate is examination ratings.
Assessment rates remain confidential and cannot be disclosed directly, except to the extent required by law. However, the proposed assessment system, similar to the current system, is based in part on publicly available information. Even under the current system, it is possible to estimate an institution's composite CAMELS rating using publicly available information. Under the proposed system it may be possible to estimate component or composite ratings or assessment rates. The additional information that could be determined under the new assessment system should not materially affect an institution's funding costs compared to the current system.
Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The FDIC invited comments on how to make this proposal easier to understand, but received none.
The Regulatory Flexibility Act (RFA) requires that each federal agency either certify that a proposed rule would not, if adopted in final form, have a significant economic impact on a substantial number of small entities or prepare an initial regulatory flexibility analysis of the proposal and publish the analysis for comment. See 5 U.S.C. 603, 604, 605. Certain types of rules, such as rules of particular applicability relating to rates or corporate or financial structures, or practices relating to such rates or structures, are expressly excluded from the definition of “rule” for purposes of the RFA. 5 U.S.C. 601. The final rule governs assessments and sets the rates imposed on insured depository institutions for deposit insurance. Consequently, no regulatory flexibility analysis is required. Nonetheless, the FDIC voluntarily undertook a regulatory flexibility analysis to aid the public in commenting upon the small business impact of its proposed rule. The initial regulatory flexibility analysis was published in the
In its analysis, the FDIC used data as of December 31, 2005, and calculated the total assessments that would be collected under the base rate schedule in the final rule. The economic impact on each small institution for RFA purposes (i.e., institutions with assets of $165 million or less) was then calculated as the difference in annual assessments under the base rate schedule compared to the prior rule as a percentage of the institution's annual revenue and annual profits, assuming the same total assessments collected by the FDIC from the banking industry.
Based on the December 2005 data, under the final base rate schedule, for more than 99 percent of small institutions (as defined for RFA purposes), the change in the assessment system would result in assessment changes (up or down) totaling one percent or less of annual revenue.
The FDIC performed a similar analysis to determine the impact on profits for small (again, as defined for RFA purposes) institutions. Based on December 2005 data, under the final base rate schedule, 85 percent of the small institutions (as defined for RFA purposes) with reported profits would have experienced an increase or decrease in their annual profits of one percent or less.
The FDIC analyzed the effect of the proposal on these institutions that showed no profit or loss by determining the annual assessment change (either an increase or a decrease) that would result. The analysis showed that 56 percent (224) of the 399 small insured institutions in this category would have experienced a change (increase or decrease) in annual assessments of $5,000 or less. Of the remainder, 3 percent (12) would have experienced assessment changes (increases or decreases) of $20,000 or more.
The final rule makes only minor modifications to the way assessment rates are calculated for small institutions (although the final rule does set assessment rates higher than the base rates). Again assuming that the same assessment revenue would be collected under the old system as under the final rule, these modifications have a minimal effect on almost all small institutions. The effect of the final rule on a small institution's annualized profit and revenue as of June 30, 2006 is nearly identical to the effect shown under the proposal.
The final rule does not directly impose any “reporting” or “recordkeeping” requirements within the meaning of the Paperwork Reduction Act. The compliance requirements for the final rule do not exceed existing compliance requirements for the present system of FDIC deposit insurance assessments, which, in any event, are governed by separate regulations. The FDIC is unaware of any duplicative, overlapping or conflicting Federal rules. Accordingly, the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small institutions for purposes of the RFA.
No collections of information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501
The FDIC has determined that the final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Public Law 105-277, 112 Stat. 2681).
The Office of Management and Budget has determined that the final rule is not a “major rule” within the meaning of the relevant sections of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (5 U.S.C. 801
Bank deposit insurance, Banks, banking, Savings associations.
12 U.S.C. 1441, 1813, 1815, 1817-1819, 1821; Sec. 2101-2109, Pub. L. 109-171, 120 Stat. 9-21, and Sec. 3, Pub. L. 109-173, 119 Stat. 3605.
(a)
(1)
(2)
(3)
(4)
(b)
(1)
(ii) For purposes of this section, an insured branch of a foreign bank will be deemed to be Well Capitalized if the insured branch:
(A) Maintains the pledge of assets required under § 347.209 of this chapter; and
(B) Maintains the eligible assets prescribed under § 347.210 of this chapter at 108 percent or more of the average book value of the insured branch's third-party liabilities for the quarter ending on the report date specified in paragraph (b) of this section.
(2)
(ii) For purposes of this section, an insured branch of a foreign bank will be deemed to be Adequately Capitalized if the insured branch:
(A) Maintains the pledge of assets required under § 347.209 of this chapter; and
(B) Maintains the eligible assets prescribed under § 347.210 of this chapter at 106 percent or more of the average book value of the insured branch's third-party liabilities for the quarter ending on the report date specified in paragraph (b) of this section; and
(C) Does not meet the definition of a Well Capitalized insured branch of a foreign bank.
(3)
(c)
(1)
(2)
(3)
(d)
(1)
(i)
(ii)
(B)
(2)
(3)
(ii)
(4)
(ii)
(iii)
(B)
(iv)
(v)
(vi)
(5)
(ii)
(6)
(ii)
(7)
(B)
(ii)
(A) The assets of the established institution, as reported in its report of condition for the quarter ending immediately before the merger, exceeded the assets of the new institution, as reported in its report of condition for the quarter ending immediately before the merger; and
(B) Substantially all of the management of the established institution continued as management of the resulting or surviving institution.
(iii)
(iv)
(v)
(A) A company that is a bank holding company under the Bank Holding Company Act of 1956 or a savings and loan holding company under the Home Owners' Loan Act, and:
(
(
(B) An eligible depository institution, as defined in 12 CFR 303.2(r), that has been chartered as a bank or savings association for at least five years as of the date that the otherwise new institution was established.
(vi)
(vii)
(viii)
(ix)
(8)
(a)
(1)
(2)
(3) All institutions in any one risk category, other than Risk Category I, will be charged the same assessment rate.
(b)
(1)
(2)
(3) All institutions in any one risk category, other than Risk Category I, will be charged the same assessment rate.
(c)
(2)
(i) Estimated operating expenses of the Deposit Insurance Fund;
(ii) Case resolution expenditures and income of the Deposit Insurance Fund;
(iii) The projected effects of assessments on the capital and earnings of the institutions paying assessments to the Deposit Insurance Fund;
(iv) The risk factors and other factors taken into account pursuant to 12 U.S.C. 1817(b)(1); and
(v) Any other factors the Board may deem appropriate.
(3)
(4)
The uniform amount and pricing multipliers are derived from:
• A model (the Statistical Model) that estimates the probability that a Risk Category I institution will be downgraded to a composite CAMELS rating of 3 or worse within one year;
• Minimum and maximum downgrade probability cutoff values, based on data from June 2006, that will determine which small institutions will be charged the minimum and maximum assessment rates in Risk Category I;
• The minimum base assessment rate for Risk Category I, equal to two basis points, and
• The maximum base assessment rate for Risk Category I, which is two basis points higher than the minimum rate.
The Statistical Model is defined in equation 1a below.
The explanatory variables (regressors) in the model are five financial ratios and a weighted average of the “C,” “A,” “M,” “E” and “L” component ratings. The five financial ratios included in the model are:
• Tier 1 leverage ratio
• Loans past due 30-89 days/Gross assets
• Nonperforming assets/Gross assets
• Net loan charge-offs/Gross assets
• Net income before taxes/Risk-weighted assets.
The financial ratios and the weighted average of the “C,” “A,” “M,” “E” and “L” component ratings (collectively, the regressors) are defined in Table A.1. The component rating for sensitivity to market risk (the “S” rating) is not available for years prior to 1997. As a result, and as described in Table A.1, the Statistical Model is estimated using a weighted average of five component ratings excluding the “S” component. In addition, delinquency and non-accrual data on government guaranteed loans are not available before 1993 for Call Report filers and before the third quarter of 2005 for TFR filers. As a result, and as also described in Table A.1, the Statistical Model is estimated without deducting delinquent or past-due government guaranteed loans from either the loans past due 30-89 days to gross assets ratio or the nonperforming assets to gross assets ratio.
The financial ratio regressors used to estimate the downgrade probabilities are obtained from quarterly reports of condition (Reports of Condition and Income and Thrift Financial Reports). The weighted average of the “C,” “A,” “M,” “E” and “L” component ratings regressor is based on component ratings obtained from the most recent bank examination conducted within 24 months before the date of the report of condition.
The Statistical Model uses ordinary least squares (OLS) regression to estimate downgrade probabilities. The model is estimated with data from a multi-year period (as explained below) for all institutions in Risk Category I, except for institutions established within five years before the date of the report of condition.
The OLS regression estimates coefficients, β
The risk measures are financial ratios as defined in Table A.1, except that the loans past due 30 to 89 days ratio and the nonperforming asset ratio are adjusted to exclude the maximum amount recoverable from the U.S. Government, its agencies or government-sponsored agencies, under guarantee or insurance provisions. Also, the weighted sum of six CAMELS component ratings is used, with weights of 25 percent each for the “C” and “M” components, 20 percent for the “A” component, and 10 percent each for the “E,” “L,” and “S” components.
The pricing multipliers are also determined by minimum and maximum downgrade probability cutoff values, which will be computed as follows:
• The minimum downgrade probability cutoff value will be the maximum downgrade probability among the forty-five percent of all small insured institutions in Risk Category I (excluding new institutions) with the lowest estimated downgrade probabilities, computed using values of the risk measures as of June 30, 2006.
• The maximum downgrade probability cutoff value will be the minimum downgrade probability among the five percent of all small insured institutions in Risk Category I (excluding new institutions) with the highest estimated downgrade probabilities, computed using values of the risk measures as of June 30, 2006.
The uniform amount and pricing multipliers used to compute the annual base assessment rate in basis points, P
Solving equation 2 for minimum and maximum base assessment rates simultaneously, (2 = α
Substituting equations 1b, 3 and 4 into equation 2 produces an annual base assessment rate for institution i at time T, P
The initial Statistical Model is estimated using year-end financial ratios and the weighted average of the “C,” “A,” “M,” “E” and “L” component ratings over the 1984 to 2004 period and downgrade data from the 1985 to 2005 period. The FDIC may, from time to time, but no more frequently than annually, re-estimate the Statistical Model with updated data and publish a new formula for determining assessment rates—equation 5—based on updated uniform amounts and pricing multipliers. However, the minimum and maximum downgrade probability cutoff values will not change without additional notice-and-comment rulemaking. The period covered by the analysis will be lengthened by one year each year; however, from time to time, the FDIC may drop some earlier years from its analysis.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Federal Deposit Insurance Corporation.
Final rule.
Under the Federal Deposit Insurance Reform Act of 2005, the Federal Deposit Insurance Corporation (FDIC) must by regulation set the Designated Reserve Ratio (DRR) for the Deposit Insurance Fund (DIF) within a range of 1.15 percent to 1.50 percent. In this rulemaking, the FDIC establishes the DRR for the DIF at 1.25 percent.
Munsell St. Clair, Senior Policy Analyst, Division of Insurance and Research, (202) 898-8967; or Christopher Bellotto, Counsel, Legal Division, (202) 898-3801, Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
The Federal Deposit Insurance Reform Act of 2005 (the Reform Act) amends section 7(b)(3) of the Federal Deposit Insurance Act (the FDI Act) to eliminate the current fixed designated reserve ratio (DRR) of 1.25 percent.
In setting the DRR for any year, section 2105(a) of the Reform Act, amending section 7(b)(3) of the FDI Act, directs the Board to consider the following factors:
(1) The risk of losses to the DIF in the current and future years, including historic experience and potential and estimated losses from insured depository institutions.
(2) Economic conditions generally affecting insured depository institutions. (In general, the Board should consider allowing the DRR to increase during more favorable economic conditions and decrease during less favorable conditions.)
(3) That sharp swings in assessment rates for insured depository institutions should be prevented.
(4) Other factors as the Board may deem appropriate, consistent with the requirements of the Reform Act.
(C) FACTORS—In designating a reserve ratio for any year, the Board of Directors shall—
(i) take into account the risk of losses to the Deposit Insurance Fund in such year and future years, including historic experience and potential and estimated losses from insured depository institutions;
(ii) take into account economic conditions generally affecting insured depository institutions so as to allow the designated reserve ratio to increase during more favorable economic conditions and to decrease during less favorable
(iii) seek to prevent sharp swings in the assessment rates for insured depository institutions; and
(iv) take into account such other factors as the Board of Directors may determine to be appropriate, consistent with the requirements of this subparagraph.
Section 2105 of the Reform Act (to be codified at 12 U.S.C. 1817(b)(3)(C)).
In July 2006, the FDIC published a proposed rule that would set the DRR at 1.25 percent. In its proposal, the FDIC analyzed the statutory factors that must be considered in setting the DRR. The FDIC also identified three “other factors” that it considered.
In the proposal, the FDIC's best estimate of potential loss provisions for 2006 related to future failures was $93 million. The FDIC also considered economic stress events and their potential implications for losses to the insurance fund by running several two-year stress event simulations. The results of each simulation, which were derived from historical stress events, demonstrate that banks are well positioned to withstand a significant degree of financial adversity. In no case did the stress simulation results raise any significant concerns.
So far this year no banks have failed. In addition, loss provisions anticipated for next year are expected to remain low. These estimates suggest that near-term losses to the insurance fund would not significantly alter the reserve ratio.
U.S. economic growth appears to be moderating in the second half of 2006. Consensus estimates of U.S. economic growth are in the 2.0 to 2.5 percent range for the second half of 2006, compared to growth of 3.2 percent reported for 2005. While the cumulative effects of higher interest rates, higher energy prices and slower home price appreciation are expected to slow consumer spending, exports and nonresidential investment appear poised to make up a larger portion of net growth in the economy. This rebalancing of economic activity should be consistent with stability in the outlook for bank credit quality, and problem loan ratios are likely to move up modestly over time from today's historic low levels. Possible exceptions to this generally positive credit outlook include certain subsectors of residential real estate loan portfolios, where higher interest rates and a leveling off of home price increases could contribute to a higher incidence of credit distress.
The condition of the banking industry remains strong. Earnings have set records each of the last five years, capital measures are still near historically high levels, and asset quality indicators remain solid. For the first half of 2006, the industry's annualized return on assets (ROA) remained high at 1.34 percent. The aggregate equity-to-asset ratio was 10.27 percent as of June 30, 2006, and more than 99 percent of all insured institutions met or exceeded the requirements of the highest regulatory capital standards. The ratio of noncurrent loans to total loans is its lowest since institutions began reporting that data 23 years ago. No insured institutions have failed in over two years, extending the longest period without a failure since the creation of the FDIC in 1933. Therefore, banks and thrifts generally appear to be well positioned to withstand the financial stress that may arise from potential economic shocks in the next few years.
The Reform Act directs the FDIC's Board to consider preventing sharp swings in assessment rates for insured depository institutions.
Strong insured deposit growth has contributed to a decline in the reserve ratio from 1.31 percent at year-end 2004 to 1.23 percent as of June 30, 2006. If recent robust insured deposit growth continues, there will be further downward pressure on the reserve ratio. This downward pressure could be offset by raising assessment rates; however, the availability of assessment credits will temporarily limit future revenue. Raising the reserve ratio to a DRR of 1.25 percent within a reasonably short time frame could require (depending upon insured deposit growth) a temporary, substantial increase in assessment rates, which would exhaust most of the credits rapidly. Increasing the reserve ratio more gradually could result in less substantial increases in rates.
The FDIC's Board also considered certain “other factors” in its decision to propose setting the DRR at 1.25 percent.
a.
Furthermore, to provide institutions a transition to the new system, one-time assessment credits will be available to those institutions that contributed in earlier years to the build-up of the insurance funds. The application of these credits to assessments will limit assessment revenue in the near term. If insured deposit growth remains strong, this may place temporary downward pressure on the reserve ratio, which is expected to reverse itself once banks begin to use up their credits.
Finally, the FDIC will be changing to a system where the reserve ratio will be managed within a range from a system where a hard target for the reserve ratio applied.
b.
c.
The FDIC also noted that the manner in which the FDIC's Board evaluates the statutory factors may depend on its view of the role of the DRR, which may change over time. The FDIC identified two potential general roles for the DRR: a signal of the reserve ratio that the Board would like the fund to achieve; and a signal of the Board's expectation of the change in the reserve ratio under the assessment rate schedule adopted by the Board.
The FDIC received 16 comments directly addressed to the proposed rule for setting the DRR.
One individual set out several arguments for setting the DRR at 1.50 percent, including:
• Greater risk in the banking industry;
• Strong insured deposit growth;
• Inadequacy of a 1.25 percent DRR as evidenced by the FDIC fund falling from 1.24 percent in 1981 to a negative number in 1991; and
• The number of times the reserve ratio has been above 1.50 percent during the FDIC's history.
Several other commenters suggested setting the DRR below 1.25 percent. Arguments in support of this suggestion included:
• A lower ratio would provide the industry with time to recapitalize the fund without facing sharp swings in assessment rates, particularly for those institutions which will not have credits;
• The FDIC is unrealistic in its optimism about the economy, and Congress expected the FDIC to set the DRR at the lower end of the range when institutions generally would face difficulty making payments, such as in difficult economic times, while setting the DRR higher when the economy was good and payments could be made more easily;
• The banking industry is financially healthy;
• The risk of fund losses is low, at least in part due to prompt corrective action requirements and other new supervisory and enforcement tools that enhance safety and soundness;
• Congress intended for the FDIC to determine an appropriate level for the DRR annually, rather than allowing the reserve ratio to meet the DRR over a period of a few years;
• The number of bank failures has been low;
• hardship on new growth institutions would be lessened; and
• The risk to the industry is lower now than in 1991 when Congress set the DRR at 1.25.
Other commenters suggested that increases in the DRR be phased in gradually:
• Starting with a DRR of 1.20 percent and phasing in an increase to 1.25 percent over a five-year period; and
• Allowing an initial drift toward 1.15 percent, with a phased-in move to 1.25 percent over time.
One comment from a banking industry trade group, however, stated that “it would not be prudent” to set the target at the minimum of 1.15 percent.
Several commenters suggested that, if the DRR were set at 1.25 percent initially, or wherever it is set, the FDIC should increase the reserve ratio gradually over a period of no less than three years, or three to five years, in order to avoid unnecessary surges in assessment rates. More generally, the FDIC should take a slow and steady approach.
Several commenters viewed the DRR as useful only for guidance in setting assessments, suggesting that the DRR:
• Is a very rough guide to a long-run equilibrium for the reserve ratio, and not a primary driver of premiums in the short-run;
• Should be analyzed each year to determine whether it is reasonable given the actual risk of loss to the DIF;
• Should not be viewed as requiring the imposition of higher assessments, but rather the FDIC should consider economic factors and the condition of the banking industry generally to determine whether to lower the DRR or whether it will be restored through deposit base changes, growth in investment earnings, low levels of expected failures, and similar factors.
Three commenters sought greater analytical justification for setting the DRR at 1.25 percent, asserting that the FDIC's rationale was:
• Unclear;
• Not sufficiently explained, requesting more thorough analysis within two years; and
• Not justified based on actual risk and market conditions.
The FDIC believes that the statutory analysis conducted in the proposed rulemaking is correct. Based upon that analysis, and for the reasons that follow, the FDIC has determined to set the DRR at 1.25 percent.
The FDIC concludes that the best way to balance all of the statutory factors (including the “other factors” identified above) and to preserve the FDIC's new flexibility to manage the DIF is to maintain the DRR at 1.25 percent. Several factors that the Board must (or may) consider—preventing sharp swings in assessment rates, the transitional nature of the assessment system, maintaining a DRR at the midpoint of the reserve ratio's normal operating range, the historical experience with a DRR of 1.25 percent, as well as the intent of the new legislation to provide the FDIC with flexibility to manage the reserve ratio within a range—all support or are consistent with maintaining the current DRR of 1.25 percent.
Several commenters argued that the present good health of the industry argues in favor of a DRR lower than 1.25 percent. A goal of the Reform Act, however, is to allow the fund to rise when conditions are good so that it could decline when conditions are less favorable without the need to raise assessments sharply. In fact, the Reform Act directs the FDIC to consider allowing the DRR to increase under favorable economic conditions. Generally favorable economic conditions and the strong condition of the industry provide little justification for lowering the DRR.
Further, most of the comments seeking to have the DRR set lower than 1.25 percent appear to be concerned with the assessment rates that will be charged, and the resulting amount of assessments that will be collected, if the DRR is set at 1.25 percent. This issue will be addressed in the risk-based assessments final rule being presented to the FDIC Board of Directors along with this DRR final rule case.
How the FDIC will use the DRR may change over time. The FDIC views the role of the DRR as a signal of the level that the DIF should achieve; however,
The final rule setting the DRR at 1.25 percent will become effective on January 1, 2007.
The proposed rule will set the Designated Reserve Ratio for the Deposit Insurance Fund. It will not involve any new collections of information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501
Pursuant to 5 U.S.C. 605(b), the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small businesses (
The FDIC has determined that the final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 2681).
The Office of Management and Budget has determined that the final rule is not a “major rule” within the meaning of the relevant sections of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (5 U.S.C. 801,
Bank deposit insurance, Banks, banking, Savings associations.
12 U.S.C. 1441, 1813, 1815, 1817-1819, 1821; Sec. 2101-2109, Pub. L. 109-171, 120 Stat. 9-21, and Sec. 3, Pub. L. 109-173, 119 Stat. 3605.
(g)
By order of the Board of Directors.
National Park Service, Interior.
Final rule and technical amendment.
This rule revises the special regulations for vessel quotas and operating requirements for cruise ships, tour vessels, charter vessels, private vessels, and passenger ferries within Glacier Bay National Park and Preserve. The rule implements the related final environmental impact statement completed in 2003 for vessel management in the park and preserve. This rule also makes nonsubstantive technical reorganizational changes for all of part 13. The part 13 reorganization, while not included in the proposed rule, is a result of comments received regarding the complexity of the Glacier Bay regulations specifically, as well as comments received previously for various rulemaking documents concerning the organization of part 13 generally.
This rule is effective on January 2, 2007.
This rule revises the special regulations for vessel quotas and operating requirements for cruise ships, tour vessels, charter vessels, private vessels, and passenger ferries within Glacier Bay National Park. The rule implements a final environmental impact statement (FEIS) completed in 2003 for vessel management in the Park. In 2001, the Ninth Circuit Court of Appeals determined that a 1996 increase in vessels into Glacier Bay violated the National Environmental Policy Act because an environmental impact statement (EIS) had not been prepared when the vessel entry quota was increased. The court prohibited vessel traffic above the pre-1996 levels, unless an EIS was prepared. The court decision went into effect in late summer 2001 resulting in a reduction in vessel traffic. Following the court decision, Congress enacted legislation (Sec. 130, Pub. L. 107-63, 115 Stat. 442, Nov. 5, 2001) that returned the vessel quotas to the 2000 calendar year level until changed based on an EIS that was directed to be completed by January 1, 2004. The EIS was completed and announced in the
Under these revised rules, daily vessel quotas remain unchanged, however, the regulations provide an administrative procedure for increases in seasonal quotas up to the daily maximum of two cruise ships. Although the final regulation provides for an increase in seasonal quotas of cruise ships, increased resource protection is also provided by extending the seasonal-use day quota season for cruise ships to include May and September, requiring the superintendent to carefully evaluate available studies before allowing any increase in cruise ship numbers, and revising operating requirements. Subject to the established daily quotas, seasonal limitations are eliminated for all other vessel categories. Pursuant to statute, a new vessel category, passenger ferry, is added with a daily quota of one. The various proposals regarding definitions and vessel operational requirements have also been adopted unless noted otherwise in the “Changes to the Final Rule” section. As used within this document, the terms “we,” “our,” and “us” refer to the National Park Service.
The proposed rule was published for public comment on March 3, 2006 (71 FR 10940), with the initial comment period lasting until May 2, 2006. The National Park Service received 28 timely written responses, plus two petitions, regarding various sections of the proposed rule. One petition was signed by 113 individuals and the other was signed by 106 individuals. All of the written responses were either separate letters or e-mail messages. Of the 28 written responses, one was from the State of Alaska, two were from non-governmental organizations (including one consolidated response from 6 signatory groups), 5 were from small businesses, and 15 were submitted by individuals. Many proposed changes either received supporting comments or no comments. These sections are being adopted as proposed, unless noted otherwise below. The proposed sections that did receive comments of opposition or revision are discussed below.
1. One commenter expressed support for the simplification of vessel management in Glacier Bay. The State of Alaska also commended the NPS on efforts to simplify the rules, but said the rule is still complex and recommended that the NPS further simplify the system.
2. Several commenters suggested the NPS address and possibly limit administrative use. Other commenters recommended that NPS increase scientific research efforts.
3. One commenter stated that there has been insufficient communication between the NPS and the City of Gustavus and that the City Council was not adequately informed about the changes in vessel management.
4. One individual commented that the NPS is over-regulating private vessels. This individual observed that all known collisions with whales have been caused by large commercial touring vessels.
5. One individual commented that the rules will reduce public access.
6. The State of Alaska and other individuals commented that the regulatory structure is hard to follow.
7. We received 24 comments on the proposal to eliminate the permit exception for vessels based in Bartlett Cove. Many commenters requested that the NPS retain the permit exemption. Alternative suggestions included providing “grandfather rights” to people who have utilized this exception, suspend the implementation of the regulation until a new dock is built in Gustavus or until after the 2006 vessel permit season, enforce speed limits and require evasive action if whales are encountered, issue seasonal or right-of-way permits to those based in Bartlett Cove, allow only charter boats or commercial fishermen with lifetime access permits to use the exception, designate one private vessel permit as a “transit” permit that only one vessel could use at a time, or modify the regulatory definition of Glacier Bay or the boundaries of the Park to exclude Bartlett Cove. Other individuals commented that accessing Bartlett Cove was a right under the provisions of ANILCA section 1110(b), Access to Inholdings.
The NPS does not believe ANILCA section 1110(b) applies in this circumstance. Gustavus is not within the boundaries of the park or effectively surrounded by the park, nor is access to or from Gustavus impeded by the park boundary.
8. One commenter suggested that the NPS adopt vessel definitions that conform to U.S. Coast Guard definitions.
9. One commenter suggested that the Glacier Bay Lodge vessel and a possible future kayak drop-off vessel be removed from the charter or tour categories.
10. A few commenters expressed support for the safe harbor exception to the permit requirement. One individual requested clarification on how the safe harbor would be implemented.
11. We received several comments regarding the vessel quotas. The State of Alaska requested the NPS allow two cruise ships each day from June 1 to August 31 so the maximum of 184 cruise ships can visit Glacier Bay during this time. Three commenters recommended the NPS maintain existing quota levels. One commenter suggested that charter or bare boat rentals should be excluded from private vessel status when there are no clients on board.
Vessel quotas are directly tied to research and available scientific information. The connection was made by several commenters. One commenter suggested utilizing a scientific advisory board regarding cruise ship quotas. The proposed regulation ensures that the annual cruise ship quota will be based in part on available scientific information. This would involve input from the Glacier Bay Science Advisory Board, which was established to provide the superintendent with the best available information of the effect of cruise ships on park resources.
12. Several commenters expressed support for the proposed closure of the Beardslee Entrance and Adams Inlet to cruise ships and tour vessels. Two commenters suggested also closing this area to charter vessels due to the potential size of vessels in this class. One individual suggested making a safe harbor exception to the closure.
12. Two non-governmental organizations commented on the passenger ferry service. One organization expressed opposition to the ferry and the other organization suggested adopting size limits.
13. Two commenters objected to increasing speed limits in Glacier Bay whale waters. One of these commenters recommended adopting a 10-knot speed limit due to potential acoustic impact on whales. Another commenter stated boats will not be able to come up on step with the 13-knot speed limit.
14. One commenter said that whales use Whidbey Passage regularly which would compel the superintendent to adopt vessel operating restrictions, effectively making this area “de facto” whale waters.
Based on the preceding comments and responses, the NPS has made the following changes to the proposed rule language for vessel management at Glacier Bay National Park:
Part 13 reorganization—Based on public comments that the rule is confusing due to the structure of the regulations, the NPS has decided to reorganize the entire Part 13. This reorganization will establish several new subparts and redesignate all sections. It also redesignates numerous paragraphs as sections. A derivation table showing the old and revised section numbers follows. These changes will make the rule much easier to use by introducing new headings and eliminating many levels of subdivisions, particularly in the Glacier Bay regulations. With the exception of vessel management in Glacier Bay, the substance of the Part 13 regulations and their corresponding relationship to 36 CFR Parts 1-7 and 12 remain completely unaffected by these changes.
Part 13 Technical amendment—The NPS revised Part 13 in 2004 (69 FR 70070, Dec. 2, 2004) and inadvertently removed the hearing provision for temporary closures and restrictions relating to the taking of fish and wildlife in the old § 13.30(d) (now § 13.50(d)). We are correcting this mistake.
Section 13.1160(c)—Permits for vessels based in Bartlett Cove—As discussed in the Comments Section, the NPS decided to adopt a “transit” permit provision for private vessels. This regulation would be in effect for five years from the effective date of this final rule, allowing time for vessel owners to plan for alternatives to basing their vessels in Bartlett Cove, and for the City of Gustavus to upgrade boat facilities outside the Park. The “transit” permit would count toward the private daily vessel quota of 25. This “transit” permit could be used by several different vessels in a day provided that only one vessel is using the permit at a time. The “transit” permit could be used only to directly exit Bartlett Cove and allow the vessel to return directly to Bartlett Cove. It would not allow travel into any other part of Glacier Bay. The superintendent will develop application procedures and operating conditions as part of the compendium. The superintendent is considering the following procedures and conditions for the 2007 compendium: (1) Making a percentage of the 25 private vessel permits available on an advance-notice basis and the remaining portion on a short-notice basis (48 hours before the date for which the permit would be issued) to
Section 13.1176(a)(c)—Speed Restrictions—The NPS is increasing the speed limit to 13 knots from 10 knots as discussed in the proposed rule; however, the superintendent may modify the speed limit based on NOAA guidelines or new scientific information.
Section 13.1102—Definitions—The reorganized Glacier Bay regulations will have one definitions section for all of Glacier Bay. In the old 13.65 regulations, the commercial fishing and resource protection subsections each had a definitions section. Creating a single definitions section for all of Glacier Bay results in a non-substantive change to the definition of Glacier Bay with respect to commercial fishing. The old 13.65(a) commercial fishing definition of Glacier Bay was “all marine waters within Glacier Bay National Park, including coves and inlets, north of an imaginary line drawn from Point Gustavus and Point Carolus.” The definition for Glacier Bay set forth in the proposed rule will now apply throughout Glacier Bay and covers the same area; however, it defines the area using coordinates. This definition of Glacier Bay is: “all waters inside a line drawn between Point Gustavus at 135°54.927′ W longitude; 58°22.748′ N latitude and Point Carolus at 136°2.535′ W longitude; 58°22.694′ N latitude.”
Section 13.1104—Coordinates—The NPS added a new regulation to clarify that all coordinates referenced in subpart M use Horizontal datum World Geodetic System of 1984 (WGS 84).
This document is not a significant rule and has not been reviewed by the Office of Management and Budget under Executive Order 12866.
(1) This rule will not have an effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. These conclusions are based on the analysis contained in the final environmental impact statement and a report prepared on the economic impact of this regulation, “Economic Analysis of Vessel Management Alternatives in Glacier Bay National Park and Preserve”, prepared for the NPS, Environmental Quality Division, by Research Triangle Institute, copies available from Glacier Bay National Park and Preserve, P.O. Box 140, Gustavus, Alaska 99826, (907) 697-2230.
(2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency. Actions taken under this rule will not interfere with other agencies or local government plans, policies, or controls. This is an agency specific rule.
(3) This rule does not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. It affects only the operations of various types of motor vessels on waters managed by the park. No grants or other forms of monetary supplement are involved.
(4) This rule does not raise novel legal or policy issues.
The Department of the Interior certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. The Final rule:
a. Does not have an annual effect on the economy of $100 million or more. No incremental negative impacts on small businesses are expected and possible future increases in vessel quota levels will likely result in revenue growth.
b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. The final rule will generally maintain existing patterns of vessel management in the park relative to costs or prices; and
c. Does not have significant adverse effects on competition, employment,
This final rule does not impose an unfunded mandate on State, local or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local, or tribal governments or the private sector. A statement containing the information required by the UMRA (2 U.S.C. 1531
In accordance with Executive Order 12630, the rule does not have significant takings implications. A takings implications assessment is not required because no taking of personal property will occur as a result of this final rule.
In accordance with Executive Order 13132, the rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment. The final rule is limited in effect to federal lands and waters managed by the NPS and will not have a substantial direct effect on state and local government in Alaska.
In accordance with Executive Order 12988, the Office of the Solicitor has determined that this rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order. This rule does not impose a new burden on the judicial system.
This regulation requires an information collection from 10 or more parties, which must be submitted for OMB approval under the Paperwork Reduction Act. However, these are not new collection requirements and, therefore, no additional request to OMB has been prepared in conjunction with this rule. The information collection activities are necessary for the public to obtain benefits in the form of concession contracts and special use permits. Information collection associated with the award of concession contracts is covered under OMB control number 1024-0125; the information collection associated with the issuance of special use permits is covered under OMB control number 1024-0026.
A Draft Environmental Impact Statement (DEIS) and Final Environmental Impact Statement (FEIS) were completed and a Record of Decision (ROD) issued. The FEIS and ROD are available online at:
In accordance with Executive Order 13175 “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249); the President's memorandum of April 29, 1994, “Government to Government Relations with Native American Tribal Governments” (59 FR 22951); the Department of the Interior-Alaska Policy on Government-to-Government Relations with Alaska Native Tribes dated January 18, 2001; Part 512 of the Departmental Manual, Chapter 2, “Departmental Responsibilities for Indian Trust Resources”; and the park consultation agreement with tribal governments, the potential effects on federally-recognized Indian tribes and have been evaluated.
During the past several years, the NPS has developed an effective working relationship with the Hoonah Indian Association and other regional Native organizations with interests in matters pertaining to Glacier Bay National Park and Preserve. All parties consulted concur that Glacier Bay and Dundas Bay lie within the traditional homelands of the Hoonah Tlingits, and that the Hoonah Indian Association, a federally recognized tribal government, is the representative government for Hoonah Tlingits. During this extended consultation the full range of issues relating to vessel quotas, operating requirements, and cultural resources has been identified and discussed at length. Extensive ethnographic research had been conducted to gather detailed information about cultural resources important to Hoonah Tlingits. Meetings were held with the tribal government and with community and tribal members.
Executive Order 12866 requires each agency to write regulations that are easy to understand. We invite your comments on how to make this rule easier to understand, including answers to questions such as the following: (1) Are the requirements in the rule clearly stated? (2) Does the rule contain technical language or jargon that interferes with its clarity? (3) Does the format of the rule (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce its clarity? (4) Would the rule be easier to read if it were divided into more (but shorter) sections? (A “section” appears in bold type and is preceded by the symbol “§ ” and a numbered heading; for example § 7.XX .........) (5) Is the description of the rule in the “Supplementary Information” section of the preamble helpful in understanding the proposed rule? What else could we do to make the rule easier to understand?
Alaska, National Parks, Reporting and recordkeeping requirements.
16 U.S.C. 1, 3, 462(k), 3101 et seq.; Subpart M also issued under 16 U.S.C. 1a-2(h), 20, 1361, 1531, 3197; Pub. L. 105-277, 112 Stat. 2681-259, October 21, 1998; Pub. L. 106-31, 113 Stat. 72, May 21, 1999; Sec. 13.1202 also issued under Sec. 1035, Pub. L. 104-333, 110 Stat. 4240, November 12, 1996.
The following definitions shall apply to all regulations contained in this part:
(1) Geodes;
(2) Petrified wood; and
(3) Jade, agate, opal, garnet, or other mineral that when cut and polished is customarily used as jewelry or other ornament.
(1) Land selections of the State of Alaska which have been tentatively approved or validly selected under the Alaska Statehood Act (72 Stat. 339) and lands which have been confirmed to,
(2) Land selections of a Native Corporation made under the Alaska Native Claims Settlement Act (85 Stat. 688) which have not been conveyed to a Native Corporation, unless any such selection is determined to be invalid or is relinquished; and
(3) Lands referred to in section 19(b) of the Alaska Native Claims Settlement Act.
(a) The regulations contained in part 13 are prescribed for the proper use and management of park areas in Alaska and supplement the general regulations of this chapter. The general regulations contained in this chapter are applicable except as modified by part 13.
(b) Subparts A through F contain regulations applicable to park areas. Such regulations amend in part the general regulations contained in this chapter. The regulations in subparts A through F govern use and management, including subsistence activities, within the park areas, except as modified by special park regulations in subparts H through V.
(c) Subpart F contains regulations applicable to subsistence uses. Such regulations apply on federally owned lands and interests therein within park areas where subsistence is authorized. Subsistence uses are not allowed in Kenai Fjords National Park, Katmai National Park, Glacier Bay National Park, Klondike Gold Rush National Historical Park, Sitka National Historical Park, the former Mt. McKinley National Park. The regulations in subpart F amend in part the general regulations contained in this chapter and the regulations contained in subparts A through C of part 13.
(d) Subparts H through V contain special regulations for specific park areas. Such regulations amend in part the general regulations contained in this chapter and the regulations contained in subparts A through F of part 13.
(e) Subpart E of this part 13 contains regulations applicable to authorized visitor service providers operating within certain park areas. The regulations in subpart E amend in part the general regulations contained in this chapter.
(f) For purposes of this chapter, “federally owned lands” does not include those land interests:
(1) Tentatively approved to the State of Alaska; or
(2) Conveyed by an interim conveyance to a Native corporation.
The information collection requirements contained in subparts C and G, and §§ 13.55, 13.440, 13.450, 13.485, and 13.495 are necessary for park Superintendents to issue concession contracts and special use permits, and have been approved by the Office of Management and Budget under 44 U.S.C. 3507. Information collections associated with the award of concession contracts are covered under OMB control number 1024-0125; the information collections associated with the issuance of special use permits are covered under OMB control number 1024-0026.
(a) A person may not place an object on the surface of an airstrip that, because of its nature or location, might cause injury or damage to an aircraft or person riding in the aircraft.
(b) A person may not dig a hole or make any kind of excavation, or drive a sled, tractor, truck, or any kind of vehicle upon an airstrip that might make ruts, or tracks, or add to an accumulation of tracks so as to endanger aircraft using the airstrip or persons riding in the aircraft.
(a) Camping is authorized in park areas except where such use is prohibited or otherwise restricted by the Superintendent in accordance with this section, the provisions of § 13.50, or as set forth for specific park areas in subparts H through V of this part.
(b)
(c)
Picnicking is authorized in park areas except where such activity is prohibited or otherwise restricted by the Superintendent. The public will be notified by one or more of the following methods—
(a) Signs posted at conspicuous locations, such as normal points of entry or reasonable intervals along the boundary of the affected park locale;
(b) Maps available in the office of the Superintendent and other places convenient to the public;
(c) Publication in a newspaper of general circulation in the affected area; or
(d) Other appropriate methods, including park Web sites, brochures, maps, and handouts.
(a) Irritant chemical devices, including bear spray, may be carried, possessed, and used in accordance with applicable Federal and non-conflicting State laws, except when prohibited or restricted under § 13.50.
(b) Paragraphs (d) through (g) of this section apply to all park areas in Alaska except Klondike Gold Rush National Historical Park, Sitka National Historical Park and the former Mt. McKinley National Park, Glacier Bay National Monument and Katmai National Monument.
(c) Except as provided in this section and § 2.4 of this chapter, the following are prohibited—
(1) Possessing a weapon, trap, or net;
(2) Carrying a weapon, trap, or net;
(3) Using a weapon, trap, or net.
(d) Firearms may be carried, possessed, and used within park areas in accordance with applicable State and Federal laws, except where such carrying, possession, or use is prohibited or otherwise restricted under § 13.50.
(e) Traps, bows and other implements (other than firearms) authorized by applicable State and Federal law for the taking of fish and wildlife may be carried, possessed, and used within park areas only during those times when the taking of fish and wildlife is authorized by applicable law or regulation.
(f) In addition to the authorities provided in paragraphs (d) and (e) of this section, weapons (other than firearms), traps, and nets may be possessed within park areas provided such weapons, traps, or nets are within or upon a device or animal used for transportation and are unloaded and cased or otherwise packed in such a manner as to prevent their ready use while in a park area.
(g) Notwithstanding the provisions of this section, local rural residents who are authorized to engage in subsistence uses, including the taking of wildlife under § 13.480, may use, possess, or carry traps, nets and other weapons in accordance with applicable State and Federal laws.
(a) This section applies to all park areas in Alaska except Klondike Gold Rush National Historical Park, Sitka National Historical Park, the former Mt. McKinley National Park, and the former Katmai National Monument.
(b) Gathering or collecting natural products is prohibited except as allowed by this section, § 2.1 of this chapter, or part 13, subparts F through V. For purposes of this paragraph, “natural products” includes living or dead fish and wildlife or parts or products thereof, plants or parts or products thereof, live or dead wood, fungi, seashells, rocks, and minerals.
(c) Gathering or collecting, by hand and for personal use only, of the following renewable resources is permitted—
(1) Natural plant food items, including fruits, berries and mushrooms, but not including threatened or endangered species;
(2) Driftwood and uninhabited seashells;
(3) Such plant materials and minerals as are essential to the conduct of traditional ceremonies by Native Americans; and
(4) Dead wood on the ground for use as fuel for campfires within the park area.
(d) The Superintendent may authorize, with or without conditions, the collection of dead standing wood in all or a portion of a park area. Collecting dead or downed wood in violation of terms and conditions is prohibited.
(e) Surface collection, by hand (including hand-held gold pans) and for personal recreational use only, of rocks and minerals is permitted, with the following exceptions:
(1) Collection of silver, platinum, gemstones and fossils is prohibited; and
(2) Collection methods that may result in disturbance of the ground surface, such as the use of shovels, pickaxes, sluice boxes, and dredges, are prohibited.
(f) The Superintendent may limit the size and quantity of the natural products that may be gathered or possessed.
(1) Under conditions where it is found that significant adverse impact on park resources, wildlife populations, subsistence uses, or visitor enjoyment of resources will result, the Superintendent will prohibit the gathering or otherwise restrict the collecting of natural products.
(2) The Superintendent will notify the public of portions of a park area in which closures or restrictions apply by:
(i) Publishing a notice in at least one newspaper of general circulation in the State and providing a map available for public inspection in the office of the Superintendent; or
(ii) Posting appropriate signs.
(g)
(a) [Reserved]
(b)
(c)
(1)
(2)
(ii) The Superintendent may deny a permit or otherwise restrict the expanded use of a park area directly incident to the exercise of such rights or privileges, if the Superintendent determines, after conducting a public hearing in the affected locality, that the expanded use constitutes either:
(A) A significant expansion of the use of a park area beyond the level of such use during 1979 (taking into consideration the relative levels of use in the general vicinity, as well as the applicant's levels of use); or
(B) A direct threat to, or significant impairment of, the values and purposes for which the park area was established.
(d)
(2) Violating a provision of either Federal or non-conflicting State law or regulation is prohibited.
(3) Engaging in trapping activities as the employee of another person is prohibited.
(4) It shall be unlawful for a person having been airborne to use a firearm or any other weapon to take or assist in taking any species of bear, caribou, Sitka black-tailed deer, elk, coyote, arctic and red fox, mountain goat, moose, Dall sheep, lynx, bison, musk ox, wolf and wolverine until after 3 a.m. on the day following the day in which the flying occurred. This prohibition does not apply to flights on regularly scheduled commercial airlines between regularly maintained public airports.
(5) Persons transporting wildlife through park areas must identify themselves and the location where the wildlife was taken when requested by
(e)
(a) This section applies to all park areas in Alaska except Klondike Gold Rush National Historical Park and Sitka National Historical Park, or as further restricted for specific park areas in subparts H through V of this part.
(b)
(2) Identification information is required for all personal property left in park areas. Identification information consists of the owner's name, home address, telephone number, date that the property was left, and the type of fuel if the property contains fuel. This information must be—
(i) Labeled on the property; or
(ii) Provided to the Superintendent.
(3) All property must be stored in such a manner that wildlife is unable to access the contents. Storing property in a manner that wildlife can access contents is prohibited.
(4) Leaving fuel in more than one location in a park area or leaving more than 30 gallons of fuel is prohibited unless authorized by the Superintendent.
(5) Storing fuel within 100 feet of a water source, high water mark of a body of water, or mean high tide is prohibited unless stored in a spill proof overpack container or authorized by the Superintendent. Fuel must be contained in an undamaged and closed fuel container designed for fuel storage. Fueling from containers must occur in such a manner that any spillage would be prevented from coming into contact with water, soil, or vegetation. Failure to properly contain or prevent spillage is prohibited.
(6) Leaving property unattended for longer than 24 hours on facilities is prohibited unless authorized by the Superintendent.
(7) Property left in violation of this section is prohibited and subject to impoundment and, if abandoned, disposal or forfeiture.
(c) The Superintendent may designate areas where personal property may not be left unattended for any time period, establish limits on the amount and type of personal property that may be left unattended, prescribe the manner in which personal property may be left unattended, or establish limits on the length of time personal property may be left unattended. Such designations and restrictions shall be published in at least one newspaper of general circulation within the State, posted at community post offices within the vicinity affected, made available for broadcast on local radio stations in a manner reasonably calculated to inform residents in the affected community, and designated on a map which shall be available for public inspection at the office of the Superintendent, or designated by the posting of appropriate signs, or both.
(d) In the event unattended property interferes with the safe and orderly management of a park area or is causing damage to the resources of the area, it may be impounded by the Superintendent at any time.
(a)
(b)
(c)
(2) Other emergency closures shall become effective upon notice as prescribed in paragraph (f) of this section; and
(3) No emergency closure or restriction shall extend for a period exceeding 30 days, nor may it be extended.
(d)
(2) Temporary closures shall be effective upon notice as prescribed in paragraph (f) of this section; and
(3) Temporary closures or restrictions shall not extend for a period exceeding 12 months and may not be extended.
(e)
(f)
(1) Published in at least one newspaper of general circulation in the State and in at least one local newspaper if available, posted at community post offices within the vicinity affected, made available for broadcast on local radio stations in a manner reasonably calculated to inform residents in the affected vicinity, and designated on a map which shall be available for public inspection at the office of the Superintendent and other places convenient to the public;
(2) Designated by the posting of appropriate signs; or
(3) Both.
(g)
(h)
(i) Except as otherwise specifically permitted under the provisions of this part, entry into closed areas or failure to abide by restrictions established under this section is prohibited.
(a)
(2) The Superintendent shall grant or deny the application in writing within 45 days. If this deadline cannot be met for good cause, the Superintendent shall so notify the applicant in writing. If the permit application is denied, the Superintendent shall specify in writing the reasons for the denial.
(b)
(i) Any statement or documentation, in addition to that included in the initial application, which demonstrates that the applicant satisfies the criteria set forth in the section under which the permit application is made.
(ii) The basis for the permit applicant's disagreement with the Superintendent's findings and conclusions; and
(iii) Whether or not the permit applicant requests an informal hearing before the Regional Director.
(2) The Regional Director shall provide a hearing if requested by the applicant. After consideration of the written materials and oral hearing, if any, and within a reasonable period of time, the Regional Director shall affirm, reverse, or modify the denial of the Superintendent and shall set forth in writing the basis for the decision. A copy of the decision shall be forwarded promptly to the applicant and shall constitute final agency action.
The policy of the National Park Service is to manage the use, occupancy and disposition of cabins and other structures in park areas in accordance with the language and intent of ANILCA, the National Park Service Organic Act (16 U.S.C. 1
(a) Use and/or occupancy pursuant to a valid existing lease or permit;
(b) Use and occupancy of a cabin not under valid existing lease or permit;
(c) Use for authorized commercial fishing activities;
(d) Use of cabins for subsistence purposes;
(e) Public use cabins; and
(f) Use of temporary facilities related to the taking of fish and wildlife.
Unless otherwise specified, this subpart applies to all park areas in Alaska except Klondike Gold Rush National Historical Park and Sitka National Historical Park.
The following definitions apply to this subpart:
Except as otherwise specified in this subpart, the procedures set forth in § 13.55(a) govern application for any permit authorized pursuant to this subpart.
Before a permit for the use and occupancy of a cabin or other structure is issued pursuant to this subpart, the Superintendent shall publish notice of the proposed issuance in the local media and provide a public comment period of at least sixty days, subject to the following exceptions: Prior notice and comment are not required for a permit authorizing use and occupancy for 14 days or less of a public use cabin or use and occupancy of a temporary facility for the taking of fish or wildlife for sport or subsistence purposes.
(a) The superintendent may revoke a permit or lease issued pursuant to this subpart when the superintendent determines that the use under the permit or lease is causing or may cause significant detriment to the principal purposes for which the park area was established.
(b) The superintendent may revoke or modify any permit or lease issued pursuant to this subpart when the permittee violates a term of the permit or lease.
The procedures set forth in § 13.55(b) govern appeals of a permit denial, a denial of a permit renewal, a permit revocation and a superintendent's final decision on a permit revocation issued pursuant to § 13.112(a).
(a) A permittee shall not accrue a compensable interest in a cabin or other structure in a park area unless specifically authorized by Federal statutory law.
(b) A cabin or other structure in a park area may not be sold, bartered, exchanged, assigned or included as a portion of any sale or exchange of other property by a permittee unless specifically authorized by Federal statutory law.
(c) The Superintendent shall determine the extent and nature of a permittee's possessory interest at the time a permit is issued or denied.
The Superintendent shall establish permit conditions that require a permittee—
(a) When constructing, maintaining or repairing a cabin or other structure authorized under this subpart, to use materials and methods that blend with and are compatible with the immediate and surrounding landscape; and
(b) When terminating an activity that involves a structure authorized under this subpart, to dismantle and remove the structure and all personal property from the park area within a reasonable period of time and in a manner consistent with the protection of the park area.
(a) A permittee under this subpart who holds a permit for use and occupancy of a cabin or other structure located on public lands in a park area, not under valid existing lease or permit in effect on December 2, 1980, does not have a “valid property or occupancy interest” for purposes of ANILCA section 1110(b) and its implementing regulations.
(b) When issuing a permit under this subpart, the Superintendent shall provide for reasonable access which is appropriate and consistent with the values and purposes for which the park area was established.
(c) All impacts of the access to a cabin or other structure are deemed to be a part of, and shall be considered in any evaluation of, the effects of a use authorized by a permit issued under this subpart.
(a) An existing cabin or other structure not under valid lease or permit, and its contents, are abandoned:
(1) When no permit application has been received for its use and occupancy before October 20, 1987, one year after the effective date of this subpart; or
(2) One year after a permit application for its use and occupancy has been denied or a permit for its use and occupancy has been revoked, denied or has expired.
(b) A claimant or applicant whose application for a permit has been denied or whose permit has expired may remove all or a portion of a cabin or other structure and its contents from a park area, to the extent of his or her possessory interest and under conditions established by the Superintendent, until the date the cabin or structure is considered abandoned.
(c) The contents of a cabin or other structure are considered abandoned when the cabin or other structure is considered abandoned.
(d) A person whose permit for the use and occupancy of a cabin or other structure is revoked may remove his or her personal property from a park area under conditions established by the Superintendent until one year after the date of the permit's revocation.
(e) The Superintendent shall dispose of abandoned property in accordance with §§ 2.22 and 13.45 of this chapter. No property shall be removed from a cabin until such property has been declared abandoned or determined to constitute a direct threat to the safety of park visitors or area resources.
During an emergency involving the safety of human life, a person may use any cabin designated by the Superintendent for official government business, general public use or shared subsistence use. The person shall report such use to the Superintendent as soon as is practicable.
Use or occupancy of a cabin or structure in a park area is prohibited, except pursuant to the terms of a permit issued by the Superintendent under this subpart or as otherwise authorized by provisions of this chapter.
The Superintendent may issue a permit for the construction, temporary use, occupancy, and maintenance of a cabin or other structure which is authorized by law but not governed by any other section in this subpart.
A person who holds a valid lease or permit in effect on December 2, 1980, for a cabin, homesite or similar structure not subject to the provisions of §§ 13.146-13.149 of this subpart, on Federal lands in a park area, may continue the use authorized by that lease or permit, subject to the conditions in §§ 13.138-13.142.
The Superintendent shall renew a valid lease or permit upon its expiration in accordance with the provisions of the original lease or permit, subject to any modifications or new conditions that the Superintendent finds necessary for the protection of the values and purposes of the park area.
The Superintendent may deny the renewal or continuation of a valid lease or permit only after issuing specific findings, following notice and an opportunity for the leaseholder or permittee to respond, that renewal or continuation constitutes a direct threat to, or a significant impairment of, the purposes for which the park area was established.
Subject to any prohibitions or restrictions that apply to transfer in the existing lease or permit, the Superintendent may transfer a valid existing lease or permit to another person at the election or death of the original permittee or leaseholder, only if the Superintendent determines that:
(a) The continued use is appropriate and compatible with the values and purposes of the park area;
(b) The continued use is non-recreational in nature;
(c) There is no demonstrated overriding need for public use; and
(d) The continued use and occupancy will not adversely impact soils, vegetation, water or wildlife resources.
A cabin or other residential structure in existence and occupied by a claimant, both prior to December 18, 1973, with the claimant's occupancy continuing for a substantial portion of the time, may continue to be used and occupied by the claimant pursuant to a renewable, nontransferable five-year permit. Upon the request of the claimant or a successor who is an immediate family member and residing in the cabin or structure, the Superintendent shall renew this permit every five years until the death of the last immediate family member of the claimant who was residing with the claimant in the structure under permit at the time of issuance of the original permit.
A cabin or other residential structure in existence prior to December 1, 1978, with occupancy commenced by a claimant between December 18, 1973 and December 1, 1978, which a claimant has continued to occupy or use for a substantial portion of the time, may continue to be used and occupied by the claimant pursuant to a non-transferable permit. The Superintendent may issue and extend such permit for a term not to exceed December 1, 1999 for such reasons as are deemed by the Superintendent to be equitable and just. The Superintendent shall review the permit at least every two years and modify the permit as necessary to protect park resources and values.
In order to obtain, renew or extend a permit, a claimant shall submit a written application. In the case of an application to renew or extend a permit issued pursuant to §§ 13.144 or 13.146, if no circumstance relating to the permittee's occupancy and use of the cabin or structure has changed in the interim, applicable material submitted by the permittee to satisfy the original application requirements is considered sufficient and need not be resubmitted. The following information is required to be included in a permit application:
(a) Reasonable proof of possessory interest or right of occupancy in the cabin or structure, demonstrated by affidavit, bill of sale, or other documentation. In order for a claimant to qualify for a permit described in section 13.144, the claimant's possessory interest or right of occupancy must have been acquired prior to December 18, 1973. In order for a claimant to qualify for a permit described in section 13.146, the claimant's possessory interest or right of occupancy must have been acquired prior to December 1, 1978;
(b) A sketch or photograph that accurately depicts the cabin or structure;
(c) A map that shows the geographic location of the cabin or structure;
(d) The claimant's agreement to vacate and remove all personal property from the cabin or structure upon expiration of the permit;
(e) The claimant's acknowledgement that he or she has no legal interest in the real property on which the cabin or structure is located;
(f) Reasonable proof that the claimant has lived in the cabin or structure during a substantial portion of the time and continues to use the cabin or other structure as a primary, permanent residence; and
(g) A list of all immediate family members residing with the claimant within the cabin or structure for which the application is being submitted. Such list need only include those immediate family members who will be eligible to continue to use and occupy the cabin or other structure upon the death or departure of the original claimant.
The deadline for receipt of a permit application for the occupancy and use of an existing cabin or other structure described in §§ 13.144 or 13.146 is October 20, 1987. The Superintendent may extend this deadline for a reasonable period of time only when a permit applicant demonstrates that extraordinary circumstances prevented timely application.
The use of a campsite, cabin or other structure in conjunction with commercial fishing activities authorized by section 205 of ANILCA in Cape Krusenstern National Monument, the Malaspina Glacier Forelands area of Wrangell-Saint Elias National Preserve, and the Dry Bay area of Glacier Bay National Preserve is authorized pursuant to the provisions of § 13.40(c) of this chapter and the terms of a permit issued by the Superintendent.
(a) A local rural resident who is an eligible subsistence user may use an existing cabin or other structure or temporary facility or construct a new cabin or other structure, including temporary facilities, in a portion of a park area where subsistence use is allowed, pursuant to the applicable provisions of subparts F through V of this part and the terms of a permit issued by the Superintendent. However, the Superintendent may designate existing cabins or other structures that may be shared by local rural residents for authorized subsistence uses without a permit.
(b) For purposes of this section, the term “local rural resident”, with respect to national parks, monuments, and preserve, is defined in § 13.420 of this chapter.
In order to obtain or renew a permit, a person shall submit an application. In the case of an application to renew a permit issued pursuant to § 13.160, if no circumstance relating to the permittee's occupancy and use of the cabin or structure has changed in the interim, applicable material submitted by the permittee to satisfy the original application requirements is considered sufficient and need not be resubmitted. The following information is required to be included in a permit application:
(a) An explanation of the applicant's need for the cabin or structure;
(b) A description of an applicant's past, present and anticipated future subsistence uses relevant to his or her need for the cabin or structure;
(c) A blueprint, sketch or photograph of the cabin or structure;
(d) A map that shows the geographic location of the cabin or structure; and
(e) A description of the types of occupancy and schedule for use of the cabin or structure. All information may be provided orally except the cabin blueprint, sketch or photograph and the map.
(a) In making a decision on a permit application, the Superintendent shall consider whether the use by local rural residents of a cabin or other structure for subsistence purposes is customary and traditional in that park area and shall determine whether the use and occupancy of a new or existing cabin or structure is “necessary to reasonably accommodate” the applicant's subsistence uses. In making this determination, the Superintendent shall examine the applicant's particular circumstances, including but not limited to his or her past patterns of subsistence uses and his or her future subsistence use plans, reasonable
(b) The Superintendent may permit the construction of a new cabin or other new structure for subsistence purposes only if a tent or other temporary facility would not adequately and reasonably accommodate the applicant's subsistence uses without significant hardship and the use of no other type of cabin or other structure provided for in this subpart can adequately and reasonably accommodate the applicant's subsistence uses with a lesser impact on the values and purposes for which the park area was established.
The Superintendent shall, among other conditions, establish terms of a permit that:
(a) Allow for use and occupancy during the harvest or gathering of subsistence resources, at such times as may be reasonably necessary to prepare for a harvest season (
(b) Prohibit residential use in conjunction with subsistence activities; and
(c) Limit the term of a permit to a period of five years or less.
A temporary facility or structure directly and necessarily related to the taking of subsistence resources may be constructed and used by a qualified subsistence user without a permit so long as such use is for less than thirty days and the site is returned to a natural condition. The Superintendent may establish conditions and standards governing the use or construction of these temporary structures and facilities which shall be published annually in accordance with § 1.7 of this chapter.
In any permit authorizing the construction of a cabin or other structure necessary to reasonably accommodate authorized subsistence uses, the Superintendent shall provide for shared use of the facility by the permittee and other local rural residents rather than for exclusive use by the permittee.
The Superintendent may designate a cabin or other structure located outside of designated wilderness areas and not otherwise under permit under this subpart (or under permit for only a portion of the year) as a public use cabin. Such designated public use cabins are intended for short term recreational use and occupancy only.
The Superintendent may establish conditions and develop an allocation system in order to manage the use of designated public use cabins. The Superintendent shall mark all public use cabins with a sign and shall maintain a map showing their locations.
The use and occupancy of a cabin or other structure located in a designated wilderness area are subject to the other applicable provisions of this subpart, and the following conditions:
(a) A previously existing public use cabin located within wilderness designated by ANILCA may be allowed to remain and may be maintained or replaced subject to such restrictions as the Superintendent finds necessary to preserve the wilderness character of the area. As used in this section, the term “previously existing public use cabin” means a cabin or other structure which, on November 30, 1978, was recognized and managed by a Federal land managing agency as a structure available for general public use.
(b) Within a wilderness area designated by ANILCA, a new public use cabin or shelter may be constructed, maintained and used only if necessary for the protection of the public health and safety.
(c) A cabin or other structure located in a designated wilderness area may not be designated, assigned or used for commercial purposes, except that designated public use cabins may be used in conjunction with commercial guided visitor services, but not to the exclusion of the general public.
In a national preserve where the taking of fish and wildlife is permitted, the construction, maintenance or use of a temporary campsite, tent platform, shelter or other temporary facility or equipment directly and necessarily related to such activities is prohibited except pursuant to the terms of a permit issued by the Superintendent. This requirement applies only to a temporary facility that will remain in place for a period longer than 14 days.
In order to obtain or renew a permit, a person shall submit an application. In the case of an application to renew a permit issued pursuant to this section and § 13.186, if no circumstance relating to the permittee's occupancy and use of the structure has changed in the interim, applicable material submitted by the permittee to satisfy the original application requirements is considered sufficient and need not be resubmitted. The following information is required to be included in a permit application:
(a) An explanation of the applicant's need for the temporary facility, including a description of the applicant's hunting and fishing activities relevant to his or her need for the facility;
(b) A diagram, sketch or photograph of the temporary facility;
(c) A map that shows the geographic location of the temporary facility; and
(d) A description of both the past use (if any) and the desired use of the temporary facility, including a schedule for its projected use and removal. All information may be provided orally except the diagram, sketch or photograph of the facility and the map.
(a) In making a decision on a permit application, the Superintendent shall determine whether a temporary facility is “directly and necessarily related to” the applicant's legitimate hunting and fishing activities by examining the applicant's particular circumstances, including, but not limited to his or her reasonable need for a temporary facility and any reasonable alternatives available that are consistent with the applicant's needs. The Superintendent shall also consider whether the proposed use would constitute an expansion of existing facilities or use and would be detrimental to the purposes for which the national preserve was established. If the Superintendent finds that the proposed use would either constitute an expansion above existing levels or be detrimental to the purposes of the preserve, he/she shall deny the permit. The Superintendent may authorize the replacement or relocation within the national preserve of an existing temporary facility or structure.
(b) The Superintendent shall deny an application for a proposed use that
The Superintendent shall allow for use and occupancy of a temporary facility only to the extent that such facility is directly and necessarily related to the permittee's hunting and fishing activities, and shall provide that the temporary facility be used and maintained in a manner consistent with the protection of the values and purposes of the park area in which it is located. The Superintendent may also establish permit terms that:
(a) Limit use to a specified period, not to exceed the applicable hunting or fishing season and such additional brief periods necessary to maintain the facility before and after the season;
(b) Require the permittee to remove a temporary facility and all associated personal property from the park area upon termination of the permittee's hunting and fishing activities and related use of the facility or on a specific date;
(c) Require reasonable seasonal relocation of a temporary facility in order to protect the values and purposes for which the park area was established;
(d) Require that a temporary facility be used on a shared basis and not exclusively by the permittee; and
(e) Limit the overall term of a permit to a reasonable period of time, not to exceed one year.
(a) Except as otherwise provided for in this section, the regulations contained in this part apply to visitor services provided within all national park areas in Alaska.
(b) The rights granted by this subpart to historical operators, preferred operators, and Cook Inlet Region, Incorporated are not exclusive. The Director may authorize other persons to provide visitor services on park lands. Nothing in this subpart shall require the Director to issue a visitor services authorization if not otherwise mandated by statute to do so. Nothing in this subpart shall authorize the Director to issue a visitor services authorization to a person who is not capable of carrying out its terms and conditions in a satisfactory manner.
(c) This subpart does not apply to the guiding of sport hunting or sport fishing.
The following definitions apply to this subpart:
(1) On or before January 1, 1979, was lawfully engaged in adequately providing such visitor services in the applicable park area;
(2) Has continued, as further defined in § 13.310, to lawfully provide that visitor service since January 1, 1979, without a change in controlling interest; and
(3) Is otherwise determined by the Director to have a right to continue to provide such services or similar services pursuant to § 13.310.
(a) A historical operator will have a right to continue to provide visitor services in a park area under appropriate terms and conditions contained in a visitor services authorization issued by the Director as long as such services are determined by the Director to be consistent with the purposes for which the park area was established. A historical operator may not operate without such an authorization. The authorization will be for a fixed term. Failure to comply with the terms and conditions of the authorization will result in cancellation of the authorization and consequent loss of historical operator rights under this subpart.
(b) Nothing in this subpart will prohibit the Director from permitting persons in addition to historical operators to provide visitor services in park areas at the Director's discretion as long as historical operators are permitted to conduct a scope and level of visitor services equal to those provided before January 1, 1979, under terms and conditions consistent with this subpart. A historical operator may be permitted by the Director under separate authority to increase the scope or level of visitor services provided
(c) If a historical operator applies for a visitor services authorization in the form of a joint venture, the application will not be considered as validly made unless the historical operator demonstrates, to the satisfaction of the Director, that it has the controlling interest in the joint venture.
(d) A historical operator may apply to the Director for an authorization or amended authorization to provide visitor services similar to those it provided before January 1, 1979. The Director will grant the request if such visitor services are determined by the Director to be:
(1) Consistent with the protection of park resources and the purposes for which the park area was established;
(2) Similar in kind and scope to the visitor services provided by the historical operator before January 1, 1979; and
(3) Consistent with the legal rights of any other person.
(e) When a historical operator's visitor services authorization expires, and if the applicable visitor services continue to be consistent with the purposes for which the park area was established as determined by the Director, the Director will offer to renew the authorization for a fixed term under such new terms and conditions as the Director determines are in the public interest.
(f) If the Director determines that authorized visitor services must be curtailed or reduced in scope, level, or season to protect park resources, or for other purposes, the Director will require the historical operator to make such changes in visitor services. If more than one historical operator providing the same type of visitor services is required to have those services curtailed, the Director will establish a proportionate reduction of visitor services among all such historical operators, taking into account historical operating levels and other appropriate factors so as to achieve a fair curtailment of visitor services among the historical operators. If the level of visitor services must be so curtailed that only one historical operator feasibly may continue to provide the visitor services, the Director will select one historical operator to continue to provide the curtailed visitor services through a competitive selection process.
(g) Any of the following will result in loss of historical operator status:
(1) Revocation of an authorization for historic types and levels of visitor services for failure to comply with the terms and conditions of the authorization.
(2) A historical operator's declination of a renewal of the authorization made pursuant to paragraph (d) of this section.
(3) A change in the controlling interest of the historical operator through sale, assignment, devise, transfer, or by any other means, direct or indirect. A change in the controlling interest of a historical operator that results only in the acquisition of the controlling interest by an individual or individuals who were personally engaged in the visitor services activities of the historical operator before January 1, 1979, will not be deemed a change in the historical operator's controlling interest for the purposes of this subpart.
(4) A historical operator's failure to provide the authorized services for more than 24 consecutive months.
(h) The Director may authorize other persons to provide visitor services in a park area in addition to historical operators.
(a) In selecting persons to provide visitor services for a park area, the Director will, if the number of visitor services authorizations is to be limited, give a preference (subject to any rights of historical operators or CIRI under this subpart) to preferred operators determined qualified to provide such visitor services.
(b) In such circumstances, the Director will publicly solicit competitive offers for persons to apply for a visitor services authorization, or the renewal of such an authorization, to provide such visitor services pursuant to 36 CFR part 51 and/or other National Park Service procedures. All offerors, including preferred operators, must submit a responsive offer to the solicitation in order to be considered for the authorization. If the best offer from a preferred operator is at least substantially equal to the best offer from a non-preferred operator, the preferred operator will receive authorization. If an offer from a person besides a preferred operator is determined to be the best offer (and no preferred operator submits a responsive offer that is substantially equal to it), the preferred operator who submitted the best offer from among the offers submitted by preferred operators will be given the opportunity, by amending its offer, to meet the terms and conditions of the best offer received. If the amended offer of such a preferred operator is considered by the Director as at least substantially equal to the best offer, the preferred operator will receive the visitor service authorization. If a preferred operator does not amend its offer to meet the terms and conditions of the best offer, the Director will issue the authorization to the person who submitted the best offer in response to the solicitation.
(c) The Native Corporation(s) determined to be “most directly affected”under this subpart and local residents have equal preference. The rights of preferred operators under this section take precedence over the right of preference that may be granted to existing satisfactory National Park Service concessioners pursuant to the Concessions Policy Act (16 U.S.C. 20) and its implementing regulations and procedures, but do not take precedence over the rights of historical operators or CIRI as described in this subpart.
(d) An offer from a preferred operator under this subpart, if the offer is in the form of a joint venture, will not be considered valid unless it documents to the satisfaction of the Director that the preferred operator holds the controlling interest in the joint venture.
(e) Nothing in this subpart will prohibit the Director from authorizing persons besides preferred operators to provide visitor services in park areas as long as the procedures described in this section have been followed. Preferred operators are not entitled by this section to provide all visitor services in a park area.
(f) The preferences described in this section may not be sold, assigned, transferred or devised, directly or indirectly.
(a) The Cook Inlet Region, Incorporated (CIRI), in cooperation with village corporations within the Cook Inlet region when appropriate, will have a right of first refusal to provide new visitor services within that portion of Lake Clark National Park and Preserve that is within the boundaries of the Cook Inlet region. In order to exercise this right of first refusal, the National Park Service will publicly solicit competitive offers for the visitor services authorization pursuant to 36 CFR part 51 or other applicable National Park Service procedures. CIRI must submit a responsive offer within 90 days of such solicitation. If CIRI makes such an offer and is determined by the Director to be capable of carrying out the terms and conditions of the visitor services authorization, it will receive the authorization. If it does not, the authorization may be awarded to another person pursuant to usual National Park Service policies and procedures if otherwise appropriate.
(b) The CIRI right of first refusal will have precedence over the rights of preferred operators. An offer from CIRI under this section, if the offer is in the form of a joint venture, will not be considered valid unless it demonstrates to the satisfaction of the Director that CIRI has a controlling interest in the joint venture.
(c) The CIRI right of first refusal may not be sold, transferred, devised or assigned, directly or indirectly.
(a) Before the award of the first visitor service authorization in a park area to be made after the effective date of this subpart, the Director will provide an opportunity for any Native Corporation interested in providing visitor services within the applicable park area to submit an application to the superintendent to be determined the Native Corporation most directly affected by the establishment or expansion of the park area by or under the provisions of ANILCA. An application from an interested Native Corporation will include the following information:
(1) Name, address, and phone number of the Native Corporation; date of incorporation; its articles of incorporation and structure;
(2) Location of the corporation's population center or centers; and
(3) An assessment of the socioeconomic impacts, including historical and traditional use and land-ownership patterns and their effects on the Native Corporation as a result of the expansion or establishment of the applicable park area by ANILCA.
(4) Any additional information the Native Corporation considers relevant or the Director may reasonably require.
(b) Upon receipt of all applications from interested Native Corporations, the Director will determine the “most directly affected” Native Corporation considering the following factors:
(1) Distance and accessibility from the corporation's population center and/or business address to the applicable park area; and
(2) Socioeconomic impacts, including historical and traditional use and landownership patterns, on Native Corporations and their effects as a result of the expansion or establishment of the applicable park area; and
(3) Information provided by Native Corporations and other information considered relevant by the Director to the particular facts and circumstances of the effects of the establishment or expansion of the applicable park area.
(c) In the event that more than one Native Corporation is determined to be equally affected within the meaning of this section, each such Native Corporation will be considered as a preferred operator under this subpart.
(d) The Director's most directly affected Native Corporation determination applies to the award of all future visitor service authorizations for the applicable park area. However, a Native Corporation that did not apply for this determination in connection with an earlier visitor services authorization may apply for a determination that it is an equally affected Native Corporation for the applicable park area in connection with a later visitor services authorization. Such subsequent applications must contain the information required by paragraph (a) of this section, and must be made in a timely manner as described by the Director in the applicable solicitation document so as not to delay the consideration of offers for the visitor services authorization.
An appeal of the denial of rights with respect to providing visitor services under this subpart may be made to the next higher level of authority. Such an appeal must be submitted in writing within 30 days of receipt of the denial. Appeals must set forth the facts and circumstances that the appellant believes support the appeal. The appellant may request an informal meeting to discuss the appeal with the National Park Service. After consideration of the materials submitted by the appellant and the National Park Service record of the matter, and meeting with the appellant if so requested, the Director will affirm, reverse, or modify the denial appealed and will set forth in writing the basis of the decision. A copy of the decision will be forwarded to the appellant and will constitute the final administrative decision in the matter. No person will be considered to have exhausted administrative remedies with respect to a denial of rights to provide visitor services under this subpart until a final administrative decision has been made pursuant to this section.
(a) The information collection requirements contained in this part have received emergency approval from the Office of Management and Budget under 44 U.S.C. 3507,
(b) The public reporting burden for the collection of information is estimated to be 480 hours for large operations and 240 hours for small operations, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed and completing and reviewing the collection of information, including suggestions for reducing the burden, to Information Collection Officer, National Park Service, 800 North Capitol Street, Washington, DC 20013; and the Office of Management and Budget, Office of Information and Regulatory Affairs, Attention: Desk Officer for the Department of Interior (1024-0125), Washington, DC 20503.
(a) Consistent with the management of fish and wildlife in accordance with recognized scientific principles and the purposes for which each park area was established, designated, or expanded by ANILCA, the purpose of this subpart is to provide the opportunity for local rural residents engaged in a subsistence way of life to do so pursuant to applicable State and Federal law.
(b) Consistent with sound management principles, and the conservation of healthy populations of fish and wildlife, the utilization of park areas is to cause the least adverse impact possible on local rural residents who depend upon subsistence uses of the resources of the public lands in Alaska.
(c) Nonwasteful subsistence uses of fish, wildlife and other renewable resources by local rural residents shall be the priority consumptive uses of such resources over any other consumptive uses permitted within park areas pursuant to applicable State and Federal law.
(d) Whenever it is necessary to restrict the taking of a fish or wildlife population within a park area for subsistence uses in order to assure the continued viability of such population or to continue subsistence uses of such population, the population shall be allocated among local rural residents engaged in subsistence uses in accordance with a subsistence priority system based on the following criteria:
(1) Customary and direct dependence upon the resource as the mainstay of one's livelihood;
(2) Local residency; and
(3) Availability of alternative resources.
(e) The State of Alaska is authorized to regulate the taking of fish and wildlife for subsistence uses within park areas to the extent such regulation is consistent with applicable Federal law, including but not limited to ANILCA.
(f) Nothing in this subpart shall be construed as permitting a level of subsistence use of fish and wildlife within park areas to be inconsistent with the conservation of healthy populations, and within a national park or monument to be inconsistent with the conservation of natural and healthy populations, of fish and wildlife.
Subsistence uses by local rural residents are allowed pursuant to the regulations of this subpart in the following park areas:
(a) In national preserves;
(b) In Cape Krusenstern National Monument and Kobuk Valley National Park;
(c) Where such uses are traditional (as may be further designated for each park or monument in the applicable special regulations of this part) in Aniakchak National Monument, Gates of the Arctic National Park, Lake Clark National Park, Wrangell-St. Elias National Park, and the Denali National Park addition.
(1) Any person who has his/her primary, permanent home within the resident zone as defined by this section, and whenever absent from this primary, permanent home, has the intention of returning to it. Factors demonstrating the location of a person's primary, permanent home may include, but are not limited to, the permanent address indicated on licenses issued by the State of Alaska Department of Fish and Game, driver's license, and tax returns, and the location of registration to vote.
(2) Any person authorized to engage in subsistence uses in a national park or monument by a subsistence permit issued pursuant to § 13.440.
(1) “Family” shall mean all persons related by blood, marriage, or adoption, or any person living within the household on a permanent basis; and
(2) “Barter” shall mean the exchange of fish or wildlife or their parts taken for subsistence uses—
(i) For other fish or game or their parts; or
(ii) For other food or for nonedible items other than money if the exchange is of a limited and noncommercial nature; and
(3) “Customary trade” shall be limited to the exchange of furs for cash (and such other activities as may be designated for a specific park area in the applicable special regulations of this part).
(a) A resident zone shall include—
(1) The area within a national park or monument; and
(2) The communities and areas near a national park or monument which contain significant concentrations of rural residents who, without using aircraft as a means of access for purposes of taking fish or wildlife for subsistence uses (except in extraordinary cases where no reasonable alternative existed), have customarily and traditionally engaged in subsistence uses within a national park or monument. For purposes of determining “significant” concentrations, family members shall also be included.
(b) After notice and comment, including public hearing in the affected local vicinity, a community or area near a national park or monument may be—
(1) Added to a resident zone; or
(2) Deleted from a resident zone, when such community or area does or does not meet the criteria set forth in paragraph (a) of this section, as appropriate.
(c) For purposes of this section, the term “family” shall mean all persons living within a rural resident's household on a permanent basis.
(a) Any rural resident whose primary, permanent home is outside the boundaries of a resident zone of a national park or monument may apply to the appropriate Superintendent pursuant to the procedures set forth in § 13.495 for a subsistence permit authorizing the permit applicant to engage in subsistence uses within the national park or monument. The Superintendent shall grant the permit if the permit applicant demonstrates that,
(1) Without using aircraft as a means of access for purposes of taking fish and wildlife for subsistence uses, the applicant has (or is a member of a family which has) customarily and traditionally engaged in subsistence uses within a national park or monument; or
(2) The applicant is a local rural resident within a resident zone for another national park or monument, or meets the requirements of paragraph (a)(1) of this section for another national park or monument, and there exists a pattern of subsistence uses (without use of an aircraft as a means of access for purposes of taking fish and wildlife for subsistence uses) between the national park or monument previously utilized by the permit applicant and the national park or monument for which the permit applicant seeks a subsistence permit.
(b) In order to provide for subsistence uses pending application for and receipt of a subsistence permit, until August 1, 1981, any rural resident whose primary permanent home is outside the boundaries of a resident zone of a national park or monument and who meets the criteria for a subsistence permit set forth in paragraph (a) of this section may engage in subsistence uses in the national park or monument without a permit in accordance with applicable State and Federal law. Effective August 1, 1981, however, such rural resident must have a subsistence permit as required by paragraph (a) of this section in order to engage in subsistence uses in the national park or monument.
(c) For purposes of this section, the term “family” shall mean all persons living within a rural resident's household on a permanent basis.
(a) Notwithstanding the provisions 43 CFR 36.11(f) the use of aircraft for access to or from lands and waters within a national park or monument for purposes of taking fish or wildlife for subsistence uses within the national park or monument is prohibited except as provided in this section.
(b)
(i) A community shall quality as an “exempted community” if, because of the location of the subsistence resources upon which it depends and the extraordinary difficulty of surface access to these subsistence resources, the local rural residents who permanently reside in the community have no reasonable alternative to aircraft use for access to these subsistence resources.
(ii) A community which is determined, after notice and comment (including public hearing in the affected local vicinity), to meet the description of an “exempted community” set forth in paragraph (b)(1) of this section shall be included in the appropriate special regulations for each park and monument in this part.
(iii) A community included as an “exempted community” in the special regulations of this part may be deleted therefrom upon a determination, after notice and comment (including public hearing in the affected local vicinity), that it does not meet the description of an “exempted community” set forth in paragraph (b)(1) of this section.
(2) Any local rural resident aggrieved by the prohibition on aircraft use set forth in this section may apply for an exception to the prohibition pursuant to the procedures set forth in § 13.495. In extraordinary cases where no reasonable alternative exists, the Superintendent may grant the exception upon a determination that the location of the subsistence resources depended upon and the difficulty of surface access to these resources, or other emergency situation, requires such relief.
(c) Nothing in this section shall prohibit the use of aircraft for access to lands and waters within a national park or monument for purposes of engaging in any activity allowed by law other than the taking of fish and wildlife. Such activities include, but are not limited to, transporting supplies.
(a) Notwithstanding any other provision of this chapter, the use of snowmobiles, motorboats, dog teams, and other means of surface transportation traditionally employed by local rural residents engaged in subsistence uses is permitted within park areas except at those times and in those areas restricted or closed by the Superintendent.
(b) The Superintendent may restrict or close a route or area to use of snowmobiles, motorboats, dog teams, or other means of surface transportation traditionally employed by local rural residents engaged in subsistence uses if the Superintendent determines that such use is causing or is likely to cause an adverse impact on public health and safety, resource protection, protection of historic or scientific values, subsistence uses, conservation of endangered or threatened species, or the purposes for which the park area was established.
(c) No restrictions or closures shall be imposed without notice and a public hearing in the affected vicinity and other locations as appropriate. In the case of emergency situations, restrictions or closures shall not exceed sixty (60) days and shall not be extended unless the Superintendent establishes, after notice and public hearing in the affected vicinity and other locations as appropriate, that such extension is justified according to the factors set forth in paragraph (b) of this section. Notice of the proposed or emergency restrictions or closures and the reasons therefore shall be published in at least one newspaper of general circulation within the State and in at least one local newspaper if appropriate, and information about such proposed or emergency actions shall also be made available for broadcast on local radio stations in a manner reasonably calculated to inform local rural residents in the affected vicinity. All restrictions and closures shall be designated on a map which shall be available for public inspection at the office of the Superintendent of the affected park area and the post office or postal authority of every affected community within or near the park area, or by the posting of signs in the vicinity of the restrictions or closures, or both.
(d) Motorboats, snowmobiles, dog teams, and other means of surface transportation traditionally employed by local rural residents engaged in subsistence uses shall be operated:
(1) In compliance with applicable State and Federal law;
(2) In such a manner as to prevent waste or damage to the park areas; and
(3) In such a manner as to prevent the herding, harassment, hazing or driving of wildlife for hunting or other purposes.
(e) At all times when not engaged in subsistence uses, local rural residents may use snowmobiles, motorboats, dog teams, and other means of surface transportation in accordance with 43 CFR 36.11(c), (d), (e), and (g).
Fish may be taken by local rural residents for subsistence uses in park areas where subsistence uses are allowed in compliance with applicable State and Federal law, including the provisions of §§ 2.3 and 13.40 of this chapter:
Local rural residents may hunt and trap wildlife for subsistence uses in park areas where subsistence uses are allowed in compliance with applicable State and Federal law. To the extent consistent with the provisions of this chapter, applicable State laws and regulations governing the taking of wildlife which are now or will hereafter be in effect are hereby incorporated by reference as a part of these regulations.
(a) Notwithstanding any other provision of this part, the non-commercial cutting of live standing timber by local rural residents for appropriate subsistence uses, such as firewood or house logs, may be permitted in park areas where subsistence uses are allowed as follows:
(1) For live standing timber of diameter greater than three inches at ground height, the Superintendent may permit cutting in accordance with the specifications of a permit if such cutting is determined to be compatible with the purposes for which the park area was established;
(2) For live standing timber of diameter less than three inches at ground height, cutting is permitted unless restricted by the Superintendent.
(b) The noncommerical gathering by local rural residents of fruits, berries, mushrooms, and other plant materials for subsistence uses, and the noncommerical gathering of dead or downed timber for firewood, shall be allowed without a permit in park areas where subsistence uses are allowed.
(c) Notwithstanding any other provision of this part, the Superintendent, after notice and public hearing in the affected vicinity and other locations as appropriate, may temporarily close all or any portion of a park area to subsistence uses of a particular plant population only if necessary for reasons of public safety, administration, or to assure the continued viability of such population. For the purposes of this section, the term “temporarily” shall mean only so long as reasonably necessary to achieve the purposes of the closure.
(1) If the Superintendent determines that an emergency situation exists and that extraordinary measures must be taken for public safety or to assure the continued viability of a particular plant population, the Superintendent may immediately close all or any portion of a park area to the subsistence uses of such population. Such emergency closure shall be effective when made, shall be for a period not to exceed sixty (60) days, and may not subsequently be extended unless the Superintendent establishes, after notice and public hearing in the affected vicinity and other locations as appropriate, that such closure should be extended.
(2) Notice of administrative actions taken pursuant to this section, and the reasons justifying such actions, shall be published in at least one newspaper of general circulation within the State and at least one local newspaper if available, and information about such actions and reasons also shall be made available for broadcast on local radio stations in a manner reasonably calculated to inform local rural residents in the affected vicinity. All closures shall be designated on a map which shall be available for public inspection at the office of the Superintendent of the affected park area and the post office or postal authority of every affected community within or near the park area, or by the posting of signs in the vicinity of the restrictions, or both.
(a) Notwithstanding any other provision of this part, the Superintendent, after consultation with the State and adequate notice and public hearing in the affected vicinity and other locations as appropriate, may temporarily close all or any portion of a park area to subsistence uses of a particular fish or wildlife population only if necessary for reasons of public safety, administration, or to assure the continued viability of such population. For purposes of this section, the term “temporarily” shall mean only so long as reasonably necessary to achieve the purposes of the closure.
(b) If the Superintendent determines that an emergency situation exists and that extraordinary measures must be taken for public safety or to assure the continued viability of a particular fish or wildlife population, the Superintendent may immediately close all or any portion of a park area to the subsistence uses of such population. Such emergency closure shall be effective when made, shall be for a period not to exceed sixty (60) days, and may not subsequently be extended unless the Superintendent establishes, after notice and public hearing in the affected vicinity and other locations as appropriate, that such closure should be extended.
(c) Notice of administrative actions taken pursuant to this section, and the reasons justifying such actions, shall be published in at least one newspaper of general circulation within the State and in at least one local newspaper if available, and information about such actions and reasons also shall be made available for broadcast on local radio stations in a manner reasonably calculated to inform local rural residents in the affected vicinity. All closures shall be designated on a map which shall be available for public inspection at the office of the Superintendent of the affected park area and the post office or postal authority of every affected community within or near the park area, or by the posting of signs in the vicinity of the restrictions, or both.
(a) Any person applying for the subsistence permit required by § 13.440(a), or the exception to the prohibition on aircraft use provided by § 13.450(b)(2), shall submit his/her application to the Superintendent of the appropriate national park or monument. If the applicant is unable or does not wish to submit the application in written form, the Superintendent shall provide the applicant an opportunity to present the application orally and shall keep a record of such oral application. Each application must include a statement which acknowledges that providing false information in support of the application is a violation of Section 1001 of Title 18 of the United States Code, and additional statements or documentation which demonstrates that the applicant satisfies the criteria set forth in § 13.440(a) for a subsistence permit or § 13.450(b)(2) for the aircraft exception, as appropriate. Except in extraordinary cases for good cause shown, the Superintendent shall decide whether to grant or deny the application in a timely manner not to exceed forty-five (45) days following the receipt of the completed application. Should the Superintendent deny the application, he/she shall include in the decision a statement of the reasons for the denial and shall promptly forward a copy to the applicant.
(b) An applicant whose application has been denied by the Superintendent has the right to have his/her application reconsidered by the Alaska Regional Director by contacting the Regional Director within 180 days of the issuance of the denial. The Regional Director may extend the 180-day time limit to initiate a reconsideration for good cause shown by the applicant. For purposes of reconsideration, the applicant shall present the following information:
(1) Any statement or documentation, in addition to that included in the initial application, which demonstrates that the applicant satisfies the criteria set forth in paragraph (a) of this section;
(2) The basis for the applicant's disagreement with the Superintendent's findings and conclusions; and
(3) Whether or not the applicant requests an informal hearing before the Regional Director.
(c) The Regional Director shall provide a hearing if requested by the applicant. After consideration of the written materials and oral hearing, if any, and within a reasonable period of time, the Regional Director shall affirm, reverse, or modify the denial of the Superintendent and shall set forth in writing the basis for the decision. A copy of the decision shall be forwarded promptly to the applicant and shall constitute final agency action.
The following communities and areas are included within the resident zone for Aniakchak National Monument:
(a) Approaching a bear or any large mammal within 50 yards is prohibited.
(b) Continuing to occupy a position within 50 yards of a bear that is using a concentrated food source, including, but not limited to, animal carcasses, spawning salmon, and other feeding areas is prohibited.
(c) The prohibitions do not apply to persons—
(1) Engaged in a legal hunt;
(2) On a designated bear viewing structure;
(3) In compliance with a written protocol approved by the Superintendent; or
(4) Who are otherwise directed by a park employee.
The use of off-road vehicles for purposes of reindeer grazing may be permitted in accordance with a permit issued by the Superintendent.
The following area is included within the resident zone for Cape Krusenstern National Monument: The NANA Region.
The following communities and areas are included within the resident zone for Denali National Park addition: Cantwell, Minchumina, Nikolai, and Telida.
Camping is allowed in accordance with the backcountry management plan.
Leaving unattended and abandoned property along the road corridor, at Wonder Lake, and in the areas included in the backcountry management plan, is prohibited.
The limit of catch per person per day shall be 10 fish but not to exceed 10 pounds and one fish, except that the limit of catch of lake trout (mackinaw) per person per day shall be two fish including those hooked and released. Possession of more than one day's limit of catch by one person at any one time is prohibited.
Climbing on Mount McKinley or Mount Foraker without registering, on a form provided by the Superintendent, at least 60 days in advance of any climb is prohibited.
What is prohibited? No one may fire a gun during the summer season in or across the Kantishna area firearm safety zone, unless they are defending life or property.
(a) The summer season begins on the Saturday of Memorial Day weekend and continues through the second Thursday following Labor Day or September 15, whichever comes first.
(b) The Kantishna Area firearm safety zone includes: The Kantishna Airstrip; the State Omnibus Act Road right-of-way; and all public lands located within one mile of the Kantishna Airstrip or the State Omnibus Act Road right-of-way, from the former Mt. McKinley National Park boundary at mile 87.9 to the south end of the Kantishna Airstrip.
The use of a bicycle is prohibited—
(a) On the Savage River Loop Trail; the Savage Cabin Trail; the Triple Lakes Trail; the McKinley Bar Trail; and the Eielson Area Trails; and
(b) Within the Frontcountry Developed Area as defined by § 13.970 except on park roads, road shoulders, and in public parking areas, or on trails and areas designated for bicycle use by the Superintendent. A map of the designated trails and areas open to bicycle use is available for inspection at the park visitor center and on the park Web site.
The use of roller skates, skateboards, roller skis, in-line skates, and similar devices is prohibited—
(a) On the Savage River Loop Trail; the Savage Cabin Trail; the Triple Lakes Trail; the McKinley Bar Trail; and the Eielson Area Trails; and
(b) Within the Frontcountry Developed Area as defined by § 13.970 except on trails and areas designated by the Superintendent. A map of the designated trails and areas is available for inspection at the park visitor center and on the park Web site.
Yes, you must obtain a permit from the superintendent to operate a motor vehicle on the restricted section of the Denali Park road. The restricted section begins at the west end of the Savage River Bridge (mile 14.8) and continues to the former Mt. McKinley National Park boundary north of Wonder Lake (mile 87.9).
The superintendent is authorized, under this subpart, to issue no more than 10,512 motor vehicle permits each year for access to the restricted section of the road. The superintendent will issue the permits for the period that begins on the Saturday of Memorial Day weekend and continues through the second Thursday following Labor Day or September 15, whichever comes first. Each permit allows one vehicle one entry onto the restricted portion of the Park road.
(a) The superintendent will apportion motor vehicle permits among authorized users following the procedures in § 13.55. Authorized users are individuals, groups and governmental entities who are allowed by law or policy to use the restricted section of the road.
(b) The superintendent will establish an annual date to evaluate permit requests and publish that date, along with the results of the annual apportionment, in the superintendent's compendium of rules and orders. The superintendent's compendium is available to the public upon request.
(c) The superintendent will reevaluate the access requirements of any business that is sold, ceases to operate or that significantly changes the services currently offered to the public.
(a) No one may operate a motor vehicle on the restricted section of the Park road without a valid permit.
(b) No one may use a motor home, camper or trailer to transport guests to a lodge or other business in Kantishna.
(c) No one may transfer or accept transfer of a Denali Park road permit without the superintendent's approval.
A
No, based on the application of the definition of traditional activities within the park to the factual history of the Old Park, there are no traditional activities that occurred during periods of adequate snow cover within the Old Park; and, thus, Section 1110(a) of ANILCA does not authorize snowmachine access. Hunting and trapping were not and are not legally permitted activities in the Old Park at any time of the year. Sport fishing has not taken place in the Old Park during periods of adequate snow cover due to weather conditions that are adverse to sport fishing, and the limited fishery resources within the Old Park. During periods of adequate snow cover, berry picking is not feasible, and has not taken place in the Old Park. Under the definition, recreational use of snowmachines is not a traditional activity. There are no villages, homesites or other valid occupancies within the Old Park. Access by snowmachine through the Old Park in transit to homesites, villages and other valid occupancies was not lawful prior to the enactment of ANILCA and is available through routes outside the Old Park that have been historically used for that purpose. Therefore, the use of snowmachines is not authorized by section 1110(a) for such travel. Further, Congress did not authorize subsistence activities in the Old Park. In addition, the National Park Service has determined that the use of even a few snowmachines in the Old Park would be detrimental to the resource values of the area. Therefore, because no usage is authorized in the Old Park by section 1110(a) the Old Park remains closed to all snowmachine use in accordance with 36 CFR 2.18.
You can use a snowmachine outside of the Old Park for traditional activities or travel to and from villages and homesites and other valid occupancies as authorized by 43 CFR 36.11(c), or when lawfully engaged in subsistence activities authorized by § 13.460.
The types of snowmachines allowed are defined in § 13.1 under “snowmachine or snowmobile”.
Snowmachine use is governed by regulations at § 2.18(a) of this chapter, traffic safety, § 2.18(b) of this chapter, state laws, and § 2.18(d) and (e) of this chapter, prohibited activities; and 43 CFR 36.11(a)(2) adequate snow cover, and 43 CFR 36.11(c) traditional activities.
The superintendent will determine when snow cover is adequate for snowmachine use. The superintendent will follow the procedures in §§ 1.5 and 1.7 of this chapter to inform the public.
Nothing in this subpart shall limit the authority of the superintendent to restrict or limit uses of an area under other statutory authority.
For purposes of this subpart, the Frontcountry Developed Area (FDA) means all park areas within the portion of the park formerly known as Mt. McKinley National Park (Old Park) not designated as Wilderness by Congress. A map showing the FDA is available at the park visitor center.
(a) Camping is prohibited in the FDA except in designated campgrounds in accordance with the terms and conditions of a permit. Violation of permit terms and conditions is prohibited.
(b) Camping in designated campgrounds in the FDA for more than a total of 14 days, either in a single period or combined periods, is prohibited.
(a) Camping is prohibited in the FDA except in designated campgrounds and the designated area where the park road is closed to motor vehicle use. A map showing the designated area is available at the park visitor center and on the park Web site.
(b) Camping in the FDA without a permit is prohibited. Violation of permit terms and conditions is prohibited.
(c) Camping in the FDA for more than a total of 30 days, either in a single period or combined periods, is prohibited.
Lighting or maintaining a fire is prohibited in the FDA except—
(a) In established receptacles within designated campgrounds;
(b) From October 1 through April 14 in that portion of the FDA where the park road is closed to motor vehicle use; and
(c) Under conditions that may be established by the Superintendent.
Possessing a pet is prohibited—
(a) In the FDA, except in public parking areas, on or immediately adjacent to park roads, or in designated campgrounds;
(b) Within 150 feet of the park sled dog kennels; and
(c) Within 150 feet of the park water system intake facilities.
The Superintendent may prohibit or otherwise restrict activities in the FDA to protect public health, safety, or park resources. Information on FDA closures and restrictions will be available for inspection at the park visitor center and on the park Web site. Violating FDA closures or restrictions is prohibited.
The following communities and areas are included within the resident zone for Gates of the Arctic National Park: Alatna, Allakaket, Ambler, Anaktuvuk Pass, Bettles/Evansville, Hughes, Kobuk, Nuiqsut, Shungnak, and Wiseman.
In extraordinary cases where no reasonable alternative exists, local rural residents who permanently reside in the following exempted community(ies) may use aircraft for access to lands and waters within the park for subsistence purposes in accordance with a permit issued by the Superintendent: Anaktuvuk Pass.
In the Gates of the Arctic National Preserve unit which contains the Kobuk River and its tributaries, “customary trade” shall include—in addition to the exchange of furs for cash—the selling of handicraft articles made from plant material taken by local rural residents of the park area.
As used in this subpart:
All coordinates referenced in this subpart use horizontal datum World Geodetic System of 1984 (WGS 84).
Collecting or burning interstadial wood (aged wood preserved in glacial deposits) is prohibited.
Collecting rocks and minerals in the former Glacier Bay National Monument is prohibited.
The collection of naturally shed goat hair is authorized in accordance with terms and conditions established by the Superintendent. Violating terms and conditions for collecting goat hair is prohibited.
From May 1 through September 30, camping within Glacier Bay as defined by this subpart up to
The Superintendent may prohibit or otherwise restrict activities in the Bartlett Cove Developed Area to protect public health, safety, or park resources, or to provide for the equitable and orderly use of park facilities. Information on closures and restrictions will be available at the park visitor information center. Violating Bartlett Cove Developed Area closures or restrictions is prohibited.
(a) Docking, tying down, or securing aircraft is prohibited except at the designated aircraft float at the Bartlett Cove Public Use Dock. Docking, tying down, or securing aircraft to the Bartlett Cove Public Use Dock for longer than 3 hours in a 24-hour period is prohibited. Pilots must remain with the aircraft or provide notice of their location to a park ranger. Failure to remain with the aircraft or provide notice to a park ranger is prohibited.
(b) Vehicles exceeding 30,000 pounds gross vehicle weight are prohibited on the dock, unless authorized by the Superintendent.
(c) Leaving personal property (other than vessels) unattended on, or attached to, the floats or pier without prior
(d) Processing commercially caught fish on the Public Use Dock is prohibited.
(e) The Superintendent may authorize the buying or selling of fish or fish products on or at the Public Use Dock. Buying or selling of fish or fish products is prohibited on or at the Public Use Dock without written permission from the Superintendent.
(f) Utilizing the fuel dock for activities other than fueling and waste pump-out is prohibited. Other uses may be authorized by the Superintendent to protect park resources or public safety.
(g) Leaving a vessel unattended on the fuel dock for any length of time is prohibited.
(h) Using electrical shore power for vessels is prohibited unless otherwise authorized by the Superintendent.
(a) Camping is prohibited in the Bartlett Cove Developed Area except in the Bartlett Cove Campground. From May 1 through September 30, all overnight campers must register to camp in the Bartlett Cove Campground. Failure to register is prohibited.
(b) Cooking, consuming, or preparing food in the Bartlett Cove Campground is prohibited except in designated areas.
(c)
Use of a bicycle is prohibited on the Forest Loop, Bartlett River and Bartlett Lake trails.
Commercial transport of passengers between Bartlett Cove and Gustavus by motor vehicles legally licensed to carry 15 or fewer passengers is allowed without a permit. However, if required to protect public health and safety or park resources, or to provide for the equitable use of park facilities, the Superintendent may establish a permit requirement with appropriate terms and conditions for the transport of passengers. Failure to comply with permit terms and conditions is prohibited.
Yes—Commercial fishing is authorized within the outer waters of the park and within the non-wilderness waters of Glacier Bay, subject to the provisions of this chapter.
(a) Commercial fishing shall be administered pursuant to a cooperatively developed State/federal park fisheries management plan, international conservation and management treaties, and existing federal and non-conflicting State law. The management plan shall provide for the protection of park values and purposes, the prohibition on any new or expanded fisheries, and the opportunity to study marine resources.
(b) Commercial fishing or conducting an associated buying or processing operation in wilderness waters is prohibited.
(c) A new or expanded fishery is prohibited. The Superintendent shall compile a list of the existing fisheries and gear types used in the outer waters and follow the procedures in §§ 1.5 and 1.7 of this chapter to inform the public.
(d) Maps and charts showing which marine areas of Glacier Bay are closed to commercial fishing are available from the Superintendent.
Three types of commercial fishing are authorized in Glacier Bay non-wilderness waters: Longline fishing for halibut; pot and ring fishing for Tanner crab; and trolling for salmon.
(a) All other commercial fishing, or a buying or a processing operation not related to an authorized fishery is prohibited in Glacier Bay.
(b) On October 1, 2000, each fishery will be limited to fishermen who qualify for a non-transferable commercial fishing lifetime access permit (see § 13.1134). Commercial fishing without a permit issued by the superintendent, or other than in accordance with the terms and conditions of the permit, is prohibited.
(c) The Superintendent shall include in a permit the terms and conditions that the superintendent deems necessary to protect park resources. Violating a term or condition of the permit is prohibited.
A Glacier Bay commercial fishing lifetime access permit will be issued by the superintendent to fishermen who have submitted documentation to the superintendent, on or before October 1, 2000, which demonstrates to the satisfaction of the superintendent that:
(a) They possess valid State limited entry commercial fishing permits for the district or statistical area encompassing Glacier Bay for each fishery for which a lifetime access permit is being sought; and,
(b) They have participated as a limited entry permit holder or crewmember in the district or statistical area encompassing Glacier Bay for each fishery for which a lifetime access permit is being sought.
(1) For the Glacier Bay commercial halibut fishery, the applicant must have participated as a permit holder or crewmember for at least 2 years during the period 1992-1998.
(2) For the Glacier Bay salmon or Tanner crab commercial fisheries, the applicant must have participated as a permit holder or crewmember for at least 3 years during the period 1989-1998.
An applicant for a lifetime access permit must provide information sufficient to establish eligibility as follows:
(a) The applicant's full name, date of birth, mailing address and phone number;
(b) A notarized affidavit (required), sworn by the applicant, attesting to his or her history of participation as a limited entry permit holder or crewmember in Glacier Bay during the qualifying period for each fishery for which a lifetime access permit is being sought;
(c) A copy of the applicant's current State of Alaska limited entry permit or, in the case of halibut, an international Pacific Halibut Commission quota share (required), that is valid for the area that includes Glacier Bay, for each fishery for which a lifetime access permit is sought;
(d) For qualifying years as a limited entry permit holder, available corroborating documentation of the applicant's permit and quota share history for the Glacier Bay fishery during the qualifying period, and/or for qualifying years as a crewmember, other available corroborating documentation of crewmember status. This may include a copy of the applicant's commercial crewmember license for each qualifying year, a notarized affidavit from their employer (generally a limited entry permit holder, or boat owner hired or contracted by a limited entry permit holder) stating the years worked by the
(e) For applicants qualifying as a limited entry permit holder, available corroborating documentation of commercial landings for the Glacier Bay fishery during the qualifying periods—i.e., within the statistical unit or area that includes Glacier Bay. For halibut, this includes regulatory sub-area 184. For Tanner crab, this includes statistical areas 114-70 through 114-77. For salmon, the Superintendent may need additional documentation that supports the applicant's declaration of Glacier Bay salmon landings. For halibut and Tanner crab, the Superintendent may consider documented commercial landings from the unit or area immediately adjacent to Glacier Bay (in Icy Strait) if additional documentation supports the applicant's declaration that landings occurred in Glacier Bay.
(f) Any additional corroborating documentation that might assist the superintendent in a timely determination of eligibility for the access permits.
Before October 1, 2000, all required information (as listed in § 13.1136) should be sent to: Superintendent, Attn: Access Permit Program, Glacier Bay National Park and Preserve, P.O. Box 140, Gustavus, Alaska 99826.
The superintendent will make a written determination of an applicant's eligibility for the lifetime access permit based on information provided. A copy of the determination will be mailed to the applicant. If additional information is required to make an eligibility determination, the applicant will be notified in writing of that need and be given an opportunity to provide it.
Yes—If an applicant's request for a commercial fishing lifetime access permit is denied, the superintendent will provide the applicant with the reasons for the denial in writing within 15 days of the decision. The applicant may appeal to the Regional Director, Alaska Region, within 180 days. The appeal must substantiate the basis of the applicant's disagreement with the Superintendent's determination. The Regional Director (or his representative) will meet with the applicant to discuss the appeal within 30 days of receiving the appeal. Within 15 days of receipt of written materials and the meeting, if requested, the Regional Director will affirm, reverse, or modify the Superintendent's determination and explain the reasons for the decision in writing. A copy of the decision will be forwarded promptly to the applicant and will be the final agency action.
The superintendent will renew lifetime access permit at 5-year intervals for the lifetime of a permittee who continues to hold a valid State limited entry commercial fishing permit, and for halibut an International Pacific Halibut Commission quota share, and is otherwise eligible to participate in the fishery under Federal and State law.
The following are prohibited:
(a) Commercial fishing in the waters of Geikie, Tarr, Johns Hopkins and Reid Inlets.
(b) Commercial fishing in the waters of the west arm of Glacier Bay north of 58° 50.0′ N latitude, except commercial fishermen who have been authorized by the superintendent to troll for salmon may troll for king salmon during the period October 1 through April 30, in compliance with state commercial fishing regulations.
(c) Commercial fishing in the east arm of Glacier Bay, north of an imaginary line running from Point Caroline through the southern point of Garforth Island and extending to the east side of Muir Inlet, except commercial fishermen who have been authorized by the superintendent to troll for salmon may troll for king salmon south of 58° 50.0′ N latitude during the period October 1 through April 30, in compliance with state commercial fishing regulations.
A permit from the superintendent is required for motor vessels in accordance with this subpart and applicable regulations in this part.
In Glacier Bay from June 1 through August 31 an individual must have a permit from the NPS issued for a specific vessel for a specific period of time.
(a) From June 1 through August 31, when the operator of a private vessel enters Glacier Bay for the first time that calendar year, the operator must go directly to the Bartlett Cove Ranger Station for orientation.
(b) From May 1 through September 30, the operator of a private vessel must immediately notify the Bartlett Cove Ranger Station of the vessel's entry to or exit from Glacier Bay.
Each commercially operated motor vessel must have a permit to operate in Glacier Bay National Park and Preserve in accordance with § 5.3 of this chapter.
(a) A cruise ship must have a concession contract to operate in Glacier Bay.
(b) A tour vessel, charter vessel, and passenger ferry must have a commercial authorization to operate in Glacier Bay.
(c) The operator of a cruise ship, tour vessel, charter vessel, and passenger ferry must notify the Bartlett Cove Ranger Station of the vessel's entry into Glacier Bay within 48 hours in advance of entering Glacier Bay or immediately upon entry.
(d) Cruise ships and tour vessels are prohibited from operating in the Beardslee Entrance and at the entrance to Adams Inlet, as defined as waters within the Wilderness boundaries in those respective areas.
(e) Off-boat activity from a cruise ship, tour vessel, or charter vessel is prohibited, unless authorized by the superintendent.
(f) Off-boat activity from a passenger ferry is prohibited, except for passenger access at the Bartlett Cove docks.
(g) A passenger ferry must travel a direct course between the mouth of Glacier Bay and Bartlett Cove, except when the vessel is granted safe harbor by the Superintendent as stated in § 13.1156(e).
A vessel permit is not required in Glacier Bay when:
(a) A motor vessel is engaged in official, non-commercial business of the State or Federal Government;
(b) A motor vessel is operating in Bartlett Cove waters east of a line extending from the long axis of the fuel dock to the wilderness boundary of Lester Island;
(c) One motor vessel is launched from a motor vessel that has a permit and only while the authorized motor vessel remains at anchor or operated in accordance with a concession agreement from a permitted motor vessel while that vessel is not underway;
(d) A commercial fishing vessel authorized under this subpart is actually engaged in commercial fishing; or
(e) A vessel is granted safe harbor by the superintendent.
(a) Operating a motor vessel in Glacier Bay without a required permit is prohibited.
(b) Violating a term or condition of a permit or an operating condition or restriction issued or imposed pursuant to this chapter is prohibited.
(c) The superintendent may immediately suspend or revoke a permit or deny a future permit request as a result of a violation of a provision of this chapter.
The superintendent will allow vessel entry in accordance with the following table:
Cruise ships and tour vessels are limited to the daily vessel quota year-round. Charter and private vessels are not subject to quotas from September through May.
(a) The Director will reduce the vessel quota levels for any or all categories of vessels in this subpart as required to protect the values and purposes of Glacier Bay National Park and Preserve. The director will make these reductions based on the controlling biological opinion issued by the National Oceanic and Atmospheric Administration Fisheries Service under section 7 of the Endangered Species Act, applicable authority, and any other relevant information.
(b) The superintendent will annually determine the cruise ship quota. This determination will be based upon applicable authorities, appropriate public comment and available scientific and other information. The number will be subject to the maximum daily vessel quota of two vessels.
(c) From June 1 through August 31, the superintendent will designate one private vessel permit from the daily quota of 25 as a transit permit. This transit permit may be used only to directly exit Glacier Bay from Bartlett Cove and return directly to Bartlett Cove. The superintendent may establish application procedures and operating conditions. Violating operating conditions is prohibited. This paragraph will cease to have effect on November 30, 2011.
(d) Nothing in this section will be construed to prevent the superintendent from taking any action at any time to protect the values and purposes of Glacier Bay National Park and Preserve.
(a) Operating a vessel within 1/4 nautical mile of a whale is prohibited, except for a commercial fishing vessel authorized under this subpart that is actively trolling, setting, or pulling long lines, or setting or pulling crab pots.
(b) The operator of a vessel inadvertently positioned within 1/4 nautical mile of a whale must immediately slow the vessel to ten knots or less, without shifting into reverse unless impact is likely. The operator must direct or maintain the vessel on as steady a course as possible away from the whale until at least 1/4 nautical mile of separation is established. Failure to take such action is prohibited.
(c) The operator of a vessel or seaplane positioned within 1/2 nautical mile of a whale is prohibited from altering course or speed in a manner that results in decreasing the distance between the whale and the vessel or seaplane.
Section 13.1170 does not apply to a vessel being used in connection with federally permitted whale research or monitoring; other closures and restrictions in “Vessel Operating Restrictions,” §§ 13.1170 through 13.1180, do not apply to authorized persons conducting emergency or law enforcement operations, research or resource management, park administration/supply, or other necessary patrols.
(a) May 15 through September 30, the following waters are designated as whale waters.
(1) Waters north of a line drawn from Point Carolus to Point Gustavus; and south of a line drawn from the northernmost point of Lars Island across the northernmost point of Strawberry Island to the point where it intersects the line that defines the Beardslee Island group, as described in § 13.1180(a)(4), and following that line south and west to the Bartlett Cove shore (so as to include the Beardslee Entrance and Bartlett Cove); and
(2) Other waters designated by the superintendent as temporary whale waters.
(b) The public will be notified of other waters designated as temporary whale waters in accordance with § 1.7 of this chapter.
(c) Violation of a whale water restriction is prohibited. The following restrictions apply in whale waters unless otherwise provided by the superintendent in the designation:
(1) Operating a motor vessel less than one nautical mile from shore (where the width of the water permits), or in narrower areas navigating outside of mid-channel is prohibited. This restriction does not apply to motor vessels less than 18 feet in length, or vessels actively engaged in fishing activities or operating solely under sail.
(2) Unless other restrictions apply, operators may perpendicularly approach or land on shore (
(3) Operators must follow motor vessel speed limits in § 13.1176(a).
(a) From May 15 through September 30, in designated whale waters the following are prohibited:
(1) Operating a motor vessel at more than 20 knots speed through the water; or
(2) Operating a motor vessel at more than 13 knots speed through the water, when the superintendent has designated a maximum speed of 13 knots, or at a maximum speed designated by the superintendent based on NOAA guidelines or new scientific information.
(b) From July 1 through August 31, operating a motor vessel on Johns Hopkins Inlet waters south of 58°54.2′ N latitude (a line running due west from Jaw Point) at more than 10 knots speed through the water is prohibited.
The following are prohibited:
(a) Operating a vessel or otherwise approaching within 100 yards of South Marble Island; or Flapjack Island; or any of the three small unnamed islets approximately one nautical mile southeast of Flapjack Island; or Eider Island; or Boulder Island; or Geikie Rock; or Lone Island; or the northern three-fourths of Leland Island (north of 58°39.1′ N latitude); or any of the four small unnamed islands located approximately one nautical mile north (one island), and 1.5 nautical miles east (three islands) of the easternmost point of Russell Island; or Graves Rocks (on the outer coast); or Cormorant Rock, or any adjacent rock, including all of the near-shore rocks located along the outer coast, for a distance of 1
(b) Operating a vessel or otherwise approaching within 100 yards of a Steller (northern) sea lion (
(c) May 1 through August 31, operating a vessel, or otherwise approaching within
(d) May 1 through August 31, operating a cruise ship on Johns Hopkins Inlet waters south of 58°54.2′ N latitude (an imaginary line running approximately due west from Jaw Point).
(e) May 1 through June 30, operating a vessel or a seaplane on Johns Hopkins Inlet waters south of 58°54.2′ N latitude (an imaginary line running approximately due west from Jaw Point).
(f) July 1 through August 31, operating a vessel or a seaplane on Johns Hopkins Inlet waters south of 58°54.2′ N latitude (an imaginary line running approximately due west from Jaw Point), within
(g) Restrictions imposed in this section are minimum distances. Park visitors are advised that protection of park wildlife may require that visitors maintain greater distances from wildlife.
(a) May 1 through September 15, operating a motor vessel or a seaplane on the following water is prohibited:
(1) Adams Inlet, east of 135°59.2′ W longitude (an imaginary line running approximately due north and south through the charted (5) obstruction located approximately 2
(2) Rendu Inlet, north of the wilderness boundary at the mouth of the inlet.
(3) Hugh Miller complex, including Scidmore Bay and Charpentier Inlet, west of the wilderness boundary at the mouth of the Hugh Miller Inlet.
(4) Waters within the Beardslee Island group (except the Beardslee Entrance), that is defined by an imaginary line running due west from shore to the easternmost point of Lester Island, then along the south shore of Lester Island to its western end, then to the southernmost point of Young Island, then north along the west shore and east along the north shore of Young Island to its northernmost point, then at a bearing of 15 true to an imaginary point located one nautical mile due east of the easternmost point of Strawberry Island, then at a bearing of 345 true to the northernmost point of Flapjack Island, then at a bearing of 81 true to the northernmost point of the unnamed island immediately to the east of Flapjack Island, then southeasterly to the northernmost point of the next unnamed island, then southeasterly along the (Beartrack Cove) shore of that island to its easternmost point, then due east to shore.
(b) June 1 through July 15, operating a motor vessel or a seaplane on the waters of Muir Inlet north of 59°02.7′ N latitude (an imaginary line running approximately due west from the point of land on the east shore approximately 1 nautical mile north of the McBride Glacier) is prohibited.
(c) July 16 through August 31, operating a motor vessel or a seaplane on the waters of Wachusett Inlet west of 136°12.0′ W longitude (an imaginary line running approximately due north from the point of land on the south shore of Wachusett Inlet approximately 2
June 1 through August 31, except on vessels in transit or as otherwise authorized by the superintendent, the use of generators or other non-propulsive motors (except a windlass) is prohibited from 10 p.m. until 6 a.m. in Reid Inlet, Blue Mouse Cove and North Sandy Cove.
The superintendent will make rules for the safe and equitable use of Bartlett Cove waters and for park docks. The superintendent will notify the public of these rules by posting of a sign or a copy of them at the dock. Failure to obey a sign or posted rule is prohibited.
(a) The State of Alaska statutes and regulations applicable to marine vessel emission standards are adopted as a part of these regulations.
(b) Violating a State of Alaska statute or regulation applicable to marine vessel visible emission standards is prohibited.
Closed waters and islands within Glacier Bay as described in §§ 13.1174-13.1180 of this subpart are described as depicted on NOAA Chart #17318 GLACIER BAY (4th Ed., Mar. 6/93) available to the public at park offices at Bartlett Cove and Juneau, Alaska.
Fishing is allowed in accordance with § 13.40 of this chapter, but only with artificial lures and with the following additional exceptions:
(a) Bait, as defined by State law, may be used only on the Naknek River during times and dates established by
(b) Flyfishing only is allowed on the Brooks River between Brooks Lake and the posted signs near Brooks Camp.
(c) No person may retain more than one fish per day caught on Brooks River, on the waters between the posted signs 200 yards from the outlet of Brooks Lake, or on the water between the posted signs 200 yards from the mouth of the Brooks River on Naknek Lake.
Local residents who are descendants of Katmai residents who lived in the Naknek Lake and River Drainage will be authorized, in accordance with State fishing regulations or conditions established by the Superintendent, to continue their traditional fishery for red fish (spawned-out sockeye salmon that have no significant commercial value).
(a) Approaching a bear or any large mammal within 50 yards is prohibited.
(b) Continuing to occupy a position within 50 yards of a bear that is using a concentrated food source, including, but not limited to, animal carcasses, spawning salmon, and other feeding areas is prohibited.
(c) The prohibitions in this section do not apply to persons—
(1) Engaged in a legal hunt;
(2) On a designated bear viewing structure;
(3) In compliance with a written protocol approved by the Superintendent; or
(4) Who are otherwise directed by a park employee.
Leaving a boat, trailer, or vehicle unattended for more than 72 hours at the facilities associated with the Lake Camp launching ramp is prohibited without authorization from the Superintendent. Leaving a boat unattended at the Lake Camp dock is prohibited.
For purposes of this subpart, the Brooks Camp Developed Area (BCDA) means all park areas within a 1.5 mile radius from the Brooks Falls Platform and is depicted on a map available at the park visitor center. Sections 13.1222-13.2240 of this subpart apply from May 1 through October 31 unless stated otherwise.
(a) Camping is prohibited in all areas of the BCDA except within the Brooks Camp Campground and other designated areas.
(b) Camping in Brooks Camp Campground for more than a total of 7 nights during the month of July is prohibited.
(c) Exceeding a group size limit of 6 persons per site in the Brooks Camp Campground while in operation as a designated fee area is prohibited.
The Falls and Riffles bear viewing platforms and boardwalks are closed from 10 pm to 7 am from June 15 through August 15. Entering or going upon these platforms and boardwalks during these hours is prohibited.
The area within 50 yards of the ordinary high water marks of the Brooks River from the Riffles Bear Viewing Platform to a point 100 yards above Brooks Falls is closed to entry from June 15 through August 15, unless authorized by the Superintendent. The Superintendent may designate a route to transit through the closed area.
In the BCDA, all fish must be stored in designated facilities and in accordance with conditions established by the Superintendent. Storing fish in any other manner is prohibited. Employees may store fish in employee residences.
Lighting or maintaining a fire is prohibited except in established receptacles in the BCDA.
Within the BCDA, washing dishes or cooking utensils at locations other than the water spigot near the food cache in the Brooks Campground or other designated areas is prohibited.
Possessing a pet in the BCDA is prohibited.
All persons visiting the BCDA must receive an NPS-approved Bear Orientation. Failure to receive an NPS-approved Bear Orientation is prohibited.
Within the BCDA, picnicking in locations other than the Brooks Camp Visitor Center picnic area, Brooks Campground, Brooks Lake Picnic Area, and a site designated in the employee housing area is prohibited. Food consumption or possession while at the Brooks River is prohibited.
Leaving property, other than motorboats and planes, unattended for any length of time within the BCDA is prohibited, except at the Brooks Lodge Porch, Brooks Campground, or designated equipment caches as posted at the Brooks Camp Visitor Center.
The Superintendent may prohibit or otherwise restrict activities in the BCDA to protect public health and safety or park resources. Information on BCDA closures and restrictions will be available for inspection at the park visitor center. Violating BCDA closures or restrictions is prohibited.
Subsistence uses are prohibited in, and the provisions of Subpart F of this part shall not apply to, Kenai Fjords National Park.
(a) Except for areas designated by the Superintendent, climbing or walking on, in, or under Exit Glacier is prohibited within
(b) Entering an ice fall hazard zone is prohibited. These zones will be designated with signs, fences, rope barriers, or similar devices.
(a) Camping within 500 feet of the North Arm or Holgate public use cabin is prohibited except by the cabin permit holder on a designated tent site, or as otherwise authorized by the Superintendent.
(b) Camping within the 5-acre NPS-leased parcel surrounding the Aialik public use cabin is prohibited except by the cabin permit holder on a designated tent site, or as otherwise authorized by the Superintendent.
(c) Lighting or maintaining a fire within 500 feet of the North Arm or Holgate public use cabins is prohibited except by the cabin permit holder in NPS established receptacles, or as otherwise authorized by the Superintendent.
(d) Lighting or maintaining a fire within the 5-acre NPS-leased parcel surrounding the Aialik public use cabin is prohibited except by the cabin permit holder in NPS-established receptacles, or as otherwise authorized by the Superintendent.
(a) Camping is permitted only in designated areas.
(b) Camping without a permit is prohibited. The Superintendent may establish permit terms and conditions. Failure to comply with permit terms and conditions is prohibited.
(c) Camping at Dyea campground more than 14 days in a calendar year is prohibited.
The Superintendent may allow the gathering of mushrooms in accordance with § 2.1(c) of this chapter.
The National Park Service administers certain state-owned lands and waters within the boundary of Klondike Gold Rush National Historical Park under a memorandum of understanding with the State of Alaska. The prohibition on carrying, possession, and use of weapons, traps, and nets in this chapter does not apply to the lawful taking of wildlife on these State-owned lands and waters.
The following area is included within the resident zone for Kobuk Valley National Park: The NANA Region.
In addition to the exchange of furs for cash, “customary trade” in Kobuk Valley National Park shall include the selling of handicraft articles made from plant material taken by local rural residents of the park area.
The following communities and areas are included within the resident zone for Lake Clark National Park: Iliamna, Lime Village, Newhalen, Nondalton, Pedro Bay, and Port Alsworth.
The following activities are prohibited in Sitka National Historical Park—
(a) Camping.
(b) Riding a bicycle, except in the public parking areas and on routes designated by the Superintendent. Routes may only be designated for bicycle use based on a written determination that such use is consistent with the purposes for which the park was established.
(c) The use of roller skates, skateboards, roller skis, in-line skates, and other similar devices.
(a)
(b)
(c)
A map showing the boundaries of the KNHL is available at the park visitor center. The following activities are prohibited within the KNHL—
(a) Entering closed structures or passing beyond barricades;
(b) Entering mine tunnels and other mine openings;
(c) Camping in or on any historic structure; and
(d) Camping within the mill site of the KNHL. The mill site consists of the collection of buildings clustered around the mill building on both sides of National Creek. For purposes of this subpart, the mill site is the area bounded by Bonanza Creek to the north, the Kennicott Glacier to the west, the 2,200 foot contour line to the east, and Sweet Creek to the south. The mill site is depicted on a map available at the park visitor center; and
(e) Lighting or maintaining a fire within the mill site as defined in paragraph (d) of this section.
For purposes of this subpart, the HVCDA consists of all park areas within a
(a) Lighting or maintaining a fire;
(b) Camping;
(c) Entering the area after visiting hours (visiting hours will be posted at the entrance gate).
For purposes of this subpart, the Slana Developed Area consists of all park areas within a
The Superintendent may prohibit or otherwise restrict activities in the KNHL, Headquarters/Visitor Center Developed Area, and Slana Developed Area to protect public health and safety or park resources. Information on closures and restrictions will be available at the park visitor center. Violating these closures or restrictions is prohibited. Notwithstanding the provisions of this subpart, the Superintendent may issue a Special Use Permit to authorize uses in the KNHL and either developed area.
Department of the Army, DOD.
Final rule.
The Department of the Army is publishing as a final rule an amendment to its regulations to reflect a substantial revision of AR 27-20, an Army publication which governs the processing of claims worldwide. The purpose of this revision is to make AR 27-20 clearer and easier to use, after years of piecemeal amendments. This rewrite also ensures that AR 27-20 is in keeping with current statutes, legal opinions and Department of Justice guidance pertaining to claims processing. This updated rule will expedite payment of meritorious claims throughout the world.
U.S. Army Claims Service, ATTN: JACS-TCO, 4411 Llewellyn Avenue, Fort Meade, MD 20755-5360.
George Westerbeke, (301) 677-7009, x220.
In the August 11, 2006 issue of the
AR 27-20 and its companion DA Pam 27-162 will be available on the Web site of the U.S. Army Publications Directorate,
The Department of the Army has determined that the Regulatory Flexibility Act does not apply because the rule does not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612.
The Department of the Army has determined that the Unfunded Mandates Reform Act does not apply because the rule does not include a mandate that may result in estimated costs to State, local or tribal governments in the aggregate, or the private sector, of $100 million or more.
The Department of the Army has determined that the National Environmental Policy Act does not apply because the rule does not have an adverse impact on the environment.
The Department of the Army has determined that the Paperwork Reduction Act does not apply because the rule does not involve collection of information from the public.
The Department of the Army has determined that Executive Order 12630 does not apply because the rule does not impair private property rights.
The Department of the Army has determined that according to the criteria defined in Executive Order 12866 this rule is not a significant regulatory action. As such, the rule is not subject to Office of Management and Budget review under section 6(a)(3) of the Executive Order.
The Department of the Army has determined that according to the criteria defined in Executive Order 13045 this rule does not apply.
The Department of the Army has determined that according to the criteria defined in Executive Order 13132 this rule does not apply because it will not have a substantial 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.
Claims, Government employees, Military personnel.
10 U.S.C. 2733; 10 U.S.C. 1089; 10 U.S.C. 1054; 28 U.S.C. 1291, 2401-2402, 2411-2412, 2671-2680; 10 U.S.C. 2737; 32 U.S.C. 715; 10 U.S.C. 2734a, 2734b; 10 U.S.C. 2734; 10 U.S.C. 4801, 4802, 4806; 46 U.S.C. app. 740; 39 U.S.C. 411; 10 U.S.C. 939; 10 U.S.C. 2736; 10 U.S.C. 2735; 10 U.S.C. 2731.
This part sets forth policies and procedures that govern the investigating, processing, and settling of claims against, and in favor of, the United States under the authority conferred by statutes, regulations, international and interagency agreements, and Department of Defense Directives (DODDs). It is intended to ensure that claims are investigated properly and adjudicated according to applicable law, and valid recoveries and affirmative claims are pursued against carriers, third-party insurers, and tortfeasors.
(a)
(1)
(ii) The Gonzales Act, 10 U.S.C. 1089. This act permits individual suits against health care providers for certain torts (see § 536.80).
(iii) Certain suits arising out of legal malpractice, 10 U.S.C. 1054, discussed at § 536.81 and at DA Pam 27-162, paragraph 2-62f.
(iv) The Federal Tort Claims Act (FTCA), 28 U.S.C. 1291, 1402, 2401-2402, 2411-2412, and 2671-2680 (see subpart D of this part). The Westfall Act, 28 U.S.C. 2679, an integral part of the FTCA, provides absolute immunity from individual suit for common law torts for employees of the United States acting within the scope of their employment.
(A) The legislative history of the FTCA.
(B) Regulations of the Attorney General implementing the Federal Tort Claims Act, 28 CFR Part 14.
(C) An appendix to 28 CFR Part 14 sets forth certain delegations of settlement authority to the Secretary of Veterans Affairs, the Postmaster General, the Secretary of Defense, the Secretary of Transportation, and the Secretary of Health and Human Services.
(v) The Non-Scope Claims Act (NSCA), 10 U.S.C. 2737 (see subpart E of this part).
(vi) The National Guard Claims Act (NGCA), 32 U.S.C. 715 (see subpart F of this part).
(vii) Claims under International Agreements or the Foreign Claims Act.
(A) International Agreements Claims Act (IACA), 10 U.S.C. 2734a and 2734b.
(B) Foreign Claims Act (FCA), 10 U.S.C. 2734 (see subpart J of this part).
(viii) The Army Maritime Claims Settlement Act (AMCSA), 10 U.S.C. 4801, 4802 and 4806. Affirmative claims under the AMCSA are processed under 10 U.S.C. 4803 and 4804 (see § 537.16 of this chapter).
(ix) Admiralty Extension Act (AEA), 46 U.S.C. app. 740 (see subpart H of this part).
(x) Claims against nonappropriated fund (NAF) activities and the risk management program (RIMP) (see subpart K of this part), processed under Army Regulation (AR) 215-1 and AR 608-10.
(xi) Claims by the U.S. Postal Service for losses or shortages in postal accounts caused by unbonded Army personnel (39 U.S.C. 411 and Department of Defense (DOD) Manual 4525.6-M).
(2)
(i) The Personnel Claims Act (PCA), 31 U.S.C. 3721 (see AR 27-20, chapter 11).
(ii) Redress of injuries to personal property, Uniform Code of Military Justice (UCMJ), Article 139, 10 U.S.C. 939 (see subpart I of this part).
(3)
(i) The Federal Claims Collection Act (FCCA), 31 U.S.C. 3711-3720E.
(ii) The Federal Medical Care Recovery Act (FMCRA), 42 U.S.C. 2651-2653.
(iii) Collection from third-party payers of reasonable costs of healthcare services, 10 U.S.C. 1095.
(b)
(c)
(d)
(2) 10 U.S.C. 2731, provides a definition of the word “settle.”
(e)
(1) Tucker Act, 28 U.S.C. 1346, provides exclusive jurisdiction in the Court of Federal Claims over causes of actions alleging property loss caused by a Fifth Amendment “taking.”
(2) Maritime authority statutes, Public Vessels Act (PVA), 46 U.S.C. app. 781-790, Suits in Admiralty Act (SIAA), 46 U.S.C. app. 741-752, and the Rivers and Harbors Act, 33 U.S.C. 408 and 412.
(3) Federal Employees Compensation Act (FECA), two excerpts: 5 U.S.C. 8116 and 8140, providing guidance on personal injury and death claims by civilian employees arising within the scope of their employment (see DA Pam 27-162, paragraph 2-15b) and information on certain claims by Reserve Officers Training Corps (ROTC) cadets, respectively, (see DA Pam 27-162, paragraph 2-17d(2)).
(4) Longshore and Harbor Workers Compensation Act (LHWCA), 33 U.S.C. 901-950.
(5) Claims for consequential property damage by civilian employees may only be considered in the Court of Federal Claims pursuant to 28 U.S.C. 1491.
(f)
(g)
(a)
(b)
(c)
(d)
(i) Effectively control and supervise the investigation of potentially compensable events (PCEs) occurring within the command's geographic area of responsibility, in other areas for which the command is assigned claims responsibility, and during the course of the command's operations.
(ii) Provide services for the processing and settlement of claims for and against the United States.
(2) The Commander USARCS, may delegate authority to establish a command claims service to the commander of a major overseas command or other commands that include areas outside the United States, its territories and possessions.
(i) When a large deployment occurs, the Commander USARCS, may designate a command claims service for a limited time or purpose, such as for the duration of an operation and for the time necessary to accomplish the mission. The appropriate major Army command (MACOM) will assist the Commander USARCS, in obtaining resources and personnel for the mission.
(ii) In coordination with the Commander USARCS, the MACOM will designate the area of responsibility for each new command claims service.
(3) A command claims service may be a separate organization with a designated commander or chief. If it is part of the command's Office of the Staff Judge Advocate (SJA), the SJA will also be the chief of the command claims service, however, the SJA may designate a field grade officer as chief of the service.
(e)
(1) An office under the supervision of the senior judge advocate (JA) of each command or organization so designated by the Commander USARCS. The senior JA is the head of the ACO.
(2) An office under supervision of the senior JA of each command in the area of responsibility of a command claims service so designated by the chief of that service after coordination with the Commander USARCS. The senior JA is the head of the ACO.
(3) The office of counsel of each U.S. Army Corps of Engineers (COE) district within the United States and such other COE commands or agencies as designated by the Commander USARCS, with concurrence of the Chief Counsel, Office of the Chief of Engineers, for all claims generated within such districts, commands or agencies. The district counsel or the attorney in charge of the command's or agency's legal office is the head of the ACO.
(f)
(1) Claims processing offices without approval authority.
(2) Claims processing offices with approval authority.
(3) Medical claims processing offices.
(4) Special claims processing offices.
(g)
(2) The authority to act upon appeals or requests for reconsideration, to deny claims (including disapprovals based on substantial fraud), to grant waivers of maximum amounts allowable, or to make final offers will not be delegated except that the Commander USARCS may delegate this authority to USARCS Division Chiefs.
(3) CPOs will provide copies of all delegations affecting them to the ACO and, if so directed, to command claims services.
(a)
(b)
TJAG has worldwide Army Staff responsibility for administrative settlement of claims by and against the U.S. government, generated by employees of the U.S. Army and DOD components other than the Departments of the Navy and Air Force. Where the Army has single-service responsibility, TJAG has responsibility for the Army. See DODD 5515.9. Certain claims responsibilities of TJAG are exercised by The Assistant Judge Advocate General (TAJAG) as set forth in this part and directed by TJAG.
(a) Promptly investigate potential claims incidents with a view to determining the degree of the Army's
(b) Efficiently and expeditiously dispose of claims against the U.S. by fairly settling meritorious claims at the lowest level within the claims system commensurate with monetary jurisdiction delegated, or by denying non-meritorious claims.
(c) Develop a system that has a high level of proficiency, so that litigation and appeals can be avoided or kept to a minimum.
The Commander USARCS shall:
(a) Supervise and inspect claims activities worldwide.
(b) Formulate and implement claims policies and uniform standards for claims office operations.
(c) Investigate, process and settle claims beyond field office monetary authority and consider appeals and requests for reconsideration on claims denied by the field offices.
(d) Supervise the investigation, processing, and settlement of claims against, and in favor of, the United States under the statutes and regulations listed in § 536.2 and pursuant to other appropriate statutes, regulations, and authorizations.
(e) Designate ACOs, CPOs, and claims attorneys within DA and DOD components other than the Departments of the Navy and Air Force, subject to concurrence of the commander concerned.
(f) Designate continental United States (CONUS) geographic areas of claims responsibility.
(g) Recommend action to be taken by the SA, TJAG or the U.S. Attorney General, as appropriate, on claims in excess of $25,000 or the threshold amount then current under the FTCA, on claims in excess of $100,000 or the threshold amount then current under the FCA, the MCA, the NGCA, AMCSA, FCCA and FMRCA and on other claims that have been appealed. Direct communication with Department of Justice (DOJ) and the SA's designee is authorized.
(h) Operate the “receiving State office” for claims arising in the United States, its territories, commonwealths and possessions cognizable under Article VIII of the North Atlantic Treaty Organization (NATO) Status of Forces Agreement (SOFA), Partnership for Peace (PFP) SOFA, Article XVI of the Singapore SOFA, and other SOFAs which have reciprocal claims provisions as delegated by TJAG, as implemented by 10 U.S.C. 2734a and 2734b (subpart G of this part).
(i) Settle claims of the U.S. Postal Service for reimbursement under 39 U.S.C. 411 (see DOD Manual 4525.6-M).
(j) Settle claims against carriers, warehouse firms, insurers, and other third parties for loss of, or damage to, personal property of DA or DOD soldiers or civilians incurred while the goods are in storage or in transit at government expense (AR 27-20, chapter 11).
(k) Formulate and recommend legislation for Congressional enactment of new statutes and the amendment of existing statutes considered essential for the orderly and expeditious administrative settlement of noncontractual claims.
(l) Perform post-settlement review of claims.
(m) Prepare, justify, and defend estimates of budgetary requirements and administer the Army claims budget.
(n) Maintain permanent records of claims for which TJAG is responsible.
(o) Assist in developing disaster and maneuver claims plans designed to implement the responsibilities set forth in § 536.9(a)(12).
(p) Develop and maintain plans for a disaster or civil disturbance in those geographic areas that are not under the jurisdiction of an area claims authority and in which the Army has single-service responsibility or in which the Army is likely to be the predominant Armed Force.
(q) Take initial action, as appropriate, on claims arising in emergency situations.
(r) Provide assistance as available or take appropriate action to ensure that command claims services and ACOs are carrying out their responsibilities as set forth in §§ 536.8 and 536.9, including claims assistance visits.
(s) Serve as proponent for the database management systems for torts, personnel and affirmative claims and provide standard automated claims data management programs for worldwide use.
(t) Ensure proper training of claims personnel.
(u) Coordinate claims activities with the Air Force, Navy, Marine Corps, and other DOD agencies to ensure a consistent and efficient joint service claims program.
(v) Investigate, process and settle, and supervise the field office investigation and processing of, medical malpractice claims arising in Army medical centers within the United States; provide medical claims judge advocates (MCJAs), medical claims attorneys, and medical claims investigators assigned to such medical centers with technical guidance and direction on such claims.
(w) Coordinate support with the U.S. Army Medical Command (MEDCOM) on matters relating to medical malpractice claims.
(x) Issue an accounting classification to all properly designated claims settlement and approval authorities.
(y) Perform the investigation, processing, and settlement of claims arising in areas outside command claims service areas of operation.
(z) Maintain continuous worldwide deployment and operational capability to furnish claims advice to any legal office or command throughout the world. When authorized by the chain of command or competent authority, issue such claims advice or services, including establishing a claims system within a foreign country, interpreting claims aspects of international agreements, and processing claims arising from Army involvement in civil disturbances, chemical accidents under the Chemical Energy Stockpile Program, other man-made or natural disasters, and other claims designated by competent authority.
(aa) Upon receiving both the appropriate authority's directive or order and full fiscal authorization, disburse the funds necessary to administer civilian evacuation, relocation, and similar initial response efforts in response to a chemical disaster arising at an Army facility.
(bb) Respond to all inquiries from the President, members of Congress, military officials, and the general public on claims within USARCS' responsibility.
(cc) Serve as the proponent for this publication and DA Pam 27-162, both of which set forth guidance on personnel, tort, disaster and affirmative claims, as well as claims management and administration.
(dd) Provide supervision for the Army's affirmative claims and carrier recovery programs, as well as other methods for recovering legal debts.
(ee) Provide support for the overseas environmental claims program as designated by the DA.
(ff) Execute other claims missions as designated by DOD, DA, TJAG and other competent authority.
(gg) Appoint Foreign Claims Commissions outside Command Claims Services' geographic areas of responsibility.
(hh) Budget for and fund claims investigations and activities; such as per diem and transportation of claims personnel, claimants and witnesses; independent medical examinations;
(a)
(1) Exercise claims settlement authority as specified in this part, including appellate authority where so delegated.
(2) Supervise the investigation, processing, and settlement of claims against, and in favor of the United States under the statutes and regulations listed in § 536.2, and pursuant to other appropriate statutes, regulations, and authorizations.
(3) Designate and grant claims settlement authority to ACOs. A grant of such authority will not be effective until coordinated with the Commander USARCS, and assigned an office code. However, the chief of a command claims service may redesignate a CPO that already has an assigned office code as an ACO without coordination with the Commander USARCS. The Commander USARCS will be informed of such a designation.
(4) Designate and grant claims approval authority to CPOs. Only CPOs staffed with a claims judge advocate (CJA) or claims attorney may be granted approval authority. A grant of such authority will not be effective until coordinated with the Commander USARCS, and assigned an office code.
(5) Train claims personnel and monitor their operations and ongoing claims administration. Conduct a training course annually.
(6) Implement pertinent claims policies.
(7) Prepare and publish command claims directives.
(8) Administer the command claims expenditure allowance, providing necessary data, estimates, and reports to USARCS on a regular basis.
(9) Perform the responsibilities of an ACO (see § 536.9), as applicable, ensure that SOFA claims are investigated properly and timely filed with the receiving State and adequately funded.
(10) Serve as the United States “sending State office,” if so designated, when operating in an area covered by a SOFA.
(11) Supervise and provide technical assistance to subordinate ACOs within the command claims service's geographic area of responsibility.
(12) Appoint FCCs.
(b)
(a)
(1) Ensure that claims and potential claims incidents in their area of responsibility are promptly investigated in accordance with this part.
(2) Ensure that each organization or activity (for example, U.S. Army Reserve (USAR) or Army National Guard of the United States (ARNGUS) unit, ROTC detachment, recruiting company or station, or DOD agency) within the area appoints a claims officer to investigate claims incidents not requiring investigation by a JA (see § 536.23) and ensure that this officer is adequately trained.
(3) Supervise the investigation, processing, and settlement of claims against, and in favor of, the United States under the statutes and regulations listed in § 536.2 and pursuant to other appropriate statutes, regulations, and authorizations.
(4) Act as a claims settlement authority on claims that fall within the appropriate monetary jurisdictions set forth in this part and forward claims exceeding such jurisdictions to the Commander USARCS, or to the chief of a command claims service, as appropriate, for action.
(5) Designate CPOs and request that the Commander USARCS, or the chief of a command claims service, as appropriate, grant claims approval authority to a CPO for claims that fall within the jurisdiction of that office.
(6) Supervise the operations of CPOs within their area.
(7) Implement claims policies and guidance furnished by the Commander USARCS.
(8) Ensure that there are adequate numbers of qualified and adequately trained CJAs or claims attorneys, RCJAs or attorneys, recovery claims clerks, claims examiners, claims adjudicators and claims clerks in all claims offices within their areas to act promptly on claims.
(9) Budget for and fund claims investigations and activities, such as: per diem and transportation of claims personnel, claimants and witnesses; independent medical examinations; appraisals and independent expert opinions; long distance telephone calls; recording and photographic equipment; use of express mail or couriers; and other necessary expenses.
(10) Within the United States and its territories, commonwealths and possessions, procure and disseminate, within their areas of jurisdiction, appropriate legal publications on state or territorial law and precedent relating to tort claims.
(11) Notify the Commander USARCS, of all claims and potentially compensable events (PCEs) as required by § 536.22(c); notify the chief of a command claims service of all claims and PCEs.
(12) Develop and maintain written plans for a disaster or civil disturbance. These plans may be internal SJA office plans or an annex to an installation or an agency disaster response plan.
(13) Implement the Army's Article 139 claims program. (See subpart I of this part).
(14) Notify USARCS of possible deployments and ensure adequate FCCs are appointed by USARCS and are trained.
(b)
(2) In addition to the utilization of unit claims officers required by § 536.10(a), if indicated, the full-time responsibility for investigating and processing claims arising within or related to the activities of a unit or organization located within a section of the designated area may be delegated to another command, unit, or activity by establishing a CPO at the command, unit, or activity (see § 536.10(b)(4)). Normally, all CPOs will operate under the supervision of the ACO in whose area the CPO is located. Where a proposed CPO is not under the command of the ACO parent organization, this designation may be achieved by a support agreement or memorandum of understanding between the affected commands.
(3) Normally, claims that cannot be settled by a COE ACO will be forwarded directly to the Commander USARCS, with notice of referral to the Chief Counsel, COE. However, as part of his or her responsibility for litigating suits that involve civil works and military
(a)
(1) Investigate all potential and actual claims arising within their assigned jurisdiction, on either an area, command, or agency basis. Only a CPO that has approval authority may adjudicate and pay presented claims within its monetary jurisdiction.
(2) Ensure that units and organizations within their jurisdiction have appointed claims officers for the investigation of claims not requiring a JA's investigation. (See § 536.22).
(3) Budget for and fund claims investigations and activities; including, per diem and transportation of claims personnel, claimants and witnesses; independent medical examinations; appraisals; independent expert opinions; long distance telephone calls; recording and photographic equipment; use of express mail or couriers; and other necessary expenses.
(4) Within CONUS, procure and maintain legal publications on local law relating to tort claims pertaining to their jurisdiction.
(5) Notify the Commander USARCS of all claims and claims incidents, as required by § 536.22 and AR 27-20, paragraph 2-12.
(6) Implement the Army's Article 139 claims program (see subpart I of this part).
(b)
(2)
(3)
(4)
(ii)
(iii)
(5)
The Chief of Engineers, through the Chief Counsel, shall:
(a) Provide general supervision of the claims activities of COE ACOs.
(b) Ensure that each COE ACO has a claims attorney designated in accordance with § 536.4.
(c) Ensure that claims personnel are adequately trained, and monitor their ongoing claims administration.
(d) Implement pertinent claims policies.
(e) Provide for sufficient funding in accordance with existing Army regulations and command directives for temporary duty (TDY), long distance telephone calls, recording equipment, cameras, and other expenses for investigating and processing claims.
(f) Procure and maintain adequate legal publications on local law relating to claims arising within the United States, its territories, commonwealths and possessions.
(g) Assist USARCS in evaluation of claims by furnishing qualified expert and technical advice from COE resources, on a non-reimbursable basis except for temporary duty (TDY) and specialized lab services expenses.
(a) After consulting with the Commander USARCS on the selection of medical claims attorneys, the Commander of the U.S. Army MEDCOM, the European Medical Command, or other regional medical command, through his or her SJA/Center Judge Advocate, shall ensure that an adequate number of qualified MCJAs or medical claims attorneys and medical claims investigators are assigned to investigate and process medical malpractice claims arising at Army
(b) Upon request of a claims judge advocate or claims officer, shall provide a qualified health care provider at a medical treatment facility (MTF) to examine a claimant for his injuries even if the claimant is not otherwise entitled to care at an MTF (See AR 40-400, Patient Administration, paragraph 3-47).
The Chief, National Guard Bureau (NGB), shall:
(a) Ensure the designation of a point of contact for claims matters in each State Adjutant General's office.
(b) Provide the name, address, and telephone number of these points of contact to the Commander USARCS.
(c) Designate claims officers to investigate claims generated by ARNG personnel and forward investigations to the Active Army ACO that has jurisdiction over the area in which the claims incident occurred.
Commanders of MACOMs, through their SJAs, shall:
(a) Assist USARCS in monitoring ACOs and CPOs under their respective commands for compliance with the responsibilities assigned in §§ 536.9 and 536.10.
(b) Assist claims personnel in obtaining qualified expert and technical advice from command units and organizations on a nonreimbursable basis (although the requesting office may be required to provide TDY funding).
(c) Assist TJAG, through the Commander USARCS, in implementing the functions set forth in § 536.7.
(d) Coordinate with the ACO within whose jurisdiction a maneuver is scheduled, to ensure the prompt investigation and settlement of any claims arising from it.
(a)
(1)
(2)
(3)
(4)
(5)
(b)
(c)
(2)
(d)
(e)
(f)
(g)
(h)
(a)
(b)
(2) It is the policy of USARCS that unclassified attorney work product may be released with or without a request from the claimant or attorney, whenever such release may help settle the claim or avoid unnecessary litigation.
(3) A statutory exemption or privilege may not be waived. Similarly, documents subject to such statutorily required nondisclosure, exemption, or privilege may not be released. Regarding other exemptions and privileges, authorities may waive such exemptions or privileges and direct release of the protected documents, upon balancing all pertinent factors, including finding that release of protected records will not harm the government's interest, will promote settlement of a claim and will avoid unnecessary litigation, or for other good cause.
(4) All requests for records and information made pursuant to the FOIA, 5 U.S.C. 552, the Privacy Act of 1974, 5 U.S.C. 552a, or HIPAA, 42 U.S.C. 1320d, will be processed in accordance with the procedures set forth in AR 25-55 and AR 340-21, respectively as well as 45 CFR Parts 160 and 164, DODD 6025.18-R, this part, and DA Pam 27-162.
(i) Any request for DOD records that either explicitly or implicitly cites the FOIA shall be processed under the provisions of AR 25-55. Requests for DOD records submitted by a claimant or claimant's attorney will be processed under both the FOIA and under the Privacy Act when the request is made by the subject of the records requested and those records are maintained in a system of records. Such requests will be processed under the FOIA time limits and the Privacy Act fee provisions. Withheld information must be exempt from disclosure under both Acts.
(ii) Requests that cite both Acts or neither Act are processed under both Acts, using the FOIA time limits and the Privacy Act fee provisions. For further guidance, see AR 25-55, paragraphs 1-301 and 1-503.
(5) The following records may not be disclosed:
(i) Medical quality assurance records exempt from disclosure pursuant to 10 U.S.C. 1102(a).
(ii) Records exempt from disclosure pursuant to appropriate balancing tests under FOIA exemption (6) (clearly unwarranted invasion of personal privacy), exemption (7)(c) (reasonably constitutes unwarranted invasion of privacy), and law enforcement records (5 U.S.C. § 552(b)) unless requested by the subject of the record.
(iii) Records protected by the Privacy Act.
(iv) Records exempt from disclosure pursuant to FOIA exemption (1) (National security) (5 U.S.C. 552(b)), unless such records have been properly declassified.
(v) Records exempt from disclosure pursuant to the attorney-client privilege under FOIA exemption (5) (5 U.S.C. 552(b)), unless the client consents to the disclosure.
(6) Records within a category for which withholding of the record is discretionary (AR 25-55, paragraph 3-101), such as exemptions under the deliberative process or attorney work product privileges (exemption (5) (5 U.S.C. 552(b)) may be released when there is no foreseeable harm to government interests in the judgment of the releasing authority.
(7) When it is determined that exempt information should not be released, or a question as to its releaseability exists, forward the request and two copies of the responsive documents to the Commander USARCS. The Commander USARCS, acting on behalf of TJAG (the initial denial authority), may deny release of records processed under the FOIA only. The Commander USARCS, will forward to TJAG all such requests processed under both the FOIA and PA. TJAG is the denial authority for Privacy Act requests (AR 340-21, paragraph 1-7i).
(c)
(a)
(b)
(1) FCA (10 U.S.C. 2734);
(2) MCA (10 U.S.C. 2733);
(3) Status of Forces Agreements (10 U.S.C. 2734a and 2734b);
(4) NATO SOFA (4 U.S.T. 1792, Treaties and International Acts Series (T.I.A.S.) 2846) and other similar agreements;
(5) FCCA (31 U.S.C. 3711-3720E) and FMCRCA (42 U.S.C. 2651-2653);
(6) Claims not cognizable under any other provision of law, 10 U.S.C. 2737; and
(7) Advance payments, 10 U.S.C. 2736.
(c)
(d)
See also § 536.32 for information on transferring claims among armed services branches.
(a)
(b)
(c)
(d)
See also § 536.32 for information on transferring claims among armed services branches.
All ACOs will prepare a disaster claims plan and furnish a copy to USARCS. See DA Pam 27-162, paragraph 1-21 for specific requirements related to disaster claims planning.
Members of USARCS and command claims services will make claims assistance visits to field offices on a periodic basis. See DA Pam 27-162, paragraph 1-22 for specific requirements related to claims assistance visits.
The Commander USARCS will make an annual claims award to outstanding field offices. See DA Pam 27-162, para 1-23 for more information on annual claims awards.
(a)
(b)
(c)
(d)
See the parallel discussion at DA Pam 27-162, paragraph 2-1.
(a) Investigation is required when:
(1) There is property loss or damage.
(i) Property other than that belonging to the government is damaged, lost, or destroyed by an act or omission of a government employee or a member of North Atlantic Treaty Association (NATO), Australian or Singaporean forces stationed or on temporary duty within the United States.
(ii) Property belonging to the government is damaged or lost by a tortious act or omission not covered by the report of survey system or by a carrier's bill of lading.
(2) There is personal injury or death.
(i) A civilian other than an employee of the U.S. government is injured or killed by an act or omission of a government employee or by a member of a NATO, Australian or Singaporean force stationed or on temporary duty within the United States. (This category includes patients injured during treatment by a health care provider).
(ii) Service members, active or retired, family members of either, or U.S. employees, are injured or killed by a third party and receive medical care at government expense.
(3) A claim is filed.
(4) A competent authority or another armed service or federal agency requires investigation.
(b) Determining who is a government employee is a matter of federal, not local, law. Categories of government employees usually accepted as tortfeasors under federal law are:
(1) Military personnel (soldiers of the Army, or members of other services where the Army exercises single-service jurisdiction on foreign soil; and soldiers or employees within the United States who are members of NATO or of other foreign military forces with whom the United States has a reciprocal claims agreement and whose sending States have certified that they were acting
(i) Assigned to units performing active or inactive duty.
(ii) Serving on active duty as Reserve Officer Training Corps (ROTC) instructors.
(iii) Serving as Army National Guard (ARNG) instructors or advisors.
(iv) On duty or training with other federal agencies, for example: the National Aeronautics and Space Administration, the Department of State, the Navy, the Air Force, or DOD (federal agencies other than the armed service to which the Soldier is attached may also provide a remedy).
(v) Assigned as students or ordered into training at a non-federal civilian educational institution, hospital, factory, or other facility (excluding soldiers on excess leave or those for whom the training institution or organization has assumed liability by written agreement).
(vi) Serving on full-time duty at nonappropriated fund (NAF) activities.
(vii) Of the United States Army Reserve (USAR) and ARNG on active duty under Title 10, U.S.C.
(2) Military personnel who are United States Army Reserve soldiers including ROTC cadets who are Army Reserve soldiers while at annual training, during periods of active duty and inactive duty training.
(3) Military personnel who are soldiers of the ARNG while engaged in training or duty under 32 U.S.C. 316, 502, 503, 504, 505, or engaged in properly authorized community action projects under the Federal Tort Claims Act (FTCA), the Non-Scope Claims Act (NSCA), or the National Guard Claims Act (NGCA), unless performing duties in furtherance of a mission for a state, commonwealth, territory or possession.
(4) Civilian officials and employees of both the DOD and DA (there is no practical significance to the distinction between the terms “official” and “employee”), including but not limited to the following:
(i) Civil service and other full-time employees of both the DOD and DA who are paid from appropriated funds.
(ii) Persons providing direct health care services pursuant to personal service contracts under 10 U.S.C. 1089 or 1091 or where another person exercised control over the health care provider's day-to-day practice. When the conduct of a health care provider performing services under a personal service contract is implicated in a claim, the CJA, Medical Claims Judge Advocate (MCJA), or claims attorney should consult with USARCS to determine if that health care provider can be considered an employee for purposes of coverage.
(iii) Employees of a NAF instrumentality (NAFI) if it is an instrumentality of the United States and thus a federal agency. To determine whether a NAFI is a “federal agency,” consider both whether it is an integral part of the Army charged with an essential DA operational function and also what degree of control and supervision DA personnel exercise over it. Members or users, unlike employees of NAFIs, are not considered government employees; the same is true of family child care providers. However, claims arising out of the use of some NAFI property or from the acts or omissions of family child care providers may be payable from such funds under subpart K of this part as a matter of policy, even when the user is not acting within the scope of employment and the claim is not otherwise cognizable under any of the other authorities described in this part.
(5) Prisoners of war and interned enemy aliens.
(6) Civilian employees of the District of Columbia ARNG, including those paid under “service contracts” from District of Columbia funds.
(7) Civilians serving as ROTC instructors paid from federal funds.
(8) ARNG technicians employed under 32 U.S.C. 709(a) for claims accruing on or after January 1, 1969 (Public Law 90-486, August 13, 1968 (82 Stat. 755)), unless performing duties solely in pursuit of a mission for a state, commonwealth, territory or possession.
(9) Persons acting in an official capacity for the DOD or DA either temporarily or permanently with or without compensation, including but not limited to the following:
(i) Dollar-a-year personnel.
(ii) Members of advisory committees, commissions, or boards.
(iii) Volunteers serving in an official capacity in furtherance of the business of the United States, limited to those categories set forth in DA Pam 27-162, paragraph 2-45.
See the parallel discussion at DA Pam 27-162, paragraph 2-2.
(a)
(1) At the request of the area claims authority, commanders and heads of Army and DOD units, activities, or components will appoint a commissioned, warrant, or noncommissioned officer or a qualified civilian employee to investigate a claims incident in the manner set forth in DA Pam 27-162 and this part. An ACO will direct such investigation to the extent deemed necessary.
(2) CPOs are responsible for investigating claims incidents arising out of the activities and operations of their command or agency. An ACO may assign area jurisdiction to a CPO after coordination with the appropriate commander to investigate claims incidents arising in the ACO's designated geographic area. (See § 536.3(f).)
(3) Claims incidents involving patients arising from treatment by a health care provider in an Army medical treatment facility (MTF), including providers defined in 536.23(b)(4)(ii), will be investigated by a claims judge advocate (CJA), medical claims judge advocate (MCJA), or claims attorney rather than by a unit claims officer.
(4) An ACO will publish and distribute a claims directive to all DOD and Army installations and activities including active, Army Reserve, and ARNG units as well as units located on the post at which the ACO is located. The directive will outline each installations' and activities' claims responsibilities. It will institute a serious claims incident reporting system.
(b)
(c)
See the parallel discussion at DA Pam 27-162, paragraph 2-3.
All ACOs and CPOs will institute procedures to ensure that potential claimants or attorneys speak to a CJA, claims attorney, investigator, or examiner. On initial contact, claims personnel will render assistance, discuss all aspects of the potential claim, and determine what statutes or procedures apply. Assistance will be furnished to the extent set forth in DA Pam 27-162, paragraph 2-4. To advise claimants on the correct remedy, claims personnel will familiarize themselves with the remedies listed in DA Pam 27-162, paragraphs 2-15 and 2-17.
(a) A claim is a writing that contains a sum certain for each claimant and that is signed by each claimant, or by an authorized representative, who must furnish written authority to sign on a claimant's behalf. The writing must contain enough information to permit investigation. The writing must be received not later than two years from the date the claim accrues. A claim under the Foreign Claims Act (FCA) may be presented orally to either the United States or the government of the foreign country in which the incident occurred, within two years, provided that it is reduced to writing not later than three years from the date of accrual. A claim may be transmitted by facsimile or telegram. However, a copy of an original claim must be submitted as soon as possible.
(b) Where a claim is only for property damage and it is filed under circumstances where there might be injuries, the CJA should inquire if the claimant desires to split the claim as discussed in § 536.60.
(c) Normally, a claim will be presented on a Standard Form (SF) 95 (Claim for Damage, Injury, or Death). When the claim is not presented on an SF 95, the claimant will be requested to complete an SF 95 to ease investigation and processing.
(d) If a claim names two claimants and states only one sum certain, the claimants will be requested to furnish a sum certain for each. A separate sum certain must be obtained prior to payment under the Federal Tort Claims Act (FTCA), Military Claims Act (MCA), National Guard Claims Act (NGCA) or the FCA. The Financial Management Service will only pay an amount above the threshold amount of $2,500 for the FTCA, or $100,000 for the other statutes.
(e) A properly filed claim meeting the definition of “claim” in paragraph (a) of this section tolls the two-year statute of limitations (SOL) even though the documents required to substantiate the claim are not present, such as those listed on the back of an SF 95 or in the Attorney General's regulations implementing the FTCA, 28 CFR 14.1—14.11. However, refusal to provide such documents may lead to dismissal of a subsequent suit under the FTCA or denial of a claim under other subparts of this part.
(f) Receipt of a claim by another federal agency does not toll the SOL. Receipt of a U.S. Army claim by DOD, Navy, or Air Force does toll the SOL.
(g) The guidelines set forth in federal FTCA case law will apply to other subparts of this part in determining whether a proper claim was filed.
See the parallel discussion at DA Pam 27-162, paragraph 2-5.
The following are proper claimants:
(a)
(1)
(2)
(b)
(2)
(c)
(1) It must contain written evidence of the agent's or legal representative's
(2) It must refer to or cite the statute granting authority.
(d)
(e)
(f)
(i) Every purported transfer or assignment of a claim against the United States, or any interest, in whole or in part, on a claim, whether absolute or conditional; and
(ii) Every power of attorney or other purported authority to receive payment for all or part of any such claim.
(2) The Antiassignment Act was enacted to eliminate multiple payment of claims, to cause the United States to deal only with original parties and to prevent persons of influence from purchasing claims against the United States.
(3) In general, this statute prohibits voluntary assignments of claims, with the exception of transfers or assignments made by operation of law. The operation of law exception has been held to apply to claims passing to assignees because of bankruptcy proceedings, assignments for the benefit of creditors, corporate liquidations, consolidations, or reorganizations, and where title passes by operation of law to heirs or legatees. Subrogated claims that arise under a statute are not barred by the Antiassignment Act. For example, subrogated workers' compensation claims are cognizable when presented by the insurer under subpart D or H of this part, but not other subparts.
(4) Subrogated claims that arise pursuant to contractual provisions may be paid to the subrogee, if the legal basis for the subrogated claim is recognized by state statute or case law, only under subpart D or H of this part. For example, an insurer that issues an insurance policy becomes subrogated to the rights of a claimant who receives payment of a property damage claim. Generally, such subrogated claims are authorized by state law and are therefore not barred by the Antiassignment Act.
(5) Before claims are paid, it is necessary to determine whether there may be a valid subrogated claim under a federal or state statute or a subrogation contract held valid by state law.
(g)
(h)
See the parallel discussion at DA Pam 27-162, paragraph 2-6.
Claims personnel will acknowledge all claims immediately upon receipt, in writing, by telephone, or in person. A defective claim will be acknowledged in writing, pointing out its defects. Where the defects render the submission jurisdictionally deficient based on the requirements discussed in DA Pam 27-162, paragraphs 2-5 and 2-6, the claimant or attorney will be informed in writing of the need to present a proper claim no later than two years from the date of accrual. Suit must be filed in maritime claims not later than two years from the date of accrual. See § 536.122. In any claim for personal injury or wrongful death, an authorization signed by the patient, natural or legal guardian or estate representative will be obtained authorizing the use of medical information, including medical records, in order to use sources other than claims personnel to evaluate the claim as required by the Health Care Portability and Accountability Act (HIPAA), 42 U.S.C. 1320d-1320d-8. See the parallel discussion at DA Pam 27-162, paragraph 2-7.
(a)
(b)
(c)
See the parallel discussion at DA Pam 27-162, paragraph 2-8.
(a) A properly filed claim stops the running of the SOL when it is received by any organization or activity of the DOD or the U.S. Armed Services. Placing a claim in the mail does not constitute filing. The first Army claims office that receives the claim will date, time stamp, and initial the claim as of the date the claim was initially received “on post,” not by the claims office. If initially received close to the SOL's
(b) The ACO or CPO that first receives the claim will enter the claim into the Tort and Special Claims Application (TSCA) database and let the system assign a number to the claim. The claim, whether on an SF 95 or in any other format, shall be scanned into a computer and uploaded onto the TSCA database so that it will become a permanent part of the electronic record. A joint claim will be given a number for each claimant, for example, husband and wife, injured parent and children. If only one sum is filed for all claimants, the same sum will be assigned for each claimant. However, request the claimant to name a sum for each claimant. The claim will bear this number throughout the claims process. Upon transfer, a new number will not be assigned by the receiving office. If a claim does not meet the definition of a proper claim under §§ 536.26 and 536.27, it will be date stamped and logged as a Potentially Compensable Event (PCE).
(c) The claim will be transferred if the claim incident arose in another ACO's geographic area; the receiving ACO will use the claims number originally assigned.
(d) Non-Appropriated Fund Instrumentality (NAFI) claims that relate to claims determined cognizable under subpart K of this part will be marked with the symbol “NAFI” immediately following the claimant's name, to preclude erroneous payment from appropriated funds (APF). This symbol will also be included in the subject line of all correspondence.
(e) Upon receipt, copies of the claims will be furnished as follows (when a current e-mail address is available and it is agreeable with the receiving party, providing copies by e-mail is acceptable):
(1) To USARCS, if the amount claimed exceeds $25,000, or $50,000 per incident. However, if the claim arises under the FTCA or AMCSA, only furnish copies if the amount claimed exceeds $50,000, or $100,000 per incident.
(2) For medical malpractice claims, to the appropriate MTF Commander/s through MEDCOM Headquarters, and to the Armed Forces Institute of Pathology at the addresses listed below.
MEDCOM, ATTN: MCHO-CL-Q, 2050 Worth Road, Suite 26, Fort Sam Houston, TX 78234-5026.
Department of Legal Medicine, Armed Forces Institute of Pathology, 1335 E. West Highway, #6-100, Silver Spring, MD 20910-6254, Commercial: 301-295-8115, e-mail:
(3) If the claim is against AAFES forward a copy to: HQ Army and Air Force Exchange Service (AAFES), ATTN: Office of the General Counsel (GC-Z), P.O. Box 650062, Dallas, TX 75265-0062, e-mail:
(4) If the claim involves a NAFI, including a recreational user or family child care provider forward a copy to: Army Central Insurance Fund, ATTN: CFSC-FM-I, 4700 King Street, Alexandria, VA 22302-4406, e-mail:
(f) ACOs or CPOs will furnish a copy of any medical or dental malpractice claim to the MTF or dental treatment facility commander and advise the commander of all subsequent actions. The commander will be assisted in his or her responsibility to complete DD Form 2526 (Case Abstract for Malpractice Claims).
See the parallel discussion at DA Pam 27-162, paragraph 2-9.
A claim file will be opened when:
(a) Information that requires investigation under § 536.23 is received.
(b) Records or other documents are requested by a potential claimant or legal representative.
(c) A claim is filed.
See the parallel discussion at DA Pam 27-162, paragraph 2-10.
(a) Claims filed with the wrong federal agency, or claims that should be adjudicated by receiving State offices under NATO or other SOFA, will be immediately transferred to the proper agency together with notice of same to the claimant or legal representative. Where multiple federal agencies are involved, other agencies will be contacted and a lead agency established to take all actions on the claim. Where the DA is the lead agency, any final action will include other agencies. Similarly, where another agency is the lead agency, that agency will be requested to include DA in any final action. Such inclusion will prevent multiple dates for filing suit or appeal.
(b) If another agency has taken denial action on a claim that involves the DA, without informing the DA, and in which the DA desires to make a payment, the denial action may be reconsidered by the DA not later than six months from the date of mailing and payment made thereafter.
See also §§ 536.17 and 536.18; AR 27-20, paragraph 13-2; and the parallel and related discussion of this topic at DA Pam 27-162, paragraphs 1-19, 1-20, 2-13 and 13-2.
Small claims procedures are authorized for use whenever a claim may be settled for $5,000 or less. These procedures are designed to save processing time and eliminate the need for most of the documentation otherwise required. These procedures are described in DA Pam 27-162, paragraphs 2-14 and 2-26.
(a)
(b)
(c)
(2) Single-service jurisdiction is established for all foreign countries in which a SOFA is in effect and for certain other countries. A list of these countries is posted on the USARCS Web site; for the address see § 536.2(a). Claims will be processed by the service exercising single-service responsibility. In the United States, USARCS is the receiving State office and all SOFA claims should be forwarded immediately to USARCS for action. Appropriate investigation under subpart B of this part procedures is required of an ACO or a CPO under USARCS' direction.
(d)
(2) Tort claims will be processed by the armed service that exercises single-service responsibility. When requested, the Commander USARCS may furnish a Judge Advocate or civilian attorney to serve as a Foreign Claims Commission (FCC) for another service. With the concurrence of the Commander USARCS, Army JAs may be appointed as members of another department's foreign claims commissions. See subpart J of this part. The FCA permits compensation for damages caused by “out-of-scope” tortious conduct of Soldier and civilian employees. Many of these claims are also compensable under Article 139, Uniform Code of Military Justice. See DA Pam 27-162, chap. 9. To avoid the double payment of claims, ACOs and CPOs must promptly notify the Command Claims Service of each approved Article 139 claim involving a claimant who could also file under an applicable SOFA.
(e)
(2) An ACO will establish with a state claims office routine procedures for the disposition of claims, designed to ensure that the United States and state authorities do not issue conflicting instructions for processing claims. The procedures will require personnel to advise the claimant of any remedy against the state or its insurer.
(i) Where the claim arises out of the act or omission of a member of the ARNG or a person employed under 32 U.S.C. 709, it must be determined whether the employee is acting on behalf of the state or the United States. For example, an ARNG pilot employed under section 709 may be flying on a state mission, federal mission, or both, on the same trip. This determination will control the disposition of the claim. If agreement with the concerned state cannot be reached and the claim is otherwise payable, efforts may be made to enter into a sharing agreement with the state concerned. The following procedures are required in the event there is a remedy against the state and the state refuses to pay or the state maintains insurance coverage and the claimant has filed an administrative claim against the United States. First, forward the file and the tort claim memorandum, including information on the status of any judicial or administrative action the claimant has taken against the state or its insurer to the Commander USARCS. Upon receipt, the Commander USARCS will determine whether to require the claimant to exhaust his or her remedy against the state or its insurer or whether the claim against the United States can be settled without requiring such exhaustion. If the Commander USARCS decides to follow the latter course of action, he or she will also determine whether to obtain an assignment of the claim against the state or its insurer and whether to initiate recovery action to obtain contribution or indemnification. The state or its insurer will be given appropriate notification in accordance with state law.
(ii) If an administrative claim remedy exists under state law or the state maintains liability insurance, the Commander USARCS or an ACO acting upon the Commander USARCS' approval may enter into a sharing agreement covering payment of future claims. The purpose of such an agreement is to determine in advance whether the state or the DA is responsible for processing a claim (did the claim arise from a federal or state mission?), to expedite payment in meritorious claims, and to preclude double recovery by a claimant.
(f)
(ii) If, upon investigation, the damage is considered to be primarily due to the contractor's fault or negligence, the claim will be referred to the contractor or the contractor's insurance carrier for settlement and the claimant will be so advised.
(iii) Health care providers hired under personal services contracts under the provisions of 10 U.S.C. 1089 are not considered to be independent contractors but employees of the United States for tort claims purposes.
(2)
(g)
(h)
(i)
(1) Claims by the U.S. Postal Service for funds and stock are adjudicated by USARCS with assistance from the Military Postal Service Agency and the ACO or CPO having jurisdiction over the particular Army post office, when directed by USARCS to assist in the investigation of the claim.
(2) Claims for loss of registered and insured mail are processed under subpart C of this part by the ACO or CPO having jurisdiction over the particular Army post office.
(3) Claims for loss of, or damage to, parcels delivered by United Parcel Service (UPS) are the responsibility of UPS.
(j)
(k)
(1)
(2)
(3)
(l)
(1) Before the commencement of any event that involves the use of DOD or Army land, vehicles, equipment or Army personnel for community activities, the Command involved should be advised to first determine and weigh the risk to potential third-party claimants against the benefits to the DOD or the Army. Where such risk is excessive, try to obtain an agreement from the sponsoring civilian organization holding the Army harmless. When feasible, third-party liability insurance may be required from the sponsor and the United States added to the policy as a third-party insured.
(2) When Army equipment and personnel are used for debris removal relief pursuant to the Federal Disaster Relief Act, 42 U.S.C. 5173, the state is required to assume responsibility for third-party claims. The senior judge advocate for a task force engaged in such relief should obtain an agreement requiring the state to hold the Army harmless and establish a procedure for payment by the state. Claims will be received, entered into the TSCA database, investigated and forwarded to state authorities for action.
(m)
(n)
See parallel discussion at DA Pam 27-162, paragraph 2-1.
Claims for property damage, personal injury, or death arising in the United States based on contamination by toxic substances found in the air or the ground must be reported by USARCS to the Environmental Law Division of the Army Litigation Center and the Environmental Torts Branch of DOJ. Such claims arising overseas must be reported to the Command Claims Service with geographical jurisdiction over the claim and USARCS. Claims for personal injury from contamination frequently arise at an area that is the subject of claims for cleanup of the contamination site. The cleanup claims involve other Army agencies, use of separate funds, and prolonged investigation. Administrative settlement is not usually feasible because settlement of property damage claims must cover all damages, including personal injury. Payment by Defense Environmental Rehabilitation Funds should be considered initially and any such payment should be deducted from any settlement under AR 27-20.
An ACO or a CPO routinely receives claims or inquiries about claims that clearly are not cognizable under this part. It is the DA's policy that every effort be made to discover another remedy and inform the inquirer as to its nature. Claims personnel will familiarize themselves with the remedies set forth in DA Pam 27-162, paragraph 2-17, to carry out this policy. If no appropriate remedy can be discovered, forward the file to the Commander USARCS, with recommendations.
Prompt and thorough investigation will be conducted on all potential and actual claims for and against the government. Evidence developed during an investigation provides the basis for every subsequent step in the administrative settlement of a claim or in the pursuit of a lawsuit. Claims personnel must gather and record adverse as well as favorable information. The CJA, claims attorney or unit claims officer must preserve their legal and factual findings.
(a) The investigation is conducted to ascertain the facts of an incident. Which facts are relevant often depends on the law and regulations applicable to the conduct of the parties involved but generally the investigation should develop definitive answers to such questions as “When?” “Where?” “Who?” “What?” and “How?”. Typically, the time, place, persons, and circumstances involved in an incident may be established by a simple report, but its cause and the resulting damage may require extensive effort to obtain all the pertinent facts.
(b) The object of the investigation is to gather, with the least possible delay, the best available evidence without accumulating excessive evidence concerning any particular fact. The claimant is often an excellent source of such information and should be contacted early in the investigation, particularly when there is a question as to whether the claim was timely filed.
(a) ACOs or CPOs will budget operation and maintenance (O&M) funds for the costs of hiring property appraisers, accident reconstructionists, expert consultants to furnish opinions, and medical specialists to conduct independent medical examinations (IMEs). Other expenses to be provided for from O&M funds include the purchase of documents, such as medical records, and the hiring of mediators. See § 536.53(b). Where the cost exceeds $750 or local funds are exhausted, a request for funding should be directed to the Commander USARCS, with appropriate justification. The USARCS AAO must be notified as soon as possible when an accident reconstruction is indicated.
(b) Where the claim arises from treatment at an Army MTF, the MEDDAC commander should be requested to fund the cost of an independent consultant's opinion or an IME.
(c) The use of outside consultants and appraisers should be limited to claims in which liability or damages cannot be determined otherwise and in which the use of such sources is economically feasible, for instance, where property damage is high in amount and not determinable by a government appraiser or where the extent of personal injury is serious and a government IME is neither available nor acceptable to a claimant. Prior to such an examination at an MTF, ensure that the necessary specialists are available and a prompt written report may be obtained.
(d) Either an IME or an expert opinion is procured by means of a personal services contract under the Federal Acquisition Regulation (FAR), part 37, 48 CFR 37.000
(e) Whenever a source other than claims personnel is used to assist in the evaluation of a claim in which medical information protected by HIPAA is involved, the source must sign an agreement designed to protect the patient's privacy rights.
(a) The methods and techniques for investigating specific categories of claims are set forth in DA Pam 27-162, paragraphs 2-25 through 2-34. The investigation of medical malpractice claims should be conducted by a CJA or claims attorney, using a medical claims investigator.
(b) A properly filed claim must contain enough information to permit investigation. For example, if the claim does not specify the date, location or details of every incident complained of, the claimant or legal representative should be required to furnish the information.
(c) Request the claimant or legal representative to specify a theory of liability. However, the investigation should not be limited to the theories specified, particularly where the claimant is unrepresented. All logical theories should be investigated.
(a) Under the FTCA, the United States is liable in the same manner and to the same extent as a private individual under like circumstances in accordance with the law of the place where the act or omission giving rise to the tort occurred (28 U.S.C. 2673 and 2674). This means that liability must rest on the existence of a tort cognizable under state law, hereinafter referred to as a state tort. A finding of state tort liability requires the litigating attorney to prove the elements of duty, breach of duty, causation, and damages as interpreted by federal case law.
(b) The foregoing principles and requirements will be followed in regard to tort claims against the United States under other subparts, with certain
(c) Interpretation will be made in accordance with FTCA case law and also maritime case law where applicable. Additionally, a noncombat activity can furnish the basis for a claim under subparts C, F, and J of this part. Noncombat activities include claims arising out of civil works, such as inverse condemnation.
(d) Federal, not state or local, law applies to a determination as to who is a federal employee or a member of the armed forces. Under all subparts, the designation “federal employee” excludes a contractor of the United States. See 28 U.S.C. 2671. See however, § 536.23(b)(4)(ii) concerning personal services contractors. For employment identification purposes apply FTCA case law in making a determination.
(e) Federal, not state or local, law applies to an interpretation of the SOL under all subparts. Minority or incompetence does not toll the SOL. Case law developed under the FTCA will be used in other subparts in interpreting SOL questions.
(f) Under the FTCA state or local law is used to determine scope of employment and under other subparts for guidance.
A claim for violation of the U.S. Constitution does not constitute a state tort and is not cognizable under any subpart. A constitutional claim will be scrutinized in order to determine whether it is totally or partially payable as a state tort. For example, a Fifth Amendment taking may be payable in an altered form as a real estate claim. For further discussion see DA Pam 27-162, paragraph 2-36.
(a) A member of the armed forces' claim for personal injury or wrongful death arising incident to service is not payable under any subpart except to the extent permitted by the receiving State under §§ 536.114 through 536.116 (Claims arising overseas); however, a claim by a member of the United States Armed Forces for property loss or damage may be payable under AR 27-20, chapter 11 or, if not, under subparts C, E, F, or G of this part. Derivative claims and claims for indemnity are also excluded.
(b) Claims for personal injury or wrongful death by members of a foreign military force participating in a joint military exercise or operation arising incident to service are not payable under any subpart. Claims for property loss or damage, but not subrogated claims, may be payable under subpart C of this part. Derivative claims and claims for indemnity or contribution are not payable under any subpart.
For further discussion see DA Pam 27-162, paragraph 2-37.
A federal or NAFI employee's personal injury or wrongful death claim payable under the Federal Employees Compensation Act (FECA) or the Longshore and Harbor Workers Compensation Act (LSHWCA) is not payable under any subpart. Derivative claims are also excluded but a claim for indemnity may be payable under certain circumstances. A federal or NAFI employee's claim for an incident-to-service property loss or damage may be payable under AR 27-20, chapter 11 or, if not, under subparts C, D, F, G, H or J of this part. For further discussion see DA Pam 27-162, paragraph 2-38.
This topic is more fully discussed in DA Pam 27-162, paragraph 2-39. The exclusions listed below are found at 28 U.S.C. 2680 and apply to subparts C, D, F, and H and §§ 536.107 through 536.113 (Claims arising in the United States) of subpart G, except as noted therein, and not to subparts E, J or §§ 536.107 through 536.113 (Claims arising overseas) of subpart G of this part. A claim is not payable if it:
(a) Is based upon an act or omission of an employee of the U.S. government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation is valid. This exclusion does not apply to a noncombat activity claim.
(b) Is based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the government, whether or not the discretion is abused. This exclusion does not apply to a noncombat activity claim.
(c) Arises out of the loss, miscarriage, or negligent transmission of letters or postal matters. This exclusion is not applicable to registered or certified mail claims under subpart C of this part. See § 536.34(i).
(d) Arises in respect of the assessment or collection of any tax or customs duty, or the detention of any goods or merchandise by any customs or other law enforcement officer. See 28 U.S.C. 2680(c).
(e) Is cognizable under the SIAA (46 U.S.C. app. 741-752), the PVA (46 U.S.C. app. 781-790), or the AEA (46 U.S.C. app. 740). This exclusion does not apply to subparts C, F, H or J of this part.
(f) Arises out of an act or omission of any federal employee in administering the provisions of the Trading with the Enemy Act, 50 U.S.C. app. 1-44.
(g) Is for damage caused by the imposition or establishment of a quarantine by the United States.
(h) Arises out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights, except for acts or omissions of investigation of law enforcement officers of the U.S. government with regard to assault, battery, false imprisonment, false arrest, abuse of process or malicious prosecution. This exclusion also does not apply to a health care provider as defined in 10 U.S.C. 1089 and § 536.80 of this part, under the conditions listed therein.
(i) Arises from the fiscal operations of the U.S. Department of the Treasury or from the regulation of the monetary system.
(j) Arises out of the combatant activities of U.S. military or naval forces, or the Coast Guard during time of war.
(k) Arises in a foreign country. This exclusion does not apply to subparts C, E, F, H, J or §§ 536.114 through 536.116 (Claims arising overseas) of subpart G of this part.
(l) Arises from the activities of the Tennessee Valley Authority, 28 U.S.C. 2680(l).
(m) Arises from the activities of the Panama Canal Commission, 28 U.S.C. 2680(m).
(n) Arises from the activities of a federal land bank, a federal intermediate credit bank, or a bank for cooperatives, 28 U.S.C. 2680(n).
This topic is more fully discussed in DA Pam 27-162, paragraph 2-39.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
See parallel discussion at DA Pam 27-162, paragraphs 2-40 through 2-43.
To be payable, a claim against the United States under any subpart, except §§ 536.114 through 536.116 (Claims arising overseas), must be filed no later than two years from the date of accrual as determined by federal law. The accrual date is the date on which the claimant is aware of the injury and its cause. The claimant is not required to know of the negligent or wrongful nature of the act or omission giving rise to the claim. The date of filing is the date of receipt by the appropriate federal agency, not the date of mailing. See also § 536.26(a) and parallel discussion at DA Pam 27-162, paragraph 2-44.
To be payable, a claim under any subpart except subpart K of this part, §§ 536.153 through 536.157 (Claims involving tortfeasors other than nonappropriated fund employees), must be based on the acts or omissions of a member of the armed forces, a member of a foreign military force within the United States with which the United States has a reciprocal claims agreement, or a federal civilian employee. This does not include a contractor of the United States. Apply federal case law for interpretation. See parallel discussion at DA Pam 27-162, paragraph 2-46.
To be payable, a claim must be based on acts or omissions of a member of the armed forces, a member of a foreign military force within the United States with which the United States has a reciprocal claims agreement, or a federal employee acting within the scope of employment, except for subparts E, J, or subpart K of this part, §§ 536.153 through 536.157 (Claims involving tortfeasors other than nonappropriated fund employees). A claim arising from noncombat activities must be based on the armed service's official activities. Excluded are claims based on vicarious liability or the holder theory in which the owner of the vehicle is responsible for any injury or damage regardless of who the operator was. See parallel discussion at DA Pam 27-162, paragraph 2-46.
(a)
(b)
(c)
(d)
(e)
(f)
For further discussion see DA Pam 27-162, paragraph 2-51.
Where permitted by applicable state or maritime law, damages recovered from collateral sources are payable under subparts D and H, but not under subparts C, E, F, or J of this part. For further discussion see DA Pam 27-162, paragraph 2-57.
Subrogation is the substitution of one person in place of another with regard to a claim, demand or right. It should
(a) Before claims personnel evaluate a claim:
(1) A claimant or claimant's legal representative will be furnished the opportunity to substantiate the claim by providing essential documentary evidence according to the claim's nature including, but not instead of, the following: Medical records and reports, witness statements, itemized bills and paid receipts, estimates, federal tax returns, W-2 forms or similar proof of loss of earnings, photographs, and reports of appraisals or investigation. If necessary, request permission, through the legal representative, to interview the claimant, the claimant's family, proposed witnesses and treating health care providers (HCPs). In a professional negligence claim, the claimant will submit an expert opinion when requested. State law concerning the requirement for an affidavit of merit should be cited.
(2) When the claimant or the legal representative fails to respond in a timely manner to informal demands for documentary evidence, interviews, or an independent medical examination (IME), make a written request. Such written request provides notice to the claimant that failure to provide substantiating evidence will result in an evaluation of the claim based only on information currently in the file. When, despite the government's request, there is insufficient information in the file to permit evaluation, the claim will be denied for failure to document it. Failure to submit to an IME or sign an authorization to use medical information protected by HIPAA, for review or evaluation by a source other than claims personnel, are both grounds for denial for failure to document, provided such evaluation is essential to the determination of liability or damages. State a time limit, for example, 30 or 60 days, to furnish the substantiation or expert opinion required in a medical malpractice claim.
(3) If, in exchange for complying with the government's request for the foregoing information, the claimant or the legal representative requests similar information from the file, the claimant may be provided such information and documentation as is releasable under the Federal Rules of Civil Procedure (FRCP). Additionally, work product may be released if such release will help settle the claim. See § 536.18.
(b) An evaluation should be viewed from the claimant's perspective. In other words, before denying a claim, first determine whether there is any reasonable basis for compromise. Certain jurisdictional issues and statutory bases may not be open for compromise. The incident to service and FECA exclusions are rarely subject to compromise, whereas the SOL is more subject to compromise. Factual and legal disputes are compromisable, frequently providing a basis for limiting damages, not necessarily grounds for denial. Where a precise issue of dispute is identified and is otherwise unresolvable, mediation by a disinterested qualified person, such as a federal judge, or foreign equivalent for claims arising under the FCA, should be obtained upon agreement with the claimant or the claimant's legal representative. Contributory negligence has given way to comparative negligence in most United States jurisdictions. In most foreign countries, comparative negligence is the rule of law.
For further discussion see DA Pam 27-162, paragraph 2-59.
When joint tortfeasors are liable, it is DA policy to pay only the fair share of a claim attributable to the fault of the United States rather than pay the claim in full and then bring suit against the joint tortfeasor for contribution. If payment from a joint tortfeasor is not forthcoming after the CJA's demand, the United States should settle for its fair share, provided the claimant is willing to hold the United States harmless. Where a joint tortfeasor's liability greatly outweighs that of the United States, the claim should be referred to the joint tortfeasor for action.
(a) The use of future periodic payments, including reversionary medical trusts, is encouraged to ensure that the injured party is adequately compensated and able to meet future needs.
(1) It is necessary to ensure adequate care and compensation for a minor or other incompetent claimant or unemployed survivor over a period of years.
(2) A medical trust is necessary to ensure the long-term availability of funds for anticipated future medical care, the cost of which is difficult to predict.
(3) The injured party's life expectancy cannot be reasonably determined or is likely to be shortened.
(b) Under subpart D of this part, structured settlements cannot be required but are encouraged in situations listed above or where state law permits them. In the case of a minor, every effort should be made to insure that the minor, and not the parents, receives the benefit of the settlement. Annuity payments at the age of majority should be considered. If rejected, a blocked bank account may be used.
(c) It is the policy of the Department of Justice never to discuss the tax-free nature of a structured settlement.
For further discussion, see DA Pam 27-162, paragraph 2-63.
It is DA policy to settle meritorious claims promptly and fairly through direct negotiation at the lowest possible level. The Army's negotiator should not admit liability as such is not necessary. However, the settlement should reflect diminished value where contributory negligence or other value-diminishing factors exist. The negotiator should be thoroughly familiar with all aspects of the case, including the claimant's background, the key witnesses, the anticipated testimony and the appearance of the scene. There is no substitute for the claims negotiator's personal study of, and participation in, the case before settlement negotiations begin. If settlement is not possible due to the divergence in the offers, refine the issues as much as possible in order to expedite any subsequent suit. Mediation should be used if the divergence is due to an issue of law affecting either liability or damages. For further discussion see DA Pam 27-162, paragraph 2-64.
An AAO or, when delegated additional authority, an ACO or a CPO, has authority to settle claims in an amount exceeding the monetary authority delegated by regulation. It is DA policy to delegate USARCS authority, on a case-by-case basis, to an ACO or a CPO possessing the appropriate ability and experience. Only an attorney should negotiate with a claimant's attorney. Negotiations with unrepresented claimants may be conducted by a non-attorney, under the supervision of an attorney. For further discussion see DA Pam 27-162, paragraph 2-65.
All aspects of the applicable law and procedure, except the amount to be claimed, should be explained to both potential and actual claimants. The negotiator will ensure that the claimant is aware of whether the negotiator is an attorney or a non-attorney, and that the negotiator represents the United States. As to claims within USARCS' monetary authority, the chronology and details of negotiations should be memorialized with a written record furnished to the claimant. The claimant should understand that it is not necessary to hire an attorney, but when an attorney is needed, the negotiator should recommend hiring one. In a claim where liability is not an issue, the claimant should be informed that if an attorney is retained, the claimant should attempt to negotiate an hourly fee for determination of damages only. For further discussion see DA Pam 27-162, paragraph 2-68.
“Settlement authority” is a statutory term (10 U.S.C. 2735) meaning that officer authorized to approve, deny or compromise a claim, or make final action. “Approval authority” means the officer empowered to settle, pay or compromise a claim in full or in part, provided the claimant agrees. “Final action authority” means the officer empowered to deny or make a final offer on a claim. Determining the proper officer empowered to approve or make final action on a claim depends on the claims statute involved and any limitations that apply under that statute. DA Pam 27-162, paragraph 2-69, outlines how various authority is delegated among offices.
Normally, a claim will include all damages that accrue by reason of the incident. Where a claimant has a claim for property damage and personal injury arising from the same incident, the property damage claim may be paid, under certain circumstances, prior to the filing of the personal injury claim. The personal injury claim may be filed later provided it is filed within the applicable statute of limitations. When both property damage and personal injury arise from the same incident, the property damage claim may be paid to either the claimant or, under subparts D or H of this part, the insurer and the same claimant may receive a subsequent payment for personal injury. Only under subparts D or H of this part may the insurer receive subsequent payment for subrogated medical bills and lost earnings when the personal injury claim is settled. The primary purpose of settling an injured claimant's property damage claim before settling the personal injury claim is to pay the claimant for vehicle damage expeditiously and avoid costs associated with delay such as loss of use, loss of business, or storage charges. The Commander USARCS' approval must be obtained whenever the estimated value of any one claim exceeds $25,000, or the value of all claims, actual or potential, arising from the incident exceeds $50,000; however, if the claim arises under the FTCA or AMCSA, only if the amount claimed exceeds $50,000, or $100,000 per incident.
(a) This section implements 10 U.S.C. 2736 (Act of September 8, 1961 (75 Stat. 488)) as amended by Public Law 90-521 (82 Stat. 874); Public Law 98-564 (90 Stat. 2919); and Public Law 100-465 (102 Stat. 2005)). No new liability is created by 10 U.S.C. 2736, which merely permits partial advance payments, only under subparts C, F or J of this part, on claims not yet filed. See AR 27-20, paragraph 11-18 for information on emergency partial payments in personnel claims, which are not governed by 10 U.S.C. 2736.
(b) The Judge Advocate General (TJAG) and the Assistant Judge Advocate General (TAJAG) may make advance payments in amounts not exceeding $100,000; the Commander USARCS, in amounts not exceeding $25,000, and the authorities designated in §§ 536.786(4) and (5) and 536.101, in amounts not exceeding $10,000, subject to advance coordination with USARCS, if the estimated total value of the claim exceeds their monetary authority. Requests for advance payments in excess of $10,000 will be forwarded to USARCS for processing.
(c) Under subpart J of this part, three-member foreign claims commissions may make advance payments under the FCA in amounts not exceeding $10,000, subject to advance coordination with USARCS if the estimated total value of the claim exceeds their monetary authority.
(d) An advance payment, not exceeding $100,000, is authorized in the limited category of claims or potential claims considered meritorious under subparts C, F or J of this part, that result in immediate hardship. An advance payment is authorized only under the following circumstances:
(1) The claim, or potential claim, must be determined to be cognizable and meritorious under the provisions of subparts C, F or J of this part.
(2) An immediate need for food, clothing, shelter, medical or burial expenses, or other necessities exists.
(3) The payee, so far as can be determined, would be a proper claimant, including an incapacitated claimant's spouse or next-of-kin.
(4) The total damage sustained must exceed the amount of the advance payment.
(5) A properly executed advance payment acceptance agreement has been obtained. This acceptance agreement must state that it does not constitute an admission of liability by the United States and that the amount paid shall be deducted from any subsequent award.
(e) There is no statutory authority for making advance payments for claims payable under subparts D or H of this part.
For further discussion see DA Pam 27-162, paragraph 2-71.
(a)
(2) In any claim which must be supported by an expert opinion as to duty, negligence, causation or damages, an expert opinion must be submitted upon request. All opinions must meet the standards set forth in Federal Rule of Evidence 702.
(3) An action memorandum is required for all final actions regardless of whether payment is made electronically. The memorandum will contain a sufficient rendition of the facts, law or damages to justify the action being taken. (A model action is posted on the USARCS Web site; for the address see § 536.2(a).)
(b)
(c)
For further discussion see DA Pam 27-162, paragraph 2-72.
(a)
(2) DA Form 1666 (Claims Settlement Agreement) may be used for payment of COE claims of $2,500 or less or all Army Central Insurance Fund and Army and Air Force Exchange Service claims.
(3) DA Form 7500 (Tort Claim Payment Report) will be used for all payments from the Defense Finance and Accounting Service (DFAS), for example, FTCA claims of $2,500 or less, FCA and MCA claims of $100,000 or less and all maritime claims regardless of amount.
(4) Financial Management Service (FMS) Forms 194, 196 and 197 will be used for all payments from the Judgment Fund, for example, FTCA claims exceeding $2,500, MCA and FCA claims exceeding $100,000.
(5) An alternative settlement agreement will be used when the claimant is represented by an attorney, or when any of the above settlement agreement forms are legally insufficient (such as when multiple interests are present, a hold harmless agreement is reached, or there is a structured settlement). For further discussion, see DA Pam 27-162, paragraph 2-73c.
(b)
(c)
(2)
(3)
(4)
(d)
(2) Generally, only a court-appointed guardian of a minor's estate, or a person performing a similar function under court supervision, may execute a binding settlement agreement on a minor's claim. In the United States, the law of the state where the minor resides or is domiciled will determine the age of majority and the nature and type of court approval that is needed, if any. The age of majority is determined by the age at the time of settlement, not the date of filing.
(3) For claims arising in foreign countries where the amount agreed upon does not exceed $2,500, the requirement to obtain a guardian may be eliminated. For settlements over $2,500, whether or not the claim arose in the United States, refer to applicable local law, including the law of the foreign country where the minor resides.
(4) In claims where the claimant is an incompetent, and for whom a guardian has been appointed by a court of competent jurisdiction, the signature of the guardian must be obtained. In cases in which competence of the claimant appears doubtful, a written statement by the plaintiff's attorney and a member of the immediate family should be obtained.
(5) Settlement agreements involving subrogated claims must be executed by a person authorized by the corporation or company to act in its behalf and accompanied by a document signed by a person authorized by the corporation or company to delegate execution authority.
(6) If it is believed that the foregoing requirements are materially impeding settlement of the claim, bring the matter to the attention of the Commander USARCS for appropriate resolution.
(e)
(2) Costs are a matter to be determined solely between the attorney and the claimant and will not be set forth or otherwise enumerated in the settlement agreement.
(f)
(g)
(h)
(a) When claims personnel believe that a claim should be compromised, and after every reasonable effort has been made to settle at less than the amount claimed, a settlement authority will make a written final offer within his or her monetary jurisdiction or forward the claim to the authority having sufficient monetary jurisdiction, recommending a final offer under the applicable statute. The final offer notice will contain sufficient detail to outline each element of damages as well as discuss contributory negligence, the SOL or other reasons justifying a compromise offer. The offer letter should include language indicating that if the offer is not accepted within a named time period, for example, 30 or 60 days the offer is withdrawn and the claim is denied.
(b) A final offer under subpart D of this part will notify the claimant of the right to sue, not later than six months from the notice's date of mailing, and of the right to request reconsideration. The procedures for processing a request for reconsideration are set forth in § 536.89.
(c) Under subparts C or F of this part, the notice will contain an appeal paragraph. A similar procedure will be followed in subparts E and H of this part. Subpart J of this part sets forth its own procedures for FCA final offers. The procedures for processing an appeal are set forth in § 536.79 of this part. The letter must inform claimants of the following:
(1) They must accept the offer within 60 days or appeal. The appeal should state a counteroffer.
(2) The identity of the official who will act on the appeal, and the requirement that the appeal will be addressed to the settlement authority who last acted on the claim.
(3) No form is prescribed for the appeal, but the notice of appeal must fully set forth the grounds for appeal or state that it is based on the record as it exists at the time of denial or final offer.
(4) The appeal must be postmarked not later than 60 days after the date of mailing of the final notice of action. If the last day of the appeal period falls on a Saturday, Sunday, or legal holiday, as specified in Rule 6a of the Federal Rules of Civil Procedure, the following day will be considered the final day of the appeal period.
(d) Where a claim for the same injury falls under both subparts C and D of this part (the MCA and the FTCA), and the denial or final offer applies equally to each such claim, the letter of notification must advise the claimant that any suit brought on any portion of the claim filed under the FTCA must be brought not later than six months from the date of mailing of the notice of final offer and any appeal under subpart C of this part must be made as stated in paragraph (c) of this section. Further, the claimant must be advised that if suit is brought, action on any appeal under subpart C of this part will be held in abeyance pending final determination of such suit.
(e) Upon request, the settlement authority may extend the six-month reconsideration or 60-day appeal period provided good cause is shown. The claimant will be notified as to whether the request is granted under the FTCA and that the request precludes the filing of suit under the FTCA for 6 months. Only one reconsideration is authorized. Accordingly, that claimant should be informed of the need to make all submissions timely.
For further discussion see DA Pam 27-162, paragraph 2-74.
(a) Where there is no reasonable basis for compromise, a settlement authority will deny a claim within his or her monetary jurisdiction or forward the claim recommending denial to the settlement authority that has jurisdiction. The denial notice will contain instructions on the right to sue or request reconsideration. The notice will state the basis for denial. No admission of liability will be made. A notice to an unrepresented claimant should detail the basis for denial in lay language sufficient to permit an informed decision as to whether to request appeal or reconsideration. In the interest of deterring reconsideration, appeal or suit, a denial notice may be releasable under the Federal Rules of Civil Procedure or by the work product documents doctrine.
(b) Regardless of the claim's nature or the statute under which it may be considered, letters denying claims on jurisdictional grounds that are valid, certain, and not easily overcome (and for this reason no detailed investigation as to the merits of the claim was conducted), must state that denial on such grounds is not to be construed as an opinion on the merits of the claim or an admission of liability. In medical malpractice claims, the denial should state that the file is being referred to U.S. Army Medical Command for review. If sufficient factual information exists to make a tentative ruling on the merits of the claim, liability may be expressly denied.
See § 536.53, on denying a claim for failure to substantiate. In addition, the procedures and rules in DA Pam 27-162, paragraph 2-69, settlement and approval authority, apply equally to the denial of claims. See also DA Pam 27-162, paragraph 2-75.
(a) When suit is filed before final action is taken on a subpart D of this part claim, a denial letter will be issued only upon request of DOJ or the trial attorney. If suit is filed prematurely or in error, the claimant may be requested to withdraw the suit without prejudice. Such a request must be coordinated with the trial attorney.
(b) Claimants who have filed companion claims should be notified that, due to suit being filed, no action can be taken pending the outcome of suit and they may file suit if they wish.
For further discussion see DA Pam 27-162, paragraph 2-76.
Thirty or sixty day letters seeking information from claimants, final offers and denial notices are time-sensitive as they require a claimant to take additional action within certain time limits. Accordingly, follow procedures to ensure that the date of mailing and receipt of a request for reconsideration are documented. Use certified mail with return receipt requested (or registered mail, if being sent to a foreign country other than by the military postal system) to mail such notices. Upon receipt, an appeal or request for reconsideration will be date-time stamped, logged in, and acknowledged as set forth in § 536.68.
See also AR 27-20, paragraph 13-5, and DA Pam 27-162, paragraph 2-77.
(a) An appeal or a request for reconsideration will be acknowledged in writing. A request for reconsideration under subpart D of this part invokes the six-month period during which suit cannot be filed, 28 CFR 14.9(b). The acknowledgment letter will underscore this restriction.
(b) Where the contents of the appeal or request for reconsideration indicate, additional investigation will be conducted and the original action changed if warranted. Except for subpart J of this part, which sets forth separate rules for FCCs, if the relief requested is not warranted the settlement authority will forward the claim to a higher settlement authority with a claims memorandum of opinion (see § 536.62) stating the reasons why the request is invalid.
See also DA Pam 27-162, paragraph 2-78.
After final action has been taken, the settlement authority will retain the file until at least one month after either the period of filing suit or the appeal has expired and until all data has been entered into the database. A paid claim file will be retained until final action has been taken on all other claims arising out of the same incident. If any single claim arising out of the same incident must be forwarded to higher authority for final action, all claims files for that incident will be forwarded at the same time. For further discussion see DA Pam 27-162, paragraph 2-79.
(a) An unrepresented claimant will be listed as the sole payee. Joint claimants will not be listed since settlement agreements must specify the amount payable to each claimant individually and each must be issued a separate check.
(b) When a claimant is represented by an attorney, only one payment voucher will be issued with the claimant and the attorney as joint payees. The payment will be sent to the office of the claimant's attorney. The attorney of record, either an individual or firm designated by the claimant, will be the co-payee. If claimant has been represented by other attorneys in the same claim, such attorneys will not be listed as payees, even if they have a lien. Satisfaction of any such fee will be a matter between the claimant and such attorney. If payment is made by electronic transfer, the funds will be paid into the account of the claimant. However, if requested, the payment may be made into the attorney's escrow account provided the claimant has provided written authorization.
(c) In a structured settlement the structured settlement broker will be the sole payee, who is authorized to issue checks for the amounts set forth in the settlement agreement. The up-front cash payment may be deposited into an escrow account established for the benefit of the claimant.
(d) If a claimant is a minor or has been declared incompetent by a court or other authority authorized to do so, payment will be made to the court-appointed guardian of the minor or incompetent, at a financial institution approved by the court approving the settlement.
(e) If the claimant is representing a deceased's estate on a wrongful death claim, or a survival action on behalf of the deceased, the payment will be made to the court-appointed representative of the estate. No payment will be made directly to the estate.
See also § 536.63 and DA Pam 27-162, paragraphs 2-73 and 2-81.
(a) 31 U.S.C. 1304 sets forth the type and limits of claims payable out of the Judgment Fund. Only final payments that are not payable out of agency funds are allowable, per the Treasury Financial Manual, Volume I, Part 6, Chapter 3110, at Section 3115, September 2000. Threshold amounts for payment from the judgment fund vary according to the subpart and statutes under which a claim is processed. To determine the threshold amount for any given payment procedure one must arrive at a sum of all awards for all claims arising out of that incident, including derivative claims. A joint amount is not acceptable. A claim for injury to a spouse or a child is a separate claim from one for loss of consortium or services by a spouse or parent. The monetary limits of $2,500 set forth in subpart D and $100,000 set forth in subparts C, F or J of this part, apply to each separate claim.
(b) A claim for $2,500 or less arising under subpart D or E, or under §§ 536.107 through 536.113 of subpart G, is paid from the open claims allotment (see AR 27-20 paragraph 13-6 b(1)) or, if arising from a project funded by a civil works appropriation, from COE civil works funds. The Department of the Treasury pays any settlement exceeding $2,500 in its entirety, from the Judgment Fund. However, if a subpart G of this part, §§ 536.107 through 536.113 claim is treated as a noncombat activity claim, payment is made as set forth in paragraph (c) of this section.
(c) The first $100,000 for each claimant on a claim settled under subparts C, F or J of this part is paid from the open claims allotment. Any amount over $100,000 is paid out of the Judgment Fund.
(d) If not over $500,000, a claim arising under subpart H of this part is paid from the open claims allotment or civil works project funds as appropriate. A claim exceeding $500,000 is paid entirely by a deficiency appropriation.
(e) AAFES or NAFI claims are paid from nonappropriated funds, except when such claims are subject to apportionment between appropriated and nonappropriated funds. See DA Pam 27-162, paragraph 2-80h.
(f) COE claims arising out of projects not funded out of civil works project funds are payable from the open claims allotment not to exceed $2,500 for subpart D claims and $100,000 for claims arising from subparts C, F or J of this part and from the Judgment Fund, over such amounts.
For further discussion see DA Pam 27-162, paragraph 2-80.
A claimant's acceptance of an award, except for an advance payment or a split payment for property damage only, constitutes a release of the United States and its employees from all liability. Where applicable, a release should include the ARNG or the sending State. For further discussion see DA Pam 27-162, paragraph 2-82.
The statutory authority for this subpart is contained in the Act of August 10, 1956 (70A Stat. 153, 10 U.S.C. 2733), commonly referred to as the Military Claims Act (MCA), as amended by 90-521, September 1968 (82 Stat. 874); Public Law 90-522, September 1968 (82 Stat. 875); Public Law 90-525, September 1968 (82 Stat. 877); Public Law 93-336, July 8, 1974 (88 Stat. 291); Public Law 98-564, October 1984, (98 Stat. 2918); and Public Law 103-337, October 1994 (108 Stat. 2664).
(a) The guidance set forth in this subpart applies worldwide and prescribes the substantive bases and special procedural requirements for the
(1) Caused by military personnel or civilian employees (enumerated in § 536.23(b)) acting within the scope of their employment, except for non-federalized Army National Guard soldiers as explained in subpart F of this part; or
(2) Incident to the noncombat activities of the armed services (see AR 27-20, Glossary).
(b) A tort claim arising in the United States, its commonwealths, territories, and possessions may be settled under this subpart if the Federal Tort Claims Act (FTCA) does not apply to the type of claim under consideration or if the claim arose incident to noncombat activities. For example, a claim by a service member for property loss or damage incident to service may be settled if the loss arises from a tort and is not payable under AR 27-20, Chapter 11.
(c) A tort claim arising outside the United States may be settled under this subpart only if the claimant has been determined to be an inhabitant (normally a resident) of the United States at the time of the incident giving rise to the claim. See § 536.136(b).
(a)
(1) Caused by an act or omission of military personnel or civilian employees of the DA or DOD, acting within the scope of their employment, that is determined to be negligent or wrongful; or
(2) Incident to the noncombat activities of the armed services.
(b)
(1) Real property used and occupied under lease (express, implied, or otherwise). See § 536.34(m) and paragraph 2-15m of DA Pam 27-162.
(2) Personal property bailed to the government under an agreement (express or implied), unless the owner has expressly assumed the risk of damage or loss.
(3) Registered or insured mail in the DA's possession, even though the loss was caused by a criminal act.
(4) Property of a member of the armed forces that is damaged or lost incident to service, if such a claim is not payable as a personnel claim under AR 27-20, chapter 11.
(c)
(a) Those resulting wholly from the claimant's or agent's negligent or wrongful act. (See § 536.77(a)(1)(i) on contributory negligence.)
(b) Claims arising from private or domestic obligations rather than from government transactions.
(c) Claims based solely on compassionate grounds.
(d) A claim for any item, the acquisition, possession, or transportation of which was in violation of DA directives, such as illegal war trophies.
(e) Claims for rent, damage, or other payments involving the acquisition, use, possession or disposition of real property or interests therein by and for the Department of the Army (DA) or Department of Defense (DOD). See § 536.34(m) and paragraph 2-15m of DA Pam 27-162.
(f) Claims not in the best interests of the United States, contrary to public policy, or otherwise contrary to the basic intent of the governing statute (10 U.S.C. 2733); for example, claims for property damage or loss or personal injury or death of inhabitants of unfriendly foreign countries or individuals considered to be unfriendly to the United States. When a claim is considered not payable for the reasons stated in this section, it will be forwarded for appropriate action to the Commander USARCS, with the recommendations of the responsible claims office.
(g) Claims presented by a national, or a corporation controlled by a national, of a country at war or engaged in armed conflict with the United States, or any country allied with such enemy country unless the appropriate settlement authority determines that the claimant is, and at the time of the incident was, friendly to the United States. A prisoner of war or an interned enemy alien is not excluded from bringing an otherwise payable claim for damage, loss, or destruction of personal property in the custody of the government.
(h) A claim for damages or injury, which a receiving State should adjudicate and pay under an international agreement, unless a consistent and widespread alternative process of adjudicating and paying such claims has been established within the receiving State. See DA Pam 27-162, paragraph 3-4a, for further discussion of the conditions of waiver.
(i) Claims listed in §§ 536.42, 536.43, 536.44, 536.45, and 536.46 of this part, except for the exclusion listed in § 536.45(k). Additionally, the exclusions in § 536.45(a), (b), (e) and (k) do not apply to a claim arising incident to noncombat activities.
(j) Claims based on strict or absolute liability and similar theories.
(k) Claims payable under subparts D or J of this part, or under AR 27-20, chapter 11.
(l) Claims involving DA vehicles covered by insurance in accordance with requirements of a foreign country unless coverage is exceeded or the insurer is bankrupt. When an award is otherwise payable and an insurance settlement is not reasonably available, a field claims office should request permission from the Commander USARCS to pay the award, provided that an assignment of benefits is obtained.
(a)
(ii) Claims are cognizable when based on those acts or omissions recognized as tortious by a majority of jurisdictions that require proof of duty, negligence, and proximate cause resulting in compensable injury or loss subject to the exclusions set forth at § 536.76. Strict or absolute liability and similar theories are not grounds for liability under this subpart.
(2)
(3)
(ii) Scope of employment will be determined in accordance with federal law. Follow guidance from reported FTCA cases. The formulation of a binding interpretation is delegated to the Commander USARCS, provided the statutory provisions of the MCA are followed.
(iii) The collateral source doctrine is not applicable.
(iv) The United States will only be liable for the portion of loss or damage attributable to the fault of the United States or its employees. Joint and several liability is inapplicable.
(v) No allowance will be made for court costs, bail, interest, inconvenience or expenses incurred in connection with the preparation and presentation of the claim.
(vi) Punitive or exemplary damages are not payable.
(vii) Claims for negligent infliction of emotional distress may only be entertained when the claimant suffered physical injury arising from the same incident as the claim for emotional distress, or the claimant is the immediate family member of an injured party/decedent, was in the zone of danger and manifests physical injury for the emotional distress. Claims for intentional infliction of emotional distress will be evaluated under general principles of American law as set forth in paragraph (a)(1)(i) of this section and will be considered as an element of damages under paragraph (b)(3)(ii) of this section. Claims for either negligent or intentional infliction of emotional distress are excluded when they arise out of assault, battery, false arrest, false imprisonment, malicious prosecution, abuse of process, libel, or slander, as defined in § 536.45(h).
(viii) In a claim for personal injury or wrongful death, the total award for non-economic damages to any direct victim and all persons, including those derivative to the claim, who claim injury by or through that victim will not exceed $500,000. However, separate claims for emotional distress considered under paragraph (b)(1) of this section are not subject to the $500,000 cap for the wrongful death claim as they are not included in the wrongful death claim; rather, each is a separate claim with its own $500,000 cap under paragraph (b)(3)(ii) of this section. Continuous or repeated exposure to substantially the same or similar harmful activity or conditions is treated as one incident for the purposes of determining the extent of liability. If the claim accrued prior to September 1, 1995, these limitations do not apply. Any such limitation in the law of the place of occurrence will apply.
(b)
(i) Persons who suffer physical injuries or intentional emotional distress, but not subrogees (when claiming property loss or damage, medical expenses or lost earnings); see paragraph (a)(3)(iii) of this section.
(ii) Spouses for loss of consortium, but not parent-child or child-parent loss of consortium;
(iii) Members of the immediate family who were in the zone of danger of the injured person as defined in paragraph (a)(3)(vii) of this section.
(2)
(i) Past expenses, including medical, hospital and related expenses actually incurred. Nursing and similar services furnished gratuitously by a family member are compensable. Itemized bills or other suitable proof must be furnished. Expenses paid by, or recoverable from, insurance or other sources are not recoverable.
(ii) Future medical, hospital, and related expenses. When requested, a medical examination is required.
(iii) Past lost earnings as substantiated by documentation from both the employer and a physician.
(iv) Loss of earning capacity and ability to perform services, as substantiated by acceptable medical proof. When requested, past federal income tax forms must be submitted for the previous five years and the injured person must undergo an independent medical examination (IME). Estimates of future losses must be discounted to present value at a discount rate of one to three percent after deducting for income taxes. When a medical trust providing for all future care is established, personal consumption may be deducted from future losses.
(v) Compensation paid to a person for essential household services that the injured person can no longer provide for himself or herself. These costs are recoverable only to the extent that they neither have been paid by, nor are recoverable from, insurance.
(3)
(i)
(ii)
(iii)
(iv)
(c)
(1)
(ii) Parties in interest are the surviving spouse, children, or dependent parents to the exclusion of all other parties. If there is no surviving spouse, children, or dependent parents, the next of kin will be considered a party or parties in interest. A dependent parent is one who meets the criteria set forth by the Internal Revenue Service to establish eligibility for a DOD identification card.
(2)
(i) Loss of monetary support of a family member from the date of injury causing death until expiration of decedent's worklife expectancy. When requested, the previous five years federal income tax forms must be submitted. Estimates must be discounted to present value at one to three percent after deducting for taxes and personal consumption. Loss of retirement benefits is compensable and similarly discounted after deductions.
(ii) Loss of ascertainable contributions, such as money or gifts to other than family member claimants as
(iii) Loss of services from date of injury to end of life expectancy of the decedent or the person reasonably expected to receive such services, whichever is shorter.
(iv) Expenses as set forth in paragraph (b)(2)(i) of this section. In addition, burial expenses are allowable. Expenses paid by, or recoverable from, insurance or other sources are not recoverable.
(3)
(i) Pre-death conscious pain and suffering.
(ii) Loss of companionship, comfort, society, protection, and consortium suffered by a spouse for the death of a spouse, a child for the death of a parent, or a parent for the death of a child.
(iii) Loss of training, guidance, education, and nurture suffered by a child under the age of 18 for the death of a parent, until the child becomes 18 years old.
(iv) Claims for the survivors' emotional distress, mental anguish, grief, bereavement, and anxiety are not payable, in particular claims for intentional or negligent infliction of emotional distress to survivors arising out of the circumstances of a wrongful death are personal injury claims falling under § 536.77(b)(3).
(d)
(1) Such claims are limited to damage to, or loss of, tangible property and costs directly related thereto. Consequential damages are not included. (See § 536.50(e) and DA Pam 27-162, paragraph 2-56a.)
(2) Proper claimants are described in § 536.27. Claims for subrogation are excluded. (See § 536.27(e)). However, there is no requirement that the claimant use personal casualty insurance to mitigate the loss.
(3) Allowable elements of damages and measure of proof (additions to these elements are permissible with concurrence of the Commander USARCS). These elements are discussed in detail in DA Pam 27-162, paragraph 2-54.
(i) Damages to real property.
(ii) Damage to or loss of personal property, or personal property that is not economically repairable.
(iii) Loss of use.
(iv) Towing and storage charges.
(v) Loss of business or profits.
(vi) Overhead.
(a)
(b)
(2) The Judge Advocate General (TJAG) and the Assistant Judge Advocate General (TAJAG) are delegated authority to pay up to $100,000 in settlement of a claim and to disapprove a claim regardless of the amount claimed.
(3) The Commander USARCS is delegated authority to pay up to $25,000 in settlement of a claim and to disapprove or make a final offer in a claim regardless of the amount claimed.
(4) The Judge Advocate (JA) or Staff Judge Advocate (SJA), subject to limitations that USARCS may impose, and chiefs of a command claims service are delegated authority to pay up to $25,000 in settlement, regardless of the amount claimed, and to disapprove or make a final offer in a claim presented in an amount not exceeding $25,000.
(5) A head of an area claims office (ACO) is delegated authority to pay up to $25,000 in settlement of a claim, regardless of the amount claimed, and to disapprove or make a final offer in a claim presented in an amount not exceeding $25,000. A head of a claims processing office (CPO) with approval authority is delegated authority to approve, in full or in part, claims presented for $5,000 or less, and to pay claims regardless of the amount claimed, provided an award of $5,000 or less is accepted in full satisfaction of the claim.
(6) Authority to further delegate payment authority is set forth in § 536.3(g)(1) of this part. For further discussions also related to approval, settlement and payment authority see also paragraph 2-69 of DA Pam 27-162.
(c)
(2) If such authority determines that federal liability is established, he or she may return claims of lesser value to the field claims office for settlement within that office's jurisdiction. The field claims office must take care to avoid compromising the higher authority's discretion by conceding liability in claims of lesser amount.
(d)
(1) For claims presented in an amount over $100,000, final decisions on appeals will be made by the Secretary of the Army or designee.
(2) For claims presented for $100,000 or less, and any denied claim, regardless of the amount claimed, in which the denial was based solely upon an incident-to-service bar, exclusionary language in a federal statute governing compensation of federal employees for job-related injuries (see § 536.44), or untimely filing, TJAG or TAJAG will render final decisions on appeals, except that claims presented for $25,000 or less, and not acted upon by the Commander USARCS, are governed by paragraph (d)(3) of this section.
(3) For claims presented for $25,000 or less, final decisions on appeals will be made by the Commander USARCS, his or her designee, or the chief of a command claims service when such claims are acted on by an ACO under such service's jurisdiction.
(4) Sections 536.64, 536.65, and 536.66 of this part set forth the rules relating to the notification of appeal rights and processing.
(e)
(a) The appeal will be examined by the settlement authority who last acted on the claim, or his or her successor, to determine if the appeal complies with the requirements of this regulation. The settlement authority will also examine the claim file and decide whether additional investigation is required; ensure that all allegations or evidence presented by the claimant, agent, or attorney are documented; and ensure
(b) If the evidence in the file, including information submitted by the claimant with the appeal and that found by any necessary additional investigation, indicates that the appeal should be granted in whole or in part, the settlement authority who last acted on the claim, or his or her successor, will attempt to settle the claim. If a settlement cannot be reached, the appeal will be forwarded in accordance with paragraph (a) of this section.
(c) As to an appeal that requires action by TJAG, TAJAG, or the Secretary of the Army or designee, the Commander USARCS may take the action in paragraph (b) of this section or forward the claim together with a recommendation for action. All matters submitted by the claimant will be forwarded and considered.
(d) Since an appeal under this subpart is not an adversarial proceeding, no form of hearing is authorized. A request by the claimant for access to documentary evidence in the claim file to be used in considering the appeal will be granted unless law or regulation does not permit access.
(e) If the appellate authority upholds a final offer or authorizes an award on appeal from a denial of a claim, the notice of the appellate authority's action will inform the claimant that he or she must accept the award within 180 days of the date of mailing of the notice of the appellate authority's action or the award will be withdrawn, the claim will be deemed denied, and the file will be closed without future recourse.
(a)
(1) The alleged negligent or wrongful actions or omissions occurred during the performance of medical, dental, or related health care functions (including clinical studies and investigations) while the medical or health care employee was acting within the scope of employment.
(2) Such personnel furnish prompt notification and delivery of all process served or received and other documents, information, and assistance as requested.
(3) Such personnel cooperate in the defense of the action on its merits.
(b)
(a)
(1) The alleged negligent or wrongful actions or omissions occurred during the provision or performance of legal services while the attorney or legal employee was acting within the scope of duties or employment;
(2) Such personnel furnish prompt notification and delivery of all process served or received and other documents, information, and assistance as requested;
(3) Such personnel cooperate in the defense of the action on the merits.
(b)
(a)
(2) An original approval or settlement authority may reopen and correct action on an MCA claim previously settled in whole or in part (even if a settlement agreement has been executed) when it appears that the original action was incorrect in law or fact based on the evidence of record at the time of the action or subsequently received. For errors in fact, the new evidence must not have been discoverable at the time of final action by either the Army or the claimant through the exercise of reasonable diligence. Corrective action may also be taken when an error contrary to the parties' mutual understanding is discovered in the original action. If the settlement or approval authority determines that their original action was incorrect, they will modify the action and, if appropriate, make a supplemental payment. The basis for a change in action will be stated in a memorandum included in the file. For example, a claim was settled for $15,000, but the settlement agreement was typed to read “$1,500” and the error is not discovered until the file is being prepared for payment. If appropriate, a corrected payment will be made. A settlement authority who has reason to believe that a settlement was obtained by fraud on the part of the claimant or claimant's legal representative, will reopen action on that claim and, if the belief is substantiated, correct the action. The basis for correcting an action will be stated in a memorandum and included in the file.
(b)
(2)
(c)
(d)
The statutory authority for this subpart is the Federal Tort Claims Act (FTCA) (60 Stat. 842, 28 U.S.C. 2671-2680), as amended by Public Law 89-506, July 1966 (80 Stat. 306); Public Law 93-253, March 1974 (88 Stat. 50); Public Law 97-124, December 1981 (93 Stat. 1666); Public Law 100-694, November 1988 (102 Stat. 4563-67); and Public Law 101-552, November 1996 (104 Stat. 734); and as implemented by the Attorney General's Regulations (28 CFR 14.1-14.11 and its appendix), all of which are posted on the USARCS Web site; for the address see § 536.2(a).
(a)
(b)
(a) Unless otherwise prescribed, claims for death, personal injury, or damage to, or loss of, property (real or personal) are payable under this subpart when the injury or damage is caused by negligent or wrongful acts or omissions of military personnel or civilian employees of the Department of the Army or Department of Defense while acting within the scope of their employment under circumstances in which the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred. The FTCA is a limited waiver of sovereign immunity without which the United States may not be sued in tort. Similarly, neither the Fifth Amendment nor any other provision of the U.S. Constitution creates or permits a federal cause of action allowing recovery in tort. Immunity must be expressly waived, as the FTCA waives it.
(b) To be payable, a claim must arise from the acts or omissions of an “employee of the government” under 28 U.S.C. 2671. Categories of such employees are listed in § 536.23(b) of this part.
A claim is not payable if it is identified as an exclusion in DA Pam 27-162, paragraphs 2-36 through 2-43.
The applicable law for claims falling under the Federal Tort Claims Act is set forth in §§ 536.41 through 536.52.
(a)
(1) The Judge Advocate General (TJAG);
(2) The Assistant Judge Advocate General (TAJAG); and
(3) The Commander USARCS.
(b)
(c)
(d)
(e)
(2) If the Commander USARCS determines that all claims can be settled for a total of $200,000 or less, he may return claims to the field office for settlement. If the Commander USARCS, determines that all claims cannot be settled for a total of $200,000, he must request Department of Justice authority prior to settlement of any one claim. The field claims office must not concede liability by paying any one claim of lesser value.
(a)
(b)
(c)
(2)
(d)
(2)
(e)
(f)
(g)
The statutory authority for this subpart is set forth in the Act of October 1962, 10 U.S.C. 2737, 76 Stat. 767, commonly called the “Non-Scope Claims Act (NSCA).”
(a) This subpart applies worldwide and prescribes the substantive bases and special procedural requirements for the administrative settlement and payment of not more than $1,000 for any claim against the United States for personal injury, death or damage to, or loss of, property caused by military personnel or civilian employees, incident to the use of a U.S. vehicle at any location, or incident to the use of other U.S. property on a government installation, which claim is not cognizable under any other provision of law.
(b) For the purposes of this subpart, a “government installation” is a facility having fixed boundaries owned or controlled by the government, and a “vehicle” includes every description of carriage or other artificial contrivance used, or capable of being used, as means of transportation on land (1 U.S.C. 4).
(c) Any claim in which there appears to be a dispute about whether the employee was acting within the scope of employment will be considered under subparts C, D, or F of this part. Only when all parties, including an insurer, agree that there is no “in scope” issue will the claim be considered under this subpart.
(a)
(1) Caused by negligent or wrongful acts or omissions of Department of Defense or Department of the Army (DA) military personnel or civilian employees, as listed in § 536.23(b):
(i) Incident to the use of a vehicle belonging to the United States at any place or;
(ii) Incident to the use of any other property belonging to the United States on a government installation.
(2) The claim is not payable under any other claims statute or regulation available to the DA for the administrative settlement of claims.
(b)
(c)
Under this subpart, a claim is not payable that:
(a) Results in whole or in part from the negligent or wrongful act of the claimant or his or her agent or employee. The doctrine of comparative negligence does not apply.
(b) Is for medical, hospital, or burial expenses furnished or paid by the United States.
(c) Is for any element of damage pertaining to personal injuries or death other than as provided in § 536.93(b). All other items of damage, for example, compensation for loss of earnings and services, diminution of earning capacity, anticipated medical expenses, physical disfigurement and pain and suffering are not payable.
(d) Is for loss of use of property or for the cost of substitute property, for example, a rental.
(e) Is legally recoverable by the claimant under an indemnifying law or indemnity contract. If the claim is in part legally recoverable, the part recoverable by the claimant is not payable.
(f) Is a subrogated claim.
(g) In some circumstances some claims may be partially payable. See DA
(a)
(1) The Judge Advocate General (TJAG);
(2) The Assistant Judge Advocate General (TAJAG);
(3) The Commander USARCS;
(4) The Judge Advocate (JA) or Staff Judge Advocate (SJA) or chief of a command claims service; and
(5) The head of an area claims office (ACO).
(b)
(c)
The provisions of § 536.89 addressing reconsideration apply and are incorporated herein by reference. If the claim is not cognizable under the Federal Tort Claims Act, appellate procedures under the Military Claims Act or NGCA apply.
The statutory authority for this subpart is contained in the Act of September 1960 (32 U.S.C. 715, 74 Stat. 878), commonly referred to as the “National Guard Claims Act” (NGCA), as amended by Public Law 87-212, (75 Stat. 488), September 1961; Public Law 90-486, (82 Stat. 756), August 1968; Public Law 90-521, (82 Stat. 874), September 1968; Public Law 90-525, (82 Stat. 877), September 1968; Public Law 91-312, (84 Stat. 412), July 1970; Public Law 93-336, (88 Stat. 291), July 1974; and Public Law 98-564, (98 Stat. 2918), October 1984.
This subpart applies worldwide and prescribes the substantive bases and special procedural regulations for the settlement of claims against the United States for death, personal injury, damage to, or loss or destruction of property.
(a) Soldiers of the Army National Guard (ARNG) can perform military duty in an active duty status under the authority of Title 10 of the United States Code, in a full-time National Guard duty or inactive-duty training status under the authority of Title 32 of the United States Code, or in a state active duty status under the authority of a state code.
(1) When ARNG soldiers perform active duty, they are under federal command and control and are paid from federal funds. For claims purposes, those soldiers are treated as active duty soldiers. The NGCA, 32 U.S.C. 715, does not apply.
(2) When ARNG soldiers perform full-time National Guard duty or inactive-duty training, they are under state command and control and are paid from federal funds. The NGCA does apply, but as explained in paragraph (c) of this section it is seldom used.
(3) When ARNG soldiers perform state active duty, they are under state command and control and are paid from state funds. Federal claims statutes do not apply, but state claims statutes may apply.
(b) The ARNG also employs civilians, referred to as technicians and employed under 32 U.S.C. 709. Technicians are usually, but not always, ARNG soldiers who perform the usual 15 days of annual training (a category of full-time duty) and 48 drills (inactive-duty training) per year.
(c) NGCA coverage applies only to ARNG soldiers performing full-time National Guard duty or inactive-duty training and to technicians. However, since the NGCA's enactment in 1960, Congress has also extended Federal Tort Claims Act (FTCA) coverage to these personnel.
(1) In 1968, technicians, who were state employees formerly, were made federal employees. Along with federal employee status came FTCA coverage. Technicians no longer have any state status, albeit they are hired, fired, and administered by a state official, the Adjutant General, acting as the agent of the federal government.
(2) In 1981, Congress extended FTCA coverage to ARNG soldiers performing full-time National Guard duty or inactive-duty training (such as any training or other duty under 32 U.S.C. 316, 502-505). Unlike making technicians federal employees, this extension of coverage did not affect their underlying status as state military personnel.
(d) Claims arising from the negligent acts or omissions of ARNG soldiers performing full-time National Guard duty or inactive-duty training, or of technicians, will be processed under the FTCA. Therefore, the NGCA is generally relevant only to claims arising from noncombat activities or outside the United States. Additionally, claims by members of the National Guard may be paid for property loss or damage incident to service if the claim is based on activities falling under this subpart and is not payable under AR 27-20, chapter 11.
The provisions of § 536.75 apply to claims arising under this subpart.
The provisions of § 536.76 apply to claims arising under this subpart.
The provisions of § 536.77 apply to claims arising under this subpart.
The provisions of § 536.78 apply to claims arising under this subpart.
The provisions of § 536.79 apply to claims arising under this subpart.
The authority for claims presented or processed under this subpart is set forth in the following federal laws and bi- or multinational agreements:
(a) 10 U.S.C. 2734a and 10 U.S.C. 2734b (the International Agreements Claims Act) as amended, for claims arising overseas under international agreements.
(b) Various international agreements, such as the North Atlantic Treaty Organization (NATO) Status of Forces Agreement (SOFA) and the Partnership for Peace (PFP) SOFA.
Current listings of known agreements in force are also posted on the USARCS Web site; for the address see § 536.2(a).
(a) The Commander USARCS is responsible for:
(1) Providing policy guidance to command claims services or other responsible judge advocate (JA) offices on SOFA or other treaty reimbursement programs implementing 10 U.S.C. 2734a and 2734b.
(2) Monitoring the reimbursement system to ensure that programs for the proper verification and certification of reimbursement are in place.
(3) Monitoring funds reimbursed to or by foreign governments.
(b) Responsibilities in the continental United States (CONUS)—The responsibility for implementing these agreements within the United States has been delegated to the Secretary of the Army (SA). The SA, in turn, has delegated that responsibility to the Commander USARCS, who is in charge of the receiving State office for the United States, as prescribed in DODD 5515.8. The Commander USARCS is responsible for maintaining direct liaison with sending State representatives and establishing procedures designed to carry out the provisions of this subpart.
(a)
(b)
(2)
(3)
This section sets forth procedures and responsibilities for the investigation, processing, and settlement of claims arising out of any acts or omissions of members of a foreign military force or civilian component present in the United States or a territory, commonwealth, or possession thereof under the provisions of cost sharing reciprocal international agreements which contain claims settlement provisions applicable to claims arising in the United States. Article VIII of the NATO SOFA has reciprocal provisions applying to all NATO member countries; the Partnership for Peace (PFP) Agreement has similiar provisions, as do the Singapore and Australian SOFAs.
(a) Within the United States, Art. VIII, NATO SOFA applies to claims arising within the North Atlantic Treaty Area, which includes CONUS and its territories and possessions north of the Tropic of Cancer (23.5 degrees north latitude). This excludes Puerto Rico, the Virgin Islands, and parts of Hawaii. Third-party scope claims are payable under subpart D or, if the claim arises incident to noncombat activities, under subpart C of this part. Maritime claims are payable under subpart H of this part. The provisions of these subparts on what claims are payable apply equally here. The members of the foreign force or civilian component must be acting in pursuance of the applicable treaty's objectives.
(b) Within the United States, third-party ex gratia claims are payable only by the sending State and are not payable under subpart E of this part.
The following claims are not payable:
(a) Claims arising from a member of a foreign force or civilian component's acts or omissions that do not accord with the objectives of a treaty authorizing their presence in the United States.
(b) Claims arising from the acts or omissions of a member of a foreign force or civilian component who has been excluded from SOFA coverage by agreement between the sending State and the United States.
(c) Third-party scope claims arising within the United States that are not payable under subparts C, D, or H of this part are listed as barred under those subparts. As sending State forces are considered assimilated into the U.S. Armed Services for purposes of the SOFAs, their members are also barred from receiving compensation from the United States when they are injured incident to their service,
To enable USARCS to properly discharge its claims responsibilities under the applicable SOFAs, it must be notified of all incidents, including off-duty incidents, in which members of a foreign military force or civilian component are involved. Any member or employee of the U.S. armed services who learns of an incident involving a member of a foreign military force or civilian component resulting in personal injury, death, or property damage will immediately notify the judge advocate (JA) or legal officer at the installation or activity to which such person is assigned or attached. The JA or legal officer receiving such notification will in turn notify the Commander USARCS. If the member is neither assigned nor attached to any
Responsibility for investigating an incident rests upon the area claims office (ACO) or claims processing office (CPO) responsible for the geographic area in which the incident occurred. The Commander USARCS, an ACO, and a CPO are authorized to designate the legal office of the installation at which the member of the foreign force or civilian component is attached, including the legal office of another armed force, to carry out the responsibility to investigate. The investigation will comply with the responsible Service's implementing claims regulation. When the member is neither assigned nor attached within the United States, the Commander USARCS will furnish assistance.
Settlement authority is delegated to the Commander USARCS, except for settlement amounts exceeding the Commander's authority as set forth in subparts C, D, or H of this part, or in those cases where settlement is reserved to a higher authority. Pursuant to the applicable SOFA, the Commander USARCS will report the proposed settlement to the sending State office for concurrence or objection. See, for example, NATO SOFA, Article VIII.
As claims arising from activities of members of NATO, Partnership for Peace, Singaporean, or Australian forces in the United States are processed in the same manner as those arising from activities of U.S. government personnel. All JAs and legal offices will provide assistance similar to that provided to U.S. armed services personnel.
(a) This section sets forth guidance on claims arising from any act or omission of soldiers or members of the civilian component of the U.S. armed services done in the performance of official duty or arising from any other act or omission or occurrence for which the U.S. armed services are responsible under an international agreement. Claims incidents arising in countries for which the SOFA requires the receiving State to adjudicate and pay the claims in accordance with its laws and regulations are subject to partial reimbursement by the United States.
(b) Claims by foreign inhabitants based on acts or omissions outside the scope of official duties are cognizable under subpart J of this part. Claims arising from nonscope acts or omissions by third parties who are not foreign inhabitants are cognizable under subpart E but not under subparts C or F of this part.
(a) SOFA provisions that call for the receiving State to adjudicate claims have been held to be the exclusive remedy for claims against the United States,
(b) SOFA provisions that call for the receiving State to adjudicate claims against the United States usually refer to claims by third parties brought against members of the force or civilian component. This includes claims by tourists or business travelers as well as inhabitants of foreign countries. Depending on how the receiving State interprets the particular SOFA's class of proper claimants, the receiving State may also consider claims by U.S. soldiers, civilian employees, and their family members. Chiefs of command claims services or other Army JA offices responsible for claims that arise in countries bound by SOFA or other treaty provisions requiring a receiving State to consider claims against the United States will ensure that all claims personnel know the receiving State's policy on which persons or classes of persons are proper claimants under such provisions. When a claim is filed both with the receiving State and under either the Military Claims Act (MCA) or Foreign Claims Act (FCA), the provisions of § 536.76(h) of this part and DA Pam 27-162, paragraph 3-4a apply.
(c) When SOFA provisions provide for receiving state claims consideration, the time limit for filing such claims may be much shorter than the two years otherwise allowed under the FCA or MCA. For example, receiving state claims offices in Germany require that a claim be filed under the SOFA within three months of the date that the claimant is aware of the U.S. involvement. If the filing period is about to expire for claims arising in Germany, have the claimant fill out a claim form, make two copies, and date-stamp each copy as received by the a sending State claims office. Return the date-stamped original of the claim to the claimant with instructions to promptly file with the receiving State claims office. Keep one date-stamped copy as a potential claim. Forward one date-stamped copy of the claim to the U.S. Army Claims Service Europe (USACSEUR). This may toll the applicable German statute of limitations. Additionally, many receiving state claims offices do not require claimants to demand a sum certain. All claims personnel must familiarize themselves with the applicable receiving state law and procedures governing SOFA claims.
(d) All foreign inhabitants who file claims against the United States that fall within the receiving State's responsibility, such as claims based on acts or omissions within the scope of U.S. Armed Forces members' or civilian employees' duties, must file the claim with the appropriate receiving State office. Those U.S. inhabitants whose claims would be otherwise cognizable under the Military Claims Act (subpart C of this part) and whom the receiving State deems proper claimants under the SOFA must also file with the receiving State.
(e) A claim filed with, and considered by, a receiving State under a SOFA or other international agreement claims provision may be considered under other subparts of this part only if the receiving State denied the claim on the basis that it was not cognizable under the treaty or agreement provisions. See DA Pam 27-162, paragraph 3-4a(2), for conditions of waiver of the foregoing requirement. See also §§ 536.76(h) and 536.138(j) of this part. When a claimant has filed a claim with a receiving State and received payment, or the claim has been denied on the merits, such action will be the claimant's final and exclusive remedy and will bar any further claims against the United States.
(a) Command claims services or other responsible JA offices within whose jurisdiction SOFA or other treaty provisions provide for a claim reimbursement system, and where DA has been assigned single-service responsibility for the foreign country seeking reimbursement (see § 536.17) are responsible for:
(1) Establishing programs for verifying, certifying, and reimbursing claims payments. Such service or JA office will provide a copy of its procedures implementing the program to the Commander USARCS.
(2) Providing the Commander USARCS with budget estimates for reimbursements in addition to the reports required by AR 27-20, paragraph 13-7.
(3) Providing the Commander USARCS each month in which payments are made, with statistical information on the number of individual claims reimbursed, the total amount paid by the foreign government, and the total amount reimbursed by the United States.
(4) Providing the Commander USARCS with a quarterly report showing total reimbursements paid during the quarter for maneuver damage and tort claims classified according to major categories of damage determined by the Commander USARCS, and an update on major issues or activities that could affect the reimbursement system's operation or funding.
(b) Command claims services or other responsible Army JA offices will ensure that all claims personnel within their areas of responsibility:
(1) Receive annual training on the receiving State's claims procedures, including applicable time limitations, procedures and the responsible receiving State claims offices' locations.
(2) Screen all new claims and inquiries about claims to identify those claimants who must file with the receiving State.
(3) Ensure that all such claimants are informed of this requirement and the applicable time limitation.
(4) Ensure that all applicable SOFA claims based on incidents occurring in circumstances that bring them within the United States' primary sending State jurisdiction are fully investigated.
The Army Maritime Claims Settlement Act (AMCSA) (10 U.S.C. 4801-04, 4806, as amended) authorizes the Secretary of the Army or his designee to administratively settle or compromise admiralty and maritime claims in favor of, and against, the United States.
(a) The AMCSA permits the settlement of claims that would ordinarily fall under the Suits in Admiralty Act (SIAA), 46 U.S.C. app. 741-752; the Public Vessels Act (PVA), 46 U.S.C. app. 781-790; or the Admiralty Extension Act (AEA), 46 U.S.C. app. 740. Outside the United States the AMCSA may be used to settle admiralty claims in lieu of the Military Claims Act or Foreign Claims Act. Within the United States, filing under the AMCSA is not mandatory for causes of action as it is for the SIAA or PVA.
(b) Similar maritime claims settlement authority is exercised by the Department of the Navy under 10 U.S.C. 7363 and 7621-23 and by the Department of the Air Force under 10 U.S.C. 9801-9804 and 9806.
The AMCSA applies worldwide and includes claims that arise on high seas or within the territorial waters of a foreign country. At 10 U.S.C. 4802 it provides for the settlement or compromise of claims for:
(a) Damage caused by a vessel of, or in the service of, the Department of the Army (DA) or by other property under the jurisdiction of the DA.
(b) Compensation for towage and salvage service, including contract salvage, rendered to a vessel of, or in the service of, the DA or other property under the jurisdiction of the DA.
(c) Damage that is maritime in nature and caused by tortious conduct of U.S. military personnel or federal civilian employees, an agent thereof, or property under the Army's jurisdiction.
A claim is cognizable under this subpart if it arises in or on a maritime location, involves some traditional maritime nexus or activity, and is caused by the wrongful act or omission of a member of the U.S. Army, Department of Defense (DOD) or DA civilian employee, or an agent thereof, while acting within the scope of employment. This class of claims includes, but is not limited to:
(a) Damage to a ship, boat, barge, or other watercraft;
(b) An injury that involves a ship, boat, barge, or other watercraft;
(c) Damage to a wharf, pier, jetty, fishing net, farm facilities or other structures in, on, or adjacent to any body of water;
(d) Damage or injury on land or on water arising under the AEA and allegedly due to operation of an Army-owned or leased ship, boat, barge, or other watercraft;
(e) An injury that occurs on board an Army ship, boat, barge or other watercraft; and
(f) Crash into water of an Army aircraft.
Under this subpart, claims are not payable if they:
(a) Are listed in §§ 536.42, 536.43, 536.44, 536.45 (except at (e) and (k)), and 536.46;
(b) Are not maritime in nature;
(c) Are not in the best interests of the United States, are contrary to public policy, or are otherwise contrary to the basic intent of the governing statute, for example, claims for property loss or damage or personal injury or death by inhabitants of unfriendly foreign countries or by individuals considered to be unfriendly to the United States. When a claim is considered not payable for the reasons stated in this section, it will be forwarded for appropriate action to the Commander USARCS, along with the recommendations of the responsible claims office.
(d) Are presented by a national, or a corporation controlled by a national, of a country at war or engaged in armed conflict with the United States, or any country allied with such enemy country, unless the appropriate settlement authority determines that the claimant is and, at the time of incident, was friendly to the United States. A prisoner of war or an interned enemy alien is not excluded or barred from bringing a claim for damage, loss, or destruction of personal property while held in the custody of the government if the claim is otherwise payable.
(e) Are for damages or injuries that a receiving State should pay for under an international agreement. See § 536.34(c).
(a) Within the United States the period of completing an administrative settlement under the AMCSA is subject to the same time limitation as that for beginning suit under the SIAA or PVA; that is, a two-year period from the date the cause of the action accrued. The claimant must have agreed to accept the settlement and it must be approved for payment by the Secretary of the Army or other approval authority prior to the end of such period. The presentation of a claim, or its consideration by the DA, neither waives nor extends the two-year limitation period and the claimant should be so informed, in writing, when the claim is acknowledged. See § 536.28.
(b) For causes of action under the AEA, filing an administrative claim is mandatory. However, suit is required under the two-year time limit applicable to the SIAA and PVA, even though the AEA provides that no suit shall be filed under six months after filing a claim.
(c) For causes of action arising outside the United States, there is no time limitation for completing an administrative settlement.
For admiralty claims arising within the United States under the provisions of the Limitation of Shipowners' Liability Act, 46 U.S.C. app. 181-188, in cases alleging injury or loss due to negligent operation of its vessel, the United States may limit its liability to the value of its vessel after the incident from which the claim arose. The act requires filing of an action in federal District Court within six months of receiving written notice of a claim. Therefore, USARCS, or the Chief Counsel, U.S. Army Corps of Engineers (COE), or his designee, must be notified within 10 working days of the receipt of any maritime claim arising in the United States or on the high seas out of the operation of an Army vessel, including pleasure craft owned by the United States. USARCS or Chief Counsel, COE will coordinate with the Department of Justice (DOJ) as to whether to file a limitation of liability action.
(a) The Secretary of the Army, the Army General Counsel as designee of the Secretary, or other designee of the Secretary may approve any settlement or compromise of a claim in any amount. A claim settled or compromised in a net amount exceeding $500,000 will be investigated and processed and, if approved by the Secretary of the Army or his or her designee, will be certified to Congress for final approval.
(b) The Judge Advocate General (TJAG), The Assistant Judge Advocate General (TAJAG), the Commander USARCS, the Chief Counsel COE, or Division or District Counsel Offices are delegated authority to settle, such as to deny or approve payment in full or in part, any claim under this subpart regardless of the amount claimed, provided that any award does not exceed $100,000.
(c) A Staff Judge Advocate (SJA) or chief of a command claims service and heads of area claims offices (ACOs) are delegated authority to pay up to $50,000, regardless of the amount claimed, and to disapprove or make a final offer on a claim presented in an amount not exceeding $50,000.
(d) Authority to further delegate payment authority is set forth in § 536.3(g)(1) of this part. For further discussion also related to settlement and approval authority see paragraph 2-69 of DA Pam 27-162.
(e) Where the claimed amount or potential claim damage exceeds $100,000 for COE claims or $50,000 for all others, Commander USARCS will be notified immediately, and be furnished a copy of the claim and a mirror file thereafter. See § 536.30 and AR 27-20, paragraph 2-12.
The authority for this subpart is Article 139, Uniform Code of Military Justice (UCMJ) (10 U.S.C. 939, which provides redress for property willfully damaged or destroyed, or wrongfully taken, by members of the Armed Forces of the United States.
This subpart sets forth the standards to apply and the procedures to follow in processing claims for the wrongful taking or willful damage or destruction of property by military members of the Department of the Army.
(a) A proper claimant under this subpart includes any individual (whether civilian or military), a business, charity, or state or local government that owns, has an ownership interest in, or lawfully possesses property.
(b) When cognizable claims are presented against a unit because the individual offenders cannot be identified, this subpart sets forth the procedures for approval authorities to direct pay assessments, equivalent to the amount of damages sustained, against the unit members who were present at the scene and to allocate individual liability in such proportion as is just under the circumstances.
(a)
(b)
(c)
Claims cognizable under Article 139, UCMJ, are limited to the following:
(a)
(b)
(c)
(d)
(e)
Claims not cognizable under Article 139, UCMJ, and this subpart, include the following:
(a) Claims resulting from negligent acts.
(b) Claims for personal injury or death.
(c) Claims resulting from acts or omissions of military personnel acting within the scope of their employment, including claims resulting from combat activities or noncombat activities, as those terms are defined in the Glossary of AR 27-20.
(d) Claims resulting from the conduct of Reserve component personnel who are not subject to the UCMJ at the time of the offense.
(e) Subrogated claims.
(f) Claims for theft of services, even if such theft constitutes a violation of Article 134 of the UCMJ.
(g) Claims for indirect, remote, or consequential damages.
(h) Claims by entities in conflict with the United States or whose interests are hostile to the United States.
(a)
(2) A GCMCA, or designee, has authority to approve a pay assessment in an amount not to exceed $10,000 per claimant per incident and to deny a claim in any amount.
(i) If the GCMCA or designee determines that a claim exceeding $10,000 per claimant per incident is meritorious, that officer will assess the soldier's pay in the amount of $10,000 and forward the claim to the Commander USARCS, with a recommendation to increase the assessment.
(ii) If the head of the area claims office (ACO) (usually the GCMCA's Staff Judge Advocate (SJA)) decides that the GCMCA's final action under the provisions of Rule for Courts-Martial 1107 in a court-martial arising out of the same incident would be compromised, that officer may forward the Article 139 claim to USARCS for action.
(3) Only TJAG, TAJAG, the Commander USARCS, or designee has authority to approve assessments in excess of $10,000 per claimant per incident.
(b)
(a)
(b)
(c)
(d)
(2) If the claim is not brought against a person who is a member of the Armed Forces of the United States at the time the claim is received, or if the claim does not appear otherwise cognizable under Article 139, UCMJ, the SPCMCA may refer it for legal review (see paragraph (g) of this section) within four working days of receipt. If after legal review the SPCMCA determines that the claim is not cognizable, final action may be taken disapproving the claim (see paragraph (h) of this section) without appointing an investigating officer. In claims where the special court-martial convening authority is an inactive duty soldier of the United State Army Reserve, the request for a legal review will be made within 30 calendar days.
(e)
(f)
(1) If the soldier wishes to make voluntary restitution, the investigating officer may, with the SPCMCA's concurrence, delay proceedings until the end of the next pay period to permit restitution. If the soldier makes payment to the claimant's full satisfaction, the SPCMCA will dismiss the claim.
(2) In the absence of full restitution, the investigating officer will determine whether the claim is cognizable and meritorious under the provisions of Article 139, UCMJ, and this subpart, and the amount to be assessed against each
(3) If the soldier is absent without leave and cannot be notified, a claims office may process the Article 139 claim in the soldier's absence. If an assessment is approved, forward a copy of the claim and the memorandum authorizing pay assessment by transmittal letter to the servicing Defense Accounting Office (DAO) for offset against the soldier's pay. If the soldier is dropped from the rolls, the servicing DAO will forward the assessment documents to: Commander, Defense Finance and Accounting Service (DFAS), ATTN: Military Pay Operations, 8899 E. 56th Street, Indianapolis, IN 46249.
(g)
(1) Within five working days or such time as the SPCMCA determines, that office will furnish a written opinion as to:
(i) Whether the claim is cognizable under the provisions of Article 139, UCMJ, and this subpart.
(ii) Whether the findings and recommendations are supported by a preponderance of the evidence.
(iii) Whether the investigation substantially complies with the procedural requirements of Article 139, UCMJ; this subpart; DA Pam 27-162, chapter 9; and AR 15-6, chapter 4.
(iv) Whether the claim is clearly not cognizable (see paragraph (d)(2) of this section) and final denial action can be taken without appointing an investigating officer.
(2) If the investigating officer's recommended assessment does not exceed $5,000, the claims judge advocate (CJA) or claims attorney will, upon legal review, forward the claim to the SPCMCA for final action.
(3) If the investigating officer's recommended assessment is more than $5,000, the CJA or claims attorney will, upon legal review, forward the claim file to the head of the ACO, who will also conduct a legal review within five working days.
(i) If the recommended assessment does not exceed $10,000, the head of the ACO will forward the claim file to the GCMCA for final action.
(ii) If the recommended assessment exceeds $10,000, the head of the ACO will forward the claim file to the GCMCA for approval of an assessment up to $10,000 and for a recommendation of an additional assessment. The head of the ACO will then forward the claims file and the GCMCA's recommendation to the Commander USARCS for approval.
(h)
(i)
(j)
(a)
(b)
(c)
(d)
(e)
In addition to the duties set forth in this subpart, the CJA or claims attorney is responsible for forwarding copies of completed Article 139 actions to USARCS, maintaining a log, monitoring the time requirements of pending Article 139 actions, and publicizing the
(a) The statutory authority for this subpart is the Act of August 10, 1956, 10 U.S.C. 2734 (70 Stat. 154), commonly referred to as the Foreign Claims Act (FCA), as amended by Public Law 86-223, September 1959 (73 Stat. 453); Public Law 86-411, April 1960 (74 Stat. 16); Public Law 90-521, September 1968 (82 Stat. 874); Public Law 91-312, July 1970 (84 Stat. 412); Public Law 93-336, July 1974 (88 Stat. 292); Public Law 96-513, Title V, § 511 (95), December 1980 (94 Stat. 2928). It is posted on the USARCS Web site; for the address see § 536.2(a).
(b) Claims arising from the acts or omissions of the U.S. Armed Forces in the Marshall Islands or the Federated States of Micronesia are settled in accordance with Art. XV, Non-contractual Claims, of the U.S.-Marshall Islands and Micronesian Status of Forces Agreement (the “SOFA”) (posted on the USARCS Web site; for the address see § 536.2(a)). This is pursuant to the “agreed upon minutes” that are appended to the SOFA, pursuant to Section 323 of the Compact of Free Association between the U.S. and the Marshall Islands and the Federated States of Micronesia, enacted by Public Law 99-239, January 14, 1986. (The Compact may be viewed at
(a)
(b)
(c)
(a) A claim for death, personal injury, or loss of or damage to property may be allowed under this subpart if the alleged damage results from noncombat activity or a negligent or wrongful act or omission of soldiers or civilian employees of the U.S. armed forces, as enumerated in § 536.23(b), regardless of whether the act or omission was made within the scope of their employment. This includes non-U.S. citizen employees recruited elsewhere but employed in a country of which they are not a citizen. However, a claim generated by non-U.S. citizen employees in the country in which they were recruited and are employed will be payable only if the act or omission was made in the scope of employment. But claims arising from the operation of U.S. armed forces vehicles or other equipment by such employees may be paid, even though the employees are not acting within the scope of their employment, provided the employer or owner of the vehicle or other equipment would be liable under local law in the circumstances involved.
(b) Claims generated by officers or civilian employees of the American Battle Monuments Commission (36 U.S.C. 2110), acting within the scope of employment, will be paid from American Battle Monuments Commission appropriations.
(c) Claims for the loss of, or damage to, property that may be settled under this subpart include the following:
(1) Real property used and occupied under lease, express, implied, or otherwise. See § 536.34(m) of this part and paragraph 2-15m of DA Pam 27-162.
(2) Personal property bailed to the government under an agreement, express or implied, unless the owner has expressly assumed the risk of damage or loss.
A claim is not payable if it:
(a) Results wholly from the negligent or wrongful act of the claimant or agent;
(b) Is purely contractual in nature;
(c) Arises from private or domestic obligations as distinguished from government transactions;
(d) Is based solely on compassionate grounds;
(e) Is a bastardy claim for child support expenses;
(f) Is for any item whose acquisition, possession, or transportation is in violation of Department of the Army (DA) or Department of Defense (DOD) directives, such as illegal war trophies.
(g) Is for rent, damage, or other payments involving the acquisition, use, possession, or disposition of real property or interests therein by and for the DA. See § 536.34(m) of this part and paragraph 2-15m of DA Pam 27-162.
(h) Is not in the best interest of the United States, is contrary to public policy, or otherwise contrary to the basic intent of the governing statute (10 U.S.C. § 2734); for example, claims for property loss or damage, or personal injury or death caused by inhabitants of unfriendly foreign countries or by individuals considered to be unfriendly to the United States.
(i) Is presented by a national, or a corporation controlled by a national, of a country at war or engaged in armed conflict with the United States, or any country allied with such enemy country unless the appropriate settlement authority determines that the claimant is, and at the time of the incident was friendly to the United States. A prisoner of war or an interned enemy alien is not excluded from filing a claim for damage, loss, or destruction of personal property within the federal government's custody if the claim is otherwise payable.
(j) Is for damages or injury, the claim for which a receiving State should adjudicate and pay pursuant to an international agreement, subject to waiver by the Commander USARCS. See DA Pam 27-162, paragraph 3-4a(2), for a discussion of the conditions of waiver.
(k) Is listed in §§ 536.45 and 536.46, except for the exclusions listed in §§ 536.45(e), (h) and (k). Additionally,
(l) Is brought by a subrogee.
(m) Is covered by insurance on the involved U.S. Armed Forces' vehicle or the tortfeasor's privately owned vehicle (POV), in accordance with requirements of a foreign country, unless the claim exceeds the coverage or the insurer is insolvent. See § 536.139(c).
(n) Is payable under subpart C of this part or AR 27-20, chapter 11.
(o) Is brought by or on behalf of a member of a foreign military force for personal injury or death arising incident to service, or pursuant to combined military operations. Combined military operations include exercises and United Nations and North Atlantic Treaty Association (NATO) peacekeeping and humanitarian missions. Derivative claims arising from these incidents are also excluded.
(a)
(b)
(c)
(2) When efforts under paragraph (c)(1) of this section are of no avail, or when it otherwise is determined that an insurance settlement will not be reasonably available for application to the award, no award will be made until the chief of the command claims service or the Commander USARCS, has first granted consent. In such cases, an assignment of the insured's rights against the insurer will be obtained and, in appropriate cases, reimbursement action will be instituted against the insurer under applicable procedures.
(3) If an insurance settlement is not available due to the insurer's insolvency or bankruptcy, a report on the bankruptcy will be forwarded to the Commander USARCS without delay, setting forth all pertinent information, including the alleged reasons for the bankruptcy and the facts concerning the licensing of the insurer.
(d)
(a) Claims cognizable under this subpart will be referred to the command responsible for claims arising within its geographic area of responsibility, including claims transferred by agreement between the services involved. The senior judge advocate of a command having a command claims service, or his delegee, will appoint a sufficient number of Foreign Claims Commissions (FCCs) to dispose of the claims. If there is no command claims service, the responsible commander may ask the Commander USARCS for permission to establish one. Otherwise, the Commander USARCS will appoint a sufficient number of FCCs from personnel furnished by the command involved. See § 576.3(d) for more information about command claims services.
(b) The Commander USARCS will appoint all other FCCs to act on all other claims, regardless of where such claims arose, unless they arose in a country for which single-service responsibility has been assigned to another service. FCCs appointed by the Commander USARCS at units based in the continental United States (CONUS) may act on any claim arising out of such unit's operations. Any FCC operating in, or adjudicating claims arising out of, a geographical area within a command claims service's jurisdiction, will comply with that service's legal and procedural rules.
(c) An FCC may operate as an integral part of a command claims service, which will determine the cases to be assigned to it, furnish necessary administrative services, and establish and maintain its records. Where an FCC does not operate as part of a command claims service, it may operate as part of the office or a division, corps or higher command staff judge advocate (SJA), which will perform the foregoing functions.
(d) An appointing authority who appoints or relieves an FCC whom he or she has appointed will forward one copy of each order addressing an FCC's appointment, relief, or change of responsibility to the Commander USARCS. Upon receipt of an initial appointing order, the Commander USARCS will assign an office code number to the FCC. Without such a number the FCC has no authority to approve or pay claims. See AR 27-20, paragraph 13-1.
(e) Normally, the FCC is responsible for the investigation of all claims referred to it, using both the procedures set forth in subpart B of this part and any local procedures established by the appointing authority or command claims service responsible for the geographical area in which the claim arose. Chiefs of a command claims service may request assistance on claims investigation within their geographical areas from units or organizations other than the FCC. The Commander USARCS may make the same request for any claim referred to an FCC appointed under his or her authority.
(f) When an FCC intends to deny a claim, or offer an award less than the amount claimed, it will notify in writing the claimant, the claimant's authorized agent, or legal representative of the intended action on the claim and the legal and factual bases for that action. If the FCC proposes a partial award, a settlement agreement should be enclosed with the notice. Claimants will be advised that they may either accept the FCC action by returning the signed settlement agreement or, if dissatisfied with the FCC's action, they may submit a request for reconsideration stating the factual or legal reasons why they believe the FCC's proposed action is incorrect. This notice serves to give the claimant an opportunity to request reconsideration of the FCC action and state the reasons for the request before
(1) This notice should be given at least 30 days before the FCC takes final action, except on small claims processed pursuant to § 536.33. The notice should be mailed via certified or registered mail to the claimant. The claimant should be informed that any request for reconsideration should be addressed to the FCC that took final action, and that all materials the claimant wishes the FCC to consider should be included with the request for reconsideration.
(2) An FCC may alter its initial decision based on the claimant's response or proceed with the intended action. If the claimant's response raises a general policy issue, the FCC may request an advisory opinion from the Commander USARCS or the chief of the command claims service while retaining the claim for final action at its level.
(3) Upon completing of its evaluation of the claimant's response, the FCC will notify the claimant of its final decision and advise the claimant that its action is final and conclusive as a matter of law (10 U.S.C. 2735), unless the final decision is a recommendation for payment above its authority. In that case, the FCC will forward any response submitted by the claimant along with its claims memorandum of opinion to the approval authority, and will notify the claimant accordingly.
(4) When an FCC determines that a claim is valued at more than $50,000 or all claims arising out of a single incident are valued at more than $100,000, the file will be transferred to the Commander USARCS for further action; see § 536.143(d)(2). Upon request of the Commander USARCS, the FCC may negotiate a settlement, the amount of which exceeds the FCC's authority; however, prior approval by a higher authority is required.
(5) Every reasonable effort should be made to negotiate a mutually agreeable settlement on meritorious claims. When an agreement can be reached, the notice and response provisions above are not necessary. If the FCC recommends an award in excess of its monetary authority, the settlement agreement should indicate that its recommendation is contingent upon approval by higher authority.
(g) The chief of an overseas command claims service may delegate to a one-member FCC the responsibility for the receipt, processing, and investigation of any claim, regardless of amount, except those required to be referred to a receiving State office for adjudication under the provisions of a treaty concerning the status of U.S. forces in the country in which the claim arose. If, after investigation, it appears that action by a three-member FCC is appropriate, the one-member FCC should send the claim to the appropriate three-member FCC with a complete investigation report, including a discussion of the applicable local law and a recommendation for disposition.
(a) Normally, an FCC will be composed of either one or three members. Alternate members of three-member FCCs may be appointed when circumstances require, and may be substituted for regular members on specific cases by order of the appointing authority. The appointing orders will clearly designate the president of a three-member FCC. Two members of a three-member FCC will constitute a quorum, and the FCC's decision will be determined by majority vote.
(b) Upon approval by the Commander USARCS and the appropriate authority of another uniformed service, the membership may be composed of one or more members of another uniformed service. If another service has single-service responsibility over the foreign country in which the claim arose, that service is responsible for the claim. If requested, the Commander USARCS may furnish a JAG officer or claims attorney to be a member of another service's FCC.
Normally, a member of an FCC will be either a commissioned officer or a claims attorney. At least two members of a three-member FCC must be JAs or claims attorneys. In exigent circumstances, a qualified non-lawyer employee of the armed forces may be appointed to an FCC, subject to prior approval by the Commander USARCS. Such approval may be granted only upon a showing of the employee's status and qualifications and adequate justification for such appointment (for example, lack of legally qualified personnel). The FCC will be limited to employees who are citizens of the United States. An officer, claims attorney, or employee of another armed force will be appointed a member of an Army FCC only if approved by the Commander USARCS.
(a) In order to determine whether the claim will be considered by a one-member or three-member FCC, the claimed amount will be converted to the U.S. dollar equivalent (based on the annual Foreign Currency Fluctuation Account exchange rate, where applicable). However, the FCC's jurisdiction to approve is determined by the conversion rate on the date of final action. Accordingly, if the value of the U.S. dollar has decreased, the FCC will forward the recommendation to a higher authority, if necessary.
(b) Payment will be made in the currency of the country in which the incident occurred or in which the claimant resided at the time of the incident, unless the claimant requests payment in U.S. dollars or another currency and such request is approved by the chief of a command claims service or the Commander USARCS. However, if the claimant resides in another foreign country at the time of payment, payment in an amount equivalent to that which would have been paid under the preceding sentence may be made in the currency of that third country without the approval of the Commander USARCS.
(c) A one-member FCC may consider and pay claims presented in any amount provided a mutually agreed settlement may be reached in an amount not exceeding the FCC's monetary authority. A one-member FCC may deny any claim when the claimed amount does not exceed its monetary authority. Unless otherwise restricted by the appointing authority, a one-member FCC who is a JA or claims attorney has $15,000 monetary authority, while any other one-member commission has $5,000 monetary authority.
(d) A three-member FCC, unless otherwise restricted by the appointing authority, may take the following actions on a claim that is properly before it:
(1)
(2)
(ii) Claims valued at an amount exceeding $50,000, or multiple claims arising from the same incident valued at more than $100,000, will be forwarded through the appointing authority with a memorandum of opinion to the Commander USARCS for action; see DA Pam 27-162, paragraph 2-60. The memorandum of opinion will discuss the amount for which the claimant will settle and include the recommendation of the FCC.
(e) The Judge Advocate General (TJAG), The Assistant Judge Advocate General (TAJAG) and the Commander USARCS, or his or her designee serving at USARCS, may approve and pay, in whole or in part, any claim as long as the amount of the award does not exceed $100,000; may disapprove any claim, regardless of either the amount claimed or the recommendation of the FCC forwarding the claim; or, if a claim is forwarded to USARCS for approval of payment in excess of $50,000, refer the claim back to the FCC or another FCC for further action.
(f) Payments in excess of $100,000 will be approved by the Secretary of the Army, the Army General Counsel as the Secretary's designee, or other designee of the Secretary.
(g) Following approval where required and receipt of an agreement by the claimant accepting the specific sum awarded by the FCC, the claim will be processed for payment in the appropriate currency. The first $100,000 of any award will be paid from Army claims funds. The excess will be reported to the Financial Management Service, Department of the Treasury, with the documents listed in DA Pam 27-162, paragraph 2-81.
(h) If the settlement authority upholds a final offer or authorizes an award on appeal from a denial of a claim, the notice of the settlement authority's action will inform the claimant that he or she must accept the award within 180 days of the date of mailing of the notice of the settlement authority's action or the award will be withdrawn, the claim will be deemed denied, and the file will be closed without future recourse.
(a)
(2) An original approval or settlement authority may reopen and correct action on an FCA claim previously settled in whole or in part (even if a settlement agreement has been executed) when it appears that the original action was incorrect in law or fact based on the evidence of record at the time of the action or subsequently received. For errors in fact, the new evidence must not have been discoverable at the time of final action by either the Army or the claimant through the exercise of reasonable diligence. Corrective action may also be taken when an error contrary to the parties' mutual understanding is discovered in the original action. If it is determined that the original action was incorrect, the action will be modified, and if appropriate, a supplemental payment made. The basis for a change in action will be stated in a memorandum included in the file. For example, a claim was settled for $15,000, but the settlement agreement was typed to read “$1,500” and the error is not discovered until the file is being prepared for payment. If appropriate, a corrected payment will be made. A settlement authority who has reason to believe that a settlement was obtained by fraud on the part of the claimant or the claimant's legal representative, will reopen action on that claim and, if the belief is substantiated, correct the action. The basis for correcting an action will be stated in a memorandum and included in the file.
(b)
(2)
(c)
(d)
Payment of solatia in accordance with local custom as an expression of sympathy toward a victim or his or her family is common in some overseas commands. Solatia payments are known to be a custom in the Federated States of Micronesia, Japan, Korea, and Thailand. In other countries, the FCC should consult the command claims service or Commander USARCS for guidance. Such payments are not to be made from the claims expenditure allowance. These payments are made from local operation and maintenance funds. This applies even where a command claims service is directed to administer the command's solatia program. See, for example, United States Forces Korea Regulation 526-11 regarding solatia amounts and procedures.
This subpart sets forth the procedures to follow in the settlement and payment of claims generated by the acts or omissions of the employees of nonappropriated fund (NAF) activities. NAF activities include NAF or Army and Air Force Exchange Service (AAFES) facilities, post exchanges, bowling centers, officers and noncommissioned officers' clubs, and other facilities located on land or situated in a building used by an activity that employs personnel compensated from NAFs.
Claims by employees for the loss of or damage to personal property incident to employment will be processed in the manner prescribed by AR 27-20, chapter 11 and will be paid from NAFs in accordance with § 536.152.
(a)
(b)
(1) Claims arising within the United States, its territories, commonwealths, or possessions. Such claims will be processed in the manner prescribed by subparts C, D, E, F, H or J of this part, as appropriate.
(2) Claims arising outside the United States, its territories, commonwealths, or possessions. Such claims will be processed in accordance with the provisions of applicable Status of Forces Agreements (SOFAs) or in the manner prescribed by subparts C, D, E, F, H or J of this part, as appropriate.
(c)
(1)
(2)
(d)
(e)
(1) A claims investigation under subpart B of this part will not be conducted except when the claim's estimated value may exceed the insurance policy limits. In that event, the Commander USARCS, will be notified immediately and an investigation will be conducted with a view to determining whether the United States may be liable under subparts C, D, F, H or J of this part. Otherwise, the ACO or CPO will refer the claim to the insurer and furnish copies to the USARCS AAO, as required in AR 27-20, paragraph 2-12. Assistance will be furnished to the insurer as needed. Copies of any other required investigations may be furnished to the insurer.
(2) The claim will be reviewed at key intervals to ensure that progress is being made, negotiations are properly conducted, and the file is closed. The Commander USARCS will be advised of any problems.
(3) If requested by either the insurer or NAFI officials, the appropriate claims authority will assist in or conduct negotiations.
(4) Where NAFI vehicles are required to be covered by insurance in foreign countries, the insurer will process the claim. However, if the policy coverage limit is exceeded or the insurer is insolvent, the claim may be processed under subpart G, §§ 536.114 through 536.116 (Claims arising overseas) or, if subpart G does not apply, under subparts C or J of this part. See § 536.139(c) for additional guidance.
Claims resulting from the acts or omissions of members of the classes of persons listed below may be processed under this section. An ACO or a CPO authority will ask the Commander USARCS, for an advisory opinion prior to settling any claim where the person whose conduct generated the claim does not clearly fall within one of the following categories:
(a) Civilian employees of NAFI activities whose salaries are paid from NAFs.
(b) Active duty military personnel while performing off-duty part-time work for which they are compensated from NAFIs, not to include members who are acting in their capacity as an officer or other official of the NAFI.
(c) Volunteers serving in an official capacity in furtherance of the business of the United States, limited to those categories set forth in DA Pam 27-162, paragraph 2-45d.
Claims payable from appropriated funds will be processed under the appropriate subpart. Appropriated fund payable claims include those resulting from:
(a) Acts or omissions of military personnel while performing assigned military duties in connection with NAFI activities.
(b) Acts or omissions of civilian employees paid from appropriated funds in connection with NAFI activities.
(c) Negligent maintenance of an appropriated funds facility used by a NAFI activity but for which the Department of Defense or Department of the Army (DA) command concerned is responsible and has been notified of the deficiency by the NAF. Where liability is determined to exist for both a NAFI and an appropriated fund activity, liability will be apportioned between the two activities.
(d) Temporary use of a NAFI facility by an appropriated fund activity.
(e) Operation of government owned or rented vehicles on authorized missions for NAFI activities where the driver is a DA soldier or civilian employee and is paid from APFs.
(a)
(b)
(a) The settlement or approval authority will forward the appropriate payment documents to the office listed in DA Pam 27-162, paragraph 2-80h, for payment.
(b) Reimbursement to a foreign country of the United States' pro rata share of a claim paid pursuant to an international agreement will be made from NAFs.
AAFES concessionaires and NAFI contractors, such as entertainment performers or groups, carnival operators, and fireworks displayers are considered independent contractors and claims arising from their activities should be disposed of as set forth in DA Pam 27-162, paragraph 2-15f. If a dispute arises as to the availability of liability or workers compensation insurance the claims should be referred to AAFES Dallas (see address in § 536.30(e)(4)) or the Central Insurance Fund, U.S. Army Community and Family Support Agency as applicable.
The risk management program (RIMP) is administered by the U.S. Army Community and Family Support Center under the provisions of AR 215-1 and AR 608-10 (Family Child Care Provider Claims). Providers in order to encourage authorized personnel, that is, military and civilian employees, to use the family child care program and sports equipment, such claims are processed in a manner similar to NAFI claims in §§ 536.146 through 536.152 of this subpart. Certain claims are payable from nonappropriated funds even though the U.S. is not liable under the FTCA or the MCA as the tortfeasor is not an appropriated fund or nonappropriated fund employee.
(a) Non-NAFI RIMP claims can arise from the activities of:
(1) Members of NAFIs or authorized users of NAFI sports equipment or devices for recreational purposes, while using such property, except real property, in the manner and for the purposes authorized by DA regulations and the charter, constitution, and bylaws of the particular NAF activity.
(2) Family child care providers, authorized members of the provider's household and approved substitute providers while care under the family child care program is being provided in the manner prescribed in AR 608-10, except as excluded below. Such claims are generally limited to injuries to, or death of, children receiving care under the family child care program that are caused by the negligence of authorized providers. Claims arising from the transportation of such children in motor vehicles and claims involving loss of or damage to property are not cognizable.
(b) An ACO or a CPO will ask the Commander USARCS for an advisory opinion prior to settling any non-NAFI RIMP claim where the person whose conduct generated liability does not fall clearly within the categories listed above. Such authorities may also ask, through the Commander USARCS, for an advisory opinion from the U.S. Army Community and Family Support Center prior to settling any claim arising under paragraph (a)(2) of this section, where it is not clear that the injured or deceased child was receiving care within the scope of the family child care program.
(c) Where liability has been determined to exist for both non-NAFI RIMP and APF activities, liability will be apportioned between the two activities.
(d) The total payment for all claims (including derivative claims), arising as a result of injury to, or death of, any one person is limited to $500,000 for each incident. Continuous or repeated exposure to substantially the same or similar harmful activity or conditions is treated as one incident for purposes of determining the limits of liability.
(a)
(b)
(c)
(d)
(a)
(b)
(2) The above authorities are not delegated authority to deny or make a final offer on a claim under this section. Claims requiring such action will be forwarded to the Commander USARCS with an appropriate recommendation.
(c)
Department of the Army, DoD.
Final rule.
The Department of the Army is publishing as a final rule an amendment to its regulation to reflect a substantial revision of AR 27-20, an Army publication which governs the processing of claims worldwide. The purpose of this revision is to make AR 27-20 clearer and easier to use, after years of piecemeal amendments. This rewrite also ensures that AR 27-20 is in keeping with current statutes, legal opinions and Department of Justice guidance pertaining to claims processing. This updated rule will expedite payment of meritorious claims throughout the world. AR 27-20 includes rules for processing affirmative claims, i.e., recovery actions on behalf of the United States.
U.S. Army Claims Service, ATTN: JACS-TCO, 4411 Llewellyn Avenue, Fort Meade, MD 20755-5360.
George Westerbeke, (301) 677-7009, x220.
This rule was published as a proposed rule in the August 9, 2006 issue of the
Rules for processing affirmative claims are found mostly in Chapter 14 of AR 27-20; however, rules for processing maritime affirmative claims are contained in Chapter 8. For purposes of this
The Department of the Army has determined that the Regulatory Flexibility Act does not apply because the rule does not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612.
The Department of the Army has determined that the Unfunded Mandates Reform Act does not apply because the rule does not include a mandate that may result in estimated costs to State, local or tribal governments in the aggregate, or the private sector, of $100 million or more.
The Department of the Army has determined that the National Environmental Policy Act does not apply because the rule does not have an adverse impact on the environment.
The Department of the Army has determined that the Paperwork Reduction Act does not apply because the rule does not involve collection of information from the public.
The Department of the Army has determined that Executive Order 12630 does not apply because the rule does not impair private property rights.
The Department of the Army has determined that according to the criteria defined in Executive Order 12866 this rule is not a significant regulatory action. As such, the rule is not subject to Office of Management and Budget review under section 6(a)(3) of the Executive Order.
The Department of the Army has determined that according to the criteria defined in Executive Order 13045 this rule does not apply.
The Department of the Army has determined that according to the criteria defined in Executive Order 13132 this rule does not apply because it will not have a substantial 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.
Claims, Government employees, Health care, Military personnel.
31 U.S.C. 3711-3720E; 42 U.S.C. 2651-2653; 10 U.S.C. 1095; 10 U.S.C. 4803-4804; 33 U.S.C. 408.
(a)
(b)
(c)
All of these statutes may be viewed on the USARCS Web site,
(a)
(b)
(2) Under 10 U.S.C. 1095 the United States is also deemed a third-party beneficiary or subrogee under an alternative system of computations such as workers' compensation; hospital lien laws; contract rights under the terms of insurance policies including medical payment coverage; uninsured, underinsured and no-fault coverage; and no-fault laws.
(c)
(d)
(a)
(1) Arising out of a tort under local law,
(2) Arising out of an on-the-job injury compensable under workers' compensation law except for Federal Employees Compensation Act (FECA) recoveries,
(3) Based on the United States being a third-party beneficiary of the insurance contract of the injured party to include medical payment coverage, lost wages, as well as uninsured, underinsured, and no-fault coverage.
(b)
(c)
(a) Where the tortfeasor is a department, agency or instrumentality of the United States. (See § 536.27(g) of this chapter).
(b) Where the tortfeasor is a member of the uniformed services or an employee of the DA or DOD, acting within the scope of employment, who damages or loses property. See AR 735-5, chapter 13.
(c) Where the damage or loss of property falls under a contractor bill of lading and recovery is pursued by the contracting agency, e.g., Surface Deployment and Distribution Command (SDDC), formerly the Military Traffic Management Command (MTMC), for lost or destroyed shipments.
(d) Where damage to assigned quarters, or equipment or furnishings therein, is collectible from a member of the uniformed services under 10 U.S.C. 2775.
(e) Where the medical care is furnished by a Department of Veterans Affairs facility to other than active duty members of the uniformed services for service-connected disabilities.
(a)
(2) Recovery assertions based on the United States being a third-party beneficiary or subrogee are not based on tort, but on the right to recover under local law, for example, the right of a third party to recover workers' compensation benefits is based on local law. However, the right of a third-party beneficiary to recover under an insurance contract may turn on whether an exclusionary clause is valid under the law of the jurisdiction where the contract was made.
(b)
(2) Recovery assertions based on an implied-in-law contract against a no-fault or personal-injury-protection insured must be brought no later than six years from the date of accrual, 28 U.S.C. 2415(a),
(3) Actions asserted on a third-party beneficiary basis against an insurer or workers compensation fund must comply with the state notice requirement, which varies from one to six years, or the insurer's notice requirement set forth in the policy.
(4) The statute of limitations is tolled or does not start running until the responsible federal official is notified of the existence of a recoverable loss,
(a)
(b)
(2) The MTF commander will ensure that the claims office is notified of instances in which the MTF provides, or is billed by a civilian facility for, inpatient or outpatient care resulting from injuries (such as broken bones or burns arising from automobile accidents, gas explosions, falls, civilian malpractice, and similar incidents) that do not involve collections from a health benefits or Medicare supplemental insurer. Claims personnel will coordinate with MTF personnel to ensure that inpatient and outpatient records and emergency room and clinic logs are properly screened to identify potential cases. The RJA or recovery attorney will screen the MTF comptroller records database and division records as well as ambulance logs to identify potential medical care recovery cases. The RJA or recovery attorney will also coordinate with Navy and Air Force claims offices and MTFs to ensure they identify potential claims involving treatment provided to Army personnel.
(3) The MTF commander will also ensure that the MTF does not release billings or medical records, or respond to requests for assistance with workers' compensation forms, without coordinating with the RJA or recovery attorney.
(4) The TRICARE fiscal intermediary is required to identify and mail certain information promptly to the claims office designated as the state point of contact. The fiscal intermediary must mail the TRICARE Explanation of Benefits, showing the amount TRICARE paid on the claim along with what diagnostic codes were used, and DD Form 2527, Statement of Personal Injury. A sample Statement of Personal Injury (DD Form 2527) is posted on the USARCS Web site; for the address see the Note to § 537.1.
(5) The RJA or recovery attorney will also coordinate with Navy and Air Force claims offices and MTFs to ensure they identify potential claims involving treatment provided to Army personnel, AR 40-400, paragraph 13-5.
(c)
(2) Army responsibility for affirmative claims is as follows:
(i) Damage to or loss of real or personal property of the DOD or the Army even if located at installations or activities under the jurisdiction of other uniformed services.
(ii) Personal injury to persons whose primary care for an accident-related injury is furnished at an Army MTF, regardless of the uniformed services affiliation of the person or sponsor, but not to those treated at another uniformed service's MTF even if the person is an active duty Army member.
(iii) Personal injury to an active duty or retired Army member or a family member of either category treated under TRICARE.
(iv) A lead agency will be established whenever:
(A) Property damaged or lost belonging to more than one service is involved in the same incident.
(B) Personal injury victims are treated at MTFs of more than one service.
(C) Personal injury victims with affiliations to more than one service are treated under TRICARE.
(D) Lead agencies may be established locally for claims valued at $50,000 or less. For claims greater than $50,000 USARCS will be notified and will deal with the other service at headquarters level. (See § 536.32 of this chapter.)
Upon receipt of notice of a claim involving either actual or potential amounts within USARCS' monetary jurisdiction, that is, where final action will be taken by USARCS or the Department of Justice, immediate notice will be given to USARCS. Forwarding a copy of the serious incident report, discussed in § 536.22(c) of this chapter, to USARCS, will meet this requirement. Thereafter, mirror file copies will be furnished to USARCS in accordance with AR 27-20, paragraph 2-12. This allows for continuous monitoring and discussion between the ACO and the USARCS area action officer (AAO).
(a)
(b)
(c)
(d)
(2) When the injured party is represented, a Health Insurance Portability and Accountability Act (HIPAA) medical release form (sample posted at the USARCS Web site; see § 537 (b)(4)) permitting USARCS to send out the medical records of the injured party for claims purposes, will be sent to the injured party's lawyer for completion and return.
(3) When the injured party or his or her lawyer refuses to furnish necessary information, it can usually be obtained by other means, for example, from an accident report or investigation. A notice will be furnished to all parties that the government has been assigned the right to bring a claim for the value of medical care furnished, lost pay or value of property lost or destroyed, and that the United States has the right to bring an independent cause of action. In absence of timely and appropriate response, discuss with the AAO to determine what action should be taken.
(a)
(1) The fact that the medical expenses have been assigned to the United States and as a result the United States has a cause of action in federal or state court. All parties will be notified that if the insurer pays the amount to another party, the United States has the right to collect from the insurer.
(2) Demands for third-party torts are under the authority of the FMCRA; demands where there is no tortfeasor are under the authority of 10 U.S.C. 1095; demands for property loss or damage are under the authority of the FCCA.
(b)
(1) TRICARE bills are obtained from the fiscal intermediary servicing the ACO. The amounts are based on the amount TRICARE pays and not the amount the patient is billed by the provider. TRICARE bills must be screened to insure that the care is incident or accident related as the demand is limited to that amount.
(2) MTF bills, both outpatient and inpatient, are obtained from either the MTF co-located with the ACO or if another MTF is involved, from that MTF, regardless of uniformed service affiliation. Outpatient bills include not only the cost of the visit but also the cost of each procedure, such as x-rays or laboratory tests. Inpatient billing is not based on services rendered but on a diagnostic group. Charges for professional inpatient services will be itemized the same as outpatient care. Charges for prescription services will be included. Screening to ensure that only incident or accident related care is claimed is essential. The cost of ambulance services, ground or air, will be calculated with MTF assistance and demanded. Burial expenses are obtained from the local mortuary affairs office on DD Form 2063, but will be demanded only when the insurance coverage includes such expenses.
(3) Lost pay will be obtained from the leave or earnings statement or the active duty pay chart for the year or years in question and will include special and incentive pay unless the injured service member did not receive either due to the length of time off assigned duty. The time off duty will be based on the time service members are unable to perform duties for which they have been trained (their military occupational specialty). It will not be limited to inpatient time. Time in a medical holding or convalescent leave will be lost time.
(4) The amount recoverable for personal property losses is limited to its value at the time of loss. Depreciation charts may be used to determine the reduction from the value at purchase. Replacement value will not be used. Both real and personal property damage will be on the value of labor and cost of material including the use of heavy equipment. When the cost of repairs is greater than $50,000, 10% overhead will be added. This can be substantiated using case law and by seeking documentation from the repair facility.
(c)
(a) Recovery personnel have three means of enforcing recovery following initial assertion.
(1) Referral to litigation pursuant to § 537.11;
(2) The head of an ACO should request Chief, Litigation Division, OTJAG to have the RJA appointed as a Special Assistant United States Attorney when the following criteria are met:
(i) Filing suit is a frequent necessity,
(ii) The local U.S. Attorney's office is in favor of such appointment due to his previous experience with the RJA and the additional burden of affirmative claims litigation on his staff;
(iii) The RJA has at least two years experience and is likely to continue in the RJA assignment for at least one year; and
(iv) Commander USARCS concurs in the appointment and is willing to furnish support.
(3) The RJA may request that the attorney representing the injured party include the amount asserted by the United States as part of special damages. The injured party's attorney may not represent the United States nor may the United States pay attorney fees as this would be in violation of 5 U.S.C. 3106. Where indicated, this arrangement should be reduced to writing. Be mindful that the attorney's duty to the injured party is in conflict with the interests of the United States where the amount potentially recoverable is small in comparison to the amount asserted by the United States. In this event the RJA should pursue recovery independently.
(b) Careful monitoring of all assertions is required to insure timely follow-up resulting in collection or suit where indicated. Installation of a suspense system to avoid the expiration of the statute of limitations is essential. Recommendations to file suit should be forwarded by the RJA well prior to the expiration of the statute of limitations. Within six months prior to the running of the statute of limitations, USARCS must be notified of the status of the claim or potential claim. Follow-up demands should precede filing suit to create a written record of efforts to avoid suit. Personal contact with all parties is encouraged. When represented, contact the representative.
(c) Sources other than vehicle liability coverage should be exhausted in cases where the amount of the potential recovery exceeds $50,000 and the coverage is small. Coordination with USARCS is required. USARCS can obtain expert witnesses for medical malpractice cases, product liability cases, or other cases in which another tortfeasor may be involved.
(a) If a tortfeasor or insurer refuses to settle, or if an injured party's attorney improperly withholds funds, the RJA or recovery attorney must consider litigation to protect the interests of the United States. Litigation is particularly appropriate if a particular insurer consistently refuses to settle claims, or if the government's interests are not adequately represented on a claim over $25,000.
(b) RJAs or recovery attorneys must maintain close contact with local U.S. Attorney's Offices to ensure these offices are willing to initiate litigation on cases.
(c) In order to directly initiate or intervene in litigation, an RJA or recovery attorney must prepare a litigation report and formally refer the case through the Affirmative Claims Branch, USARCS, and the Litigation Division, OTJAG (as required by AR 27-40, chapter 5), to the U.S. Attorney. While the RJA or recovery attorney, in conjunction with the Litigation Division Torts Branch, should attempt to have the U.S. Attorney's Office initiate litigation at least six months before the expiration of the statute of limitations (SOL), the RJA or recovery attorney may contact USARCS telephonically if SOL problems necessitate quick action on a case. The RJA or recovery attorney should also contact USARCS if a U.S. Attorney is reluctant to pursue an important case. An injured party's attorney may represent the government's interest in litigation without any special coordination.
(a)
(2)
(ii) The foregoing authorities may waive a claim asserted for $50,000 or less where undue hardship exists.
(iii) Determination of amount. The amount of $50,000 is determined totaling the amounts for medical care, lost military wages, lost earnings or government property damage arising from the same claims incident.
(b)
(c)
(2)
(d)
(1) The cost to collect does not justify the cost of enforcement.
(2) There is evidence of fraud or misrepresentation.
(3) The U.S. cannot locate the tortfeasor.
(4) Legal merit has not been substantiated.
(5) The statute of limitations has run and the debtor refuses to pay.
(6) Collection of all or part of the amount of funds demanded would create inequity. The following criteria apply:
(i) Detailed information on what funds are available for recovery.
(ii) Reasonable value of the injured party's claim for permanent injury, pain and suffering, decreased earning power, and any other special damages.
(iii) Military, Department of Veterans Affairs, Social Security disability, and any other government benefits accruing to the injured party.
(iv) Probability and amount of future medical expenses of the government and the injured party.
(v) Present and prospective assets, income, and obligations of the injured party and those dependent on him or her.
(vi) The financial condition of the debtor.
(vii) The degree and nature of contributory negligence on the part of the injured party in causing his injury or death.
(viii) The percentage of attorney's fees that his attorney is willing to reduce.
(ix) The willingness of the tortfeasor to enter into an installment agreement.
(e)
Meritorious assertions that do not result in collections should be enforced as follows:
(a) Where the debtor is a business or corporation otherwise financially capable the RJA or equivalent should forward a recommendation to bring suit or intervene in an existing suit regardless of the amount of the debt. As authorized by 28 U.S.C. 3011, the demand amount in the complaint shall include an additional 10% of the original claimed amount, to cover the administrative costs of processing and handling the enforcement of the debt.
(b) Where the debtor is an individual rather than a business, an asset determination should be made both as to existing assets or prospective earnings. If the injured party's attorney has made an assets search which is reliable, review the search before requesting a new one. Such a search can be paid for out of existing collections.
(1) If the debtor has assets refer to USARCS for transfer to a debt collection contractor or an agency debt collection center as determined by USARCS.
(2) If the debtor has no assets, but prospective future earnings, RJA may seek a confession of judgment and maintain contact with the debtor for future collection where authorized by state law and filing of suit is not required. If the amount is less then $5,000, enter into an installment payment arrangement.
(a)
(2)
(3)
(4)
(5)
(6)
(b)
(c)
(2)
(3)
(i)
(ii)
(d)
(a) The Army Maritime Claims Settlement Act. The sections pertinent to maritime affirmative claims are set out at 10 U.S.C. 4803-4804.
(b) The Rivers and Harbors Act. The section of the Act pertinent to affirmative claims involving civil works of a maritime nature is set out at 33 U.S.C. 408.
The Army Maritime Claims Settlement Act (10 U.S.C. 4803-4804) applies worldwide and includes claims that arise on high seas or within the territorial waters of a foreign country.
(a) 10 U.S.C. 4803 provides for agency settlement or compromise of claims for damage to:
(1) DA-accountable properties of a kind that are within the federal maritime jurisdiction.
(2) Property under the DA's jurisdiction or DA property damaged by a vessel or floating object.
(b) 10 U.S.C. 4804 provides for the settlement or compromise of claims in any amount for salvage services (including contract salvage and towage) performed by the DA. Claims for salvage services are based upon labor cost, per diem rates for the use of salvage vessels and other equipment, and repair or replacement costs for materials and equipment damaged or lost during the salvage operation. The sum claimed is usually intended to compensate the United States for operational costs only, reserving, however, the government's right to assert a claim on a salvage bonus basis in accordance with commercial practice.
(c) The United States has three years from the date a maritime claim accrues under this section to file suit against the responsible party or parties.
Under the River and Harbors Act (33 U.S.C. 408), the United States has the right to recover fines, penalties, forfeitures and other special remedies in addition to compensation for damage to civil works structures such as a lock or dam. However, claims arising under 10 U.S.C. 4804 are limited to recovery of actual damage to Corps of Engineers (COE) civil works structures.
(a) The Secretary of the Army, the Army General Counsel as designee of the Secretary, or other designee of the Secretary may compromise an affirmative claim brought by the United States in any amount. A claim settled or compromised in a net amount exceeding $500,000 will be investigated and processed and, if approved by the Secretary of the Army or his or her designee, certified to Congress for final approval.
(b) TJAG, TAJAG, the Commander USARCS, the Chief Counsel COE, or Division or District Counsel Offices may settle or compromise and receive payment on a claim by the United States under this part if the amount to be received does not exceed $100,000. These authorities may also terminate collection of claims for the convenience of the government in accordance with the standards specified by the DOJ.
(c) An SJA or a chief of a command claims service and heads of ACOs may receive payment for the full amount of a claim not exceeding $100,000, or compromise any claim in which the amount to be recovered does not exceed $50,000 and the amount claimed does not exceed $100,000.
(d) Any money collected under this authority shall be deposited into the U.S. General Treasury, except that money collected on civil works claims in favor of the United States pursuant to 33 U.S.C. 408 “shall be placed to the credit of the appropriation for the improvement of the harbor or waterway in which the damage occurred * * *” (33 U.S.C. 412; 33 U.S.C. 571).
(a) It is essential that Army claims personnel demand payment, or notify the party involved of the Army's intention to make such demands, as soon as possible following receipt of information of damage to Army property where the party's legal liability to respond exists or might exist. Except as provided below pertaining to admiralty claims and claims for damage to civil works in favor of the United States pursuant to 33 U.S.C. 408, copies of the initial demand or written notice of intention to issue a demand letter, as well as copies of subsequent correspondence, will be provided promptly to the Commander USARCS, who will monitor the progress of such claims.
(b) Subject to limitation of settlement authority, demands for admiralty claims and civil works damages in favor of the United States pursuant to 33 U.S.C. 408 may be asserted, regardless of amount, by the Chief Counsel COE, or his designees in COE Division or District Counsel offices.
(c) Where, in response to any demand, a respondent denies liability, fails to respond within a reasonable period, or offers a compromise settlement, the file will be promptly forwarded to the Commander USARCS, except in those cases in which a proposed compromise settlement is deemed acceptable and the claim is otherwise within the authority delegated in § 537.18 of this part. Files for admiralty claims and civil works claims in favor of the United States pursuant to 33 U.S.C. 408 will be promptly forwarded to the United States Department of Justice.
Admiralty claims, including claims for damage to civil works in favor of the United States pursuant to 33 U.S.C. 408, proposed for settlement or compromise in a net amount exceeding $100,000 will be submitted through the Commander USARCS to the Secretary of the Army for approval and if in excess of $500,000 for certification to Congress for final approval.
Federal Transit Administration (FTA), DOT.
Second notice of proposed rulemaking.
The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) requires the Federal Transit Administration (FTA or the Agency) to make certain changes to the Buy America requirements. This Second Notice of Proposed Rulemaking (SNPRM) proposes a publication process for public interest waivers to provide an opportunity for public comment; a clarification of Buy America requirements with respect to microprocessor waivers; new provisions to permit post-award waivers; clarifications in the definition of “end products” with regards to components and subcomponents, major systems, and a representative list of end products; a clarification of the requirements for final assembly of rolling stock and a list of representative examples of rolling stock items; expanding FTA's list of eligible communications, train control, and traction power equipment; and an update of the debarment and suspension provisions to bring them into conformity with statutory amendments made by SAFETEA-LU.
Comments must be submitted by January 29, 2007. Late filed comments will be considered to the extent practicable. FTA will also hold a public hearing in Washington, DC, to receive comments for the docket. The date and time of that hearing will be published as a separate
You may submit comments [identified by DOT DMS Docket Number FTA-2005-23082] by any of the following methods:
Richard Wong, Office of the Chief Counsel, Federal Transit Administration, 400 Seventh Street, SW., Room 9316, Washington, DC 20590, (202) 366-4011 or
On November 28, 2005, the Federal Transit Administration (FTA) published a Notice of Proposed Rulemaking (NPRM) in the
This Second Notice of Proposed Rulemaking (SNPRM) will address six issues identified in the NPRM but not covered in the final rule, and one new one: (1) A publication process for public interest waivers to provide an opportunity for public comment; (2) a clarification of Buy America requirements with respect to microprocessor waivers; (3) new provisions to permit post-award waivers; (4) clarifications in the definition of “end products” with regards to (a) components and subcomponents, (b) major systems, and (c) a representative list of end products; (5) a clarification of the requirements for final assembly of rolling stock and a list of representative examples of rolling stock items; (6) expanding FTA's list of eligible communications, train control, and traction power equipment; and (7) an update of the debarment and suspension provisions to bring them into conformity with statutory amendments made by SAFETEA-LU.
In the first NPRM, FTA proposed amending 49 CFR 661.7(b) to implement the SAFETEA-LU requirement that FTA publish justifications for public interest waivers in the
FTA received ten comments, two of which were identical. Four commenters stated that FTA's proposal created a two-step process of waiver review. These commenters expressed concern that a two-step process would cause delay. One commenter noted in particular that the proposed process would have the effect of providing multiple opportunities for filing comments, would significantly lengthen the procurement process, would adversely affect the contract schedule, and would introduce additional uncertainty in the procurement process. One commenter stated an unduly long processing time would have a negative impact on cost and competition. Another commenter expressed concern that in cases involving construction contracts, where design and/or construction might be underway, and the “notice and comment process” would delay projects, inducing engineers and builders to offer less effective substitutes in order to avoid the delay from a notice and comment process.
Four commenters provided alternatives to FTA's proposal. One
Commenters offered additional suggestions for streamlining the waiver application process. One commenter recommended the following: FTA should restrict receipt of comments on the initial waiver request to immediately affected parties; to handle comments by e-mail; to commit to a fixed time period for releasing the written justification in the event a waiver request is granted; to limit the comment period to one week after the publication date in the
Two commenters recommended that FTA publish grantees' written waiver requests and justifications in the
The majority of commenters also recommended FTA continue its internal practice of publishing all waiver decisions on the FTA Web site (
FTA agrees that SAFETEA-LU requires it to publish its “justification” in the
While several commenters complain of a “two-step” process for waiver approval, none explain how FTA can simultaneously publish a notice of waiver request and the justification for it in a single
In addition, as explained in the NPRM, FTA believes the plain language of SAFETEA-LU, and its legislative history, expressly requires FTA to issue a written justification and publish it in the
FTA shares the concern of many commenters who state that the proposed rule could cause delay by creating a so-called “two-step” process for waiver approvals. FTA will endeavor to implement a rule in a way that minimizes delays. It should be noted that any potential delay resulting from the requirement to publish a justification in the
Under the current Buy America process, FTA's Chief Counsel has been delegated with the responsibility to issue public interest waivers, soliciting comments via the FTA Web site and concurrent notification to the American Public Transportation Association (APTA). As FTA explained in the first NPRM: “This process functions well. The relevant industries and grantees actively respond and provide valuable information to FTA.” In fact, FTA relies heavily on the public comments it receives during the comment period for waiver requests. For this reason, FTA disagrees with a commenter's suggestion FTA should limit the receipt of comments on the waiver request to “immediately-affected parties.” To the contrary, FTA finds that frequent and wide-ranging public comment is an invaluable part of the Buy America process.
Because FTA relies on public input in making Buy America determinations, SAFETEA-LU's requirement to publish justifications of public interest waivers in the
Accordingly, FTA believes SAFETEA-LU requires the following process: (1) Post notification of the public interest waiver request on FTA's Web site and solicit comments on the request; (2) based on the comments received, prepare a justification that explains the rationale for approving a waiver request; (3) publish the justification in the
In the NPRM, FTA requested comment on its proposal to implement the SAFETEA-LU requirement to “clarify” that any waiver of the Buy America requirements for a microprocessor, computer, or microcomputer, applies “only to a device used solely for the purpose of processing or storing data” and does not extend to the product or device containing a microprocessor, computer, or microcomputer.
FTA received sixteen comments on this issue, three of which concurred outright with FTA's proposed change to the regulation without further substantive comment. Nine commenters appeared to endorse FTA's proposed change to the microcomputer waiver, but raised an additional issue about “input/output” facilities or devices. For example, one commenter noted that “FTA has dropped a significant phrase, `input/output,' facility from past practices.” This commenter then recommended that “existing regulatory practices must be continued to avoid significant disruption in the industry.” Four other commenters similarly recommended that FTA make clear that input/output devices or facilities are covered by the waiver. Citing the Conference Report for SAFETEA-LU (H.R. Conf. Rep. No. 109-203,
On the other hand, four other commenters opposed including “input/output” devices in the microcomputer waiver and provided comments that interpreted this matter entirely differently. The commenters congratulated FTA for purportedly “dropping” input/output facilities or devices from waiver coverage, or, recommended that FTA drop such devices from the scope of the waiver. Two of these comments also recommended FTA not include “software” in the proposed “definition” of computers, microcomputers, and other equipment covered by the waiver. The two comments also appeared to request that FTA clarify that what is “exempt” under the microprocessor waiver can not be counted as either foreign or domestic for purposes of Buy American content calculations in rolling stock procurements.
One commenter proposed amending Appendix A to 49 CFR 661.7(b) by adding a sentence clarifying that if an “end product (
Another commenter proposed an alternative version of the microcomputer waiver that includes a “hardware definition” of microprocessor, as follows: “[t]his general waiver does not extend to a product or device which merely uses microprocessor circuit chip(s) imbedded in the material or uses one or more printed circuit board assemblies consisting of microprocessor circuit chip(s) either as a group of separate items or as a single integrated microcomputer unit for controlling its end function which is not used solely for the purpose of processing or storing data.” A final comment made note of FTA's proposed changes to the microcomputer waiver, but did not appear to either approve or disapprove of FTA's proposal.
Regarding the “input/output” facility issue raised by nine commenters, it is unclear why so many of these commenters believe FTA “dropped” input/output devices from the microcomputer waiver in the first NPRM. The current version of the general waiver at 49 CFR 661.7, Appendix A, does not include the term “input/output” facility. It merely states that, “microcomputer equipment, including software, of foreign origin can be procured by grantees.” 49 CFR 661.7, Appendix A. Likewise, FTA's proposed language in the first NPRM does not mention “input/output” facilities or devices. Rather, that term is mentioned in a separate definition of a microcomputer, which FTA referred to in the NPRM. See 50 FR 18760, May 2, 1985 (“A basic microcomputer includes a microprocessor, storage, and
In clarifying that the waiver applied to devices “used solely for the purpose of processing or storing data,” as required by SAFETEA-LU, commenters may have interpreted this to mean that “input/output” facilities were somehow excluded from waiver coverage. Such is not the case. FTA agrees with the commenter who noted that in directing FTA to clarify the microcomputer waiver, Congress did not intend for FTA to change its current regulatory treatment of microcomputer equipment.
Accordingly, since FTA's existing regulatory definition of a microcomputer already includes an “input/output facility” as one of its component items, consistent with Congressional intent not to change the definitions in this rulemaking, FTA believes it is unnecessary to further amend the regulation to reiterate that input/output facilities or devices are covered by the waiver. Furthermore, in keeping with the above Congressional guidance, FTA does not agree with recommendations to eliminate “software” from the scope of the microcomputer waiver.
FTA also disagrees with the recommendation that it should clarify whether equipment subject to the microcomputer waiver is counted as foreign or domestic in calculating component content in rolling stock procurements. That change is unnecessary because FTA's regulation already dictate that components subject to the microcomputer waiver are counted as domestic in rolling stock procurements.
FTA sought comment in the first NPRM on its proposal to create a post-award non-availability waiver. Under FTA's current regulation, a bidder or offeror that certifies compliance with Buy America is “bound by its original certification” and “is not eligible for a waiver of those requirements.” 49 CFR 661.13(c). The proposed language would allow grantees to request a non-availability waiver after contract award where a bidder or offeror had originally certified compliance with the Buy
FTA received eight comments on this proposal, one of which concurred with FTA's proposed change to the regulation, without further substantive comment. A second commenter noted some minor variations in language between the proposed rule in the “Supplementary Information” section of the NPRM, and the actual proposed amendment of 49 CFR part 661. This commenter then stated that the actual proposed amendment, “appears to address this requirement.” FTA presumes the commenter is referring to the requirement of SAFETEA-LU.
The six remaining commenters endorsed the concept of a post-award waiver, but felt that FTA's proposal was unnecessarily complex or unduly restrictive. Three commenters proposed the following alternative language:
Waivers based on non-availability may be granted when the Administrator or the Administrator's designee is satisfied that the applicable certificate of Buy America compliance was made reasonably and in good faith and that intervening circumstances have made compliance with that certification impossible or commercially impracticable.
Another commenter proposed similar language, as follows:
The Administrator may grant a non-availability waiver under section 661.7(c) in any case in which a contractor has originally certified compliance with the Buy America requirements in good faith, but can no longer comply with its certification. The Administrator will grant this non-availability waiver only if the grantee provides sufficient information which indicates that the original certification was made in good faith and that the item to be procured cannot now be obtained domestically due to commercial impossibility or impracticability.
Five commenters stated that in deciding whether to grant a post-award waiver, FTA's consideration of the status of other competitors was immaterial and beyond the statutory intent of SAFETEA-LU. These commenters argued that FTA's proposal forecloses a potential waiver when, after contract award and discovery that supplies are unavailable, another bidder or offeror who certified compliance is still able to supply domestic products or materials. The five commenters argued that this would force a grantee and its winning contractor, in spite of their good faith, to be “held economic hostage” to a frustrated competitor who had obtained limited remaining domestic supplies through exclusive distribution agreement or other arrangement. According to these commenters, the situation would result in significant cost increases, as the grantee would be forced to terminate its contract and procure with the compliant contractor, with no effective competition to assure reasonable pricing.
Two commenters noted that FTA's discussion of the waiver proposal encompassed both commercial impossibility and impracticability “due to price.” These two commenters argued that the provision should allow waiver under
None of the commenters discussed or questioned the meaning of the term “impossibility.” However, a fourth commenter argued that FTA should not require grantees to produce evidence of changed market conditions that demonstrate the non-availability of materials or supplies after contract award in order to obtain a post-award waiver. Furthermore, this commenter stated that the grantee should not have to demonstrate the impossibility or impracticability of completing the third party contract. The commenter emphasized that such a requirement would prove burdensome to grantees, and goes beyond the stated provisions of SAFETEA-LU.
FTA agrees with the commenters who recommended that the proposed language in the NPRM should be simplified. In fact, FTA favors the alternative post-award waiver provision proposed by one commenter, as it matches in tone and language the existing non-availability waiver found in 49 CFR 661.7(c).
The intent of Buy America is to safeguard American jobs by requiring that “steel, iron, and manufactured goods used in the [FTA-funded] project are produced in the United States.” 49 U.S.C. 5323(j). Buy America is not intended to protect any particular contractor or supplier. In deciding whether to grant a post-award waiver, therefore, FTA should not deliberately ignore the status of other bidders or offerors who are Buy America compliant and can furnish domestic material or products on an FTA-funded project. Concluding otherwise would violate the legislative intent behind Buy America.
Therefore, commenters' disagreement notwithstanding, FTA believes the status of other bidders or offerors on an FTA-funded procurement may be a relevant factor in deciding whether to grant a post-award waiver. For example, if a winning contractor is unable to comply with its Buy America certification due to commercial impossibility or impracticability, but a second low bidder who certified compliance is available to provide domestic material or products at a reasonable price, FTA believes it would be appropriate to take that into account when deciding whether to grant the waiver request.
Moreover, FTA is mindful that a decision on a post-award waiver could adversely impact a grantee's project schedule and budget, as several commenters have stated. Therefore, it is FTA's intent to consider “all appropriate factors on a case-by-case basis,” in deciding whether to grant a post-award waiver. Such factors may include project schedule and budget. It will be the grantee's responsibility to point out such factors to FTA in requesting a post-award waiver.
FTA disagrees with the comment suggesting FTA not require grantees to produce evidence of “impossibility or impracticability of completing the third party contract,”
In fact, FTA believes further clarification of what constitutes “commercial impracticability” is warranted but disagrees with the several commenters who suggested that impracticability should not be limited “due to price,” but should apply to
As stated in this SNPRM, FTA prefers to base any regulatory requirements on existing precedents in public contracting law and practice. For example, in
A contract is commercially impracticable when performance would cause “extreme and unreasonable difficulty, expense, injury, or loss to one of the parties.”
A contract is said to be commercially impracticable when, because of unforeseen events, “it can be performed only at an excessive and unreasonable cost,”
FTA believes this “commercially senseless” standard, as articulated in Federal case law, represents the appropriate standard for determining commercial impracticability in Buy America post-award waivers. Therefore, when questions arise as to what constitutes commercial impracticability or impossibility in a specific post-award waiver request, FTA will rely on the precedents established in Federal contract law for guidance.
In the new proposal, FTA steps away from the language in the first NPRM because it is persuaded by the issues raised by commenters who stated the language included in the first NPRM should not be included in a final rule. FTA agrees and believes the better approach is to require the grantee, in making a request for a post-award waiver, to provide specific evidence of a contractor's good faith and evidence justifying the post-award waiver. This evidence may include information about the origin of the product or materials, invoices, or other relevant solicitation documents as requested and that the item to be procured cannot now be obtained domestically due to commercial impossibility or in practicability. Additionally, when determining whether conditions exist to grant a post-award waiver, FTA will consider all appropriate factors on a case-by-case basis. FTA requests comments on this new proposal to modify the post-award waiver procedures.
FTA's initial NPRM sought comments on two alternative definitions of the term “end product.” The first proposed definition comes from FTA's current, long-standing practice whereby the end product of a procurement is the deliverable item specified by the grantee in the third party contract. Under this so-called “shifting” methodology, the same item may be an end-product, a component, or a subcomponent, depending on the article specified in the third party contract, with resulting differences in the applicability of Buy America requirements to the same item based on its characterization as an end product, component or subcomponent. Applying this shifting approach, FTA's first proposed definition stated: “End product means any item subject to 49 U.S.C. 5323(j) that is to be acquired by a grantee, as specified in the overall project contract.”
The second proposed definition was based on the definition of end product in the Buy American Act, 41 U.S.C. 10a-10d, as implemented in the Federal Acquisition Regulation (FAR) Part 25. Under this second definition, FTA proposed to abandon the “shifting” methodology in favor of one where the end products do not shift, and components and subcomponents retain their designation. FTA's second proposed definition stated: “End product means any article, material, supply, or system, whether manufactured or unmanufactured, that is acquired for public use under a federally funded third party contract.” A list of representative end products is included at Appendix A to this section.
FTA's second proposed definition includes the term “system” and mentions a “list of representative end products.” FTA will address these two important issues separately in the SNPRM; that is, whether a “system” should be included as an end product, and what items should be included on a representative list of end products.
FTA received twenty-one comments on the definition of “end product.” Four commenters expressly endorsed retaining some form of FTA's current “shifting” methodology. All four of these commenters are transit operators receiving FTA funds, three of whom are among the largest transit operators in the country.
One of the commenters who specifically supported FTA's first proposed definition noted a discrepancy between the proposed rule in the “Supplementary Information” section of the NPRM, and the actual proposed amendment of 49 CFR part 661, to the effect that the proposed amendment omits the clause, “A list of representative end products is included at Appendix A to this section.” FTA agrees that this sentence should have been included in the proposed amendment. Furthermore, this same commenter stated that the second “non-shifting” proposed definition of end product “would substantially reduce much of the current flexibility in the Buy America program.” A second commenter stated that to “rigidly fix the nature of a component at the time a vehicle is purchased would create massive uncertainty in the marketplace.”
A third commenter, a large transit operator, expressed “grave concerns” about abandoning FTA's long standing shifting methodology in favor of one where the end products do not shift. According to the commenter, such a change in methodology would undermine the basic purpose of the Buy America rule, which is to encourage the creation of American jobs. The commenter explained that the shifting methodology encourages American job creation by providing an incentive for manufacturers of end product components to invest in domestic facilities for after market support. A manufacturer of rail car equipment, for example, would have an incentive to invest in domestic facilities in order to achieve Buy America compliance when selling former “components” as “end products” in an after market procurement.
The commenter also stated that the alternative proposal cannot be practically implemented. Such a new methodology would necessarily place great reliance on the accompanying list of end product items. The commenter explained that the burden for transit agencies to track the status of rolling stock component items (as either foreign
This commenter argued that the “non-shift” methodology would not, in fact, create consistency. Again, using the example of a rail car manufacturer, the commenter explained that it is the manufacturer who decides in each particular case whether a given component should be of domestic or foreign manufacture in order for the end product to meet the sixty percent domestic content requirement for rolling stock [forty percent of the components, by cost, may be foreign]. Thus, any typical component of a rail car could be “of foreign manufacturer in one specific instance and * * * of domestic manufacturer in another, even when foreign cars are manufactured by the same rail car builder.”
A fourth commenter, also a large transit operator, raised similar arguments to support its endorsement of the shifting approach to end products. This commenter also stated that abandonment of the shifting methodology would create a disincentive for manufacturers to establish domestic facilities to support after market purchases, but added that the lack of domestic facilities “will create longer lead times on acquiring replacement parts.”
One commenter suggested FTA revisit its application of the end product definition as it applies to construction projects, specifically, that the “deliverable of the project” as described in the contract should be viewed as the end product, with structures such as terminals and stations to be considered as components. Furthermore, the commenter suggested that FTA should not apply the Buy America requirements “for the minimal use of iron or steel products where the cost of the foreign sourced item is less than a particular dollar threshold.” Such an approach, according to the commenter, would be consistent with the application of Buy America used by the Federal Highway Administration, and would foster uniformity within the U.S. Department of Transportation.
Another commenter appeared to endorse the “shift” approach to end product analysis and suggested the following definitions:
“Any item subject to 49 U.S.C. 5323(j) that is to be acquired by a grantee, as specified in the overall project contract and which is ready to provide its intended end function or use without any further manufacturing or assembly change(s).” Or,
“End product means any article, material, supply, or system, whether manufactured or unmanufactured, that is acquired for public use under a federally funded third party contract and which is ready to provide its intended end function or use without any further manufacturing or assembly change(s). A list of representative end products is included at Appendix A.”
This commenter stated that this proposed definition would clarify that an end product is something that will not require further changes and can function with appropriate mounting and interconnection for its input and output without further manufacturing or assembly.
Of the sixteen remaining commenters, three did not specifically comment on the issue of “shift/non-shift,” but focused instead on whether a “system” should be included as an end product, or recommended that certain products be included in the list of representative end products. Another commenter requested FTA “strike the end product definition as written,” but did not identify which of the two proposed definitions to strike.
Twelve commenters expressly favored the second definition—the “non-shift” approach—to end product analysis. The primary reason given for eliminating the shift methodology, as this commenter put it, is to “achieve reasonable predictability for the business community.” Commenters also stated that knowing particular items will always be designated as an end product, a component, or a subcomponent would enhance stability in the transit industry, enable proposers to plan and price proposals more accurately, and would allow transit agencies to obtain better prices.
One of the twelve commenters addressed the concerns of some grantees that abandonment of the “shift” approach in rolling stock procurements would discourage manufacturers from establishing domestic facilities for after market support; and would thereby create an overwhelming recordkeeping burden on public transit agencies and suppliers. Specifically, the commenter recommended that in adopting a “non-shift” methodology to end product analysis, FTA should retain its current practice of treating replacement parts as manufactured products rather than as rolling stock.
The commenter stated that treating replacement parts under the rolling stock standard, instead, would prove unworkable and would impose crushing recordkeeping requirements on transit agencies. This is so because transit agencies would have to track the origins of every component and sub-component of their rolling stock end products, no matter how old, to determine if they should replace foreign and domestic components and subcomponents with like foreign and domestic replacement parts—a task that becomes impossible or excessively burdensome where vehicles and components may each contain a varied combination of foreign and domestic parts.
On the other hand, treating replacement parts under the manufactured product standard rather than the rolling stock standard would obviate the need to maintain detailed parts lists, according to the commenter. While acknowledging that some in the transit community advocate treating replacement parts as manufactured end products, per the terms of a contract and current FTA practice, the commenter advocated a different approach. Using the example of a replacement bus engine, the commenter would treat this as “a manufactured product
For rolling stock replacement parts, the commenter stated that the optimal course of action for maintaining consistency and avoiding undue administrative burden “is in consistently applying the end product, component, and sub-component labels.” Because replacement parts manufacturers are already accustomed to having their products treated as manufactured products, the commenter states that its approach “will not represent the kind of sea change likely to disrupt the supply industry.”
Addressing the topic of replacement parts, another commenter recommended that “all spare parts be exempt from the Buy America requirements.” While acknowledging that such an approach may circumvent the objectives of Buy America, the commenter argued that “it will increase competition and should result in lower costs to the grantee.”
Twelve commenters who supported a “non-shift” approach expressed differences of opinion on a proposed definition of end product. For example, five commenters favored FTA's proposed non-shift definition of end product, which is based on the Buy American Act, used for direct Federal procurements. Three of these commenters stated that consistency of definitions in publicly funded contracts is a benefit.
Seven commenters disagreed with FTA's proposed definition. Some of these commenters characterized FTA's proposed definition as overly broad or insufficiently descriptive. One commenter proposed an alternative definition, as follows:
However, several commenters specifically disagreed with this proposed definition, as it did not include the term “system.”
A second commenter proposed a “non-shift” definition of end product, by specifically amending 49 CFR 661.11(s) to read as follows:
Two commenters, in identical fashion, proposed the following definition:
In proposing this definition, these two commenters stated that end products are usually specified as stand alone assemblies (line item or separate descriptions) and are sold with individual performance warranties and can function independently in differing service environments.
Two commenters criticized the “shift” approach to end product analysis, but did not propose alternative definitions. One of these commenters stated that FTA's proposed “shift” definition is not consistent with Congressional intent, as it allows for system end products. The other commenter advocated eliminating the “shift” approach. While not offering a definition of end product, the commenter suggested that an “individual items” may be considered as end products if any of the following criteria are present: (1) Separate line item pricing for individual elements is involved; (2) Performance warranties for individual or separable product elements are involved; (3) The procured items are regularly sold separately; and (4) The procured items can function separately.
Upon careful analysis and review of the comments received on the end product issue, FTA concurs with the majority of commenters who recommended FTA adopt a “non-shift” approach to end product analysis. FTA finds the commenters” argument especially compelling that such an approach would (1) Foster reasonable predictability and stability in the transit business community, (2) enable offerors and bidders to price proposals more accurately, and (3) allow transit agencies to obtain better prices to be especially compelling. Further, FTA is mindful of the concerns expressed by commenters who opposed abandoning the current “shift” approach, as this change could lead to enormous administrative burdens on grantees and result in the potential loss of American jobs. FTA believes there is a straightforward solution that can address these concerns.
The commenters who opposed the “non-shift” approach focused their comments almost entirely on the effect of such a change in the market for rolling stock replacement parts. FTA agrees with the “grave concerns” expressed by some commenters on this issue. Keeping track of after market rolling stock components would not only prove to be an impossible burden for grantees, it also and could very well discourage parts suppliers from sourcing in the United States. However, these concerns rest on the assumption that FTA would treat replacement parts under the rolling stock standard (
By continuing to treat replacement parts under the manufactured products standard in 49 CFR 661.5, suppliers must still manufacture replacement components in the United States, thus preserving American jobs. In addition, grantees will not have to engage in the burdensome recordkeeping requirements that a change to a rolling stock standard for replacement parts would entail. As one commenter stated, “[r]eplacement parts manufacturers are already accustomed to their products being treated as manufactured products so this will not represent the kind of sea change likely to disrupt the supply industry.” FTA agrees, and believes that this approach should alleviate grantees' concerns about procuring replacement parts under a “non-shift” end product standard.
Here is how FTA believes a “non-shift” approach to end product analysis would work in rolling stock procurement. First, when procuring end products such as rail cars or buses, there would be little or no difference in the Buy America requirements under a “non-shift” approach from the current “shift” method. In either case, under FTA's Buy America requirements for rolling stock, 49 U.S.C. 5323(j)(2)(C) and 49 CFR 661.11, sixty percent of all components, by cost, must be of U.S. origin, and final assembly of the vehicle must take place in the United States. Furthermore, FTA's audit requirements, which state that a recipient purchasing rolling stock must conduct, or cause to be conducted, a pre-award and a post-delivery audit to verify compliance with Buy America would remain the same.
Any change between the “non-shift” and “shift” approaches to end product analysis would occur primarily in the procurement of replacement parts. Under FTA's current Buy America methodology, if a grantee procures a replacement part for a bus, rail car, or other rolling stock end product, then the general requirements for manufactured products found at 49 CFR 661.5 apply. In that case, the replacement part component, such as a bus engine, “shifts” to become an end product and all manufacturing processes for the engine must take place in the United States. All of the components of the engine must be manufactured domestically, regardless of the origin of the subcomponents.
Under the proposed “non-shift” methodology, what would change specifically is that the replacement part, in this example a bus engine, would always remain a component instead of “shifting” to being an end product. Using the manufactured product standard, this would mean the replacement part component,
With adoption of a “non-shift” approach to manufactured end products, similar results would apply. For example, when procuring a manufactured end product such as a mobile vehicle lift, there would be little or no difference in the Buy America requirements under a “non-shift” approach from the current “shift” method. In either case, all of the manufacturing processes for the vehicle lift end product must take place in the United States and all of the components of the product must be of U.S. origin.
As with the example of the bus engine, however, there would be a change in the subcomponent requirements for replacement parts for manufactured end products such as a mobile vehicle lift. What would be considered a component under the current “shift” approach would become a subcomponent under the “non-shift” approach, and may be foreign-sourced.
With products that are made primarily of steel and iron such as track-work or a steel bridge, there would be absolutely no change in the Buy America requirements between the current “shift” approach and the proposed “non-shift” methodology. In either case, the requirements are clear: “
In short, FTA foresees a change in the Buy America requirements resulting from adoption of the “non-shift” approach to end product analysis primarily in the procurement of replacement parts for rolling stock and manufactured products. While this change may permit an increase in the level of foreign sourced subcomponents for replacement parts, FTA believes the benefits of the new approach more than outweigh the possible disadvantages. FTA agrees with one commenter who stated that for rolling stock replacement parts, in particular, the proposed “non-shift” approach represents “the optimal course of action for balancing consistency and administrative burden.”
To conclude, FTA believes a “non-shift” approach to end product analysis will achieve the goals of enhancing consistency, stability, and favorable price structures in the transit industry with minimal disruption to current practices while still maintaining the legislative intent of Buy America.
Having proposed adoption of the “non-shift” methodology, the task remains to shape a workable definition of end product. Additionally, in drafting a definition of end product, FTA believes the end product definition should be consistent with the current definition of “component” in 49 CFR 661.3, which states: “
In defining the term “end product,” SAFETEA-LU requires that “the procurement of systems” be addressed “to ensure that major system procurements are not used to circumvent the Buy America requirements.” In light of this requirement, the NPRM sought comment on whether FTA should continue its longstanding practice of including “systems” as definable end products. Furthermore, FTA sought comment on a proposed definition of system, which is based on the “functional test” for interconnected systems from the Harmonized Tariff Schedule of the United States (HTSUS), 19 U.S.C. 1202, heading 8474, used in customs law. FTA's proposed definition of system stated: “System means a machine, product, or device, or a combination of such equipment, consisting of individual components, whether separate or interconnected by piping, transmission devices, electrical cables or circuitry, or by other devices, which are intended to contribute together to a clearly defined function.”
In addition, FTA also sought comment on whether the same or different Buy America requirements should apply to open architecture versus proprietary system end products.
FTA received nineteen comments on the issue of system end products. Eight commenters opposed including systems as end products. Two comments, which were identical, expressed concern that FTA's proposed definition could be “stretched to include a whole ‘system’ of disconnected but related end products, such as buses, garages, access roads, bus shelters,” which could lead to distortions in the Buy America requirements. Another commenter objected that including a system in the end product definition could result in “gamesmanship,” thereby eliminating American jobs. A fifth commenter offered similar views that including a system as an end product allows “foreign suppliers to circumvent the intent of Congress with respect to Buy America compliance.”
One other commenter, whose views were fully endorsed by a yet another commenter, stated that including a system as an end product would violate Congress' stated intent in SAFETEA-LU that “system procurements not be used to circumvent Buy America requirements.” The commenter explained that under FTA's historical interpretation of the Buy America requirements, “end products” are made up of components and subcomponents. For manufactured products, components must be domestically produced, but subcomponents may be foreign sourced.
Using the example of fare collection equipment, the commenter pointed out that an automated fare collection system is comprised of ticket vending machines, fare gates, computers, software, and like items. By designating an automated fare collection system as an end product, the ticket vending machine, for example, would be a component, and must be manufactured domestically. The ticket handling assembly that goes into the ticket vending machine would be a subcomponent, and may be foreign sourced. Under a “non-system” approach to Buy America analysis, however, the ticket vending machine is the end product and the ticket handling assembly is a component, and both items would have to be manufactured domestically.
The commenter went on to state that including a “major system” as an end product results in designation of critical equipment as components, rather than as end products, thereby dramatically increasing the quantity of foreign-manufactured equipment that may be incorporated into a procured system. This is so where systems are end products and an item “should be designated properly as a component is pushed ‘downstream' and becomes a subcomponent,” that may be foreign sourced. It is this situation, according to the commenter, that Congress sought to avoid.
The commenter stated further that if equipment must be domestically made when not purchased as part of a system, but may be foreign sourced when part of a system procurement, then the system procurement “has been used to
The above commenter asserted that the definition of “end product” is not objectionable if it includes only those items which may be considered as a single manufactured product if manufactured in a U.S. facility. To facilitate this approach, the commenter proposed clarifying the existing regulatory definition of end product as “any item subject to 49 U.S.C. 5323(j) that is to be acquired by the grantee, as specified in the overall project contract,” by adding the following language to the regulatory text:
Notwithstanding the characterization of a system as an end product by a grantee in its project contract procuring manufactured products, the system shall not be considered the end product where (1) The solicitation provides separate line item pricing for individual product elements and the owner retains the right to materially add or subtract quantities of individual product elements, (2) the solicitation provides for performance warranties for individual or separable product elements (other than warranties relating to degraded mode operation), thereby demonstrating that individual elements can fully perform independently, or (3) items identified in the solicitation that constitute the system are regularly sold separately (other than in the context of replacement parts) and can function independently of the system. In solicitations where circumstances described in (1), (2), or (3) above are present, then those individual items or elements identified in the solicitation shall be considered end products rather than part of any system.
In addition, the commenter suggested FTA consider the following clarifying language:
Example of manufacturing products that have sometimes been treated by grantees as end products, based upon a system characterization, which would no longer be treated as end products under this definition include fare collection and distribution, security and access control, vehicle location, passenger information and signage products (unless such signage provides system-wide information rather than just location specific information). Further, FTA should eliminate fare collection systems from the proposed list of end products in the appendix to the regulation; so that it is clear that separable fare collection products with separable performance warranties do not constitute an end product merely because they are purchased as part of a larger procurement described as a “system.”
The commenter proposed a representative list of “proper end products” to include in the regulation, which FTA has summarized, as follows:
End Products: transit/coach/shuttle buses; trolley replicas; subway rail cars; light rail cars; destination displays or signs; audio annunciation devices; wheelchair restraint devices; mobile video surveillance equipment; vehicle power generation devices; vehicle fire suppression devices; route or run displays or signs; video recorders and cameras; audio recorder, player, or transmission device; GPS and vehicle location devices; electrical control and multiplexing devices; voice enunciation devices; operator input/output displays and devices; automatic passenger counting equipment; automated gates and turnstiles; vehicle location devices; fareboxes; automated ticketing/fare card machines; ticket/fare card validators; ticket/fare card encoding equipment.
Another commenter offered similar views that an end product system could be so large, and incorporate so many different levels and types of equipment that relatively major items now considered to be components, and subject to the Buy America requirements, would become subcomponents not subject to the Buy America requirements. The commenter added that FTA's proposal is “contrary to the statutory requirement that the definition of end product ensure major system procurements are not used to circumvent the Buy America requirements.”
In contrast to the foregoing, the ten remaining commenters recommended including a system as a definable end product. Six commenters endorsed FTA's proposed definition of system, which limits system end products to those that are intended to provide a “clearly defined function.” One commenter recommended that the following language be added after the clause “clearly defined function,” to wit: “necessary to fulfill the function as defined.” The commenter suggested this change would “minimize the tendency to add ancillary items to a “system.” Another commenter noted simply that “[a]ddition of this definition [of system] reflects the requirements of SAFETEA-LU.”
Of the reasons given in support of FTA's proposal, several commenters noted that the concept of system end products has long precedent in FTA-funded procurements for both rolling stock and manufactured products. These commenters also stated that nothing in SAFETEA-LU or its legislative history indicates that Congress intended to preclude a system as an end product. Referring to the legislative history of SAFETEA-LU, one of these commenters pointed out that Congress specifically rejected at least two proposals that would have effectively treated all identifiable items or discrete elements of a system procurement as end products. According to the commenter, Congress rejected these proposals so as not to substantially alter current FTA practice. Rather, SAFETEA-LU instructed FTA to develop a rule that would cure potential abuses without eliminating system procurements, or fundamentally change the agency's long-standing Buy America practices.
This commenter endorsed FTA's proposed definition of “system,” which employs a functional test to make clear that a system is an end product only where the system provides a “clearly defined function.” The commenter felt FTA's definition “protects against the bundling of a host of unrelated independent functions into a ‘super system' that would undermine the Buy America rules.” The commenter agreed with another comment which recommended FTA provide some examples (based on FTA precedents) of “super systems” that would not qualify as end products. Furthermore, the commenter stated that for manufactured items, requiring the end product, “and all components” be of U.S. manufacture, would ensure that substantial processing and labor all occur in the United States.
A third commenter, who also endorsed FTA's proposed definition of system, recommended that FTA make clear in its regulatory guidance that if products in a particular application, which must necessarily perform on an integrated basis with other products constitute a portion of the same acquisition, then the products together constitute a system end product. The commenter offered the following examples of “high-end systems” that should be referenced as end products: (1) Communication based train control systems; (2) automatic train supervision systems; (3) passenger information and communication systems; (4) CCTV (closed circuit television) systems; (5) traction power systems; (6) automatic interlocking systems; (7) access control systems; (8) intelligent video systems; and (9) intrusion detection systems. Such systems may be covered by performance warranties for the system as a whole. The commenter stated, however, that discrete elements of a system may also be covered by
The above commenter also recommended FTA not make any distinction between open architecture and proprietary systems. The commenter stated the key question to consider is whether products perform and operate on an integrated basis. The intellectual property rights, if any, which pertain to products is a separate legal question that does not necessarily relate to integration of system equipment.
Another commenter recommended a two-pronged approach to defining “system,” in order to provide a ceiling on what may be bundled into a particular end product and to discourage any gamesmanship that sidesteps the Buy America requirements. First, the commenter stated the representative listing of products in Appendix A of the current 49 CFR part 661 should include proper end products, whether or not referred to as “systems.” Second, the commenter recommended the definition of “system” be expanded to provide guidance on what is
In similar fashion, one commenter recommended FTA develop a “list of high level systems or end products that are commonly purchased and require that systems or end products on this list must be treated as end products for the purpose of meeting Buy America requirements even if the contract calls for a higher level system of which two or more listed items would be components.” To meet these criteria, the commenter recommended that the end product definition be revised to read: “The following is a list of items * * * that are representative end products subject to the requirements of Buy America as end products even if they are to be acquired by a grantee as part of a larger overall project.” The commenter stated that adoption of its recommendation would prevent a grantee from acquiring a “transportation system” of trains, buses, and fare collection equipment, and treating these major items as components of system procurement. The commenter also suggested that based on its recommendations, FTA would have “no reason” to distinguish between proprietary and open architecture systems.
Another commenter similarly recommended against creation of “super system” end products that do not meet the Buy America requirements. Such a situation could lead to foreign “dumping” of manufactured products into the U.S. transit market.
FTA agrees with the majority of commenters who recommended FTA should continue its longstanding practice of including a “system” as a definable end product. Based on the plain language of SAFETEA-LU and its legislative history, FTA also agrees with those commenters who stated that by requiring FTA to develop a rule to “ensure that major system procurements are not used to circumvent the Buy America requirements,” Congress did not intend to expressly prohibit the designation of system end products. Rather, SAFETEA-LU instructs FTA to develop a rule that would cure potential abuses, without eliminating system procurements or drastically changing FTA's long-standing Buy America practices. FTA proposes to contain the potential for abuse by defining a “system” as the minimum set of components and interconnections needed to perform all of the functions specified by the grantee in its procurement. All second and subsequent system elements proposed by the supplier to meet the site capacity specified by the grantee would be additional end products applied to the original system. In addition, the second and subsequent sites in a procurement addressing multiple geographic sites would be additional end products applied to the original system.
Furthermore, as FTA explained in the NPRM, and as commenters subsequently noted, the concept of system end products is of long standing at FTA, and is a concept well grounded in Federal public contract law.
For the foregoing reasons, FTA proposes to retain the application of a “system” in the definition of “end product.” FTA agrees with a commenter who noted FTA's proposed definition will “protect against the bundling of a host of unrelated independent functions into a ‘super system' that would undermine the Buy America rules.” Most importantly, as FTA explained in the NPRM, FTA will carefully review system procurements in Buy America cases to determine whether an integrated system actually exists, and, if so, which items of equipment constitute the system. This review process will further serve to avoid the problem of “super systems.” FTA already employs a longstanding model to determine if a system is “too large” and must be broken down into separate, multiple end products. Thus, the concerns expressed by commenters that an end product system could be so large, and incorporate so many different levels of equipment such as stations, track, vehicles, fare collection equipment, etc., so as to circumvent the requirements of Buy America, are adequately addressed. Under FTA's Buy America methodology, if a purported end product is too large,
In response to FTA's request for comment on whether different Buy America requirements should apply to open architecture versus proprietary system end products, one commenter recommended FTA not make any distinction between the two. The commenter stated that the key question to consider is whether products perform and operate on an integrated basis. The intellectual property rights, if any, which pertain to products is a separate legal question that does not necessarily relate to integration. FTA agrees with these comments, and will not implement a distinction in regulation between open architecture versus proprietary system end products.
FTA received many helpful comments on its proposed definition of “system” to further refine it. For example, commenters suggested FTA should consider whether performance warranties apply to an integrated system (regardless of whether components are separately warranted); whether products perform on an integrated basis with other products in a system, or are operated independently of associated products in the system; or whether transit agencies routinely procure a product separately (other than as replacement or spare parts). Based on these suggestions, FTA seeks comments on its proposal to revise the definition of “system” in 49 CFR 661.3.
To comply with the SAFETEA-LU requirement to include a “representative list” of end products, FTA sought comment on a proposed list of representative end products. As FTA explained in the first NPRM, the proposed list is not meant to be all-inclusive. Rather, it describes general “representative” categories of end products.
FTA received thirteen substantive comments on this issue. Of these, nine commenters proposed their own lists of end products, components, or subcomponents, which were often extensive and reflected particular industries. Comments offering such lists may be viewed online at
Two comments, which were identical, stated FTA's representative list “in Appendix A can quickly be outdated by technology (
One commenter stated FTA's proposed representative list was overly broad, without instructional value, and, therefore, insufficient. Instead, the commenter recommended FTA implement a “comprehensive” list of representative end products, components, and subcomponents in Appendix A to 49 CFR part 661. The commenter further stated that Appendix A should be “regularly supplemented as new or changing end products, components, sub-components, and manufacturing processes enter the marketplace.” Such proposed supplemental changes should be posted for public comment, prior to final decision. The commenter also suggested that the list of items in Appendix A should consist of concrete examples, rather than mere descriptive terms. The commenter proposed a new version of Appendix A, which can be found in the docket at entry number 21.
Three commenters disagreed with the proposal that FTA adopt a “comprehensive” list of end products, components, and subcomponents to be constantly updated. These commenters felt that attempting to identify a “comprehensive list” from the universe of potential end products, components, and subcomponents typically acquired in transit procurements, and then constantly updating this list, is unrealistic and burdensome to grantees. In substantially similar statements, two commenters noted that the previous commenter was unable to achieve consensus from its membership on this issue, or on its proposed “comprehensive list.”
Instead of a “comprehensive list,” the three commenters agreed with FTA's inclusion of a “representative” list of end products in Appendix A. The commenters supported the suggestion FTA include some “illustrative” examples of end products in Appendix A. Commenters stated that these examples should be drawn from published FTA decisions.
FTA agrees with the commenters who recommended FTA implement a “representative” list of end products rather than a “comprehensive” list as some commenters suggested for two reasons. First, SAFETEA-LU requires the Secretary to “develop a list of
FTA believes it is impractical to attempt to produce an exhaustive “comprehensive” list of every conceivable end product, component, and subcomponent in the transit industry. Instead, the better approach is to develop a representative list that is not meant to be all-inclusive. An example of this practical approach are the representative lists of typical bus and rail car components found in Appendices B and C to 49 CFR 661.11. FTA's proposed representative list of end products is similarly reflective of the broad scope of transit end products with which Buy America is concerned.
Several commenters recommended FTA provide “illustrative” examples of typical end products. In fact, FTA believes that its proposed list accurately reflects the type of end products FTA typically reviews in its Buy America practices. For example, FTA recently reviewed a procurement for a “hybrid-electric shuttle bus.” Rather than enumerate this specific vehicle type in the regulation, a “hybrid-electric shuttle bus” is clearly a “vehicle,” and, thus, a rolling stock end product within the meaning of 49 CFR 661.3 and the proposed representative list of end products in Appendix A. Thus, FTA believes it is unnecessary to enumerate every conceivable type of bus in the list of end products, whether the bus is a trolley replica, hybrid-electric, or standard diesel model, as one commenter recommended.
In another example from an actual procurement that underwent Buy America review, “manganese steel frogs” are a type of special track-work, and thus, a steel end product. Again, FTA sees no need to specifically add the
FTA seeks comments on its proposal to add an Appendix A to 49 CFR 661.1 to include a representative list of end products.
In the first NPRM, FTA sought comment on its proposal to amend the definition of “final assembly” in 49 CFR part 661 for rolling stock procurements; to incorporate the “minimum requirements” of final assembly for rail cars and buses as stated in the March 18, 1997, Dear Colleague letter, C-97-03 (incorporated as section 3035 of the Transportation Equity Act for the 21st Century (TEA-21) (Pub. L. 105-178)); and to further clarify those requirements. FTA based its proposed definition on its March 18, 1997, Dear Colleague letter.
FTA received nine comments on this issue. One comment, which three other comments endorsed, recommended several changes to FTA's proposed definition, to make it consistent with the lists of typical components for rail cars and buses in 49 CFR 661.11(b) and (c). The comment proposed the following revisions to FTA's proposed rule (the commenter's proposed inserted text is underlined; proposed deletions are in brackets):
Rail Cars: In the case of the manufacture of a new, remanufactured, or overhauled rail car, final assembly would typically include, as a minimum, [the following operations:] installation and interconnection of
Buses: In the case of a new, remanufactured, or overhauled bus, final assembly would typically include, at a minimum, the installation and interconnection of
Two other comments, which are identical, recommended the following changes to the Bus section of FTA's proposed definition by: (1) Moving the word “chassis” just after the word “shells;” (2) replace the words “suspensions, steering mechanisms and wheels,” where chassis had been; (3) replace the words “(drive train)” by “(propulsion components, including inverters and controllers) and energy storage device (if used)”—to accommodate hybrid electric buses; and (4) replace “wheelchair lift” to “wheelchair lift/ramp”—to accommodate low floor bus components. Another commenter recommended FTA's proposed reference to “motors” and “gear units” be modified to read “motors, gear units or integrated motor/gearbox.”
Additionally, a commenter noted that the March 18, 1997, Dear Colleague letter contained the following provision, which the commenter recommended should be added to the proposed definition of final assembly in Appendix D of 49 CFR 661.11:
If a manufacturer's final assembly processes do not include all the activities that are typically considered the minimum requirements, it can request a Federal Transit Administration (FTA) determination of compliance. FTA will review these requests on a case-by-case basis to determine compliance with Buy America.
This commenter also found the following language in FTA's proposed definition to be ambiguous: “installation and interconnection of car bodies or shells.” The commenter felt that this language could be interpreted to mean that various sections of the car body or bus shell are to be assembled at the final assembly location. The commenter recommended FTA either delete the language or replace it with the phrase, “the installation and interconnection of intercar or bus articulations or coupling systems.” The commenter suggested that the term “suspensions, frames and chassis” should be clarified. The commenter also recommended that the term “door control systems” replace the current “door systems.” Finally, the commenter recommended FTA consider a previously rescinded Dear Colleague letter issued on September 25, 1997, C-97-18, as it raised “valid issues concerning the need for flexibility in determining compliance with final assembly requirements.”
FTA concurs with the comment, which FTA quoted in full above, recommending several changes to FTA's proposed definition of “final assembly” for rail cars and buses. FTA notes that several of the proposed changes were also mentioned by other commenters, such as using the terms “door control systems” and “integrated motor/gear units” in lieu of the designations proposed in the first NPRM. In addition, FTA agrees that the definition of final assembly should refer back to 49 CFR 661.11(b) and (c) for the bus and rail car components that must be incorporated into the end product at the final assembly location.
FTA also agrees with the comment recommending that the following language from the March 18, 1997, Dear Colleague Letter should be added to the definition of “final assembly:”
If a manufacturer's final assembly processes do not include all the activities that are typically considered the minimum requirements, it can request an Federal Transit Administration (FTA) determination of compliance. FTA will review these requests on a case-by-case basis to determine compliance with Buy America.
FTA, however, disagrees with the commenter who stated that the phrase “installation and interconnection of car bodies or shells” is ambiguous. FTA also declines to adopt the language of a previously rescinded Dear Colleague letter of September 25, 1997, C-97-18, as the commenter suggested.
Based on the above, FTA seeks comments on its proposal to adopt Appendix D to 49 CFR 661.11 per the above commenter's recommendation.
FTA sought comment on three substantive proposals to the Buy America requirements for rolling stock in 49 CFR 661.11. In the first of these proposals, FTA sought comment on whether it should continue to find that the items of communication equipment listed in 49 CFR 661.11 include wayside equipment,
In addition, FTA sought comment on whether the term “communication equipment” should be clarified in the Buy America regulations to reflect continuing changes in technology and advances in systems integration. In particular, FTA posed the question whether “communication equipment” should be limited to equipment whose primary function is communication “with or between people” versus “machine to machine” interface.
FTA received eight comments on these three proposals. Three commenters urged FTA not to modify its interpretation of communication equipment listed in 49 CFR 661.11 as including wayside equipment. No commenter opposed this interpretation.
Two commenters, who submitted identical comments, agreed with FTA's proposal that “communication equipment” should be limited to equipment whose primary function is to facilitate communication “with or between people” versus “machine to machine” interface. Three commenters opposed this proposal. These commenters argued that such a distinction is unnecessary, ineffective, or illogical. Several commenters pointed out that many communications networks often support both capabilities; and that it cannot be said whether equipment primarily supports one purpose or the other.
One commenter recommended that FTA change or delete the following listed items in 49 CFR 661.11(t), (u), and (v): Under 49 CFR 661.11(v)(2), “Primary AC transformer rectifiers” be changed to “Primary AC Rectifier Transformers;” the language “at central control” be deleted from 49 CFR 661.11(v)(4), which states “Traction power console and CRT display system at central control;” and the language “Power rail” be deleted from 49 CFR 661.11(v)(17), which states “Power rail insulators.” The commenter also recommended that FTA delete the following pieces of equipment entirely in section 661.11(v): (9) Facility step down transformers; (10) Motor control centers (facility use only); (21) Connectors, tensioners, and insulators for overhead power wire systems; and (22) Negative drainage boards.
The above commenter and another recommended that the following items be added to the lists of equipment in 49 CFR 661.11(t), (u), and (v), as follows:
49 CFR 661.11(t) [train control equipment]: (1) Propulsion Control Systems; (2) Cab Signaling; (3) ATO Equipment; (4) ATP Equipment; (5) Wayside Transponders; (6) Trip Stop Equipment; (7) Wayside Magnets; (8) Cab Displays; (9) Speed Measuring Devices; (10) Car Axle Counters; and (11) Communication Based Train Control (CBTC).
49 CFR 661.11(u) [communication equipment]: (1) Antennas; (2) Wireless Telemetry Equipment; (3) Passenger Information Displays; (4) Communications Control Units; (5) Communication Control Heads; (6) Wireless Intercar Transceivers; (7) Multiplexers; (8) SCADA Systems; (9) LED Arrays; (10) [APTA added] Screen Displays such as LEDs and LCDs; (11) Fiber-optic transmission equipment; (12) Frame or cell based multiplexing equipment; and (13) Communication system network elements.
49 CFR 661.11(v) [traction power equipment]: (1) Surge Arrestors; (2) Protective Relaying; and (3) Bimetallic Power Transmission System (BPTS) Equipment.
One commenter recommended that the following items be added to the list of traction power equipment in 49 CFR 661.11(v): Main transformers, transfer switches, bonds, and power rail. Another commenter suggested the following items be added to the list of communications equipment in 49 CFR 661.11(u): (1) Fiber Optic Transmission Equipment; (2) Frame or cell-based multiplexing equipment; and (3) Communication system network elements. This commenter also recommended that aluminum conducting rail, which is referred to as Bimetallic Power Transmission System (BPTS), be added to the list of traction power equipment in 49 CFR 661.11(v).
A final commenter proposed various miscellaneous “corrections and clarification” on such issues as (1) FTA's Buy America Web site be binding; (2) a standard “tariff exemption” form be added to 49 CFR 661.11; (3) spare parts be 60% domestic; (4) a U.S. components' domestic manufacturing costs count toward a vehicle; (5) administrative and overhead costs be counted towards components; (6) the general requirements of § 661.5 not apply to remanufactured or overhauled vehicles; (7) manufacturers not be required to provide recipients with hard copies of Buy America calculations; and (8) grantees not be allowed to require both 49 CFR 661.5 and 661.11 requirements on rolling stock contract. FTA views these comments to be non-responsive.
FTA agrees with the commenters who recommended that FTA continue its longstanding interpretation that items of communication equipment listed in 49 CFR 661.11 include wayside equipment, and, thus, are subject to the rolling stock standard. FTA notes that no commenter opposed this interpretation.
FTA also concurs with the commenters who argued that “communication equipment” should not be limited to equipment whose primary function is to facilitate communication “with or between people” versus “machine to machine” interface. FTA finds commenters’ argument particularly convincing that communication networks frequently support both capabilities (
Regarding proposed changes to train control, communication, and traction power equipment in 49 CFR 661.11(t), (u), and (v), respectively, FTA notes that only one commenter recommended deleting enumerated items. FTA declines to do so, absent a specific showing as to why specific items of equipment should be deleted from the lists in 49 CFR 661.11.
However, FTA agrees to add certain items of equipment, as recommended by several commenters. With respect to two
Accordingly, FTA seeks comments on its proposal to amend 49 CFR 661.11(t), (u), and (v), respectively, by adding the following:
FTA notes that several commenters recommended that aluminum composite conducting rail, otherwise known as Bimetallic Power Transmission (BPTS) Equipment, which is a combination of an aluminum conductor and a stainless steel abrasion-resistant cap, be considered as traction power equipment, and added to the list of items at 49 CFR 661.11(v). FTA's current regulation at 49 CFR 661.11(w) states that “[t]he power or third rail is not considered traction power equipment and is thus subject to the requirements of 49 U.S.C. 5323(j) and the requirements of 49 CFR 661.5.” Regardless whether BPTS equipment is made primarily from aluminum, steel, or some other material, 49 CFR 661.11(w) expressly precludes it from being considered as traction power equipment if it is used as the “power or third rail”. If BPTS third rail is not made primarily of steel, it would be treated as a “manufactured product” under 49 CFR 661.5(d).
Section 3023 of SAFETEA-LU amended 49 U.S.C. 5323(j)(6) (as redesignated by SAFETEA-LU) by striking “Intermodal Surface Transportation Efficient Act of 1991 (Public Law 102-240, 105 Stat. 1914)” and inserting “Federal Public Transportation Act of 2005”. This SNPRM proposes to amend 49 CFR 661.18 to conform to this statutory change.
This SNPRM is authorized under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (Pub. L. 109-59), which amended section 5323(j) and (m) of title 49, United States Code and required FTA to revise its regulations with respect to Buy America requirements.
This SNPRM is a nonsignificant regulatory action under section 3(f) of Executive Order 12866 and, therefore, was not reviewed by the Office of Management and Budget. This SNPRM is also nonsignificant under the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034, Feb. 26, 1979). This SNPRM imposes no new compliance costs on the regulated industry; it merely clarifies terms existing in the Buy America regulations and adds terms consistent with SAFETEA-LU.
This SNPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). This SNPRM does not include any regulation that has substantial direct effects on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.
This SNPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”). Because this SNPRM does not have tribal implications and does not impose direct compliance costs, the funding and consultation requirements of Executive Order 13175 do not apply.
The Regulatory Flexibility Act (5 U.S.C. 601-611) requires each agency to analyze regulations and proposals to assess their impact on small businesses and other small entities to determine whether the rule or proposal will have a significant economic impact on a substantial number of small entities. This SNPRM imposes no new costs. Therefore, FTA certifies that this proposal does not require further analysis under the Regulatory Flexibility Act. FTA requests public comment on whether the proposals contained in this SNPRM have a significant economic impact on a substantial number of small entities.
This SNPRM does not propose unfunded mandates under the Unfunded Mandates Reform Act of 1995. If the proposals are adopted into a final rule, it will not result in costs of $100 million or more (adjusted annually for inflation), in the aggregate, to any of the following: State, local, or Native American tribal governments, or the private sector.
This SNPRM proposes no new information collection requirements.
A regulation identifier number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN number contained in the heading of this document may be used to cross-reference this action with the Unified Agenda.
The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321-4347), requires Federal agencies to consider the consequences of major Federal actions and prepare a detailed statement on actions significantly affecting the quality of the human environment. There are no significant environmental impacts associated with this SNPRM.
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Grant programs-transportation, Public transportation, Reporting and recordkeeping requirements.
Accordingly, for the reasons described in the preamble, 49 CFR part 661 of the Code of Federal Regulations is proposed to be amended as follows:
1. The authority citation for part 661 continues to read as follows:
49 U.S.C. 5323(j) (formerly sec. 165, Pub. L. 97-424; as amended by sec.337, Pub. L. 100-17; sec.1048, Pub. L. 102-240; sec.3020(b), Pub. L. 105-178; and sec. 3023(i) and (k), Pub. L. 109-59); 49 CFR 1.51.
2. Revise § 661.3 to read as follows:
As used in this part:
The following is a list of representative end products that are subject to the requirements of Buy America. This list is representative, not exhaustive.
(1)
(2)
(3)
3. In § 661.7:
a. Revise paragraph (b) and add new paragraph (c)(3) to read as set forth below; and
b. Amend appendix A to § 661.7 by removing paragraphs (b) and (c) and adding new paragraph (b) to read as set forth below.
(b) Under the provision of section 165(b)(1) of the Act, the Administrator may waive the general requirements of section 165(a) if the Administrator finds that their application would be inconsistent with the public interest. In determining whether the conditions exist to grant this public interest waiver, the Administrator will consider all appropriate factors on a case-by-case basis, unless a general exception is specifically set out in this part. When granting a public interest waiver, the Administrator shall issue a detailed written statement justifying why the waiver is in the public interest. The Administrator shall publish this justification in the
(c) * * *
(3) After contract award, the Administrator may grant a non-availability waiver under this paragraph, in any case in which a bidder or offeror originally certified compliance with the Buy America requirements in good faith, but can no longer comply with its certification. The Administrator will grant a non-availability waiver only if the grantee provides sufficient evidence that the original certification was made in good faith and that the item to be procured cannot now be obtained domestically due to commercial impossibility or impracticability. In determining whether the conditions exist to grant a post-award non-availability waiver, the Administrator will consider all appropriate factors on a case-by-case basis.
(b) Under the provisions of § 661.7 (b) and (c) of this part, a general public interest waiver from the Buy America requirements applies to microprocessors, computers, microcomputers, or software, or other such devices, which are used solely for the purpose of processing or storing data. This general waiver does not extend to a product or device which merely contains a microprocessor or microcomputer and is not used solely for the purpose of processing or storing data.
4. Amend § 661.11 by removing and reserving paragraph (s), adding paragraphs (t)(14) through (t)(22), (u)(18)
(t) * * *
(14) Cab Signaling;
(15) ATO Equipment;
(16) ATP Equipment;
(17) Wayside Transponders;
(18) Trip Stop Equipment;
(19) Wayside Magnets;
(20) Speed Measuring Devices;
(21) Car Axle Counters;
(22) Communication Based Train Control (CBTC).
(u) * * *
(18) Antennas;
(19) Wireless Telemetry Equipment;
(20) Passenger Information Displays;
(21) Communications Control Units;
(22) Communication Control Heads;
(23) Wireless Intercar Transceivers;
(24) Multiplexers;
(25) SCADA Systems;
(26) LED Arrays;
(27) Screen Displays such as LEDs and LCDs for communication systems;
(28) Fiber-optic transmission equipment;
(29) Fiber-optic transmission equipment;
(30) Frame or cell based multiplexing equipment; 13) Communication system network elements.
(v) * * *
(28) Propulsion Control Systems;
(29) Surge Arrestors;
(30) Protective Relaying.
(a)
(b)
(c) If a manufacturer's final assembly processes do not include all the activities that are typically considered the minimum requirements, it can request a Federal Transit Administration (FTA) determination of compliance. FTA will review these requests on a case-by-case basis to determine compliance with Buy America.
5. Amend § 661.18 introductory text by removing “the Intermodal Surface Transportation Efficiency Act of 1991” and in its place add, “the Federal Public Transportation Act of 2005”.